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Foreign Trade Zones allow business to compete in the global economy

ROBERT KANE

ROBERT KANE

By BECKY GILLETTE

U.S. Foreign Trade Zones (FTZs) help businesses lower their Customs-related costs on imported raw materials and components, thus enabling them to cost-effectively produce their finished products in the U.S. instead of overseas, said Robert Kane, president of the Hancock County Port and Harbor Commission, and president of the Mississippi Coast FTZ.

FTZs help U.S. companies compete in the global economy, Kane said.

“Businesses use FTZs to efficiently and effectively source their merchandise from around the world,” Kane said. “The FTZ has contributed to the diversity of our exportable products. The FTZ program is particularly important in Mississippi. In 2015, the total output of Mississippi’s FTZ manufacturers exceeded 15 percent of the total economic output of the state. FTZs help established companies to keep growing and generating quality employment for Mississippians.”

Kane said companies take advantage of benefits and are realizing significant cost and cash flow savings. There is also an impact on attracting new development.

“The competition to attract and win companies to invest in our community is getting harder and harder,” Kane said. “Our region is competing with communities that are very aggressive in terms of the benefits and incentives. The FTZ is one of the elements that has enabled the Mississippi Gulf Coast to be considered within the list of economically competitive options for companies.”

Kane said the attractiveness of the FTZ to new industry is particularly significant where multi-national firms are concerned.

FTZ production authority helps U.S-based manufacturers lower their cost of production, thereby helping them increase exports and displace imports of similar finished products. Kane said this past year users of the Mississippi Coast FTZ exported more than $3.2 billion in finished product value, which accounted for more than 30 percent of the state’s total. The total output of state FTZ’s manufacturers exceeded $9 billion in 2015.

The use of FTZs in helping the business community meet the challenges of globalization is not new. However, Kane said they are facing new issues that are an outgrowth of the way in which recently promulgated federal regulations are being interpreted by federal bureaucrats.

“These affect the way in which we manage our FTZ project and, more importantly, the flexibility and efficiency with which our FTZ project serves the public,” Kane said. “All Zone projects are, by federal regulation, operated as public utilities, affording uniform treatment under like conditions. The public entities who appoint board members to the Mississippi Coast FTZ have decades of experience with public utility principles, and are quite accustomed to operating in accordance with them. We are hopeful that the innovative way in which our Zone project serves our trade community will be recognized and appreciated by federal officials as representative of the highest standards of sound practice and public service, and have enlisted the help of our federally elected officials in facilitating our dialogue with them.”

The Mississippi Coast FTZ operates under the authority of the Mississippi Coast Foreign Trade Zone, Inc., a non-profit corporation. Its board members are appointed by five regional public entities: the Gulfport-Biloxi International Airport Authority, the Hancock County Port and Harbor Commission, the Harrison County Development Commission, the Jackson County Port Authority, and the Mississippi State Port Authority.

“These entities operate in concert to make sure that the FTZ program is available to any member of the business community who needs the program to enhance its competitiveness,” Kane said. “The Mississippi Coast FTZ uses the professional services of the FTZ Corporation and the Hailey McNamara law firm to help it efficiently deliver the benefits of the FTZ program to all of its constituents. One might think that the involvement of several public entities might make the management and administration of our Zone project somewhat challenging. Thanks to our innovative business model, the opposite is true. Using our locally-based professional service providers, and the in-house staff of our five public agencies in concert, we are able to enjoy both strength in numbers and nimbleness of action at the same time.”

Kane said the companies who use the Zone project benefit from long-standing interaction with their service-providers, and they also know and interact with their board members and key in-house staff people.

“This creates an effective sense of community and purpose that makes our Zone project a success,” he said.

Major south Mississippi FTZ operators include Ingalls Shipbuilding, Chevron, and VT Halter Marine in Pascagoula, TopShip in Gulfport and Channel Control Merchants in Hattiesburg.

The Coast FTZ is one of four in the state.

FTZ aren’t always an advantage for economic development. For example, inland in Tupelo they aren’t as advantageous.

“Every applicable deal we’ve done, we have offered to cover the cost of the initial application of FTZ designation as part of the incentive package, with the company paying the ongoing maintenance,” said Joe Max Higgins, Jr., CEO, Golden Triangle Development LINK. “In my 13 years here, we’ve never had a company find the value was worth the investment.

Higgins said there are areas in the state whose manufacturers find savings in FTZs.

“We just haven’t seen it here,” he said.

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