FTZ’ine December 2022

December 1, 2022

FTZ’ine February 2023

January 31, 2023

FTZ’ine January 2023

End Of Eras

We hope all our readers enjoyed a safe and enjoyable holiday with family and friends.

Just before we left for a much needed break, Congress passed a massive $1.7T omnibus spending bill to fund the military and government through Sept. 30th, the end of the government fiscal year. The bill includes pay raises for service members and government workers, nearly $40 billion in emergency aid to areas struck by public disasters, and over $44 billion in aid for Ukraine.

It was likely the last time Nancy Pelosi would lead the House as Speaker. Other Members ended their service entirely, notably including Senator Richard Shelby of Alabama, senior member of the Appropriations Committee.

December 31st also marked the end to the tenure of U.S. Foreign-Trade Zones Board Executive Secretary Andrew McGilvray, who retired last week after almost 25 years of service to the FTZ Board.

Raging COVID cases crushed Chinese factory output (and US supply chains that need it) with the odd effect of creating excess capacity for ocean carriers. Freight rates between the U.S. and China may be going down, but the harsh rhetoric and threatening military action between the countries have only increased to start 2023.

Top Story: Andrew McGilvray Retires From FTZ Board

Andrew McGilvray has been Executive Secretary and Staff Director of the U.S. Foreign-Trade Zones Board since 2006. Mr. McGilvray, simply known as ‘Andrew’ by everyone in the FTZ industry, oversaw and administered specific improvements to the program that will be felt long after his departure.

With feedback from a series of regional grantee outreach meetings, he guided the creation and adoption of the Alternative Site Framework (ASF) in 2008. This new method for applying for FTZ status was rapidly adopted in ports across the country. Andrew was also the primary drafter of the FTZ Board’s revised regulations which codified ASF in 2012 and also created a faster, simpler way to qualify for and maintain manufacturing authority for most FTZ program users.

To take full advantage of these simpler procedures, the FTZ Board staff developed on-line forms, and made the transition to all-electronic filing. These enhancements to the program not only opened the program to a wider audience, but they turned prescient when the pandemic forced most government operations into remote operations. As a result, the growth in the program continued unabated by the broad impact of the virus.

Andrew oversaw dramatic growth in the physical footprint of the program , with ASF applications, on-line forms, and electronic filing driving significant growth in employment and the number of program users, especially among smaller U.S. organizations.

Before assuming the role of Executive Secretary, Mr. McGilvray worked as a FTZ analyst and authored the 2004 staff report on enhancing the FTZ program as part of the Commerce Department's Manufacturing Initiative. Prior to joining the FTZ Board’s staff in 1997, Mr. McGilvray worked as an antidumping analyst and then as advisor to senior officials overseeing investigations into unfair trade. Andrew has a degree in Economics from George Mason University.

Andrew declined to be interviewed for this article, but we have it on good authority the while ‘Trade Administration’ will no longer be part of his daily responsibilities, ‘International’ is likely to remain a theme in retirement. Best of luck Andrew, and safe travels.

Tech Tip: The Problem with ACE Reports

Now that you are returning to regular business operations following a nice winter holiday break, you may be wondering if elves of some sort have been tinkering with your ACE reports. Did you have saved reports that you used on a regular basis to monitor in-bonds, open manifests, or other CBP activity that now suddenly don’t work? Perhaps your data disappeared into the universe. The ACE universe, that is.

Don’t worry, that’s not as bad as it sounds. While the rest of us were doing last minute shopping, CBP was busy updating the data universes in ACE, and several were retired. Any saved reports that were sourcing fields from those retired universes now need to be repointed to a new universe(s). Once that is done, your reports will work again. In some cases additional programming work will be necessary to relate the field in the new universe to the other data in your report.

CSMS # 54385977 – “Retirement of Certain Data Universes and Reports in ACE Reports on Thursday, December 22, 2022” outlines which universes were retired and provides instructions on how to repoint saved reports to work with the new data sets.

If you have questions about ACE reports or other ACE challenges, please send them to our Sr. Vice President, Melissa Irmen at Melissa.Irmen@iscm.co.

West Coast Labor Still Unresolved As The Great Migration Continues

The new year did not bring a new West Coast labor deal.

Port of Los Angeles Chief Executive Gene Seroka commented during a CNBC interview that he expects bargaining will produce a deal this spring.

Seroka said the parties are reaching the “far edge of negotiations” and will likely produce a deal in February or March.

Container count through the Port of LA is down over 20% in the past few months, forcing Los Angeles to hand over the mantle of largest U.S. container port to New York.

Gulf and East Coast ports that have benefitted from the influx of port calls can expect a fight to keep the volume once a new contract is signed.

After an earlier than normal peak season in 2022, importers shifted cargo towards the East Coast, a boom to the Port of New York and New Jersey in particular, possibly to “avoid labor disruptions” said Seroka.

That shift has had a direct impact on the west coast economy, which will make the west eager to get their port calls back once the ink dries.

“If cargo is down 25% year on year, the jobs could be down right now 20% or 22%. It may not be exactly one for one, but you’ve got a downstream,” Seroka told CNN.

With less revenue coming in, Seroka said it limits investments in port infrastructure. The marine terminals pay taxes to the city, county, and state – and, if business is down, that’s less revenue going to municipalities.

“The economic impacts are far reaching when it comes to us losing our traditional share. That’s a real concern,” said Seroka. Perhaps that concern will create the impetus for a contract.

2022 Word of the Year: Defenestration

The accelerating pace of assassinations in Russia at once highlights the stark difference in freedoms between our country and theirs, and also suggest hope that there may be broadening dissatisfaction inside Russia over the war with Ukraine.

Oxford defines ‘defenestration’ as ‘the action of throwing someone out of a window.’ That’s been happening to high-level Russians a lot lately.

According to Wikipedia, it’s not actually a new word; its roots can be traced back to 1618. But only the Russians still made heavy use of it in 2022.

Some two dozen notable Russians died mysteriously last year. That led Elaine Godfrey to coin the term ‘Sudden Russian Death Syndrome’ in an opinion piece printed in The Atlantic.

It is possible that these deaths were indeed suicides. Think of stock traders in the U.S. right after the 1929 market crash. In a similar way, many Russian business tycoons may be looking at the end of life as they knew it as western sanctions continue to strangle the livelihoods they enjoyed right up until the February 24th invasion.

But two dozen is a lot, and in addition to the defenestrations, suspected poisonings, suspicious heart attacks, and supposed suicides have claimed the lives of important Russian businessmen, bureaucrats, oligarchs, and journalists.

And not just in Russia. In August, the Latvia-born Putin critic Dan Rapoport apparently fell from the window of his Washington, D.C., apartment, a mile from the White House. Two weeks ago, in the French Riviera, a Russian real-estate tycoon took a fatal tumble down a flight of stairs. Things that make you go Hmmmm.

The escalating war rhetoric makes it unclear if the war can be settled on the battlefield. The growing number of high-level deaths may be a sign that Russia’s cognoscenti may be coming to the same conclusion. So advice to Vladimir Putin at the start of the New Year might be: stay away from the window.

Fines Highlight U.S., FTZ Labor Woes

A 14-year-old girl from Guatemala assembled auto body components, a 12-year-old child worked in a metal stamping shop, and dozens of other underage workers were found in at least four auto supplier plants, according to a Reuters investigative report.

No we’re not talking about China; these were auto parts plants in the United States.

The Reuters report released last year details allegations at two auto supplier plants where employees reported working alongside at least 10 children.

According to the report, state and federal inspectors arrived unannounced at one of the supplier plants in late August for a site inspection. As investigators arrived, workers fled out of the back of the plant before they could be questioned.

In response to the report, Hyundai Motor Company Chief Operating Officer Jose Munoz told Reuters "Hyundai is pushing to stop using third party labor suppliers and oversee hiring directly." With the U.S. labor market as strained as it is, that will not be easy. Despite rumblings of a recession, many FTZs still face the similar problem of finding appropriate talent for their operations in 2023.

The U.S. Labor Department eventually sued auto parts maker SL Alabama for employing children at its facility in Alexander City, Alabama, where it makes headlights, taillights, and side mirrors for Hyundai and Kia, and fined the supplier $30,000 for violations.

Its Not Just Your Teenager That Drives While Texting

The U.S. harbor pilot in charge of the 12,000 TEU Ever Forward had been making calls, texting, and emailing on his mobile phone when the ship he was steering ran aground outside of Baltimore Harbor on March 13th.

The U.S. Coast Guard in the Maryland-National Capitol Region released its marine casualty investigation into the grounding last month.

Even with an unlimited data plan, that is going to be a very expensive phone call.

Investigators found the pilot made a series of five phone calls amounting to over 60 minutes of time during the course of his outbound route, in addition to two text messages and the drafting of an email immediately prior to the accident on the way to Norfolk, Virginia.

General Average was declared by carrier Evergreen when multiple attempts to refloat the stranded ship failed. It is not clear if this finding of distraction will change responsibility for the cost of refloating the ship and recovering the containers. Salvage crews worked for almost a month to free the ship, and had to remove 550 containers to lighten the load before high tide would carry the vessel.

FTZ Staff Activity

FTZ Board Staff processed a Minor Boundary Modification (S-208-2022) to FTZ 74D on behalf of United Safety Technology Corp, in Baltimore, MD on November 28, 2022
FTZ Board Staff processed a Minor Boundary Modification (S-209-2022) in FTZ 181C on behalf of Bral Corporation, in Warren, OH on November 29, 2022
FTZ Board Staff processed a Subzone (S-210-2022) modification in FTZ 196A on behalf of TTI, Inc., in Fort Worth, TX
FTZ Board Staff processed a Minor Boundary Modification (S-211-2022) in FTZ 202 on behalf of CNA Freight, LLC, in Rancho Cucamonga, CA on November 30, 2022
FTZ Board Staff processed a Minor Boundary Modification (S-212-2022) in FTZ 153J on behalf of Ajinomoto Bio-Pharma Services, in San Diego, CA on November 30, 2022
FTZ Board Staff processed a Minor Boundary Modification (S-213-2022) in FTZ 281 on behalf of DFASS Distribution, LLC, in Hialeah, FL on December 5, 2022
FTZ Board Staff processed a Minor Boundary Modification (S-214-2022) in FTZ 89 on behalf of Optum Frontier Therapies II, LLC, in Las Vegas, NV on December 7, 2022
FTZ Board Staff processed a Subzone (S-215-2022) in FTZ 18G on behalf of Tesla, Inc., in Oakland, CA
FTZ Board Staff processed a Minor Boundary Modification (S-216-2022) to establish FTZ 125F on behalf of REV Recreation Group, Inc. d/b/a Midwest Automotive Designs, in Elkhart, IN on December 9, 2022
FTZ Board Staff processed a Minor Boundary Modification (S-217-2022) in FTZ 32 on behalf of American Foods International, LLC, in Doral, FL on December 12, 2022
FTZ Board Staff processed a Minor Boundary Modification (S-218-2022) in FTZ 225 on behalf of EBV Explosives Environmental Company dba General Dynamics Ordnance and Tactical Systems, Munitions Services, Inc., in Carthage, MO on December 12, 2022
FTZ Board Staff processed a Minor Boundary Modification (S-219-2022) in FTZ 40K on behalf of Ferralloy, Inc., in Westlake, OH on December 15, 2022
FTZ Board Staff processed a Minor Boundary Modification (S-220-2022) in FTZ 3G on behalf of APS West Coast, Inc., in Benicia/Antioch, CA on December 19, 2022
FTZ Board Staff processed a Minor Boundary Modification (S-221-2022) in FTZ 49 on behalf of Weida Freight System, Inc., in Edison, NJ on December 19, 2022
FTZ Board Staff processed a Termination (S-222-2022) in FTZ 281 on behalf of EA Global Trading, Inc. dba Amerex, in Doral, FL on December 20, 2022
FTZ Board Staff processed a Minor Boundary Modification (S-223-2022) in FTZ 2 on behalf of Port Cargo Service, LLC, in Harahan, LA on December 21, 2022
FTZ Board Staff processed a Subzone (S-224-2022) in FTZ 40I on behalf of Swagelok Company, in Valley City, OH

FTZ Board Activity

voestalpine High Performance Metals LLC received authorization of production activity for tool steel and specialty metals within FTZ 207 in South Boston, Virginia. MORE
Par Hawaii Refining, LLC submitted a notification of proposed production activity for renewable fuels within FTZ 9 in Kapolei, Hawaii. MORE
TSMC Arizona Corporation submitted a notification of proposed production activity for semiconductor wafers within FTZ 75 in Phoenix, Arizona. MORE
Epson Portland Inc. received authorization of production activity for Inkjet ink printer bottles (empty and filled) for retail sale within FTZ 45 in Hillsboro, Oregon. MORE
Piramal Pharma Solutions received authorization of production activity for pharmaceutical products within FTZ 35 in Sellersville, Pennsylvania. MORE
Boehringer Ingelheim Animal Health Puerto Rico LLC submitted a notification of proposed production activity for pharmaceutical products/canine within FTZ 61 in Barceloneta, Puerto Rico. MORE
Global Manufacturing LLC submitted a notification of proposed production activity for mattresses and box springs within FTZ 163 in Ponce, Puerto Rico. MORE
United Safety Technology Corp. submitted a notification of proposed production activity for medical and non-medical disposable gloves within FTZ 74 in Sparrows Point, Maryland. MORE
Boehringer Ingelheim Animal Health Puerto Rico LLC received approval for subzone 61AC for its facility within FTZ 61 in Barceloneta, Puerto Rico. MORE
CNH Industrial America LLC submitted a notification of proposed production activity for tractor component parts and axle subassemblies within FTZ 41 in Sturtevant, Wisconsin. MORE
Procter & Gamble Manufacturing Company submitted a notification of proposed production activity for industrial perfumes/fragrance mixtures within FTZ 151 in Lima, Ohio. MORE
Tesla, Inc. submitted an application for subzone status for its facility within FTZ 18 in Oakland, California. MORE
BMW Manufacturing Company, LLC submitted a notification of proposed production activity for passenger motor vehicles within FTZ 38 in Spartanburg, South Carolina. MORE
TTI, Inc. submitted an application for the expansion of subzone 196A in Fort Worth, Texas. MORE
Flemish Master Weavers was denied authorization of production activity for machine-made woven area rugs within FTZ 186 in Sanford, Maine. MORE
Lucid Motors USA, Inc. received authorization of production activity for electric automobiles and subassemblies within FTZ 75 in Casa Grande and Tempe, Arizona. MORE
Swagelok Company submitted an application for the expansion of subzone 40I in Valley City, Ohio. MORE
Voestalpine High Performance Metals LLC received approval for subzone 207E for its facility within FTZ 207 in South Boston, Virginia. MORE

End Of Eras –

We hope all our readers enjoyed a safe and enjoyable holiday with family and friends.

Just before we left for a much needed break, Congress passed a massive $1.7T omnibus spending bill to fund the military and government through Sept. 30^th, the end of the government fiscal year. The bill includes pay raises for service members and government workers, nearly $40 billion in emergency aid to areas struck by public disasters, and over $44 billion in aid for Ukraine.

December 31^st also marked the end to the tenure of U.S. Foreign-Trade Zones Board Executive Secretary Andrew McGilvray, who retired last week after almost 25 years of service to the FTZ Board. Raging COVID cases crushed Chinese factory output (and US supply chains that need it) with the odd effect of creating excess capacity for ocean carriers. Freight rates between the U.S. and China may be going down, but the harsh rhetoric and threatening military action between the countries have only increased to start 2023.