Job bleeding in Free Zones

Formosano2000 · Feb 18, 2005

Ironically, just when the DR economy seems to be improve amid the IMF agreement and rising confidence, Free Zones are hurting. Not all Free Zones, obviously, but those that face fierce competition from China have the most to lose, now that the textile quota is gone.

Another thing, while the US$ has depreciated dramatically against most other world currencies, RD$ seems (as far as I know) to be the only currency that doubled its value against US$ over the past year. This, I'm afraid, might be the last nail on the coffin that forces some exporters out of business.

Asian countries are having a great time riding the export wave since many of them (China, Hong Kong...etc) have their currencies implicitly/explicitly pegged to the US$. So the weaker the US$, that better their export prospects are at the expense of other strong-currency countries.

Food for thought !

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http://elcaribe.com.do/articulo_mul...d=A651B18A5F95445689D43A5399751417&Seccion=64

Contin?an los despidos en zonas francas
Por la eliminaci?n de las cuotas al comercio mundial de textiles
Por EFE / elcaribecdn.com
Viernes 18 de febrero del 2005 actualizado a las 4:32 PM

Formosano2000 · Mar 4, 2005

From bad to worse

This following sentence merits attention:

"La p?rdida de puestos resulta superior a los 18,492 nuevos empleos que generar?n las 116 empresas aprobadas durante el a?o pasado en el sector de zonas francas"

Basically, job loss is outpacing job creation.

-----------------------------------
Zonas francas han despedido a 19 mil
La eliminaci?n de puestos se ha producido en 4 meses
Por Idonelia P?rez Blanco / El Caribe
Viernes 4 de marzo del 2005 actualizado a las 1:11 AM

For full article: http://elcaribe.com.do/articulo_mul...d=2A2692B68A6F484D93D1FDAC71D0FED0&Seccion=69

NALs · Mar 4, 2005

Formosano2000 said:
This following sentence merits attention:

"La p?rdida de puestos resulta superior a los 18,492 nuevos empleos que generar?n las 116 empresas aprobadas durante el a?o pasado en el sector de zonas francas"

Basically, job loss is outpacing job creation.

-----------------------------------
Zonas francas han despedido a 19 mil
La eliminaci?n de puestos se ha producido en 4 meses
Por Idonelia P?rez Blanco / El Caribe
Viernes 4 de marzo del 2005 actualizado a las 1:11 AM

For full article: http://elcaribe.com.do/articulo_mul...d=2A2692B68A6F484D93D1FDAC71D0FED0&Seccion=69

Job loss is outpacing job creating within the Zona Franca sector of the economy. Not from the entire economy which is still producing more jobs and wealth, as reflected by the growing economy. In fact, an economy is growing when jobs and wealth is being created. Without one or the other, suchthing can't happen.

This is due to the recent deregulation of the worldwide textile industry by the WTO.

Just about every country in the world has been losing their textile Free Trade Zone factory operations to China.

I'm telling you, China is getting on the nerves of ALOT of people...

but, that is Market Capitalism in its purest form. I just wish this also applied to industries that are heavily found in first world countries, but that will not happen...

MrMike · Mar 5, 2005

I think if the DR Free Zones had used their time under quotas to establish more efficient systems and gotten a reputation for quick turnaround time and high quality they might have been able to retain the high end market on the basis of quality and good client relationships.

My family has a Free Zone comapany that does electronic work, and over the past 18 years we have occasionally lost an odd job to China based on cost. At least half have come back based on quality.

Electronics manufacturing has never had any quotas in the DR and has had to be competetive by itself from the start. I have been told that the next logical step in the DR's evolution would be to get more into higher technology manufacturing now that supposedly there is a well-trained work force available. (many ofthem without work)

Escott · Mar 5, 2005

Nal0whs said:
Job loss is outpacing job creating within the Zona Franca sector of the economy. Not from the entire economy which is still producing more jobs and wealth, as reflected by the growing economy. In fact, an economy is growing when jobs and wealth is being created. Without one or the other, suchthing can't happen.

Where have you gotten the info about The economy is still producing more jobs and wealth? Can you site a source other than your own declaration that states that since the new administration came into power this has happened other than in the government which of course was suppose to shrink?

Escott

gringito · Mar 5, 2005

China is Getting On Your Nerves?

Nal0whs said:
Job loss is outpacing job creating within the Zona Franca sector of the economy. Not from the entire economy which is still producing more jobs and wealth, as reflected by the growing economy. In fact, an economy is growing when jobs and wealth is being created. Without one or the other, suchthing can't happen.

This is due to the recent deregulation of the worldwide textile industry by the WTO.

Just about every country in the world has been losing their textile Free Trade Zone factory operations to China.

I'm telling you, China is getting on the nerves of ALOT of people...

but, that is Market Capitalism in its purest form. I just wish this also applied to industries that are heavily found in first world countries, but that will not happen...

There are other reasons that the Free Trade Zones have been losing their place in the market that have nothing to do with China. The cost of doing business in the DR has risen significantly over the last 4 years and that has more to do with the situation than China. Industrials in the DR are paying in excess of $.09 per KWhr for electricity compared to $.04 in other markets that compete directly with the DR Free Trade Zones. The DR Free Trade Zones have limited themselves to "cheap labor" prospects that are basically about textile manufacturing instead of more sophisticated FTZ possibilities because of the low edeucation level of the country. One of the disheartnening things about the Dr has always been their propensity to blame their problems on others. Start taking responsibility for what happens in your country and to its people. Start making a change.

Escott · Mar 6, 2005

gringito said:
There are other reasons that the Free Trade Zones have been losing their place in the market that have nothing to do with China. The cost of doing business in the DR has risen significantly over the last 4 years and that has more to do with the situation than China. Industrials in the DR are paying in excess of $.09 per KWhr for electricity compared to $.04 in other markets that compete directly with the DR Free Trade Zones. The DR Free Trade Zones have limited themselves to "cheap labor" prospects that are basically about textile manufacturing instead of more sophisticated FTZ possibilities because of the low edeucation level of the country. One of the disheartnening things about the Dr has always been their propensity to blame their problems on others. Start taking responsibility for what happens in your country and to its people. Start making a change.

I completely agree with what you said and have been preaching this to no avail. The "It's the Other Guy" reasoning that keeps coming back. Then there is "Denial" an then it is "All the fault of the US" and well you get the picture. There are problems that these people don't want fixed because there won't be any graft and yet some people defend this.

For the life of me I on't understand this.

Escott

Naufrago · Mar 6, 2005

Nal0whs said:
Job loss is outpacing job creating within the Zona Franca sector of the economy... Not from the entire economy which is still producing more jobs and wealth, as reflected by the growing economy. ...I'm telling you, China is getting on the nerves of ALOT of people...

Not that I know but, I keep hearing a lot of Dominican business executives saying that the Free Zones are experiencing serious difficulties. Still I see so many middle class managers and families that appear to be doing very well and are optomistic about their futures...

There's no way to stop China from taking over the world markets. That Giant is waking up and the entire Western World will be in serious trouble as muti-nationals start shifting their investment capital for greater profits.

Formosano2000 · Mar 8, 2005

China is but one threat

See today's article in El Caribe:

http://elcaribe.com.do/articulo_mul...d=209626EFD62942A39461B1C11B52172F&Seccion=69

I have seen first hand the tremendous increase of all costs associated with operating a business in the Free Zones, labor cost being only one of them. The high-priced but unreliable energy supply and whimsical "aduanas" rank higher on my list. In short, DR is rapidly becoming investor-unfriendly.

Solution: move (to China or elsewhere) or improve. How to improve ? By trimming costs ( including labor ) and raise efficiency (ie.technology). Both of which point to REDUCTION of employment. And this in the end defeats the whole purpose of Free Zones. Why Free Zones to begin with ? Answer: to employ a vast mass of Dominicans who otherwise couldn't find work. So if the situation ends with Free Zones keeping employment to minimal, how does this benefit DR ??

Anybody got answers ??

gringito said:
There are other reasons that the Free Trade Zones have been losing their place in the market that have nothing to do with China. The cost of doing business in the DR has risen significantly over the last 4 years and that has more to do with the situation than China. Industrials in the DR are paying in excess of $.09 per KWhr for electricity compared to $.04 in other markets that compete directly with the DR Free Trade Zones. The DR Free Trade Zones have limited themselves to "cheap labor" prospects that are basically about textile manufacturing instead of more sophisticated FTZ possibilities because of the low edeucation level of the country. One of the disheartnening things about the Dr has always been their propensity to blame their problems on others. Start taking responsibility for what happens in your country and to its people. Start making a change.

Lurch · Mar 8, 2005

Formosano2000 said:
See today's article in El Caribe:

http://elcaribe.com.do/articulo_mul...d=209626EFD62942A39461B1C11B52172F&Seccion=69

I have seen first hand the tremendous increase of all costs associated with operating a business in the Free Zones, labor cost being only one of them. The high-priced but unreliable energy supply and whimsical "aduanas" rank higher on my list. In short, DR is rapidly becoming investor-unfriendly.

Solution: move (to China or elsewhere) or improve. How to improve ? By trimming costs ( including labor ) and raise efficiency (ie.technology). Both of which point to REDUCTION of employment. And this in the end defeats the whole purpose of Free Zones. Why Free Zones to begin with ? Answer: to employ a vast mass of Dominicans who otherwise couldn't find work. So if the situation ends with Free Zones keeping employment to minimal, how does this benefit DR ??

Anybody got answers ??

Unfortunately the only solutions would require an overhaul of the dominican culture. The RD simply cannot compete in any area in the global market (including tourism). I have said it often before everything can be done either cheaper, better or faster in other markets.

Currently South and Central America are truly making strides in their efficiency, I have been hearing quite a few discussions regarding the possiblities when China or SE Asia is not the preferred location.

Of course there is always the miniscule change that this Fernandez will revert to the former Fernandez

but I highly doubt it. He is now truly a real dominican politician.

Formosano2000 · Mar 30, 2005

Only getting worse

I'm afraird the texile industry, which accounts for more than half of Zona Franca factories, will be annhilated unless DR improves its competitiveness via devalued peso and improved efficiency (reliable energy + reduced customs hassle).

Where are all these thousands of unemployed going to find jobs ?
---------------------------------

http://elcaribe.com.do/articulo_mul...d=9DFB33B6A98240A8908741D4316A653B&Seccion=69

Siguen los despidos en las zonas francas
En Esperanza se pierden 1,400 puestos, mientras la competencia internacional aprieta
Por Idonelia P?rez Blanco / El Caribe
Miercoles 30 de marzo del 2005 actualizado a las 1:50 AM

Lurch · Mar 31, 2005

Formosano2000 said:
I'm afraird the texile industry, which accounts for more than half of Zona Franca factories, will be annhilated unless DR improves its competitiveness via devalued peso and improved efficiency (reliable energy + reduced customs hassle).

Where are all these thousands of unemployed going to find jobs ?
---------------------------------

http://elcaribe.com.do/articulo_mul...d=9DFB33B6A98240A8908741D4316A653B&Seccion=69

Siguen los despidos en las zonas francas
En Esperanza se pierden 1,400 puestos, mientras la competencia internacional aprieta
Por Idonelia P?rez Blanco / El Caribe
Miercoles 30 de marzo del 2005 actualizado a las 1:50 AM

Free zones alone have lost 20,000 jobs in the last 3 months (job losses are increasing monthly). Multiple factory closures and many companies no longer considering the RD for future business. Seems the PLD has decided full speed ahead on the currency manipulation regardless of the impact on the export economy. This is only the very beginning of the consquences of this poorly considered policy. :tired:

Tick tock tick tock.....(may already be too late to reverse this trend)

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