DC Velocity - October 2013

BY MARK B. SOLOMON, SENIOR EDITOR

THE DC VELOCITY Q&A

thoughtleaders

NEXT YEAR MARKS THE 80TH ANNIVERSARY OF THE Foreign-Trade Zones Act, which created an important—but what has been an underutilized—weapon for U.S. business. The law established Foreign Trade Zones, or FTZs, secure areas located in or near U.S. Customs ports of entry but legally considered to be outside the Customs territory for the purpose of tariff laws and entry procedures. There, goods may be handled, manufactured or reconfigured, and re-exported without the intervention of customs authorities. Only when the goods are moved to consumers within the country where the zone is located do they become subject to the prevailing customs duties.

Despite the advantages of FTZs, most U.S. companies don’t take advantage of them. There are about 600 zones and sub-zones in the U.S., a fraction of the number in existence worldwide. One company that has moved to take advantage is Blount International Inc., a Portland, Ore.-based designer and manufacturer of equipment used in the forestry, farming, ranching, and construction sectors, among others. At the helm of the effort is Dino Scott, Blount’s Kansas City-based global compliance and FTZ manager, who has spent 22 years plying his trade on four continents. The Panamanian-born Scott holds bachelor’s degrees in business administration and supply chain, and expects to get his master’s this month in transportation and logistics.

Scott was interviewed by Senior Editor Mark B. Solomon
about the benefits of an FTZ, the challenges Blount faced in
implementing the program, why it chose Kansas City, and why
companies engaged in international trade should look hard at
establishing a zone regardless of the cost and effort involved.

QWhen did the Blount FTZ open?

A Our FTZ was launched on Aug. 5. At this time, it is the only manufacturing FTZ designation in the Kansas City area.

QWhat was your objective in establishing an FTZ, what benefits has Blount derived from it, and what, if any, changes did this demand of your internal procedures? A The primary objective was to support and improve the flow of inbound and outbound inventory. The implementation of an FTZ operation allows any company to review, revise, and improve its inventory management skills. The secondary goals include the cost savings that come with duty inversion, duty avoidance, and duty deferral.

The integration of the FTZ into Blount’s established supply chain and distribution infrastructure required that certain practices undergo a review and revision process. A reassessment of Blount’s receiving and shipping methods allowed our management to analyze the required practices at the FTZ, determine where inconsistencies lay in our cur-