In mid-November, Amway Global, told 93 employees at its operation in Ada, Michigan, in the United States, that their jobs soon would be cut and relocated to Costa Rica. A week later, a Boston Scientific Corporation (BSC) plant just outside of Miami, Florida, also in the U.S., announced plans to shut down the installation and move 1,400 jobs to a new facility in Costa Rica.
While the creation of new jobs may be good news for the struggling Costa Rican economy, nearly 1,500 U.S. employees have been told their once-solid jobs at these companies will soon disappear.
In a message to The Tico Times this week, former Boston Scientific employee David Rodríguez said he was laid off from the Doral plant west of Miami two years ago, after working there for 10 years.
“I have friends who still work there; some attend my church,” he said. “From what I have heard, many – especially those who are older and have worked there for over 15 years and were hoping to retire at BSC – are shocked and worried about their futures. The reality is that there will be more than 1,200 people without a job in two years time and BSC will continue on.”
A reasonable assumption might be that the decision of Amway Global, a multi-level marketing and direct sales company, and BSC, which manufactures medical devices, to export jobs was due to tighter funding or diminishing earnings. In fact, both companies are prospering financially.
According to Amway spokesman Stephen Duthie, the company reported sales of more than $8.2 billion last year, a 15 percent leap from the previous year. Sales at BSC exceeded $8 billion in 2008.
“We are looking to grow our market in Latin America, and creating a hub in Costa Rica will allow us to run it more efficiently,” Duthie said in an interview with The Tico Times. “This was not a decision made under duress.”
The Job Relocation Trend
BSC is not the first “life sciences” company to leave the Miami area and redistribute jobs toLatin Americathis year.
According to The Miami Herald, Johnson & Johnson health care products and pharmaceuticals announced in January that it would eliminate 159 jobs in Florida’sMiamiLakesoperation and transfer them toCiudad Juárez, Mexico. In April, BSN Medical, which makes orthopedic products, announced that it would close its plant in Miramar, Florida, and export most of its jobs toReynosa, Mexico. The plant laid off 163 workers.
The latest layoffs come at a time when the unemployment rate in the U.S. is at 10.2 percent, the highest level in over 26 years.
According to the Beacon Council, a public-private organization that focuses on job creation and economic growth inMiami-DadeCounty, the unemployment rate there in October was 11.8 percent, a 5.2 percent increase compared with the rate in October 2008.
Miami is not the only U.S. area suffering from high unemployment.
According to the U.S. Bureau of Labor Statistics, the unemployment rate in the state of Michigan, the home of Amway Global, has climbed to a whopping 15.1 percent, the highest rate of any U.S. state.
Though the 93 jobs snipped at Amway are relatively few in number, laid-off employees must try to find work in the worst job market in many decades.
Yet the trend of slashing the number of employees and relocating jobs has shown no sign of slowing as companies continue to employ cost-cutting measures.
A statement issued by the Beacon Council after BSC announced its decision to close the Doral plant reads:
“We are told that in a restructuring effort to reduce operating costs, Boston Scientific will relocate to an existing and vacant company facility in Costa Rica which will result in lower operating and labor costs for the company. The Beacon Council is disappointed with their decision and, although we have been in communication with the company, there was little we could do to retain the company in Miami-Dade. While Boston Scientific deems this to be a necessary business move needed to adjust to the current economic crisis, without a doubt, their decision will be severely felt in our Miami-Dade community.”
Likewise, when the tire company Firestone announced plans to cut jobs in Indianapolis, Indiana, in the U.S., and move them to Turrialba, a small town on Costa Rica’sCaribbeanslope, Costa Rican President Oscar Arias, who spoke at the inauguration, cited the same rationale.
“This plant was in Indianapolis in the U.S., and they brought it here because certainly the costs of production are lower in Costa Rica,” Arias said. “But overall it is important for a canton like this, depressed in employment numbers.”
One Man’s Loss Is Another’s Gain
Arias’s comments highlight the benefit for Costa Rica of the slashed U.S. jobs.
The Boston Scientific jobs lost in Miami will be filled by Costa Rican workers at the two plants in the Propark free-trade zone in Coyol, near Alajuela. When the jobs are distributed over the next two years, Boston Scientific will provide work to approximately 4,000 Costa Ricans.
“The moving of jobs here to Costa Rica is always great news for our economy,” said Julio Acosta, a senior advisor at Infinitum, an international business consulting firm based in Costa Rica. “It boosts the Costa Rican economy because it provides jobs for local workers and also generates more business for other companies here.”
According to Acosta, the cost-cutting schemes are rooted in lower wages paid to Ticos, and this translates directly into profits for the company.
“This has been happening here and in countries all over the world,” Acosta said. “Where wages are lower, companies will employ people there to do the labor at less cost. … The trend will continue. And one day, if wages in Costa Rica increase, companies will outsource to a less expensive country. Companies will always look for the cheapest way to maximize profits.”