Foreign-Trade Zone 230-Greensboro, North Carolina Application for Subzone Klaussner Home Furnishings (Upholstered Furniture) Asheboro and Candor, NC

An application has been submitted to the Foreign-Trade Zones Board (the Board) by the Piedmont Triad Partnership, grantee of FTZ 230, requesting special-purpose subzone status for the upholstered furniture manufacturing facilities of Klaussner Home Furnishings (KHF) located in Asheboro and Candor, North Carolina. The application was submitted pursuant to the provisions of 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 December 16, 2009.

The KHF facilities (800 employees) consist of three sites: Site 1—manufacturing plant and warehouse (77.5 acres) located at 405 Lewallen Road, Asheboro; Site 2—manufacturing plant and warehouse (76.4 acres) located at 4400 Highway 220 Business South, Asheboro; and, Site 3—manufacturing plant (52.5 acres) located at 468 East Main Street in the town of Candor, North Carolina. The facilities are used to manufacture and distribute upholstered furniture (up to 1 million sofas, sleep sofas, and recliners combined annually) as well as cut and cut-and-sewn upholstery covering sets for the U.S. market and export. The application proposes that KHF utilize foreign-origin “micro-denier suede” fabric to be transformed into furniture upholstery covering sets under FTZ procedures. The finished upholstery covering sets (HTSUS 9401.90.5020; duty free) would then be assembled into finished chairs, seats, sofas, sleep sofas, and sectionals manufactured by KHF facilities in North Carolina and Iowa.

The proposed scope of authority under FTZ procedures would only involve duty savings on foreign-origin, micro-denier suede fabrics (classified under HTSUS Headings 5407, 5512, 5515, 5516, 5903, 5906, 6001, 6005, 6006; duty rate range: 2.7-17.2%) finished with a caustic soda wash process, which the applicant indicates are not produced by U.S. mills. The application indicates that KHF does not seek FTZ benefits on any of the other foreign fabrics used in production at the facilities (i.e., full duties would be paid on all such fabrics). All other material inputs used in production would be domestic status.

FTZ procedures could exempt KHF from customs duty payments on the foreign micro denier suede fabric used in export production. On micro-denier suede fabric used in production for the U.S. market, KHF could elect the finished upholstery cover (i.e., furniture part) duty rate (free) after the foreign fabric has been manufactured into cut or cut-and-sewn upholstery covering sets, at which time they are entered for consumption from the proposed subzone. KHF would also have the option to elect the finished furniture duty rate (free) for the subject fabric when the finished furniture is entered for domestic consumption. The application indicates that the savings from FTZ procedures would help improve the facilities' international competitiveness.

In accordance with the Board's regulations, Pierre Duy of the FTZ Staff is designated examiner to evaluate and analyze the facts and information presented in the application and case record and to report findings and recommendations to the Board. Public comment is invited from interested parties. Submissions (original and 3 copies) shall be addressed to the Board's Executive Secretary at the following address: Office of the Executive Secretary, Room 2111, U.S. Department of Commerce, 1401 Constitution Avenue, NW., Washington, DC 20230-0002. The closing period for receipt of comments is March 1, 2010. Rebuttal comments in response to material submitted during the foregoing period may be submitted during the subsequent 15-day period to March 16, 2010.

A copy of the application will be available for public inspection at the Office of the Foreign-Trade Zones Board's Executive Secretary at the address listed above and in the “Reading Room” section of the Board's website, which is accessible via http://www.trade.gov/​ftz. For further information, contact Pierre Duy at Pierre.Duy@trade.gov or (202) 482-1378.