The Venezuelan metals conglomerate Sural SA plans to invest $25 million in an aluminum-cable factory near Ponce, along Puerto Rico's south coast, in what is seen here as a major boost to the long-dormant idea of establishing a 168- acre Ponce Free Zone.
Alfredo Rivieri, president of Sural, told The Journal of Commerce Tuesday his company could be established in Ponce by year's end, manufacturing aluminum electrical and transmission cable for utility companies across the United States.Initially, he said, 125 people would work at the plant, with employment climbing to between 300 and 400 employees in three shifts over the next three to five years. He said the factory would be financed through Puerto Rican banks and would receive tax benefits through the U.S. Internal Revenue Code's Section 936 program, which exempts U.S. firms from paying income tax on profits earned by island subsidiaries.
"We chose Puerto Rico because we think it has good economic incentives, it has cheap labor, it's close to Venezuela, and because the Ponce free port offers good manufacturing conditions," Mr. Rivieri said.
Sural, with 1990 sales of around $100 million, already employs 800 in Caracas and Puerto Ordaz, Venezuela. It has stateside manufacturing operations in Alabama, California, New York and Washington state.
Mr. Rivieri said a letter of intent signed by Sural and the Port of Ponce, as well as a one-year feasibility study that is winding up, shows his company is serious about investing in Puerto Rico.
"Even though there's a recession in the U.S. right now, we're very interested in the long-term," he said, adding that all raw material for the plant will be purchased from Venezuelan suppliers.
Although there are other Venezuelan companies manufacturing in Puerto Rico, Sural's project would be by far the largest - both in terms of dollar investment and numbers of jobs created. In addition, said Mr. Rivieri, no company is currently manufacturing aluminum cable in Puerto Rico.
The project is one of three recently announced by Ponce Mayor Rafael Santiago Cordero as part of efforts to establish a free zone in Ponce, the island's major Caribbean port city, with some 200,000 people.
The other two companies planning major investments in Ponce are
Hispasilos, a Spanish firm specializing in the production of bulk cement and plaster, and Ponce Rolling Mills, which will invest $12 million and employ 120 people in the manufacture of steel rods for the U.S. construction industry.
Ponce received U.S. Commerce Department authorization to establish its free trade zone more than a year ago, but progress was hampered by red tape and financial irregularities that led to the resignation of the current mayor's predecessor, Jose Dapena Thompson.
Backers of the project say that when finally completed, the zone will be the largest of its kind in the Caribbean, employing 3,000 people and attracting $200 million in new investments.