Industry in Argentina



Industry was the largest single sector in Argentina's economy, with a 20.3% share of GDP. Well-integrated into local agriculture, half of the industrial exports have rural origin.

With a 6.5% production growth rate, the diversified manufacturing sector is organized around a steadily growing network of industrial parks (314 )

History
Between the 1850s and 1870s Argentina's exports of wool resulted in a period of economic boom, which was disrupted by periods of recession in wool markets first in 1866 and more severely in 1873. After 1873 tariffs were put in place to protect local industries. The manufacture of shoes and furniture was not mechanized and local industry was unable to compete with either the high quality goods imported from Europe, or the least expensive goods produced in mechanized factories in the United States.

Faced with the prospect of default as foreign capital dried up during the recessionary period, the Argentine president Nicolás Avellaneda chose to implement economic reforms by abandoning the gold standard and increasing duties on imported goods leading to a period of import substitution.

As immigration to Argentina increased demand followed. By 1875 Argentina had become a center of British overseas investment. 12 per cent of British capital in Latin America went to Argentina ranking fourth behind Mexico, Brazil and Peru. By 1890 Argentina was first, receiving double what Britain invested in Brazil and Mexico at 35 per cent.

Sectors
Between 1877 and 1916 large firms were involved with the following industries and goods: chocolate, jam, coffee, biscuits, shoes, glass, paper, textiles, burlap bags, metallurgy, hats, leather. There were also several tanneries in operation during those years. Cigarettes were produced by Nobleza Piccardo, known today as British American Tobacco.

Beer and breweries were a growing industry in the late 19th century when Emilio Bieckert, a descendant of a beer producing family located near Strasbourg, arrived in Buenos Aires. By 1860 Bieckert was brewing light, golden beer from barley. His initial humble efforts gained him recognition and in Germany his award-winning beer was likened to Pilsner. He also opened the first ice factory in Argentina. In 1864 Melville Sewell Bagley began making an orange peel liquor called Hesperidina.

Three chocolate factories introduced steam-powered production in the 1880s, spurred on by growing aggregate demand, protectionist tariffs and the post-colonial tastes. One confectionary, operated by a Basque businessman, began by selling imported and locally crafted sweets, but later implemented mechanized manufacturing processes to produce wholesale quantities of a single product, a Catalan jellied quince known as dulce de membrillo.

the leading sectors by volume were: food processing, beverages and tobacco products; motor vehicles and auto parts; textiles and leather; refinery products and biodiesel; chemicals and pharmaceuticals; steel, aluminum and iron; industrial and farm machinery; home appliances and furniture; plastics and tires; glass and cement; and recording and print media. In addition, Argentina has since long been one of the top five wine-producing countries in the world.

Industrial centers
Córdoba is Argentina's major industrial center, hosting metalworking, motor vehicle and auto parts manufactures. Next in importance are the Greater Buenos Aires area (food processing, metallurgy, motor vehicles and auto parts, chemicals and petrochemicals, consumer durables, textiles and printing); Rosario (food processing, metallurgy, farm machinery, oil refining, chemicals, and tanning); San Miguel de Tucumán (sugar refining); San Lorenzo (chemicals and pharmaceuticals); San Nicolás de los Arroyos (steel milling and metallurgy); and Ushuaia and Bahía Blanca (oil refining). Other manufacturing enterprises are located in the provinces of Santa Fe (zinc and copper smelting, and flour milling); Mendoza and Neuquén (wineries and fruit processing); Chaco (textiles and sawmills); and Santa Cruz, Salta and Chubut (oil refining)

The electric output of Argentina totaled over 122 TWh, of which about 37% was consumed by industrial activities.

Recent trends
Argentine manufacturers have been badly impacted by the recent economic crisis, with the national statistics agency reporting that industrial production decreased by 21.2% in March 2024 vs. March 2023. The decline was broad-based with electronics and tools production down by 43%, furniture by 40%, metal and machinery down 33%, and motor vehicles down 25% from the prior year.

Collapsing demand in Argentina's domestic market has hurt locally-owned small and medium sized industrial enterprises. In a May 2024 survey conducted by the Industriales Pymes Argentinos association, 70% of respondents described their situation as "bad" or "very bad", with 55% expecting conditions to worsen over the next 12 months. The head of the Cámara de la Industria de la Indumentaria, a textile industry association, estimated in March 2024 that 160 textile manufacturers had closed since the beginning of the year in the province of Santa Fe alone, eliminating over 100,000 jobs. The suspension of all federal public works contracts has similarly hurt businesses in the construction supply chain, including asphalt and concrete manufacturers.

Large industrial groups have resorted to layoffs and production shut-downs. Steel producer Acindar (a subsidiary of ArcelorMittal) suspended production at its five plants for one month in March 2024. Production at the General Motors plant near the city of Rosario was halted for two months at the start of 2024. Other multinationals, including Clorox and Procter & Gamble, are divesting local production operations entirely due to the challenging business environment.

However, even in the midst of this severe downturn, Argentina's industrial sector continues to attract greenfield foreign direct investment. In February 2024, Toyota announced a USD $50 million investment to produce the Hiace utility vehicle at its plant in Zárate in the province of Buenos Aires, creating 100 local direct and indirect jobs. Mercedes-Benz announced construction of a new bus and truck plant, also in Zárate, in March 2024; this new plant will complete the company's USD $110 million investment cycle initiated in 2021. Furthermore, in April 2024, Stellantis announced a five-year plan to invest USD $387 million at its El Palomar factory, which includes plans to launch SUV production for the first time in Argentina under its Peugeot brand. Although modest in number, these investments indicate that some multinational companies remain confident in the long-term potential of Argentine manufacturing for both domestic and export markets.