Car manufacturing looking up for Buenos Aires

The financial crisis has hit cities and countries hard around the world, Buenos Aires and Argentina included. Unemployment is up by record amounts, the government, like governments across the globe, is struggling to contain a budget deficit, and international trade, on which the country so heavily relies, is down by double-digit amounts.

There is a human face to the crisis as well, as one dockworker, Gustavo Ramirez, who works as a stevedore in Buenos Aires, told the IMF, “we used to work 20-24 days a month, now we work an average 14-15 days…I have six people I must support, it’s very difficult.” He spoke to the IMF as part of their Faces of the Crisis investigation, profiling workers in a number of countries.

The reduction in Ramirez’s working hours is an indicator of the significant drop in trade, and his story is representative of millions of workers across Buenos Aires.

But things are looking up, it is not all doom and gloom for the capital city. Markets in the US and across Europe have recently begun to signal a turnaround in the downward spiral, the UK and US, as well as cities across Europe have begun to recover from the financial crisis.

It took the crisis a while to reach Buenos Aires, and it will likewise take a while for the recovery to reach here as well, but there are signs heralding its arrival.

The Ford Motor Company recently announced plans to invest $250 million (ARS 1 billion) in upgrading their car manufacturing plant in the city. The upgrades will involve more workers, better production facilities and will facilitate in the faster assembly of vehicles, a sure sign that Ford is looking towards the future when the market stabilizes, and a further sign that the company remains committed to their activities in the city.

The importance of this announcement by Ford was illustrated by the fact that it was made by Ford CEO Alan Mulally alongside President Kirchner to a bank of Buenos Aires news providers.

Ford further announced that the upgrade plans, which will be completed around 2012, will also include new facilities for the production of an all-new vehicle not yet produced anywhere else in the world.

Further signs of optimism in the Argentinian and regional markets were shown by Volkswagen as well, they recently finalized a loan of Euro170 million (just under ARS 1 billion), to expand their car production plant in Buenos Aires. The loan was granted by the European Investment Bank (EIB) as part of their Euro3.8 billion fund that aims to fight climate change in Latin American and Asia.

The funding of VW might seem strange then, but the company will use the finances to build a production line dedicated to the manufacturing of more energy-efficient vehicles.

Buenos Aires has a historical attachment to these two companies, Ford first begun producing the iconic Model-T in the capital as far back as 1913, and employs over 1000 people, while the new investments by both Ford and VW is expected to see the creation of over 2000 permanent jobs, as well as employment in secondary industries such as construction, supplies, etcetera.

In addition, the new manufacturing activities will contribute to a rebound in trade for Argentina as the cars are exported to markets around South America.

Although car manufacturing is currently down by 23% compared to last year, these are all positive signs for the city that the data next year will show a different story.