Foreign-Trade Zone 15-Kansas City, MO; Expansion of Manufacturing Authority-Subzone 15E, Kawasaki Motors Manufacturing Corp., U.S.A., Plant (Internal-Combustion Engines, Parts of Industrial Robots), Maryville, MO

An application has been submitted to the Foreign-Trade Zones Board (the Board) by the Greater Kansas City Foreign-Trade Zone, Inc., grantee of FTZ 15, requesting, on behalf of the Kawasaki Motors Manufacturing Corp., U.S.A. (KMM), operator of FTZ Subzone 15E, KMM plant, Maryville, Missouri, an expansion of the scope of manufacturing authority to include new manufacturing capacity under FTZ procedures within Subzone 15E. It was formally filed on March 1, 2000.

Subzone 15E was approved by the Board in 1989 with authority granted for the manufacture of small internal-combustion engines and transmissions for motorcycles, personal water craft, all-terrain vehicles, subject to certain conditions (Board Order 454, 54 FR 50257, 12-5-89). The Board authorized KMM's request for removal of the conditions in 1992 (Board Order 560, 57 FR 4862, 2-10-92), and an expansion of the scope of manufacturing authority under FTZ procedures (engines for lawn/garden equipment and additional small engine production capacity to 500,000 units/year) was approved in 1999 (Board Order 1014, 64 FR 5765, 2-5-99).

KMM is now requesting that its current scope of FTZ manufacturing authority be extended to include small industrial diesel engines and parts of industrial robots. Subzone 15E at the KMM plant (600 employees, 113 acres) would be expanded by some 525,360 square feet from the current 607,080 to a total of 1.13 million square feet of FTZ manufacturing space. Most of the finished engines and industrial robot components are shipped to KMM's Lincoln, Nebraska, plant to equip vehicles and industrial robots assembled there. The application states that the additional production activity at the Maryville plant will supplant similar activity currently conducted abroad. The new manufacturing activity will involve casting, machining, finishing, and assembly using domestic and foreign materials and components.

The expanded operations will involve a continuation of KMM's utilization of foreign-sourced materials and components (up to 81% of the finished engines' ex-plant value at the outset). Components that will be sourced from abroad include: belts, electrical components, fuel pumps, housings, fasteners, gaskets, flywheels, rocker arms, pistons, crankshafts, connecting rods, cylinder heads, balancer shafts, manifolds, crankcases, intake/exhaust valves, flanges/spacers/grommets, starter motors, breathers, pulleys, exhaust components, carburetors, turbojets/props/turbines and parts, pumps, parts of transmissions, gauges, bearings, hoses, o-rings, resins, cements, adhesives, ballotini, rubber belts, paper packaging, base metal mountings, netting, articles of plastic/rubber, articles of aluminum and zinc, fabricated steel and copper tube/wire/chain/springs, and electric motors/generators (duty rate range: free—12.5%). The application indicates that the extent of domestic sourcing of materials and components will increase in the future.

FTZ procedures would exempt KMM from Customs duty payments on the foreign components used in export activity (about 13% of shipments). On its domestic sales, the company would be able to elect the duty rate that applies to finished engines and industrial robot parts (duty free—2.8%) for the foreign components noted above. The finished engines and industrial robot parts shipped in-bond to Subzone 59A at KMM's plant in Nebraska would be processed for Customs entry after final assembly of robots and vehicles (duty free—2.8%). The application indicates that the savings from FTZ procedures help improve KMM's international competitiveness.

Public comment on the application is invited from interested parties. Submissions (original and three copies) shall be addressed to the Board's Executive Secretary at the address below. The closing period for their receipt is May 9, 2000. Rebuttal comments in response to material submitted during the foregoing period may be submitted during the subsequent 15-day period to May 24, 2000.

A copy of the application will be available for public inspection at the following location: Office of the Executive Secretary, Foreign-Trade Zones Board, Room 4008, U.S. Department of Commerce, 14th Street & Pennsylvania Avenue, NW, Washington, DC 20230.