Challenges Facing Manufacturing in Puerto Rico

What Puerto Rico must do to remain competitive

Agenda

• Education• Government• Operating Limitations• Business Community• Protection?

Education

• We need to keep kids in school longer. Make it interesting, go back to trades teaching.

• We have excellent universities however we need more trade school exposure (application of how to work in industry)

• How to live in a highly populated area. Common etiquette. (I relate this to being service oriented).

Literacy levels % of population older than 10 years

35.1%

10.8% 8.5%

1940 1970 2003E

% of Education Budget allocated for Teacher salaries

64%

35%

Average OECD Puerto Rico

College Board Aptitude Test Results

554538

466 465461 456 445 445

300

350

400

450

500

550

600

1983 1990 2000 2004

Math ReasoningVerbal Reasoning

High level of School Dropouts

19% 19% 21%

38% 38% 40%

58%

13%

USA Germany Japan

Source: Organization for Economic Cooperation and Development (OECD), Education at a Glance 2001; A T Kearney Analysis

Canada France UK PuertoRico

Italy

Government

• Needs to handle employment without robbing Peter to Paul (recent employment incentive) Can actually hurt current businesses.

• Should invest in internships• Permit processes (?)• Governments inability to understand business.• Crime (whom would want to live here?)

Governmental employment

USA

6.5

12.2

12.7

13.5

14.6

15.6

16.2

17.5

17.8

19.1

21.5

25.3

Source: OECD Labor Database; PR Labor Department, Establishment Survey; A T Kearney Analysis

% empleo total 2000

Puerto Rico

Turkey

Canada

Check Republic

Ireland

USA

Italy

New Zealand

Germany

Spain

Netherlands

Korea

Homicides per 100,000 population

19.6

5.9

3

18

Puerto Rico USA Chile Mexico

Operational Limitations

• Electrical (nothing new here)• Labor Laws (Ability to arbitrate, not pay) • Benefits (Xmas Bonus)• Municipal Taxes on Inventories

Our Electrical

Guaynab

o

Colton (7

004)

Oaklan

d (7031)

Red Lio

n (7037)

Treich

lers (

7043)

New Prag

ue (7029)

Macon (7

025)

Columbus (7005)

York

(7045)

Martins C

reek (

7026)

Tampa (

7042)

Loudonvil

le (7024)

Decatur (

617)

Commerce C

ity (5

240)

Hastings

(7017)

Denve

r (7010)

Chester

(7003)

Omaha 1

6th St (7

032)

Sherm

an (7

040)

Omaha C

St (7

033)

Sagin

aw (7

039)

Alton (7

001)

Fremont (7

013) $-

$0.05

$0.10

$0.15

$0.20

$0.25

$0.30

FEB 13)

P6 (Nov12)

Comparative to other MIlls

Guaynab

o

Hastings

(7017)

Martins C

reek (

7026)

Commerce C

ity (5

240)

Colton (7

004)

Alton (7

001)

Oaklan

d (7031)

Decatur (

617)

Tampa (

7042)

New Prag

ue (7029)

Sagin

aw (7

039)

Columbus (7005)

Omaha C

St (7

033)

Chester

(7003)

Sherm

an (7

040)

Macon (7

025)

York

(7045)

Denve

r (7010)

Omaha 1

6th St (7

032)

Fremont (7

013)

Loudonvil

le (7024)

Red Lio

n (7037)

Treich

lers (

7043)$0.00

$50,000.00

$100,000.00

$150,000.00

$200,000.00

$250,000.00

$300,000.00

$350,000.00

$400,000.00

$450,000.00

$500,000.00

(FEB13)

P6 (Nov12)

New business creation per million in population

Source: National Science Foundation; U.S. Small Business Administration; OECD;IADB; A T Kearney Analysis

PuertoRico

Mexico USA. Chile Ireland Singapore

2,4552,330

532346303225

Additional

• Business Community is real separated, each have their own focus (How Many Org)

• DRCAFTA

• Data from: Alianza Para Dessarollo De Puerto Rico

• ConAgra Mills• OECD Org for Economic Development