Strategic Advantages of Near Shoring in Costa Rica

Is there a strategic advantage to near shoring in Costa Rica? Let’s take a look:

• Cost
• Co-location
• Infrastructure
• Human capital
• Proximity — time and space
• Trade stability
• Environmental stewardship
• Business-friendly government system

In 1987, Baxter Healthcare opened the first medical device manufacturing facility in Costa Rica. Since that time, the industry has continued to expand and today makes up 36% of all Costa Rican exports. Why do industry players continue to choose Costa Rica for nearshoring? A number of factors make the country attractive.

Cost

Direct labor cost in Costa Rica is roughly one-third of most regions of the United States. For devices with substantial labor content, the savings can be significant.

Co-location

For component and sub-assembly manufacturers, facilities close to customers reduce shipping time and enable vendors to be more responsive. With most med device manufacturing within a two-hour radius, expediting and reliable same-day delivery are straightforward.

Infrastructure

Unlike some other low-cost countries, Costa Rica offers substantial supporting infrastructure. Products and services such as packaging materials, sterilization, and biocompatibility testing are readily available locally.

Human capital

The country has a large base of skilled direct labor. The government has also pursued a long-term effort to produce greater numbers of technical and STEM personnel. With several decades of industrial development, there is a large base of experienced engineering and managerial talent.

Proximity — time and space

Travel to Costa Rica is relatively easy. With a roughly four-hour flight from Atlanta to San José, door-to-door travel within a single day is common. There is minimal jet lag and no need to adjust one’s body clock.

With the time zone mirroring U.S. Mountain or Central time, U.S.-based personnel can avoid the challenges associated with working in Asia. Normal business hours generally match, reducing the need for evening or very early morning calls and meetings.

Trade stability

The current global trade reset has created uncertainty across a number of trading relationships. The United States and Costa Rica, however, have a positive trade relationship without the threat of high punitive tariffs.

Tax benefits

American companies locating manufacturing operations in Costa Rica can access benefits such as income tax deferrals, customs duties exemptions, VAT exemptions, and remittance tax exemptions.

Environmental stewardship

For companies that prioritize carbon performance, Costa Rica offers sizable advantages. Approximately 99% of the country’s electricity is generated from renewable sources, including geothermal, wind, solar, and especially hydropower.

Business-friendly government

The national government has been forward-looking for many years, identifying medical device manufacturing as a key sector. The nation has the lowest corruption index score in Central America and continues to improve, while contract law is straightforward. The trade promotion agency Procomer is proactive in helping companies with legal, logistical, and marketing support.

In choosing to locate our newest facility in Alajuela, Costa Rica, ProMed Molded Products considered all of these benefits. Lower costs tied to higher labor-content molded components and assemblies, along with co-location near many of our customers, ranked high on our list. Ultimately, the whole of these factors is greater than the sum of its parts. Our facility’s construction will be complete in late 2025, and we plan to be in production by Q2 2026.