DOMINICAN REPUBLIC--BLUE LANTERN APPLICATION

UNCLAS SANTO DOMINGO 002829

SIPDIS

STATE FOR: PM/DTCC PETER MAXWELL

E.O. 12958: N/A
TAGS: ETTC KOMC DR
SUBJECT: DOMINICAN REPUBLIC--BLUE LANTERN APPLICATION
05-956096

REF: SECSTATE 69855


1. Per reftel request EconOff visited HiRel Systems
International, LLC (HRSI) in the San Isidro Free Trade Zone
of Santo Domingo. The company is a fully-owned subsidiary
company of HiRel Systems International of the United States.
EconOff met with General Manager Domingo Gonzalez who has
headed the manufacturing operation in the Dominican Republic
since it started operations two years ago. The operation
makes electromagnetic components used in the manufacture of
medical and communications equipment.


2. The facility receives all of its input materials from the
parent company's operation in Dover, New Hampshire, assembles
the parts and re-exports 100 percent of the finished
components to the Dover facility by Federal Express or UPS.
Strict rules granting tax breaks to companies located in
Dominican free trade zones prohibit the merchandise from
being sold in-country. The New Hampshire facility performs
final quality control, packages the parts and ships them to
the customer.


3. HiRel Systems' Dominican operation employs 88 Dominicans
and is in the process of hiring 25 new employees to expand
its production. According to Mr. Gonzalez, the operation has
a higher quality output than a similar assembly operation
owned by HiRel in China. The higher reliability combined
with a quicker turnaround time and reduced shipping costs
that result from closer proximity to the United States makes
the Dominican operation more efficient than the one in China
and Gonzalez is optimistic about the facility's future.


4. EconOff also met with HiRel's local controller, Luis
Martinez. Post is not aware of derogatory information about
the company and HRSI appears to be a reliable recipient of
controlled technical data for U.S. Munitions List items.
KUBISKE