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Resiliency, proximity to the mainland and tax incentives make Puerto Rico an ideal home for U.S. manufacturers looking to reshore.

As it did for so many companies around the globe, the pandemic fast became an opportunity for logistics company Prime Air to prove its mettle. When Covid descended, Prime Air—which offers transport services, storage and delivery of freight worldwide and emergency shipments for the pharmaceutical and medical device industries—suddenly found itself facing tsunami-like headwinds. 

“There were so many challenges in the system we had to overcome,” recalls Iris Vincent, president of Prime Air. One of those was the overnight disappearance of international routes for freighters as a result of the consumer travel shutdown. At the same time, one of the over-the-counter medications used to treat Covid was being manufactured primarily in Puerto Rico, and demand was skyrocketing. “That product used to be handled via ocean, and with Covid, all of a sudden, the same amount of medication that they used to ship via ocean, they had to start shipping via air,” she says.

In order to maintain consistency on various routes, the Prime Air team was challenged to come up with alternatives for moving freight—from new combinations of ocean and air shipments to passenger airlines willing to do cargo flights to daily private charters. 

“At some point, it felt like we were almost converting ourselves into an airline,” says Gabriel Vincent, director of operations—and he’s only half kidding. He recalls one of the more creative steps they took: locating an available 777 passenger aircraft in Bangkok, arranging a charter and bringing it into San Juan to load up the belly with cargo in order to get product shipped on time. 

Prime Air President Iris Vincent
Prime Air President Iris Vincent

Ultimately, it was through a combination of creativity, tenacity and, in no small part the location of its headquarters that Prime Air was able to not only survive but thrive through the pandemic.Resiliency is baked into Puerto Rico’s business culture and infrastructure. “Hurricanes, earthquakes, politics, we’ve had a little bit of everything down here,” says Tom Vincent, cofounder of the family-run business, noting that the adversity has made the island stronger. “You have to have some fast legwork to be able to adapt to that.” Puerto Rico has its own Business Emergency Operations Center, with all the various sectors of private industry participating to ensure a quick return to business. 

The proof that it works? Hurricane Maria. “A day-and-a-half after Maria had passed, we were here at the airport receiving flights of goods coming in— although we were using private jets, [as the] scheduled airlines weren’t operating yet,” Vincent says. Today, companies around the island continue to participate in scenario planning to prepare for various emergencies—hurricanes, earthquakes and now, a pandemic. “There are a lot of tabletop exercises being done, so we’ll be ready for whatever comes.”

Isla Frio Refrigeration has been running its facilities for two years and, so far, has experienced no interruption to business, says general manager Bismark Marquez. Isla Frio, which offers several storage units, including a 90,000-square-foot space with temperatures ranging from -20°F to 65°F, has both a backup generator and a fully charged thermal energy storage (TES) system. When Hurricane Fiona came through last September and caused power outages, the backup system was able to keep facility temperatures stable. Weather, says Marquez, “has not been a drawback for us.” 

Tapping a Robust Talent Pipeline

On the flip side, the year-round balmy climate is a plus for both companies reshoring and employees choosing to return to Puerto Rico from the mainland. Marquez shares that a candidate he is currently considering for a warehouse supervisor position fits that profile. “He was born here, but has been living in Missouri and wants to return after many years of living on the mainland,” he says. “It’s partly cost of living, and also that it’s like summer here all year long.” 

The influx of returnees adds to an already robust pool of top talent. The University of Puerto Rico–Mayagüez, one of the island’s 80 institutions of higher learning, is the leading producer of scientists and engineers for NASA. Half of all university graduates in Puerto Rico hold a STEM degree, outpacing the national average by 20 percent, and most are bilingual. Puerto Rico also claims the second-largest concentration of women engineers in the country and ranks sixth in the world in terms of availability of scientists and engineers.

While Prime Air regularly recruits externally—and grew its head count by 10 percent over the past three years—they also seek to retain employees through a culture of caring and support, says Iris Vincent. “Retention is less expensive than attracting new talent, of course, so we’re focused on keeping our employees happy and as comfortable as possible so they can be ambassadors for the company with other potential employees.” 

That includes supporting additional education and training, says Tom Vincent. “If one of our employees wants to advance in their career by getting additional credits in studies, we highly promote that because we want to see people grow from within more than going out to recruit.” The supportive culture extends to employees’ families as well. When hurricane season approaches, the company offers a care package to every employee with non-perishable food, bottled water and canned goods says Vincent. “Because if we don’t look out for the employee’s families as well as the employee, they won’t be able to come to work.”

“Made in America”

As the reshoring trend continues unabated—American companies reshored about 350,000 jobs in 2022, compared with 260,000 the prior year, according to Deloitte—manufacturers are looking more closely at this U.S. territory nestled in the Caribbean, which offers some significant advantages. 

First off, the Puerto Rico Incentives Code, or Act 60 as it’s commonly known, offers substantial tax benefits: a 4 percent flat corporate tax rate, 100 percent tax exemption on capital gains, 75 percent exemption on property tax and up to 50 percent back in tradeable tax credits on R&D expenditures. “That’s in addition to other municipality exemptions for manufacturing,” says Rafael Perez, senior business development director for Invest Puerto Rico, the island’s official business attraction organization. 

Production costs for manufacturers are typically lower in Puerto Rico, Marquez notes, adding that one more sizable advantage is proximity to the mainland. “Rather than having to wait 30 to 60 days in ocean transit time, it’s just three days to Jacksonville [Florida],” he says. 

When the product arrives, he adds, it has that “Made in America” label, which is something consumers are increasingly valuing, according to a recent survey conducted by Retail Brew and the Harris Poll: 71 percent of respondents said they sought out products made in America, and nearly half said they’d be willing to pay 10–20 percent more for them. Three-quarters said it’s “very or somewhat important for brands to make their products in the U.S.”

And for manufacturers in the life science and medical device sectors, Puerto Rico offers an ecosystem into which new entrants can move. The island is home to more than 80 manufacturing facilities operated by some of the largest drug makers, including Amgen, Johnson & Johnson, Pfizer, Becton Dickinson, Medtronic, Boston Scientific and GlaxoSmithKline, among other international players. Puerto Rico is currently the largest exporter of biopharmaceuticals in the U.S.—totaling more than $50 billion—and half of the territory’s $106 billion total GDP comes from manufacturing (the majority of that from pharma and medical devices). 

Growth in manufacturing and innovation on the island recently attracted a $2 million investment by Scale AI to turn part of the Port of Ponce into a “Smart Port Lab,” with hardware autonomy kits integrated into cranes; autonomous inspection systems; computer-assisted surveillance systems and digital-receipt registries that will track and monitor container movement. “That’s a signal of the transformation Puerto Rico is going through,” says Perez. 

Prime Air has invested in new technology too, giving customers end-to-end visibility into the supply chain as well as an app to monitor the live temperatures and humidity of each warehouse at the San Juan Airport. 

But advanced technology doesn’t mean sacrificing personal attention—particularly in Puerto Rico, where the culture is as high-touch as it is high-tech. “Our customers don’t get an answering machine when they call us—there’s always a person behind the phone or email,” says Steven Vincent, Prime Air’s director of business development. “We never treat them as just a number.” 


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