Auto parts companies ask to reduce wages to face the crisis

The auto parts industry claims the possibility of adjusting wages to current production levels, at least while the crisis in the automotive sector lasts, to avoid future bankruptcy situations.

The claim comes from the Association of Argentine Component Factories (Afac), which presented a survey among 61 companies, of which 16 percent said they were evaluating their presentation in preventive bankruptcy proceedings.

The entity is made up of 225 auto parts firms, of which 23 are in Córdoba.

40 percent of the companies surveyed did not pay national taxes in May, 35 percent have trouble paying wages, and nearly one in three posted sales drops of more than 60 percent, according to the report.

“The situation is very complicated. The companies that started working do so with 50 percent of their staff, but they have to pay one hundred percent of wages, “says Juan Cantarella, general manager of the organization.

The problem, he warns, is that it will take automotive terminals “between six months and a year” to return to acceptable production levels, at least those that were in the months prior to the quarantine caused by the Covid-19 virus.

Companies in the sector complain about the rigidity of the sector wage agreement, in relation to automotive terminals.

“Auto factories, where the incidence of labor is four percent, can pay up to 60 or 65 percent of net wages. On the other hand, auto parts companies, where the incidence rises to 35 or 40 percent, must pay 85 percent of the net if there is a suspension, but, if there is no agreement with the union, they are obliged to pay one hundred percent, “he explains.

It should be noted that the Afac data is confirmed in Córdoba with the Economic Activity Monitor of the Ministry of Industry of the Province, according to which the local auto parts industry works at 53.6 percent of the rate it had in the first quarter of last year.

Currently, Cantarella clarifies, the entire sector is using the Emergency Assistance to Work and Production (ATP) program to pay salaries. The sector is concerned about the announcement by the national government that contributions will be reduced by area as it is released from quarantine.

“If the sector continues to work at 50 percent, having to pay all of the salaries, postponing the payment of taxes, a snowball will be generated from which many companies will not be able to leave,” says the manager.

In any case, the study clarifies that the priority of companies continues to be the payment of wages in relation to compliance with services, with suppliers and with taxes. 69 percent paid wages in full and at term, 21 percent met a portion, seven percent did so in full but in installments, and three percent were unable to meet these obligations.