Foreign trade zones may help attract more companies to central New Jersey.
By: Steve Feitl
There is no port of call in East Windsor Township. Nor is there an airport. Yet, imported goods clear customs each week at Conair Corporation’s distribution center at 150 Milford Rd.
Conair operates out of a special sub-zone of a foreign trade zone. It is the only current foreign trade zone operator in Mercer County though that may soon change.
There are five foreign trade zones in the state, including the Mercer zone and designations in Morris County, Newark, Lakewood and Salem.
But there is an increasing demand among warehouse distribution users, according to officials with foreign trade zone operator Rockefeller Group Development Corporation.
Mercer County recently filed an expansion application on behalf of several municipalities with the U.S. Department of Customs. The application to the Division of Foreign Trade Zones was originally filed in December and amended this month. The county expects a decision later this spring, said Wayne Staub, the business representative for the Mercer County Economic Development Department.
Foreign trade zones allow companies to treat their facilities as if they were located outside the United States for customs purposes. Deferred duties and consolidated weekly entry fees are two of the main benefits of the business-friendly program, Mr. Staub said.
For example, Conair can import its health and beauty products or electronic appliances and store them in its East Windsor warehouse without paying a duty until the merchandise is sold, Mr. Staub said.
"They hold on to their money much longer this way," he said. "And if they sell it outside the U.S., they never pay the duty at all."
East Windsor assisted Conair in attaining the status in 1997 and has been pleased with the subsequent results, according to Township Mayor Janice Mironov.
Conair recently opened a 175,000-square-foot addition to their existing facility, and has another 500,000 square feet before the Township Planning Board.
"They have found the designation to be very important and helpful to their operation," she said. "As a result, they’ve made a long-term commitment to our town."
The success of the East Windsor sub-zone led to the pending expansion application. Mr. Staub polled Mercer County municipalities to gauge interest and found five interested parties. Ewing, Hamilton, Trenton and Washington Township joined East Windsor in requesting a broader county trade zone.
East Windsor sought a consistent location and zoning for its part of the application. The second Conair property in East Windsor would be part of the expanded zone, as would several other parcels off Milford Road, just minutes from Exit 8 on the New Jersey Turnpike.
"There is both interest and support," Mayor Mironov said.
The foreign trade zone designation is an effective tool in attracting developers and something the township has used to market itself and provide economic development to the community, she said.
Washington Township has already seen its potential impact, as Mercedes-Benz Corporation has plans for a 1 million-square-foot distribution facility there, Mr. Staub said.
But not all Mercer communities opted to take part in the expansion. Lawrence Township, for one, declined participation.
There were no existing businesses that were involved in consequential international commerce, Township Manager William Guhl said. The other option would be to offer attractive land for an international business to develop, but that also didn’t seem likely, Mr. Guhl said.
"Very little of Lawrence remains developable," he said. "There’s precious little of it, so we just didn’t think we had a fit."
But developers have found suitable areas outside of Mercer County.
Rockefeller Group Development Corporation operates a general purpose foreign trade zone at its 150-acre warehouse and distribution park in Cranbury Township. The Middlesex County location, minutes from Exit 8A on the NJ Turnpike, is tied to the group’s initial zone in Mount Olive in Morris County.
Rockefeller has two current tenants in Crate and Barrel, a home furnishings and housewares retailer, and Pearson Education, a college textbook distributor. The latter warehouse claims 890,000 square feet, though it does not make use of Rockefeller’s foreign trade zone benefits, said Eugene Preston, senior vice president for Rockefeller.
Crate and Barrel, however, occupies 675,000 square feet over two buildings on Prospect Plains Road and takes advantage of Rockefeller’s full services.
In addition to the financial benefits of the foreign trade zone, Rockefeller offers in-house training on getting the most out of the unique designation. The company brought in Brandi Hanback of the National Association of Foreign Trade Zones to head up Rockefeller Foreign Trade Zone Services, Mr. Preston said.
"We will train their people and help develop their systems to fully realize the benefits of the foreign trade zone," he said.
It’s a practice Rockefeller is trying to perfect throughout the country with zones in Pennsylvania, Florida, Illinois and California. The group has another 1.6 million square feet available for development on its Cranbury property and has seen an increase in demand since an amendment in 2000 to the foreign trade zone agreement allowed for less prohibitive accounting for distribution companies, Mr. Preston said.
Warehouse distribution users in particular can take advantage of the consolidated weekly customs entries, which can cut down on administrative fees, he noted.
It’s these types of benefits that are attractive to international businesses and one of the reasons Mr. Staub believes foreign trade zones are a no-lose proposition for municipalities.
"I see no downside," he said. "If you have the designation and don’t use it, there’s no penalty. I think it can really help a municipality market itself to international businesses."