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More Than $5.8 Million In Incentives Lost To Sara Lee, Harvey Hubbell

Until 2001, incentives were invested in job creation and infrastructure improvements


July 1, 2004
Copyright © 2004 CARIBBEAN BUSINESS. All Rights Reserved.

The Puerto Rico Industrial Development Co. (Pridco) has disbursed $5.8 million in job creation and infrastructure incentives to Sara Lee Corp. and Harvey Hubbell Inc., two nonlocal companies with operations in Puerto Rico which recently announced the closing of two plants and a reduction in work force at a third operation, bringing the total of job eliminations to 1,170.

More job reductions will be announced at Sara Lee. CARIBBEAN BUSINESS sources say the company’s sales & marketing division will be reduced significantly, by almost 50%, in the coming months.

Since 2001, companies such as Sara Lee have slashed their labor-intensive work force in Puerto Rico, attracted by the more competitive operational expenses of foreign countries such as the Dominican Republic and Mexico, the island’s closest competitors. Sara Lee, which since 2001 has closed plants in Camuy, Guanica, San Sebastian, Barceloneta, Comerio, and Rio Piedras, has reduced its total work force from 7,500 employees to the fewer than 2,000 who remain in Camuy, Humacao, and Vega Baja.

"In November 1999, Pridco certified $9 million in incentives for Sara Lee to create 2,000 jobs in its subsidiaries within a 36-month period, based on an employment base of 7,000 workers," said a government source. "In December 1999, Pridco disbursed $5.4 million for 1,209 jobs created in Dorado’s Playtex Corp., Ponce’s Hanes Menswear, and Humacao’s Seamless Textiles. The balance of the incentives, $3.6 million, was never claimed."

On June 10, Sara Lee announced it would close its Corozal plant by November, leaving 640 employees jobless, and reduce operations at its Vega Baja facility by 290 employees. The company’s Vega Baja plant will continue operating with 250 employees who cut patterns and sew underclothes.

Four days after Sara Lee’s announcement, Harvey Hubbell revealed it was closing its Aibonito electronic-instruments manufacturing plant, leaving 240 employees jobless. The news was a surprise since the company had boasted at the end of 2003 of its highest cash-flow level in its 115-year history. According to Pridco sources, the agency hadn’t been informed about the closing until it was made public.

Back in 1995, Pridco also approved $404,175 in incentives to Harvey Hubbell for infrastructure improvements and job creation, although only $308,000 was claimed. In September 1997, the company’s Dorado plant was granted $173,000 to purchase new air-conditioning units and a 500-kilowatt electricity power substation and to design and construct a 12,250-square-foot parking lot. Another $135,000 was disbursed to the Aibonito plant for infrastructure improvements. Harvey Hubbell never claimed job creation incentives totaling $51,175 for its Vega Baja and Aibonito plants.

Harvey Hubbell has three facilities in Puerto Rico. In Vega Baja, as in Aibonito, the company makes lighting arrestors and wiring devices while a third plant in Naguabo manufactures emergency light products.

This Caribbean Business article appears courtesy of Casiano Communications.
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