Cheap imports, empty factories: Argentina’s manufacturers feel the squeeze

In Argentina, the manufacturing sector is struggling under President Javier Milei's policies of opening the economy to global competition. Once employing nearly 120 people and producing 40,000 pairs of sneakers and flip-flops a month, the Kioshi Footwear factory now has only 14 employees and produces a quarter of its previous output.

Kioshi director Emmanuel Fernandez explains that the domestic market is dead, with people struggling to afford basic goods like shoes. In 2024, Milei dismantled protectionist policies, leading to an "avalanche" of imports that have devastated local manufacturers. Idle machines and unsold merchandise line warehouses, with only 10% of machines operating in Kioshi.

Manufacturing output dropped 5% between June and July, the steepest decline in 16 months. Around 40% of Argentina's industrial capacity was idle in June. The Argentine Industrial Union demands government action to address the loss of 90,000 industrial jobs and closures of nearly 30,000 companies in the past three years. President Milei dismisses these losses as "creative destruction" on the path to a prosperous future.

Small businesses, like a Swiss chemicals group subsidiary, have already closed, leaving workers jobless and forced to seek work in the informal sector like Uber drivers. The government argues its actions are necessary to benefit the 48 million Argentines, but industrialists contend the playing field remains uneven due to an artificially strong peso, high interest rates, and taxes, making local products uncompetitive against cheap imports.