Foreign Trade Zone's Boost Economic Activity

June 23, 2008
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BATTLE CREEK — Domestic companies operating in U.S. foreign trade zones handled $491 billion in domestic and foreign merchandise in fiscal 2006 and their trade zone activities employed more than 360,000 workers that year, according to the National Association of Foreign Trade Zones.

Michigan is one of the top 15 states in terms of merchandise receipts by FTZs. The association's annual report shows that economic activity by companies located in FTZs increased by 20 percent in 2006 and that exports from U.S. foreign trade zones totaled $30 billion that year, an increase of 30 percent over 2005.

Willard M. Berry, president of NAFTZ, said foreign trade zones are one of the best pro-manufacturing job programs available in this nation today.

"The report underscores the fact that, by eliminating disincentives to manufacture in the United States, FTZs help level the playing field and encourage companies to establish or keep their operations in the United States," Berry said.  

The advantage of an FTZ is that companies using the zone can defer, delay or altogether eliminate U.S. customs duties. Within an FTZ, merchandise can be assembled, stored, processed, salvaged, destroyed, relabeled, mixed, repaired, sampled, cleaned, repackaged or manipulated. Custom duties are paid only when and if merchandise is transferred into U.S. Customs territory. No customs duties are paid on merchandise exported from an FTZ. However, if an imported product is exported back out of the country, no duty is ever paid.

Jan Burland, executive director of Battle Creek-Calhoun-Kalamazoo Inland Port Development Corp., said the foreign trade zone serving the cities of Battle Creek and Marshall and the counties of Calhoun and Kalamazoo has a 50,000-square-foot Customs Cargo Center warehouse that's open to the public. It's "general purpose," meaning that multiple users can conduct a variety of business activities in it. The FTZ is on Dickman Road in Fort Custer Industrial Park.

"It's an economic development tool, surely, but if a company neither imports or exports, they're less likely to find benefits from an FTZ," Burland remarked. "If you do import or export and are looking to cut some money out of your expense side, you might want to think about foreign trade zones."

The Battle Creek-Calhoun-Kalamazoo FTZ has a number of subzones, which are FTZs established for a company at its existing location for a particular purpose. Often, subzones serve a purpose for a period of time and then are deactivated, Burland noted. Subzones include Mead Johnson Nutritional in Zeeland, Abbott Labs in Sturgis, Perrigo Co. in Allegan, Silver Foam Distributing in Jackson, and Total Logistic Control in Zeeland and Kalamazoo.

"Generally, at our foreign trade zone here in Battle Creek, 1 to 5 percent of our inventory at any point in time is foreign trade zone status, and the rest is domestic merchandise," Burland said.

Foreign trade zone authorities are required to provide an annual report to the U.S. Department of Commerce regarding the dollar value of merchandise that went into the zone and the dollar value of merchandise that left the zone, either for domestic consumption or for export, Burland said.

Columbian Logistics Network is the operator of the Kent-Ottawa-Muskegon counties' general purpose foreign trade zone. The zone is located at two of CLN's facilities, Columbian Distribution Services, 900 Hall St. SW, and Columbian Interstate Services, 2900 Dixie St. in Grandville. The foreign trade zone at Columbian boasts nine loading docks, two rail spurs for inbound and outbound shipments and electronic security. The facilities are food grade licensed. In addition, ESCO Co. and Diesel Technology operate subzones in the Grand Rapids area. 

There also is a designated foreign trade zone on the grounds of Gerald R. Ford International Airport, but it has never been activated.  

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