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Intel to lay off 1,500 employees, move manufacturing operations to Asia

Intel's Costa Rica operations (courtesy Intel).

Intel’s Costa Rica operations (courtesy Intel).

April 7th, 2014 (InsideCostaRica.com) Intel’s Costa Rican unit will lay off some 1,500 employees and move its manufacturing operations to Vietnam, according to reports.  The layoffs would represent more than half of its total staff in the country.

 

According to reports, the US chip manufacturer will retain some 1,200 workers in Costa Rica, mostly working in its service operations.

 

Local economists are warning the move could have significant effects on the economy.

 

Intel’s closure of its manufacturing operations will have a direct impact on the country’s exports and produce a drop in the country’s GDP, economists warn – estimates indicate that Intel’s manufacturing operations represent 5% of the country’s entire GDP and a significant percentage of the country’s total exports.

 

Between 1997 and 2010, Intel represented an average of 6% of the country’s total direct foreign investment.

 

Economist Melvin Garita said there would also be serious indirect consequences of the move.  Intel has important local supply chains – and the closure of Intel’s manufacturing operations in the country will affect between 2,500 and 3,500 people who work as part of those supply chains, Garita said.

 

Government officials have remained tight-lipped on the reports since rumors of the closure began last week, and have refuted rumors that the move is the result of high electricity costs in the country.

 

Costa Rica’s Minister of Foreign Trade, Anabel Gonzalez, told reporters that the company would be giving “important announcements” in the coming days.

 

Communications Minister, Carlos Roverssi, said the government would not address the issue until the company makes a formal announcement of the closure.

 

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  • Karen Mata

    Certainly not related to the Jamaican centrist taking office??

  • Karen Mata

    Other news…the expat caja tax just doubled…

  • Patrick Smyth

    Ouch – that’s a huge hit

  • Scott MacDougall

    This is a significant indication that as a foreign company, Costa Rica no longer provides the cost benefits and economic environment it did at one time. Electrical costs and a certain and serious economic down turn in Costa Rica in the very near future I would bet had some help in Intel making this decision. The cost of Costa Rican arrogance will soon be paid by the people of tis country.

  • roberto

    Intel Corp. should be boycotted and they should apologize to all USA citizens for moving to Saigon City.
    Vietnam War Casualty Statistics

    Total number of U.S. soldiers deployed to Vietnam
    536,100

    Total number of U.S. casualties in the Vietnam War
    58,220

    Total number of U.S. soldiers wounded in the Vietnam War
    303,644

    Total military casualties from both sides
    1.475 million

    Total wounded from both sides
    2.094 million

    Total civilian casualties from both sides
    4 million

    Age of the oldest man killed during the Vietnam War
    62

    Total number of KIA’s soldiers who were less than 20 years old
    11,465

    • Carlo Latini

      I think the Americans invaded Vietnam and got exactly what they deserved.

      • Karen Mata

        When you think, the world gets weaker, pally.

      • Karen Mata

        What did you think when the Americans invaded Italy?? Did you like that too??

        The only resistance was by the German 10th Army, as the eytyes were too busy soiling themselves when they paused from their crying.

      • Karen Mata

        You gave yourself a thumbs up??

        I love it.

    • exfl

      So how do you feel about doing business with Japan? ….Germany? Or doesn’t that war matter?

  • disgusted

    Tight Lipped, Hummm The Diputados were negotiating a higher salary and what they can get before they leave office.

    Jobs gone forever.. Shows business here is closed. Too many regulation, employees rights and huge tax burden placed on them . My guess next to close shop will be Hewlett Packard… Intel did not make the chips for the smart phones here and the laptop industry remains flat.

    • El Torito

      Nice pun about the laptop industry.

  • Fernando Gerdano

    CR one of the toughest countries in the world to do business in…it took Intel 15 years to find this out the hard way. I don’t blame them. Smart move getting out. Huge huge hit for the country. Who will pay.

    • McDemon

      They are 102 out of 189 countries. Damn tough!!!!

  • McDemon

    Not at all surprising with the kind shit this government pulls. Costa Rica is shooting themselves in the foot. Scott nailed it on the head. This government needs to get off its arrogant, corrupt high horse and do something or the shit is going to hit the fan. According to a TT article last year, the actual unemployment rate here is over 18%. What the hell do the economists think is going to happen when the “walking ATM” gringos realize that things are much cheaper and easier both north and south of the border as well as many other places? Do you think a town like Playas del Coco will be able to support FOUR large grocery stores, in addition to all the local businesses? Not a chance. This will lead to an uptick in unemployment and social stability. Costa Rica will have completely squandered their position as an up and coming country and will be thrown right back to a 1980 Banana Republic with unemployment skyrocketing and inflation at 80% + as it was in 1981……This place is a sinking ship.

  • Ken Morris

    This is actually a bigger jolt than it appears to be, since Intel was one of the few outfits exporting finished goods. A lot of CR’s exports are still agricultural products, while its imports are value-added goods, which is a recipe for long term losses already reflected in the ratio of exports to imports.

    Unlike some others, though, I don’t fault the government for failing to maintain a business climate attractive to multinationals like Intel. Playing this game is a recipe for disaster too, since there will always be countries where the multinationals can do business at lower costs.

    Instead, I fault the government and the culture in general for imaging that attracting multinationals like Intel is a good long term economic strategy. It isn’t. The only good long term economic strategy for CR is to develop its own industries, the way Japan, South Korea, Tawain, etc. do. However, I see very little evidence of CR even thinking along these development lines, much less of the government providing incentives for business start-ups.

    With any luck, Intel’s departure will prompt CR to rethink the dependent development path it has been following and strike out in new entrepreneurial directions. It would be a pity if the only outcome is to encourage more wooing of foreign multinationals with more tax concessions, infrastructure promises, and all the rest.

  • Karen Mata

    This is akin to the US losing nearly a trillion in GDP.

    The reaction from their legislators will be

    1 Put a lean on Mel Gibson’s property

    2 Cave in where in time this will become a de facto state of China.

    • Frank Castle

      lien not lean. Costa Rica needs to develop a home grown cellphone industry, for low end users or something else similar to that. You already have trained folks that worked for Intel who could get that started. Just a thought.

      • Carlo Latini

        What would you expect from a Military academy graduate?

  • Andrew

    Funny that I would read this the same day I return to Costa Rica. I was given 65 days at the airport by some bitch at immigration after she asked for my return ticket and saw that it was for a date just shy of 90 days.
    I’ve been coming here for over 10 years. I play by the rules. I leave when I’m supposed to. I get charged more for services than a tico: Gringo Tax.
    And now I finally realize that Costa Rica doesn’t want me here AT ALL.
    Call me a little slow to catch on, but in 63 days I’m outta here for good.
    Costa Rica has finally killed this cow. I’ll spend my money where I feel a tad more welcome. Pura F-ing Vida

  • stfree

    So Intel wants to more to VietNam… but maybe not so fast.
    AP by Chris Bremmett 5/19/2014
    “Two Chinese passenger ships arrived at a Vietnamese port Monday to
    evacuate thousands of Chinese workers following deadly rioting last week, officials
    said, a dramatic maneuver from Beijing that intensifies pressure on
    Hanoi as the two countries jostle over disputed territory in the South
    China Sea.
    Vung Ang, Viet Nam… was overrun
    by an anti-China mob last week. Two Chinese workers were killed and 140
    injured in the attack, which also left parts of the facility on fire.
    Around 400 other factories around the country were damaged or destroyed
    in mob violence, most in industrial parks close to southern Ho Chi Minh
    City. Many factories were not Chinese-run but Taiwanese or from
    elsewhere in Asia, apparently targeted mistakenly or by gangs intent on
    looting.”