SHIPBUILDERS WANT ARGENTINA'S HELP TO REVERSE SLIDE INDUSTRY SEEKS LOW-COST LOANS AND TAX RELIEF

SHIPBUILDERS WANT ARGENTINA'S HELP TO REVERSE SLIDE INDUSTRY SEEKS LOW-COST LOANS AND TAX RELIEF

The Argentine shipbuilding and repair industry - now pulling in about $30 million in revenue a year - wants government help to revive its sagging fortunes.

Industry officials say they need reduced taxes and low-cost loans to spur an industry that is operating at about 25 percent capacity and registering sales that are less than half the industry's peak in the late 1970s.The aid would let more than a dozen Argentine shipyards compete more effectively with their neighbors in Brazil and take advantage of new market trends in the 1990s, industry officials said.

"The problem is not technical. The problem is financial," said Jose Manuel Suarez, secretary of the Argentine Naval Industry Federation. "The market exists. With help and investments, we can compete with international markets."

About half of the local industry's $30 million in revenue comes from shipbuilding, primarily fishing vessels, while the remaining amount comes from ship repairs, said Mr. Suarez, also an executive with Sanym SA, a private Argentina shipbuilding and repair company.

Industry officials met with Argentine Economics Minister Domingo F. Cavallo for the first time late last month to discuss their concerns. Mr. Cavallo set up a special working group, composed of representatives from the industry, trade, and ports and waterways committees, to study the issues.

Mr. Suarez said the Argentine industry sees export opportunities for the construction of mid-sized vessels and doesn't want to lose out on market developments such as new International Maritime Organization rules that require vessels to have double hulls by 1995.

Ricardo Jose Cuccurulla, internal auditor for Tandanor S.A.C.I. y N., said the development of the Mercosur common market and the Hydrovia project this decade also will provide more opportunities for Argentine shipbuilding and repair yards as regional trade increases.

Mercosur is the Spanish acronym for the Southern Cone Common Market, a free-trade zone comprising Argentina, Brazil, Uruguay and Paraguay that is set to start at the beginning of 1995.

The Hydrovia Paraguay-Parana is an 1,800-mile waterway project that would develop waterway links among the Mercosur countries and Bolivia. A consortium headed by Ciamar SA, a private Argentine shipping line, bought Tandanor from the federal government in 1991 for $59 million.

Tandanor, one of the largest of about a dozen ship-repair companies in Argentina, recorded about $12 million in revenue last year, Mr. Cuccurulla said. About 80 percent of the 100 vessels repaired by the company last year were owned by foreign companies, he added.

Some of the changes the industry wants are a reduction in taxes, like the elimination of a local gross tax of 1.5 percent to 3 percent of the amount invoiced, and cuts in the 20 percent import tax that companies pay to import steel. The industry also wants loans with lower interest rates, currently ranging between 10 percent and 14 percent, and longer terms of repayments, which are now three to four years, Mr. Cuccurulla said.

Argentina needs the financial help to compete with companies in Uruguay and especially Brazil, which faces lower salaries, social benefits and taxes, he added.

But Martin Sgut, a Buenos Aires-based maritime consultant, said other Argentine industries oppose any favorable treatment for the shipping industry.

Shipbuilding is "a disaster," he said. "Other industries say there's a conflict of interest. They don't want to give subsidies to construct ships."

An emergency economic decree, issued by the Argentine government in 1990, ended government subsidies for the shipping industry and instituted many other economic reforms. Argentina has been deregulating and privatizing its maritime industry for the past two years in an attempt to lower its transportation costs.