AMBASSADOR WAYNE HOSTS ROUNDTABLE FOR IBM CEO, AND VISITS

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SUBJECT: AMBASSADOR WAYNE HOSTS ROUNDTABLE FOR IBM CEO, AND VISITS
TURNER BROADCASTING


1. (U) Contains business-sensitive information. Not for internet
distribution

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Summary
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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
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