Foreign-Trade Zone 22-Chicago, Illinois; Application For Foreign-Trade Subzone Status, Northrop Grumman Corporation-Defense Systems Division (Radar and Electro-Optical Systems), Rolling Meadows, Illinois

An application has been submitted to the Foreign-Trade Zones Board (the Board) by the Illinois International Port District, grantee of FTZ 22, requesting special-purpose subzone status for the manufacturing facilities (radar and electro-optical systems) of the Defense Systems Division (DSD) of Northrop Grumman Corporation, located in Rolling Meadows, Illinois. The application was submitted pursuant to the Foreign-Trade Zones Act, as amended (19 U.S.C. 81a-81u), and the regulations of the Board (15 CFR part 400). It was formally filed on November 15, 2000.

The Northrup Grumman DSD facilities are located at 600 Hicks Road, Rolling Meadows, Illinois (2 buildings/959,000 square feet on 50 acres). The facilities (2,500 employees) are used for the development and manufacture of radar and electro-optical systems for defense, aerospace, and transportation applications. Some of the components used in the manufacturing process are purchased from abroad (an estimated 40% of finished product value), including: plastic boxes or crates; vulcanized rubber products; printed labels; transfers (decalomanias); self-adhesive plastic flat shapes; aluminum castings; hand tools; mirrors; pressure-reducing valves; electric motors and generators; electrical transformers, static converters, and inductors; plugs or sockets; printed-circuit assemblies and assembly parts; electrical switching/connection/circuit-protection parts; arc lamps; coaxial cable; electric conductors; mirrors and other optical elements, instruments, and devices, including parts; lasers; materials testing machines; and oscilloscopes, oscillographs, and other measuring or checking instruments. Duty rates on these imported items range from 1.7% to 5.8%. The company also uses a number of foreign-sourced items that are duty free.

Zone procedures would exempt DSD from Customs duty payments on foreign components used in export production. FTZ procedures will help DSD to implement a more cost-effective system for handling Customs requirements (including reduced brokerage fees and Customs merchandise processing fees). On its domestic sales, DSD would be able to choose the lower duty rate that applies to the finished products (duty-free to 2.8%), where applicable, for the foreign components noted above. DSD would also be able to defer payment of duties on imported components until Customs entry is made on the finished products. The company would be exempt from duty payments on foreign merchandise that becomes scrap/waste (scrap rate estimated at 1.5% of parts). FTZ status may also make a site eligible for benefits provided under state/local programs. The application indicates that the savings from zone procedures would help improve the plant's international competitiveness.

In accordance with the Board's regulations, a member of the FTZ Staff has been designated examiner to investigate the application and report to the Board.

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 January 29. 2001. Rebuttal comments in response to material submitted during the foregoing period may be submitted during the subsequent 15-day period to February 13, 2001.

A copy of the application and the accompanying exhibits will be available for public inspection at each of the following locations:

Office of the Executive Secretary, Foreign-Trade Zones Board, U.S. Department of Commerce, Room 4008, 14th and Pennsylvania Avenue, NW., Washington, DC 20230

U.S. Department of Commerce Export Assistance Center 55 W. Monroe St., Suite 2440, Chicago, Illinois 60603