U.S. ports play a major role in the many advantages Foreign Trade Zones offer. This one-two punch keeps America competitive in the race for investment dollars and helps power the recovery.
With 327 official ports of entry—including seaports, airports and land border locations—the U.S is the largest trading nation in the world for goods and services. Ports provide the link for getting goods to consumers and transporting U.S. made products overseas for export. It is here that Customs and Border Protection (CBP) enforces the import and export laws and regulations of the U.S. federal government and conducts immigration policy and programs. Officers accept entries of merchandise, clear passengers, collect duties and enforce various provisions. Ports also perform agriculture inspections to protect the country from potential carriers of animal and plant pests or diseases that could cause damage to America’s crops, livestock, pets and the environment.
United States international export and import sums for goods and services have been significant. 2009 exports totaled $1.6 trillion and imports $1.9 trillion while 2010 exports reached $1.8 trillion and imports $2.3 trillion. This year’s numbers look to be similar with 2011 January to March exports alone reaching $505.2 billion and imports $645.8 billion. Major category service imports and exports include travel, royalties and license fees and other private services. The March 2010 ($150.3 billion) to March 2011 ($172.7 billion) increase in exports of goods reflected increases in industrial supplies and materials ($9.9 billion); capital goods ($4 billion); foods, feeds and beverages ($2.4 billion); automotive vehicles, parts and engines ($2.4 billion); and consumer goods ($0.7 billion).
There are 361 commercial seaports serving the U.S., the largest being Los Angeles, Long Beach and New York/New Jersey. Ports are found along the Atlantic, Pacific, Gulf and Great Lakes coasts, as well as in Alaska, Hawaii, Puerto Rico, Guam and the U.S. Virgin Islands. They are gateways to domestic and international trade with more than 3,100 publicly and privately owned cargo and passenger handling facilities. Established by enactments of state government, public port agencies develop, manage and promote the flow of waterborne commerce. They act as catalysts for economic growth, and depending on the individual port facility, may accommodate anything from barges, ferries, recreational watercraft, passenger ships and ocean-going cargo. Ports also play a role in national security by supporting the mobilization, deployment and resupply of U.S. military forces.
The increasing demands placed on waterborne transportation have been addressed through billions of dollars worth of port improvements. Part of the rationale to update and modernize facilities stems from the significant benefits ports contribute to local and regional economies. U.S. ports and their harbors and the industries located within them help form a vital economic interface between the U.S. and the world. In addition to port sector jobs with above average wages, U.S. businesses related to waterborne commerce contributed more than $3 trillion to the U.S. economy and almost $213 billion in federal, state and local taxes—seaport activities alone accounted for $31.2 billion.
The U.S. Foreign Trade Zone (FTZ) program has been a critical tool in helping U.S. ports remain a strong economic force in the global community. The program was created in 1934 with the goal of helping businesses in the U.S. stay competitive with foreign manufacturers and suppliers. According to the National Association of Foreign Trade Zones, a not-for-profit trade association, there are currently 256 General Purpose Zones and 498 Subzones in the United States (including Puerto Rico). They handle almost $500 billion worth of merchandise annually.
Located in or near a U.S. Customs Port of Entry, FTZs can benefit companies in many ways. Regardless of proximity, foreign and domestic merchandise in these areas are considered to be outside of “Customs territory.” This means that if the final product emerging from a FTZ is exported, no U.S. customs duties or excise taxes are levied. If the product is imported into the U.S., Customs duties and excise taxes are due only at the time of transfer from the FTZ to U.S. consumers.
Once received at a FTZ, goods can be assembled, tested, sampled, relabeled, repaired, stored, salvaged, processed, destroyed, mixed, repackaged, manipulated and manufactured (with special approval) before entering U.S. commerce. Therefore, just like the duty on a product manufactured abroad and imported into the U.S. is paid at the rate of the finished product rather than that of the individual parts, materials or components, so is the duty on merchandise made in a U.S. FTZ. If a product never enters the U.S. market, no duties or taxes are paid—there is no time limit on how long merchandise can remain in a zone.
Businesses in a FTZ may see a reduction in duties on labor, overhead and profit. They also can be granted special privileges, including direct delivery, to substantially reduce importation costs and increase supply-chain efficiency. Direct delivery provides for imported shipments to move directly from the port of unloading to a U.S. manufacturing or distribution facility in-bond, eliminating certain types of delays that can be associated with Customs entry at the port. Full security reviews are still in place at the port and are supplemented by additional security at the FTZ to complement government efforts to secure international cargo. This can result in lower inventory levels and expedited movement of goods to and from the zone.
FTZ companies will also see reduced fuel costs, reduced transportation surcharges and improvement of container transportation capacity.
Benefits can be seen on other sides as well.
The FTZ program directly supports hundreds of thousands of U.S. jobs. And while the U.S. government incurs a reduction in Customs duty revenue by the use of FTZs, it more than makes up for it by the income tax gained from direct and indirect jobs FTZs help to create and retain. In addition, local governments benefit from sales and property taxes.
U.S. ports are playing a major role in the current economic recovery. There has never been a better time for companies to locate their business in a FTZ at U.S. ports.
Port Freeport: Place for Business Opportunity
Port Freeport came into being more than 100 years ago when the first jetty system was built in Freeport, Texas. Since that time, it has become one of the fastest growing ports on the Gulf Coast and currently ranks 16th among U.S. ports in international cargo tonnage handled. With a current channel of 45-foot depth, soon to be widened and deepened, just 3 miles from open Gulf of Mexico waters, Port Freeport offers more than 7,500 acres for future development. Port Freeport serves its customers and stakeholders through development and marketing of competitive world-class navigational capabilities, technically advanced marine and multimodal terminal services and port-related industrial facilities while achieving profits and creating jobs as a leading economic catalyst for the Texas Gulf Coast.
Port Freeport offers the following benefits: rail, highway, vessel and/or barge transportation can be seamlessly utilized; direct access to the Gulf Intracoastal Waterway, Brazos River Diversion Channel, State Highway 36, State Highway 288 and Union Pacific Railroad; only a few minutes commute from quality schools, housing and medical care and just 59 miles south of downtown Houston, Texas—the nation’s fourth largest city; surrounded by a highly qualified, technical labor pool; available existing water supply, wastewater collection, electrical distribution, gas and telephone; existence of adjacent properties that could support future growth and development; air freight service by all national carriers from multiple surrounding airports within a 60-mile radius; availability of local, high-quality trainable workforce and close proximity to universities and technical colleges; ability to manage inventory and/or manufacture duty deferred, inside the Foreign-Trade Zone; Texas is a right-to-work state, which leaves the right to choose between union and non-union labor; and the state of Texas, Brazoria County and Port Freeport offer competitive incentives, tax credits and exemptions.
Recent developments at Port Freeport include the opening of the first phase of its Velasco Terminal, which will add further cargo-handling capabilities. With a new 800-foot-long dock and 20 acres of backlands, it promises an eventual offering of 2,400 feet of berthing and more than 90 acres of supporting land.
Meanwhile, the Port continues to work in conjunction with federal and state authorities to advance the project to deepen the Port’s channel to 55 feet from its present 45 feet, and substantially widen the channel as well. It is expected that benefits of the channel project should exceed its $300 million cost.
With so many developments pointing toward growing diversified activity at Port Freeport, anticipation has grown for its expansion, as the Port already holds impressive status as an economic cornerstone of the community and region—a dynamic force directly and indirectly responsible for nearly 60,000 jobs with an overall annual economic impact in Texas of $10.2 billion.
Unlike many ports, which are running out of available land, Port Freeport boasts more than 7,500 acres of currently undeveloped tracts, all proximate to the waters of the Gulf of Mexico. The Port is a mere 3 miles—45 minutes by ship—from the open sea.
The Foreign-Trade Zone Program adds to Port Freeport’s appeal. Since established in 1988, Port Freeport’s Foreign-Trade Zone No. 149 has helped American companies involved in global commerce to save money on the products they import into the U.S. through deferral, reduction and/or elimination of Customs duties assessed on foreign merchandise, and port officials have been fielding a lot of inquiries about the FTZ of late.
Port Freeport Managing Director Phyllis Saathoff, a past president of the National Association of Foreign-Trade Zones, pointed out that there may be no better time for businesses engaged in international trade to explore the benefits FTZ No. 149 has to offer.
“Especially in challenging economic times,” Saathoff said, “we are pleased to be able to offer businesses in the region another tool to stay competitive and reduce costs.”
Those seeking additional information about Port Freeport are encouraged to check out Port Freeport’s web site—www.portfreeport.com—or contact Mike Wilson at 1-800-362-5743, ext. 4325, or by e-mail at wilson@portfreeport.com.
St. Clair County: Blue Water Region in the Heart of MI
St. Clair County, MI, known as “The Blue Water Region” due to its abundant 140 miles of crystal blue shoreline, is strategically located in Southeastern Michigan. St. Clair County is home to the City of Port Huron, the “Maritime Capital” of the Great Lakes, which also serves as the terminus for an International border crossing between the United States and Canada via the Blue Water Bridge. The Blue Water Bridge is a twin-span bridge spanning the St. Clair River that links Port Huron, Michigan (USA) to Sarnia, Ontario (Canada)—two of the world’s largest trading partners—and provides quick access from Interstate 94/69 to highway 402. In 2010, the total value of trade between Michigan and Canada was $62.4 billion, an increase of over 40 percent compared to 2009 and the majority of Canada-U.S. trade is concentrated in the Province of Ontario.
A recent regional border study also indicated that more than $50 million is spent annually in The Blue Water Region by border friendly neighbors. This figure is expected to continue to increase if changes being proposed by the U.S. take affect. Imposing and increasing duty-free limits will only further promote cross-border activity between the U.S. and Canada and speed up the movement of goods into the United States.
Available logistics options in St. Clair County provide the perfect mix of transportation for freight and business travel. In addition to the International border crossing, the region also offers a 23-foot Deep Water Port, rail connectivity via two class I railroads (CN/CSX) with double stack capacity, a regional county airport plus two major international airports within a one hour drive time. Highway accessibility via I-94 provides southerly access to Detroit and important Midwestern markets, including Chicago and Minneapolis. Interstate 94 and 69 both provide direct access to Canada (highway 402). The region is a well connected transportation gateway throughout the United States and Canada. St. Clair County serves as one of the top three International Border Crossings in the U.S. and one of the busiest rail routes in North America.
The EDA of St. Clair County, (www.edascc.com) the region’s primary economic development partner, holds the operating designation for Foreign Trade Zone 210. St. Clair County’s FTZ 210 is located just minutes from The Blue Water Bridge and offers nearby rail connectivity and Deep Water port access. The EDA is working toward establishing an International Trade office and as a result will be heavily promoting FTZ 210, which in recent years has been under utilized. Establishing an International Trade office along with a marketing campaign aimed to better expose the tremendous potential that awaits future FTZ zone 210 operators is expected to dramatically peak interest and FTZ operations in 2012.
St. Clair County, MI boasts a successful manufacturing community with eight fully serviced industrial parks and a strong local business expansion record. Many companies came to the region due to transportation infrastructure and affordable business climate, resulting in numerous expansions and local business growth.
St. Clair County also is a community with very strong ties to the automotive industry, and is home to several successful automotive manufacturers such as ZF Group, Keihin, International Automotive Components, JCIM, Dana, TI Automotive, SMR, SMW and Chrysler. As part of the Detroit metro cluster, the area offers key connections to successful Tier 1 and Tier 2 suppliers.
Opportunities exist for additional industries including alternative energy and defense. The St. Clair County region is strategically located within one day’s drive to major wind energy OEM’s and centrally located to BAE defense assembly facilities and General Dynamics facilities. Large assembly components for the wind industry can often be seen traveling through the region’s St. Clair River. St. Clair County recently became the pilot location for testing a hydrokinetic device in development by the University of Michigan. The unit was placed in the mouth of the St. Clair River for Phase I testing and will return this summer for Phase II after testing modifications are complete.
St. Clair County offers transportation and logistics by water, air, highway or rail with a variety of FTZ border friendly sites currently available. For more information, or to view a map of available locations visit: www.edascc.com/ftz.php or call toll free 1-877-982-9511.
Jersey City: New Jersey’s Premier Destination for Business
With more than 245,000 residents who represent more than 90 different nationalities and a daily employee base of individuals from every race, creed and walk of life, it is no wonder that Jersey City has become a world-class city and the cultural center of New Jersey.
Jersey City Mayor Jerramiah T. Healy says: “Our diversity, regard for tradition and appreciation of innovation provided the basis of Jersey City’s cultural and economic growth. But certainly, the vision, determination and strength of our residents, merchants and business leaders have made this growth extraordinary.”
Many of the nation’s finest businesses and biggest retailers reside in Jersey City. Within its 15-square miles there are businesses and other establishments with decades-old roots in the community as well as brand-new entrepreneurial endeavors. Businesses choose to locate in Jersey City because of its proximity to Manhattan, and easy accessibility to a comprehensive mass transit system that includes the world’s great seaports, and three international airports.
Newer, less expensive commercial spaces with impressive amenities and state-of-the-art technologies are available with lower operating costs than those in Manhattan, and businesses thrive amid incredible housing opportunities, a flourishing cultural community, nationally known retailers, unique and culturally diverse shops and dining spots and world-class hotels.
In Jersey City, there is no city income, corporate, payroll or commercial rent tax.
The City of Jersey City and the Jersey City Economic Development Corporation (JCEDC) are committed to helping businesses thrive, not just survive. The JCEDC works in partnership with a whole host of public and private entities to provide the 1.4 million residents, business people and visitors who are in Jersey City each day with a comprehensive array of services and programs.
The JCEDC is home to the Jersey City Urban Enterprise Zone (UEZ)—one of the largest and most productive in New Jersey. One-third of Jersey City is designated as an UEZ, and participating UEZ businesses can charge half the standard sales tax—just 3.5 percent—on certain purchases. UEZ member businesses may be eligible for employee tax credits and reduced unemployment insurance. Additionally, UEZ members may apply for State of New Jersey programs such as Façade Rehabilitation and Relocation grants, InvestNJ Business Grants and Main Street Business programs and the Business Employee Incentive Program.
The Jersey City Economic Development Corporation also is dedicated to assisting businesses—especially small businesses and microenterprises—by providing tools such as technical assistance and access to financing that can lead to long-term success.
New Jersey ports and its logistics sector are responsible for more than 500,000 jobs. And each year, more than 600 million tons of freight with an estimated value of over $800 billion moves into, through and out of the state. From 2006 to 2008 cargo volume increased by 15 percent at the Port of New York and New Jersey, and in spite of the current recession, this level is expected to double in the next 20 years. It was this growth forecast combined with a desire to effectively meet projected demand that prompted the New York-New Jersey port complex to position itself to capture as much of the expected traffic flow. In 2005, New Jersey’s Portfields Initiative was launched as a joint project of the Port Authority of New York & New Jersey (PANYNJ), the New Jersey Economic Development Authority (EDA) and Public Service Gas & Electric (PSE&G), which spearheaded a public-private coalition of developers, logistics companies and communities to promote and market this effort. The goal of this initiative was to transform underutilized Brownfield sites into productive warehousing and distribution centers that would retain and attract logistics operations and create new jobs. There are currently 21 Portfields sites which have been identified as strategic centers most able to capitalize on emerging market opportunities and logistics trends for ocean and air freight-related warehousing and distribution operations. Each Portfields site is situated in New Jersey’s Port District, thus the name.
Portfields plans call for over 10 million square feet of new and improved warehouse and distribution space throughout the Port District. These projects involve private sector developers and, in some cases, have private/public sector partnerships of developers and public agencies, which sponsor various projects.
For complete information, visit the Jersey City Economic Development Corporation’s website at www.jcedc.org, or phone UEZ Director Roberta Farber at 201-333-7797.
Surprise, AZ Leads the Way with Maricopa FTZ
February’s news that Spain-based Gestamp Solar Steel is establishing its U.S. operations in Surprise contributed to nearly 1,000 new jobs announced in the community in just the last year, aligning with the strategic vision of creating a robust business environment that creates employment.
Gestamp will be open and operating by summer 2011. In Phase I, about 100 construction jobs and 50 permanent jobs will be created at the fabrication facility.
Gestamp manufactures steel support structures for use in the solar industry. The company will build a manufacturing facility and U.S. headquarters at Skyway Business Park inside the 2 square-mile rail-served Southwest Railplex.
“Surprise is the perfect fit for our company, meeting our need with shovel ready land complete with rail access,” said Jon Riberas, President & CEO of Gestamp Renewables. “Our company delivers quality products that demand a quality workforce, and we found what we were looking for in Arizona.”
At full build out, the plant will employee 300 people.
“This is what economic development is all about,” says Jeff Mihelich, Surprise Community and Economic Development Director. “Companies such as Gestamp Solar Steel take advantage of what we have to offer in terms of land and transportation access, an educated workforce and a great lifestyle. As a result, we generate good jobs for residents and welcome a new corporate partner.”
Gestamp operates hundreds of plants in 25 countries in Europe, the Americas and Asia. In 2010 Gestamp Corporation had revenue of approximately $6.5 billion and employs 20,000 people.
Surprise will waive up to $400,000 in review fees and invest up to $1.4 million in public infrastructure. Gestamp will have project office space at the city’s innovation center, the AZ TechCelerator, while their new facility is under construction.
Just last summer, Spain-based Rioglass Solar announced it would build its U.S. headquarters in Surprise and manufacture solar related products at the Skyway Business Park. Rioglass will invest approximately $50 million and create more than 100 new jobs in Phase 1, set to open this summer. A potential Phase II would add another 100 jobs and additional $45 million capital investment.
“It is exciting to be welcoming European-based companies to Surprise,” says Mihelich. “These large and established operations will be stable employers with a vast network of resources.”
Surprise has had success landing new large manufacturing operations due to its proximity to key markets and enhanced infrastructure. The Southwest Railplex industrial park has significant advantages in regards to rail, power and water. The park has 14 on-rail/off-rail shovel ready sites, an untapped power substation and water capacity to support large water users. Surprise has been named a “Micro City of the Future” by Foreign Direct Investment Magazine for its infrastructure and business friendliness.
In addition to the infrastructure, Surprise added a new major asset for business, a foreign trade zone. The Greater Maricopa Foreign Trade Zone (GMFTZ) was announced earlier this year, positioning the Surprise Southwest Railplex as one of the premiere locations for manufacturing and rail logistics.
The U.S. Foreign Trade Zones Board approved the GMFTZ in late December 2010. The Surprise Pointe Industrial Park, located inside the Southwest Railplex, is one of the four identified sites in west Phoenix.
“With the support of our City Council, Westmarc and West Valley communities, the FTZ will be an important tool to encourage growth and create jobs in Surprise,” said Surprise Community and Economic Development Director Jeff Mihelich.
FTZs are considered outside of U.S. territory for the purpose of customs duty payment. Goods entering FTZs are not subject to tariff taxes until the goods leave the zone, according to the federal government’s Trade Information Center. Merchandise that is shipped to foreign countries from FTZs is exempt from export duty, allowing firms to minimize their costs. Importing and exporting of goods is encouraged by FTZs because of these import and export duty breaks. In Arizona, companies receive additional benefits with a 75 percent reduction in property taxes.
A variety of activities can be conducted in a zone, including assembling, packaging, storing, repairing, combining with foreign or domestic content or processing, according to the Foreign Trade Zone Board, made up of U.S. Commerce and Treasury Department officials. Manufacturing and processing within FTZs requires FTZ Board approval.
For more information, contact Surprise Economic Development at 623-222-3326 or Mike.Hoover@Surpriseaz.gov.
