The Shifting Sands of Argentine Industry

argentina’s industrial landscape is undergoing a period of intense upheaval, marked by a concerning rise in SME closures and a leadership transition within the unión Industrial Argentina (UIA). These changes reflect deeper tensions between large-scale exporters and the struggling SME sector,exacerbated by recent economic policies.

Leadership Change at UIA: Rappallini Takes the Helm

The UIA,a central business organization in Argentina,has experienced a meaningful leadership change. This shift comes amid growing discontent over the depiction of SME interests within the organization. It’s significant to note that Rappallini brings a diverse background to the role, holding qualifications as both a lawyer and an ontological coach, in addition to a degree in Marketing.

Funes de Rioja’s Legacy: A Divisive Figure

The departure of Funes de Rioja from a leadership position within the UIA is attributed to his perceived dual role as a triumphant lobbyist for specific interests and a less effective advocate for the SME sectors that form the core of the business central. Critics suggest a conflict of interest, alleging that his firm, belly & Funes de Rioja, benefited from designing aspects of the Base Law, enabling governmental adjustments and labour reforms.

“(Funes) mixes the interests of the industries that we are part of UIA, with the lobby of his legal study,”

An anonymous entrepreneur who voted for Rapallini

Furthermore, concerns have been raised about the firm potentially collecting commissions from investments exceeding US $200 million entering the country, raising questions about equitable benefits for productive SMEs.

SME Crisis: Closures and Job Losses Loom

The Argentine industrial sector faces a grim reality, with SMEs bearing the brunt of economic challenges. While Argentina currently has approximately 551,000 companies, including microenterprises and SMEs, the UIA projects a concerning trend. In 2024, around 12,000 businesses closed, and projections for 2025 indicate a potential closure of an additional 25,000, threatening approximately 300,000 registered jobs. This situation underscores the vulnerability of SMEs in the current economic climate.

This situation is exacerbated by an economic model that favors speculative financial investments over productive activities. This model prioritizes generating income through financial instruments rather than through labor and production, creating an unstable environment for businesses focused on real-world output.

Regional Perspectives: Guillermo Moretti’s Critique

Guillermo Moretti, a representative of the Santa Fe Industrial Federation (FISFE) and a regional vice president of UIA, voiced strong concerns about the government’s perception of the industrial sector.Moretti, now part of the new Executive Committee under Rappallini, stated that the president made it clear that he dose not see the industrial sector as the protagonist of the country’s departure. His decision to leave an event for Industry Day reflects a sense of disillusionment and a perceived lack of respect for the industrial community.

Diverging Interests Within UIA

The UIA’s internal dynamics reflect the broader economic divisions within Argentina. The organization comprises both large, export-oriented companies and smaller, domestically focused SMEs. These groups frequently enough have conflicting interests, leading to tensions within the UIA and challenges in representing the needs of all members effectively.

Navigating argentina’s economic Turbulence: A Divided Industrial Landscape

Argentina’s industrial sector is currently facing a complex dichotomy.While large corporations involved in commodity extraction and processing operate largely independently of the nation’s economic fluctuations, small and medium-sized enterprises (SMEs) remain deeply vulnerable. These SMEs, heavily reliant on domestic consumption, are feeling the brunt of recent economic downturns. Consumption has notably decreased, with a 13.9% drop in 2024, and this trend has persisted for four consecutive months into 2025, directly impacting businesses that produce for the Argentine market.

The UIA’s New leadership: A Shift in Priorities?

The Unión Industrial Argentina (UIA),the country’s leading industrial association,is at a pivotal moment. With a new president at the helm, expectations are high for a change in direction, particularly concerning policies affecting SMEs. Though, some critics suggest that the UIA’s agenda is unduly influenced by larger corporations, potentially at the expense of smaller businesses.

One businessman, who supported the new UIA president’s candidacy, voiced concerns about the current state of affairs:

Today the UIA is in the hands of Techint, which is part of the government and Funes de Rioja expresses that, it is functional to that scheme. The large companies kick for the recess to them, but to small and medium -sized it harms us.

Seeking a New “Productive Contract”

The new UIA president aims to forge a new productive contract, signaling a potential departure from the status quo.This vision involves regular meetings with Pablo Lavigne, the Secretary of Productive Coordination, to introduce a revised agenda into the broader economic planning process. The goal is to address the concerns of SMEs and create a more favorable environment for domestic production.

Anticipated Measures for SME Relief

The UIA president recently announced that a series of measures are in the pipeline, designed to provide significant relief to SMEs. These measures were revealed via a tweet from the Minister of Economy, Luis Caputo, and involve a reduction of between 3% and 5% of about 4,000 taxes that affect the sector.

Export Rights Curtailed for Manufacturing Industries

In a move impacting a significant portion of Argentina’s exporting businesses,the government has eliminated export rights for 411 tariff positions related to manufactures of industrial origin (MOI). This decision affects approximately 7,100 companies, representing 80% of Argentina’s active exporters. The policy will initially affect 3,580 companies,with plans to extend the measure to the remainder shortly thereafter.

Balancing Tariffs and Local Production: A Delicate Act

Amidst concerns about the impact of lowered tariffs on domestic consumption and increased finished goods imports, industry voices are calling for a more strategic approach. rappallini argues that tariff reductions must be coupled with improvements to local production conditions. The sentiment is that Argentine exporters should not be penalized in a way that is not seen in other countries.

Tariffs cannot be lowered without improving the conditions for local production; it cannot be that in Argentina what happens in any country in the world: that it is indeed paid for exporting.
Rappallini, Industry Expert

labor Reform and economic Realities

Against the backdrop of ongoing discussions between the UIA, the government, and the CGT, labor reform remains a critical issue, particularly given the IMF’s conditionalities.Recent data paints a concerning picture of the labor market:

• over the past 16 months, Argentina has seen a loss of 194,500 jobs, with the “monotax” system serving as the primary entry point into the labor market.
• An estimated 4 million workers are engaged in multi-jobbing, working 16 hours or more per day, effectively reversing significant labor rights advancements.

Luis Campos,director of the Autonomous CTA,notes that salary increases that outpaced inflation in 2024 were often achieved through increased working hours. While employment levels remain below 2023 figures by 2.3%, average working hours have increased by 5%.

The few salary groupings that beat inflation in 2024, did so increasing the hours worked. The employment level remains 2.3% below 2023 and the hours worked increased by 5% on average.
Luis Campos,director of the Autonomous CTA

Furthermore,the minimum,vital,and mobile salary has lost 50% of its value since 2017,with a 30% decline since the current administration took office.

Workplace Safety Under Scrutiny

The UIA is also engaged in discussions with the government and the CGT regarding the prevention of accidents and occupational diseases. A draft law is under consideration, aiming for parliamentary approval this year. Though, a recent fatal accident at the salta headquarters of Ceramic Alberdi, owned by a UIA director, has brought renewed attention to workplace safety concerns.

Preliminary reports suggest that a long-term employee was fatally injured by a machine in the grinding sector during maintenance. Union sources allege inadequate communication systems contributed to the incident, preventing timely notification of the machine’s operation.

Enrique Gatti,president of alberdi Ceramics,stated that the company adheres to strict safety protocols and is committed to a safe working environment. He also confirmed that the company is providing support to the deceased worker’s family.

Official statistics from the Occupational Risk System indicate that Argentina recorded 355,000 workplace accidents in 2024, resulting in 231 fatalities. Within the manufacturing industry, there were 97,734 reported accidents (a 15.2% decrease) and a 12.8% year-over-year reduction in fatal incidents.

Despite the reported decline in accidents, a gap remains between company safety protocols and actual working conditions, particularly as automation and artificial intelligence become more prevalent.

Looking Ahead: Industrial profitability and Reform

The question remains: what reforms are needed across various industrial sectors to restore profitability and ensure worker safety in Argentina?