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Contact the Central American Group to explore the foreign investment option in Costa Rica and to establish nearshore manufacturing operations in the Green Park Free Zone.
The American company Johnson & Johnson MedTech recently announced that it will install a medical device manufacturing plant in Costa Rica. This project represents the company’s most significant investment outside the United States.
“We are very proud of what this means for the country; a world leader in medical devices chose us to make its largest investment in history outside the United States. It will bring 3,000 jobs and opportunities for linkages and development,” said the president of Costa Rica, Rodrigo Chaves, in a statement.
The town of Grecia will be the site of Johnson & Johnson’s new Costa Rican manufacturing plant
According to information from the Costa Rican Government, the company will install the 205,000 square-foot manufacturing plant in Costa Rica in a free zone in the town of Grecia, province of Alajuela, located about 40 kilometers west of San José and is outside of what the Costa Rican Government calls the “Greater Metropolitan Area” (GMA).
The Costa Rican Government did not specify the investment amount in the facilities. However, it did highlight the importance of more and more companies establishing themselves outside the Greater Metropolitan Area of the country to expand opportunities and development to various regions that have historically yet to be the target of foreign direct investment.
Costa Rica is a strategic location for Johnson & Johnson
“Costa Rica is a highly strategic place where we have been present for 40 years. Our company has benefited greatly from the Costa Rican workforce’s local talent with specialized experience in our industry,” asserted the international vice president of Johnson & Johnson, Gustavo Galá.
With 130 years of experience, the company is dedicated to developing and distributing pharmaceutical products, medical devices, and consumer products. It currently has more than 85 manufacturing plants located worldwide.
From 2014 to 2022, Costa Rica’s medical device exports have had an annual growth rate of 17%, going from exporting 1.7 billion dollars to 5.9 billion dollars. In the first half of 2023, exports of medical devices totaled approximately 3.6 billion dollars, according to official data.
The medical device sector is the leading exporter of Costa Rica.
Why establish a manufacturing plant in Costa Rica outside of the Greater Metropolitan Area
The location of the Johnson & Johnson manufacturing plant in Costa Rica is a success for the government’s effort to create sources of employment for citizens who live outside of the country’s principal population center.
For several reasons, establishing manufacturing facilities outside of the Greater Metropolitan Area (GMA) in Costa Rica can be a strategic move. Among them are the following:
- Lower Labor Costs: Wages tend to be lower in areas outside the GMA, making it cost-effective to hire a skilled workforce.
- Reduced Real Estate Costs: Land and property prices are generally lower outside the GMA, allowing for more cost-effective facility construction and operation.
- Improved Infrastructure: The government often invests in infrastructure development in areas outside the GMA to encourage economic growth, making transportation and logistics more efficient.
- Reduced Congestion: The GMA can experience traffic congestion, leading to delays in transporting goods and materials. Operating outside the GMA can mitigate these issues.
Availability of Land:
- Ample Space: Rural and suburban areas outside the GMA typically have more available land for expansion, allowing businesses to scale their operations as needed. Companies that wish to establish a manufacturing plant in Costa Rica can take advantage of this feature of the country’s offerings to investors.
- Less Zoning Restrictions: In some cases, there may be fewer zoning restrictions outside the GMA, providing more flexibility in facility design and usage.
Access to a Diverse Workforce:
- Skilled Labor Pool: Costa Rica has a well-educated workforce, and skilled labor can be found in various regions, not just in the Greater Metropolitan America, which can benefit companies that choose to establish a manufacturing plant in Costa Rica.
- Local Talent Development: Companies can collaborate with local educational institutions to train and develop talent specific to their needs.
- Reduced Environmental Impact: Operating outside the GMA may have a smaller environmental footprint, with less congestion, pollution, and pressure on local resources.
- Potential for Sustainable Practices: Some rural areas may offer opportunities for sustainable practices such as renewable energy generation and eco-friendly facility design.
- Reduced Risk: Concentrating all operations within the GMA may expose a business to higher risks, such as natural disasters or civil unrest. Diversifying locations can mitigate these risks.
- Tax Benefits: The Costa Rican government may offer incentives, such as tax breaks and subsidies, to encourage businesses to invest in less developed regions outside of the GMA.
Local Community Engagement:
- Positive Public Relations: Expanding into rural areas can foster goodwill with local communities, leading to positive public relations and potential support for the business.
Supply Chain Diversification:
- Reduced Dependency: By having manufacturing facilities outside the GMA, businesses can reduce their dependency on a single location, which can be critical for supply chain resilience.
- Closer to Emerging Markets: Depending on the business’s nature, locating facilities outside the GMA may provide closer proximity to emerging markets and customers.
While there are several advantages to establishing manufacturing facilities outside of the Greater Metropolitan Area in Costa Rica, businesses should conduct thorough feasibility studies and consider their specific industry and operational requirements before making such a strategic decision. Additionally, they should assess the potential challenges and opportunities unique to the chosen location.
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