Comments on: Video of Intel CEO contradicts government line on departure

By: Andrew

Andrew — Sat, 26 Apr 2014 14:35:00 +0000

That attempt by the central bank head to spin the Moodys news in a positive way was among the lamest I’ve ever seen–even by Costa Rican standards. What he should have said was: “I have a new cushy job with the new government. My wife is out right now shopping for a new Benz. I plan to stick my head in the sand and snort up as many turtle eggs as possible before shit really hits the fan–excuse me.”

By: Ben

Ben — Wed, 23 Apr 2014 21:44:00 +0000

http://www.torontosun.com/videos/3499476092001

By: Ben

Ben — Wed, 23 Apr 2014 19:29:00 +0000

Your right CR has egg on its face both goverment PLN and PAC but Intel is looking for cheap Labour thats a fact and Cheap Countries to work in. I guess thats the world we live in now mega profits. Don´t expect much from new goverment they could have a major revolt if they do anything to crazy. I hope they cut half of goverment staff but they will not. Is Costa Rica done is there any future in CR? That the true question. Do you really trust Intel now or any US company that is in CR working?

By: McDemon

McDemon — Wed, 23 Apr 2014 18:55:00 +0000

If that were true Ben, they would be closing down their service sector components as well. It was clearly stated, at an internal meeting, that this would not be the case. Intel closed down not because of labor portion of costs (which by the way have not risen significantly since they entered the market as opposed to Caja costs) but rather the bureaucratic costs of doing business here. Rises in electricity costs of several hundred percent over the last decade are INSANE in a country that touts 94% renewable energy sources(80% is generate by hydro, the CHEAPEST form of energy production).. My average bill in 6 years has increased almost 300% with very little change in habits. It is hilarious that the new central bank president gave an interview to Bloomberg yesterday saying exactly the opposite of what insiders in Intel are saying. I’d like to make an introduction: Face of the CR government meet Egg. Egg, meet the face of the CR government. The new administration better make some big changes very quickly or it will be a very long next few decades in the making for Costa Rica.

By: stfree

stfree — Wed, 23 Apr 2014 18:50:00 +0000

Actually, it’s a case of BOTH scenarios having truth in them. It all depends on who’s doing the telling.

A CEO will never publicly admit that their product line has lagged and now must be reworked – but that IS the case with Intel. They have neglected the rapid growth that the mobile devices chip market represents and need to catch up to remain globally competitive. The operation here is dedicated to manufacture chips for PCs, which are waning. The CR government is right in saying the the manufacturing consolidation to Vietnam responds to that need.

It is also correct that Intel has been unsuccessfully lobbying for reduced costs for it’s manufacturing operations. The price of electricity here is a significant part of that cost structure as the process of chip manufacture consumes large amounts. But equally important was the high cost of lower level manufacturing personnel and the total Costa Rican benefit package (CAJA, Aguinaldo, Cesantia etc) and work week/hours scheduling. Vietnam is early in their human resources cost curve, so they have not imposed equivalents for their workers. The social/work ethic is also considerably different. They probably will change too but it’ll be some years down the road.

When that happens, the “Intels” of the world will move again in a never-ending cycle.

By: McDemon

McDemon — Wed, 23 Apr 2014 18:43:00 +0000

As the Intel employees were making 15-30% than average pay for their work, salaries were not the cost that caused the departure. If that were the case, they could have shaved the salaries down to average and save a ton of money. The reality is that corruption, graft, inefficiency, multi-layered convoluted bureaucracies, import taxes, immigration costs and delays all add significant costs to operating a business in Costa Rica. People can cry all they want about Vietnam having less of this or less of that or that it is unfair blah blah blah….At the end of the day it is the leaders of Costa Rica that are causing the exodus and it is only they, by taking their greedy little hands out of the proverbial cookie jar, who can stem the tide.

By: Derryl Hermanutz

Derryl Hermanutz — Wed, 23 Apr 2014 18:32:00 +0000

Thanks for the info, Ben.

By: John Dungan

John Dungan — Wed, 23 Apr 2014 18:31:00 +0000

Considering how difficult it can be conducting any kind of business day-to-day in CR, this is certainly no surprise. Beyond the hidden costs of labor are all the bureaucratic hurdles that make life so damn difficult for a business person. I’m frankly surprised they lasted as long as they did, given what I know about that place.

By: Ben

Ben — Wed, 23 Apr 2014 18:26:00 +0000

There the word Globalization. Poor stay poor and Rich get Richer. As for energy cost i looked it up Asia has about the same as Central America.

By: Derryl Hermanutz

Derryl Hermanutz — Wed, 23 Apr 2014 18:24:00 +0000

Vietnam probably has lower electricity costs than we do, which is a big factor for a manufacturer. I don’t know if Vietnam has a social security system and caja taxes like CR, but that’s probably another component of Vietnam’s lower costs. Wages may be a bit lower in Vietnam too. Aside from the electricity costs, CR’s other higher costs go directly to raising the standard of living of the workers. If workers are not earning a living wage, then other taxpayers just have to subsidize them. So there’s no benefit in trying to “compete” by driving your country’s working class into tax-subsidized poverty. Corporate globalization is a double edged sword. It makes goods cheap for people who still have incomes to buy goods. But it ravages worker incomes by forcing nations into a downward spiral of corporate subsidies to attract and keep mobile global capital that has no loyalty to any nation.