April 9th, 2014 (InsideCostaRica.com) Just two hours after microchip giant Intel made its official announcement yesterday that it would close its Costa Rican manufacturing operations and layoff 1,500 staff, Bank of America announced that it would close its service center operations in the country, also laying off 1,500 workers in a country with a workforce of just 2.2 million.
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 more than 20% of the country’s entire exports.
Intel’s departure is also expected to affect 2,500 to 3,500 people who work as part of the company’s supply chain.
The company said layoffs would begin this month and conclude over the next six months. The company said the operations would be moved to facilities in China, Malaysia, and Vietnam, adding the move would place the operations closer to the company’s buyers and suppliers.
Intel announced in mid-January that it would lay off five percent of its global workforce this year, cutting around 5,400 jobs, as a result of the stagnating market for personal computers. The Costa Rica cuts are “consistent with that, but it’s not directly tied to that,” said Chuck Mulloy, a corporate spokesman for Intel
Just hours after Intel’s announcement, Bank of America made a surprise announcement that it would also close its operations in Costa Rica, laying off around 1,500 people.
“As a result of constant reviews we will close our technology and operations sites in San José, Costa Rica,” the bank said in a statement. The bank’s Costa Rica facilities provided “back office” support.
The announcements come just two days after Luis Guillermo Solis was elected to be Costa Rica’s next president. In a press release, Solis said that Intel executive assured him that the move “had no relation with the election of the new Costa Rican government.”
Foreign Trade Minister, Anabel Gonzalez, also insisted that Intel’s decision was for internal reasons and not due to a deteriorating business climate. “The country has been making great strides in services, innovation and technology,” she said.
President Laura Chinchilla said Intel’s departure would not affect the country’s image, adding that “some [companies] would come and some would go.” Chinchilla said several new multinationals would be setting up shop soon, without providing details.
In a Bloomberg survey published last month, Costa Rica was ranked fourth behind Russia, Argentina and Ukraine on a list of countries confronting the biggest loss of investor confidence.