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Argentine timber industry in crisis: some sectors suffer collapses of up to 60%

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• This affects small and medium-sized enterprises. Sawmills have seen a 20% decline. Construction carpentry impacted by the downturn in building activity. Warning about deregulation of technical standards.

The delay in the exchange rate and the adjustment being carried out by the national government have caused a strong negative impact on the furniture and sawmill industries, according to a report by the Argentine Federation of the Timber Industry (FAIMA).

"The mechanical wood processing industry encompasses a wide chain of sectors, including sawmills, furniture manufacturing, boards, wood construction, and on-site carpentry," explained the organization.

The report states that "currently, all these sectors are experiencing a marked recession," though the intensity and severity vary among them.

In the case of sawmills, which represent the first stage of wood processing, the report notes "sustained declines in activity levels, with an average year-on-year production drop of 20% in May." "These declines are more pronounced in small and medium-sized sawmills, where falls reach 40%," says the entity representing the country's companies.

It warns that "the export-oriented sawmill sector showed promising performance early this year but has failed to sustain it due to the exchange rate lag caused by currency stability and domestic inflation."

"The declines in production levels have led to a reduction in work shifts, decreasing hours worked by 20%, with the consequent impact on workers' wages," the report states.

Timber industry in crisis: furniture
In the furniture manufacturing segment, FAIMA warns that "the impact of the recession on companies linked to furniture production has been significant, with a 37% year-on-year decline in sector output."

"In some cases, production drops reach 60%. These declines have affected not only plant utilization rates but also the number of shifts worked and, in some cases, employment levels," the organization noted.

The report points out that "many of these companies are located in towns across the country's interior, where they are the main generators of local employment, highlighting the importance of their productive viability for regional economies."

Timber industry in crisis: boards
On the other hand, the report states that "the board industry is showing recessive behavior."

"Boards used in the furniture industry have seen lower demand (as a production input) due to the decline in furniture production, directly impacting this link in the industrial chain," the study specifies.

It also highlights that boards linked to construction (plywood) "have experienced a drop in activity levels due to declines in the construction industry, which saw a 22% year-on-year reduction in June."

Timber industry in crisis: construction carpentry
In this regard, FAIMA details that wood construction and on-site carpentry "have seen average declines of 30%, driven by the aforementioned drop in main construction activity."

According to the business chamber, "all sectors share the issue of significant increases in production costs, both due to rising inputs and public service costs, which have increased by an average of 500%."

"These increases have been difficult to pass on to prices in the current recessionary context, severely affecting the profitability of the entire chain," FAIMA indicates.

In response, the organization also warns about the national government's deregulatory trend in international trade.

"The elimination of technical standards is deeply concerning, as it could allow the entry of lower-quality imported products that do not meet the necessary regulations to prevent potentially harmful accidents for users," the entity warned.

Source:ambito.com