Wanted: Firms to cash in on foreign-trade zone

Organizers of the region's expanded foreign-trade zone hope the sector boosts, existing companies, while attracting new ones.

Randy Campbell led the effort to widen Foreign-Trade Zone 147 to sites in Cumberland, Dauphin, Franklin, Lancaster, Northampton and York counties. Previously, the FTZ

"The foreign-trade zone programs in areas such as Central Pennsylvania are strongest when they serve the existing business community," Campbell said. "That's where the marketing needs to occur."

The previous zone in York County saw only light use, said Joseph Cervenak, vice president of the board that oversees the zone.

Many companies are not aware of foreign-trade zones and how they work, he said. But the expansion is likely to raise awareness, Cervenak said.

"Now, it's big enough that you can turn around and advertise it. And you can make it part of your marketing pitch for the area," he said. Cervenak is managing principal of Kemper-Joseph, an international trade and logistics consulting firm in Springettsbury Township, York County.

Foreign-trade zones are considered to be outside the customs territory of the U.S. Activities in the zones are exempt from the typical rules governing what types of goods may flow into the country and how those goods are taxed. Companies operating in FTZs can defer or cancel import duties, lowering their costs or easing cash flow.

Companies are not required to have physical presences within the midstate's zone to participate, but it helps.

The expanded foreign-trade zone is one of the largest in the nation, Campbell said. It includes several new or planned business parks.

One new site is Cumberland Valley Business Park in Franklin County. An official there said several companies were interested in joining the FTZ now that it's available. The interested companies include Gabler Trucking Inc., clothing maker Tom James Co. and Ingersoll-Rand Co., which manufactures equipment for various industries, said Kip Feldman, director of real estate for the Letterkenny Industrial Development Authority, which manages the park. Officials at the three companies could not be reached for comment.

"It was not something that they could have undertaken on their own," said Feldman.

C&J Clark America Inc., a Massachusetts-based shoe wholesaler and retailer, offered a recent example on how to use an FTZ. The firm does business as The Clarks Cos.

Clarks received approval to include a distribution center in Conewago Township, Adams County, in the region's foreign-trade zone. The company imports shoes from overseas and sends them to that facility. Thanks to the foreign-trade zone, Clarks can defer import duties on those shoes until they are shipped from the distribution center.

That allows more time for Clarks to invest or earn interest on its money, said George Neiman, who manages finances for the distribution center and other Clarks operations.

Foreign-trade zones were created in 1934 to correct unintended consequences of U.S. trade policy, Campbell said. They spread quickly during the 1980s, when the U.S. automobile industry sought help against competition from Japan. Now, foreign-trade zones are so common that regions without them are at a disadvantage in economic development, Campbell said.