Clark Galvan
American manufacturers were interested in investing in Puerto Rico because of the low wage rates, advantageous tax breaks, and government-supported start-up costs. The island's focus on electronic components, semiconductors, and tech manufacturing also made it an attractive prospect for companies seeking an innovative environment for production and development.
| Characteristics | Values |
|---|---|
| Wage rates | Low |
| Tax breaks | Section 936 of the Internal Revenue Code, enacted by the U.S. Congress in 1976, exempted mainland companies from federal taxes on income earned in Puerto Rico |
| Government-supported start-up costs | Yes |
| Industry associations | Strong |
| Governmental support | Yes |
| Environment | Conductive to expansion and collaboration |
| Manufacturing industries | Pharmaceuticals, medical devices, aerospace, electronics, petrochemicals, textiles, processed food, shoes, clothing, ceramics, tobacco, wood products |
What You'll Learn
Low wage rates
Puerto Rico's low wage rates were appealing to American manufacturers as they meant an average saving of 15% or higher. This was particularly attractive when offshoring work to Asia, where wages are even lower, was no longer a viable option.
Puerto Rico's low wages were not the only factor that made it an appealing place for American manufacturers to invest. The island also offered a supportive business environment, with strong industry associations and governmental support. This made it an ideal place for companies to expand and collaborate.
Additionally, Puerto Rico's diverse range of industries, from pharmaceuticals and medical devices to aerospace and electronics, made it a dynamic advanced manufacturing hub. This allowed American manufacturers to produce a wide range of products, from prescription drugs to semiconductors, all in one place.
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Tax breaks
American manufacturers were interested in investing in Puerto Rico due to the island's tax breaks, low wage rates, and government-supported start-up costs.
Section 936 of the Internal Revenue Code, enacted by the U.S. Congress in 1976, exempted mainland companies from federal taxes on income earned in Puerto Rico. This was a significant incentive for American manufacturers to establish operations on the island.
The tax breaks, combined with low wage rates and government support, made Puerto Rico an attractive location for manufacturing operations. Hundreds of manufacturers from the United States and Europe set up factories in Puerto Rico, initially producing textiles, processed food, shoes, clothing, ceramics, tobacco, and wood products. Over time, these factories also began manufacturing petrochemicals and other high-technology products, such as electronics, semiconductors, and aerospace components.
Puerto Rico's tax breaks and other incentives have contributed to the island's dynamic advanced manufacturing sector, which boasts a diverse range of industries. The island has become a haven for companies seeking a robust and innovative environment for production and development, particularly in pharmaceuticals, medical devices, and food and beverage processing.
The supportive business environment, backed by strong industry associations and governmental support, has facilitated expansion and collaboration for companies operating in Puerto Rico. This has further enhanced the island's appeal as a manufacturing hub, attracting investment and creating jobs.
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Government-supported start-up costs
Puerto Rico has a diverse range of industries, from pharmaceuticals and medical devices to aerospace and electronics. It is a haven for companies seeking a robust, innovative environment for production and development in the advanced manufacturing industry. The island is a critical player in medical device manufacturing, crafting everything from diagnostic equipment to cardiovascular devices. It is also a powerhouse in pharmaceutical manufacturing, producing a wide spectrum of products, from prescription drugs to biologics and APIs.
The island's focus on electronic components and semiconductors strengthens its position in tech manufacturing. Its food and beverage processing sector caters to both local and export markets, and is pivotal in Puerto Rico's diverse manufacturing ecosystem.
Puerto Rico's supportive business environment, backed by strong industry associations and governmental support, makes it an attractive prospect for companies seeking expansion and collaboration opportunities.
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A diverse range of industries
Puerto Rico has a diverse range of industries, from pharmaceuticals and medical devices to aerospace and electronics. The island is a haven for companies seeking a robust, innovative environment for production and development in the advanced manufacturing industry.
Pharmaceuticals: Puerto Rico is a powerhouse in pharmaceutical manufacturing, producing a wide spectrum of products, from prescription drugs to biologics and APIs.
Medical Devices: The island is critical to medical device manufacturing, crafting everything from diagnostic equipment to cardiovascular devices.
Electronics: With a focus on electronic components and semiconductors, this sector strengthens Puerto Rico’s position in tech manufacturing.
Food and Beverage Processing: Catering to both local and export markets, this sector is pivotal in Puerto Rico’s diverse manufacturing ecosystem.
Puerto Rico's supportive business environment, strong industry associations, and governmental support make it an attractive location for companies looking to expand and collaborate. Additionally, low wage rates, advantageous tax breaks, and government-supported start-up costs have induced hundreds of manufacturers from the United States and Europe to establish operations in Puerto Rico.
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Supportive business environment
Puerto Rico has a supportive business environment that is conducive to expansion and collaboration. The island boasts a diverse range of industries, from pharmaceuticals and medical devices to aerospace and electronics. It is a haven for companies seeking a robust, innovative environment for production and development in the advanced manufacturing industry.
The island's pharmaceutical sector is particularly strong, with Puerto Rico excelling in the production of a wide spectrum of products, ranging from prescription drugs to biologics and APIs. The island is also a critical player in medical device manufacturing, crafting everything from diagnostic equipment to cardiovascular devices.
In addition to its strong healthcare sector, Puerto Rico also has a focus on electronic components, semiconductors, and food and beverage processing. This sector is pivotal in Puerto Rico’s diverse manufacturing ecosystem, catering to both local and export markets.
The supportive business environment in Puerto Rico is further enhanced by advantageous tax breaks and government-supported start-up costs. Section 936 of the Internal Revenue Code, enacted by the U.S. Congress in 1976, exempted mainland companies from federal taxes on income earned in Puerto Rico. This, along with low wage rates, induced hundreds of manufacturers from the United States and Europe to establish operations on the island.
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Frequently asked questions
American manufacturers were interested in investing in Puerto Rico because of low wage rates, advantageous tax breaks, and government-supported start-up costs.
American manufacturers in Puerto Rico were eligible for tax exemptions under Section 936 of the Internal Revenue Code, enacted by the U.S. Congress in 1976, which exempted mainland companies from federal taxes on income earned in Puerto Rico.
American manufacturers in Puerto Rico were involved in a diverse range of industries, including pharmaceuticals, medical devices, aerospace, electronics, food and beverage processing, petrochemicals, and textiles.
The presence of American manufacturers in Puerto Rico helped to eliminate much of the island's poverty and led to its classification as a "high-income country" by the World Bank.
Yes, after 25 years of sending manufacturing jobs to Asia, a 2013 report by the Boston Consulting Group found that more than half of the major manufacturing companies surveyed were interested in bringing manufacturing back to North America, with 20% planning to do so in the near future and 16% having already begun.
