Salt Lake City Foreign Trade Zone
Locating or expanding your company’s operations into a Foreign Trade Zone (FTZ) is a smart business strategy. In today’s competitive marketplace you can’t afford to let cost saving opportunities pass you by. Consider the Salt Lake City Foreign Trade Zone as a key source of cost savings and your international gateway to U.S. markets.
When operating from a foreign trade zone, your company gains a distinct competitive advantage by receiving cost reductions in customs duties and fees, strategic location, and supporting services. This competitive advantage brings an increase in profits and sales.
The Salt Lake City Foreign Trade Zone is your gateway to U.S. markets
The Salt Lake City FTZ is strategically located on 55 acres adjacent to the Union Pacific Intermodal Terminal and in close proximity to the city’s international airport and major interstate highways. These are a few of the reasons the Salt Lake City FTZ can be a strategic location for your company.
- Salt Lake City, often referred to as the “Crossroads of the West,” is a hub for air, ground and rail distribution located almost equidistant from all major western U.S. markets.
- Salt Lake City International Airport is within a 2.5 hour flight of half of the U.S. population and ranks as the 22nd busiest airport in the U.S. with more than 970 flights daily.
- Utah’s road transportation system includes distribution arteries of I-15, I-80, I-70, and I-84.
- Utah has over 700 trucking companies and approximately 2,500 registered carriers that provide one-day and two-day direct service to any point in the continental western U.S.
- Utah has approximately 1,700 miles of railroad tracks with coverage in the Salt Lake – Ogden metropolitan area. The state’s location makes for an excellent interline switching route for shipments destined for West Coast or Eastern and Midwestern main terminals without the need to back haul shipments.
- Salt Lake City offers a full-service customs port of entry.
Benefits of locating at the Salt Lake City FTZ
- Defer customs duty and federal excise taxes. By bringing your international shipments into the Salt Lake City FTZ you may be able to defer any applicable customs duty and federal excise taxes until the merchandise leaves the zone to be consumed in the U.S. This is an excellent way to lower the cost of holding inventory until you’re ready to ship to market.
- Eliminate duty and federal excise taxes. Goods from outside the U.S. may be imported into, and then exported from the Salt Lake City FTZ to locations outside of the U.S. without the payment of duty and excise taxes. Goods may also be imported into, and destroyed in the zone without the payment of duty and excise taxes.
- Reduce dutiable tariff on imported parts when assembled in finished products. For example, consider a company that assembles all-terrain vehicles. Imported ATV tires are dutiable at 4%. If assembled into a finished ATV in an FTZ, the duty rate of the finished ATV (2.5%) can apply to the value of the tires resulting in duty reduction (inverted tariff).
- No time contraints on storage. Merchandise may remain in a zone indefinitely, whether or not it’s subject to duty.
- Satisfy exportation requirements. Merchandise entered in to the U.S. on an entry for warehousing, temporary importation under bond, or for transportation and exportation may be transferred to the Salt Lake City FTZ in zone restricted status from the customs territory to satisfy a legal requirement to export the merchandise.
- Increase security and lower insurance costs. Customs security requirements and federal criminal sanctions are deterrents against theft. This may result in lower insurance costs and fewer incidents of loss of cargo admitted into the Salt Lake City FTZ.
- Avoid costly supply chain delays, consolidate customs reporting and reduce fees with direct delivery and weekly entry. You may obtain permission from customs to move merchandise directly from the port of arrival to the Salt Lake City FTZ, avoiding costly supply chain delays. You may also utilize weekly entry procedures to consolidate customs reporting and reduce costs including broker fees and merchandise processing fees (MPF).
Here’s how the savings work
Example: ABC Company is a manufacturer in the Salt Lake area considering assembling in the Salt Lake City FTZ (in other words, the entire plant would be “outside” the U.S. Customs territory).
Brief profile of ABC Company:
- Pays annual duty of $1,600,000 (before becoming part of the Salt Lake City FTZ)
- Currently imports $40,000,000 in components
- Averages 40 days of turnover time
- Exports 3% of its imports and destroys 1% due to waste during production
- Averages 4% duty on its imported parts, compared to an import duty rate of 2.5% on its finished product
ABC Company saves an estimated $168,329 due to duty delay (first year savings only), $11,783 in interest savings on the unpaid duty (future year savings), $64,000 because it no longer pays duty on its export or waste in production, and $576,000 by paying the finished product duty rate on its imported components. ABC Company’s total benefit is $808,329 the first year and $651,783 in future years. This does not include potential savings from weekly entry procedures.
Plans for the site currently include eight buildings ranging in size from 40,000 square feet to 360,000 square feet. Construction will commence as tenants are secured. The Rockefeller Group will then work with individual tenants as needed to active the zone and realize FTZ savings. Commerce Real Estate Solutions will market the site.
Youngest population in the nation
- Median age is 29
- Growing workforce
Highly educated workforce
- 27% hold a college degree
- 91% hold a high school diploma
- 9 public universities, 4 private universities, 10 applied technology college campuses
Strong work ethic
- Average turnover rate is 11.2%
- Fewer sick days – 6th healthiest state in the nation
Linguistically diverse, internationally experienced
- Population speaks 90% of the world’s written languages
- 60% of public school students study a world language
- 180 languages are spoken by University of Utah students
- 80+ language courses are offered at Brigham Young University
- 77% of Brigham Young University students speak a second language
- 47% of Brigham Young University students have lived outside the U.S. for 1+ years
“Per capita, Utah is the most linguistically diverse region of the U.S.” – Time Magazine
Competitive business costs
- Utah’s wages = 90.3% of the national average
Low utility costs
- 2nd lowest electrical rates in the western U.S. and 5th lowest rates in the U.S.
- 4th lowest industrial natural gas rates in the U.S.
Low transportation costs
- 2nd lowest outbound carrier rates in the western U.S.
- 3rd lowest “load to truck” ratio in the western U.S.
Utah poised to lead nation in export growth
Utah companies exported more than $19 billion in 2012. Utah’s exports grew during the economic slow down that occured in 2008 and 2009 while the nation saw double-digit decreases in exports. Some western states were down 24 to 54 percent. The average loss for all states was 19.5 percent, with 12 states declining more than 25 percent.
State and local incentives
State and local incentives are available for qualifying companies. For more information, contact the Incentives team at the Governor’s Office of Economic Development.