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Three Major Furniture Companies Thank Greg Jones of the Foreign-Trade Zone Corporation for Assistance with FTZ Applications

1/26/2009

During a recent FTZ application approval announcement ceremony at Lane Furniture Industries’ production facility in Tupelo, Mississippi, Skipper Holliman, the President of Lane Furniture Industries, Joey Tarrant, the Vice-President of Operations of H.M. Richards, and Al Wiygul, the President of Bauhaus USA, expressed gratitude to Greg Jones, Senior Consultant and Vice-President of the Foreign Trade Zone Corporation (FTZC), for his assistance in obtaining Foreign-Trade Zone (FTZ) Manufacturing Authority for their companies from the U.S. Foreign-Trade Zones Board (FTZ Board). 

Having received the approval of their applications for FTZ Manufacturing Authority – which were sponsored by the Greater Mississippi Foreign-Trade Zone, Grantee of FTZ 158 – from the FTZ Board, the companies now have the authority to produce cut-and-sewn kits used in the manufacture of upholstered furniture under FTZ procedures. This authority will enable the companies to reduce their Customs-related costs and use U.S. workers to produce cut-and-sewn kits that could otherwise be more cost-effectively produced overseas.

Due to the “irrational duty rate” relationship between cut-and-sewn kits (duty free) and the micro-denier suede fabric from which they are made (up to 17.2 percent), overseas cut-and-sew operations may ship kits into the U.S. duty free, giving them up to a 17.2 percent cost advantage over U.S. cut-and-sew operations. Because there is no U.S. source for micro-denier suede suitable for use in the production of these kits, U.S.-based cut-and-sew operations must import the micro-denier suede fabric they use – and pay duty on it.

This cost structure has forced the shutdown of a number of domestic cut-and-sew operations in favor of duty-free imported kits produced by foreign cut-and-sew technicians. By enabling the recently-approved companies to pay duty on cut-and-sewn kits (“free”) instead of the fabric used to make those kits (up to 17.2 percent duty), FTZ status will encourage the retention of about 950 American cut-and-sew technicians’ jobs. It will have no effect on micro-denier fabric purchasing patterns, because the fabric will be produced overseas whether the upholstery covers are cut-and-sewn by foreign workers or by U.S. workers.

The Foreign-Trade Zones Program was established in 1934 as a means to counteract some of the counterproductive results of the global trade and production environment. These zones are considered, for Customs purposes, to be outside of the Customs Territory of the United States. They provide a number of benefits key to the competitiveness of companies that engage in international trade.

Greg Jones began working in the FTZ program in 1986, and has been an active member in the National Association of Foreign Trade Zone (NAFTZ) since 1987. He served as president of the NAFTZ from 1993 to 1995, and was designated as an Honorary Life Member in 2000. The Foreign-Trade Zone Corporation is a service provider offering FTZ cost-benefit analyses, FTZ Board applications, activation with Customs and Border Protection (CBP), training, assistance in designing, creating and managing Zone projects, and its SmartZone Premier Foreign-Trade Zone management software.

To learn more about the Foreign-Trade Zone Corporation, see www.ftzcorp.com

    

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