"Nearshoring": a must-do agenda for Puerto Rico

As published in Spanish in EL NUEVO DIA in San Juan on June 21, 2024

Puerto Rico has been lost, misplaced and confused on the global manufacturing board for years. That's why it should quickly take advantage of the current momentum of the “nearshoring” movement, which would allow the territory to transform its economy and create thousands of good jobs. "Reshoring" is translated as relocation or return of production and "nearshoring" as "closeness". The current massive wave of plant relocation requires immediate and urgent attention because the window of opportunity is closing soon.

In recent times Puerto Rico was a world leader in manufacturing. But, in 1996, then-Governor Pedro Rosselló asked Congress and then-President Bill Clinton to eliminate Section 936 of the Federal Internal Revenue Code, which promoted the relocation of hundreds of companies that operated on the island. After the defeat of statehood in the 1993 plebiscite, they partly blamed the companies. Its elimination caused, as many of us anticipated, an economic crisis that we are still living through. Puerto Rico lost more than 100,000 well-paid jobs and also tax revenues that exceeded $1,000 million annually.

Under the administration of Sila Calderón, an enormous effort was made in Congress to restore a federal incentive for manufacturing in Puerto Rico. Ramón Cantero Frau, together with the powerful lobbyist Tommy Boggs, almost succeeded. However, the initiative was not successful. Eventually, the government of Aníbal Acevedo Vilá developed an advanced bio-manufacturing strategy called "Bio Island" to compete with the giants of Asia.

However, congressional action was needed.

As director of the Office of Federal Affairs in Washington, DC, it fell to me to develop the strategy to get Congressman Charlie Rangel, chairman of the powerful Ways and Means Committee, to place the issue of Puerto Rico at the top of his agenda. Rangel, a friend of many on the island, agreed to talk to me and literally invited me to a ballgame at Yankee Stadium. He told me that he would include the issue of Puerto Rico and a new section similar to 936 as a priority on the agenda, but only if I brought him a letter signed by both Governor Acevedo Vila and the then Puerto Rico Resident Commissioner Luis Fortu?o. However, the local political polarization in the New Progressive Party prevented Fortu?o from signing the letter, closing that opportunity and marking the beginning of Puerto Rico's fiscal bankruptcy.

Now a new opportunity arises with different scenarios and new players. The eleventh annual Kearney Return Index (KRI) report concludes that as reshoring and nearshoring activity increases, “Made in America, for America” describes the foreseeable future of industrial manufacturing in the Western Hemisphere.

As U.S. companies reconsider their operations in Asia due to geopolitical tensions, supply chain disruptions and rising costs, nearshoring presents a strategic opportunity for Puerto Rico that I have not seen since my conversation with Chairman Rangel in 2007. This has to be the top priority and the obligatory agenda for the public and private sector on the island immediately. If we miss this opportunity, we will continue to deceive ourselves, kneeling and begging permanently as an economic development strategy. It's time to stand up.

#

• In the golden age of the paper press in Puerto Rico, Antonio Luis Ferré developed the most important newspaper in the country. Since my first foray into electoral politics, in 1995, he always had the deference and courtesy to offer me advice, ideas and even constructive criticism. I had brief, but extremely intense and productive conversations for many years with him. We didn't always agree, but every conversation was a school full of learning. I will keep those memories as a guide and inspiration. Chivalrous, but firm, kind but combative when necessary, Antonio Luis Ferré led an important part of Puerto Rican democracy for decades. To his children María Luisa, Ma?u, Albi, To?o and Loren, my solidarity, my deepest condolences and the testimony of my deep respect for your dad.