2010-7883. Foreign-Trade Zone 82; Application for Subzone Authority; ThyssenKrupp Steel and Stainless USA, LLC; Invitation for Public Comment on Preliminary Recommendation

The FTZ Board is inviting public comment on its staff's preliminary recommendation pertaining to the application by the City of Mobile, grantee of FTZ 82, to establish a subzone at the ThyssenKrupp Steel and Stainless USA, LLC (ThyssenKrupp) facility in Calvert, Alabama. The staff's preliminary recommendation is for approval of the application with a restriction limiting the FTZ benefits to ThyssenKrupp's production for export. The bases for this finding are as follows:

Analysis of the application record indicates that full approval of the ThyssenKrupp application could have a negative impact on domestic raw material suppliers as well as other domestic steel producers. Regarding raw material suppliers, while there may not be sufficient quantities available from domestic sources for all raw materials proposed in the application, significant U.S. production remains of several key materials. Unrestricted use of FTZ procedures in the steel industry could harm certain domestic raw material producers if cost savings are provided for imported materials used in ThyssenKrupp's production for the U.S. market.

As to impact on other domestic steel producers, while ordinarily all companies in an industry would have an equal opportunity to use FTZ procedures for their operations, the structure of many existing U.S. steel plants could make those companies' use of FTZ procedures overly complicated and costly. Unlike the ThyssenKrupp plant, many existing facilities are “mini-mills” and have less integration at a single site. Product may move between several facilities during the manufacturing process. This structure would require FTZ applications, CBP activations, and bonds to be done separately for each facility, whereas ThyssenKrupp will only face those burdens (and costs) once due to the nature of its Alabama facility.

In addition, ThyssenKrupp will be sourcing the “slab” for its carbon steel operations from Brazil, and will be shipping some stainless steel production to Mexico for certain cold-rolling operations. Other domestic producers conduct such operations in the United States, creating higher levels of U.S. activity and employment. As a result, in combination with the other factors cited above, unrestricted FTZ authority for ThyssenKrupp could provide cost savings that would not be equally available to other domestic producers that have higher overall U.S. value added.

At the same time, the ThyssenKrupp facility in Alabama will be competing with other ThyssenKrupp plants abroad for production destined for markets elsewhere in North and South America and beyond. FTZ savings for the Alabama facility's export production could enhance its competitiveness in the world market.

Public comment on the preliminary recommendation and the bases for the finding is invited through May 14, 2010. Rebuttal comments may be submitted during the subsequent 15-day period, until June 1, 2010. Submissions (original and one electronic copy) shall be addressed to the Board's Executive Secretary at: Foreign-Trade Zones Board, U.S. Department of Commerce, Room 2111, 1401 Constitution Ave., NW., Washington, DC 20230.

For further information, contact Elizabeth Whiteman at [e-mail] or [phone].

Dated: March 30, 2010.

Andrew McGilvray,

Executive Secretary.