ACCORDING TO a story published in the local media, HP is evaluating a plan to manufacture PCs for the local market in Argentina's province of Tierra del Fuego, taking advantage of the island's industry promotion programmes, but PC assemblers on the mainland are insanely lobbying to fight it.

Just as we recently mentioned Argentina's southmost province of Tierra del Fuego (TDF hereinafter), comes news about an imbroglio involving "The Company Formerly Known as Hewlett Packard" (and formerly headed by our friend Carly Fiorina) in one side and a local business chamber representing PC system assemblers in mainland Argentina in the other corner of the ring side.

Local paper LN quotes Martin Flachsland, marketing manager at HP Argentina who said that the firm is "currently evaluating producing systems from the ground up, at existing, already operating plants" (in TDF), adding that "we will manufacture, not just assemble (a PC from) finished parts".

HP's local branch could likely partner with NewSan, a local company with plenty of experience in manufacturing electronic goods in its factories down in TDF, and which surely has plenty of equipment in place and experience, including the wave soldering machinery and the rest of the kit needed to build PCBs. After all, NewSan already manufactures lots of products including TVs and LCDs under the terms of the TDF industrial promotion programme.

In a nutshell, the industrial promotion programme is the key of the brouhaha: PC assemblers are apparently frightened to death and wetting their collective pants when they think about the notion of competing with HP branded systems carrying zero import duties, and assembled using components manufactured down here.

So their grand plan was to go crying to the government saying HP will be a bad boy that will take away their lunch boxes if allowed to do it. This lobbying group apparently thinks that HP's move would wipe them out of the market, as HP's systems produced under the rule of the province's investment promotion programmes will be much cheaper.

Representatives from the Camoca trade group representing the PC assemblers outside TDF spoke with representatives of the Ministry of Industry and told them that HP's project "would kill the firms building PCs on the mainland", adding that companies in TDF have a 20% pricing edge because they pay no import duties on parts, they pay no gross receipts tax, and no VAT, all beacause they're located in the TDF island.

Those interested can find a quite good overview of the tax breaks and duty-free exemptions for industrial production in TDF over here. Most of the firms building electronics in TDF are located in Rio Grande which has a population of 60,000 and is considered the " industrial capital" of the island. The HDTV that I wrote about last year was made there, for instance.

In response to the move by the "angry PC assemblers bearing screwdrivers" trade group, the HP exec told LN: "We're not going to (just) assemble. This move by the Camoca trade group is founded on an incorrect assumption". Then people from NewSan, the firm which allegedly HP had talks for to use its factories down under, said "the idea is to manufacture motherboards. HP selected firms and considered that our company could meet its requirements".

NewSan's conclusion:"this is all comes down to a political decision. If the manufacturing [in TDF under the terms of the promotion programme] is allowed, we could then think about manufacturing other products that are now imported, like printers".

So, instead of welcoming HP's move with open arms as this would bring more jobs to this remote region and also reduce the cost of PCs in the local market, the Angry Crowd with Screwdrivers would apparently enjoy seeing this investment by HP derailed. Why don't they ask HP Argentina access to its locally produced mobos so they can use those in their own systems?. Surely that's a possibility that nobody seems to have thought about.

Sources who deal with HP ventured to this scribbler that what this trade group would accomplish -if in the end they reach their goal of stalling HP's project for Tierra del Fuego- is seeing HP moving the project up to Brazil, under similar conditions.

So, those cheaper locally produced parts to be used in HP's systems that the "angry people bearing screwdrivers" crowd fears today could tomorrow come instead from Brazil. And since Brazil and Argentina are part of the Mercosur common market, goods produced in one country do not pay import duties when entering another member country. Philips is for instance already selling notebooks manufactured in Brazil, as you can see over here.

Could the guys from Camoca perhaps think outside the box and figure a way their own sector could profit by using HP's cheaper and locally manufactured mobos? I'm not holding my breath. And you thought only the EU had spats.µ