The Island Reaches Out To The City
By MARK PAZNIOKAS, Courant Staff Writer

CAGUAS, Puerto Rico -- Not long ago, this industrial city outside San Juan was the last place a mayor from a mainland U.S. city would come to talk about economic development - unless his mission was to plead for the "pirates" of Caguas to stop raiding his employment base.

Puerto Rico's hyper-aggressive economic policy was based on a simple and, for a time, effective formula: Siphon manufacturing jobs from the mainland with generous tax incentives and less expensive labor. Rapidly growing Caguas was a beneficiary.

But this is where Hartford Mayor Eddie A. Perez lunched Thursday on the third day of a trip to sell his heavily Latino city as a ripe market for Puerto Rican businesses. His host was Luis Rivera Oyola, who founded a company in 1996 dedicated to undercutting U.S. manufacturers.

"For many years, Puerto Rico was known as a bit of a pirate in the U.S.," said Rivera, founder and president of Manufacturing Technology Services. "We were not very popular in that sense. Today, we have a different strategy."

Economic development on the island today is a two-way street. Puerto Rico still seeks investment from the mainland, but increasingly the government is pushing local companies such as MTS to grow by expanding into new markets. That could mean opening manufacturing and distribution facilities in states they once raided for jobs.

And Hartford, with a Puerto Rican mayor and the highest percentage of Puerto Rican residents of any city on the U.S. mainland, is among the first to try to cash in on the change.

PromoExport, the Commonwealth of Puerto Rico's export office, organized a trade show for Hartford in San Juan that began Wednesday and concludes today. Hartford is the first city to receive such hospitality from the administration of Gov. Sila M. Calderon, who took office in January 2001.

"The purpose of the trip has to do exactly with my priority - economic development and jobs," Calderon said this week after Perez met with her at La Fortaleza, the old Spanish colonial fortress that serves as the governor's residence. "This has to be our biggest push."

The push to expand markets for Puerto Rican goods comes from market forces and tax changes that are phasing out the incentives that attracted a wide range of manufacturers, including the world's largest drug companies, to the island.

Perez and Hartford's economic development director, Harry Freeman, came here hoping to position Hartford as the entry to New England's Latino market, but they will leave tonight with a more ambitious plan to mine the island for business.

"There is a lot more opportunity than I originally thought," Perez said. "That is based on the potential from the policy sea change of not draining jobs to here, but to market to the mainland. That means a little more work."

Their touting Hartford as the center of a Latino market that runs from Bridgeport through central Connecticut and into Massachusetts was well received, especially by consumer-products companies eager to sell Puerto Rican foodstuffs in New England.

Carla Haeussler, a manufacturer of gourmet sweets, wants to sell in New England. She is not formally exporting yet, but customers from the mainland already have found her on the Internet. Javier Denis, the president of a company that makes seasonings, is looking to expand his distribution network from New York into New England. A farmers cooperative hopes they can market directly to the mainland.

Arturo Rivera, who represents 30 coffee growers in the Puerto Rican mountains, is getting ready to market a gourmet coffee that he hopes will rival Jamaica's Blue Mountain coffee. He will need a distribution point in the U.S.

"It's a first step," Eduardo Fernandez, the executive vice president of Pan American Grain, said of the trade show.

But Perez and Freeman said they were surprised Thursday afternoon by Puerto Rican Chamber of Commerce officials, who pressed them on how fast they can open an office in Hartford. Time and again this week, Puerto Rican companies indicated interest in a broader New England market, not just its Latinos.

Rivera, who gave Perez a tour of his electronics factory Thursday, said he is interested in partnerships with Connecticut manufacturers, an interest that could require an assembly plant on the mainland. His company's business model is based today on building alliances, not raiding business, he said.

His revenues have grown by at least 50 percent in each of the past three years.

"I think it's really been eye-opening," Freeman said. "We knew there were opportunities. I don't think we fully appreciated those opportunities."

Freeman and his island counterparts say Perez, who was born in Corozal, Puerto Rico, and lived there until 1969, is one reason for the interest. One of just three Puerto Rican mayors in the 50 states, Perez is the first Puerto Rican mayor of a state capital.

Antonio Sosa Pascual, the director of PromoExport, said Puerto Rican companies are notoriously conservative about moving into foreign markets, even the U.S. Perez is a comforting presence for a company looking to expand for the first time beyond Puerto Rico's shoreline.

"Our companies are conservative. They are conservative in their business decisions. In that sense, they are going to think not only once, not twice but five times before they venture outside the island," Sosa said. "This type of network will really make them feel more comfortable, make them feel it's worth a try."

Sosa said he thinks Hartford's short-term gain from its trade show will come from the banking industry. Banco Popular de Puerto Rico and the Doral Bank are both interested in the Connecticut market. Perez and the rest of his small delegation - his aide, Kelvin Roldan, and Oz Griebel of the MetroHartford Alliance - will meet today with top executives of both banks.

Manuel Cidre, the president of the Puerto Rican Manufacturers Association, said he is aware of at least one association member seriously considering opening a manufacturing operation and retail outlet in Hartford - him.

Cidre said he had been considering a site in New Jersey for a bakery operation until he met with Perez.

"I am very, very interested," said Cidre.