Howard, the jewel in the crown

July 13, 2010

Martes Financiero

Many new projects are coming to fruition at Howard.

Here, amidst the new buildings, old infrastructure and enormous hangars located on 52,700 square meters, magazines and school text books are being printed, spray guns for painting cars are being assembled and airplanes are being almost completely disassembled in order to fix any type of problem they may be experiencing, while replacement parts are installed as required.

Although there is much more work to be done in what is known as the Panama Pacifico Special Economic Area — according to the master plan, one million square meters will be built for commercial, industrial, residential and hotel use —, companies already here cannot stop talking about the huge potential of the place and the excellent choice they made, particularly the multinationals, in settling on Panama and Howard as the place to set up their operations, as opposed to other countries in the Latin American region.

According to the most recent report provided by the Panama Pacifico Special Economic Area Agency (Aaeepp), as at 2nd July this year, 48 companies had signed up although only 26 of these had actually moved in.

The Agency’s administrator Miguel Angel Clare explains that the start date for company operations depends on the nature of their activities, and some of them do not start right away because they have to wait for the accommodation to be finished or fitted out, or because they are waiting for an environmental impact assessment to be approved or for licenses, approvals or permits to be issued by the authorities.

Caterpillar is one of these companies.

This US manufacturer of construction and mining equipment, diesel engines and industrial gas turbines broke ground on their new site on 1st June and hope their demonstration and training center at Howard will be ready by 2012.

While this and other companies finish moving in to Howard, those already settled in the area are working at full pace.

Long term gamble.

3M had many suitors among Latin American countries wanting to attract this company that manufactures and markets products for the transportation, healthcare, office equipment, security and occupational health markets among others.

And the final choice was the Panama Pacifico Special Economic Area. Here are located two of the 42 divisions of this US based multinational: transport and communications.

“Panama Pacifico was the place we wanted to be”, says 3M Panamá, S.A.´s marketing manager, Rodrigo González, adding that this is the place with most facilities because this area is focused on high tech development, manufacture and production, as well as logistics management.

In 2008, 3M signed a contract with the agency and on 11th March 2009, started up its machines to manufacture and assemble products for the automotive industry.

These products were a disc used in body shops to polish cars and a compressed air spray gun for painting vehicles.

González explains that they produce around two million of these discs each month, destined for the whole of the American continent with the exception of Brazil; however the capacity of the plant is being doubled to produce 4 million discs per month so they can also supply Europe and Asia.

In relation to the spray guns, González explains that they receive the 700 component parts in Panama, which are then assembled at their facilities in Howard.

This is not 3M´s only Project on this site. At the end of this year it will also be home to the company’s Communications division, which will be used to receive all 3M´s factory requests and dispatching them to its subsidiary companies.

However, the company is not satisfied with just these two divisions on the site. González states that company representatives are meeting at the U.S. headquarters to discuss the possibility of opening other divisions in Panama.

“What we want to do is turn Panama into the Latin American hub where we can manage the production and manufacture for the whole American continent”, states González.

3M Panama Pacifico has a 10 year investment plan, and since 2008 up to the end of this year alone is estimated to have invested 10 million dollars.

Albacrome, a printing company from El Salvador that publishes magazines, books and other documents has also taken the gamble of installing its second plant in Central America here at Howard.

Since they set up business in 2009 up to the present they have invested 20 million dollars in upgrading the building where they are located, together with their printing equipment.

General Manager Gisela Álvarez de Porras tells us that the plant in Panama prints magazines for its main business partner, Televisa.

Magazines including Tú, Esquire, Vanidades, Cosmopolitan, Teen, Ideas, TV y Novelas are printed at Panama Pacifico for onward distribution throughout the Caribbean and South America.

“This is the location from which we are starting to make contacts in the South American and Caribbean markets, and the idea is to grow the portfolios of our existing clients so that this continues to be an export product”, points out Álvarez de Porras.

Her job is to attract clients currently printing their magazines, books or documents in Colombia or Costa Rica, to bring their business to Panama.

Albacrome has plenty of space for growing their business in Panama. They are currently only operating at 30% of their capacity, a percentage they hope to increase in the short to medium term.

There have been many changes since Dell Computer set up its offices in Howard in 2003.

One thing that has changed since it started up is the company’s focus.

The United States Company started operations in the area to use its call center to look after its North American (80%) and Latin American (20%) clients in terms of customer service, sales and technical support.

“We looked after everyone, from individual consumers right up to the medium sized and large companies”, says Martín Álvarez, director for Dell in Central America and the Caribbean.

However, the strategy has changed. Now the focus is on clients in the corporate segment (small companies, multinationals and Government) of Latin America.

“Panama is Dell’s hub for Latin America. 65% of our operation is dedicated to supporting our clients in the region”, says Álvarez, while adding that they also deal with all the company’s purchase orders in the region as well as part of the United States.

“We have to wake up when Argentina wakes up and go to sleep when California turns out the light”, says Dells´ General Manager in Panama.

Singapore Technologies Aerospace Panama also looks after clients from all over the world.

During the last three years since it began operations here, the company has provided aircraft maintenance and repair services for airlines such as Tame from Ecuador; Brazil’s Varig; and leasing companies such as GE Aviation Services, AWAS Aviation Services, AerCap, MCAP Europe and Aviation Capital Group.

René Debroy, the company’s marketing director, says that while he has serviced 5 or 6 aircraft simultaneously, he has capacity for 12 aircraft altogether.

This is why he is increasing the promotion of the company’s services in South America and the United States, selling the advantages that Panama has to offer companies in the aviation industry.

Debroy recognizes that although the company is well known, above all in Asia and Europe, in this region it is in competition with other companies that have been established for a number of years in Costa Rica, El Salvador and Brazil.

With four hangars in Howard, Singapore Technologies Aerospace is finishing their refurbishing so as to enable them to provide aircraft painting services. He hopes that his strategy will enable the business to grow.

Believing in the future

Movement in the area is rather slow, but this does not worry the companies providing themselves services to companies in the area. These companies believe that in the short and medium term, the picture will change.

Mail Boxes Etc., which is the first company to set up business in the recently inaugurated Business Park, has put all its efforts into providing services to companies established there until the residential area opens up in 2011.

“We are offering virtual office services to companies that have not finished moving in, until their offices are 100% ready”, says Dimitri Tagarópulos, owner of the postal services, communications and business franchise.

His partner Ivi Tagarópulos recognizes that movement is a little slow, but trusts that this will change in September when the rest of the businesses move into the Business Park.

It is nine years since representatives of the old Interoceanic Regional Authority (ARI) talked abut establishing a law that would convert Howard into a special economic zone and setting up a “one stop shop” to simplify dealings with the public sector, as well as benefits including labor, immigration, tax and land use.

The tenants are satisfied with progress up to date, but agree that the cherry on the cake that is still lacking is the development of more services such as restaurants and banks. This will attract more movement to the area.