The Two Sides of the Industrial Sector

While a group of manufacturing companies decided to reduce their operations in Costa Rica, arguing that local production costs are high, another group of companies in the sector decided to increase their investments.

Tuesday, October 29, 2019

According to the most recent official data, during August 2019 the growth of economic activity in the manufacturing sector was 2.5%, explained by increased external demand for products from special regimes companies, particularly medical implements and steel products such as bars and sheets. This contrasts with the decline in manufacturing activities for the domestic market. See report of the Central Bank of Costa Rica.


In this context, Vicesa, a company involved in the manufacture of glass products, announced in mid-October the dismissal of 254 employees working at the Cartago plant. The company reported that it made the decision because of the fall in sales and the slowdown of the local economy.

Among the strongest arguments of Vicesa, a company that also has industrial operations in Guatemala, was that in Costa Rica pays 47% more for electricity compared to what it cancels in its plant located in Guatemala.

Baxter, Calox, Dos Pinos, Yanber, Amoena and Cargill were other companies in the manufacturing sector that in the last two years reduced their operations or laid off employees in the country, citing reasons of national and international origin.

You may be interested in "Central America: $70 Million in Industrial Investment"

Not everything is negative in the country, as there are industrial companies that have decided to increase their operations. Elfinancierocr.com reviews that "... When talking about companies that seem to be pleased with what Costa Rica offers are Eaton Pozuelo, Florida Ice & Farm (Fifco), Kimberly Clark, Sylvania, Mexifrutas, Paradise Ingredients, Edwards Lifesciences and Align Technology. These companies made investments to increase their productive capacities or decided to settle in the country during the last two years...".

The companies that have invested, made those decisions because of "... the standard of the Costa Rican human talent, the quality and fame of the Costa Rican products, the increase in the demand, as well as the stability in the productive and commercial environment."

Also see "Exporters: Two Sides of One Coin"

Expectations in the sector are different, since generally manufacturing companies in free trade zones enjoy an increase in their sales and on the other hand, those that are dedicated to the production of goods for local consumption are not at their best.



More on this topic

Industrialist Expect a Year Without Growth

April 2019

In Costa Rica, businessmen expect job creation to stagnate this year, as only a thousand new jobs are expected to be created, resulting in a year-on-year increase of just 0.7%.

The forecasts of the Chamber of Industries of Costa Rica (ICRC) for this one are the result of the study that the sector carries out every year, which concludes that in the most positive scenario, the performance of production, employment and investment, would be similar to that of 2018.

Costa Rica: Industrial Sector to Grow 4% in 2018

December 2017

The union of industrialists estimates that next year the GDP of the manufacturing industry will increase by around 4%, and formal employment of the sector could grow no more than 2%.

From a statement issued by the Chamber of Industries of Costa Rica:

Costa Rica: Manufacturing Sector Deteriorates

March 2014

The loss of competitiveness due to costs, infrastructure backlog and delays in proceedings are forcing public sector companies to reduce their production and staff numbers.

The structural problems affecting the manufacturing sector explain the increasing shrinkage of Costa Rica's actual production.

Costa Rica: Natural Gas Imports by Private Firms

July 2013

The industrial sector is willing to import the LNG needed without state intermediaries in order to reduce production costs.

"On 11 June, the Administrative Court accepted a law which is forcing the Ministry of Environment and Energy (Minae) to decide, within fifteen working days, on the possibility of the private sector importing liquefied natural gas (LNG)," reported Elfinancierocr.com.

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