Latin America is currently facing an intense deindustrialization process and short-term actions should be addressed in order to restore the region’s competitiveness, Daniel Novegil, CEO at Ternium, said on Tuesday during the Alacero conference, which is being held in the city of Buenos Aires, Argentina, from November 10-11.
Citing data from a four-year research performed by Alacero, the region’s steel industry association and invited scientists, Novegil defined the performance of the local manufacturing industry as “worrying” when compared to that of other emerging countries, like China in Korea.
According to Novegil, the share of the manufacturing industry in the GDP of countries like Brazil, Argentina and Mexico declined in 2014 to 11 percent, in the case of Brazil, and to 17 percent in the case of both Mexico and Argentina. In China and Korea those figures reach a share of 32 and 31 percent, respectively.
In addition to the strong deindustrialization process currently taking place in the region, Novegil said Latin American countries are also seeing record imports from China. The CEO said the trend is hitting the local metal-mechanic sector as well as affecting the “quality of jobs” in the region.
Novegil estimated imports in the local metal-mechanic sector to have reached over $84 billion in 2014, from $82 and $74 billion in 2014 and 2013. Citing data from the Alacero study, the Ternium executive said each $1 million-worth in imports of metal-mechanic related products mean up to 64 direct, indirect and induced jobs are lost.
“We’re recipients of Chinese imports, and as a result, we’re suffering the impacts of such a decision,” he said.
In his presentation at the Alacero conference, Novegil addressed a few solutions, which could help the local industry to recover its competitiveness.
The solutions proposed by the executive include correction of relative prices, investments, protection against the “unfair competition” with Chinese imports, stimulus for local exports, higher efficiency in the local labor market, infrastructure and logistics, investments and development of innovation, technical capacitation, as well as the strengthening of the local value chain.
“Latin America has a lot of potential, and has the ability to transform itself,” Novegil said.
According to the executive, China is currently a threat to the addition of value for the local industry.