A planned exodus of two U.S.-based businesses and the loss of local jobs has shaken Costa Rica. Between the move of Intel Corp’s manufacturing operation to Vietnam and the eventual closure of the Bank of America subsidiary BA Continuum, the nation stands to lose 3,000 total jobs.
Government leaders confirmed Intel’s decision to remove production operations at a noon press conference Tuesday. Led by Anabel González, the minister of Comercio Exterior, officials downplayed the impact of Intel’s departure and said the nation benefits from a wealth of investors.
“It’s become a country where others can invest,” Ms. González said. “Today we don’t depend on one business nor one sector.”
Chuck Mulloy, a corporate spokesman for Intel, later confirmed the company’s plans and said all manufacturing operations will be completely shut down by December following gradual closures over the next few months. Mulloy said Intel will keep nearly 1,000 Costa Rican positions in engineering, information technology, and finance.
While the economic bruise was still being assessed, a second announcement hit. According to a source, employees from BA Continuum were called in for a 2 p.m. meeting to announce that the facility on Calle Blancos in San José will be closing and layoffs are inevitable. Around 1,400 call center and information positions are expected to be cut as a result.
By the afternoon Dan Frahm, a communications executive for Bank of America had confirmed that the parent company alerted BA Contiuum heads in Costa Rica that the office will be totally closed in nine to 12 months. Frahm said the company has been in talks with ministers and other government leaders to relay their plans with transparency and give the country time for assessment.
At the conference neither Ms. González nor a pair of representatives from the Coalición Costarricense de Iniciativas de Desarrollo, known as CINDE mentioned word of BA Continuum. Gabriela Liobet, who is the executive director at CINDE, was at the meeting. She said later the investment agency was as shocked as was the rest of the nation when they learned of the company’s plans.
“This announcement from BA Continuum took us by surprise,” said Ms. Llobet in a written statement. “We had not been informed of any development by the company, so really we receive this news with great astonishment.”
Ms. Llobet, and CINDE president José Rossi were unanimous in assuring that the nation has enough foreign investment and demand to survive. Rossi said the country’s economic prowess has come a long way since Intel first planted itself in Costa Rican soil in 1997.
“Back then we began only with the development of high-tech industries, and we had just installed a dozen companies,” Rossi said. “Today we have added more than 250 high-tech multinationals that operate in the country and manufacture a great diversity of devices.”
Heavyweight foreign investors like Hewlett-Packard and IBM are among the many that continue to keep Costa Rica on the international marketplace’s map. Still, the loss of Intel production takes out a big chunk of the country’s trade opportunity.
Ms. González said that when Intel began in Costa Rica, its production represented a third of the total exports coming from the country. Today the percentage has dropped to 13 percent. When asked at the press conference if the loss of business may scar Costa Rica’s future marketability and shy away potential foreign investors, Ms. González said she was confident that it would not.
“There is no blemish on the country’s business card,” Ms. González said. “It’s still a card with a respected name. There are 250 business leaders still invested in this country.”
Later in the day the Spanish-language press was reporting that Ms. Gonzalez was getting a job with the World Bank.
The individual impact on employees of both firms will be heavy. The Bank of America worker who attended the 2 p.m. meeting said that he just received a promotion, married and now his wife is expecting a baby.
Several expats said that the impact of the loss of jobs would have a ripple effect.
By Michael Krumholtz
of the A.M. Costa Rica staff