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Journal of Commerce
15th Annual TPM Conference
Building a Trade
Advantage –
Activation and
Operation of FTZ
An FTZ Operator Success Story
© 2015 Ricoh Electronics, Inc. 1
Ricoh Electronics, Inc.
Providing RICOH Manufacturing
Service in the USA
Ricoh Group Headquarters
© 2015 Ricoh Electronics, Inc. 2
• Company Name: Ricoh Company, Ltd.
• Established: February 6, 1936
• Head Office: Ginza, Tokyo, Japan
• Chairman: Shiro Kondo
• President & CEO: Zenji Miura
• Capital: $1,353 million
• Consol. Net Sales: $21.7 billion
• Affiliated Cos.: 234 companies
• Nbr of Employees: 109,000
• Our global network of production and sales facilities.
■ Sales and Services
● Manufacturing, R&D
Americas Headquarters
European Headquarters
China Headquarters
Ricoh Company, Ltd.
Ricoh Software Research Center (Beijing) Co., Ltd.
Ricoh Electronic Devices Korea Co., Ltd.
Ricoh China Co., Ltd.
Ricoh Electronic Technology Co., Ltd. (China)
Ricoh Imaging Technology (Shanghai) Co., Ltd.
Ricoh International (Shanghai) Co., Ltd.
Ricoh Hong Kong Ltd.
Shanghai Ricoh Digital Equipment Co., Ltd.
Ricoh Asia Industry Ltd.
Ricoh Components Asia (H.K.) Co., Ltd.
Ricoh Asia Industry (Shenzhen) Ltd.
Ricoh Asia Pacific Pte. Ltd.
Ricoh UK Ltd.
Ricoh Europe PLC
Ricoh UK Products Ltd.
Ricoh Thailand Ltd.
Ricoh India Limited.
Ricoh Thermal Media (Wuxi) Co., Ltd.
Ricoh Rus, Ltd.
Ricoh Deutschland GmbH
Ricoh Nederland B.V.
Ricoh Italia Srl
Ricoh España S.L.U.
Ricoh Americas Holdings, Inc.
Ricoh Latin America, Inc.
Ricoh Canada Inc.
IKON Office Solutions, Inc.
InfoPrint Solutions Company, LLC
Ricoh Innovations, Inc.
Ricoh Electronics, Inc.
Ricoh Electronic Devices Shanghai Co., Ltd.
Ricoh Australia Pty. Ltd.
Ricoh Manufacturing (Thailand) Ltd. Ricoh Asia Pacific Operations Ltd.
Ricoh Components Asia (Shenzhen) Co., Ltd.
Ricoh France S.A.S.
Ricoh Industrie France S.A.S.
Ricoh South Africa (Pty) Ltd.
Tustin Plant
Santa Ana Plant
Ricoh Electronics, Inc. Georgia Plant
Ricoh Austria GmbH
Ricoh Ireland Limited Ricoh Polska Sp.zo.o.
Ricoh Finland Oy
Ricoh Schweiz AG
Ricoh Portugal, Unipessoal, Lda
Ricoh Norge A.S.
GR Advanced Materials Ltd.
Ricoh (Singapore) Pte. Ltd.
Ricoh (Philippines), Inc.
Ricoh New Zealand Ltd. Ricoh (Malaysia) Sdn.Bhd.
Ricoh Hungary Kft.
Ricoh Americas Corporation
Ricoh Brasil, S.A.
Ricoh Argentina, S.A.
Ricoh Chile, S.A.
Ricoh Colombia, S.A.
Ricoh Panama, S.A.
Ricoh Costa Rica, S.A.
Ricoh El Salvador, S.A. de C.V.
Ricoh Guatemala, S.A.
Ricoh Mexicana, S.A. de C.V. Ricoh Dominicana, S.A.
Ricoh Puerto Rico, Inc.
Ricoh Taiwan Co., Ltd.
Ricoh Thermal Media (Beijing) Co., Ltd.
Ricoh Belgium N.V.
Ricoh Luxembourg PSF SARL
Ricoh Denmark A/S
Ricoh Sverige AB.
Asia Pacific Headquarters
Ricoh Japan Corporation
Ricoh Group Headquarters
Lanier (Australia) Pty. Ltd.
Shanghai Ricoh Office Equipment Co., Ltd.
Ricoh Production Print Solutions, LLC
© 2015 Ricoh Electronics, Inc. 3
Ricoh Global Network
Ricoh Electronics, Inc.
© 2015 Ricoh Electronics, Inc. 4
• Ricoh Electronics, Inc. (REI) was established in 1973 as the U.S.
manufacturing subsidiary of Ricoh Company Ltd. for the production of
multifunction printers, peripherals, printed circuit boards, parts, continuous
form production printing systems, thermal media, toner, and recycled toner
cartridges.
Ricoh Electronics, Inc.
© 2015 Ricoh Electronics, Inc. 5
Main Operations
California
Multi-Function Printer (MFP), printers, machine accessories, and related supplies, printed circuit boards, & machine parts (press, mold)
Established:
President & CEO:
FY 2015 Forecast sales:
Headquarters:
Employees:
January 30, 1973
Jeffrey Briwick
$1.9B
Tustin, CA
1,088 (includes 220 contingent workers)
© 2015 Ricoh Electronics, Inc. 6
Orange County, CA
Grantee POLB
Subzone 50J
Lawrenceville, GA
Grantee GAFTZ
Subzone 26H
REI Locations
© 2015 Ricoh Electronics, Inc. 7
California Facilities
• Toner cartridge recycling
• Metal stamping/machine parts
• Copier cabinets
• Power coating/painting
Tustin #1 Headquarters
• Digital MFPs
• Printed circuit boards
• Plastic injection molding
Tustin #2
• US Super Configuration
Distribution Center
Tustin #3
Santa Ana #1 • Thermal media
Santa Ana #2 • Continuous Form Production
Printing Systems • Facilities maintenance
• Warehouse
Santa Ana #3
• Multifunction Copier-Based Printer Systems
• Peripherals
• Large Capacity Trays
• New & Recycled Toner & Cartridges
• Printed Circuit Boards
• Printer Parts
• Injection Molding
• Powder Coating
• Metal Stamping
• Tool and Die
© 2015 Ricoh Electronics, Inc. 8
Digital Imaging Products
© 2015 Ricoh Electronics, Inc. 9
Thermal Media Products
Since 1985, these direct thermal paper products have
been manufactured in REI’s foreign-trade zone.
• Shipping labels
• Postal labels
• Assembly tags
• Barcode labels
• Specimen labels
• Pharmacy labels
• Wristband labels
• Shelf labels and tags
• Supermarket food labels
• Airline baggage tags
• Transportation tracking labels
© 2015 Ricoh Electronics, Inc. 10
Thermal Media Products
RECO-View® Re-Writable Media
• Loyalty cards
• Commuter pass
• ID cards
© 2015 Ricoh Electronics, Inc.. 11
Environmental Sustainability
REI has been a zero waste to landfill manufacturer since 2001
2011: Nearly 1,000 solar panels installed at Tustin HQ building
2013 Solar Energy Generation: Plan vs. Actual
0
10,000
20,000
30,000
40,000
50,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Kw
h
Plan
Actual
© 2015 Ricoh Electronics, Inc.. 12
REI’s Foreign-Trade Subzone
The goal of the Foreign-Trade Zone program is to encourage commercial and industrial operations in the United States
that would otherwise have been conducted abroad for Customs reasons, including export activity.
© 2015 Ricoh Electronics, Inc. 13
REI’s Foreign-Trade Subzone
• What is a foreign-trade zone from the operator’s point of view?
A foreign-trade zone (FTZ or Zone) is a defined secure area within
the United States that, for Customs purposes, is treated as if it is
outside U.S. borders to provide various incentives.
• What can be done to merchandise in a zone?
Merchandise admitted into a zone may be stored, exhibited,
repacked, assembled, distributed, sorted, graded, cleaned,
processed, tested, labeled, repaired, mixed with other foreign or
domestic merchandise, manipulated, destroyed or, after granted
specific approval by the U.S. FTZ board, manufactured.
• What is a Subzone?
Subzones are sponsored by General Purpose Zones – like the
Port of Long Beach – and are generally single-company sites for
operations that cannot feasibly be moved to or accommodated
in a General Purpose Zone.
© 2015 Ricoh Electronics, Inc. 14
Benefits to REI of FTZ
• Cash Flow on Duty Deferral: Customs duties and merchandise
processing fees (MPF) are paid only when foreign merchandise is
shipped into U.S. territory. Therefore, inventory is held in the FTZ
without duty payment.
• Inventory Control: The FTZ program requires accurate reporting to
follow foreign merchandise from receipt, through processing (WIP),
and shipment from the zone for entry into U.S. Customs territory or
for export. The high quality of inventory control systems benefits
production systems.
• Production Equipment: Not subject to duty until assembled,
installed, tested, and used in production.
• Storage: No time constraints on storage.
What are Some of the Advantages (Cost Savings) to REI from
Manufacturing in a Foreign-Trade Zone?
© 2015 Ricoh Electronics, Inc. 15
Benefits to REI of FTZ
• Exports: Foreign merchandise in the zone may be re-exported free
of duty.
• Duty Drawback: Unnecessary, as products that remain on site can
be re-exported free of duty.
• Zone-to-Zone Transfer: Duty deferral benefits are available when
transferring product “in bond” from one zone to another.
• Scrap/Waste/Yield Loss/Obsolescence: No duties are paid on most
scrapped product or materials.
• Value-Added: Value added to merchandise in an FTZ is not
dutiable. Customs duties are not owed on labor, overhead and
profit attributed to production operations in the FTZ.
© 2015 Ricoh Electronics, Inc. 16
Calculating the Savings
Duty Avoidance on Exports -
HYPOTHETICAL: REI exports approximately 15% of products
from the zone.
Est. Total Annual Foreign Value ($100,000,000) X
Percentage Exported (15%) X
Average Duty Rate of Imported Product (2.5%) =
Total Annual Duties Saved ($375,000)
Example
$100,000,000 X 15% =
$15,000,000 X 2.5% =
$375,000
© 2015 Ricoh Electronics, Inc. 17
Calculating the Savings
EXAMPLE: REI imports dry toner (which carries a 6.5% duty
rate) from Japan and uses it in the manufacture of a toner
cartridge (which is free of duty) for a multi-function printer. When
the cartridge leaves the FTZ and enters the commerce of the
U.S., the duty rate on the toner drops from the 6.5% toner rate to
the duty free cartridge rate.
By participating in the FTZ program, REI has eliminated duty on
this component and, therefore, reduced the component cost by
6.5%.
An Inverted Tariff Savings Benefit Exists When the Duty Rate for the
Overall Finished Good is Lower than the Duty Rate of the
Component Parts.
© 2015 Ricoh Electronics, Inc. 18
Administrative Savings – Weekly Entry Procedure
Calculating the Savings
• EXAMPLE: Estimating 10 shipments per week, each with a value of
over $140,000, the merchandise processing fees would amount to
$4,850 ($485 x 10) per week. If this figure is annualized, the
amount is $252,200 (52 x $4,850) per year.
• Based on this example, utilizing the Weekly Entry Procedure would
permit the zone user to make just one entry for the week. The MPF
paid by the zone user is just $485 total for the week’s shipments,
which is the single entry maximum amount. If this figure is
annualized, the zone user pays only $25,220 yearly.
• What are the savings?
Using the Weekly Entry procedures, the zone user saves
$226,980 per year.
© 2015 Ricoh Electronics, Inc. 19
Foreign-Trade Zones also benefit the public -
• Help facilitate and expedite international trade.
• Provide special Customs procedures as a public service
to help companies conduct international trade related operations
in competition with foreign plants.
• Encourage and facilitate exports.
• Help attract offshore activity and encourage retention
of domestic activity.
• Assist state/local economic development efforts.
• Help create employment opportunities.
Benefit to the Public
Questions?
© 2015 Ricoh Electronics, Inc. 20
21 © 2015 Ricoh Electronics, Inc.
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