Feature

If You Were in Doubt, Utah Really is Global

The phrase "Utah is global" took on even greater meaning last week, when the Foreign-Trade Zones Board of the U.S. Department of Commerce approved Salt Lake City's application to reactivate Foreign Trade Zone #30.

A Foreign Trade Zone (FTZ) is a geographical location, licensed by the U.S. government. Salt Lake City's FTZ will offer Utah businesses important advantages in competing on a global scale.

"This is great news for Salt Lake City and Utah businesses," says Mayor Ralph Becker, "and a great complement to the other assets we have in place as a global city."

Benefits of an FTZ

In the complex world of import-export, a Foreign Trade Zone (FTZ) has many benefits. Businesses that locate in an FTZ can enjoy, depending on their specific circumstances, reduced duties, deferral of duties and in some cases elimination of duties, improved cash flow, lower inventory costs and streamlined customs procedures. For example, a manufacturing company that imports components for its products might be able to defer payment of duties on those components until the complete products are assembled and distributed. 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. What's more, a business within an FTZ can reduce delivery times and expedite the flow of goods in and out of the country, facilitating just-in-time delivery, reduced paperwork and other regulatory costs, as well as lower broker fees.

Salt Lake City Economic Development Director Bob Farrington says the reactivated FTZ fits nicely with Salt Lake City's economic development plans. He and William D'Evelyn, principal broker with Commerce CRG, the FTZ's real estate broker, say the reactivated FTZ will enable the city to attract new types of manufacturers and other firms, including some of the world's best and largest companies.

EDCUtah President and CEO Jeff Edwards agrees. "We just couldn't be happier with the approval to reactivate the zone," he says. "Salt Lake City's Foreign Trade Zone provides a huge advantage for Utah and gives EDCUtah the chance to recruit companies that will use the zone for their global business efforts. The zone is yet another economic development tool that will make the state an attractive place to do business."

Original FTZ License Allowed to Expire

Salt Lake City actually had an FTZ near the international airport from 1977 to 1996, but no real development occurred there and the zone's license was allowed to expire. The site was later sold to become part of the airport's expansion. The reactivated FTZ will be located on 55 acres at 1105 S. 4800 West, near the Union Pacific intermodal facility. The location is also conveniently close to the Salt Lake City International Airport and is just off I-80.

"Salt Lake City's Foreign Trade Zone is a key inland opportunity, especially from a logistical perspective, says Brandi Handback, managing director of Foreign Trade Zone Services for The Rockefeller Group, which will manage and develop the zone. The Rockefeller Group has a 30-year history of successfully marketing and developing FTZs in the United States, starting in 1978 when it built the first inland Foreign Trade Zone. Handback has been helping Salt Lake City coordinate the FTZ application process for approximately four years.

"This FTZ will be an important manufacturing and staging location as freight is distributed to key markets," she adds. "It puts Salt Lake City on the global map and offers businesses the opportunity to leverage FTZ benefits with Utah's excellent labor pool and logistics to maximize cost savings."

Additionally, Handback says companies expanding overseas can enjoy the benefits available to general purpose FTZs by becoming Trade Zone Sub-zones. The sub-zone status offers a number of advantages, including elimination or deferral of import duties; exemption from quotas, local inventory tax and duty on damage or waste; lowest duty on final product and indefinite storage of merchandise. The Rockefeller Group can assist businesses with their applications for sub-zone status.

International Trade Important for Manufacturing Jobs

International trade accounts for more than 20 percent of all Utah manufacturing jobs, and "every penny saved through tariff and tax relief translates into more jobs, new equipment and strengthened operations for Utah business," says Lew Cramer, president and CEO of World Trade Center Utah.

"Foreign Trade Zones are great catalysts to help create jobs and capital investment opportunities that result from international trade operations," adds Cramer. "Reactivating Salt Lake City's Foreign Trade Zone will certainly add to the international trade already taking place in Utah."

Initial plans for Salt Lake City's FTZ envision an industrial park with more than one million square feet of industrial and manufacturing space. Handback says a marketing and educational outreach program will be forthcoming in the next three to six months, to help businesses understand the benefits and opportunities the FTZ offers. D'Evelyn says his team from Commerce CRG will be meeting with The Rockefeller Group and Salt Lake City officials in the near future to help plan the educational sessions and marketing efforts for the FTZ.

Clearinghouse for Questions

In the mean time, Cramer says World Trade Center Utah is prepared to serve as the clearinghouse for questions related to the development and opportunities within Salt Lake City's FTZ. Businesses or individuals with questions about the FTZ may e-mail those questions to Elizabeth Goryunova at egorn@wtcut.com. The questions will be beneficial to the development of educational materials about the FTZ and the opportunities it provides..

There are currently more than 230 Foreign-Trade Zone projects (with nearly 400 Subzones) in the United States. In the western U.S., California has the most FTZs with 17, followed by Arizona with six, Colorado and Nevada each of two, and Idaho has one FTZ.

CALENDAR

Mar. 24-26:  JEC Composites Show (Paris, France)

Mar. 30:  Governor's 3rd Annual Utah Economic Summit (Grand America Hotel, Salt Lake City)

Apr. 14:  Senator Bennett's 8^th Annual Rural Business Conference (Heber Valley-Zermatt Resort in Midway)

Apr. 15-17:  Utah League of Cities and Towns Midyear Conference (Dixie Center, St. George)

Apr. 26-28:  CoreNet (Dallas, TX)

Apr. 29-May1:  SME (San Diego, CA)

June 3:  EDCUtah Golf for Grants Match Grant Tournament (Eaglewood Golf Course in North Salt Lake). This is the main fundraiser for EDCUtah's Community Match Grants Program. Sponsorship opportunities for 2009 are limited to investors in EDCUtah and are now available. Please call Arthur Franks, membership director for EDCUtah at (801) 323-4242 to secure your sponsorship opportunity!