A Sanford company hopes to save significant money by tapping a little-used federal program that allows it to avoid tariffs on certain fibers it imports to make its Oriental-style rugs.
Flemish Master Weavers, part of Natco Home Fashions Inc., a Rhode Island company, has operated its rug-making business in Sanford for more than 20 years. It is listed as one of Sanford’s major employers with more than 100 employees, according to the Sanford Regional Economic Growth Council’s website.
In late July, the company received notice that it had been granted preliminary approval to use the benefits extended under Waterville’s foreign trade zone. Such zones are specially designated areas that operate almost like duty-free shops for manufacturers that import and export products. Import duties on raw materials used in production are waived, and some export fees can also be waived. Maine has five foreign trade zones, but heavy compliance costs associated with capitalizing on their benefits have curtailed their use. The other zones are in Auburn, Bangor, Madawaska and Brunswick.
Flemish needed to request an extension of Waterville’s trade zone to include the Sanford operation as a “subzone.” The company applied for subzone status to save duty fees of 8 percent and 8.8 percent, respectively, on the polypropolene and polyester yarns it imports. On Friday, the U.S. Commerce Department issued a notice approving the subzone status, the first of two necessary steps.
Two U.S. producers of fiber have urged the Commerce Department to reject Flemish’s application, arguing that the company could source its fiber domestically. The department has not yet determined whether the complaints merit blocking Flemish from avoiding the import tariffs.
In its application letter filed by Waterville’s city manager, it stated that the rug-maker could not continue operating at a competitive price unless the tariffs are waived.
Flemish Master Weavers President Johan Moulin did not return calls seeking comment Friday. A call to parent company Natco was referred to Moulin.
According to Natco’s website, centraloriental.com, Natco is one of the largest companies in the home textiles industry, with manufacturing facilities in Georgia, Maine and Toronto, as well as several joint ventures in China. Central Oriental is the fashion brand for the company.
Central Oriental’s greatest asset is the rug manufacturing facility in Sanford, with over 300,000 square feet, 10 high-speed looms and fully automated packaging and finishing, the website says. Flemish continues to grow and is planning an 80,000-square-foot expansion, it says.
Natco was founded in 1917 and is based in West Warwick, Rhode Island. It has a manufacturing facility in Ningbo, China, as well as offices throughout North America. Natco Home Fashions operates as a subsidiary of Natco Products Corp., which also operates about a dozen other subsidiaries throughout North America.
In 2002, Natco purchased a majority interest in Flemish, which had previously operated under the name Rainbow Rugs.
CORRECTION: The original version of this story erroneously said Flemish Master Weavers would be able to avoid tariffs on imported yarn in the future. The company has not yet received approval to avoid paying tariffs.
Send questions/comments to the editors.
