MCALLEN, Texas – The McAllen Foreign Trade Zone recently celebrated its 50th Anniversary with a food truck offering BBQ plates for drivers pulling in and out of its busy facility.
Keith Patridge, president and CEO of McAllen Foreign Trade Zone, said he wanted to say thank you to all the companies and workers who have made the organization such a success.
McAllen FTZ handles between half to three quarters of a million dollars worth of business a year.
“To me, McAllen Foreign Trade Zone is a great example of what has made McAllen what it is today,” Patridge said. “We are really a public utility and we work on a regional basis.”
The McAllen FTZ website explains what a foreign trade zone is:
“A Foreign Trade Zone is an isolated, policed, and enclosed area that is in or adjacent to a port of entry and is considered outside customs territory of the United States. A FTZ is a restricted access site authorized by the Foreign Trade Zone’s Board which consists of the Secretary of Commerce and the Secretary of the Treasury. Through regulations of the Customs and Border Protection (CBP), FTZs are secured areas under CBP supervision and are located in or near a CBP port of entry. CBP entry procedures do not apply, although FTZs are within the territory and jurisdiction of the United States.”
The U.S. Customs and Border Protection website details the benefits of operating inside a foreign trade zone. Click here to read CBP’s analysis.
As a long time employee of McAllen FTZ, Patridge sat down recently and wrote his recollections of the early days. But, he was not around when organization started and none of the original pioneers are still alive. Nonetheless, he thinks it is important to record how the entity started out.
“This was back in 1970. There was this new program called the Foreign Trade Zone program. There was no thought of including anything other than foreign trade zones located at water ports. The leadership of McAllen said, we need to have one at our international port of entry,” Patridge said.
Patridge said that showed tremendous vision.
“First of all there were 17 people that came together, individuals, all private business individuals that came together. All of them put five dollars in a hat for the filing fee to file for the incorporation of what was the McAllen Trade Zone, Inc. That launched what is today the McAllen Foreign Trade Zone, Inc. It started out with five dollars each from the 17.”
Patridge said a further three business people joined the operation a little later.
“So, it would increase to 20. Those 20 were leaders of the city. Unfortunately, they have all passed, now. But they had this vision to create a foreign trade zone. It was in 1965 and it took until October 26, 1970, before we finally got permission to establish the Foreign Trade Zone. It is called Foreign Trade Zone No. 12. It was the first foreign trade zone not located on a water port and only the 12th one ever created.”
One of the founders of McAllen FTZ was McAllen-based attorney John Richard Freeland. Freeland passed away in 2014. His obituary stated: “At the urging of then McAllen Chamber of Commerce manager, Wade Terrell, he was very instrumental in getting the permit for the McAllen Trade Zone.”
Speaking about John Freeland, Patridge said: “What goes around, comes around. John was instrumental in getting the McAllen Foreign Trade Zone started. Now, his son, Mark Freeland, also an attorney, is set to become the next chairman of McAllen Economic Development Corporation.”
According to the McAllen FTZ website, more than 410 companies ranging from manufacturing, industrial, supplier, warehouse distribution, and logistics, have located in McAllen. “Today, the McAllen Foreign Trade Zone consists of over 775 acres, and offers full service logistics solutions to over 100 clients representing over 42 countries world wide,” the website states.
Asked about the impact of McAllen FTZ on the local economy, Patridge said the organization has, in the past, hit a billion dollars worth of business a year.
“Last year we were between half a billion and three quarters of a billion a year. A lot of it depends on who is located in the Foreign Trade Zone. But generally we do between half a billion and three quarters of a billion dollars and then, as we start seeing additional new companies coming in, why that increases.”
The McAllen FTZ jurisdictional territory covers all of Hidalgo County. So, the organization has the ability to set up other trading zones, outside of McAllen.
“We have established foreign trade zone companies as foreign trade zones in Pharr, in Mission, in Hidalgo, and we will put them anywhere. Any time any of the cities in Hidalgo County have a company that would like to become a foreign trade zone, we would be happy to set them up.”
Patridge is convinced McAllen FTZ will do very well under the new United States-Mexico-Canada Agreement. “It has the potential to become very, very, important to us,” he said.
Asked how important McAllen FTZ has been to Reynosa, Patridge said: “It all depends on the cost structure of the companies that are there. It allows them to reduce their costs by bringing components in. Traditionally, raw materials have come through the ports of Long Beach or the traditional water ports and come into the U.S. side where they would reach a foreign trade zone. They would come in, in-bond into the foreign trade zone where there would be no duty paid. And then when they export them to Mexico, there is no duty. So, you have that financial incentive to save that type of money. Plus there are some tax benefits from being in a foreign trade zone as well.”
Most people know Patridge as president and CEO of McAllen Economic Development Corporation. But it is actually the McAllen Foreign Trade Zone that pays his salary.
“McAllen Foreign Trade Zone donates my time to manage the McAllen Economic Development Corporation. We also have grown to the point – thanks to a really dedicated and great team of employees at the McAllen Foreign Trade Zone – whereby we can assist the City of McAllen in economic development.”
By way of example, Patridge said McAllen FTZ picks up all the overhead salaries and lease payments for McAllen EDC.
“Last year we ended up providing in value, over a half million dollars to the City of McAllen through savings that we have given. These are through grants from the McAllen Foreign Trade Zone to MEDC or through providing services to the City at no cost or minimal cost.”
Asked for any wrap-up remarks, Patridge said: “We have a great team. And we keep evolving with the market. For example we started doing a fulfillment business to customers for medical devices where we are fulfilling the orders online. In effect, we are an itty-bitty Amazon.”
Editor’s Note: The main image accompanying the above news story shows Keith Patridge.
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