Paolo Rocca: “When the industry withdraws, everything breaks down there.”
The head of the Techint group, Paolo Rocca, warned that practically all of Latin America had a setback in its industrial activity during the last decade (with the exception of Mexico, he remarked) and that one of the consequences of that setback is a direct negative impact on each community where industrial complexes lose weight or are directly withdrawn. “Everything is broken,” he said, without much euphemism.
“It is in the local communities where we are granted a license to operate every day. The workers who enter the plant, the kids who go to school, the people who surround our plant, ask us and give us an operating license. They tell us: we want your company to be in my community,” Rocca said. “And I’m seeing that in all the places where our industry loses its operating license, everything breaks,” added the businessman, in the closing of the second day of the Alacero meeting, at the Hilton Hotel. “The unity is broken, the industry is broken, the ability to attract investments and talent to the community is broken, which is an essential factor of transformation. This can be a virtuous circle or a vicious circle. The local care dimension is fundamental.
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Rocca gave a 30-minute talk focusing exclusively on the opportunities for the steel industry in the region, with a special focus on the Chinese steel oversupply (estimated at 400 million tons, out of a global demand of 1.7 billion tons). But although he carefully avoided any reference to the local political situation, the businessman demanded that the governments of the region (including Alberto Fernández’s) take into account the industry as a key actor to get out of the economic and social crisis.
“We have an opportunity, as an industry and as countries, to be able to return to the path of industrial growth, to think about an inclusive development that can satisfy the demand for greater equality, greater opportunity for all our people, which is based on the training of people, with quality employment,” Rocca said. “A return to an industrial dimension will, to some extent, be a necessity in the face of a cycle change that erodes commodity prices. It is a change. Today most governments receive from different export taxes about 30% of their tax revenues,” he added.
Techint, which owns the Siderar and Siderca steel mills (in addition to the oil company Tecpetrol and the construction company that bears the group’s name) is one of the most important players within the Argentine Industrial Union (UIA).
It also controls several steel mills abroad, in Mexico, Brazil and the United States, and was also a controlling shareholder of the Venezuelan steel mill Sidor, which the government of Hugo Chávez expropriated in 2008 (and for which a director of the group admitted, in the framework of the cause of the notebooks, to have paid bribes to officials of the government of Cristina Kirchner to intercede with Chávez).
“The dimension of our industry is one of the issues that worries me the most,” Rocca said. “This cycle of growth in China, of valuation of raw materials, of commodities, has in fact allowed the promotion of an economic policy in many of our countries of the region based on the primarization of economies. An example in that sense is Brazil, where the weight of manufacturing on the Gross Domestic Product has dropped from 16% to 17% ten years ago to 11% now.
Rocca said the loss of specific weight of the manufacturing industry within the region’s economies in turn affects the value chain. In that sense rescued the case of Mexico as an industrial policy that was sustained over time and with different governments. “The only country that has a relatively high level of participation of manufacturing over gross product is Mexico, with 18% of GDP that is growing, since ten years ago was 17%. Mexico is obviously sustained by regional economic agreements, but also by a policy maintained throughout the time of promotion and development of the value chain.