Communications Systems Inc. (CSI), a global provider of connectivity and telecommunications infrastructure and services, announced it is closing its Suttle business unit in Costa Rica and will consolidate them into its Minnesota facilities.
In a news release, the company stated that the closure of its production plant, located in Alajuela, means the dismissal of its 113 employees.
“Wind down activities will commence this week and it is expected all production will be transferred within the next six months,” the statement said.
The company’s website, however, states that the Costa Rica plant employs “170 plant workers and 20 support staff including management, engineers, designers, quality assurance, procurement, materials, and logistics.”
CSI launched operations in Costa Rica in 1989 with fiber termination and injection molding production for the company’s Suttle business unit, known here as Suttle Costa Rica S.A.
“The closure is intended to increase the efficiency of Suttle’s operations and improve the lead time and availability of its products,” CSI stated.
The company noted that the closure also comes as a response to declines in revenue in CSI’s Suttle business segment, which has experienced two years of operating losses.
CSI’s Chief Executive Officer Roger Lacey said the decision to close the Alajuela facility was not easy and that they did consider alternatives to closing it.
“But we are facing the reality that customers, primarily in the US, demand quick turn around on orders, prefer American-made products, and demand value for money spent. Thus, we are unable to maintain our two production facilities,” he said.
Mark Fandrich, Chief Financial Officer, said the total cost to close the Costa Rica facility is expected to be approximately $1.6 million.
“Payback is expected to be less than one year after concluding the closure,” he said.
In March 2014, Suttle announced that it would invest $1.2 million in its Alajuela facilities, for new equipment, software, molds for its products and expansion of the physical plant. The investment also would represent the creation of 50 new jobs, the company said at the time.
Trade promotion agency offers help
General Director of the Costa Rican Investment Promotion Agency (CINDE) Jorge Sequeira said the agency received the news of Suttle’s closing on Tuesday.
“We were officially informed that the company has experienced a drop in revenues from its Costa Rica operations for the past two years. Therefore it will consolidate its operations at its U.S. facilities in order to take advantage of existing resources,” Sequeira told The Tico Times in a written response.
Sequeira also confirmed that CINDE offered Suttle support to relocate its staff to other transnational companies that employ workers with a similar profile.