Thursday, August 22nd, 2013

“Do You Know the Way to San José?” No, not that one

Posted by Michael Taylor, SPI Senior Director, International Affairs & Trade

Sealed Air Corporation certainly knows the way to San José — Costa Rica, that is! Last week, immediately after SPI’s trade mission to Panama, I traveled to Costa Rica to meet with their Export Promotion Agency (PROCOMER), their Investment Promotion Agency (CINDE), and Board Members and the Executive Director of ACIPLAST – the Association of the Costa Rican Plastics Industry. I also took the opportunity to visit Sealed Air Corporation’s medical manufacturing facility located in Global Park, a free zone and business park located in San José.

Sealed Air Corp.’s production facility in the Global Park of San José.

Sealed Air Corp.’s facility in San José’s Global Park.

In January 2012, Sealed Air announced the acquisition of the Costa Rican operation of Advanced Thermalforming Enterprise (ATE) (Oceanside, CA), a privately-owned medical thermoforming company. At the time of the announcement, they were very excited to expand their operations to Costa Rica and envisioned this site as a key element of Sealed Air Medical’s strategic expansion into Central and Latin America.

Global Park free zone/business park in San José.

Global Park free zone/business park in San José.

Because of the notable growth experienced by Costa Rica, this was a very good location for a facility. The number of multinational medical device and pharmaceutical companies with operations in Costa Rica has grown extensively, from 8 companies in 2000 to 38 in 2010. The FDA now has an office there. The Costa Rican medical device sector started in 1987 with the installation of Baxter Healthcare. Since then the industry has been evolving, growing, and manufacturing far more complex items. Its output now ranges from commodities to high-tech, highly regulated devices such as heart valves, aesthetic implants, and surgical systems. In 2011, exports of medical devices accounted for 3.0 percent of the country’s GDP and represented 11.8 percent of the total exports of goods (US $1.2 billion).

Rolando Salas (left), general manager of Sealed Air’s Costa Rican facility, showed SPI’s Michael Taylor the plant’s product diversity.

Rolando Salas (left), general manager of Sealed Air’s Costa Rican facility, showed SPI’s Michael Taylor the plant’s product diversity.

When you look at the growth rates of U.S. exports of medical devices into Latin American markets from 2000 to 2012, you find some very impressive numbers: Mexico 159%, Brazil 67%, Venezuela 341%, Colombia 160%, Chile 156%, Costa Rica 995%, Dominican Republic 376%, Ecuador 1205%, Peru 117%, and Panama 252%.

Aside from the significant growth of the medical sector in Costa Rica, another reason for locating a facility here was that a large number of Sealed Air’s existing medical device and pharmaceutical customers (i.e., Allergan, ArthroCare, and Hospira) had already set up manufacturing facilities in Global Park. This connection of producer to consumer was brought home as Rolando Salas, the plant general manager, showed me examples of the product lines produced in his facility.

San José, Costa Rica is the hub of a metro area of 2.2 million people.

San José, Costa Rica anchors a metro area of 2.2 million people.

Along with this growth in the medical sector, the overall plastics industry in Costa Rica also has been growing. I was able to understand this firsthand during a visit to Productos Plasticos S.A. (PROPLAX) and a conversation with Marco Luconi, a Board Member of ACIPLAST. PROPLAX began in 1964 with blow molding and today the facility I visited does thermoforming. From 2008 to 2012, plastics manufacturers in Costa Rica grew 30 percent, from 247 to 321 companies. From 2011 to 2012, plastic products produced in Costa Rica for export grew 18.4 percent, from $310 to $367 million.

In 2012, Costa Rica was the top export market in Central America for the U.S. plastics industry, with exports totaling $422 million, an annual increase of 3.6 percent. Not surprisingly, the biggest growth segment for the U.S. plastics industry in Costa Rica was machinery exports, which increased 43.7 percent from 2011 to 2012. Costa Rican plastics industry exports to the U.S. grew 28 percent from 2011 to 2012 – from $81.2 to 103.9 million.

With its manufacturing tradition and growing economy, perhaps other U.S. plastics companies besides Sealed Air should learn the way to San José, Costa Rica. This is another example of the valuable things that can be learned from participating in a trade mission and exploring market opportunities firsthand. SPI’s next trade mission is to Mumbai, India from December 12-16 in conjunction with the Plastivision India 2013 Exhibition and Conference. Please join us. Oftentimes you need to see for yourself to understand all the possibilities and how a new market can fit into a regional strategy that maximizes the value for your company.

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