Puerto Rico town to dismiss 200 in largest such layoffs

SAN JUAN, Puerto Rico — A small mountain town in central Puerto Rico whose economy depended heavily on manufacturing announced Thursday it will dismiss 200 employees in the largest layoff of its kind in the U.S. territory in more than a decade.

Cidra spokeswoman Eunice Castro told The Associated Press that it is necessary to lay off 35 percent of workers because the town of 40,000 people is running out of money after the closure of a PepsiCo manufacturing plant in February, which itself cost 200 jobs.

The soft drink company generated some $7.5 million a year and represented 40 percent of Cidra's budget. As a result of the plant closure, the town budget will shrink from $18.6 million to $11.1 million in the upcoming fiscal year, with $10.5 million alone needed for employee salaries, Castro said.

"None of this adds up," she said. "It's not possible."

She said Mayor Javier Carrasquillo analyzed whether the town could save money by implementing furloughs, but found that the 572 current employees would have to work only three hours a day for that plan to generate sufficient savings. The layoffs will become effective June 30.

Carrasquillo told the local newspaper El Nuevo Dia that he worries other towns might face similar situations in the near future as Puerto Rico struggles to emerge from an 11-year recession and tries to restructure a portion of its more than $70 billion public debt load.

A federal control board overseeing Puerto Rico's finances is expected to approve a fiscal plan by next week with new austerity measures that Gov. Ricardo Rossello has rejected, including layoffs and a 10 percent cut to a public pension system facing nearly $50 billion in liabilities. Puerto Rico in general is trying to diversify its revenue sources, with manufacturing representing about 45 percent of the island's economy.

Several of Puerto Rico's 78 municipalities have implemented layoffs or eliminated jobs through attrition in the past decade, but none as big as Cidra's. Currently, there are 52,100 employees working in all municipalities, compared with 64,900 a decade ago, said Vilmar Trinta, spokeswoman for the island's Department of Labor.

Puerto Rico also has seen a drop in population in the past decade as a result of the economic crisis, with roughly half a million people leaving for the U.S. mainland in search of jobs and a more affordable cost of living, including an estimated 135,000 who fled after Hurricane Maria struck the island as a Category 4 storm on Sept. 20.