FTZ #176: Our History and our Partners

Foreign Trade Zones tend to be pictured as warehouses on airport property, a third-party warehouse where companies can store imported inventory to defer and reduce import tariffs.

While FTZ #176 was first established by the Greater Rockford Airport Authority, its growing number of partners now span industries and manufacturing across an 11-county region in northern Illinois. 

For the past 31 years, FTZ #176 has encompassed the Northern Illinois region that spans Stephenson to McHenry Counties from West to East, and the Wisconsin Stateline to Lasalle/Peru from North to South. Businesses within that zone are able to activate their facility, at their current location, as an FTZ site or subzone and access the tax benefits that come with it.

That’s a boon for manufacturers, who are struggling with global supply chain holdups due to congestion at ports of entry, high tariff rates, inflation and instability in Eastern Europe. By operating within the FTZ, companies can bring the customs clearance process in-house and in doing so, offset some of that ongoing uncertainty and cost.

The Greater Rockford Airport Authority was on the ground floor of establishing FTZ #176 back in 1991, in an effort to help local manufacturers who utilize the airport for transporting goods. At the time, Chrysler’s Belvidere Assembly plant was among the first approved FTZ operators in the region. It maintained that status until 1997, and the zone was dormant until 2003.

Since that time, zone operators across Northern Illinois have begun taking advantage of FTZ opportunities in growing numbers. They’ve found it leads to improvements in their inventory management systems, such as reducing inaccurate inventory and improving product tracking. Likewise, they can save between one and three days’ worth of holdup at the port of entry as their product waits on processing and inspection. With prior customs approval through the FTZ, no one needs to wait for a customs inspector to break the seal or open a package. Instead, inventory gets moved along the process quickly.

At present, FTZ #176 has a collection of partners throughout Northern Illinois, including:

  • Bergstrom Inc.
  • Brake Parts Inc. LLC
  • Cellusuede Products Inc.
  • Chicago Importing Company
  • Leading Americas Inc.
  • Mitsubishi Logisnext Co., Ltd.
  • PCI Pharma Services
  • Schenker
  • Staal & Plast USA, Inc.

Activating your facility as an FTZ can you save your company both time and money. Learn more about how FTZ #176 can impact your bottom line and improve delivery times by contacting Carrie Zethmayr, FTZ Administrator at (312) 221-1115, emailing at carrie@zethmayr,com or visiting https://ftzrockford.com/ and https://flyrfd.com/.

How FTZ #176 Can Save Your Business Time and Money

As manufacturers and distributors continue to be plagued with growing supply-chain costs and constraints, Foreign Trade Zone #176 is a tool that’s been available in Northern Illinois for more than 30 years to help companies reduce costs, tighten supply-chain timelines, and carry more inventory.

Following the pandemic, inventory management practices have rebalanced from “just-in-time” to “just-in case,” with businesses holding more inventory to ensure they don’t get caught unprepared when a supply chain disruption hits. As a result, warehouses are bursting at the seams and inventory carrying costs are exploding.

Activating your facility as a Foreign Trade Zone (FTZ) subzone of FTZ #176 is an increasingly popular way to reduce inventory carrying costs and reduce overall supply-chain risk. Within an 11-county area in Northern Illinois, businesses can become FTZ subzones and bypass customs delays at the port of entry. Rather, customs processing happens at a company’s subzone site and the company defers the import tariff until the product actually leaves its facility. FTZs were developed for the express purpose of supporting US-based businesses while saving them time and money.

Consider this: A shipment arrives in a U.S. port of entry and is placed in a holding area until a customs inspector can sign off on it. That process can take between one and three days. Then, it moves on to a U.S. factory to be assembled before it can go to market.

In a FTZ subzone facility, that same shipment bypasses port customs and heads directly to your subzone. There, it can begin the assembly process so that plant operations continue without disruption. The import tariff is due when the product leaves your facility, rather than at the time the product is imported. This deferral can lead to a significant decrease in inventory carrying costs, especially if your imports are subject to section 301 or section 232 tariffs.

Additional FTZ benefits include:

  • Duty Exemption: No duties are collected on re-exports, or goods destroyed in the FTZ. That’s a particular benefit to companies with fragile imports or manufacturing processes that result in large amounts of scrap.
  • Duty Deferral: Taxes are deferred on imports until they leave the subzone. Additionally, products can be transferred from one zone to another without being taxed. There is no time limit on how long products can stay in a subzone.
  • Duty Reduction: If your finished good is valued at a lower US Harmonized Tariff rate than the rate on foreign inputs, you will be taxed at the rate of the finished product. Duty also is not owed on labor, overhead or profit attributable to zone production operations.
  • MPF Reduction: The Merchandise Processing Fee is only paid on goods once they leave the subzone and enter the US Customs territory. Additionally, companies only need to file a single entry for all good shipped over the course of a week, reducing brokerage fees.

Overall, cash flow improves and inventory carrying costs can decrease by as much as 25 percent when utilizing an FTZ. For businesses throughout Northern Illinois, FTZ #176 is based at Chicago Rockford International Airport and can help individual companies establish themselves as subzones.

To learn more about utilizing a Foreign Trade Zone to expedite your business processes, call Carrie Zethmayr, Administrator of FTZ #176 at (312) 221-1115, email at carrie@zethmayr.com or visit https://ftzrockford.com/.