FTZ PRESS RELEASES

1. The Big Picture, The National Impact
   of the Foreign-Trade Zones Program - 12-31-2005
2. New participants into Foreign Trade Zone 106 - 1-5-2005
3. Recruiting the Big Ones By Melissa Davis - 11-30-1998

New participants into Foreign Trade Zone 106 by Brian Brus
Appeared in the The Journal Record
1/5/2005

The people Matthew Weaver talks to want to know why it took so long to hear her pitch. "They're asking me, 'Why haven't I heard about this before? This is a no-brainer,'" Perri said. "Who wouldn't want an opportunity to save that kind of money?"

Perri is in the midst of a campaign to draft new participants into Foreign Trade Zone 106. As the zone's developmental director, she's been traveling the state and appealing to commerce departments, economic development centers, industrial parks, chambers of commerce and similar business organizations to think big.

Xerox has saved about $750,000 annually by working within the zone, Perri said. ConocoPhillips has saved from $1.5 million to $2 million annually. Imation, which has been in and out of the program depending on its production line, has saved an estimated $6 million over the last four years, she said.

Sharon Schmelke, Xerox's zone administrator, said the company has been involved for three years. She would not discuss company figures, nor confirm Perri's savings estimates. The biggest benefit has been the ease of importing material, Schmelke said.

"We've been approved for direct delivery, which means we can bypass all the customs holdups and ports," she said. "That has really saved us a lot of time and money."

Xerox can save up to 10 days in delivery of the chemicals used in its printer and copying machine toner products. The company ships from Brazil and Japan.
"And you're no longer just another name on a piece of paper," Schmelke said. "You have a one-on-one relationship with your customs people."

That was one of the goals of the Foreign Trade Zones Act of 1934: "to expedite and encourage foreign commerce." Merchandise within the designated zones - usually near U.S. Customs Ports of Entry - receive the same tax-free customs treatment they would as if the transactions occurred outside the United States. The tariff and tax protections effectively lower the costs of U.S.-based operations engaged in international trade, which helps strengthen the companies' bottom line.

In 1970 there were eight zone projects nationwide; today there are more than 250, customs officials confirmed. The program's growth is due in large part to the expansion of the program to allow manufacturing activity in the zones. U.S.-based manufacturers can bring foreign-sourced materials into the zones duty-free, incorporate those materials into a finished product using U.S. parts and labor, and then pay duty on the value of the foreign content only.

Perri is promoting a related element to potential participants.

"There has to be a good, sound reason you want to be in the zone," she said. "You have to be importing basically a minimum of about $5 million a year in order to make it worthwhile. Oklahoma doesn't have a whole lot of major industry. We've got a lot of mom-and-pop businesses, and our small companies just don't make that much. However, they do pay a lot in fees.

"So we're developing the concept of small communities or cities; economic development centers coming together to sponsor a warehouse or general purpose zone," said Perri. "The city would pay the fees - they're much cheaper if the land is government-owned - then they would charge user fees to small companies to come in and use their space. You can have a half-dozen smaller businesses coming together in one building to do the assembly, to change that product that has a duty on it into something else that's duty-free. … A small community could have several businesses taking advantage of the program."

Perri's pitch might be working; five groups have expressed interest, she said without identifying them.

Zone 106 is comprised of the western two-thirds of the state. The zone includes in its easternmost border Kay County to the north, then south to include Noble, Payne, Lincoln, Seminole and Pontotoc counties, and then southwest through Garvin, Stephens and Cotton counties. The state has three other foreign trade zones.

Schmelke warned that a company should be ready for extensive government paperwork. The zones are under the supervision of the U.S. Customs Service. Customs' oversight of zone operations since 1986 has included compliance audits and site inspections.

Brian Brus reports on city government and retail. You may reach him by phone at 278-2837 or by e mail, brian.brus@journalrecord.com.