Industry in Argentina

With industrial production of USD $79.8 billion in 2023 (19% of GDP), Argentina is the third-largest industrial power in Latin America after Mexico and Brazil.^[2] Argentine industry is dominated by the food processing, chemicals, and motor vehicle sectors, which together drive almost 50% of gross value added in manufacturing.^[3]

Argentina has a sophisticated industrial base that includes world-class facilities operated by multinational corporations. Over 30% of Argentine exports by value consist of manufactured goods, of which two-fifths are from sectors defined by the United Nations as medium-high and high technology industries, including chemicals, pharmaceuticals, motor vehicles, machinery, computer equipment, and electronics.^[4] Although Argentine manufacturers have been negatively impacted by shortages of foreign currency and imported parts, not to mention decreased demand due to the economic downturn that started in mid-2023, both global and domestic companies continue to invest in Argentine industry given the country's long-term commercial opportunities.

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.^[5]

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.^[5]

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.^[5]

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.^[5] 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.^[6] In 1864 Melville Sewell Bagley began making an orange peel liquor called Hesperidina.^[5]

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.^[5]

In 2012^[update] 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.^[7]

See Automotive Industry in Argentina

The automotive sector is the third-largest industrial subsector, driving 3% of GDP and 9% of total industrial production.

Pharmaceuticals drive 5% of total industrial production. Argentina has over 200 pharmaceutical plants with 43,000 employees. Over USD $800 million of production is exported to neighboring Latin American countries every year. Local companies such as Roemmers and Elea Phoenix dominate the industry; only two of Argentina’s top 10 pharmaceutical companies by revenue are subsidiaries of foreign multinationals (Sanofi and Bayer).^[8]

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).^[9] 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)^[9]

The electric output of Argentina in 2009^[update] totaled over 122 TWh (440 PJ), of which about 37% was consumed by industrial activities.^[10]

Argentine manufacturers have been badly impacted by the recent economic crisis, with the national statistics agency reporting that industrial production decreased by 14.8% in May 2024 vs. May 2023. The decline was broad-based with electronics and tools production down by 28%, motor vehicles down 19%, and metals and machinery down 17% vs. a year earlier.^[11]

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.^[12] 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.^[13] The suspension of all federal public works contracts has similarly hurt businesses in the construction supply chain, including asphalt and concrete manufacturers.^[14]

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.^[15] Production at the General Motors plant near the city of Rosario was halted for two months at the start of 2024.^[16] Other multinationals, including Clorox,^[17] Procter & Gamble,^[18] and Canadian fertilizer company Nutrien^[19] 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, particularly in the automotive sector. In February 2024, Toyota announced a USD $50 million investment to produce the Hiace utility vehicle at its plant in Zárate, creating 100 local direct and indirect jobs.^[20] 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.^[21] Stellantis announced USD $270 million in investment at its El Palomar factory in April 2024^[22] and a further USD $385 million at its Ferreyra facility in September 2024.^[23] Outside of the automotive sector, the global chemicals company Evonik announced the expansion of its biofuels facility in Rosario in July 2024 that will increase production capacity by 50%.^[24] 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.

Selected domestically-owned companies are also announcing major investments in Argentine manufacturing. Local steel company Sidersa announced in June 2024 that it would invest USD $300 million investment in a next-generation steel mill in San Nicolás. The new plant will create 300 new jobs and is expected to export 30% of its production.^[25]

Local financing markets have reopened for Argentine manufacturers as well. Recent bond sales include a USD $50 million raise by Mirgor, a producer of consumer electronics and auto parts,^[26] USD $30 million by Aluar, Argentina’s largest aluminum producer,^[27] and USD $73 million by food processor Arcor.^[28] Meanwhile, USD $30 million and USD $70 million in bonds were sold by the local subsidiaries of agricultural equipment multinationals John Deere^[29] and CNH^[30] respectively. These financings carry significant currency risk for the issuers given that with the exception of Arcor the bonds have all been dollar-denominated or dollar-linked. Yet the availability of capital is an encouraging sign for Argentine industry.

To encourage further investment, the Milei administration implemented Decree 749/2024, which authorizes the regulatory framework known as RIGI (Régimen de Incentivo para Grandes Inversiones or Incentive Regime for Large Investments).^[31] RIGI tax, customs, legal, and foreign currency benefits are being offered to targeted industrial sectors, including steel, petrochemicals, infrastructure, electric and hybrid vehicles, biotechnology, nanotechnology, and defense manufacturing.^[32] Foreign officials have responded positively to the RIGI, with U.S. Undersecretary of State for Economic Growth, Energy and Environment, José W. Fernández remarking that “a company that is considering a major investment spoke very favorably” of the new regime.^[33]

• Agriculture in Argentina

Wikimedia Commons has media related to Industry in Argentina.

• Ministerio de Industria Archived 2014-08-19 at the Wayback Machine (in Spanish)