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Savings on the horizon for Pro-Pipe USA at Iron Horse

The first tenant at Citizen Potawatomi Nation’s Iron Horse Industrial Park is one step closer to moving product in and out of its foreign-trade zone. Foreign-Trade Zone Board Executive Secretary Andrew McGilvary authorized Pro Pipe USA, LLC’s application of proposed production activity at Iron Horse FTZ 106 satellite site. The approval came after the 120-day review period that began on March 5, 2020.

“This is the first of many approvals we’ll likely see for firms manufacturing in Iron Horse,” said Citizen Potawatomi Nation Economic Development Director James C. Collard, Ph.D. “FTZs are a game changer for the park’s tenants, allowing them to save money on customs duties that they otherwise would have to pay. We are thrilled that Pro-Pipe USA is on the way to using this strategic tool to enhance their bottom line.”

Congress passed the Foreign-Trade Zones Act of 1934 in an effort to offset tariffs and spur international trade in the depths of the Great Depression. An amendment in the 1980s helped jumpstart the designation’s use as a tool for manufacturers during another time of slow economic output. The amendment allowed products manufactured in those zones — such as Pro-Pipe USA’s at Iron Horse — to avoid value-added taxes that are part of the normal taxation formula outside of FTZs.

Pro-Pipe USA’s approval in the federal registry limits the company’s protected FTZ activities to the production of high-density polyethylene pipe at its soon-to-be completed manufacturing facility at Iron Horse. Additionally, Pro-Pipe USA can avoid customs duties and possibly defer or reduce foreign-status production equipment used to manufacture its products.

“While these approvals take time and patience as a result of the due diligence taken to ensure we’re helping tenants meet all the federal guidelines, in the end, the savings to our tenants are worth the wait,” Collard said.

CPN Administrative Research Analyst Vedrana Milakovic leads the efforts on the firm’s application and regulatory paperwork. According to her, the next step is securing approval from FTZ 106.

“The goal is to have Pro-Pipe site activated as soon as possible so we can receive a firms code to import and export through,” she said. “When Pro-Pipe is activated, then the site is considered to be outside of the normal federal, state and local tax regime and will benefit from all the FTZ advantages.”

In addition to Collard and Milakovic, Senior Administrative Assistant Courtney Palmer and Transload Facility Manager Randy Story are on site to support the needs of current and potential clients. If you or your company are interested in learning about potential tax savings on manufacturing or other sectors, please visit ironhorsecpn.com/foreign-trade-zone to learn more.