...It’s a current example of the value of a Foreign Trade Zones.
...Steelmaker ThyssenKrupp wants the multibillion-dollar plant it’s building in
Calvert, Ala., to be designated as an FTZ so it can get relief from paying
import duties and, as the company says, level the playing field with foreign
imports. But rival steelmakers and unions say it would unfairly give
ThyssenKrupp a leg up in the struggling domestic market.
...How it pans out is yet to be seen, but it shows the critical nature of FTZs.
...Created in 1934, FTZs were designed to encourage companies to maintain
and expand operations in the United States by removing tariff-related
disincentives associated with manufacturing in the United States. It provides
for duty-free entry of goods, including raw materials and components. Duties
are paid only when the finished product leaves the FTZ for U.S. consumption,
and not at all if it never enters U.S. commerce.
...For South Mississippi, which has 8,000 acres in FTZ general purpose and
subzones, some 5,500 people are involved in zone-related activities, which
totaled more than $11.5 billion in fiscal year 2008 – up more than $3 billion
over the previous year.
...“It is a very cohesive group,” Greg Jones, a consultant with the Mobile-
based Foreign-Trade Zone Corp., said of the Mississippi Coast Foreign-Trade
Zone Inc., a non-profit that operates South Mississippi’s FTZ. “It’s
surprisingly nimble and is very much geared towards enhancing the
competitiveness of companies on the Gulf Coast.”
...South Mississippi’s FTZ has changed over 25 years to include multiple sites
in several counties. The most recent alteration shifted acres from Gulfport to
Hattiesburg to help a company there, while another change could draw
international flights to South Mississippi: A reduction in fuel costs that puts
three South Mississippi airports on equal footing with larger airports.
...“It’s one of the elements of establishing international flights,” said Bruce
Frallic, director of the Gulfport-Biloxi International Airport, who hopes to
make the airport a port of entry for general aviation and air cargo. “It brings in
a new dimension to the community.”
State, region FTZs
...Some 2,000 companies nationwide use FTZs, and use is growing. In 1970
there were eight FTZ projects with a total of three subzones. Today there are
more than 250 with about 450 subzones. The combined value of shipments
into FTZs was nearly $502 billion in fiscal year 2007, up from $491 billion the
year before, according to the FTZ Board.
...Merchandise entering an FTZ may be assembled, tested, sampled,
relabeled, stored, salvaged, processed, repackaged, destroyed, mixed,
manipulated and, with approval from the FTZ Board, manufactured.
...Mississippi has three Foreign Trade Zones, with the most recent, the
Northern Mississippi Foreign Trade Zone (Southaven, No. 262), added in
2004. It’s in DeSoto County, a suburb of Memphis, Tenn., at the 219-acre
DeSoto Trade Center.
...The most far-flung trade zone in Mississippi is the Greater Mississippi
Foreign Trade Zone (Vicksburg/Jackson, No. 158). Much of the general
purpose acreage is in and around Vicksburg and Jackson, but it also includes
general purpose acreage in Washington, Tate and Lee counties. One of the
FTZs two subzones is Alliant Techsystems in Iuka, near Alabama and
Tennessee.
...Along the coast is the Mississippi Coast Foreign Trade Zone (Harrison
County, FTZ No. 92), activated in 1985. It has 13 sites of more than 5,000
acres at airports, ports and industrial parks. Six sites are in Jackson, four in
Harrison and three in Hancock counties. Another 3,000 acres are in four
“subzones.”
...Today FTZ 92 has six active users, including three in the subzones. Most of
the zone-related activity involves shipbuilding, offshore vessel repair and
refurbishing and oil refining, said Jones, who assists in administration,
marketing and management of FTZ 92. Collectively general purpose zone
users have 2,000 people and subzones have 3,500 people involved in zone-
related activities. The number of actual workers in the zones is far larger.
...“A lot of people ask about the FTZ, so it puts another tool in our toolbox,”
said Larry Barnett, executive director of the Harrison County Development
Commission. For those who need FTZ procedures, “it helps them be more
competitive.”
...In fiscal year 2008, the most recent year for which figures are available,
total FTZ 92-related activity exceeded $11.5 billion, of which more than $10.5
billion is accounted for by the value of shipments, said Jones.
...“This represents an increase of more than $3 billion from the previous year.
That said, I think the most important figure is the figure of approximately
$700 million in value-added activity,” said Jones.
...There are a couple thousand acres still available within FTZ No. 92 general-
purpose zone. But it can be expanded, and subzone status is available for
companies that can’t be accommodated in the existing zone.
...“A real advantage to companies already in a zone is that, if they find
themselves in need of zone procedures, their location within an already
designated zone area makes implementation of zone procedures quicker and
easier,” said Jones, a former president of the National Association of Foreign
Trade Zones.
Pro-active
...The Mississippi Coast Foreign-Trade Zone Inc. “is very pro-active in
making sure that zone status is made available to any company that needs it,”
said Jones. The board, members of which are appointed by five public entities
in the three coastal counties, has shown that ability to change over the years.
...In 1999 the zone was expanded to include general-purpose zone acreage in
Hancock and Jackson counties. The Greater Gulfport/Biloxi Foreign Trade
Zone Inc. subsequently changed its name to the Mississippi Coast Foreign
Trade Zone Inc.
...Recent changes successfully pursued by the board include a minor boundary
modification, where acreage at the Gulfport airport was relinquished and
shifted to Hattiesburg to help the international distribution operations of
Hudson's Salvage.
...In addition, five Mississippi airports located in FTZs, including three in FTZ
No. 92, can now provide tax-free fuel to flights engaged in international trade.
The reduction in fuel costs by nearly 30 cents per gallon puts Gulfport-Biloxi
International Airport, Stennis International Airport and Trent Lott International
Airport on an even footing with international airports at Atlanta, Miami and
Dallas/Fort Worth when it comes to reduced fuel costs, said Jones.
...Frallic said the most significant aspect of the fuel cost reduction is what it
can do for development. It puts the airports in a position to offer fuel with
savings similar to those at bigger airports, but at airports that are far less
congested.
...“We went a step further,” said Frallic, by going to the state tax commission
and getting a waiver on the state tax of 5 cents a gallon. Add that to the FTZ
savings and the money becomes especially significant – thousands of dollars
for a 10,000 gallon load of fuel.
...Getting the state to go along was helped by the fact that there are currently
no international flights and the number of international general aviation flights
is limited.
...“This is revenue neutral,” said Frallic, and it made sense to lay the
groundwork now in order to have a benefit in place for future use. For aircraft
operators, fuel can make up 40 percent of the cost of their operation. Offering
a savings makes it more likely they’ll use your facility, Frallic said.
Proven worth
...Jones said FTZs have proven their worth. They keep companies in the U.S.
and attract foreign companies.
...“Over the past 23 years, I've had the opportunity of analyzing a number of
situations in which a local plant is struggling to compete in today's global
environment. In many cases, the plant’s biggest competitive threat is not its
brand-name competitor a hundred miles away; it’s its intra-company sister
plant located in the Far East,” he said.
...“You would be surprised at how often zone savings can influence
production share in favor of a U.S.-based plant versus its foreign sister plant,”
Jones said.
...He’s also seen cases where the cost structure within a zone has been a part
of the overall calculation for a new U.S.-based manufacturing investment, and
cases where foreign suppliers migrate to the United States, with FTZ
procedures contributing to the cost structure that justifies that move.
...“The bottom line in all of this is that the finished products involved tend to
have more U.S. value-added in their production. More U.S-value-added
means more U.S. workers are involved in the manufacture of these products,
and, as most people know, the wages for manufacturing jobs are typically
higher than those for non-manufacturing jobs.” - David Tortorano
January 2010
...Steelmaker ThyssenKrupp wants the multibillion-dollar plant it’s building in
Calvert, Ala., to be designated as an FTZ so it can get relief from paying
import duties and, as the company says, level the playing field with foreign
imports. But rival steelmakers and unions say it would unfairly give
ThyssenKrupp a leg up in the struggling domestic market.
...How it pans out is yet to be seen, but it shows the critical nature of FTZs.
...Created in 1934, FTZs were designed to encourage companies to maintain
and expand operations in the United States by removing tariff-related
disincentives associated with manufacturing in the United States. It provides
for duty-free entry of goods, including raw materials and components. Duties
are paid only when the finished product leaves the FTZ for U.S. consumption,
and not at all if it never enters U.S. commerce.
...For South Mississippi, which has 8,000 acres in FTZ general purpose and
subzones, some 5,500 people are involved in zone-related activities, which
totaled more than $11.5 billion in fiscal year 2008 – up more than $3 billion
over the previous year.
...“It is a very cohesive group,” Greg Jones, a consultant with the Mobile-
based Foreign-Trade Zone Corp., said of the Mississippi Coast Foreign-Trade
Zone Inc., a non-profit that operates South Mississippi’s FTZ. “It’s
surprisingly nimble and is very much geared towards enhancing the
competitiveness of companies on the Gulf Coast.”
...South Mississippi’s FTZ has changed over 25 years to include multiple sites
in several counties. The most recent alteration shifted acres from Gulfport to
Hattiesburg to help a company there, while another change could draw
international flights to South Mississippi: A reduction in fuel costs that puts
three South Mississippi airports on equal footing with larger airports.
...“It’s one of the elements of establishing international flights,” said Bruce
Frallic, director of the Gulfport-Biloxi International Airport, who hopes to
make the airport a port of entry for general aviation and air cargo. “It brings in
a new dimension to the community.”
State, region FTZs
...Some 2,000 companies nationwide use FTZs, and use is growing. In 1970
there were eight FTZ projects with a total of three subzones. Today there are
more than 250 with about 450 subzones. The combined value of shipments
into FTZs was nearly $502 billion in fiscal year 2007, up from $491 billion the
year before, according to the FTZ Board.
...Merchandise entering an FTZ may be assembled, tested, sampled,
relabeled, stored, salvaged, processed, repackaged, destroyed, mixed,
manipulated and, with approval from the FTZ Board, manufactured.
...Mississippi has three Foreign Trade Zones, with the most recent, the
Northern Mississippi Foreign Trade Zone (Southaven, No. 262), added in
2004. It’s in DeSoto County, a suburb of Memphis, Tenn., at the 219-acre
DeSoto Trade Center.
...The most far-flung trade zone in Mississippi is the Greater Mississippi
Foreign Trade Zone (Vicksburg/Jackson, No. 158). Much of the general
purpose acreage is in and around Vicksburg and Jackson, but it also includes
general purpose acreage in Washington, Tate and Lee counties. One of the
FTZs two subzones is Alliant Techsystems in Iuka, near Alabama and
Tennessee.
...Along the coast is the Mississippi Coast Foreign Trade Zone (Harrison
County, FTZ No. 92), activated in 1985. It has 13 sites of more than 5,000
acres at airports, ports and industrial parks. Six sites are in Jackson, four in
Harrison and three in Hancock counties. Another 3,000 acres are in four
“subzones.”
...Today FTZ 92 has six active users, including three in the subzones. Most of
the zone-related activity involves shipbuilding, offshore vessel repair and
refurbishing and oil refining, said Jones, who assists in administration,
marketing and management of FTZ 92. Collectively general purpose zone
users have 2,000 people and subzones have 3,500 people involved in zone-
related activities. The number of actual workers in the zones is far larger.
...“A lot of people ask about the FTZ, so it puts another tool in our toolbox,”
said Larry Barnett, executive director of the Harrison County Development
Commission. For those who need FTZ procedures, “it helps them be more
competitive.”
...In fiscal year 2008, the most recent year for which figures are available,
total FTZ 92-related activity exceeded $11.5 billion, of which more than $10.5
billion is accounted for by the value of shipments, said Jones.
...“This represents an increase of more than $3 billion from the previous year.
That said, I think the most important figure is the figure of approximately
$700 million in value-added activity,” said Jones.
...There are a couple thousand acres still available within FTZ No. 92 general-
purpose zone. But it can be expanded, and subzone status is available for
companies that can’t be accommodated in the existing zone.
...“A real advantage to companies already in a zone is that, if they find
themselves in need of zone procedures, their location within an already
designated zone area makes implementation of zone procedures quicker and
easier,” said Jones, a former president of the National Association of Foreign
Trade Zones.
Pro-active
...The Mississippi Coast Foreign-Trade Zone Inc. “is very pro-active in
making sure that zone status is made available to any company that needs it,”
said Jones. The board, members of which are appointed by five public entities
in the three coastal counties, has shown that ability to change over the years.
...In 1999 the zone was expanded to include general-purpose zone acreage in
Hancock and Jackson counties. The Greater Gulfport/Biloxi Foreign Trade
Zone Inc. subsequently changed its name to the Mississippi Coast Foreign
Trade Zone Inc.
...Recent changes successfully pursued by the board include a minor boundary
modification, where acreage at the Gulfport airport was relinquished and
shifted to Hattiesburg to help the international distribution operations of
Hudson's Salvage.
...In addition, five Mississippi airports located in FTZs, including three in FTZ
No. 92, can now provide tax-free fuel to flights engaged in international trade.
The reduction in fuel costs by nearly 30 cents per gallon puts Gulfport-Biloxi
International Airport, Stennis International Airport and Trent Lott International
Airport on an even footing with international airports at Atlanta, Miami and
Dallas/Fort Worth when it comes to reduced fuel costs, said Jones.
...Frallic said the most significant aspect of the fuel cost reduction is what it
can do for development. It puts the airports in a position to offer fuel with
savings similar to those at bigger airports, but at airports that are far less
congested.
...“We went a step further,” said Frallic, by going to the state tax commission
and getting a waiver on the state tax of 5 cents a gallon. Add that to the FTZ
savings and the money becomes especially significant – thousands of dollars
for a 10,000 gallon load of fuel.
...Getting the state to go along was helped by the fact that there are currently
no international flights and the number of international general aviation flights
is limited.
...“This is revenue neutral,” said Frallic, and it made sense to lay the
groundwork now in order to have a benefit in place for future use. For aircraft
operators, fuel can make up 40 percent of the cost of their operation. Offering
a savings makes it more likely they’ll use your facility, Frallic said.
Proven worth
...Jones said FTZs have proven their worth. They keep companies in the U.S.
and attract foreign companies.
...“Over the past 23 years, I've had the opportunity of analyzing a number of
situations in which a local plant is struggling to compete in today's global
environment. In many cases, the plant’s biggest competitive threat is not its
brand-name competitor a hundred miles away; it’s its intra-company sister
plant located in the Far East,” he said.
...“You would be surprised at how often zone savings can influence
production share in favor of a U.S.-based plant versus its foreign sister plant,”
Jones said.
...He’s also seen cases where the cost structure within a zone has been a part
of the overall calculation for a new U.S.-based manufacturing investment, and
cases where foreign suppliers migrate to the United States, with FTZ
procedures contributing to the cost structure that justifies that move.
...“The bottom line in all of this is that the finished products involved tend to
have more U.S. value-added in their production. More U.S-value-added
means more U.S. workers are involved in the manufacture of these products,
and, as most people know, the wages for manufacturing jobs are typically
higher than those for non-manufacturing jobs.” - David Tortorano
January 2010
Economic development
FTZs: The quiet development tool
FTZs: The quiet development tool
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