AMBASSADOR WAYNE HOSTS ROUNDTABLE FOR IBM CEO, AND VISITS

UNCLAS BUENOS AIRES 000727 SIPDIS SIPDIS SENSITIVE USDOC FOR 4322/ITA/MAC/OLAC/PEACHER STATE FOR WHA/BSC AND WHA/EPSC E FOR THOMAS PIERCE EB/CBA FOR FMERMOUD, DENNIS WINSTEAD EB/IFD/OIA FOR WSCHOLZ, MTRACTON EB/IFD/OMA FOR AHAVILAND AND ASIROTIC PASS NSC FOR JOSE CARDENAS PASS FED BOARD OF GOVERNORS FOR PATRICE ROBITAILLE PASS USTR FOR EEISSENSTAT, SCRONIN TREASURY FOR RALBANO AND LTRAN US SOUTHCOM FOR POLAD E.O. 12958: N/A TAGS: ECON EINV ECPS BEXP AR SUBJECT: AMBASSADOR WAYNE HOSTS ROUNDTABLE FOR IBM CEO, AND VISITS TURNER BROADCASTING ¶1. (U) Contains business-sensitive information. Not for internet distribution -------------- Summary -------------- ¶2. (SBU) Ambassador hosted a roundtable discussion on April 3 for IBM CEO Sam Palmisano who traveled to Argentina to visit the company's rapidly growing subsidiary, which is expanding at a rate of 15 percent per year and is now the largest U.S. employer in Argentina, providing products and services to 15 countries in Latin America, Europe and Asia. The local Presidents of General Motors, Motorola and Wal-Mart participated and provided an upbeat assessment of Argentina's short and medium term prospects and their own expansion plans. IBM, like most IT firms, said their biggest challenge is finding enough technical personnel to keep pace with their expansion plans. In a recent roundtable hosted by Ambassador Wayne for the IT sector, he offered to work with the companies to establish a dialogue with the GOA to fortify its ability to keep pace with rising demand for technical personnel. End Summary. ¶3. (SBU) On April 3, Ambassador Tony Wayne hosted a roundtable with the Presidents of the Argentine subsidiaries of General Motors, Wal-Mart and Motorola for the CEO of IBM who made a one-day visit to Buenos Aires to visit the company's growing local subsidiary and meet with key IBM clients in South America. IBM CEO Sam Palmisano was accompanied by Juan Fernandez Oliva, President of IBM Latin America, Gonzalo Escajadillo, President of IBM Argentina/IBM Spanish South America, and Sebastian Mocorrea, Vice President of Government Affairs for IBM Latin America. The purpose of the roundtable was to give Mr. Palmisano a better idea of the business climate as IBM continues to expand its Argentine base of operations. ¶4. (SBU) IBM currently has approximately 6,000 employees in Argentina and is the largest single U.S. employer in Argentina. The firm continues to increase its workforce by approximately 10-15 �0A;percent per year as it expands its production of software and services, which are sold locally and exported to 15 countries in Latin America, Europe and Asia. IBM's operations in Argentina are growing on average of 15 percent per year and medium-term expectations are favorable. IBM has been operating in Argentina since 1923 and has evolved over the years from an equipment manufacturer to a service provider. Argentina is one of IBM's key global locations for expansion due to its talented pool of creative technicians and engineers. ¶5. (SBU) Like other U.S. technology companies, the biggest issue facing IBM is being able to continue to locate new employees that have the education and experience necessary to join the company's expanding team. IBM Argentina invests a lot of resources to train new recruits every year as the number of firms demanding employees places greater strains on the current rate at which the educational system can produce them. ¶6. (SBU) While the Presidents of the companies that participated expressed concerns about some of the policies being pursued by the GOA, especially with respect to consumer price controls, all agreed that the short and medium-term prospects for Argentina remain very positive and indicated that their companies were expanding operations in the country and exports from Argentina. Wal-Mart, the newest player in Argentina, said that it was undertaking an aggressive expansion plan valued at USD 150 million during the next two years aimed at making the company a bigger player in Argentina's lucrative retail and consumer market. Mr. Palmisano echoed those sentiments by commenting that things really appeared to have improved since his last visit to Argentina a couple years ago. 7 (SBU) Argentina continues to grow and attract new companies, especially in the information technology sectors. Most firms cite the countries strong educational system and the creativity of its workforce as key attractions when deciding to expand here. Just in the last week the President of Turner Broadcasting Systems Latin America, Juan Carlos Urdaneta, hosted Ambassador Wayne for a tour of the company's new regional headquarters in Argentina, which will serve as TBS' new hub for regional programming and broadcasting. TBS is in the process of finalizing the $220 million acquisition of Claxxon, an Argentine content producer, that will increase its employment in Argentina from 200 to 600 by the end of 2007, expand Turner's regional channels and move it further into local content production. Also this week, Google CEO Eric Schmidt traveled to Argentina to inaugurate the company's new regional headquarters for Latin America and Spain. He commented that the quality of human resources for the IT sector in Argentina was as good as anywhere in Europe and said that Google hoped to continue to expand here faster than the national average for the IT sector in the coming years. 8 (SBU). Comment: Despite concerns expressed by business people about the GOA's unorthodox methods of managing the economy with measures like price accords, Argentine and U.S. companies continue to express confidence in the country's short and medium term growth prospects. While U.S. investors in some sectors of the economy, such as electricity and gas, have experienced difficulties in managing their operations due to interventionist government policies, other sectors, such as IT, have managed to expand both local and regional operations without any significant problems. The concern most often expressed by the IT sector is the challenge they experience in locating adequate numbers of ready-to-hire technical employees, which requires the companies to devote more time and resources to human resource development, which at present is offset by the relatively lower compensation structure. Ambassador Wayne, during a recent roundtable with IT companies, offered to assist them to establish a dialogue with the GOA to explore ways in which Argentina can better meet the educational needs for the rapidly expanding IT sector. End comment. WAYNE