As published in Toledo Business Journal - September 1, 2011
Port of Toledo
Port to expand
Foreign Trade Zones
The Toledo-Lucas County Port Authority is on its way to making northwest Ohio more appealing for foreign companies and goods. It extended an offer to 14 counties in the area to participate in alternative site framework (ASF) to be designated as a Foreign Trade Zone (FTZ) area.
Out of the 14 counties, Sandusky, Lucas, Defiance, Henry, Wood, and Williams are considering the designation.
Foreign Trade Zones are secured sites where goods can be stored, repackaged, assembled, and manufactured. The zones offer companies the ability to reduce, defer, or eliminate duties. Inventory stored at these sites are not subject to import quotas. Products imported into these zones are exempt from duty until they enter the US marketplace, and duty is never paid if the products are re-exported.
ASF is an optional program to manage US FTZ sites. ASF gives more flexibility to FTZs by using simpler and less time-consuming procedures. According to Matt Sapara, director of development at the Toledo-Lucas County Port Authority, the ASF shortens the length of time it takes to reap the benefits of a FTZ. Currently, projects with FTZ components in these counties have to wait 18 months for the Foreign Trade Zone Board to approve the activity and gain the benefits.
Defiance County Economic Development Corporation executive director, Jerry Hayes explained that in 2002 Defiance County started a long and expensive pursuit of a general FTZ extension application for an industrial district near Defiance. When the Ohio Legislature started discussion about the elimination of the personal property tax on inventories, the county discontinued its FTZ application effort. Successful implementation of the new ASF program will provide the county the needed process to get the Foreign Trade Zone treatment it needs for specific projects in less time with less expense, he noted.
According to Foreign Trade Zone News, ASF was created when the old traditional site-management framework (TSF) got to be outdated. TSF tended to impose major burdens on everyone involved because it took so long, consumed too much in government resources, and resulted in too many unused FTZ sites.
“Foreign Trade Zones are significant because if you bring in raw materials to your site, you can manipulate them or turn them into a finished product and the tax or duty that is associated with that product isn’t due until the product is one step closer to the end consumer,” Sapara stated.
According to Wood County Commissioner Tim Brown, FTZs are advantageous to the community because they relieve companies of paying Federal duties and tariffs on materials brought into the country for assembly then shipped outside the United States. “I believe every tool that enables our county to attract business and industry is vital in this very challenging economy,” he stated.
“While we believe the tool may be helpful in attracting companies looking to locate in the vicinity of the new CSX Intermodal facility in Henry Township, I believe it will be helpful to all areas of Wood County. Once the Foreign Trade Zone is in place it will give us a more competitive edge, as the nearly 18-month application process to the Federal government will no longer be necessary, Brown stated.
Additionally, executive director of the Sandusky County Economic Development Corporation (SCEDC), Kay E. Reiter noted, “SCEDC is currently working with a local manufacturer who has a very large international manufacturing presence. Like all businesses they are constantly looking at ways to hold down their cost of doing business. The development of a Foreign Trade Zone would be very critical to their bottom line.”
Sapara explained that the Port Authority is packaging up the applications and will be submitting them to the Board in the near future. He stated that it will take six months to a year to get everyone positioned to take advantage of ASF. Once approved, the counties will be able to benefit from the FTZ instantaneously. The counties that declined to be part of the application process will still be able to take advantage of the FTZ reimbursements, however, they will still have to go through the 18-month approval process.
“We consider part of our mission in terms of economic development to develop the whole region, not just Lucas County,” stated Sapara. “We are engaged all over the place. Our financing programs, for example, support 22 counties in the State. While it’s Toledo-Lucas County Port Authority, it’s really regional economic development.”
“Defiance County is very pleased to see the Toledo-Lucas County Port Authority pursuing this expedited approval system for FTZ designations. We see an abundance of opportunities for this new program. It should help to reduce turnaround time for prospect firms seeking sites that can provide FTZ treatment,” stated Hayes.
According to the Ohio Business Development Coalition (OBDC), the state is centrally located within 600 miles of 60% of the US and Canadian population and is within a one-day drive of 70% of North America's manufacturing capacity. Ohio's established logistics infrastructure includes multi-modal and intermodal networks allowing efficient import and export of products – 180 public airports, eight interstate highways, 36 freight railroads, and 25 waterfront ports.
According to the Import Administration, there are about 250 general purpose zones and over 450 subzones approved in the US. Ohio has 10 designated Foreign Trade Zones strategically located around the state that help companies reduce operating costs while increasing profits. The Toledo-Lucas County Port Authority is designated as FTZ number eight. General purpose zone operators in the zone include the Port of Toledo, Toledo Express Airport, Ohio Northern Global Distribution & Business center, Ampoint Industrial Complex, and Spartan Logistics.