Manufacturing in Puerto Rico: Positive Outlook

A recent report in El Nuevo Dia offers evidence of a positive outlook for manufacturing in Puerto Rico.

In separate interviews with Secretary of Economic Development and Commerce, Manuel Cidre; the executive vice president of the Association of Industrialists (AIPR), Yandia Pérez; and Invest Puerto Rico’s chief executive, Rodrick Miller, El Nuevo Dia received information about new investments in Puerto Rico’s manufacturing sector.

Pérez said that, while many specific examples are confidential, the AIPR has worked in the past year with companies producing renewable energy, medical devices, textiles and IT services. Many of these companies were referred by Invest PR.

Invest PR hopes to bring 6,000 new jobs to Puerto Rico this year.

One company that is far enough along in the process to be public about their plans is India-based pharmaceuticals company Aurobindo. Aurobindo, which has suffered in the stock market following warnings about its overseas plants from the FDA, has bought the former Viatris plant in Cagaus.

Viatris, like many other Puerto Rico pharmaceuticals companies, is losing patents on many of its drugs, including the blockbuster Viagra. This slipping of patented medications into unprotected status is one of the reasons Puerto Rico has lost some of its pharmaceuticals manufacturers. However, Aurobindo specializes in generic drugs. U.S. leaders have been worrying that the U.S. relies too heavily on overseas production of popular generic drugs. Production in Puerto Rico will have multiple benefits for Aurobindo.

Puerto Rico’s history of manufacturing

Puerto Rico already has dozens of FDA-approved pharmaceuticals factories. According to official figures, manufacturing on the Island also includes other sectors:

• 36.3% biopharma
• 23.5% electronics
• 26.9% chemicals
• 5.4% medical devices
• 2.5% beverages and tobacco
• 2.5% food
• 3% other items, such as textiles

Some specific products:

• pharmaceuticals
• supplements and vitamins
• pacemakers
• glucose sensors
• insulin pumps
• catheters
• swabs
• contact lenses
• guide wires
• uniforms and footwear for military use
• clothing
• agrochemicals
• blocks
• medical cannabis products
• aerospace and electronic components
• solar generators
• aluminum windows and doors
• cigars
• food
• beverages
• beers and spirits

Altogether, manufacturing represents almost half of Puerto Rico’s GDP. However, it provides jobs for just about 8% of workers. Part of this discrepancy is caused by the use of transfer payments, a common practice in pharma and tech industries.

However, this is still an important part of the labor market. As of October 2021, Puerto Rico had 79,300 manufacturing jobs with a monthly payroll of $130.6 million.

Labor shortage

Manufacturing in the States has been struggling with a lack of workers. Puerto Rico is expecting to face the same problem; El Nuevo Dia reports that the leaders they spoke with felt that they had already missed some opportunities because of corporations’ concerns that the workforce might not be there as needed.

However, the Island may have an advantage over the States  First, there are more available workers. With labor force participation of just about 40%, compared with 52% for the United States as a whole, Puerto Rico may have greater availability by percentage.

Second, there is a stigma attached to factory work in the States that keeps young people working as baristas even though they could earn more in manufacturing. Puerto Rico doesn’t have the same negative attitude toward manufacturing. The average factory worker in the States is in his 50s, and Puerto Rico has an older population as well as more STEM grads. These are factors that suggest that Puerto Rico might offer better prospects for manufacturers.

Still, Puerto Rico leaders see the need to work on this issue. Rodrick Miller of Invest Puerto Rico said. “We cannot control the political world, but we can retain, attract and rethink the talent we have.”

Training opportunities

While Puerto Rico has the advantage of an educated workforce with many experienced manufacturing workers, the Island is also working to increase that level of expertise.

Companies such as Amgen and Medtronic fund educational and internship programs in collaboration with the University of Puerto Rico. UPR also has programs in mechatronics as well as a Masters degree in Manufacturing Engineering

The most recent initiative is the PR Ready program that the Science, Technology and Research Trust has developed with CDBG-DR recovery funds. PR Ready offers training programs in manufacturing as well as health care and IT fields.

Reputation management

Secretary Cidre acknowledged that “the issue of the ease of doing business requires from the DDEC a responsible investment in technology” to solve the historical problem of permitting procedures.” Greater integration among agencies and municipalities with the online portal for small business in Puerto Rico will make the Island a more desirable location for manufacturers.

Meanwhile, Pérez said “[W]e must urgently address our image on the issue of corruption. It is important that as a people we establish a culture that doing business is a ‘win win’ for everyone if it is done legally.”