But Paolo Rocca, CEO of steel giant Techint, did just that this week, slamming what he saw as Argentina’s declining competitiveness and criticising the government for having “lost its way”. The government’s response was swift, and sharp.
Cristina Fernández, the president, said Rocca would do well to remember that his company benefits from a charmed existence: subsidies and anti-dumping meaures on the one hand, and a near-monopoly position on the other.Axel Kicillof, the high-profile deputy economy minister whose leftist ideology is in the ascendant and whose influence goes well beyond his title, later added that the government ought to sink Techint, but wouldn’t.
Surely this is not the kind of threat an administration bent on boosting economic growth should be issuing to a local captian of industry, especially one so key: Tenaris, one of the Techint group companies, is the world’s biggest maker of seamless steel pipes for the energy industry, for example, with a heavy weighting on the local Merval stock exchange. Not unsurprisingly, the market didn’t take to all this too well: shares in Siderar, another Tenaris company and Argentina’s leading steelmaker, slid on Friday afternoon.
But Rocca’s point is an interesting one. He says wages in his sector, at $24 per hour, far exceed those in Mexico ($12) and Brazil ($9); that there are energy bottlenecks; and investment is low, factors that add up to severe limitations to economic progress in the short-term. His arguments were all loudly refuted by Fernández, who preaches a mantra of social inclusion in which companies have a social duty to reinvest to foster growth and to earn “reasonable” profits.
Is her method for tackling it working? No, according to the World Economic Forum. Argentina’s competitiveness has sunk 10 places in a year according to its latest Global Competitiveness Report, with inflation, policy instability, corruption and foreign exchange restrictions cited as the most problematic factors for doing business.
Business leaders may be worried about the official cheap-dollar policy. But put up and shut up seems to be the government line.
from Financial Times - beyondbrics
