Foreign trade zone touted in Cambria County

Deal with Argentine winemakers among potential benefits

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JOHNSTOWN -- Military aircraft and small commercial passenger planes are the frequent fliers at the John Murtha Johnstown-Cambria County Airport, but Argentinian winemakers may soon be among their ranks if a proposed foreign trade zone is established in the county.

Airport and county officials are hopeful that establishing a foreign trade zone will help to secure a deal with the winemakers to invest in operations to establish wine bottling operations in Cambria County.

Through the trade zone, raw wine would be shipped to the area for manufacturing. Reduced tariffs will help drive down costs while helping create jobs, officials said.

Cambria County President Commissioner Douglas Lengenfelder, however, cautioned that establishing a foreign trade zone in Cambria County is still about a year and a half or two years from completion.

In February, Mr. Lengenfelder led a trip to South America with local business leaders in an effort to solicit support for investment in business opportunities in Cambria County.

Robert A. Gleason Jr., Republican Party of Pennsylvania chairman; Jose Latour, a Florida lawyer tapped to help establish the foreign trade zone; and multiple Cambria County business leaders and their spouses attended the trip.

About $3,000 of county money was used to pay Mr. Latour's expenses as the county's legal counsel on the trip. Mr. Lengenfelder said everyone else paid his or her own way.

Mr Lengenfelder secured a letter of intent from Jorge Ortiz, CEO of the Tapiz and Zolo vineyards to ship raw wine to the airport. Once there, local manufacturing companies would bottle, package and distribute the wine, all at reduced costs for the Argentinian company.

The company planned initially to only sell the wine in Pennsylvania, but now it wants to distribute the wine across the East Coast, Mr. Lengenfelder said. "It's going to be much, much larger than we had expected," he said.

Mr. Lengenfelder is quick to emphasize government is not in the business of creating jobs. Instead, he said he hopes to use his role in county government to establish the foreign trade zone and allow private business to reap the benefits.

"This is a win-win situation," he said.

"What foreign trade zones allow you to do is treat products in different manners to make it more attractive to do domestic manufacturing in the U.S.," said Tim White, vice president of development at the Regional Industrial Development Corp. of Southwestern Pennsylvania.

RIDC owns 11 business parks in the Pittsburgh region and provides financing for industrial and high-tech businesses, Mr. White said. RIDC is also the grantee of foreign trade zone 33 in Pittsburgh, which is home to various manufacturing plants, including one for Mitsubishi Electric Power Products.

The foreign trade zone supports export-oriented companies, generates jobs and helps to import wealth into the economy, Mr. White said. "It's a good tool. If you look on a national basis, there's a broad use of foreign trade zones," he said.

RIDC established and manages the foreign trade zone program, Mr. White said. "It's a great tool for companies that are focused on creating wealth ... and has a multiplier effect on a regional basis," he added.

According to U.S. Customs and Border Protection, the foreign trade zone program levels the playing field for companies that import raw materials and components used in domestic manufacturing.

"The program encourages U.S.-based operations by removing certain distinctiveness associated with manufacturing in the United States," according to information available from U.S. Customs and Border Protection at cbp.gov.

Domestic manufacturers, including automobile companies and other technical manufacturing processes, typically import large quantities of parts used in domestic manufacturing. Instead of paying a higher rate for each part, the overall manufactured good is assessed rather than each individual component.

For wine imports, the raw wine would not be taxed until it is bottled and shipped from the foreign trade zone for consumption, Mr. Lengenfelder said.

Pennsylvania has seven designated foreign trade zones, including ports in Philadelphia and Pittsburgh. About 250 foreign trade zones are located throughout the country, Mr. Lengenfelder said.

"Why come to ours and not Pittsburgh?" he asked, before answering that a dollar goes further in Cambria County. Even the cost of renting a forklift to move supplies is cheaper when compared to larger cities, he said.

region - businessnews


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