The restrictions that companies from various fields have to access inputs and spare parts due to exchange controls, added to the soaring value of the dollar and the exchange rate gap, are beginning to show clear impacts on economic activity. An auto parts company, PWA Poliuretanos Woodbridge de Argentina SA, today warned its clients that due to lack of foreign exchange it cannot meet its import commitments and, therefore, it will have to stop production at its industrial plant in mid-September.
The company, which manufactures headrests, armrests and polyurethane foams used inside automobiles, is a supplier to most of the automotive terminals that produce in Argentina from its plant located in the Pilar Industrial Park. In the letter he sent to his clients today, to which he agreed Infobaepointed out that communication A7532 of the Central Bank, which at the end of June ordered more restrictions for the payment of imports, limited to the maximum its possibility of fulfilling its commitments abroad, “even to make payments corresponding to imports that we have already received in our plant and with payment due date.”
“Under these restrictions and given the partial impossibility of complying with the established contractual deadlines, we are receiving the refusal of our suppliers to supply us, with the consequent shutdown of the plant, a fact that will occur in the middle of next Septemberdepending on the demand of our clients”, stated PWA in its letter.
“The consequence of this situation is that in the third week of September we must stop production operations completely, thus generating the impossibility of supplying all our customers who together represent 80% of the Argentine automotive market,” the company said.
Likewise, he clarified that within these inputs, some chemical products stand out that cannot be completely replaced by others of local production. Therefore, the restriction on this imported input does not protect any similar product manufactured in Argentina.
To explain its situation, the company pointed without hesitation to the provision of the Central Bank and left a warning about the possibility of legal conflicts due to its non-compliance. “These arrears in payments made by PWA, are the result of this new regulation imposed by the BCRA, being completely out of their control and cannot be considered as violations of the Contracts in force between both parties, since they constitute an event of force majeure”.
“Woodbridge as a corporation is currently looking for global solutions to be able to overcome these restrictions imposed by the BCRA, although up to now the consequence of this situation is that in the third week of September we have to stop production operations completelythus generating the impossibility of supplying all our customers who together represent 80% of the Argentine automotive market”.
PWA is the Argentine subsidiary of Woodbridge, a company of Canadian origin founded in 1978 with global business. According to its official website, the company operates with more than 50 plants in 10 countries and employs 7,500 workers.
Industrial activity begins to feel concretely the restrictions imposed by the Central Bank (BCRA) for access to official dollars destined for imports
His case is noted in a context in which the industrial activity begins to feel in a concrete way the restrictions imposed by the Central Bank (BCRA) for access to official dollars destined for imports. Many companies are running out of stock, they cannot make more payments abroad and they also have no possibility of obtaining 180-day financing.
In addition, in cases such as the one described, the company is involuntarily in double default. On the one hand, they cannot meet the payments to their foreign suppliers, even with the merchandise already received. At the same time, they cannot deliver the merchandise to their customers in a timely manner, so they are susceptible to claims.
From different areas, including the Central Bank itself, the Government usually expresses its willingness to prevent production from being stopped. But as explained Infobaefine tuning and case-by-case solutions are becoming more and more urgent. The Argentine Industrial Union (UIA) has already informed the authorities of the BCRA and the Ministry of Productive Development that there are some critical cases that have already decided to advance vacations due to the lack of supplies to continue producing. And that there are nearly a hundred companies that will be added to the list of critical cases in the coming weeks. This information was delivered to the government through an extensive report that the manufacturing plant carried out based on a survey carried out among its associates and that some 500 companies answered, sources from the industrial sector specified.
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