Lambert foreign trade zone expanded

Friday, February 13, 2009

St. Louis Business Journal - by Evan Binns

St. Louis has taken another step in setting up the region to become a hub for commercial activity with China.

The U.S. Department of Commerce recently approved an 820-acre expansion of the Foreign-Trade Zone around Lambert-St. Louis International Airport. The existing trade zone is about 11 acres. The department also awarded a $1.7 million grant to the St. Louis County Economic Council to conduct market research, gauge local interest in the project and perform outreach to other Midwestern states.

"The grant and expansion have created an excellent framework for business with the Chinese," said Mike Jones, chief policy adviser for St. Louis County. "They will allow us to make a case to the Chinese and prove the idea is executable."

When local agencies began talks with the U.S. Department of Commerce's Economic Development Administration (EDA) in May 2008, the initial value of the grant was slated to be $150,000, according to Denny Coleman, president and chief executive of St. Louis County Economic Council.

"In the succeeding months, with the progress made with high-ranking Chinese officials and support within the community, we were able to substantially increase the size of the grant," Coleman said. In addition to the $1.7 million grant, an EDA stipulation requires a 25 percent match to be raised locally.

Coleman attributed the grant's success to the efforts of Sens. Kit Bond and Claire McCaskill, who were involved with preliminary EDA negotiations and voiced their support for the grant's speedy approval in Washington, D.C. The grant application was submitted late in the fourth quarter of 2008 and its approval announced in the last week of January.

Jones is also chairman of the Midwest China Hub Commission (MCHC), an inter-governmental entity formed to coordinate local efforts to make St. Louis an air freight hub. The MCHC is seeking local funds for the grant's 25 percent match requirement and is receiving significant interest, according to Coleman.

The Foreign-Trade Zone expansion sites include NorthPark, a 550-acre redevelopment located east of Lambert; Hazelwood Commerce Center, an industrial park on nearly 170 acres, directly northwest of Lambert and Interstates 70 and 170; and Lindbergh Distribution Center, a 528,000-square-foot distribution warehouse on 25 acres owned by Duke Realty LP, located southwest of the former Ford plant in Hazelwood. A fourth 75-acre tract of land owned by the airport has also been approved for FTZ designation. Chris McKee, president of McEagle Properties, said trade zone designation would offer a competitive advantage for St. Louis and the company. "It gives us a chance to differentiate ourselves from other areas that don't have that designation," McKee said. McEagle is developing both NorthPark and Hazelwood Commerce Center.

Jones said an expanded trade zone provides more bargaining leverage when pitching St. Louis as an ideal hub for Chinese imports. "A major cost factor in luring foreign air freight is lessened import duties," he said. "If areas in proximity to the airport are trade zones, you have that much more of an advantage."

Tim Nowak, executive director of the World Trade Center St. Louis, said the $1.7 million grant complemented the China hub commission's proposal. "It means we have a more complete package to present to the Chinese as to why it makes sense to land freight in St. Louis," Nowak said.