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Transnational Corporations and the ‘Restructuring’ of the Argentine Automotive Industry: Change or Continuity?

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The New International Division of Labour

Part of the book series: International Political Economy Series ((IPES))

Abstract

Revisiting the historical development of the Argentine automotive industry from the mid-1950s to the present, Fitzsimons and Guevara challenge the dominant point of view that the development of the new international division of labour led to its qualitative restructuration during the 1990s. Instead, they show that low scales of production, obsolete technology and a resulting low global competitiveness characterised the local auto industry throughout the period. Based on empirical analysis and the international comparison of wages and prices, they argue that transnational automotive-manufacturers compensated for their ‘backwardness’ with the appropriation of a portion of the relatively abundant ground-rent available in Argentina. The NIDL therefore did not replace the old form of industrialisation related to the ‘classic’ international division of labour.

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Notes

  1. 1.

    Data from Organisation Internationale des Constructeurs d’Automobiles (http://www.oica.net).

  2. 2.

    Note the distortion introduced by the greater proportion of workers dedicated to existing R&D activities in the core countries, which implies an underestimation of the productivity of labour effectively applied in direct production in those countries.

  3. 3.

    During just a few years, the automotive TNCs located a significant part of their production in the Mexican market. For example, in the period 2004–2005, 45 per cent of automobile exports were destined for Mexico. However, note that these exports are carried out in a market of preferential agreement (Acuerdo de Complementación Económica N°55) that regulates trade exchange without tariffs in the process of a regime of compensation on imports and exports, similar to that which is in effect for the regional market.

  4. 4.

    The Mercosur tariff is 35 per cent. The tariff is 2.5 per cent in the USA, 0 per cent in Japan and 10 per cent in the EU (López 2007: 35).

  5. 5.

    This term is not synonomous with ‘surplus profits’ (Marx 1991: 279, 300–1), insofar as the obtainment of extraordinary profits is not necessarily expressed in above normal profits, but fundamentally in obtaining normal profits despite producing in backward conditions.

  6. 6.

    We are assuming, for the moment, that automotive firms must purchase their means of production at least at prices of production, discounting at this level of analysis the possibility of the reduction of costs related to constant capital.

  7. 7.

    From 1960 to 2007 the Argentine state annually appropriated, on average, 20 per cent of the total ground-rent that flowed out of agrarian production, with peaks of 50 per cent in some periods (see Iñigo Carrera 2008).

  8. 8.

    See Appendix for methodological references.

  9. 9.

    We take the US sphere of capital accumulation as the most immediate expression of normal conditions of the exploitation of labour-power. Automotive wages in the USA were historically the highest in international terms. Other countries, as in Europe and Japan, had lower wages in the 1960s and 1970s. But these lower salaries corresponded with less qualified labour-power. In fact, Japanese and European labour-power was put into production on a massive scale only when automation simplified the labour process and enabled the incorporation of these lesser-qualified workers. Progressively (although slowly), the wage difference between the ‘classic’ European countries (Germany, France, and the UK) and Japan compared with the USA was reduced, as the attributes of their respective working classes tended to converge. If one takes into account that the Argentine automotive industry tended to be backward in terms of the incorporation of technical innovations relative to all the classic industrial countries (ruling out the skill-level of labour-power as a possible explanation of Argentine lower wages), it is therefore adequate to take the US wage as an expression of the norm in the payment of labour-power or, in other words, as an indicator of the value of automotive labour-power.

  10. 10.

    There is insufficient data on the working day, and there are complications inherent in the separation between intensity and productivity.

  11. 11.

    Using the method of absolute purchasing power parity (see Appendix).

  12. 12.

    There certainly exist other complementary forms of the appropriation of rent by TNCs, such as direct subsidies, tax exemptions, and lines of cheap credit, all of which resulted from different regimes of promotion of the sector implemented by the national state. For reasons of space, the examination of these other forms of transfer of ground-rent to automotive capital falls outside the focus of this chapter.

  13. 13.

    Other Latin American countries, and Brazil especially, show similar characteristics. In contrast, the automotive industry in East Asian countries (Japan and South Korea especially) were based on the development of more modern systems of production and the emergence of new individual capitals. See Grinberg (2011) for a comparison between Brazil and Korea.

  14. 14.

    The transfer of complete production lines by Kaiser Motors from the USA to Argentina (and Brazil) has been well studied and documented (see MacDonald 1988, for instance), as has the use of second-hand machinery on the part of General Motors and Ford (Jenkins 1984: 52). On the other hand, a study by the Asociación de Fábricas de Automotores shows that until 1967 a quarter of the total machinery used was over ten years old, which implies that it was second-hand when the first plants were established. Other evidence which supports the same conclusion can be found in a government survey from the early 1970s (reproduced in Sourrouille 1980, Table 27), in which Ford, General Motors, Chrysler, Fiat, Citroen, and Mercedes Benz are confirmed as having built their Argentine plants through the adaptation of existing technology from their countries of origin. The most prominent studies of the industry also agree on this point (Jenkins 1984: 52; Nofal 1989: 90–1; Schvarzer 1993; Sourrouille 1980: 169).

  15. 15.

    Note that the productivity of labour in the Argentine automotive industry remained practically unaltered for decades (in 1990 it was only 12 per cent greater than in 1960, according to the Asociación de Fábricas de Automotores 1996).

  16. 16.

    It should be noted that this regression in the real wage coincided with the moment in which the automotive TNCs deepened the relative modernisation of the productive process and the reorganisation of labour relations. Between 1994 and 1998, new automotive production plants were opened and the first collective labour agreements were signed that incorporated new—more flexible—forms of the organisation of the labour process (Guevara 2010: 123).

  17. 17.

    According to calculations by Iñigo Carrera (2011: 56), the annual average of agrarian ground-rent between 2003 and 2010 was 53 per cent greater than between 1991 and 2001, and 83 per cent more than in 2002.

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Author information

Authors and Affiliations

  1. Department of Economics and Administration, National University of Quilmes and National Scientific and Technical Research Council, Bernal, Buenos Aires, Argentina

    Alejandro Fitzsimons

  2. National Scientific and Technical Research Council, Buenos Aires, Argentina

    Sebastián Guevara

Authors
  1. Alejandro Fitzsimons
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  2. Sebastián Guevara
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Editor information

Editors and Affiliations

  1. Politics, University of Manchester, Chadderton, Oldham, Greater Manches, United Kingdom

    Greig Charnock

  2. University of Quilmes and CONICET, Economics and Administration National, Bernal, Buenos Aires, Argentina

    Guido Starosta

Appendix: Motor Vehicle Industry Wages in Argentina and the United States

Appendix: Motor Vehicle Industry Wages in Argentina and the United States

 

Nominal wage in Argentina (current ARS)

Real wage in Argentina (2005 ARS)

Nominal wage in USA (current USD)

Real wage in USA (2005 USD)

Absolute PPP (ARS/USD)

Wage domestic purchase power (ARG as % of USA)

Relative PPP (ARS/USD)

Value represented in wage (ARG as % of USA)

1960

1.90E-08

45261

6676

47044

3.51E-12

80.9

7.70E-12

36.9

1961

2.20E-08

46131

6756

47130

3.95E-12

82.3

7.98E-12

40.7

1962

2.44E-08

40112

7229

49922

5.01E-12

67.6

1.11E-11

30.4

1963

3.05E-08

40383

7583

51683

6.13E-12

65.7

1.38E-11

29.1

1964

3.96E-08

42833

7884

53041

7.39E-12

67.9

1.61E-11

31.2

1965

5.27E-08

44404

8281

54833

9.35E-12

68.1

1.95E-11

32.6

1966

6.97E-08

44511

8289

53360

1.20E-11

70.1

2.52E-11

33.4

1967

8.95E-08

44225

8221

51334

1.50E-11

72.4

3.31E-11

32.9

1968

1.07E-07

45591

n/a

n/a

1.68E-11

n/a

3.57E-11

n/a

1969

1.20E-07

47540

9476

53851

1.71E-11

74.2

3.38E-11

37.6

1970

1.26E-07

43667

n/a

n/a

1.84E-11

n/a

3.60E-11

n/a

1971

1.74E-07

44943

11201

56049

2.37E-11

65.5

4.82E-11

32.2

1972

2.50E-07

40735

12406

60152

3.64E-11

55.3

7.53E-11

26.8

1973

4.44E-07

45098

13432

61310

5.49E-11

60.1

1.15E-10

28.8

1974

5.94E-07

48661

13905

57161

6.15E-11

69.6

1.28E-10

33.5

1975

1.53E-06

44276

14954

56332

1.59E-10

64.2

3.78E-10

27.1

1976

5.86E-06

31153

17315

61673

8.19E-10

41.3

2.02E-09

16.7

1977

1.80E-05

34705

19407

64902

2.12E-09

43.7

4.87E-09

19.1

1978

4.94E-05

34572

n/a

n/a

5.44E-09

n/a

1.28E-08

n/a

1979

1.75E-04

47087

n/a

n/a

1.27E-08

n/a

2.49E-08

n/a

1980

3.88E-04

52039

24391

57809

2.24E-08

70.9

4.21E-08

37.8

1981

7.52E-04

49356

26912

57820

4.15E-08

67.2

8.26E-08

33.8

1982

1.52E-03

37807

27488

55629

1.04E-07

53.5

2.08E-07

26.6

1983

8.28E-03

46298

n/a

n/a

4.46E-07

n/a

9.02E-07

n/a

1984

0.0862

66250

32481

61054

3.10E-06

85.4

6.59E-06

40.3

1985

0.51

51248

34695

62973

2.31E-05

64.1

5.42E-05

27.4

1986

0.99

51960

35203

62728

4.32E-05

65.2

9.04E-05

31.2

1987

2.27

51504

35085

60316

9.64E-05

67.2

2.03E-04

31.9

1988

9.79

50068

37702

62241

4.10E-04

63.3

9.69E-04

26.8

1989

297.98

47915

n/a

n/a

0.0124

n/a

0.0297

n/a

1990

n/a

n/a

42580

63625

0.28

n/a

0.73

n/a

1991

18182

44582

45394

65091

0.74

53.9

1.69

23.8

1992

25153

49380

43953

61182

0.90

63.6

1.90

30.0

1993

27253

48369

49506

66909

0.97

56.9

1.98

27.7

1994

30237

51513

56058

73872

0.98

54.9

1.98

27.2

1995

28042

46213

54414

69730

0.99

52.2

2.08

24.7

1996

25777

42414

55207

68717

0.96

48.6

1.91

24.5

1997

22830

37368

56975

69328

0.94

42.4

1.83

21.8

1998

22493

36494

53857

64528

0.94

44.5

1.86

22.5

1999

22620

37117

55694

65287

0.91

44.8

2.00

20.3

2000

26109

43249

58347

66173

0.87

51.5

1.81

24.8

2001

25188

42173

58913

64966

0.84

51.1

1.85

23.1

2002

22911

30477

64142

69632

1.04

34.5

2.49

14.4

2003

31266

36662

64937

68925

1.15

41.9

2.64

18.3

2004

41780

46919

65963

68199

1.17

54.2

2.65

23.9

2005

48547

48547

67341

67341

1.27

56.8

2.85

25.3

2006

58830

53049

65836

63775

1.36

65.5

2.97

30.1

2007

75361

60093

67242

63333

1.50

74.7

3.34

33.6

2008

91138

59258

67828

61526

1.77

75.8

3.88

34.6

2009

87354

49454

60889

55424

2.04

70.3

4.42

32.4

2010

128591

57846

68671

61497

2.53

74.1

5.41

34.6

2011

181971

66094

68715

59655

3.04

87.2

5.95

44.5

2012

208114

61136

67266

57213

3.68

84.1

7.26

42.6

2013

283146

66064

64486

54055

4.56

96.2

8.99

48.9

  1. Sources and methodology
  2. (1) ‘Payroll’ divided by ‘all employees’, data from Asociación de Fábricas de Automotores (various years). Calculated as average between total number of employees on 31/12 of corresponding year and total on 31/12 of previous year. Asociación de Fábricas de Automotores data excludes the parts and components industry
  3. (2) 1960–2006: Consumer Price Index (CPI) published by Instituto Nacional de Estadísticas y Censos (http://www.indec.mecon.ar/); 2007–2013: CPI published by Dirección Provincial de Estadísticas y Censos, Provincia de San Luis (http://www.estadistica.sanluis.gov.ar/)
  4. (3) 1960–1988: ‘Payroll’ divided by ‘all employees’, ‘motor vehicles and equipment’ industry, data from Bureau of the Census’ ‘Statistical Abstract’ (http://www.census.gov/compendia/statab/). In order to estimate motor vehicle manufacturing wages only, we have added to the source data 3 per cent for 1960–1969, 6 per cent for 1970–1979 and 10 per cent for 1980–1989, based on the wage differential between ‘motor vehicles’ and ‘motor vehicle parts’ reported by Lewis and Bauer (1964), and Bureau of Labor Statistics (1976 and 1991). 1990–2013: ‘Average hourly earnings for production workers’ multiplied by ‘weekly hours’ worked, ‘motor vehicle manufacturing’ (NAICS code 3361), data from Bureau of Labor Statistics ‘Current Employment Statistics’; we added 4 per cent to estimate ‘all employees’, based on differential between ‘production workers’ and ‘all employees’ reported in Bureau of the Census’ ‘Statistical Abstract’, various years)
  5. (4) CPI published by Bureau of Labor Statistics
  6. (5) Absolute purchasing power parity (absolute PPP) between Argentine peso and US dollar for the year 2005 is taken from World Bank (2008). 1960–2013 series calculated with previously mentioned CPIs. For the distinction between ‘absolute’ and ‘relative’ PPP, see Balassa (1964) and Officer (1978). For the justification of the utilisation of absolute PPP for the comparison of national real wages, see Iñigo Carrera (2007: 31–2)
  7. (6) = (1)/(5)/(3) × 100
  8. (7) Relative purchasing power parity (relative PPP) between ARS and USD calculated with the base period of 1960–1972, using previously mentioned CPIs. See Iñigo Carrera (2007: 31–5) for the justification of the utilisation of relative PPP for the estimation of parity exchange rates between national currencies
  9. (8) = (1)/(7)/(3) × 100

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Fitzsimons, A., Guevara, S. (2016). Transnational Corporations and the ‘Restructuring’ of the Argentine Automotive Industry: Change or Continuity?. In: Charnock, G., Starosta, G. (eds) The New International Division of Labour. International Political Economy Series. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-137-53872-7_8

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