MercoPress. South Atlantic News Agency

Departure of foreign companies from Argentina and also from Brazil on the rise and with no end in sight

Leaving the region seems to be a global strategy for a large number of foreign investors

Foreign companies keep leaving Argentina and claiming those moves are part of global strategies. Local analysts are reluctant to believe these explanations, but perhaps they would reconsider their stance if they see a similar exodus also taking place in Brazil.

Last week, Ecolumber, a Spanish firm dedicated to of walnut trees in the province of Río Negro chose to leave as Argentina braces for an economic shakedown after the primary elections next month and a collapse now regarded as inevitable after the November mid-term polls.

Meanwhile, in Brazil, Panasonic announced it would cut down operations in the Manaus Free Trade Zone, ending the production of TV sets and other devices, which will result in the termination of 130 jobs, according to company sources, which have also explained the decision was made taking into account the country's current economic situation.

Other factories operating in the Manaus Free Trade Zone, such as Sony and Canon, had also announced their ending of activities.

In recent months, large scale companies with well-known brands have left Argentina, such as Latam Airlines, Falabella, Walmart or MetLife, as well as industrial firms which failed to reach the mass public, such as Axalta chemical or Brightstar technology. The departure of multinationals of a lesser size has reached the restaurant online booking platform TheFork as well as Ecolumber, which explained the Spanish Securities Commission that the company had ended its divestment process in Argentina with the sale of all the shares of its local Pampa Grande subsidiary. Ecolumber had purchased Pampa Grande in 2008 for US $ 2.5 million and sold it for US $ 1.46 million to an undisclosed buyer.

Also last week US insurer MetLife announced it was selling its local operations to the local group GST, while Dow's plant in the province of Santa Fe is going to be shut down soon, although their Bahía Blanca operations would remain untouched, also as a part of a global restructuring program.

Some 100 jobs will be lost when the San Lorenzo (Santa Fe) plant ceases production in December 2022. Transferring the factory to another owner has been ruled out.

MetLife sold its last stake of their Argentine operations to the local GST group for for between US $ 8 and US $ 9 million. GST's CEO is Isela Costantini, the former General Motors local operations chief and head of flag carrier Aerolineas Argentinas under President Mauricio Macri.

Two years ago, MetLife began a process of reviewing its global investment portfolio. Under this premise, the company has already disposed of different assets and business divisions in markets such as the United States, Greece, Poland or Hong Kong.

In Argentina, the company operates two large businesses. On the one hand, the life and property insurance firm, which has 400 employees and would now be passing into the hands of GST.

MetLife also has another office in Buenos Aires which offers services to the entire region, including a consulting division which works with MetLife subsidiaries worldwide.

Also leaving the country in the past few days were US laboratory Eli Lilly, which has been taken over by the local Laboratorios Raffo, and the Chinese oil company Sinopec, which sold its assets to Eduardo Eurnekian's Compañía General de Combustibles.

Speculations aside, it is clear at this point that the Argentine market is no longer attractive and more foreign companies are expected to depart shortly.

Also redirecting investments these days was German giant Bayer, which ended its soy business in Argentina to head “towards more profitable projects,” amid tensions between the Argentine government and the agricultural sector.

Bayer, owner of Monsanto since 2018, announced through a statement it was suspending its soybean seeds and biotechnology business in Argentina for the campaign 2021/2022 and “will redirect its investments towards profitable and innovative projects that promote greater competitiveness in agriculture.”

As the company explained, the decision is consistent with the Global Transformation plans and claimed low penetration in the country. “Argentina represented approximately 10% of the total area sown with Intacta RR2 PRO® in South America in 2020/2021,” explained the firm, which will keep its businesses in all the other Mercosur countries (Brazil, Uruguay and Paraguay).

Bayer “will seek an orderly transition to accompany its customers and partners and remains fully committed to its corn, crop protection and digital agriculture businesses in the country,” the statement added.

The German firm has just shifted from pharmaceuticals to agriculture, which represents 80% of its business these days.

Companies feeing Alberto Fernández's Argentina include:

Falabella - On May 31, the Chilean capital chain terminated its online commerce platform in the country and thus made its exit from Argentina. In April of last year, in full strict quarantine, the firm announced the beginning of the withdrawal process. Over the months, it was closing down stores both in Buenos Aires and in Mendoza, Córdoba, San Juan and Rosario. Falabella arrived in Argentina in 1993 and had up to ten stores throughout the country, offering around 5,000 jobs. The group will keep its Sodimac operation in Argentina.

Walmart - In November last year, the De Narváez Group took over local operations of a firm which has also left Brazil.

Latam Airlines - The carrier ceased its domestic operations in 2020 after 15 years, but remains in the country through its foreign branches offering international flights. Some 1,700 workers lost their jobs as a result of the move.

Other airlines - Carriers which saw their operations affected by the coronavirus pandemic restrictions and decided to lift their Argentine operations were Air New Zealand, Qatar Airways, Emirates, and Norwegian which in addition to terminanting its nonstop services between Ezeiza and Gatwick, sold its local domestic routes to fellow budget company JetSmart.

Petrobras - In December 2020 and after a 18-year stay in Argentina, the Brazilian oil company left the country, as it had done with its Uruguay and Colombia businesses.

Sportswear - In 2020 the sports footwear brand Asics left its business in the hands of the Dass Argentina group, which had local control of other brands such as Fila and Umbro. Last year, Nike had also announced it was leaving and that it would hand over operations to a licensee, which so far has not occured. Under Armor, a sports clothing and accessories firm which in 2019 opened its first and only store in the country, is said to be looking for a local agent to continue its presence in Argentina, as their expansion plans were cut short by the pandemic.

TheFork - The online restaurant booking platform, owned by TripAdvisor which in 2019 had bought over local startup Restorando also announced its departure in the past few days in an email to its customers, explaining the decision was due to the pandemic and its impact on global and local economy.

Engie - The French energy company sold its Litoral Gas shares to Tecpetrol and US investment fund Oaktree Capital Management, who will split the company's shares equally. Engie emerged from the merger of GDF and Suez, and its decision to leave the country surprised the energy sector, since in 2019 it had shown its interest in buying YPF's stake in Metrogas. The company explained its decision on its preference for renewable sources of energy.

Met life - The buyover of MetLife's operations in Argentina by the GST Group has been detailed above.

Eli lilly - Its medicines will be marketed by Laboratorios Raffo as of September 1. The company is one of the main suppliers of diabetes drugs in the local market. The pharmaceutical company also plans to stop operating in Chile, Peru and some Central American countries.

Sinopec - The Compañía General de Combustibles (CGC) has bought over its operation for reportedly US $ 240 million.

Kodak - Kodak Alaris, the company that was formed after the bankruptcy of the historic photography brand, announced the closure of its offices in Buenos Aires and that all businesses in the region would shift to Mexico City's headquarters. This company too said the decision was not related to the local economic situation, but rather a business strategy which includes subsidiaries elsewhere.

Brightstar - At the end of October 2020, Brightsar, a cell phone assembler in Tierra del Fuego, sold its operations to the local firm Mirgor.

Glovo - In September last year, the delivery app Glovo sold its operations to Delivery Hero, the parent company of PedidosYa. The firm, which was born in 2015 in Barcelona, arrived in the country in 2018 and became one of the first to offer delivery through cell phone applications.

Pierre Fabre - The laboratory specialized on cosmetic products such as Avène and Ducray, sold its plant in the Buenos Aires town of Virrey del Pino to the local group Sidus to bolster its presence in France.

In additions to the departing companies, there are many which for the time being have decided to just downsize their Argentine businesses.

In Brazil, Panasonic will continue investing in new lines and products. The Manaus unit will maintain production of microwave ovens, automotive products and electronic components.

In addition to Manaus, the brand has a refrigerator and washing machine factory in Minas Gerais, batteries in São Paulo and offices in the city of São Paulo.

In the Manaus Free Trade Zone, Sony was sold to Mondial after announcing the end of activities in September 2020 after 36 years. Some 220 employees were laid off.

LG also announced the end of global operations in mobile phones and transferred the monitors and notebooks sector to the factory in Manaus, on April 5 this year.

Meanwhile, Canon announced in June the closure of its only factory in Brazil. Sales and technical assistance to customers were not affected, however, 43 jobs were terminated.