 A Competitive Edge
A contract with a private company to build and manage an international cargo center could attract more foreign trade to Jackson
Published November 30, 2003.
Reprinted with permission of The Clarion Ledger.
By Sylvain Metz
smetz@clarionledger.com
More than $226 billion in merchandise now crosses international borders into foreign trade zones scattered across the United States.
Dirk Vanderleest, executive director of the Jackson Municipal Airport Authority, says he'd be happy to get one quarter of one percent of those goods to flow through his airport. He believes that will happen once the Mississippi International Air Cargo Center at the airport is completed.
"We've always been a crossroads of the South," Vanderleest said.
On Monday, his board approved a contract with Aviation Facilities Company Inc. of McLean, Va., which will build and manage a 60,000-square-foot international cargo center.
The $3 million facility is expected to open by Sept. 1 along Mississippi 475. Jackson International Airport could realize $100,000 annually to start as its share of fees generated by the trade-zone program.
Created by the federal government in the 1930s, the U.S. Foreign-Trade Zone Program is designed to help U.S. manufacturers compete abroad by offering lower tariffs here.
Aside from company benefits, communities with foreign-trade zones are able to offer a marketing tool to attract manufacturers and create jobs.
And with the new C-17 cargo aircraft being added to the fleet of the Mississippi Air Guard's 172 Airlift Wing next door, Vanderleest envisions a military cargo component, which could have an array of military vendors eager to locate in the area around them.
The Guard and this aircraft could be to the metro area what Federal Express is to Memphis in terms of attracting manufacturers and warehouses next door to a major hub, he said.
Two of the more than 250 U.S. foreign trade zones are in Mississippi. One is on the Mississippi Gulf Coast, which has seen $3 billion in direct, zone-related economic activity since its start in February 1985.
The other stretches across I-20 from Vicksburg to the greater Jackson metro area, including the Jackson International Airport, and runs north into portions of the Delta.
Before the central Mississippi zone was created in April 1989, foreign cargo had to clear customs in New Orleans or Atlanta before it was sent on to Jackson.
Having that international transportation capacity could be a major boon for a community, but "there are certain economies of scale associated with successful international activity, and there will be a limited number of airports and communities that can achieve that scale," said Jim Apple, vice president for economic development for the Memphis Regional Chamber of Commerce. "There's always opportunities for newcomers but it's not easy."
With major international air cargo hubs already in Memphis, Miami, New York and Los Angeles, "it will be a long effort for any other communities to dislodge and take business away from (them)," Apple said.
Greg Jones, senior consultant for The Foreign-Trade Zone Corp. of Mobile, disagreed and said a cargo center at Jackson International Airport could offer a competitiveedge to companies when cost decisions can be based on "fractions of pennies" saved.
His company helps communities in Mississippi and Alabama establish foreign trade zones and subzones, which are created for special purposes. Nissan, for example, is located in a foreign-trade subzone, receiving the same tariff breaks as the foreign-trade zone.
While labor may be cheaper abroad, cheaper transportation and communications costs, coupled with the benefits of foreign-trade zones, could sway a company to locate in the U.S., he said.
The zones can be a magnet for manufacturers competing in the global economy, Jones said.
"Communities that invest in infrastructures that facilitate trade related business operations will be the winners where those communities with nothing more than cheap labor will continue to lose economic activity to offshore locations," Jones said.
One advantage to the zones is the speed in which cargo can be flown in to keep assembly lines running.
If freight is delayed on a steamship and inventories are low "then it become really important where that airplane can actually land and where it can unload so it can be delivered to you."
The other major advantage, he and other say, is the duty break companies operating in these zones receive.
When it looks for manufacturing sites, one of Nissan's requirements is that it build within a foreign-trade zone and gain status as a subzone, said Leslie Cazas, senior manager for customs and trade for Nissan North America.
These zones allow Nissan to "defer duty during the manufacturing process and avoid paying U.S. duty on an y exports," Cazas said. "It's a savings program for Nissan."
Metro Jackson Chamber of Commerce President Duane O'Neill says the development coming to the airport is just the beginning.
"We'll see a lot more things come our way because of the facilities we have."
Competing with established facilities like those in in Los Angeles, New Orleans, Atlanta and Miami is doable for several reasons, Vanderleest said.
Unlike these larger cargo facilities which are more congested and prone to shutdowns due to weather, Vanderleest points out there's "no noise and no (bad) weather" here, and labor is cheaper.
What's more, there's plenty of room for expansion.
Of its 3,045 acres, 1,600 acres are for operations and the remaining 1,445 are for economic development.
In terms of access, the airport is within close proximity to I-20, I-55 and U.S. 49 and railroads, including the Kansas City Southern Railroad internodal site in Richland, which has grown 200-300 percent over the past several years, said Richland Mayor Shirley Hall.
The airport is also within 30 miles of the Vicksburg port.
From a dollars and cents point of view, availability of space and the lack of interruption from flight delays due to inclement weather, natural disaster or congestion, means it costs less to house and handle that cargo.
Former Jackson Mayor Dale Danks, who, in the mid- to late 1980s, started efforts to create the trade zone and apply for international status at the airport, also sees great potential for a foreign trade zone.
"I envisioned the Jackson International Airport, by virtue of its location, being halfway between Dallas and Atlanta and Memphis and New Orleans as an excellent point for trade and that sort of activity," Danks said.
The center should provide an economic boost for the area, he said.
"I always felt Jackson was more of a service center than an industrial center," Danks said. "I always felt if we could retain our service center identification nationwide and enhance our position ... to include international trade, (that) would encourage new venture capital in Jackson and Mississippi.
"That would raise the level of salaries and would be an overall economic boost in all segments of the area."
ONLINE
For more information about foreign trade zones, log on to www. mscoastftz.org
For details on the cargo center at Jackson International Airport, visit www.jmaa.com
A contract with a private company to build and manage an international cargo center could attract more foreign trade to Jackson
MASTER PLAN
Construction of the Mississippi International Airport Cargo Center is to be carried out in four phases. Phase I calls for the construction of a 60,000-square-foot cargo warehouse to accommodate air cargo and land-based operations and freight forwarders. Completion is expected by Sept. 1. It also includes a 450,000-square-foot concrete aircraft apron and lighted parking facility (both are completed). A 1.8-mile lighted access road on the south end of the airport, linking the east side of airport to west, has also been completed.
Phase II calls for construction of a 26,400-square-foot warehouse building and 275,000 square feet of apron adjacent to new taxiway.
Three new, land-base warehouse facilities, totaling 43,000 square feet, are to be constructed to accommodate cargo distribution operations.
Phase III calls for construction of two 75,000-square-foot cargo warehouses and and associated aprons as demand warrants.
Phase IV calls for the addition of 240,000 square feet of warehouse space and 130,000 square feet of land-based office space. The remaining 990,000 square feet would be dedicated for ramp area. Jackson Municipal Airport Authority Master Plan.
HOW IT WORKS
Large planes, delivering or receiving cargo from around the world, will use the cargo center as a clearinghouse for routing goods and materials to their final destinations.
TRADE ZONE DETAILS
A foreign-trade zone is a restricted-access site in, or adjacent to, a Customs port of entry, operated pursuant to public utility principles under the sponsorship of a corporation granted authority by a public entity and under supervision of the Customs Service.
Regulations of the Foreign-Trade Zones Board, Part 400
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