Luis Fortuño, former governor of Puerto Rico, in his keynote opening of the Forum on Perspectives for Economic Development and Trade Opportunities for Puerto Rico and Dominican Republic sent out a call for action, saying the time is right for a boom in manufacturing in both countries. The conference took place on Wednesday, 29 May 2024 at the Intercontinental Hotel in Santo Domingo. The event was organized by Gustavo Velez of Intelligent Economics of Puerto Rico and his partnership with Ellen Perez in the Dominican Republic.
Fortuño challenged Dominican and Puerto Rican businesspeople to retake efforts to foster sister-nation relations to compete for more US manufacturing business at a time when the US is looking South instead of East. He highlighted the positive economic growth in both countries. At the same time, he reminded his audience of the tense relations between China and the United States and the fragile situation in Taiwan. “These are factors that give reason to see us as complementary economies and this is the time to take advantage of this situation,” he said.
He admitted both countries face similar technological and workforce challenges that need to be tackled, and have the need to continue to improve education, the resilience of public infrastructures and business climates. He said the two countries need to ready now to receive more manufacturing.
“For external reasons that are happening and are accelerating, in the near future great investments will be migrating from Asia to the Americas,” he explained. “This investment will continue. There are operational and geopolitical reasons behind this, beyond the apparent political reasons,” he said.
He stressed that regardless if it is Biden or Trump who wins the November election in Washington, D.C., nearshoring is picking up speed.
He explained that the many supply chain ruptures brought about by the pandemic have made US manufacturers aware of the need to manufacture closer to their consumer markets. Moreso, Fortuño mentioned how climate change has impacted the Panama Canal adding to the circumstances that are converging and will continue to accelerate the need for nearshoring.
Fortuño said that 92% of manufacturing executives in the United States are considering nearshoring. “Of those, half are already taking steps to open plants in the Americas.
He said Mexico has been the first to benefit with US$5.5 billion already invested in automobile manufacturing in the past three years. He said Mexican exports to the US in manufacturing are up 50%. “Mexican exports are now more than the exports of China to US,” he mentioned.
Fortuño reminded his audience of the importance of the central location of the Dominican Republic and Puerto Rico. He said that both countries are strategically located to easily supply the great ports in the Gulf of Mexico of the United States. “These are two economies that are accustomed to export to the USA,” he highlighted.
He explained the transportation facilities are in place and that it is not about competing with Mexico for automobile manufacturing. “There are alternate areas where we can compete and win. The result will be jobs for all. And that is what we are looking for,” he stressed. He mentioned President Abinader has said he will redouble efforts to create jobs. And in PR, efforts are underway to do the same.
Fortuño says there has also been a dramatic increase in electronics manufacturing and mentioned the push to bring the manufacturing of semiconductors to the Americas.
Fortuño explained that today almost six of every 10 dollars of Dominican exports are of manufactured goods. In Puerto Rico almost 40% of its economy is dedicated to manufacturing, all for exports. “That is why we complement each other and it makes all the sense in the world,” he said, while insisting on both countries taking definite large steps to attract the semiconductor contracting.
He mentioned that in the United States “an impressively large” amount of funds is now available to develop the semiconductor manufacturing for the US market.
Behind the push is the vulnerability of Taiwan as a main supplier of semiconductors for the US market. He recalled the recent earthquake that affected part of the production of semiconductors in that country already made apparent this vulnerability. He also stressed the unknowns in the future in regards to that country’s geopolitical situation. “God not willing, we are talking about the tension between China and Taiwan. And not necessarily is there a need for an invasion. It could be merely a blockade that can be physical or of another type,” he emphasized. He says this makes a strong case for manufacturing semiconductors in Puerto Rico and the Dominican Republic.
Fortuño wants to retake the history both countries had with the Twin Plants scheme before Section 936 was phased out starting 1996. “Puerto Rico and the Dominican Republic had a very successful history in complementary manufacturing,” he recalls.
He says in the United States leadership is again becoming aware and there are several bills in the US Congress that address the needed changes in regional policy. These include the Americas Act that would establish a regional trade, investment, and people-to-people partnership of countries in the Western Hemisphere to stimulate growth and integration through viable long-term private sector development.
Fortuño explained the pro trade bills would not be voted on this 2024 because it is an electoral year, but expects the US Congress to move on the bills as of January 2025.
He said the legislation will provide benefits to develop manufacturing and other industries and again stressed the competitive advantage of Puerto Rico and the Dominican Republic.
He called for both public and private sectors to act now. “It is not only logical but necessary to prepare for the challenges and opportunities that are coming in the next few years,” he concluded.
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Intelligent Economics
Perspectives of Economic Development
3 June 2024