The 19th ProPymes Seminar, organized by the corporate program of the Techint group for the development of the value chain, was effectively held. This event, which for the first time in its history was held virtually because of the COVID-19 pandemic, was attended by Martín Guzmán, Argentina's Minister of Economy; Paolo Rocca, President and CEO of the Techint Group; and Martín Berardi, Executive President of Ternium Argentina, among others.
The 19th ProPymes Seminar dealt with topics such as the interaction between the public and private sectors, fiscal and monetary stability, tax and withholding reduction, long-term predictability, and future expectations and plans. In this seminar, specialists, government authorities, and industry parties exchanged ideas and opinions on the future of Argentina's exporters in a post-pandemic context, highlighting the interaction between Martín Guzmán, the Minister of Economy of Argentina, and Paolo Rocca at the end of the meeting. Both parties stressed the importance of promoting dialogue and carrying out joint actions in the public and private sectors to encourage Argentina's recovery.
The meeting was opened by Martín Berardi, Executive President of Ternium Argentina, alongside the economist Emmanuel Álvarez Agis and political analyst Sergio Berensztein, during which the challenges faced by the country to consolidate a sustained growth of industrial activity in a post-pandemic context were analyzed.
Berardi started the presentation by sharing the main results of the satisfaction survey applied to clients and suppliers of the Techint Group, which show the growth expectancy of investors, sales, exports, and jobs. The companies surveyed expected 11% of sales growth in 2021 compared to 2020, encouraged mainly by the construction, white goods, and farmland industries, to recover the rates of 2018. Exports, on the other hand, would increase by 41%, which would represent the highest value in the last three years. The investment growth projected around 40% more and the labor force would be increased by 4%. This survey also reflects the expectations of almost 200 companies that are part of the industrial value chain of the Techint Group companies.
"The data on exports is very important. We need to promote exports if we want to boost local consumption, it has to be a joint effort. Without an increase in exports, local consumption cannot grow as there will be a lack of foreign currency to import raw material. There's a strong potential, our value chain reached to export 500 million USD but this year it only reached 180 million USD", said Berardi. "If you want to have an export boost you have to be audacious and eliminate the retentions to industrial exports", added the executive.
In this context, the economist Álvarez Agis said that, if the "wind" of the world economy could be measured, next year will almost certainly be Argentina's best year since 2010. He also emphasized the importance of increasing the level of international reserves in the Central Bank and achieving exchange rate stability to create an "environment of vision".
On the other hand, Berensztein talked about the political and economic conditions of the country and the world in a post-pandemic context. "SMEs will have to enter in a global and local context of uncertainty, but the first one seems favorable", said the analyst. With regard to the future, Berardi said that "there are opportunities, but you have to do the task as a company, as a chain, and as a country, to take advantage of the winds you must know how to move the sails".
"Our goal for 2021 is to promote ProPymes Exporta, provide more financing for exports, special prices, and assist in everything we can so that the competitiveness of the industry is strengthened. The country has to export much more to avoid having these repetitive crises", concluded Berardi.
Martín Berardi and Emmanuel Álvarez Agis participated in the first section of the ProPymes Generation.
During the second part, and as it's already traditional in this type of events, different companies that integrate the Techint Group's value chain gave their testimony through successful cases to the associativity and its value to be able to carry out joint projects. In this regard, Carlos Moriconi, President and Commercial Director of Vulcano in Las Rosas, Santa Fe; and Carlos Otero, Administration and Finance Manager of Justo Otero e Hijos and Enrique Casares, Operating Director of Tecnotrol, two SMEs that provide oil services in Comodoro Rivadavia, took a moment to share their experiences. Víctor Barto, President of the Argentine Agricultural Technology Group "Argen Tech Group" and Eduardo Montes, General Manager of Mainero, who formed a group of nine agricultural machine companies to export worldwide, alongside Silvina Sforzini, Commercial Manager of Fundición San Cayetano and Marcos Dartiguelongue, Director of Ñuke, discussed the export challenges.
Vulcano, a company in our value chain that participated virtually from Las Rosas.
Paolo Rocca started his speech with a positive note: "This year has been rough for our families, for the companies, and for all the countries as well. The global scale of the crisis has limited our solutions, so the opportunities have been restricted so far. But I believe the worst has already passed, we're surpassing the crisis, and our surveys with small and medium companies show us a positive vision where we all feel we have overcome the lowest point of the crisis".
With regards to Ternium, Rocca highlighted that there's a clear recovery in the agricultural sector, construction and industrial chains such as those of the automotive industry, while pointing to a renewed export dimension driven in a large part by the significant recovery in the Brazilian market.
Furthermore, he added that: "In the case of Tenaris, it is still operating at half the level of activity it had by the end of 2019. This happened because the global company has been affected by the global drop in demand. Today we're in the middle of our activity level, but we're growing every month".
On this point, Rocca emphasized the importance of the Argentine Gas Production Promotion Plan ("Gas Plan"), a program that aims to encourage investment and gas production as a tool to stop the increasing production decline, which he expects to take effect in 2021. "The Gas Plan has been a success of this administration in achieving consensus on a common program, in which Tecpetrol will participate and increase the size of the market, favoring Tenaris at the same time". "We started this plan with a great commitment (with an investment plan of between 1,400 and 1,500 million over the next four years). We're going to provide about 20% of all gas production in the Néuquen Basin".
“Techint's Engineering and Construction area has had a very difficult time during this pandemic, but it is now rebuilding its backlog, particularly with the mining developments on the Pacific coast in Mexico and Brazil, more than in Argentina. There aren't currently any infrastructure projects in Argentine, but we look forward to have one in the future”.
"In this recovery, there are opportunities in the international context. The contrast between the U.S. and China and the redefinition of many value chains, opens up space for the Argentine industry to regain presence and expand in the Atlantic dimension", added Rocca. "There are opportunities at the regional level. Brazil is growing and the pace of recovery in the last quarter is very remarkable, indicating an industrial recovery, and we feel for our operation in Brazil an increase in economic activity that also favors the activity in Argentina. But there are also opportunities nationwide. The value chain is essential to give a national approach to the developments that may occur in the country, linked to different areas and projects that may arise as a result of a recovery in demand and investment".
Martín Guzmám, the Minister of Economy, and Paolo Rocca, President and CEO of the Techint Group.
As Rocca discussed the role of the state, he pointed out the importance of generating a context that transmits confidence to companies of consumers, referring to the presence of Martín Guzmán. "We need an environment that transmits confidence to companies. Confidence is built up with a vision and institutional and macroeconomic stability”. He also added that, in this dimension, the concern is the balance of the public accounts with the reordering of public spending and a tax structure that encourages production.
Addressing directly Guzmán, Rocca emphasized the importance of achieving this balance on public accounts by reducing public spending with more than new tax burdens "because, ultimately, in order to export and maintain competitiveness on the domestic side, the issue of tax burdens can be a problem on the external side".
In addition, Rocca discussed another important topic about stability and exchange rate predictability. "Our value chain has been working on a great exporting profile because small businesses definitely have to differentiate themselves, but sometimes they don't have enough support to remain intact in the unpredictability of this context".
In response, Guzmán said that a year after taking office, this has been "a year in which we had to adapt the economic policy schemes to the reality we are living". According to the official, the current government was working to restore macroeconomic stability even before the pandemic, "which is a central pillar for the functioning of the economy, so that all businesses and SMEs in particular, face situations of predictability and confidence that favor investment and enhance value chains to generate productivity and greater competitiveness".
Guzmán stated that "another great priority" is to solve the problem of foreign debt, both with private creditors and the International Monetary Fund (IMF). "We need to establish a restructuring process and then create a program with the IMF to refinance maturities and rebuild the public debt market in pesos, using that as a starting point to begin building a domestic capital market that currently inhibits the possibility of saving on assets in our currency so that there is more financing for the country's businesses".
Guzmán also discussed the increased fiscal spending and monetary imbalance caused by the pandemic, and said that "the pandemic led us to face other needs in terms of spending, precisely to protect all works, production, SMEs, and the most vulnerable industries in our economic system".
Regarding the problems raised by some of the participants, the government official promised to share the diagnosis, stressing that exchange rate stability "is fundamental for the environment in which the economy develops and in which the private sector operates."
On the increase in the tax burden and fiscal spending, which was also questioned by many participants, Guzmán said that Argentina is not in a position to experience a reduction in tax revenue, just because fiscal stability is an asset for the State. "It's part of what is needed for macroeconomic stability", he said.
Meanwhile, and in response to one of Rocca's concerns, Guzmán said that stabilizing the Argentine economy is a "collective task", which means that all sectors of the economy "have to understand that there is a starting point and right now is not the time to talk about something that indicates the increase of fiscal deficit. On the contrary, public accounts must be in order".
Rocca and Guzmán agreed to mention the customs-related problems that a less globalized world serves. "I don't think we should expect radical changes," said Guzmán, "but a greater importance and focus on multilateralism, contrary to what has happened in recent years”. Moreover, he added: "As a nation state, we have to ensure a consolidated State and solve the problems that we have today in Argentina, where the private sector and the public sector promote meeting points not only within our country, but also abroad."
At the end of the event, Rocca thanked Guzmán for his presence in the forum and "for his participation, his openness, the openness of his response, and for the commitment he is making towards the country”.