At a snazzy party this week celebrating the world’s biggest computer chip manufacturer’s 10th anniversary in Costa Rica, company executives shrugged off concerns that Intel’s big investment plans in China could be to the detriment of its Costa Rica operations.
The party at the five-star Costa Rica Marriott Hotel came on the heels of news that Intel expects to build a $2.5 billion plant in China’s northeast port town Dalian.
“That plant is second generation; it’s going to produce chips,”Mohsen Fazlian, the new general manager of Intel’s Costa Rica operations, told The Tico Times. The China plant is “upstream” in the value-added chain, meaning it will produce silicon wafers that will later be made into microprocessors in plants such as Costa Rica’s.
William Swope, Intel’s Vice-President of Corporate Affairs, told The Tico Times “the decision we made to go into China has no impact on Costa Rica. If anything, it has a positive impact because it would build more silicon pieces for assembly and testing in Costa Rica.”
He said the new China plant will require 2,000 more employees within three years to add to the company’s existing 4,000 jobs in China. That would be nearly twice as many employees as Intel has in Costa Rica.
The budding economy in China, which is now Costa Rica’s second biggest trade partner behind the United States, is beginning to attract technology companies because of its cheap labor costs.
Plans for the China Intel plant come weeks after Conair, the U.S. hair-care product company, finished shutting down a plant in Turrialba, 80 kilometers east of San José, to move operations to China. The plant closure has meant 500 layoffs over a period of three years, said Conair Manager Francisco López. The company’s Cartago plant, where it produces hair dryers and other products, remains open.
López said more and more industrial companies with simple production processes will pack up for China, noting the Central Valley textile company Confecciones BorKar reduced workers’ hours this month to avoid layoffs in the face of a drop in orders from U.S. firms seeking cheaper labor costs in China. But for more sophisticated industries, such as technology, Costa Rica will remain competitive, he said.
At the Intel celebration Monday evening in San Antonio de Belén, waiters served up wine and hors d’oeuvres while Intel executives mingled with administration officials to the sound of tinkling piano music. A man covered in silver body paint and flashing lights walked around the party on stilts with other body-painted models, a squawking parrot and an iguana.
“We don’t always do it up like this,” Swope said after donning the parrot on his shoulder.
Vice-President Kevin Casas, speaking to a standing cocktail-clutching crowd, said Intel’s operations here are proof that the country can and will compete in the global economy.
“Only when we’re forced to compete with the world do we know who we are,” he said. He said the debate over the controversial Central American Free-Trade Agreement with the United States (CAFTA) isn’t just a debate over a free-trade agreement but over “whether or not we’re going to fear or embrace globalization.”
Intel Chairman Craig Barrett took the microphone to defend Costa Rica as a prime investment choice of Intel in Latin America, while sneaking in a playful jab at Costa Rica’s oft-criticized state-run telecom monopoly.
“I do have one complaint – and it’s not that my Blackberry doesn’t work here, although I do hope you get that fixed for my next visit,” he said facetiously, pulling his wireless handheld e-mail device from his pocket and holding it up to a laughing audience.
He said his real complaint is that “everyone in Latin America asks me: Why did you pick Costa Rica? I tell them go to Costa Rica yourself and you’ll see why we picked Costa Rica.”
During his stay in Costa Rica this week, Barrett also pushed for more technology in education. Tuesday morning, he visited a school in Belén to inaugurate Intel’s donation of the first high-speed long-range wireless Wimax Internet connection at a public school in Costa Rica.
According to Intel’s Costa Rican media director Patricia Chico, Intel invests about $100,000 a year in social responsibility projects like the Wimax project.
Foreign Trade Minister Marco Vinicio Ruiz, who was at the anniversary celebration, applauded the fact that Intel has invested $700 million in Costa Rica’s economy since it came here. Microprocessors and chip parts are now Costa Rica’s biggest export, representing more than a fifth of all Costa Rica’s exports in dollars, about $1.7 billion.
He called for Intel to continue investing in Costa Rica.
Fazlian, 40, is an Iranian-born U.S. electrical engineer who worked in Portland, Oregon, for Intel for the last decade before he was named Intel’s new general manager in Costa Rica this month. He is Intel’s fifth general manager in 10 years after Bill Abraham stepped down.
He said he wants to see the company expand by providing more servers, and said there will likely be growth in the company’s shared services such as human resources and finance, though he gave no concrete expansion plans.