November 13, 2006
Inland island | Since the beginning, Auburn's Foreign Trade Zone largely has been ignored. That's about to change, according to development officials.
By Chris Churchill
The words "inland" and "port" don't seem to belong together. They seem incongruous, kind of like "dry dolphin," or "barking cat." But there is an inland port in Maine. And it's in Auburn.
The port is in a corner of the city that's remote from downtown and distant from the Androscoggin River. The port includes the Auburn-Lewiston Municipal Airport; an intermodal facility where cargo can be unloaded from the St. Lawrence Railroad and placed on trucks that can then head for the nearby Maine Turnpike; and an industrial park on which workers will soon break ground.
The airport, industrial park and intermodal facility are part of the city's Foreign Trade Zone, a relatively unique federal designation (there's only one other in Maine, at the Bangor International Airport) that, to put it very simply, lets companies ship international cargo in and out of the zone without paying duties or tariffs. It's a tool, says Ben Hayes, foreign trade zone director at the Lewiston-Auburn Economic Growth Council, that potentially could save a company significant sums of money.
That's been the plan, at least. When the federal government established the Auburn FTZ in 2004, at the request of Auburn officials, some in the region happily expected an immediate boom in development. But the last two years have brought mostly silence. "This is a diamond in the rough that we have not fully leveraged," says Dan Thayer, president of the Auburn Business Development Corp. "It's been a very difficult development."
But now there's evidence that the FTZ might be ready to take off. Auburn economic development officials expect to break ground on the industrial park this month (it had not yet happened by the time this issue of Mainebiz went to press). And those same officials say they will soon announce details about a proposed 380,000-sq.-ft. speculative building to be built in the park. (They declined to say who intends to construct what is expected to be mostly warehouse space, saying the developer is not yet ready to take his plans public.)
And while some lament the FTZ's slow start, Hayes says it's unrealistic to have expected it to immediately attract new companies to Auburn. That's because the area lacks the infrastructure ˆ like, for example, warehouse space ˆ that would make locating there and storing and shipping product there viable. "What we need to do is build capacity here," Hayes says. "We have the rail, we have the intermodal facility. What we need to do is overlay more infrastructure on top of that."
Plus, Hayes adds, the economics and details of a FTZ are complex, and it isn't simple for a company to figure out whether the money to be saved by using the FTZ would be worth the cost of investment. Doing so, he says, requires a great deal of corporate due diligence. "It takes time for a company to evaluate how the Foreign Trade Zone will impact their operation," he says. "Just because we have it doesn't mean a company will benefit from it."
Crowded seaports
The evolution of the Foreign Trade Zone has been gradual, and was nearly a decade in the making. In 1996, concluding they wanted to increase potential for rail capacity in the city, officials built the intermodal facility on a 45-acre site on Lewiston Junction Road.
Four years later, frustrated that items arriving at the facility needed to be taken to Portland to clear customs ˆ a time-consuming and costly process ˆ officials in Auburn pushed for, and got, a customs unit at the site. Then, says Hayes, economic development officials considered what the next move should be and gambled that an FTZ would be an appropriate and appreciated next step.
Figuring the status might aid companies already using the intermodal facility, such as L.L. Bean, they applied for the designation in 2002, and the Department of Commerce granted it two years later. But so far, Hayes says, no companies yet are taking advantage of the FTZ status, because taking advantage of it requires storing, assembling or processing product within the zone. Simply using the intermodal facility does not get a company the FTZ benefits.
Still, city officials like Thayer ˆ who also runs Thayer Corp., an HVAC contractor in Auburn ˆ believe the zone is a "gem" that will eventually produce significant economic benefits. Their confidence is boosted by the fact that entering many North American ports has become a frustrating and time-consuming process. "All ports in the U.S. are facing incoming traffic and security bottlenecks, leading to increased costs and delays," Thayer says. "So we're a very viable conduit to this part of North America."
But Auburn officials say goods arriving at Auburn primarily would arrive via ports in Halifax, Nova Scotia, Vancouver and Prince Rupert, British Columbia. (Yes, that British Columbia, way on the opposite side of the continent.)
From there, goods would be packed on trains bound for Auburn, where they likely would transfer to trucks headed for major cities such as Boston, New York and Philadelphia. "There's some real advantages that we feel lie ahead for Lewiston-Auburn in terms of hitting the northeastern market," Hayes says.
With the industrial park and warehouse space nearly in place, Auburn officials say they are ready to renew their push to get companies ˆ and the jobs they would bring ˆ into the Foreign Trade Zone. "We want to create this area as a logistics and distribution hub," Hayes says.
The port is in a corner of the city that's remote from downtown and distant from the Androscoggin River. The port includes the Auburn-Lewiston Municipal Airport; an intermodal facility where cargo can be unloaded from the St. Lawrence Railroad and placed on trucks that can then head for the nearby Maine Turnpike; and an industrial park on which workers will soon break ground.
The airport, industrial park and intermodal facility are part of the city's Foreign Trade Zone, a relatively unique federal designation (there's only one other in Maine, at the Bangor International Airport) that, to put it very simply, lets companies ship international cargo in and out of the zone without paying duties or tariffs. It's a tool, says Ben Hayes, foreign trade zone director at the Lewiston-Auburn Economic Growth Council, that potentially could save a company significant sums of money.
That's been the plan, at least. When the federal government established the Auburn FTZ in 2004, at the request of Auburn officials, some in the region happily expected an immediate boom in development. But the last two years have brought mostly silence. "This is a diamond in the rough that we have not fully leveraged," says Dan Thayer, president of the Auburn Business Development Corp. "It's been a very difficult development."
But now there's evidence that the FTZ might be ready to take off. Auburn economic development officials expect to break ground on the industrial park this month (it had not yet happened by the time this issue of Mainebiz went to press). And those same officials say they will soon announce details about a proposed 380,000-sq.-ft. speculative building to be built in the park. (They declined to say who intends to construct what is expected to be mostly warehouse space, saying the developer is not yet ready to take his plans public.)
And while some lament the FTZ's slow start, Hayes says it's unrealistic to have expected it to immediately attract new companies to Auburn. That's because the area lacks the infrastructure ˆ like, for example, warehouse space ˆ that would make locating there and storing and shipping product there viable. "What we need to do is build capacity here," Hayes says. "We have the rail, we have the intermodal facility. What we need to do is overlay more infrastructure on top of that."
Plus, Hayes adds, the economics and details of a FTZ are complex, and it isn't simple for a company to figure out whether the money to be saved by using the FTZ would be worth the cost of investment. Doing so, he says, requires a great deal of corporate due diligence. "It takes time for a company to evaluate how the Foreign Trade Zone will impact their operation," he says. "Just because we have it doesn't mean a company will benefit from it."
Crowded seaports
The evolution of the Foreign Trade Zone has been gradual, and was nearly a decade in the making. In 1996, concluding they wanted to increase potential for rail capacity in the city, officials built the intermodal facility on a 45-acre site on Lewiston Junction Road.
Four years later, frustrated that items arriving at the facility needed to be taken to Portland to clear customs ˆ a time-consuming and costly process ˆ officials in Auburn pushed for, and got, a customs unit at the site. Then, says Hayes, economic development officials considered what the next move should be and gambled that an FTZ would be an appropriate and appreciated next step.
Figuring the status might aid companies already using the intermodal facility, such as L.L. Bean, they applied for the designation in 2002, and the Department of Commerce granted it two years later. But so far, Hayes says, no companies yet are taking advantage of the FTZ status, because taking advantage of it requires storing, assembling or processing product within the zone. Simply using the intermodal facility does not get a company the FTZ benefits.
Still, city officials like Thayer ˆ who also runs Thayer Corp., an HVAC contractor in Auburn ˆ believe the zone is a "gem" that will eventually produce significant economic benefits. Their confidence is boosted by the fact that entering many North American ports has become a frustrating and time-consuming process. "All ports in the U.S. are facing incoming traffic and security bottlenecks, leading to increased costs and delays," Thayer says. "So we're a very viable conduit to this part of North America."
But Auburn officials say goods arriving at Auburn primarily would arrive via ports in Halifax, Nova Scotia, Vancouver and Prince Rupert, British Columbia. (Yes, that British Columbia, way on the opposite side of the continent.)
From there, goods would be packed on trains bound for Auburn, where they likely would transfer to trucks headed for major cities such as Boston, New York and Philadelphia. "There's some real advantages that we feel lie ahead for Lewiston-Auburn in terms of hitting the northeastern market," Hayes says.
With the industrial park and warehouse space nearly in place, Auburn officials say they are ready to renew their push to get companies ˆ and the jobs they would bring ˆ into the Foreign Trade Zone. "We want to create this area as a logistics and distribution hub," Hayes says.
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