Volkswagen is weighing use of Enterprise South industrial park as a foreign trade zone where the automaker and its suppliers could garner potentially big savings from federal tariffs, according to officials.
Chattanooga and Hamilton County governments have pledged nearly $200,000 in fees to activate and maintain the trade zone over four years.
“It would enable VW to be hopefully successful in Chattanooga,” said Chattanooga Mayor Ron Littlefield. “For $200,000, we could get quite a bit of benefit out of this.”
The trade zone program is overseen by the U.S. Customs Service, with the fees paid to the Foreign Trade Zone Board.
VW’s interest is included in a memorandum of understanding the company signed with local and state officials related to the the automaker’s $1 billion assembly plant slated to start production by early 2011.
The zone could help the company’s cash flow and cut some costs by reducing the amount of duty VW would have to pay on imported components.
Jill Bratina, VW Group of America’s director of corporate communications, said the company will “evaluate that decision once we have our suppliers in place.”
Fellow German automaker BMW has used a trade zone since it landed in South Carolina in the mid-1990s, said Suzan Carroll-Ramsey, FTZ manager for the South Carolina State Ports Authority.
She said $5.8 billion in materials and goods traveled through the zone in the 2006-07 fiscal year, the latest for which figures are available.
Ms. Carroll-Ramsey didn’t know how much BMW has saved over the years, but said VW’s amount could be substantial.
J.Ed. Marston, the Chattanooga Area Chamber of Commerce’s vice president for marketing, said the group used the FTZ as a point of recruitment for VW.
He said the group also is offering the FTZ as a competitive advantage to attract suppliers.
“We have these all ready to go at Enterprise South and in our region,” he said.
This spring, the Chamber acquired designation of the industrial park as an FTZ. In addition, other properties were designated as well, including sites in Bonny Oaks Industrial and Office Park, the JIT Terminal on Manufacturers Road and industrial sites in Bradley and Warren counties.
“It’s a great added feature in Chattanooga’s effort to attract and keep industry,” said Mr. Littlefield.
Ms. Carroll-Ramsey said the FTZ also could help by expediting delivery of components to the plant.
“It gives them the ability to have those flown in if customs is closed,” she said. “If you can’t receive goods, the assembly line shuts down.”
Mike Pare, the deputy Business editor at the Chattanooga Times Free Press, has worked at the paper for 27 years. In addition to editing, Mike also writes Business stories and covers Volkswagen, economic development and manufacturing in Chattanooga and the surrounding area. In the past he also has covered higher education. Mike, a native of Fort Lauderdale, Fla., received a bachelor’s degree in communications from Florida Atlantic University. he worked at the Rome News-Tribune before ...