PRMSDC Reveals Economic Model to Boost P.R. Manufacturing
SAN JUAN—The Puerto Rico Minority Supplier Development Council (PRMSDC) announced this week a new strategy to maximize local production, which could represent an economic boost of more than $500 million.
The company presented a series of private-sector measures that seek to certify more Puerto Rican suppliers under the PRMSDC to identify potential for production growth to satisfy national and international corporate associates, including PepsiCo, Johnson & Johnson, Wal-Mart P.R., Advil, Coca-Cola P.R., and Bristol-Myers Squibb.
While representatives of these and other companies enjoyed a cocktail celebration of the PRMSDC’s 35th anniversary at the organization’s offices in VIG Tower in San Juan’s Santurce sector, the council’s leaders discussed this ambitious project with Caribbean Business.
“Our mission is to promote the development and growth of local minority businesses through collaborative agreements with national and international companies, thus cementing an environment of trust and integrity, and establishing opportunities of mutual economic growth,” assured José Ríos Nieves, chairman of the PRMSDC.
According to the Minority Supplier Development Council—which groups the division in Puerto Rico and 23 other affiliates in the United States—a minority business is defined as one that is at least 51 percent owned, operated and controlled by an ethnic minority, which can provide proper documentation as evidence of its owner’s U.S. citizenship, among other requirements. Because businesses in Puerto Rico are predominantly controlled by Latinos, a significant number of them qualify under the council’s standards.
Ríos Nieves explained that Puerto Rico needs a new, innovative business model based on purchases and development of local suppliers for them to work with multinational companies to promote a system based on clusters, following three steps.
During the transformation stage, the PRMSDC sorts suppliers into groups with multinational corporations, according to the latter’s identified needs, so suppliers can be paired according to their capacity to meet demands, thus creating a synergy process.
By identifying more suppliers with the potential to be certified, and by attracting more multinationals, the council seeks to increase purchases of local products. In this case, the PRMSDC serves as a link between big corporations and suppliers to establish a communicative bond between them, and to ensure a business environment based on mutual benefits, or a “win-win” scenario.
“Corporations and suppliers will be responsible for boosting the island’s economic development,” the council official said, emphasizing that this economic model does not require government intervention, although he noted the Puerto Rican government could also benefit from this initiative because of taxes on multinationals, and job creation in light of higher demand.
Meanwhile, during the expansion stage, the PRMSDC evaluates its corporate associates’ monthly purchase reports, and guides and develops local minority suppliers to increase their sales, as well as pairing them with different suppliers to purchase products not found on the island.
During this process, the council intends to “improve purchase channels and acquisition of local products and services, which could represent more than $500 million for our economy,” according to the PRMSDC official.
The last stage is leadership, which takes place after clusters have been established, during which the council performs an analysis of possible future needs for its corporate associates, identifying new leadership clusters that can fulfill these demands and venture into new fields.
According to the organization’s director of Development & Corporate Services, Diego Martín, these clusters of certified minority suppliers could develop in fields such as agriculture, startup businesses and the emerging cannabis industry.
Martín informed that Puerto Rico has 520 PRMSDC-certified minority suppliers, “so we have the opportunity for growth,” but acknowledged that the council only has 18 corporate associates, which is why the organization seeks to attract more multinationals to maximize the production of suppliers that have already been certified, as well as suppliers with the potential to receive certification. With this initiative, the council seeks to create “elite” suppliers, which are local businesses whose production exceeds demand, so they increase sales and contribute to a rise in exported goods.
The PRMSDC officials revealed that this business strategy has represented a significant growth in contracts since 2016, which amounts to more than $29 million. They also emphasized that council-sponsored studies show Puerto Rico businesses have a high level of competitiveness and production capacity.
“This is the year we urge companies in the Fortune 1,000 to set their eyes on our island and our offer of integrated minority suppliers, and our new local business environment that ensures the transformation of the commercial relation between Puerto Rico and the United States,” Ríos Nieves said.
To achieve this effort, the council also proposed categorizing Puerto Rico as an Industrial Distress Zone, due to its fiscal crisis, to reduce rates and taxes on multinationals, encourage them to do business on the island and hire Puerto Rican suppliers, which leads to job creation.
“We are ready to get out of our comfort zone and look beyond. We are ready to serve and to prove to corporate associates of the new Puerto Rican market how an investment in our minority businesses is a good venture. Today is the moment that Puerto Rico needs to implement its possibilities and plant the seeds for a new economic model that ensures a path to significant growth,” the council chairman said.
For more information on the council’s requirements for certification, visit prmsdc.org.