Advanced manufacturing in Costa Rica presents opportunities for investors

Advanced manufacturing in Costa Rica is the nation’s economic future

The design and manufacture of semiconductors are among the most complex engineering processes that highly skilled workers perform. They are fundamental components in cell phones, computers, automobiles, medical devices, and aerospace technology. Hundreds of millions of transistors are packed in areas of a few square millimeters. However, due to a bilingual educated, and trained workforce, the future for advanced manufacturing in Costa Rica is a bright one.

The pandemic has caused a significant disruption in global supply chains.  This is especially the case with those configured in Asia.  This state of affairs has triggered the demand for chips due to the higher incidence of remote working and increased digital communications. It has also given rise to more companies “nearshoring” their operations. Companies now have a greater tendency to desire to relocate operations closer to their main consumer markets.  Doing so enables these organizations to better manage the risks associated with logistical and geopolitical disruptions. This set of circumstances opens opportunities for a rise in advanced manufacturing in Costa Rica. As a result, the country is well-positioned to attract more technology companies, new projects, and existing operation expansions.

The Costa Rican economy was significantly transformed in 1997 when the Intel company installed its computer chip manufacturing plant in the country. This milestone prompted many other world-class technology companies to focus on the Central American nation as a production location. As a result, today, 104 companies are active in carrying out advanced manufacturing in the country.  For instance, the German company, Zollner, is dedicated to providing electronic manufacturing services for the medical, automotive, aerospace, and electronics industries.

Intel expands its business in Costa Rica

Intel has recently announced that it will invest $ 350 million in Costa Rica over the next three years to restart its assembly and testing operations. The plant will ramp up its operations in the second half of 2021.  It will be the source of 200 new high-tech jobs. 

Advanced manufacturing in Costa Rica in the electrical and electronics sector exported products worth US $155 million in the first quarter of the current year. This growth is comparable to the 19% expansion in revenues that exports recorded in 2020. In addition to this electronic sector growth, increased activity has also been recorded in the medical device and precision metalworking industries.

It is expected that the nearshoring of advanced manufacturing to the Central American nation will continue to be a trend for the foreseeable future.  In the United States and Europe, in particular, there has been a continuing critical discussion among industry leaders concerning the movement of the production of goods in greater proximity to their end consumers in order to secure commercial supply chains.  This circumstance makes the current situation a perfect moment to make companies aware of the benefits of undertaking advanced manufacturing in Costa Rica.

Costa Rica must maintain a positive environment for foreign investors

Many opportunities are opening up for the manufacturing industry in Costa Rica.  This is in the face of new trends that the coronavirus pandemic has accentuated. As a result, Costa Rica has managed to position itself as an attractive destination for technology companies engaged in advanced manufacturing, life sciences, and other fields requiring a well-educated and trained workforce. 

In addition to the quality of its human resources, Costa Rica offers investors political and institutional stability and a free zone regime with clear and well-defined fiscal rules. However, further nurturing the progress of the country’s advanced manufacturing sector will require a proactive strategy to mitigate other future disruptions.  This includes the possibility of the imposition of a global minimum corporate income tax, as has recently been discussed in meetings by some nations.  Such a levy would negatively affect Costa Rica’s successful free zone regime. 

Just as the pandemic has triggered global demand for advanced manufacturing products in Costa Rica and accentuated the trend of nearshoring, it has also disrupted the countries’ labor market.  Additionally, it has harmed health and education spending and public finances in general. Therefore, improving the nation’s ability to tackle the issues that limit its competitiveness will be the key to moving forward to further grow advanced manufacturing operations in a post-pandemic world.