Puerto Rico Economic Sector Profiles
Manufacturing accounted for 48.6% of the Island’s GDP in 2011 and that figure has not changed in 2012. Biopharmaceuticals represented the single largest sub-sector, and has made a major contribution not only in terms of employment but also in terms of fiscal income. A recent study for the Pharmaceutical Industry Association (PIA) estimates tat the industry generated some 80,000 direct and indirect jobs and contributed in excess of 25% of total fiscal income. The medical device sector has surfaced as a major contributor to output, and has increased its share in manufacturing in the last several years.
The PR Manufacturers Association tactics include the following: support the approval of Section 933-A in Congress, separate education from politics, use the REIT mechanism to stimulate investment in tourism facilities, make available PRIDCO properties for economic activities, create a new entity that will permit the Government Development Bank to finance local enterprises through preferred action purchases, stimulate the consumption of locally produced goods, reduce energy costs through various means, and others. Most major professional and business organizations have supported the measures, as have the political parties.
A Mexican pharmaceutical firm, Neolpharma, has acquired production facilities previously owned by Pfizer in Caguas. This represents a new development in line with what has been recommended to PRIDCO in terms of its promotional activities. For many years the emphasis had been on attracting the major biopharmaceutical firms to Puerto Rico, but the efforts have not been successful in the last ten to fifteen years. The shift in emphasis consists of going after second tier firms, much less dependent on tax incentives, but in the case of non-American firms, very much concerned with entering the U.S. market. This is why the transaction by Neolpharma is so important. Success will only make attraction of similar firms more likely in the future.
The P. R. Purchasers Manufacturing Index (PMI), a recently created indicator of production in the local manufacturing sector, fell to 46.2 in November (on a non-seasonal basis), the latest month available. Industry has met with the incoming Administration with the objective of securing assurances that there will be continuity in the rules of the game concerning taxes and incentives.
The Manufacturing sector has experienced substantial job losses during the past several years. On average, employment fell from 131,800 jobs during 2001 to slightly below 78,000 by the end of 2012.
Not all manufacturing sectors have behaved in the same manner. Medical Device Manufacturing has experienced relatively little change and has stabilized at around 10,000. The aerospace industry has generated a substantial number of highly specialized engineering jobs, estimated at 3,000 in mid 2012.