News today from Managua as Astro Packing Solution, S.A. announces the indefinite closure of their manufacturing facility in Tipitapa.
The business blames the shortage of raw materials, namely the reels of paper which are the key products needed to make cartons. As a result, they say they are forced to close.
In a letter to its clients, Astro Packing explained that the Covid-19 pandemic has caused a huge drop in the production of paper reels. This has affected supply and demand with a spike in prices of the raw materials, a problem that has been going on for some months
They also said that paper mills were prioritizing the supply to their own local markets which left Astro Packing, a foreign company, without the ability to obtain supplies. In the end, the production capacity was affected to such an extent that it forced the indefinite shut down of their operation.
Astro Packing has been a landmark for many years on the route to the Augusto Cesar Sandino International Airport on the east side of Managua. They manufacture paperboard boxes and also have the specialized machinery to produce custom corrugated boxes of any size, shape or design.
Astro also has a Zona Franca or Free Zone; Astro Cartón Nicaragua S.A. which they say is currently still operating
The concept of a Zona Franca is to create an industrial park with companies relying on local or imported raw materials who then manufacture a finished product that is sold abroad. Under a special tax and customs regime supervised by the General Customs Directorate (ADUANA), these manufacturers are considered to be located outside the national territory for tax purposes. This is intended to promote investment in Nicaragua, increase exports and provide local jobs.
Zona Francas have their own Minimum Wage category; “Industries Subject to a Special Regime”. The current monthly minimum wage for Zona Franca employees, as of March 1st 2021 is 6,926 Córdobas or a little under US $200. They are currently under a four year contract (2018-2022) which gives them an 8.25% annual raise.
Due to the pandemic, several Zona Franca businesses have closed temporarily, laid-off staff or closed indefinitely.
