83.9 F
San Fernando
Friday, Mar 29, 2024

Foreign Trade Zone Status Brands Tejon

A 177-acre sliver of the 1,450-acre development of the Tejon Industrial Complex is now a Foreign Trade Zone by virtue of its February 27 approval by the U.S. Department of Commerce. The designation was announced March 13. The FTZ designation provides an economic incentive to participants importing goods; cutting some costs by bypassing, reducing or deferring fees and possibly saving time in processing at the port. An FTZ allows manufacturers or distributors to pay no duty on imported items or raw materials until those goods enter the U.S. commercial marketplace. FTZ users may also receive permission from U.S. Customs to move imported items directly from the ports to the FTZ, thereby avoiding delays at congested ports. Additionally, FTZ users may submit weekly reports and pay one broker and processing fee per week, rather than submitting a report and paying a fee for each shipment, meaning significant potential cost savings. The portion of the site designated as a FTZ can be overlaid in whole or in part, as needed by users and approved by the Commerce Department. The first major user of the Tejon site was IKEA, enticed by John DeGrinis, SIOR with Colliers International in Encino. IKEA was fast-tracked with a sub-zone FTZ, because they were already in place and ready to go. The February 27 approval of the 177-acre FTZ supplements the furniture retailer’s prior use. When IKEA moved in seven to eight years ago, they occupied 850,000 square feet of the facility, DeGrinis said; now they have 2.5 million square feet. Oneida, the tabletop products marketer, has 350,000 square feet. There are 606,000 square feet just completed, for sale or lease, whole or divisible, DeGrinis said. Congressman Kevin McCarthy (R-Bakersfield) has been working toward getting the designation since he served in the California State Assembly for the area. Elected to Congress in 2006, he contacted the Commerce Department to help usher the application through the bureaucracy said Nick Bouknight, press secretary for the Kern County representative. “He wanted to make sure there was movement on the application,” Bouknight said. That contact took place last summer, he said, and required corresponding with the FTZ board. The congressman is “very supportive” of the FTZ for the broader economic benefits to the region, not only for increasing the tax base but the added jobs that enhance the general commerce of the region, Bouknight said. Many FTZs in the region surround the harbor, but some other locations beyond the coast include Palmdale; Victorville; Palm Springs; the Riverside County city of Moreno Valley; and the Imperial Valley community of El Centro. The Tejon location, which is only 40 minutes out of Santa Clarita, includes a Best Western Motel, a smattering of fast food outlets, a Starbucks, a pair of gas stations and a Kern County Fire Department station house. The long-term plan for the Interstate 5-straddling site includes 212 acres designated as freeway commercial and an approved and entitled 15,000 acres (20,000,000 square feet) of industrial and warehouse space. What was once thought of as remote geographically, the Tejon location has become increasingly important to commerce in the region as the Los Angeles megalopolis continues to grow. New York-based Rockwell Group Development Corporation, a joint venture partner with Tejon Ranch Co., has come aboard the project and is shepherding the FTZ aspect of the development. “It’s our flagship California project,” said Brandi Hanback, Rockwell Group managing director of FTZ services, adding the developer has been involved in FTZs through its New Jersey development since the ’70s. The company sees a global advantage to the location. “Not only can it serve as a distribution center for staging of imported cargo,” she said, “but it can attract global activity that would otherwise take place outside of the U.S.” Because manufacturing and assembly that takes place inside the FTZ can avoid customs duties until the goods enter the U.S. marketplace, if the goods are exported from there, Hanback said, those fees are bypassed altogether. IKEA does that for its Canadian market, she said. The location is an advantage also, she said, because there are only so many places in California where you can put up a few million square feet of building. The Tejon site is removed from the residential concerns about operating hours, and urban traffic that inhibits efficiency, she said. “Importers can move freight out of congested areas where they can do their processing, distribution and staging,” Hanback said, “without affecting people with noise, pollution and congestion.” The site being at least 90 traffic-free minutes of drive time north of the harbor, puts most California markets within reach of new federal limits on truck drivers’ hours of operation. In 2003, the Federal Motor Carrier Safety Administration created the current rules for truck drivers: an 11-hour of service limit over 14 hours, after which they must go off-duty for at least 10 hours. After a trial period where fatigue-related accidents dropped and stayed lower those rules were made final in December of last year. The impact of that rule upon a supply chain-oriented company is how far away a truck driver can go, unload, and come back in time to spend the night at home. “It’s about the truck turn,” said Barry Hibbard, vice president of commercial and industrial with Tejon Ranch. Hibbard noted that a truck driver based out of Tejon can get home to Bakersfield, one of the few places with a home price within range of a truck driver’s salary. The location, said DeGrinis, the marketing agent with Colliers’ Tom Taylor, Patrick DuRoss for the project, makes sense as the Inland Empire distribution hubs get maximized and major supply chain retailers continue to seek a competitive advantage. “The goal,” he said, “is to get goods from the port to store shelves for the least cost as possible.” With the cost of land, even if you could find the space to house a big box distribution center, DeGrinis said, “Tejon is the first stop north” with space available. “It’s only 40 minutes out of Valencia,” he said. Fastener Company Aquired Saturn Fasteners Inc. in Burbank has been acquired by Acument Global Technologies as part of that company’s growth in supplying aerospace customers. Terms of the deal between Saturn and Acument, based in Troy, Mich., were not disclosed. Saturn employs more than 100 workers and provides threaded fasteners to distributors, original equipment manufacturers and their suppliers. “[The acquisition of] Saturn demonstrates our commitment to the aerospace industry and establishes a solid foundation for addressing the shortage of specialty threaded fasteners created by the dramatic ramp-up in global aircraft production,” said Martin Schnurr, vice president and general manager of Acument North America.

Featured Articles

Related Articles