Microsoft Plant Gives Puerto Rico a Lift Puerto Rico, once considered an economic miracle, is now struggling with a 15-percent unemployment rate. Many companies have left. A Microsoft plant expansion in Humacao offers a glimmer of hope in hard times.
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Microsoft Plant Gives Puerto Rico a Lift

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Microsoft Plant Gives Puerto Rico a Lift

Microsoft Plant Gives Puerto Rico a Lift

Microsoft Plant Gives Puerto Rico a Lift

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Puerto Rico, once considered an economic miracle, is now struggling with a 15-percent unemployment rate. Many companies have left. A Microsoft plant expansion in Humacao offers a glimmer of hope in hard times.


This is DAY TO DAY, I'm Madeleine Brand.


I'm Alex Chadwick. Good news in Puerto Rico where Microsoft is expanding its manufacturing plant. That's where it's going to produce the CDs and DVDs with its new Vista Operating System. And for Office 2000 set for release in January.

BRAND: That's 150 new jobs on the island territory. But as NPR's Mandalit del Barco reports, Puerto Rico needs a lot more than that.

MANDALIT DEL BARCO: The salsa music blaring from a portable stereo onto the factory floor isn't the only thing that distinguishes Microsoft's Puerto Rico plant. The new three story building features state of the art machines that are manufacturing the company's newest CDs and DVDs for sale throughout the Americas.

Unidentified Man: Actually, this equipment is the only one in the Caribbean; it's a brand new technology for Microsoft and for Puerto Rico.

DEL BARCO: Facilities manager Jose Negrone(ph) tours a high-tech factory in Humacao, an industrial city on the east coast of the island.

Mr. JOSE NEGRONE (Microsoft facilities manager): This is the master; this is where it all begins.

DEL BARCO: Inside a glass enclosed lab workers wear white coats and goggles to operate machines that laser etch computer codes onto glass discs.

Mr. NEGRONE: This is glass, okay?

DEL BARCO: Negrone moves to another room where the discs are plated with nickel, then to a third where high speed machines churn out plastic copies.

Mr. NEGRONE: It's making DVDs right at the moment. It's going at 2.4 seconds, so every 2.4 seconds we are doing one DVD per line.

DEL BARCO: General Manager Rodolfo Acevedo says the company is investing $65 million to expand here in Humacao, creating 150 new jobs. Puerto Rico offers the company local tax breaks including some for foreign investors even though the island is a U.S. territory.

Mr. RODOLFO ACEVEDO (General Manager, Microsoft Operation Puerto Rico): There is a strong commitment from the company to remain in Puerto Rico for a long time.

DEL BARCO: On the outside of the building is a sign that says (Spanish spoken), a new dawn. It's also a new beginning for workers like 35-year-old Delilah Vasquez(ph), a machine operator.

Ms. DELILAH VASQUEZ (Machine operator): (Through interpreter) Thank god we found ourselves in a company that's growing with good employee benefits.

DEL BARCO: After getting laid off at other U.S. factories that left Humacao, Vasquez now earns twelve dollars an hour with full medical benefits, a rarity in Puerto Rico where the per capita income is about half of what it is in Mississippi, in the mainland's poorest state. Thirty-two year old machine operator Augustino Rodriguez(ph) says he also feels fortunate to be working here.

Mr. AUGUSTINO RODRIGUEZ (Machine operator): (Through interpreter) Other companies are leaving Puerto Rico, but Microsoft is one of the most solid companies here on the island.

DEL BARCO: As welcome as Microsoft is in Humacao, no one thinks the small expansion will go far in solving the economic problems of Puerto Rico where the unemployment rate is fifteen percent, triple the rate in the rest of the United States. Many other multinational companies have moved their manufacturing plants to places like the Dominican Republic, Honduras, and China where labor is cheaper.

The exodus is in sharp contrast to the heady decades right after World War II, when hundreds of U.S. companies took advantage of federal tax breaks to build sprawling factories on the island. Factories producing medical devices, pharmaceuticals, everything from pacemakers to Viagra. Miguel Soto-Class heads the Center for the New Economy, a non-partisan research group in San Juan.

Mr. MIGUEL SOTO-CLASS (Center for the New Economy): During the '50s and '60s and part of the '70s we were considered an economic miracle. We had huge growth rates and there was a lot of industrialization in Puerto Rico.

DEL BARCO: But, the miracle didn't touch everyone. Soto-Class notes that the big companies moved to Puerto Rico to take advantage of tax incentives but they didn't bring enough of the kinds of jobs needed to put less skilled Puerto Ricans to work.

Mr. SOTO-CLASS: They were not creating enough jobs here. I mean we cared too much about the multinational corporations to the detriment of local capital and local entrepreneurs.

DEL BARCO: In the mid 1990s U.S. lawmakers from Rust Belt states began questioning all those tax breaks for Puerto Rico and Congress decided to phase them out over 10 years. The island was slow to phase in something new.

Mr. SOTO-CLASS: We've lost about 50,000 manufacturing jobs in the last about six years. They would manufacture for example shoes or clothes here and that just is not viable anymore.

DEL BARCO: A new book by Soto-Class, an economist at the Brookings Institution, suggests ways the island can restore its economy by encouraging local businesses, deflating the bloated government and moving people from welfare to work.

Mr. SOTO-CLASS: The economy is a glass half full. We have all the institutions necessary to restore growth. And certainly we have a lot of challenges.

DEL BARCO: Some of those challenges can be seen in the city of Humacao, population sixty thousand. Mayor Marcelo Trujillo Parise(ph) says factory closings in his city have led many to migrate. The latest census shows there are fewer Puerto Ricans living on the island than on the mainland.

Mayor MARCELO TRUJILLO (Humacao, Puerto Rico): If they don't have work around, they mostly stay for six months, they came back to take the unemployment.

DEL BARCO: They've been going to the United States and coming back to get welfare?

Mayor TRUJILLO: Right.

DEL BARCO: Trujillo says discouraged workers found they could live reasonably well in Puerto Rico on food stamps, disability payments, and other federal welfare programs. That's why he says he's grateful companies like Microsoft are choosing to provide much needed jobs in his city.

Mayor TRUJILLO: I prefer the people work instead of receiving food stamps.

DEL BARCO: The unemployment office here in downtown Humacao is filled with people who have been laid off from their factory jobs. Like Erminda Bonija(ph) and her husband Hector Vega(ph). They used to work at General Electric just across the street from Microsoft.

Ms. ERMINDA BONIJA: They gave lay off about sixty people. People that have family, that have children, they have their debts and all that stuff.

DEL BARCO: Bonija says finding work in Puerto Rico is tough these days for those who are not so highly skilled in science or technology.

Ms. BONIJA: Where? Where's the work?

Mr. HECTOR VEGA: (Spanish spoken)

DEL BARCO: It seems impossible, says Vega. A lot of factories are closing and others are opening but there isn't enough work for all who need it. As they stand in the unemployment line, Bonija and Vega quote the lyrics of a salsa reggaeton song that sums up their hopes of finding new jobs.

Mr. VEGA: (Spanish spoken)

Ms. BONIJA: (Singing in Spanish)

DEL BARCO: If you'll just leave, she sings, I'll take your place. Mandalit del Barco, NPR News.


BRAND: Puerto Rico's economy may also benefit from coming changes in U.S. travel policies. These are changes that have many Caribbean nations worried. Beginning in early January U.S. travelers returning from the region will need to show a passport when they come home.

CHADWICK: Up till now, coming back from the Caribbean you only had to show an ID, like a driver's license. Countries like Jamaica and Bermuda say these new requirements are going to hurt their tourist industries, maybe devastate them. Mostly, because only about one quarter of Americans actually hold passports now.

BRAND: Well, because Puerto Rico is a U.S. territory, travelers don't need to bring their passports and that's become something to market for the Puerto Rican tourist industry.

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