Industry Overview Low operation risk: demonstrated stability Labor Force Strategic location Local supply industry  Established Companies

The opportunity

Industry overview

In 1987, the medical devices sector began its development in Costa Rica when Baxter Healthcare decided to install a manufacturing operation. Since then, more companies have trusted the country and today, the medical devices manufacturing (MDM) industry counts on 23 companies, amongst which there are world leaders such as Hospira, Boston Scientific, Arthrocare, Allergan and Coloplast. Costa Rica 's human resource is its number one strength. This is the main reason why the medical industry has been able to continue growing. Just in the past 6 years, the sector has expanded from 8 enterprises to 23, employed 6,300 people and placed itself as the 4th biggest exporting sector. In 2006, it exported $633 millons and attracted $150 million of FDI.

Low operating risk: demonstrated stability

Long term MDM investment requires a stable economic, political and social environment, which Costa Rica has achieved through the years.

In this sense, Costa Rica is one of Latin America's most stable economies. After the last crisis, almost 25 years ago, it has maintained a yearly growth rate of over 4,5%, which translates into a per-capita income level of $5,031 in 2006. In fact, the Costa Rican economy has maintained stability, albeit the different international crises, which have affected other countries such as Mexico, Turkey and Venezuela in 1994-95; Thailand, Malaysia, Indonesia, Philippines, South Korea and the Czech Republic in 1997; Russia and Brazil in 1998; and Argentina in 2002.

More on Costa Rica's proven stability

Labor force

The single key factor driving medical device companies to set up operations in Costa Rica is the availability of an educated, motivated and creative workforce. Costa Rica's workforce is made up of more than 1,95 million people, about the same size as other leading locations for medical device manufacturing, such as Ireland, but its fast growth ensures a vast supply of technical, industrial, mechanic, electrical and production engineers, as well as managerial staff ready to optimize any company's results.

Its literacy rate of 94.9% is comparable even to those of highly developed countries and the workforce is becoming increasingly bilingual. As of 2006, there were over 4,990 technical graduates and more than 1,800 engineers graduated the year before.

 Education in Costa Rica has been universal, free and compulsory since 1870. Elementary schools promote a new approach to education that goes beyond teaching how to read and write, and have established programs intended to guarantee world-class literacy in computer sciences and English as a second language. In fact, 82.5% of all Secondary Education students, and 50% of all elementary students have computer-based education. English as a second language is nearly universal in Secondary Education. The Government has put special interest by increasing resources to enhance existing English programs and create additional ones nationwide. As a result, a unique, free and widespread education system allows firms to find a wide array of human resources at various levels, from technical schools to university degrees.

At a technical level, free training programs have been developed in order to address appropriately the requirements of both local and international corporations in specific sectors, therefore allowing Costa Rican technicians not only to work on the cutting edge of technology, but to maintain at the same time a productivity rate which is 20% higher than that of workers of other countries in the Americas. The leading educational centers offering this type of training, as well as the main universities are:

Costa Rican engineers and technicians guarantee high productivity, low turnover, and cost competitiveness to highly demanding high-technology operations:

• Highly productive
  Most of the MDM companies, not to say all, are experiencing high productivity rates, mainly when compared to their parent facilities . For instance, Allergan, a silicone breast implant manufacturer, has stated that its Costa Rican facility has a productivity rate that is 30% higher than a similar operation located in Santa Barbara, CA.
  
  
• Low Turn Over
  A survey conducted by CINDE shows that turnover rates in MDM for Costa Rica are less than 1% for managers, 4% for technicians and engineers, as well as only 3% and 9% for qualified (workers and 9% for) and non-qualified workers, which represent a highly stable workforce.

Source: CINDE

• Learning Curve
  Costa Ricans are easy learners and capable of adapting to new processes and high technologies. From a company's view, this translates into important reductions in training and labor costs, as the learning curve of Costa Rican employees tend be 3-4 weeks, 50% lower when compared to the average for U.S. employees.

• Competitive labor costs
  Profitable MDM requires not only a high quality location, but also low operating costs. As shown in the index below, gross remuneration costs of production assemblers are about one third of Ireland's, and about 50% of Baja California's cost, whereas manufacturing engineers' costs are about half of Ireland and Baja California's cost, and less than 50% when compared to Puerto Rico.

Strategic Location

These decades of stability and economic growth reflect relevant social achievements, among them, the fact that in the last 20 years poverty has been reduced from 40% to less than 20%. In addition, it has achieved the highest education and health levels in Latin America and one of the best in the world, and has provided wide access to health services, social security, potable water and basic public services. As pointed out by the Sub-Director Manager of the International Monetary Fund, Agustin Carstens, "a basic principle which Costa Rica has made its own is that the final purpose of economic policy is to achieve human development". Costa Rica is strategically located in the center of the Americas, providing excellent market access to the USA. In fact, there are 25 daily flights to that country, and Miami is only 2.5 hours away. Besides its geographic proximity, Costa Rica counts on excellent duty free entrance to the US and European Union markets, as well as to other important markets through free trade agreements. The Costa Rican government has currently signed and is in the process of ratifying a free trade agreement with the USA.

More on Costa Rica's strategic location

Local Supply Industry

Many local companies are currently benefiting from providing MDM companies with their necessary supplies, a factor that has allowed Costa Rica to constantly improve its local supply chain. As a result, there are many suppliers in the healthcare industry that may enable your company to focus on its core business, some of which are included in the following list:

Contractors

• Aetec
• Camtronics
• Medtech
• Precision Concepts

Metalwork

• Oberg Industries
• Olympic Machining
• Weststar Medical
• Point Technologies
• Microtechnologies
• TechShop

Plastic Injection Molding

• Electroplast
• Plásticos Star
• Medtech
• Delfiplast

Engineering Services

• AEC
• Capris

Packaging

PPC Ind.

Coating

• Specialty Coating Systems

Costa Rica Provee
Costa Rica Provee detects the needs of multinational companies, identify business opportunities, and recommends registered suppliers meeting the production, technical, and quality specifications and characteristics required by the business at hand.

Established Companies

Testimonials

'The employees of the Hospira Costa Rica plant are highly educated, talented and hard working. They are the heart of our operation and one of the reasons why we are in Costa Rica'

Jonathan Waldron
Site Manager, Hospira Costa Rica

'Baxter has been successful in Costa Rica because of the ability of our workforce to learn and apply technological changes. The commitment and affability of our people make them effective workers in world-class companies'

Nelson Rodriguez
Global Manufacturing VP, Baxter Healthcare

'The low cost of labor, same day customs turn around, and abundant technical labor pool in Costa Rica really facilitates the success of our business. Our U.S. based customers save approximately 30% over what they would pay in the States'

Camron Franklin
Sales Manager, Precision Concepts

'Specialty Coating Systems, Inc., the largest global provider of Parylene conformal coating services, is opening a new coating facility in Costa Rica to service the growing need for conformal coatings in the region. With the addition of this company, the medical device cluster in CR continues positioning as an attractive spot for companies to bring their manufacturing...

Tim Bender
Director of Marketing, Coating Systems

'Our company has been in Costa Rica for 10 years and has prospered from the abundance of well educated, as well as ambitious employees that we have hired and trained to do very technical jobs. The inexpensive labor has made it possible for us to be competitive in the U.S. market. The infrastructure of internet and telephone has been very adequate. The geographic location to the U.S. is very convenient for exporting finished products'

Tom Gerlach
General Manager, Smith Sterling

...The MedTech Group Inc. came to Costa Rica because we saw a very educated and committed work force, along with a very supportive and ethical business climate. After the experience of the first five months of operations, we realize that we were correct. We believe that the long term future of Costa Rica is very bright, and hope to make our contribution to this success...

George Blank
President, The MedTech Group 

...We decided to start our operations in CR due to the social stability and flexible/high trained labor force. Through the years, we have had a none stop growth and have absorbed almost all possible supply chain management functions. After the last 10 years, CR has not let us down supplying the best human resource for our operations...

Ernesto Kelly
General Manager, Coloplast de Costa Rica

'Cytyc Surgical Products is committed to providing educational and career advancing opportunities to bolster the Costa Rican industrial expansion taking place today. We maintain a positive growth trend by supporting not only product development but also personal and community development' 

Don Nathe, General Manager
Cytyc Surgical Products

...We at DeRoyal Cientifica are very proud of our excellence. This is one of the main reasons of our continuos growth in Costa Rica...

Daniel Leiva
General Manager, De Royal Scientific

'Arthrocare is very proud of its Costa Rica operation. We have been extremely impressed by the well-educated, experienced and talented managers and employees that make up our Costa Rican team. They successfully got our manufacturing facility up and running quickly and continue to provide high-quality, critical support to our company'

Michael Baker
President & CEO, ArthroCare Corp.

'The cost of labor is one-tenth of our US plant and turnover is very low'

Alexander Unfried
General Manager, Allergan