At this time, the Government is moving against the clock to implement a plan that will reactivate one of the sectors that is suffering the most from the sharp drop in consumption: white goods.

The Secretariat of Commerce, dependent on the Ministry of Production, led by Dante Sica, is finishing shaping a project that seeks to encourage the sales of refrigerators and washing machines with low electricity consumption through a regime of 12 interest-free installments.

Just as the Government is advancing with the textile sector in a package of instruments aimed at reactivating a sector that is being severely punished by the drop in demand, now its sights are set on the factories - most of them SMEs - that produce household items.

"We have been meeting with officials from the Ministry of Production to move forward with the financing plan for highly energy efficient appliances. We see a lot of interest and this can be of great help to us," said the director of one of the chambers who participated in the dialogue table with other colleagues and technicians.

A senior manager from another of the entities, who also joined a meeting at the Ministry, added that "we could see that there is concern among officials about the drop in sales and the impact that this is having on activity."

"They know that jobs are being lost in our sector and that, if the outlook does not change quickly, the situation will not be easily reversed. So the idea was to convene to agree on a plan that would help reactivate demand," he added, strictly off the record.

The official strategy that is currently being debated will be based on the following guidelines:

-Interest-free financing: The promotion will be channeled through the Now 12 tool, in a context in which high interest rates make commercialization in installments unfeasible.

-Launch of “White Line Week”: The strategy will not be to promote the sale of household items throughout the year but rather to activate specific promotions, with “one shot” type actions at the national level and specific to the sector.

-Energy efficiency: The Government aims to move forward strongly in the renewal of the fleet of large appliances and, to this end, the plan will focus exclusively on the most efficient equipment.

-Relabeled: The Ministry of Production is agreeing with cameras and manufacturers on an updated scale that allows the different electro devices to be classified more accurately based on their energy consumption. Officials argue that the current system was outdated in the face of technological advances in recent years.

-Focus on refrigerators and washing machines: Although the relabeling and the new regulations on energy consumption will cover the entire universe of household items, the plan to promote sales in 12 interest-free installments would focus mainly on two of the most marketed products in this sector: refrigerators and washing machines.

-Deadlines: From the chambers consulted by this means they assure that the Government is moving very quickly to be able to announce the project as soon as possible, no later than the beginning of March. However, its implementation could take a few months due to technical issues linked to product relabeling.
Fees: fundamental anabolics

In the electrical sector, financing is vital. More so in a context of sharp decline in purchasing power, which exceeded 17 points in 2018.

The problem is that, even though the Central Bank has begun a path of lowering rates, the level remains high and consumers still find it unfeasible to quote the purchase of a white goods item.

In the case of a refrigerator that is displayed in a Buenos Aires store for $20,500, whoever wants to pay for it over 12 months will end up paying a total of $30,400, that is, practically 50% more in just one year.

That is why manufacturers consider the possibility of the Government extending Now 12 - at a rate of 0% - to this type of high-value products essential.

"Today people are buying in cash or in very few installments but paying interest. If progress is finally made with longer-term financing, the effect will be very positive for industry and commerce," said one of the sources, who runs an SME that produces white goods in the province of Santa Fe.

The managers who participated in the successive meetings held in Production assure that there are still no precise numbers on the amount of money that the Government should put on the table to finance the financing.

But the officials did tell them that these “anabolics”, if the agreement is sealed, will be applied in specific doses and not throughout 2019. To this end, the plan that is gaining the most consensus is to advance with one-shot type actions.

“The possibility of implementing a sort of ‘White Line Week’ or even more specific marketing actions, such as ‘washing machine week’ or refrigerators, is being analyzed,” said one of the sources.

“We are not yet talking about funds, but we do know that they are clear about the fact that they want to focus the effort on very specific actions,” he added, and then recalled that the fiscal issue is one of the limitations when extending such a promotion for several months.

It should be noted that the Government has just implemented “Fashion Week”, which took place from December 6 to 9 of last year and which allowed the purchase of clothing, footwear and leather goods in three interest-free installments and with discounts ranging from 10% to 35%.

Key: relabeled

Very soon, consumers who enter a home appliance store will surely find that the label attached to the front of an appliance that details the energy consumption will be very different from the one in force today.

And this is one of the points that most interests the Government, which seeks to encourage the demand for much more efficient household items.

The draft of the project that was circulated among some companies highlights the need to replace the regulatory framework, which dates back to 1999, with another that expands its scope, "taking into account the technological progress achieved in recent years in terms of energy efficiency."

Specifically, the official plan seeks to establish a finer detail of the different consumption scales, to “prevent the majority of product models from concentrating on the upper classes”, that is, among those with the lowest consumption.

Currently, electro labels are made up of a scheme of horizontal bars that go from the letter “A” (lowest consumption) to “G” (highest energy expenditure).

Below is the current design:

Instead, the sketch that is now being agreed upon will consist of a semicircular figure that classifies the scales through compartments and an arrow inside that indicates the class to which the article belongs.

This is the new label that the Government is studying to promote, corresponding to an efficient article:

In parallel, this is the sketch that reached the hands of industrialists, corresponding to the new seal that medium energy consumption equipment could carry in the future:

It should be noted that this new design is designed for the entire universe of products, including washing machines, refrigerators, microwaves, water heaters, electric ovens, lamps, air conditioning equipment and televisions.

In addition, the draft resolution establishes that marketers of these products “must ensure that the label is displayed visibly.”

In addition, the text establishes that, once the regulations come into force, national manufacturers and importers will have twelve months for all the equipment they launch into the commercial circuit to include this seal.

Of course, behind this issue, there is a focus of debate: the Government wants the plan to finance purchases in interest-free installments to include only products that already have the new label.

However, from the manufacturers' side they argue that reaching a consensus on the regulations and getting the entire industry to adapt to the changes could delay this project for a long time.

"The Ministry seeks to ensure that the two things are linked. It is putting a lot of focus on the issue of energy efficiency. And we understand it. But this could cause the initiative to be delayed a few months, at a time when we need sales to react as soon as possible," said a manager.

Beyond this controversy, will a measure of this type be enough to change the trend of a sector in crisis? In the industry they assure that there are no magic formulas and that numerous variables need to improve to achieve a sustainable rebound over time, such as purchasing power, inflation, and interest rates.

However, the owner of an SME, who spoke with this medium, summarized his vision in the crudest way: "I'm just looking at the warehouse and I've already lost count of the number of refrigerators I have in stock. And a few months ago we already suspended a shift. Therefore, anything that helps sell a little more is welcome."

Juan Diego Wasilevsky / iProfesional