Foreign-Trade Zone 259-International Falls, MN; Application for Subzone Status, Arctic Cat, Inc. (All-Terrain Vehicle Engines and Snowmobiles) Thief River Falls, MN

An application has been submitted to the Foreign-Trade Zones Board (the Board) by the Koochiching Economic Development Authority, grantee of FTZ 259, requesting special-purpose subzone status for the all-terrain vehicle engine and snowmobile manufacturing facilities of Arctic Cat, Inc. (ACI), located in Thief River Falls, Minnesota. 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 3, 2004.

The proposed subzone would be comprised of four separate sites: Site 1 (77 acres/517,000 sq.ft., manufacturing plant)—601 Brooks Avenue, Thief River Falls (Pennington County), Minnesota; Site 2 (3 acres/60,000 sq. ft., manufacturing plant)—817 Lowell Drive, Thief River Falls, located immediately to the south of Site 1; Site 3 (60 acres, company test track)—Greenwood Street West between County Route 75 and State Route 32, located across Greenwood Street to the south of Site 2; and, Site 4 (20,000 sq.ft., warehouse)—“Hartz Warehouse”, 120 Arnold Avenue South, located about 1,000 feet to the east of Site 1. The facilities (1,200 employees) are used to manufacture all-terrain vehicles (ATV) and snowmobiles, assemble ATV engines, and to distribute U.S. and foreign-made ATVs, snowmobiles, related parts and branded accessories for export and the U.S. market. The manufacturing process at the facilities involves machining, painting, assembly, and testing. ACI proposes to assemble ATV engines and snowmobiles under FTZ procedures. The facilities can produce between 30,000 to 65,000 snowmobiles and 20,000 to 55,000 ATV engines annually, which are assembled from domestic and foreign-origin components. Components purchased from abroad (representing approximately 65% of total material cost) include: spark-ignition engines, articles of rubber (o-rings, seals, drive/V-belts, hoses, dampers/plugs/covers), strips, roller chain, fasteners (screws, nuts, washers, bolts, clips, studs, pins), clamps, oil strainers, crankshafts, balancers, pistons, camshafts, cylinder heads, starter motors, remote starters, water pumps, oil pumps, valves, shafts (drive, counter, secondary), bushings, pulleys, universal joints, sprockets, transmissions, gears, gear drives, axles, hubs, flywheels, rotors, idlers, electronic control units, ignition coils, spark plugs, voltage regulators, resistors, fuses, capacitors, relays, circuit boards, circuit protectors/breakers, stators, diodes, generators, transformers, wiring harnesses, magnets, solenoids, sensors, A/C condensers, electrical terminals/junction boxes/sockets, drive sheaves, parts of transmissions, clutches, CDI (capacitive discharge) units, bearings (ball, spherical, needle, tapered roller shaft; subject to ADD/CVD-must be admitted under privileged foreign status), articles of plastic (fittings, caps, decals, strips, sheets, knobs, seals, washer, o-rings, v-belts), tires, steel and alloy tube/pipe/wire/coil hooks, springs (leaf, helical), aluminum stampings, titanium tubes/bars/rods, locks, keys, hinges, castors, mountings, turbochargers, aluminum heat exchangers and parts, winches, batteries, lighting equipment, horns, alarms, block heaters, LCD screens, body stampings, bumpers, brake parts, shock absorbers, wheels, radiators, mufflers, steering parts, trailers, gauges, oxygen sensors, odometers, speedometers, meters, and thermostats (duty rate range: free—15.0%). FTZ procedures would exempt ACI from Customs duty payments on the foreign components used in export production. On its domestic sales and exports to NAFTA markets, the company would be able to choose the duty rates that apply to ATV engines and snowmobiles (duty free, 2.5%) for the foreign-sourced components noted above. The application indicates that subzone status would help improve the facilities' 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 following addresses:

1. Submissions via Express/Package Delivery Services: Foreign-Trade Zones Board, U.S. Department of Commerce, Franklin Court Building—4100W, 1099 14th Street, NW., Washington, DC 20005; or,

2. Submissions via the U.S. Postal Service: Foreign-Trade Zones Board, U.S. Department of Commerce, FCB-4100W, 1401 Constitution Ave., NW., Washington, DC 20230.

The closing period for their receipt is February 8, 2005. Rebuttal comments in response to material submitted during the foregoing period may be submitted during the subsequent 15-day period (to February 23, 2005).

A copy of the application will be available for public inspection at the Office of the Foreign-Trade Zones Board's Executive Secretary at address No.1 listed above and at the Office of the Port Director, U.S. Customs and Border Protection, 112 W. Stutsman Street, Pembina, North Dakota 58271.