It's a Milky Business
Good Morning. Puerto Rico is known for its tropical beaches, warm climate, the piña colada and, apparently, the unofficial birthplace of business monopolies.
If you're only seeing blue caps on the fresh milk section of the grocery store, get used to it. Dairy giant Tres Monjitas is taking over the milk industry, as the red caps competitor Suiza Dairy approaches a near total halt.
NEW MONOPOLY ALERT
Suiza Dairy Evaporating Quickly
What once started as good faith bargaining 38 days ago, over expanding worker's health care coverage, was just the tip of the iceberg for Suiza Dairy, after more than 80 years of operation.
How it started
From the end of the 70s and the beginning of the 80s there was such fierce competition in the milk industry in Puerto Rico. The two leading milk and dairy products brands were Suiza Dairy and Tres Monjitas. Both companies were tiptoeing one another, expanding its market by offering new milk derivatives products or diversifying existing ones.
Now, similar to many other places, Puerto Rico has experienced a decrease in the consumption of milk. Evolving consumer behavior between plant-based milk alternatives and other competing beverages lead to a decline in milk consumption.
Suiza Dairy reported it lost more than $30 million in the last year on its operation on the island. As a result, the company laid off 483 employees last month. The dairy brand said these layoffs were due to the economic situation and the determination not to continue business with 900 small local companies to which Suiza distributed its products.
The layoffs happened just as the Central General Workers' Union (CGT) resumed negotiations with Suiza Dairy about healthcare benefits. The workforce signed a collective bargaining agreement with the dairy company, back in 2013. But the section of the company’s contributions to the medical plan were left pending to be negotiated later.
When the workers resumed these negotiations this past month, Suiza stepped back and refused to negotiate in good faith. So since then, the union has been picketing daily in front of the plant. Therefore, the company stopped delivering fresh milk, especially to the most distant and mountainous places.
What’s at stake?
Puerto Rico's primary agricultural industry is dairy farming. The dairy industry in Puerto Rico represents 25% of the island's total agricultural-related income, which translates to $215 million dollars annually.
Suiza Dairy's capability was to produce 500,000 quarts of milk daily. Therefore, the labor dispute resulted in the takeover by Tres Monjitas of the entire milk distribution on the island.
A gallon of whole milk in Puerto Rico costs just under $7. That compares with the U.S. average price of about $4.26 a gallon, according to USDA.
Who benefits?
Tres Monjitas president and CEO, Jaime Fonalledas, said that his company continues to focus on responding to the consumers' demands, but remained silent about a possible acquisition of Suiza Dairy.
Along with the main plant in Rio Piedras, Suiza also has the DFM facility in Aguadilla, which produces juice and milk, and three distribution centers in Juncos, Ponce, and Hatillo.
Amidst the strike, Tres Monjitas will also assume the supply of fresh milk to all school meals that make up of nearly 250,000 students.
What’s next?
There are no signs of a labor-management agreement.
"If the strike matter isn't resolved this week, I fear that Suiza Dairy will cease to exist", said Héctor Iván Cordero, the president of the Puerto Rico Farmers Association.
If this is true, Tres Monjitas will be the only company capable of conducting such business in the island. This will result in the birth of another local monopoly, alongside Puerto Rico Aqueduct and Sewer Authority (PRASA) and LUMA, formerly associated with PREPA, the territory’s bankrupt power monopoly.
The Empresas Fonalledas is a huge roleplayer in Puerto Rico's economy. In addition to Tres Monjitas, its assets include Puerto Rico's two main shopping centers, Plaza Las Americas (San Juan) and Plaza del Caribe (Ponce); the company that operates Starbucks stores in the island, and soft-serve premium ice cream retail chain, Soft & Creamy.
EN ROUTE TO THE SUPREME COURT?
Companies Do Not Sit Idly with Minimum Wage Increase
A group of businessmen is making a second attempt to invalidate the recent $10.50 salary increase in Puerto Rico by seeking to have the case heard in the Supreme Court.
The group, consisting of six organizations, filed two appeals before the High Court. One appeal requested a Writ of Jurisdiction and the other appealed for an oral hearing, both seeking to suspend the implementation of the new minimum wage.
The appeals come in just as Judge Anthony Cuevas of the Court of First Instance dismissed the initial lawsuit after a hearing stating that the increase scheduled for July 1, 2024, was supported by the law. However, the attorney for the business group, Jaime L. Sanabria, believes that this decision was "erroneous" and "not legally grounded."
With these appeals, the businessmen aim to gain clarity on the current state minimum wage and its enforceability. They also demand an urgent determination of the state minimum wage to be paid by July 15, emphasizing the need for an oral hearing to express their positions. They believe that holding an oral hearing will assist the Court in making a well-informed decision based on the arguments presented by all parties.
$4 MILLION LOSS
LUMA's Reputation Left In The Dark as it Sparks Community Tension
LUMA, the private administrator of the island's electric control transmission, announced that the transformer delivered to Santa Isabel at a cost of more than $4 million has malfunctioned.
In response, the power company said that it will replace the transformer from another one in a substation at Maunabo, a municipality located in southeast Puerto Rico. The process could take four to six weeks, said LUMA.
Upon the announcement, a blockade was put in place at the site by hundreds of residents and its Mayor, Angel Lafuente Amaro, who said its transformer will stay untouched. LUMA assures that the transformer in Maunabo is not in use and its move would not affect the community, but residents remain skeptical, especially due to the hurricane season ahead and the need to have a concrete backup plan before removing the transformer.
“The transformer in Maunabo is not connected to the grid and is not essential for the continuity of service in the municipality. The electrical service of Maunabo residents will not be impacted,” LUMA said in a written statement issued Friday.
Meanwhile, thousands of clients in Santa Isabel, Coamo and Aibonito are plagued by blackouts causing permanent damage to their appliances, due to outages and voltage fluctuations the transformer's supposed to mitigate.
Coamo Mayor Juan Carlos García Padilla has requested that Gov. Pedro Pierluisi, the Puerto Rico Energy Bureau, LUMA, and PREPA work together to resolve the situation as soon as possible.
“The president of LUMA [reported] that the transformer did not pass the specified tests which it'll be vital to bring another transformer from Maunabo. This will take six more weeks of anguish for our inhabitants and we are not willing to acknowledge it,” the leader demanded. “We can't take it any longer, Coamo is the town most influenced by the voltage varieties that have affected everybody. I am requesting that you just come together and act mindfully so that this situation is settled. We are not getting to hold up six more weeks. Usually unacceptable.”
BEFORE YOU HIT THE BEACH
Cost of Living
The High Price of Paradise: It is 2.3% more expensive to live in urban areas of Puerto Rico than in the US, a study revealed.
In fact, Tokyo is cheaper to live in than San Juan, according to another global survey.
How much more expensive is it to live on the island? Compare City Costs and Salaries. Use this cost of living and salary calculator to find out the standard living cost between U.S. cities and Puerto Rico.
Politics
PIP Party Calls for Island Supreme Court to Hold Nov. 5 Referendum: The Puerto Rican Independence Party (PIP) described the plebiscite as “unconstitutional, misleading and fraudulent.”
Consumer
Auto Sales up 3% in June Versus SPLY: The United Automobile Importers Group (GUIA, in Spanish), an organization that represents the automotive industry in Puerto Rico, revealed that the month of June ended with a total of 10,772 units sold in Puerto Rico compared to the Same Period Last Year of 10,458, representing an increase of 3%.
The sport and sport premium had a huge spike in June with an increase of 138%, compared to the same month last year, followed by the sedan crossovers and premium sub-compacts with an increase of 15.11%.
YTD sales, on the other hand, reflected a decrease of 1.62%, through June 2024, sales reached 61,026 units versus the 62,032 units sold in the same period of 2023.
LAST BUT NOT LEAST
Passenger Traffic Increase of 11.6% at Luis Muñoz Marín Airport (SJU)
Hurry! The Energy Support 2.0 $50k Incentive, Department of Economic Development and Commerce (DDEC, in Spanish) Extended Their Application Period
Hoops Over Grammys: Top Reggaeton Players Lead Basketball boom in Puerto Rico
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