Duty Elimination on Waste, Scrap & Yield Loss

Many Manufactures are unaware that by using a Foreign Trade Zone, they can save the duty costs on all imported materials that become waste, scrap or yield loss, during their manufacturing process.  This can mean Hundreds of Thousands of dollars over the life of an imported product.

An example might be, a US Manufacture imports leather for automotive seats.  The duty rate on the leather is at 6.5%.  No matter how well they space and plan-out to cut the material, 1/10 will always be waste or scrap (un-usable).  If this company imports $1,000,000 worth of leather per month @ 6.5%, it is a total of $65,000 per month in duties paid to the US Government.  If there is NO DUTY on 1/10 of the leather, it is a savings / increase in profit of $6,500 per month ($78,000 per year).  *All manufacturing work must be done within the FTZ. 

As you can see, the FTZ can provide significant savings for manufactures who use imported products within their manufacturing process.  This is just one way – there are many more that I will discuss in up-coming blogs.