A strike leaves the Argentine auto industry without tires

The radicalization of the pulse that the workers of the tire plants have had with the companies in Argentina for four months threatens to paralyze automotive production, one of the sectors with the highest volume of exports in the South American country.

Given the risk of millionaire losses, the Government of Alberto Fernández has warned that it will open the doors to imports if the union and the companies do not reach an agreement in the next few hours.

The American Ford announced on Monday the suspension of two production shifts at its factory in the Buenos Aires town of Pacheco.

The Japanese Toyota stopped this Wednesday the manufacture of its flagship truck at its Zárate plant and other automakers have warned that they will follow in its footsteps if the production chain is not normalized within seven to ten days.

“The stocks have been decimated for a long time.

Before the stoppage, work is being done almost daily," says the president of the Argentine Tire Federation, Horacio García, who considers that it is an "emergency situation."

According to the data provided by García, the tire factories have been working at 40% of their capacity for four months, which is not enough to supply the market and even less if one takes into account that it is an expanding sector driven by the 29% growth registered by the local automotive industry.

The conflict began in June, with the reopening of collective wage negotiations.

The Single Union of Tire Workers (Sutna) has rejected successive offers of raises made by the three producing companies—Bridgestone, Pirelli and Fate—and demands that overtime be paid at three times the current value.

The 66% offered by companies is behind an inflation that accumulates 56.8% in the first eight months of the year and is expected to touch 100% by the end of 2022. Given the lack of answers, last Friday the workers went on strike and blockaded the three tire plants.

The union argues that its claim not only takes into account inflation but also the multimillion-dollar state aid that companies received to pay salaries during the pandemic and the high increase in the price of tires, which has doubled so far this year.

Today, the driver who wants to change the four wheels of his car has to pay at least 120,000 pesos (almost 800 dollars at the official price).

The value is equivalent to almost two months of average rent for an apartment in the Argentine capital.

Jobs “at risk”

The government has sided with the companies.

Economy Minister Sergio Massa warned on Tuesday that "you cannot be held hostage to the whims of a small group that endangers the jobs of 150,000 people," referring to the leaders of Sutna, aligned with the Party. Worker and away from the big unions, related to Peronism.

Massa anticipated that he will open imports if an agreement is not reached in the next few hours.

Massa's statements show the seriousness of the conflict.

Argentina restricts imports as much as possible to promote the development of local industry and, in turn, to limit the outflow of foreign currency.

At the same time, it needs the dollars that come in thanks to foreign sales from the automotive industry, which is the second largest export sector in Argentina, after agribusiness.

60% of the vehicles produced here are sold to international markets, especially Brazil.

The measure announced by Massa has divided Argentine public opinion.

While many applaud the opening of imports in the hope that it will lower prices, others call for pressure on companies to reduce their profit margins.

The union's leader, Alejandro Crespo, believes that Massa is trying to extort them into lowering their salary demands.

"The government has already given companies dollars at the official price to bring raw materials and instead of using them to produce, they stockpiled them in their warehouses," Sutna leader Alejandro Crespo denounced at a press conference on Tuesday.

Entrepreneurs in the sector point out that this is an unprecedented crisis that could disrupt the development plans of the automotive industry in Argentina.

From 2017 to date, investment announcements in the sector in Argentina amount to 6,260 million dollars.

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