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Not too long ago I had the chance to speak with Luis Alemañy, a Puerto Rican entrepreneur whose firm, SJT Manufacturing, gives a real-life instance of the alternatives current in Puerto Rico for firms trying to deliver components of their provide chains nearer to North and/or Latin America. SJT is a contract producer of high-precision sheet steel components, primarily based in Bayamón (Puerto Rico’s second-largest metropolis by inhabitants, which is positioned within the San Juan metro space). A number of the gadgets SJT produces are laptop and communication racks, electrical packing containers, and medical and examination furnishings. SJT’s shoppers embrace Google, HP, Tyco Worldwide, Johnson Controls, and Sanmina, in addition to shoppers within the army and protection house.
I examine Luis and SJT in an intriguingly titled article within the native press, Mudan manufactura de Asia a la planta SJT Manufacturing en Bayamón (“Asian manufacturing moved to SJT Manufacturing plant in Bayamón”). There have just lately been essential initiatives to advertise Puerto Rico as a alternative for some China manufacturing, particularly within the pharma sector. As an example, the MMEDS Act, a bicameral initiative launched within the Home by Puerto Rico’s resident commissioner and within the Senate by Marco Rubio, would “rescue home medical manufacturing exercise by offering incentives in economically distressed areas of the USA and its possessions.” In that context, it was thrilling to examine firms making the swap from Asia to Puerto Rico, particularly from outdoors pharma.
It’s not simply tariff-plagued and cyber-insecure China that firms are fleeing for Puerto Rico. SJT has additionally snatched manufacturing from Malaysia, a rustic that’s seen as a substitute for China. This underscores a important level: A transfer throughout the border from China to neighboring Southeast Asian international locations like Malaysia or Vietnam may (or might not) present a fast repair for the tariff downside, however could create new supply-chain anxieties. For a begin, these international locations might quickly discover themselves with a goal on their backs for their very own commerce practices, akin to currency manipulation, abetting illegal transshipment, and dumping.
Even when a rustic is an effective commerce actor, the realities of geography and borders imply that, throughout a time of disaster, its provide chains may turn out to be unreliable. That is precisely what has occurred in the course of the ongoing COVID-19 emergency. Inside this state of affairs, the benefits of working with a producer in the USA have turn out to be extra obvious than ever.
After they work with producers akin to SJT, firms that ship/promote their merchandise to the USA don’t have to fret about worldwide journey restrictions and quarantines. For workers primarily based in, say, Boston, travel to Puerto Rico is as easy as it’s to Florida. As well as, Puerto Rico has largely remained open for enterprise. Though the island adopted stricter measures than most locations in the USA, the controls had sufficient built-in flexibility to permit firms like SJT to maintain on working. As an example, the corporate would situation letters explaining the important nature of staff, with the intention to assist them navigate police checks throughout lockdowns.
Past that, you’ll be coping with English-speaking U.S. residents culturally attuned to coping with People. Many may have frolicked dwelling within the mainland United States, together with finding out at U.S. faculties. On the similar time, Puerto Rico “has the bottom labor prices of any area beneath U.S. jurisdiction,” in accordance with Invest Puerto Rico. This implies firms can profit from the U.S. labor pressure at a reduction, which is interesting to American firms, in fact, but in addition to firms from different international locations, as evidenced by the actual fact SJT has been contacted by potential shoppers in Spain and different European international locations. These points of interest will outlive COVID-19, and will additionally assist Puerto Rico achieve a long-term edge over Southeast Asia, to not point out China.
Puerto Rico has not been spared the damaging impacts of the coronavirus pandemic, but when there’s a silver lining for the island, it’s the renewed consideration being given to its manufacturing capabilities and different financial potential. COVID-19 has made it clear that securing provide chains is, actually, a matter of life and dying. When it comes right down to it, no manufacturing vacation spot can provide the ensures that one positioned on U.S. soil can ship.
Within the particular case of medical units and medicines, Puerto Rico is an apparent selection: it’s already the largest U.S. exporter of pharma and drugs merchandise. SJT’s success, nevertheless, demonstrates that pharma isn’t Puerto Rico’s solely sport.
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