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Dominican Republic's trade zones spared
Journal of Commerce / October 4, 1998

By Larry Luxner

WASHINGTON -- By a stroke of geographic luck, most of the 41 industrial parks that constitute the backbone of the Dominican manufacturing sector escaped the wrath of Hurricane Georges -- one of the worst storms to hit the Caribbean this century.

The hurricane, which killed a total of 370 people -- including 249 people in the Dominican Republic -- caused an estimated $1.5 billion in damages in the country's southern half. But the nation's northern Cibao region, home to half of the industrial parks, were not affected in any way, according to Gabriel Castro, director of the Consejo de las Zonas Francas (Council on Free Zones).

"Only five free zones suffered serious damages, and they were all in the eastern part of the country," Mr. Castro said in a phone interview from Santo Domingo. "Those made of concrete suffered no damage, including Itabo, Nigua, Bani and Barahona. In the capital, only two free zones had damages -- Los Alcarrizos and Hainamosa."

At present, close to 480 companies employ 188,000 workers in free zones, which account for over $1 billion in annual foreign-exchange earnings. About 70% of that revenue comes from sewing (including apparel as well as shoes), with electronic assembly accounting for most of the remainder. Garments, electronics and other items produced at the Dominican Republic's low-wage free zones account for 35-40% of the country's northbound shipping trade, and 20% of the southbound trade.

The four industrial parks that really took a beating by Georges were La Romana, San Pedro de Macoris, Hato Mayor and La Altagracia. At the state-owned free zone in La Romana -- home to 65 companies that employ 25,000 people -- zinc roofs were ripped off by the high winds. But 40 of those companies are already back in operation, and Mr. Castro says that "in a week to 10 days, we'll be operating at normal capacity."

The story's much the same at San Pedro de Macoris, where the local industrial park has 12,000 workers in 34 companies manufacturing apparel, shoes, electronic components and cigars, though one source at the government's office of investment promotion said "they're going to need two to three months" to return to normalcy.

"The worst damage was where ceilings blew off and merchandise got wet. If yarn gets wet, you cannot put it into the machines," said Jose Manuel Torres, director of Adozona, a private free-zone association. "In general, manbye 40% of the companies in the whole country had damages, but the sector is rapidly recovering. As of today [Thursday], 90% of the companies are operating."

John Rannik, vice-president of Agencias Navieras B&R -- a Santo Domingo-based shipping agency -- says La Romana and San Pedro "took a pretty heavy beating."

"San Pedro, by virtue of being a government-owned free zone, might take a little longer to get back on its feet than La Romana, which is privately owned," said Mr. Rannik. "I don't know how much material people lost and what the status of the machinery is, but in a free-zone environment, if you replace the roofs and the walls and the machinery didn't suffer, and you have an electric generator, you're probably better prepared for this sort of disaster than other places."

In fact, a privately run free zone adjacent to the state-owned park in San Pedro opened only a few days after the hurricane, sustaining far fewer damages because of its superior construction.

Mr. Castro estimates damages to the country's physical free-zone infrastructure at $30-35 million, not including apparel and other raw materials used in manufacturing. "We don't think this will have a big impact on revenues, because of the rapid rehabilitation of the industrial parks," he said.

The storm did cause some slight damage to the Port of Haina, which handles 70% to 80% of the Dominican Republic's shipping trade.

"Fortunately, it looks a lot worse than it really is," said Mr. Rannik. "The main seaport suffered virtually no damage at all. The container cranes are still standing up and operating, the docks didn't suffer and the breakwater held and is intact, so operationally it's the same as before the hurricane. Since the storm passed over the center of the island, Puerto Plata wasn't affected at all."

For about a week after the storm, port operations at Santo Domingo were restricted because of a nighttime curfew declared by President Leonel Fernandez, though things are gradually returning to normal there too, said Mr. Rannik.

"There were some delays and disruptions in port services, but I don't think there was any loss of cargo volumes," the shipping executive explained, adding that business is beginning to pick up with the arrival of rehabilitation equipment from the United States -- mainly building materials, electric generators and power saws. "For the next two to six months, a fair amount of foodstuffs and agricultural products will be coming in, because agribusiness really took a beating too," he said.

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