The 600-acre New England Tradeport industrial park in Windsor and East Granby is considered a prime location for future business growth in Connecticut with its proximity to Bradley International Airport and major highways.
Now the area is about to get a bit more attractive.
Almost 400 acres within the business park recently won approval from a federal agency to be designated as a Foreign Trade Zone (FTZ), which will provide economic incentives to companies located there that engage in international trade.
The designation, for example, will provide duty-free treatment to goods that are brought, processed and manufactured in the zone and then re-exported outside the country. Also, duty payments can be deferred on items brought into the zone and eventually sold in the U.S. market. It can also help with administrative savings like lowering customs brokerage fees or reducing merchandise processing fees.
Officials say the new designation, along with the recent creation of the Bradley Development Zone, could be a game changer in stirring more commercial activity near Bradley Airport, particularly at the New England Tradeport development, which has nearly 4.6 million square feet of developed and undeveloped industrial space.
“There is a confluence of incentives available here that will no doubt attract larger players to the region and facilitate growth of existing businesses,” said Tim Lescalleet, the senior vice president of Griffin Land, which is the developer of New England Tradeport. “We've already received inquiries without any formal promotion.”
Foreign Trade Zones have been around since the 1930s and were originally created to encourage and expedite U.S. participation in international trade.
Every state has at least one FTZ, and Connecticut has four, including locations in Bridgeport, New Haven and New London. The New England Tradeport zone actually expands on a FTZ that already exists in Windsor Locks at the 17.5-acre Crown Industrial Park, adjacent to Bradley Airport. That site is not owned by Griffin Land.
A Foreign Trade Zone is a geographical area that must be in or adjacent to a U.S. Port of Entry and is considered to be outside of U.S. Customs Territory for the purpose of customs duty payment.
A duty is essentially a tax placed on imported or exported products and duty rates vary based on the types of goods being shipped. Certain pharmaceuticals imported in bulk form, for example, face a 6.5 percent duty in the United States.
But goods entering FTZs are not subject to customs tariffs until the goods leave the zone and formally enter into U.S. Customs Territory.
Merchandise shipped to foreign countries from FTZs, meanwhile, is exempt from duty payments, which is especially useful to firms that import components in order to manufacture finished products for export.
There is no time limit on goods stored inside a FTZ and certain foreign and domestic merchandise held in a zone may be exempted from state and local inventory taxes as well.
A variety of activities can be conducted in a zone, including assembling, packaging, destroying, storing, or processing goods. Main foreign products received in FTZs include crude oil, petroleum, pharmaceutical products, vehicle and aircraft/spacecraft parts, and machinery/equipment. In recent years, FTZs have grown in popularity especially as companies have looked for ways to cut costs amid the economic downtown, said Rebecca Williams a senior manager of trade and customs for the Rockefeller Group, a New York-based consulting firm.
Over $534 billion in merchandise flows through Foreign Trade Zones annually, according to Rockefeller Group data. About 60 percent of the value received is domestic or foreign duty paid and approximately $35 billion is exported.
Lescalleet said having the FTZ designation gives Griffin Land another tool to attract tenants both large and small, although it raises the possibility of getting a big fish.
Dollar Tree recently received approval to build a 1-million-square-foot distribution center in the New England Tradeport on 93 acres along International Drive, although they weren't attracted by the FTZ, Lescalleet said.
Still it's those larger tenants that could quickly fill up space around Bradley Airport and turn it into a vibrant center of commerce.
New England Tradeport includes 2.6 million square feet of existing industrial space, with an additional 2 million square feet of developable sites that are shovel ready. That means they already have their state and local permits in place, which would allow for a much shorter turnaround time for a tenant that wants to open up shop in the area.
The Tradeport, which encompasses International Drive and Rainbow Road, has 20 existing tenants from a range of industries including AN Deringer, Domino's, FedEx, Westinghouse, UPS, and Pitney Bowes. Together, they occupy about 1.5 million square feet of space. About 350,000 square feet of existing space remains vacant.
The foreign trade designation, approved by the U.S. Foreign-Trade Zones Board in February, comes at a time when public officials and business interests are working to build-up the area around Bradley Airport as a major commercial center for the state. In 2010, state lawmakers established the Bradley Development Zone, which offers tax credits and property tax exemptions to manufacturers that expand or move in the four towns surrounding the airport including East Granby, Suffield, Windsor Locks and Windsor.