foreign trade zone

Sen. Kirsten Gillibrand stopped for a tour of Liberty Pumps in Bergen today to promote Genesee County's "Foreign Trade Zone" designation.

Liberty is the first company in Genesee County to apply for the benefits of an FTZ.

Charlie Cook, president and CEO of Liberty Pumps, said the designation will help his company grow and create more jobs.

"It's certainly going to help reduce our costs," Cook said. "We are initially limited to three companies because it's crucial to monitor everything and control the inventory on the floor, so our most expensive components are duty free and there's an advantage there. It's our intent to flow the savings to the bottom line and generate more profits, which fuels future growth."

Profits, Cook, explained, means more research and development and more funds to bring new products to market, which means expansion.

Liberty Pumps is surrounded by three parcels of land that are suitable for expansion and Cook mentioned that the company is considering it options and will almost certainly expand in the next couple of years.

The FTZ allows Liberty Pumps to buy some of the parts it needs to build products without paying tariffs, but then it can also avoid tariffs on its exports.

Cook wanted to note, however, that not every component it could buy overseas is imported.

"We really try to limit our foreign purchases of components," Cook said. "If we can buy it domestically, we always prefer domestic components, but the fact is, these particular motors you can't get from a U.S. manufacturer anymore. They've all closed down these lines. Other components, like castings, we could do that, but we're trying to contain that business, a lot of it, to domestic sources rather than foreign."

Gillibrand said FTZs are important to help New York's economy grow.

"I encourage all manufacturers who can benefit to apply," Gillibrand said. "We make some of the most amazing things in the world right here in New York. We produce some of the greatest agricultural products of anywhere in the world. We want to be able to increase the world markets for our goods and services. We want to keep local busineses in a position of strength."

Press Release:

Washington, D.C. – U.S. Senator Kirsten Gillibrand is urging U.S. Commerce Secretary Gary Locke to approve the application submitted by the Genesee County Economic Development Corporation (GCEDC) and the Genesee Gateway Local Development Corporation (GCLDC) for a Foreign Trade Zone (FTZ), a measure that could help attract more businesses to the region, help local businesses find new markets, and create more local jobs. 

In her letter to Secretary Locke, Senator Gillibrand wrote, “This designation would allow for important incentives that could help reduce the cost of doing business for participating companies, increase their competitiveness, and help them access new opportunities to expand their markets. The foreign trade zone designation will also minimize the need for businesses to shift their operations to foreign countries to be nearer to new markets, keeping more jobs within the United States.”

“A foreign trade zone designation for Genesee County will allow existing companies to compete in the global marketplace and attract new companies to Western New York,” stated Steve Hyde, President and CEO of the GCEDC. “Many existing companies will save money on parts they import allowing them to hire more local employees.”

Specifically, an FTZ designation allows for substantial cost savings for businesses on import duties, merchandise processing fees, faster delivery, and higher security. Thousands of businesses use FTZs to handle both foreign and domestic products each year, with more than $30 billion in merchandise exported from FTZs to foreign markets.

The GCEDC is an organization devoted to fostering increased economic activity in local communities throughout the Genesee County region. The GCEDC’s efforts include actively marketing the county to businesses and facilitating capital investment that contributes to the creation of jobs in the region. In fact, GCEDC has sponsored 160 projects, leveraging nearly $45 million in private investment into local businesses, and helping to create or save nearly 6,000 local jobs in the last six years alone.

If we're going to keep businesses in New York, they need ways to save money, and that's the chief reason the Genesee County Legislature should get behind creating a Foreign Trade Zone (FTZ) in the county, according to Charles Giunta, port director for U.S. Customs in Rochester.

Giunta (pictured above) was brought to the Ways and Means Committee meeting Wednesday afternoon by staff of the Genesee County Economic Development Center.

"I’m a different kind of port director," Giunta said. "I go out four or five times a month and make presentations to companies on foreign trade zones. Why? Because foreign trade zones mean we're going to keep the business here. They're not going to go overseas. If I can save these companies money, then it’s a no-brainer."

A foreign trade zone allows a business to import products and materials duty-free that will be used to manufacture items. It's as if the FTZ is outside the United States. There is only a duty if the item is "imported" (sold) into the U.S.

For example -- as used in the meeting -- if you built motorcycles and bought some of the parts overseas, you would pay duty, say $20 each, on the handlebars, headlamp, starter and seat. But the duty on a completed motorcycle is only $10.  So the company saves money on buying all the parts and pays duty on only the finished product when it becomes a consumed item in the United States.

GCEDC is putting together an application for an FTZ and needs the support of the legislature. A resolution will be presented to the Ways and Means Committee at its next meeting. The GCEDC is also gathering data and support material to sway the FTZ board in Washington, D.C., that there is a need and desire for an FTZ in Genesee County.

If a general FTZ is granted to Genesee County, companies that want to take advantage of the FTZ would need to apply for a subzone. A subzone must be fenced off or otherwise segregated from non-FTZ factory operations.

There is a $5,000 annual fee companies must pay.

The fee would be paid, in this case, to GCEDC, and Mark Masse, senior VP of operations, said the fee would be reinvested in GCEDC's parks and programs.

The idea of applying for an FTZ came up when a local manufacturer made a request for an FTZ. The Genesee County-based company has a plant in Georgia and an FTZ locally would save the company more than $15,000 a month.

"So there is an urgency because every month that goes by, we’re missing out and they’re out that money," said Chris Suozzi, vice president of business development for GCEDC.

Roberta Jordans, with the law firm Harris-Beach, said that with the importance President Barack Obama is putting on increasing American exports, the FTZ board in Washington is trying to expedite applications. The normal 18-month process has been shorted, she said.

Legislators pumped Giunta and Jordans with questions.

Edward DeJaneiro wanted to know that if FTZs aren't technically part of the United States, what happens if a crime is committed.

It turns out, if a person steals from within an FTZ, it's a federal crime.

Inventory control is one of the most closely watched aspects of an FTZ by U.S. Customs, Giunta. While small thefts are usually handled internally, and require notification to customs, Giunta said, big thefts will trigger a customs investigation.

After the meeting, Jordans said that companies within a FTZ must still comply with all state and federal environmental regulations, for example, as well as local zoning ordinances.

Mary Pat Hancock wondered if a FTZ would create local companies that stop buying locally grown crops.

Giunta said there just isn't as much money to be saved on importing food to make it financially worthwhile for a food processor to be part of an FTZ. The duty even on sugar has come down substantially, said Giunta, and many food items have almost no duty.

Jay Grasso wanted to know why, with it being such a seemingly great thing, there aren't more counties setting up free trade zones (the program is 76 years old).

Giunta said there simply aren't many officials with U.S. Customs out marketing the program. A lot of companies don't understand it or think it's too difficult of a process.

Masse (pictured below) said it hasn't necessarily been easy so far to convince local manufacturers to apply for subzones. Many times, businesses haven't sent decision makers to attend FTZ presentations, so something may be lost in translation when it gets back to the decision makers.

"Once somebody gets in and becomes successful, then it will become easier to sell to everybody else," Masse said.

Suozzi said the FTZ will help support other GCEDC projects, such at the STAMP project in Alabama.

"This is a tool to retain business here and it's a tool to attract business," Suozzi said. "This is a huge opportunity."