At the start of February, Randy Carr, the CEO of World Emblem, booked a plane ticket to the Caribbean. President Donald Trump had just announced a 25% duty on Mexico and Canada – what would be the first of many tariffs on other countries. World Emblem, the world’s largest producer of clothing patches which counts the Department of Homeland Security, UPS, NHL, and Levi’s as customers, produces 65% of its patches in Aguascalientes, Mexico. “It just came really fast and a lot harder than I expected,” said Carr of the tariffs. “The 25% tariffs were enough to say, this is nuts. We need to change this right now.” While President Trump eventually limited his 25% tariff to goods that don’t comply with the US’s current free trade agreement with Mexico and Canada, USMCA, the uncertainty around trade was motivation enough to start moving his supply chain. “The following week we were on a plane to… the Dominican Republic,” said Carr. World Emblem, like many other US companies, is scrambling to move manufacturing out of highly tariffed nations like Mexico and China. (World Emblem produces up to 30% of its products in China, which currently faces a 30% tariff.) While many businesses are shifting manufacturing to southeast Asian countries like Vietnam and Malaysia, Carr looked a bit closer to home: the Dominican Republic. Manufacturing in the Dominican Republic has grown exponentially in recent years, with nearly 20% of foreign investment funneling into the sector, just behind tourism, according to the Innovation Technology and Information Foundation. Foreign direct investment (FDI) into the Dominican Republic last year increased by 7.1% from the year prior, capturing 41% of all FDI into Central America, according to the United Nations Conference on Trade and Development. The country has several key factors attractive to companies: a stable government, a skilled workforce, proximity to the United States, and the so-called free zones, where 60% of the country’s manufacturing is located. Free zones, which operate relatively tax-free, can save company’s millions of dollars. “The country is well-known for its beaches, but it’s not as well known for the manufacturing sector,” said Marino Auffant, founder of Auffant Global Advisory, which focuses on building public-private strategies in the country to expand manufacturing investment. “We have seen, especially from China, some US companies moving or announcing operations shifting to the Dominican Republic over the past few months.” Apparel maker Hanes, footwear brand Timberland, aerospace companies like the Eaton Corporation, IT companies like Rockwell Automation, and medical device companies like Cardinal Health all have manufacturing facilities in the Dominican Republic. World Emblem says it will save seven figures a year by moving to the Caribbean island. This month, it plans to break ground on a 100,000 square foot plant set to open next year. The company plans to eventually move 30-35% of its manufacturing capacity to the Dominican Republic. “We moved super quick on this one. It was every day we were on the phone trying to get this done,” said Carr. Free zones and proximity There are 92 free zones (FZs) in the Dominican Republic that house over 850 companies, according to the National Free Zone Council. These zones have been around for nearly 50 years. And while not exempt from tariffs, they do allow companies to avoid 100% of taxes on things like income, export, local, and some import taxes on machinery and intellectual property. “Essentially, the DR’s free zones operate a ‘turnkey’ suite of services that ease and streamline doing business in the country,” said Stephen Ezell, the vice president of global innovation policy at the Information Technology and Innovation Foundation. A free zone is not exclusive to the Dominican Republic – there are 135 countries with free zones, according to the World Free Zones Organization. But what is unique to the island is its proximity to the United States. It takes just three days for a cargo vessel to sail from the Dominican Republic to Miami, and five days to New York. There are even plans to expand a port in the north of the country, which could cut transit time to the US by one day. By comparison, it takes cargo vessels from Asia three to four weeks to reach the West Coast, and four to six weeks to hit the East Coast. “The FZs present a very attractive environment for near-shored manufacturing, particularly of goods intended for export to North American markets,” Ezell wrote in a 2024 report about the country’s role in semiconductor manufacturing. The Dominican Republic’s free zones also house technical training schools, which the country has invested in to help train and recruit employees for companies. Wages are also about 30% lower in the Dominican Republic compared to Mexico, a country known for its cheap labor, according to Carr. The United States has a trade surplus of $5.4 billion with the Dominican Republic, one of the largest of any country. Until the Trump Administration applied its 10% universal tariff to goods from the country, the Dominican Republic–Central America Free Trade Agreement had allowed free trade between the two countries since 2004. “The manufacturing boom of the Dominican Republic has been accompanied by a growing US trade surplus because most inputs that come to the Dominican Republic for the free zones come from the United States,” said Auffant. ‘Small island’ There is one big hurdle for businesses looking to shift manufacturing to the Dominican Republic: space. The country is half the size of South Carolina, so land for the free zones is limited. In fact, the government has struggled to secure enough space for free zones, according to Ezell. “I think it’ll be a bigger leap for the Dominican Republic to become a base for manufacturing that services the Asian market at scale. It’s a small island,” said Ezell. And with that smaller footprint comes a smaller workforce available for technical training needed for manufacturing. The entire labor force on the island is 5.41 million people, according to the CIA World Factbook. “I think (there’s a) need to grow the workforce, especially at the engineer level. And I know that’s a priority for the government,” said Auffant. But the biggest obstacle to growth is simply knowledge. People may not know about the country’s manufacturing capabilities. “I think that leads many companies to default to other places more because of lack of knowledge of the manufacturing success story,” said Auffant. Carr, who said the Dominican Republic wasn’t initially on his radar as a viable country to manufacture his products, revealed the less conventional way he discovered the place where he’d eventually invest millions of dollars. “ChatGPT,” he said.
US companies are scrambling to move supply chains. This small island could be the answer
TruthLens AI Suggested Headline:
"U.S. Companies Seek Manufacturing Alternatives in the Dominican Republic Amid Tariff Uncertainty"
CNN
7.4
TruthLens AI Summary
In the wake of increasing tariffs imposed by the Trump administration, many U.S. companies are reassessing their supply chains to mitigate costs. Randy Carr, the CEO of World Emblem, a leading producer of clothing patches, found himself urgently needing to relocate production when a 25% tariff on goods from Mexico and Canada was announced. With 65% of World Emblem's patches produced in Aguascalientes, Mexico, Carr realized the potential financial impact of these tariffs. Although the tariffs were later limited to non-compliant goods under the USMCA, the uncertainty spurred Carr to explore alternatives, leading him to the Dominican Republic. This Caribbean nation has seen significant growth in its manufacturing sector, attracting nearly 20% of foreign investment, thanks to its stable government, skilled labor force, and advantageous free trade zones that allow companies to operate with reduced tax burdens. Carr plans to move 30-35% of his company's manufacturing capacity to the Dominican Republic, which he believes will save millions annually.
The Dominican Republic offers unique advantages for U.S. companies looking to shorten supply chains. With only a three-day shipping time to Miami, the proximity to the U.S. market is a significant draw. The country has invested in technical training schools to enhance the workforce's skills for manufacturing roles, presenting a viable option for companies looking to near-shore their operations. However, challenges remain, particularly regarding limited land availability for manufacturing facilities, as the island is relatively small compared to other potential locations. The workforce, while trained, is also limited in size, which may hinder expansive manufacturing growth. Despite these obstacles, the Dominican Republic has emerged as a promising alternative for companies like World Emblem, which are eager to capitalize on its manufacturing boom and favorable trade conditions. Carr's decision to explore options beyond traditional manufacturing hubs highlights a broader trend among U.S. businesses adapting to shifting trade policies and seeking more reliable production environments.
TruthLens AI Analysis
The article outlines the challenges faced by U.S. companies due to tariffs imposed by the Trump administration, particularly focusing on Randy Carr, CEO of World Emblem, and his decision to relocate manufacturing. By highlighting the Dominican Republic as a viable alternative for supply chain relocation, the article illustrates broader trends in U.S. businesses seeking to optimize their manufacturing locations amid shifting trade policies.
Motivation Behind the Article
The piece aims to inform readers about the current dynamics of global supply chains influenced by political decisions. By showcasing the experience of World Emblem, it underscores the urgency for businesses to adapt to changing trade environments. Ultimately, the intent is to present the Dominican Republic as a strategic option for companies looking to mitigate the impact of tariffs and maintain competitiveness.
Public Perception Goals
The narrative is designed to foster a positive perception of the Dominican Republic as a manufacturing hub. By emphasizing its stable government, skilled workforce, and proximity to the U.S., the article aims to shift public sentiment towards favoring investment in the region. This could potentially encourage other companies to consider similar moves, thereby boosting the Dominican economy.
Omissions or Hidden Agendas
While the article paints a generally optimistic picture of relocating to the Dominican Republic, it may downplay potential challenges such as local regulatory hurdles, competition, and the complexities of workforce integration. These factors could complicate the narrative of a seamless transition and might be worth exploring in greater depth.
Manipulation Assessment
The article's manipulative potential appears moderate. It presents a compelling case for relocating to the Dominican Republic, but the emphasis on positive aspects may obscure potential downsides. The language used is primarily supportive, focusing on benefits while avoiding more critical perspectives that could inform readers of the full scope of risks involved.
Truthfulness of the Content
The facts presented, such as the growth of foreign direct investment in the Dominican Republic, are likely accurate and verifiable through various economic reports. However, the overall portrayal of the situation may contain biases that favor the view of relocation as a wholly beneficial move.
Societal Implications
The information can influence societal attitudes toward manufacturing relocation, potentially leading to increased investments in the Dominican Republic. Economically, this could stimulate job creation in the region, while politically, it might encourage discussions about trade policies and international relations, particularly with Latin American nations.
Target Audience
The article likely appeals to business leaders, investors, and policymakers who are interested in supply chain strategies. Additionally, it may resonate with local leaders in the Dominican Republic seeking to attract foreign investment.
Market Impact
This news could have implications for companies involved in manufacturing and supply chain logistics. Stocks of firms exporting goods from the Dominican Republic or those investing in the region may see positive movements, while companies heavily reliant on China or Mexico might face scrutiny or pressure from investors.
Global Power Dynamics
The article indirectly touches on the broader context of U.S. trade policies and their impact on international relations. Shifts in supply chains may affect geopolitics and economic alliances, particularly as companies look for alternatives to China amid ongoing tensions.
Use of AI in Writing
While no direct evidence suggests AI was used in composing the article, certain patterns in language and structure could indicate the influence of algorithmic writing assistance. If AI were involved, it might have prioritized clarity and engagement, focusing on critical points to sustain reader interest.
In conclusion, while the article serves to inform about shifting supply chain strategies in light of tariffs, it selectively presents information that promotes the Dominican Republic as an attractive manufacturing option. This could lead to increased investment in the region, although it may gloss over potential challenges. The overall reliability of the content is strengthened by factual references, but the framing may reflect a bias towards optimism.