Puerto Rico economy near standstill as businesses wither

SAN JUAN, Puerto Rico – Economic activity has skidded to a near halt in significant parts of Puerto Rico, leaving the hurricane-smashed island on a knife's edge between slow recovery and partial collapse. Thousands of small businesses are teetering toward insolvency, unable to operate.

Heading into the fourth week since Hurricane Maria slammed into the island, barely 1 out of 6 clients of the islandwide electric utility has power. The rest remain in darkness.

The hum of generators has become the new soundtrack of island life.

The large pharmaceutical manufacturing plants that are the backbone of the island's export economy report major losses, but are slowly returning to operations, powered by diesel. The Bacardi rum empire reported "no major losses" and its rum inventories are safe.

Not so lucky are mom-and-pop shops, law firms, family-run farms, real estate offices, some hotels, large shopping malls and advertising businesses.

"For advertising, it's all dead," said Jaime Diaz Caban, a 41-year-old graphic designer.

Gov. Ricardo Rossello wrote a letter to four key leaders on Capitol Hill last weekend pleading for rapid disbursement of $4.6 billion to "meet the immediate emergency needs of Puerto Rico" beyond relief provided through the Federal Emergency Management Agency.

All the stores on a once-busy commercial street in the city of Caguas were shuttered earlier this week — except for two.

"I've got a generator, and they've got a generator," said Antonio Lopez Martinez, owner of the Personal Defense gun shop, signaling to another store across the street. "But all the others don't." Using generators adds considerably to operating expenses, he said.

"You're using 12 to 15 gallons of diesel a day. If you're working six days a week, you're talking about 90 gallons a week at $4 a gallon," Lopez Martinez said.

Some business owners said commercial generators are not built to endure the months of power outages that Puerto Rico is likely to sustain. "I've bought two generators and the two generators have both broken down. I have to buy a third one," said Julio Soto Quijano, a jeweler. "They aren't meant to be used this hard."

It's not just the lack of power. Without running water, few businesses could allow employees on their premises because bathrooms and toilets do not function.

A major 543-room resort, the Melia Coco Beach, also told employees in an Oct. 4 letter that it was closing permanently.

The tourism and hotel sector, which provides around 80,000 jobs and represents as much as 9 percent of the island's economy, has endured a mixed fate. Some hotels, powered by generators, have been at capacity dealing with 12,000 U.S. soldiers and the influx of federal workers arriving in Puerto Rico. Others remain shut to deal with damage and lack of water.

The massive El Conquistador, a Waldorf-Astoria resort and spa located on a peninsula near Fajardo, may not reopen until Jan. 1, its managers say. The facility has 984 rooms and villas, and normally employs 1,200 full- and part-time staff.

"We got severe damage but we will definitely prevail and come back as fast as we can," said Dermot Connolly, the property's managing director. Even getting replacement carpeting is a challenge, he added.

The island's unemployment rate, already at 10.1 percent before the hurricane, has leapt.

Agriculture, a pillar of the economy, was devastated by the storm. The island has 13,000 small farms that produce sugar cane, rice, tobacco, citrus, meat and dairy and other products.

Agriculture Secretary Carlos Flores told the newspaper El Vocero that losses could top $2 billion in that sector alone due to damage at meatpacking plants, chicken farms and other facilities, only a third of them insured.

"We have a lot of retailers, warehouses, manufacturers that are down right now," said William Villafane, chief of staff to the governor. He lauded the banking sector, which he said is "improving in huge steps. We hope that in a few weeks, they'll be back to normal."

Some citizens see things differently. Charles de Jesus Cruz, an architect, blamed banks for keeping many small businesses from rebounding. "You look at the banks, they are open only four hours a day. It's strangling the economy," he said, adding that he thinks managers are frightened of crime. "Everyone is in survival mode right now."