Unique foreign trade zone aids downtown Los Angeles

Alameda Trade Center is unique industrial park

By Craig Furniss,

The Los Angeles economy clearly is booming, driven, in part, by the city’s determination to create a business-friendly environment that supports the growing number of small and mid-sized companies that fuel Southern California’s economic expansion. In line with this strategy, the Port of Los Angeles and local government officials have worked closely with Lowe Enterprises to obtain Foreign Trade Zone (FTZ) status for its Alameda Trade Center — a 20-acre industrial project in the heart of Downtown Los Angeles that will cater to the underserved needs of emerging companies primarily in the food and import/export businesses. The Port of Los Angeles Foreign Trade Zone is the only one in downtown Los Angeles — traditionally FTZs are located adjacent to port facilities — it also is the only one specifically targeted to allow small to mid-sized businesses to own a building within a zone.

Ethnically diverse, with strong ties throughout the Pacific Rim, Latin America and Europe, Los Angeles is an important and growing international trade center. In fact, in the past decade, the metropolitan area has experienced a 67.6 percent increase in trade-related jobs which totalled 377,600 in 1996. And this isexpected to increase exponentially when the massive expansion project currently underway at the Port of Los Angeles is completed. To set this in context, the two way-trade trade flow of goods through the Los Angeles Customs District (which includes the twin ports of Los Angeles and Long Beach) totalled $169 billion in 1996 — the highest in the nation. And with the recent decommissioning of the Long Beach naval shipyard, shipping capacity will be further increased in the years ahead.

Feeding the growth in international trade are several factors such as the rising number of middle-income consumers in Latin America and throughout Asia including China, Singapore and South Korea, and burgeoning demand for U.S. products in well established markets like Hong Kong, Japan, Mexico and Canada.

Complementing the ambitious $600 million Port of Los Angeles expansion plan, is the development of the Alameda Corridor, a $2 billion, 20-mile rail and highway project that will link the port to major rail yards near downtown and speed the overland shipment of goods throughout the country.

Located at the northern end of this vital corridor on Alameda and Bay Streets, the Alameda Trade Center also offers easy access to four major California arteries — the Santa Monica (I-10), Harbor (I-110), Hollywood (I-101) and Golden State (I-5) Freeways. Downtown LA’s only gated, master-planned warehouse/ distribution park with 24-hour manned security, the Center features 30 highly efficient but attractive Class A buildings that range in size from 11,000 square feet to 50,000 square feet. Thus, they will be ideal for the smaller import/export, produce, food processing, frozen food, toy, electronics and other companies that are a key element of the local business community and Southern California’s economic vitality.

The Alameda Trade Center also offers ample parking, easy truck access, loading bays designed to accommodate shipping containers and 30-foot clear height in warehouse areas. Each facility includes 1,350 square feet of office and/or showroom space designed to buyers’ specifications, plus flexible mezzanine configuration that can be adapted for future expansion. The Center also will provide high visibility to its owners with signage on Alameda Street — a major Los Angeles thoroughfare.

As the Southern California economy has expanded, vacancy rates in the industrial category have declined. However, much of the available space is somewhat “marginal” and unsuited to the more demanding needs of today’s business community. In fact, CB Commercial estimates that vacancies in Class A, 24-foot clear buildings currently is less than 1 percent in Los Angeles, highlighting the urgent need for new, high quality manufacturing and warehouse space. The Alameda Trade Center will help to fill the void, bringing 630,000 square feet of Class A industrial space to the metropolitan area.

In addition to the physical advantages associated with locating a business and owning a building in this unique, high-quality industrial park in Downtown Los Angeles, its designation as a foreign trade zone offers a whole range of other benefits to companies in the import-export business. In fact, for some businesses those benefits may equal or exceed their (current?) mortgage or lease payments.

Among other examples: customs procedures are minimized and materials handling and processing costs may be greatly reduced. Custom’s duty savings can be considerable, especially on high-value goods such as watches or television equipment, because operating in an FTZ will allow a company to bring in goods and warehouse them without having to pay import duties. If the products are for U.S. markets, they will be subject to duty payment when they are distributed, but if they are re-exported, no tariffs will be incurred. Further, if a business is involved in light manufacturing, it can have greater latitude to select the most favorable duty rates, either on the imported components or the finished product — whichever is lower. Customs duties also are waived on labor, overhead and profit related to production in the FTZ.

Another advantage focuses on quality control. If an importer receives merchandise from overseas and discovers it is substandard or damaged, either the goods can be returned to their country of origin or destroyed without paying customs duty.

And finally, companies located in an FTZ may also save on costs associated with customs bonds and cargo insurance. Additionally, property insurance premiums may be discounted at the Alameda Trade Center as a result of the high level of security it provides.

Clearly, foreign trade is an important and rapidly expanding segment of Southern California’s economy. As the gateway to the Pacific Rim and Latin America, Los Angeles is committed to creating an environment that will make it easier for companies to locate and grow their businesses here, thereby ensuring the region’s continued economic strength and vitality.

Craig Furniss is vice president of Lowe Enterprises Commercial Group, where his primary responsibilities are project development and management of the Alameda Trade Center.