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Foreign trade zone open to other companies

Valencia Commerce Center businesses can take advantage of benefits to create jobs, attract clients

Posted: October 26, 2012 2:00 a.m.
Updated: October 26, 2012 2:00 a.m.

AMS managing partners, President Jay Catlin, left, and CEO Ken Wiseman clap at a ceremony introducing their foreign trade zone status at AMS offices in Castaic on Thursday.

AMS Fulfillment of Valencia celebrated the foreign trade zone expansion — FTZ — certification on Thursday by sharing the benefits the FTZ brings with other companies in the Valencia Commerce Center.

AMS secured the FTZ status in August after working on the certification for several years.

Ken Wiseman, CEO and managing partner for AMS Fulfillment, welcomed a large group of members from the business community — including the SCV and Los Angeles economic development corporations, the SCV Chamber of Commerce and the Valley Industry Association. The city of Santa Clarita was also on hand for the announcement.

The zone, which was carved from dedicated acreage of the larger FTZ No. 191, located in, and managed by the city of Palmdale, originally designated 18 buildings in the local business park, Wiseman said.

But on Thursday, the local warehouse, order fulfillment and distribution company opened the zone up to all businesses in the business park.

Expanding access to other businesses benefits AMS, but also any other competitor or manufacturer in the business park that is importing goods, Wiseman said. It benefits economic development locally, he said.

“Competition is good,” Wiseman said. “It’s never been anything bad.”

AMS is sharing the good news and letting other businesses know the FTZ is here and can be used by others, Wiseman said. Otherwise it could shrink in size. But taking advantage of it helps drive inland trade.

“We can leverage the FTZ as a community and create jobs,” Wiseman said, who also serves as board member on the Santa Clarita Valley Economic Development Corp.

James C. Ledford, mayor of the city of Palmdale, and Kari Blackburn, senior economic development project manager with the city’s community redevelopment agency were on hand for the announcement.

Given the economic climate in California, when the state eliminated the redevelopment agencies, it put more pressure on businesses, Ledford said. Opening up the foreign trade zone is one way to help the business community and create jobs.

Foreign trade zones have changed in the past several years, Wiseman said. It became less about the buildings and more about the zone so instead of limiting it to 18 buildings, AMS Fulfillment realized the FTZ could benefit other businesses in the area.

Operating in a FTZ benefits businesses, by helping them to grow, and the clients they serve. The designation allows a company to act as U.S. port, clearing clients’ merchandise through U.S. Customs and Border Protection.

And, bypassing Customs at the ports creates significant savings for clients by reducing time spent at port and duties paid.

Foreign and domestic merchandise is not subject to duty fees or federal excise taxes until it leaves the designated FTZ for U.S. consumption.

Deferring duties and taxes allows companies to save money while the goods are in storage, awaiting distribution to the customers at a later date. Without the FTZ, companies would have to pay duties as soon as the goods arrived at a U.S. port.

Business leaders all praised the move by AMS and the FTZ, as an economic benefit by creating jobs through increased business.

As a result of the FTZ designation, AMS Fulfillment now has a client who is thinking about ceasing its distribution in Canada and rerouting its containers to Long Beach and AMS, Wiseman said.

When the product comes through AMS, technically the product never entered the U.S. so the client won’t be double-taxed, he said. The client will pay only Canadian duties if the products remain at AMS Fulfillment, a FTZ. It won’t be double-taxed, he said. And the client no longer needs two physical warehouses.

“Historically, a company could get that tax back,” Wiseman said. “If you import a product and ship it back out, you can get the duties you paid to the U.S. government back but it’s a very complicated, time-consuming process. It’s easier to go through us and still ship out to other countries.”



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