Saturday , December 5 2020

According to Came, industrial production of SMEs declined by 5% in October



The SME industry declined for the sixth consecutive month, and the sector only operated with 58.6% of the installed capacity. Although the share of industries in the industry has increased slightly, 74% believe that their company's situation is regular, bad or critical. Only 18.7% expect a rise over the next three months.

The lack of liquidity in the market, the poor quality of the payment chain, excessive interest rates and difficulties in repaying debt complicate the business of SMEs and force many companies to shrink or rethink their continuity.

With a non-rising domestic market, industrial SMEs declined by 5% in October compared to the same month last year. This is the sixth consecutive month in which the industry falls.

Compared to September, there was an increase of 5.6%, which is mainly explained by the seasonality of the month. For the ten months of the year there was a decrease of 1.9% compared to the same period in 2017.

The data comes from CAME's Monthly Industrial Survey conducted among 300 SME businesses across the country. The Industrial Production Index (IPIP) registered a value of 79.8 points in October.

The most significant were the losses in "Footwear and leather goods" (-15%), "Rubber and plastic products" (-10.8%), "Wood and furniture" (-10.4% (-8.5%), (-3.3%), "Textiles and wearing apparel" (-3.3%) and "Electromechanical products, IT and manufacturing" (-2.5%), on the other hand , the production of "Chemical products" did not change, while the food industry (0.1%) and "non-metallic minerals" (1.6%) increased.

"The production trend does not seem to recover and will continue at least until the middle of next year," says Pablo Bozano, CEO of Centro de Argentina Chamber of Information, Electronics and Communications (CIIECCA). "Installed capacities are less than 60%, companies are not saying goodbye now, but they do not renew the fees that are lost," he warns, explaining that the only companies that are stronger "are those who export and benefit from devaluation and the new price of the dollar. "

In October, 53.9% of the sectors consulted finished with a decrease in annual output (58.9% in September) and 36.7% – with an increase (30.9% in the previous month). While most companies continue to fall, the share of emerging industries is improving.

The positive-return sector improved again in October: 36.3% compared to 32.1% in September and 28.9% in August. The percentage of sectors with negative and zero profitability remains high. But many companies have cut off their businesses, suspended their staff, and reduced all costs to keep their business.

"In the case of the dairy industry, it is experiencing a serious economic situation due to rising costs, rising raw material prices, higher labor costs, and declining consumption," explains Pablo Villaano, president of the Association of Small and Medium Dairy Enterprises (APYMEL ).

The chain of payments continues to deteriorate. According to Daniel Garcia, chairman of the CAFLED, "suppliers want to charge 30 days, and customers pay 120. This makes the companies in the sector owed by excessive interest." Consulted industrialists agree that the payment chain is postponed for 120 days and that there are many difficulties in discounting checks.

The use of installed capacities in SMEs rose again slightly in October to 58.7%, but is still too low, reflecting the decline in activity.

Expectations remain unaffected: only 18.7% of the consulted companies expect production to increase over the next three months, while 29% believe they will continue to fall. The rest do not know or think they will stay on the current levels.

Perhaps this explains why the investment is not rising: 7 out of 10 industries have no planned new investment over the next three months.

CP


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