An economic development organization in Waterville hopes its efforts to expand the city’s foreign trade zone to eight counties will allow companies from the southern tip of Somerset County down to Portland to compete better in a global economy.

The group also hopes to use it as a tool to attract out-of-state or foreign businesses, but companies contacted so far are taking a wait-and-see approach before signing up.

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The New Balance Shoe factory in Skowhegan has been identified by a Tennessee-based consulting firm, FTZ Networks, as one of 200 companies in the eight-county service area that import foreign materials or products. Staff file photo by David Leaming

The Central Maine Growth Council has already secured $35,000 from municipalities, other economic development groups and the private sector to establish the expanded foreign trade zone that will cover part of Somerset County and all of Androscoggin, Cumberland, Kennebec, Knox, Lincoln, Sagadahoc and Waldo counties. Executive Director Darryl Sterling said he expects the zone to be approved by federal regulators by the end of June.

The growth council is still looking for an additional $50,000 from community groups and the private sector for two parts of the second phase of its plan — bringing businesses on board.

A Tennessee-based consulting firm, FTZ Networks, identified for the growth council 200 companies in the eight-county service area that import foreign materials or products. Sterling said around 45 of those companies, including Idexx Laboratories Inc., New Balance, L.L. Bean, Pine State Trading Co., Madison Paper Industries and Fairchild Semiconductor, will be contacted as part of the implementation phase. The growth council has already contacted about a dozen of them, he said.

The group hasn’t signed up any businesses yet, but Sterling hopes to land the zone’s first one by the end of the year and another five or six by this time next year.

L.L. Bean’s spokeswoman, Carolyn Beem, said representatives from the Freeport-based outdoor retailer met with Sterling, and although the company is keeping an eye on the project’s progress, it doesn’t have a plan to join the zone.

“We haven’t gotten any further than that,” she said. “It’s just watching. It’s not something we’re actively pursuing.”

New Balance, which operates shoe factories in Norridgewock and Skowhegan, didn’t return calls seeking comment on the zone proposal.

The owner of another company that has been contacted, Kennebec Technologies in Augusta, said he supports the efforts to increase the manufacturing base in the central Maine region, but he didn’t know yet if the foreign trade zone would benefit his company. Wick Johnson, owner and president of the precision machine manufacturer, said most of the company’s customers are in the U.S. Even though it’s looking to expand into European markets, the company hasn’t yet been presented with a specific proposal for the foreign trade zone, he said.

“We would be very interested in being involved if the opportunity came up and fit in our business model,” Johnson said.

Foreign trade zones are areas that are in the U.S. but are considered outside the country for customs purposes. This means companies in the zones can defer, reduce or eliminate duties on imported products and avoid them altogether by exporting the products to foreign markets.

A company in a zone manufacturing products with imported foreign materials and then selling them in the U.S. can choose to pay whatever duty fees are lower — on the imported materials or final products.

There are five communities in Maine with foreign trade zones — Auburn, Bangor, Brunswick, Madawaska and Waterville — but Madawaska is the only zone being used by a business, according to the most recent report by the Foreign Trade Zone Board.

Janine Bisaillon-Cary, president of the Maine International Trade Center, said it’s a challenge for municipalities with small trade zones on specific partials of land to bring in businesses, and a larger service area — particularly if the ports of Searsport, Belfast and Portland are included — would be more successful.

In other states, foreign trade zones have attracted textile manufacturers, the energy sector and biotech and pharmaceutical companies, Bisaillon-Cary said.

The two-part second phase of the Waterville growth council’s strategy will take place from July to December and from January to June of next year, Sterling said.

The plan is to present cost-benefit analyses to companies in the region in hopes of signing them up for the program. Companies must pay an initial fee to the Central Maine Growth Council, the administrator of the zone, and then smaller annual fees after that. The fees, which will depend on the size of the companies, will be used to sustain and market the program, Sterling said.

Peter DelGreco, president and CEO of Maine & Company, a nonprofit group that helps companies relocate to Maine or expand in the state, said large companies seeking proposals to locate in Maine have asked about foreign trade zones in the past.

DelGreco said he sees it as another economic development tool, but it’s necessary to be able to market it and tell companies how it can help them. It’s helpful to have a company already identified, so the company can be a private sector champion for the program, he said.

“When there’s a company in place, ready to use it as it becomes certified, it can create momentum,” DelGreco said. “Nothing breeds success like success.”

The business outreach strategy is why Sterling said he thinks the foreign trade zone expansion will be successful. The $50,000 is needed to visit all the companies and to hire the consulting company to provide the analyses.

“That’s the critical piece. In order for the foreign trade zone to be successful, you have to implement it. You can’t just have the designation,” Sterling said.

Without the funding, the growth council won’t be able to launch the outreach effort to as many companies or as quickly, he said.

His group is hoping to get a boost from a grant sought by a fellow economic growth organization, Kennebec Regional Development Authority.

KRDA is applying for a matching-funds grant from the Northern Border Regional Commission for a $324,000 collaborative project between KRDA and the growth council, according to Brad Jackson, executive director of KRDA and FirstPark, a regional business park in Oakland supported by 24 communities.

KRDA will be putting toward the grant $99,000 in cash and $24,000 of in-kind support, and the growth council is pledging $25,000 in cash and $52,000 of in-kind support, Jackson said in an email.

If successful, little more than half of the money will be used for two years of business recruitment by KRDA in Canada and northern Europe, and the rest will go to implementing the foreign trade zone, he said.

Jackson expects to find out whether the application is successful in September.

The most recently established foreign trade zone, at Brunswick Landing, was designated in 2012. Steve Levesque, executive director of the Midcoast Regional Redevelopment Authority, which manages Brunswick Landing, said the foreign trade zone has recently been activated, and there are a number of firms that are interested in using it.

He said he isn’t concerned about competition between Brunswick Landing and the Waterville foreign trade zone because the regions have different niches. Brunswick Landing, the redevelopment of the former Brunswick Naval Air Station, focuses on attracting businesses in the light manufacturing, aerospace, biotechnology, information technology and renewable energy sectors. The Maine companies Sterling is expecting to contact cover a broad swath of industries — from agriculture retailer Johnny’s Selected Seeds to poultry vaccine manufacturer Lohmann Animal Health, both of Winslow.

“The more the merrier,” Levesque said. “The more tools that we can have to bring businesses to Maine, the better off we’ll be.”

Paul Koenig — 621-5663

pkoenig@centralmaine.com

Twitter: @paul_koenig

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