Voice of the Modern Manufacturing Economy Since 2013

Limon bets on foreign trade—and manufacturing

Article by Bart Taylor November 27, 2016, 10:53 am MST

Rural America's decisive role November 8 gives way today to the tough reality that economic prosperity is as elusive after the election as before. Small towns and communities face an uncertain future. Colorado's rural outposts must also stand by and watch urban counterparts make national headlines for job growth, rising property values, and increasingly diversified economies. It can be a tough pill. 

But for others it's inspiration, and, increasingly, small towns are taking action. On Colorado's eastern plains, in Wray and Julesburg, Rural Colorado Apparel Manufacturing cut-and-sew centers have opened to pursue business from new domestic apparel and outdoor gear companies. Trinidad and others are reimagining city centers. Farming communities, hardest hit, eye ag-tech manufacturing and new crops to feed a growing appetite for craft food, beer and yes, hemp and cannabis. 

Limon, Colorado, is taking a different approach. Seventy-five miles southeast of Denver on I-70, population 1800, Limon is betting on foreign trade. Last year the U.S. Department of Commerce awarded Limon the state’s third foreign-trade zone (FTZ), #293, a development the city hopes will translate into new primary jobs, including manufacturing jobs, that will put this town on more sound economic footing. FTZ’s provide duty relief for companies importing manufactured goods for distribution and sale throughout the U.S., or for parts and components incorporated into products manufactured on U.S. soil. Commercial merchandise can be brought in and held without being subject to the tariffs and taxes imposed by U.S. Customs and Border Protection.

At first blush, the town and trade seem strange bedfellows. What you see is what you get here, an economy based on the service businesses visible from Interstate 70; business that translates into 80,000 room nights a year and $85 per capita in retail sales from domestic traffic passing through this high plains community. 

But Joe Kiely, Limon's assistant city manager and director of the new FTZ, isn't satisfied. "Those jobs are good for government," he says, citing tax receipts, "but not good for the citizens of Limon. They're low-wage jobs, for one. We need to attract new primary jobs to Limon."

Like much of rural Colorado, government is now the top employer here and in surrounding Lincoln County. It's also the fastest growing sector, a tide of taxpayer-supported spending Kiely and other development professionals in surrounding counties would agree is unsustainable. Still, the gambit to begin providing services to companies that stand to benefit from FTZ’s – ‘the best kept secret in the business ecosystem’ as described to me – and attract foreign-direct investment to the region, is an eye-opener.

Two things work in Limon’s favor. Colorado has two other established FTZ’s, neither of which are serving a large number of companies or taking steps to expand or promote benefits. As result, there’s no real competition. Chalk it up to Colorado’s ambivalence about manufacturing, a theme I heard not only in Limon but from others. Michael W. O'Beirne, a national foreign trade consultant based in Washington D.C., with deep roots in Colorado, tells me it’s costing the region jobs. "After more than a decade trying to use Colorado FTZs, in my opinion a vacuum still exists that’s pushing companies into states like Texas and South Carolina, states proclaiming they’re ‘open for business'", he says. O’Beirne was an advocate for Limon’s FTZ but also sees a need for others. "A new west-Denver FTZ extending from Castle Rock to Windsor might help provide options for companies. The benefits are real.”

Kiely see opportunity. “We’re a motivated partner for companies", he says.  

That may be. It also seems a prerequisite if Kiely or his counterparts in Denver and Colorado Springs are to be successful recruiting a new cadre of businesses into this opaque, often confusing program. Economic development officials may be less than enthusiastic, but clearly the manufacturing and supply-chain companies that stand to benefit most from an active FTZ network don’t understand the program, either. It’s a point not lost on Karen Gerwitz, president of World Trade Center Denver. “We’re supportive and would be more than happy to do more to educate the business community", she offered, “but we just don’t see the interest or demand for information."

Understanding the scope of Limon’s opportunity is itself a challenge. Limon’s FTZ actually extends east, into metro-Denver. But as O’Beirne notes, having worked with the city, “additionally, Limon could designate FTZ subzone sites anywhere within Colorado where U.S. Customs and Border Protection will also support FTZ usage. Subzones are single-user FTZ sites like Vestas, under the FTZ authority of Denver but with manufacturing in Pueblo."

It turns out to be a huge geo-footprint that’s home to hundreds of potential manufacturers who might source materials arriving in the FTZ via rail or highway. Limon’s transportation infrastructure turns out to be its greatest asset for goods sourced from the coasts.

In the end, it may be Colorado’s improving international reputation as a regional growth economy that feeds Limon’s aspirations, along with more foreign-direct investment, or FDI, that comes with it. Today less than 100 Colorado companies are members of the Organization for International Investment, with 35% of those in manufacturing. In 2015 roughly 4% of the state’s private sector workforce was employed by foreign-direct investment. Those numbers are sure to improve.

Regardless, Joe Kiely and Limon’s brain trust aren't looking back, they’re gazing forward, to a day when the city’s FTZ is a gateway for products and components, imported by companies region-wide or utilized by a growing cadre of manufacturers across multiple industry sectors. It’s ambitious, out-of-the-box thinking, equal to the opportunity also available to manufacturing companies operating in one of America’s fastest growing regional economies. 

Bart Taylor is publisher of CompanyWeek. Reach him at btaylor@companyweek.comContact Joe Kiely at joe.kiely@portstoplains.com.

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