Foreign trade zone status for Brunswick seen as economic boost for former Navy base

BRUNSWICK, Maine — The former Brunswick Naval Air Station has been deemed a foreign trade zone by the U.S. Department of Commerce Foreign-Trade Zone Board, which according to economic development officials and members of Maine’s congressional delegation represents a potent tool for attracting businesses.

“We’re delighted,” said Steve Levesque, executive director of the Midcoast Regional Redevelopment Authority, which is overseeing the conversion of Brunswick Landing to civilian use since Brunswick Naval Air Station closed last year. “We’ve been working for several years on this. It will be a huge boost for this region.”

The MRRA applied for the status in 2010. The concept was supported by all four members of Maine’s congressional delegation.

Foreign trade zones are ports of entry to the United States where goods from overseas can arrive duty-free to be processed or incorporated in products before being sold in the U.S market or, in some cases, exported to foreign customers. The concept allows overseas producers to better compete with domestic industries, though import fees and taxes are paid on the material once it leaves the foreign trade zone for the U.S. market.

When those goods are shipped from a trade zone to overseas locations, import duties are essentially avoided altogether. In Brunswick, it will allow businesses at Brunswick Landing — the former air station — to enjoy lower prices for goods and materials. Auburn, Bangor, Madawaska, Belfast and Portland already are designated as foreign trade zones in Maine.

The foreign trade zone announced Tuesday includes 394 acres of property on the former Navy base, which includes a portion of the twin airstrips and nearby buildings.

Levesque said the formula for charging duties for imports is such that manufacturing businesses at Brunswick Landing will see a net savings by paying import duties after the material is incorporated into other products as opposed to when it arrives on U.S. soil.

“Obviously it’s a cost-savings,” he said. “It’s a huge factor, particularly with companies doing business internationally. It’s a really good opportunity to help Maine’s economy.”

Wade Merritt, vice president of the Maine International Trade Center, is focused on helping Maine businesses build relationships with overseas companies and markets. He said about 7 percent of Maine’s gross domestic product is in exports and that more than 1,600 businesses in Maine are involved in international markets through either imports or exports. He said some of Maine’s foreign trade zones are more active than others, but that Brunswick Landing is well-positioned to be successful.

“Foreign trade zones have been somewhat underutilized in Maine in the past 15 years that I’ve been around,” he said. “They’re not a silver bullet but they’re certainly valuable, and a good feature to be talking about when you’re selling a location. I think Brunswick’s got a good story to tell.”

Some foreign trade zones are used to accept goods made abroad en masse and then simply package them for sale in the United States. This will not be the focus at Brunswick Landing, which Levesque said intends to use its status for the benefit of manufacturers in the biomedical, aviation and alternative energy sectors.

“We’re not looking at the logistics market,” said Levesque. “That’s really Lewiston-Auburn’s niche. We’re more focused on manufacturing-related activities.”

Though Levesque said he hopes the status will attract a range of new business, there is one already constructing a new facility at Brunswick Landing, Molnlycke Health Care, which will benefit. Officials for Molnlycke, a manufacturer of medical devices, could not be reached Tuesday.

Levesque said the MRRA and involved businesses have to meet a set of requirements to become fully certified, and that he didn’t know exactly when the foreign trade zone would become active.

In a joint statement released Tuesday morning, U.S. Sens. Olympia Snowe and Susan Collins and U.S. Reps. Chellie Pingree and Mike Michaud said the new designation indicates that the Foreign-Trade Zones Board recognizes the “breadth and depth” of the economic opportunities available at Brunswick Landing and in the midcoast region.

“When Brunswick Naval Air Station was closed as a result of the ill-conceived 2005 Base Realignment and Closure process, we pledged that no stone would be left unturned in support of the Brunswick-Topsham region’s economic recovery,” reads the statement. “The new designation is a critical tool for the Midcoast Regional Redevelopment Authority in attracting additional business opportunities and is a clear step in the right direction.”

In a July 2010 letter of support from the delegation, they argued that the designation would be attractive to businesses seeking to locate on the former Navy base, particularly those in the aviation manufacturing and remanufacturing, composite technologies and alternative energy product manufacturing, which are industries being targeted by the MRRA.

Doug Ray, a spokesman for the Maine Department of Economic and Community Development, said Tuesday the effects of the trade zone will be felt on a wider scale than just the midcoast region.

“It’s going to enhance manufacturing benefits in the state of Maine,” he said. “It’s a tool to attract new businesses.”