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FEATURE

Is it Time to Reactivate Salt Lake Citys Foreign Trade Zone #30?

Could Utah businesses benefit from the reactivation of Salt Lake Citys Foreign Trade Zone (FTZ)? That question was on the minds of business, economic development and government leaders who gathered Tuesday at the Marriott City Center for a seminar on FTZs and their economic benefits.

Brandi Hanback, managing director of Rockefeller Group Foreign Trade Zone Services, who spoke at the seminar, says FTZs are geographical areas in or adjacent to Customs Ports of Entry, where commercial merchandise receives the same Customs treatment it would if it were outside the commerce of the United States. The U.S. Foreign-Trade Zones program was created by the Foreign-Trade Zones Act to expedite and encourage foreign commerce. FTZs provide tariff and tax relief because merchandise may be held in the zone without being subject to Customs duties and other ad valorem taxes.

Because FTZs are treated as being outside of the Customs territory of the United States, they can help lower the costs of American businesses engaged in international trade. Consequently, FTZs are seen as catalysts to help create and retain employment and capital investment opportunities that result from international trade operations.

In 1970 there were 8 Foreign-Trade Zone projects (with 3 Subzones) in the U.S. Today there are over 230 Foreign-Trade Zone projects (with nearly 400 Subzones). California has 18 FTZs, Texas has 33, and Florida has 27. Utah had an active FTZ from 1977 until 1996, and a bonded warehouse is still located at the site; however, the FTZ certification was allowed to expire.

Resurgence of Interest

Alison McFarlane, Salt Lake City senior advisor for economic development, says the Wasatch Front has seen dramatic growth in manufacturing and distribution, and consequently a resurgence of requests for reactivation of the FTZ. Governor Huntsman's October trade mission to China is a perfect launching point for reactivating Salt Lake Citys FTZ, according to McFarlane. Utah ranks 34th in the country for exports with approximately $6 billion in export business annually.

Ron Buzzard, purchasing manager for Classic Cabinets, a Salt Lake City cabinet maker with 250 employees, attended the seminar because his company imports cabinet hardware and would like to cut costs. Every penny we can save translates to new equipment we can purchase and more bodies we can put on the floor, he says. We know where to get the products and we are starting the steps to bring it in ourselves.

Through the program, Utah companies could use a warehouse within the FTZ to store, manufacture, or assemble product in essentially a Customs deferral, elimination, or duty-free area.

During this dramatic growth the FTZ program has evolved into an important means by which U.S.-based companies can enhance their cost-competitiveness, and as a means by which the United States can practice both the letter and the spirit of its trade laws.

FTZ Benefits Overview

• Duty deferral: Imported products admitted to the FTZ are not entered into the Customs territory until their withdrawal from the FTZ, which provides users a cash flow savings by deferring Customs duties until the merchandise leaves the FTZ for consumption in the U.S.
• Duty elimination: Imported products admitted to the FTZ and subsequently destroyed in the FTZ or exported from the FTZ are not subject to Customs duties.
• Duty reduction: Imported products admitted to the FTZ can be placed in a special status that allows the merchandise to be classified and appraised in its condition as withdrawn from the FTZ. For manufacturers, this means an imported component with a higher rate of duty can be classified and appraised in its finished product form, with a potentially lower rate of duty, thereby reducing the amount of duty owed.
• Zone to zone transfer: If a company utilizes more than one FTZ, merchandise may be transferred from zone to zone in order to extend the deferral benefits. This benefit can be implemented up and down the supply chain, incorporating the activities of suppliers and customers.
• Direct delivery and weekly entry/export: Users may obtain permission from Customs to move merchandise directly from the port of arrival to the FTZ, thus avoiding delays at congested ports and minimizing exams. On the outgoing side, users may obtain permission to ship unrestricted weekly (24/7), based on an estimate approved by Customs before the start of the business week. Broker fees and merchandise processing fees paid to Customs may be significantly reduced by filing one entry per week versus daily entries or one per shipment. Goods move in and out of the zone on an expedited basis, allowing for a seamless supply chain from vendor to customer without maintaining unnecessarily high levels of inventory.
• Production equipment: Certain duty deferral and reduction benefits also apply on production equipment admitted to the FTZ for assembly and testing before use in production.

Next Steps

McFarlane says attempting to reactivate Foreign Trade Zone #30 will be easier than starting from scratch, but it still involves an extensive application process. FTZ boundaries must be defined along with industry sectors that will use the zone, the economic benefits expected, and the types of goods to be manufactured there.

Tuesday's seminar, which was sponsored by Salt Lake City Corporation, EDCUTAH, the Governors Office of Economic Development, Salt Lake County, Sahara Construction, Commerce CRG and Kennecott Land, is just the first step in that process.

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CALENDAR

Nov. 12-15:

CoreNet Global Summit (Orlando, FL)

Dec. 14:

EDCUTAH Holiday Open House (Salt Lake), 4 p.m. to 6:00 p.m. Please RSVP to Trina Stanley by Thursday, Dec. 7 at 801-328-8824 or by email at tstanley@edcutah.org.

Jan. 10, 2007:

Washington County Economic Summit (St. George)
7:30 a.m. - 2:30 p.m., for more information contact: Dixie Business Alliance, 225 South 700 East, St. George, 84770. Call (435) 652-7724 or email; website:
http://www.whatsupdownsouth.com

Feb. 8, 2007:

23rd Annual Investors Choice. Venture Capital Conference (Salt Lake City)
Learn the venture process, build a fundraising presentation and meet with venture, corporate and angel investors.  Submission deadline is October 30th. For more information visit: www.venturecapital.org/utah.

IN THE NEWS

Economic Development Headlines

U of U Students Form Group for Budding Entrepreneurs

- A group of students at the University of Utah has formed Young Entrepreneurs of Utah in an effort to foster entrepreneurship by students attending colleges throughout the Wasatch Front. (The Enterprise)

Supplement Maker Expanding Plant to 75,000 Square Feet

- AMT Labs Inc., which develops and produces 457 products for the bulk vitamin and mineral supplements industry, has broken ground for an addition to one of its two existing AMT Labs buildings in North Salt Lake. (The Enterprise)

Discount College Textbook Firm Continues to Grow Nationwide

- Beat the Bookstore, a West Valley City-based chain of bookstores that buy and sell used college textbooks, has sold its final Utah franchise and is setting its sights on further expansion in the United States. (The Enterprise)

Gasoline Prices Driven by Market

- Some comments attributed to the Department of Commerce alleging "wholesale disregard for any requests for information" on the part of Utah's refining industry were disappointing and inaccurate. (Morning News)

The Waiting Game

- After two meetings with members of the Standard-Examiner's editorial board during the past 13 months, during which the urgency of the project -- purchasing the Mount Ogden Golf Course and adjacent WSU land, reconfiguring the course and developing high-end vacation homes on the property, building a downtown-to-WSU-area gondola to connect to a WSU-to-Malan's Basin gondola and, lastly, a ski resort in and around Malan's Basin -- details have been difficult to come by. (Standard-Examiner)

Canyon Tunnel Idea Could be "Dead in the Water"

- The idea of a tunnel to connect Big and Little Cottonwood Canyons has interest groups aflame once again. (KCPW)

Vision Dixie Gives Workshops

- Mounting interest in Vision Dixie may surge on Wednesday, as a series of regional planning workshops comes to St. George. (Spectrum)

Cities Plan Unifying Centers

- More than a dozen acres of dirt greet visitors to Taylorsville's City Hall. The lot near the corner of 5400 South and 2700 West has sat, untouched, since the new city headquarters and a fire station were completed more than three years ago. (Salt Lake Tribune)

S. Salt Lake Grapples With Rental-Related Issues

- In this central Salt Lake Valley city, 62 percent of the population rent rather than own living space - be it a house, duplex or apartment. (Salt Lake Tribune)

What the Minimum Wage Means to College Students

- The federal minimum wage in this country was established to ensure that a full-time worker could earn wages equal or equivalent to the federal poverty line. (Salt Lake Tribune)

Malls Getting Big Transformations

- If you like to shop Salt Lake's malls, your retail experience is about to change. (Morning News here and here)

Utah Schools Still Short on Graduating Engineers

- IUtah engineering companies are looking for more than 800 new engineers in the next year, but the state's universities are not able to answer the call. (Morning News)

Utah Ads a Success, Tourism Officials Say

- Survey results indicate that Utah's tourism advertising campaign this summer was effective in getting people in three markets to seek more information about the state and increasing the likelihood of those outsiders to visit. (Morning News here and here)

Top of Utah Feeling Pinch of Construction

- Steep construction costs are causing Top of Utah cities and transportation officials to rethink road projects. (Standard-Examiner)

Commuter Rail Half Way Done

- Commuter rail is on track and ahead of schedule. Construction of the front runner line is now half-way done. (KUTV) (KSL)

Conestoga Wood to Open Tooele Facility in January

- With the walls up and the roof on, Conestoga Wood Specialties is well on its way to meeting the scheduled January opening of its first plant in the western United States. (Utah Business Magazine)

Bank of Utah to Enter Utah County Market

- Bank of Utah is preparing to open its first branch in the Utah County market by the end of this year. (Utah Business Magazine)

Miranda Gold Corp. Stakes Claims in Utah

- Miranda Gold Corp. has announced that 189 claims (6.1 square miles) have been staked at the Lookout property in Tooele County. (Utah Business Magazine)

Zurcher Brings the Party to Orem

- At the time, Zurcher worked in the family business, Zurcher Merchandise Co., which was begun in 1952 by his father. The company sold impulse items to grocery stores. (Utah Business Magazine)

$1 Million Gift to Support Growth in U of U's Engineering Education

- John E. and Marva M. Warnock have gifted 30,000 shares of Adobe stock to the University of Utah for the renovation of the 60,000 square-foot Engineering and Mines Classroom Building. (Utah Business Magazine)

Utah Economy Beats Nation's, Survey Says

- Business conditions in the Beehive State continue to roll ahead of the rest of the nation, despite some slowing, according to a survey released Wednesday. (Morning News)

U. Scientists Create 'Louse Buster'; Spinoff Will Market Device

- In about a year, a teacher who finds head lice on a child may be able to send her to the school clinic for a 30-second treatment of hair heating and drying  safely blowing those lice right out of her hair. (Morning News)

Whole Foods Coming

- Whole Foods Market announced Thursday that it will open a new $12 million store at Trolley Square in Salt Lake City. (Morning News)

Op Ed: Downtown on its Way to Greatness

- We want a vibrant downtown Salt Lake City  a gathering place for our region. (Morning News)

UBiDS aims to help firms get contracts

- Another milestone in a statewide effort to get more Utah companies involved in government contracting was reached Wednesday with the grand opening of a program that could result in thousands of jobs. (Morning News here and here and here)

Utah Families Living Below Poverty Level

- (Morning News)

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The EDCUTAH Economic Review is a weekly publication of the Economic Development Corporation of Utah.  It is distributed to EDCUTAH partners and selected other government and civic organizations interested in Utah's economic development. If you prefer not to receive this newsletter, please use the link below. Subscribe or Unsubscribe Your comments and suggestions regarding this newsletter are always welcome. Click here: Comments

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