WATERVILLE — A Sanford business that imports yarn from abroad to make rugs is the first applicant to prepare a successful application to receive benefits under Waterville’s foreign trade zone, according to City Manager Michael Roy.
Flemish Master Weavers, which employs more than 100 people at its Sanford facility, has been working for about a year with the city, Mid-Maine Chamber of Commerce and Garvan Donegan, senior economic development specialist for Central Maine Growth Council based in Waterville, to be approved as a subzone in the city’s foreign trade zone.
The zone allows companies to have duties deferred, eliminated or reduced when importing or exporting goods. Flemish Master Weavers, which imports yarn to make its oriental-style rugs, will remain in Sanford.
Donegan said Waterville’s Foreign Trade Zone 186 covers six counties, including the Searsport and Portland areas, and the rug company will be the first user of a foreign trade zone in the state outside of the foreign trade zone in Madawaska, which is the only other active foreign trade zone in Maine. There are inactive trade zones in Brunswick, Bangor and Lewiston-Auburn, he said.
“This is a real win for FTZ 186,” Donegan said. “With total benefits of the trade zone, Flemish Master Weavers is going to save, conservatively, $1 million annually. They’re going to be hiring more and have expansion plans to grow the business.”
Donegan noted that while the U.S. Department of Commerce has approved the rug company’s being in a subzone of FTZ 186, it is a first step and further approval is needed before significant benefits can be realized by the company, including approval of commodities to be imported and exported. Those commodities are examined on an individual basis, he said.
Rug company President Johan Moulin did not return a call placed to his Sanford office early Friday evening, but the company’s attorney, Lewis Leibowitz, of Washington, D.C., said the Foreign Trade Zones Board in the Commerce Department in Washington must approve the application before benefits are available to the rug company, and that would not happen until late 2017.
Roy said he plans to report to the City Council on Wednesday on the successful bid by Flemish Master Weavers to operate as part of Waterville’s foreign trade zone. That meeting is scheduled for 7 p.m. Wednesday in the council chamber at The Center at 93 Main St. downtown.
“They’ve been approved, so there’s money coming into the city through Flemish Master Weavers through this whole approval,” Roy said. “We get an annual amount — $2,000 as an application fee, and we will get $5,000 a year as an annual payment from them. When the money comes in, it will be turned over to the Central Maine Growth Council to continue to support the work of getting more companies into the foreign trade zone.”
Like Donegan, Mayor Nick Isgro also characterized the approval as “another big win for Waterville.”
“The city of Waterville and the Central Maine Growth Council are leading the way with the most successful FTZ in the state, helping to grow jobs and manufacturing,” Isgro said Saturday. “It’s good to see more proof that the Growth Council is an effective engine driving economic development in Waterville, central Maine and beyond.”
Donegan, who said he plans to attend Wednesday’s council meeting, noted the $5,000 annual fee is an administrative fee, which may be used for the foreign trade zone program or for economic development.
“It will be up to the city exactly how to appropriate it,” he said.
Donegan said the rug company benefits from the program, and the trade zone is a job creation and retention tool that helps increase exports and imports and encourage foreign direct investment. “This is a great opportunity for us to kind of show the state of Maine, not just the city of Waterville’s forward-thinking, but Central Maine Growth Council is a true regional economic development agent leading in the initiative.”
The Growth Council, under former executive director Darryl Sterling, developed the trade zone three years ago. The council administers the trade zone and is working with the state Department of Economic Development, the state Department of Transportation, Maine Port Authority and the U.S. Department of Commerce, according to Donegan.
“I have to give thanks to U.S. Sen. Angus King — he’s been very helpful in this process — and U.S. Sen Susan Collins,” he said. “The governor’s office and DECD have been very helpful, and Reps. Bruce Poliquin and Chellie Pingree were very supportive. It really has been a statewide initiative to help jobs and manufacturing in the state.”
Donegan said having trade zone approval allows companies to stay where they are and not have to move.
The Growth Council looks to draw more companies into the trade zone and will visit a company or speak with company officials to analyze the company to determine if it would benefit from it.
“We provide some financial analysis for free,” he said. “The new arrangement allows us to bring benefits to the business, so we don’t have to uproot them. We will bring the benefits directly to them.”
He said the city and the Growth Council want to recognize officially the approval of the first company in the trade zone, and that event will be scheduled later.
“We want to celebrate this because it does mean a lot to the businesses that are involved,” Donegan said. “It can be a real powerful tool for businesses doing imports and exports.”
The Portland Press Herald reported last month that rug company officials said the business was poised to expand or collapse, depending on whether it received free trade status to import yarn. The company planned to launch a major expansion of the 210,000-square-foot facility if its application was successful. One of only four large rug manufactures in the U.S., the company has been making rugs in Sanford since 1991. Stores such as Macy’s, Home Depot and Wal-Mart carry the rugs. Natco Home Fashions Inc., based in West Warwick, Rhode Island, owns the rug manufacturer, as well as other manufacturing businesses in the U.S. and Canada, and has joint businesses in China.
In other matters at Wednesday’s meeting, councilors will consider authorizing the city to apply for a $300,000 Land and Water Conservation grant to help build a river walk at Head of Falls off Front Street. They also will consider accepting a gift of a Sea-Doo watercraft from Firehouse Subs to be used by the Fire Department for rescue operations. The watercraft is valued at $30,500.
Amy Calder — 861-9247
Twitter: @AmyCalder17
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