krgentina: chance for UK expertise
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Ws editor visited the Arctic Circle last winter; this year he has been 3 South America to meet the men who build, operate and use road transport. He brings good tidings of great joy — transport men in either hemisphere are fellow sufferers.
GENTINA means many different things to many different ,pie. It was the place the England soccer squad failed to :h and the place the Scots want to forget. Next to South ica it has the biggest British population outside the nmonwealth.
krgentina had been mis'erned for years, suffered the ors of a guerilla war for three rs and the humiliation • of using tongues when its new )ral military government ictively rid the country of 3e 20th century bandits. It is policed by trigger-happy liers.
krgentina abounds with unped potential and resources. s self sufficient in beef, ierals, cereals, fruit, textiles, her and oil. These resources .e been misdirected, and the ential has never been exited, but things are nging.
:rom an inflation rate in exsot 100 per cent in 1975 it v runs at 185 per cent. It has a long way to go, but it is erging from the desperate )ht of 1975 and rapidly. Inlied opinion estimates that
economy will take an appreciable upturn in the second half of 1979.
The opportunities which exist and will develop are not only open to these pleasant South American descendants of Spain and Britain. Those with some-, thing to offer will be heard and encouraged.
Six British transport consultancy firms heard last week that they had been granted first refusal on contracts. The best known to CM readers is Transmark, which is to look at rail operation where Argentina is to invest -£150m to improve services.
This is nevertheless small compared with the opportunity accepted by Scania to construct and develop a vehicle assembly plant. It is in the mid north of the country at Tucaman, and construction of the buildings by local labour began when the guerillas were still active in the foot hills of the Andes at Serra Catamarca less than 20km away. While the plant was under construction local labour formed a queue outside waiting for jobs even before the lines were installed.
Today the Saab-Scania plant is turning out 40 vehicles a week. They are all in 'the medium to heavy range with a few buses added to find a toehold in the market. The potential of the existing 20,000 square metres production area is 130 vehicles per month with a further 300,000sqm ready for development. One of the obvious attractions to Tucaman was a tax-free period of six years to encourage development.
The area is a vast sugar plantation with nothing apparently to commend it. Scania saw the potential and moved in.
Labour was the first problem, but it was soon overcome by using top Scania technicians from Sweden to train local men. The best of the local men were promoted and trained others and so the process was repeated. Training has now extended to local schools where the future technicians will be drawn from.
The 500 labour force for 40 vehicles a month may appear low by European production standards, but it is unlikely that it will be substantially irrcreased to reach the 130 production level. This happy state of affairs exists because the labour force, although organised into a union, is not militant. The families of Tucaman know what hunger means. Scania is providing a good living standard.
Although most of the components come through Sweden there is an export-import business thriving between Brasil and Argentina. The Tucaman plant takes engine blocks, cylinder heads and crankshafts from Brasil but exports to Brasil three times the financial value .in vehicles and components.
Turbocharged units amount to 90 per cent of the total, and all have ten-speed boxes except the buses — they are on the five-speed box which is exported to Brasil.
Power to weight ratio was unhead of in Argentina until recently. Mercedes with 140 continued overleaf engines were and are being operated at 3bhp per tonne. Things are changing. The National Transport Plan is evolving, but even more imminent is a Transport Act, the first for almost 50 years and power to weight ratios will begin at 4bhp per tonne and rise to 51/2 in three steps in the next three years.
Unless Mercedes introduce a heavier model, its Argentine days in the medium-heavy range are numbered. Chrysler and Ford dominate in the light/ medium range With 140bhp units leaving Fiat and Scania a clear run.
What has happened to the rest of Europe? Who knows. What has happened to British Leyland Commercial Vehicles? Having trouble at home is no good reason for neglecting chances abroad — BLCV is concentrating heavy investment in Africa. Argentina must surely bear investigation.
It is a vast country, of 2,807,560 square kilometres, equal to 30 per cent of Europe in size with a population of 36 million. Its distribution system covers vast distances and despite high government investment in the rail network its road transport development is assured. More than 80 per cent of all freight moves by road and more than 82 per cent of passengers move by road. The development of rail systems will try to ensure that it gains a bigger share of a growing market. It carries only eight per cent of today's freight and 15 per cent of passengers.
Scania has appointed 11 dealers to cope with the growing demand—a clear indication of the potential. Dealers get 171/2 per cent discount on sales, the customer expects and gets nothing and there are no middle men.
This is Scania's way of ensuring that its dealer network is financially sound and able to provide an ex-stock service for any of the three models in service. Comprehensive stocks must be held for the vehicle population of dealer's area.
Dealers are subjected to strict financial scrutiny. They have to produce financial controls bimonthly to satisfy the manufacturer that they are operating at sensibly commercial profit margins.
British manufacturers, indeed other European manufacturers, may not feel inclined to develop in a continent where temperaments and temperatures seem capable of causing trouble in an instant. Scania is satisfied that the trouble days of Argentina are behind it. New lines of communication will develop and the new Scandinavian pioneers mean to be part of it.
One plant official summed up the Scania philosophy for me. "The plant is built on seismic country subject to earth tremors, but our future is on very much stable foundations."
One of the areas where Britain could undoubtedly contribute to the development of Argentina's transport development is in training and research and development. Taking the last two first, a proving ground on the lines of our Motor Industry Research Association establishment in the Midlands shared by the five major manufacturers could serve as a quality control area. Scanias are tested over only 50km after assembly to ensure roadworthiness. Any defects detected in the test are rectified and the vehicle is retested. Nevertheless, Scania in Argentina has the same quality standards to meet as the company's other plants around the world and often with less well disciplined suppliers.
The management at Tucaman was at great pains to impress that they were not in some backwater of the industrial world prepared to accept other countries' rejects or substandard material. Because their conditions of tenure with the Government include a clause to ensure that they will export components and perhaps vehicles one day to Chile and other neighbours they must secure only first-grade material.
In 1976 the failure rate was 30 per cent while in this year it is 12 per cent. However, a central laboratory and test centre although non viable perhaps for one manufacturer could reduce the failure rate further, and in this the UK has sufficient technological background and experience to excel.
When the new Transport Act emerges in Argentina there will be two great gaps to be filled in training and enforcement. The existing liberal, almost nonexistent licensing system is to be tightened up, hours regulations will come, even driving tests will be introduced. These are other areas where we can sell spe ist services.
Drivers, .technicik' management will all requir be trained or developed. Bri has the most advanced tn port training in Europe, an these terms that means world.
Having helped Argentir earliest development is e‘ reason why we should stej and help again. It need not gesture of goodwill or a "st of flag" exercise, but a geni commercial enterprise.
A similar opportunity sented itself when the Mic East countries began to devE in road transport five or six yE ago. There was talk then of ling our experitise; noth came of it. This chance she not be allowed to pass with some exploration.
Scania has made its m with a growth in percenti terms from a 20 per cent sh to 50 per cent in a market wh declined by 30 per cent in same twelve-month peric Whatever else this proves makes it abundantly clear tl there are ample opportunit for expansion yet in the wor Just before a new year begin: a good time to reflect on things. The New Year is a go time to do something about it