Establishing a Manufacturing Facility in Costa Rica

The Central American Group: Hello.  Welcome to another installation of the Central American Group’s podcasts. These are discussions that we have with experts, both in the organization and external to the organization, that is centered on doing business in the Central American region. Today, we have an external expert. It happens to be the top executive of one of the Central American Group’s client companies. The name of the company NACS Inc. I will let Robert Doty tell you a bit about his company, a little bit about himself, and after that, we’ll start with the questions on the topic of establishing a manufacturing facility in Costa Rica

Robert Doty:  This is Robert Doty here.  I am the current president of NACS Inc. I’ve held a number of roles within the company over the last twenty-three years from machining, assembly, engineering, sales, and now I’ve taken over as president. Our company is really specialized in providing scalable solutions to our customers, focused in the areas of life science, space, and Medtech. We provide services that include prototyping, production, semi-automation all the way through to full-scale contract manufacturing. We’ve been in business for almost 30 years and central hub in the Minneapolis, Minnesota area.  We have recently expanded our company’s capacity by establishing a manufacturing facility in Costa Rica.

The Central American Group: That’s interesting. We’re going to talk a little bit about that today. Basically, if you can let us know what were the factors that motivated your company to set up manufacturing operations in Costa Rica?

Robert Doty: We looked at a number of different areas for further expansion.  We have a customer base in the United States that has very strong connections with Costa Rica. We have serviced these customers for over 10 plus years, and we really wanted to get down there and provide more service and more competitive cost opportunities for our customers. So, we decided to expand into The Central American Group’s Green Park Free Zone to set up operations with the goal of mimicking what we do in Minneapolis. We expect to have there for a long period of time to bring our current processes and procedures down to Costa Rica to drive quality and hire some very good talent.

The Central American Group: What are you hoping to accomplish in Costa Rica?

Robert Doty: We’re really hoping to really be close, closer to our customers so that we have great service and support and the ability to collaborate on new applications. We want to hire some really good talent, which we’ve already done, and we’ll continue to do so and provide very good, stable jobs for our employees down there. We will continue to expand and grow as the market needs are there.

The Central American Group: Can you tell us a little bit about the reasons behind your choice of the Central American Group’s Green Park Free Zone as opposed to any of the other options that were available to your company?

Robert Doty: Sure. We looked at a couple of different options in the Costa Rica area.   We concluded that the Green Park Free Trade Zone was the best option. We had a lot of confidence in infrastructure in an existing building and had very good confidence that it was going to happen on time within the budget we had set for ourselves and it absolutely did. I think we were ready to go within a day or two of the original schedules even though we had to fight through the pandemic.  That was really impressive for us. It has worked out really well.

The Central American Group: Costa Rica is very well known for the quality of its workforce and it’s got a very good educational system. As a matter of fact, it puts eight percent of its GDP into education every year.  Given those circumstances, what have you found with regard to the Costa Rican workforce? What’s been your experience been with individuals in that workforce thus far?

Robert Doty: We were really excited about it when we went to hire and bring our people on board starting in September of 2020. We put a number of different job descriptions out.  I think within the first week we had around 800 or more resumes for different areas such as machining, mechanical engineering, controls, engineering and technicians, and such.  We went through a number of interviews with potential candidates and found some really good people. We’re excited at the talent is really there. We went to the goal of establishing a manufacturing facility that would grow with good people.

The Central American Group: One thing that we’ve been getting and seeing, as have a lot of other people that are involved in manufacturing, the desire of companies to restore manufacturing to the Americas.  The phrase is being used now as ally-shoring. What we do find, however, is that rather than establishing an entire facility, a stand-alone manufacturing facility, companies that have source manufacturing in Asia are looking to do the same in Central America. From previous discussions, I know that your company has an interest in fielding this kind of response from companies that are looking to bring things back from China. Could you tell us with respect to that kind of activity, what capabilities your company has and what kind of firms could call upon you to do subcontract work for them in Costa Rica?

Robert Doty: Sure. We’re very much focused on a scalable solution. What we’re able to do is provide a full turnkey automated solution to help our customers to manufacture their products. In the Minneapolis area, NACS, Inc. is FDA registered, FDA certified, as well as ISO certified. We’re able to handle very complex devices such as drug delivery systems and MedTech. We are absolutely developing the same skill sets at our production facility in the Green Park.   We’re excited and we’re looking at current opportunities that are likely to come from Asia because of logistics and cost competitiveness, as well as work that has its origin in Costa Rica.  The neat thing, logistically, is that I can board an airplane at five-thirty in the morning in Minneapolis and I can be in San Jose at two o’clock in the afternoon.  Our plant is readily accessible, and the infrastructure is really good.

The Central American Group: That’s great. We’re glad to hear that. Just to wrap things up here. What advice would you give to other companies that are considering establishing a manufacturing facility in Costa Rica?

Robert Doty: You know, I think I would kind of put it all together and just say that, from a logistics standpoint, it’s a very great location in relation to the US. Workers with talent are there not only from a skilled operator standpoint but also from an engineering perspective. The labor pool is strong. The motivation that the employees have is great. As I have said, we are excited and ready to work. There are definitely some tax advantages and the free trade zone that can be taken into consideration for sure. And you also have the ability to service the local industry down there if you have existing US-based relationships that have made their way to Costa Rica.

The Central American Group: One other thing that I would mention, too, that it’s important is the CAFTA, the Central American Free Trade Agreement, which is essentially comparable to the USMCA that the US has with Mexico and Canada. So, with regard to your product being exported to the United States, it comes into the US duty-free. Is that correct?

Robert Doty: That is true. And that was definitely a factor.

The Central American Group: We get a lot of requests, as you know, from people looking to have things done in Costa Rica. If somebody is listening to this podcast and they’d like to get in touch with you, Robert, so that NACS Inc. could execute a project for them, how would they get in touch with you, Robert?

Robert Doty: You could definitely go to our website and then submit a request through the contact form.  That will come directly to me. We can take it from there.

The Central American Group: Robert, thanks. It’s been a pleasure talking to you. We wish you abundant luck in Costa Rica and actually looking forward to meeting you in person someday to talk more about establishing a manufacturing facility in Costa Rica.