#10 – Tom Cook

Mark Taylor:

Welcome back to Supply Chain Saga. Today, we’re joined by Tom Cook, the CEO and Managing Director of Blue Tiger International. Tom has over 30 years of experience in global trade, has written 19 books on the subject, and is also the director of the National Institute of World Trade. Tom utilizes his expertise to help companies reduce their landed cost of goods into the United States. In this episode, we discuss foreign trade zones and how they’re helping with the current reshoring trend. Let’s get started.
All right. Good morning, Tom. How are you doing?

Tom Cook:

Good morning. Thank you for having me.

Mark Taylor:

Absolutely. This is… I’m sitting here this morning in this lovely atmosphere with Mr. Tom Cook of Blue Tiger International. Tom, why don’t you introduce yourself, tell us a little bit about your supply chain journey and how you got to where you are, and then we’ll get into Blue Tiger and what you guys do.

Tom Cook:

Well, again, I appreciate the opportunity to talk to you and your audience. So I come out of a military background and was involved in supply chain logistics for the United States Navy. And I was able to, once I came out of the service to bring that into commercial utilization and things that I learned going to the Merchant Marine Academy all the way through to current times, come back to those beginning periods of time where I was helping move all kinds of materials for the armed forces. Blue Tiger International goes back to its origins in 1982, we’re supply chain management consultants. Basically at the end of the day, we help companies that have to navigate the challenges of global supply chain, we assist them in that process. And we have a focus on trying to reduce risk and spend in their supply chain and create opportunities for business process improvements at the end of the day to make their operations a much more competitive business model for their own benefit.

Mark Taylor:

Yeah. When you speak about risks to the supply chain, give us some examples. I mean, I know, and of course there was… Everybody got caught during 2020 to 2022 or so with you realize just how this just-in-time model that everybody was working with really broke down in a lot of cases. What are some other potential risks and things?

Tom Cook:

You mentioned “just-in-time,” I just wrote an article. I write a article each month for Global Trade Magazine. I have a column in there. And probably the biggest risk that companies have faced for all time, but certainly became very predominant through the COVID period, was landed cost modeling, which is understanding what the total costs are of sourcing products from foreign markets and bringing it here into the United States or to other divisions in other parts of the world. So we help companies clearly define what not only their acquisition costs are, but what are all the other additional costs that come into play. And kind of as an example is, where China is a huge source for American companies to buy from, when President Trump came into office, he declared war on China, and he put in what was called the 232 and 301 tariffs, which impacted aluminum and steel and about 40% of the commercial products that we buy from China.
And it added as much as 25% additional costs on bringing those goods into the United States by adding these excess charges on the duty and tariffs on the merchandise as it came through the border. So a big area that we look at is, is that likely to go away? Biden ran for president saying he was going to eliminate the tariffs that Trump put in place, but once he got into office in conversations with the International Trade Administration, he learned that these things were going to stay in place. So here we are now entering the fall of 2023, and those surcharges that were put in the Trump administration are still here, and it’s likely they’re going to be here for quite a while, particularly as we enter into this economic and geopolitical battle with China. So we have people positioned as engineers in various places around the world to help us look for other countries and also to look for what we refer to as friendshoring or nearshoring of bringing back manufacturing to places where those surcharges don’t exist.
So companies that we… Countries such as South Korea, Israel, the Dominican Republic, Mexico, Canada, where we have free trade agreements, when we move things through the border, there’s no duty or tariff that’s applicable. So that has a huge impact on that landed cost model. So we help companies navigate the analysis of what these options are, and then once it looks like it makes sense to them, we create a financial model and then we move them into an implementation stage. And we actually have people positioned as engineers in these various countries to actually help facilitate these changes.
One country, Mexico is an area that has received a lot of notoriety recently in various media segments that a lot of companies are actually looking to Mexico to do manufacturing because it’s low cost, it’s physically closer to the United States, the cost of moving freight is significantly less than coming out of Asia, and the cost to manage it is significantly less because it’s much easier to get to back and forth, and there’s more commonality with the governments between United States and Mexico than it is United States and China and some other Asian countries. So basically what we do is help company assess these opportunities, what their costs are going to be, what the financial benefits are, and then actually help them implement what we refer to as a turnkey solution.

Mark Taylor:

Oh, okay. So there’s about a hundred things to dig into there. For these companies that over the last, let’s say, two decades have really, really invested and bet a lot on China, are you primarily seeing those companies double down, or are you seeing them start to pull out of those investments?

Tom Cook:

I think that as we talked to a lot of companies all over the country, and last year we did an analysis of our own business model, we touch well over a hundred different verticals. So we have a pretty good array of different types of companies from pharmaceutical and medical products, to energy, to solar panels, to automobile, to consumer products and so forth. We’re at all these different verticals. And we see a common theme, which is that a lot of companies have significantly made investments in China, both directly and indirectly, and they have a vested interest in maintaining that relationship. So we see a lot of them very reluctant to look to other options because they’re so sure that that situation has worked. We all know that just generally in life, people don’t like to make change. Once they get comfortable with something, they don’t like to make change. And unchange does create uncertainty, it creates a disruption and has cost attached to it itself.

Mark Taylor:

It also creates opportunity.

Tom Cook:

Right, it does create opportunity. In that circumstance, what we try to do is to say, listen, we believe in China, and I have a lot of interest in China, both as clients and our own investments that we’ve made in creating infrastructure capability there. So we say the issue should be looking at this from a risk management supply chain standpoint and just reduce your dependence upon China and diversify your sourcing portfolio. And it doesn’t necessarily mean that you have to bring it back to the United States, which is obviously always going to present generally a higher cost model, but maybe the friendlier countries where there may not be the kind of duty rates applicable on goods moving from those countries, or they have a favorable capacity to take on the manufacturing. And basically, you’re looking at it not only just from the savings involved, but from that risk management, which is it’s like buying an insurance policy or investing in a fire protection system or alarm system. You don’t get an immediate benefit, but it’s there in case some problem occurs.
So I think one of the benefits that I believe that came out of COVID, because I always look to say anything that you live through and survive, you have to look back and say what I learned from it. I think a lot of companies have learned that COVID has kind of personified the risks that are involved when you have such a dependence on a country like China. And so, risk management now is dropping down from the C-suite into the supply chain and saying, “Hey, we have to think through some of our options.” So getting back to a specific question and point that you asked on is, I think, not to eliminate China, but just to reduce the dependency on China and create other opportunities. I also want to mention, because I do a lot of work in Washington and we sit on a number of committees associated with US Customs, Department of Commerce and other organizations there, that there is a congressional effort looking at China specifically. And as you’re probably well aware that there’s an actual congressional committee now that’s focused on looking at China.
But one of the things they are given consideration to is actually creating legislation that in certain critical areas of American purchasing, that we specifically by legislation reduce our dependency on China and find sources that are either more friendly or bring them back to the United States, areas in precious metals, in pharmaceutical medical products, things that have an indirect relationship to our energy and to our defense processing, things like that are areas that they’re looking at to see whether or not legislation might be one of the answers.

Mark Taylor:

I mean, this is something that took what 30 years to develop in terms of… Used to be everything… We produced most of our stuff. And then as you started… I don’t know enough to say… I think, for the auto industry as an example, everything, all the jobs used to be here, and then I think their costs continued going up and up and up. And so I said, “Well, fine, we’re just going to offshore all of this.” And would you say that was one of the things that kind of started the entire-

Tom Cook:

Yeah, I think that one of the consequences, particularly of American companies is that many times they make decisions based upon the short-term financial benefits and not the long-term planning. And I don’t want to say that’s across the board with all companies, but we certainly see a predominance of that thought process. And I think in a lot of major companies in the United States through the late ’80s and ’90s, you had a lot more people in the financial C-suite areas having influence on the operational decisions that were made. So a lot of decisions were made for the financial benefit, not necessarily the long-term operational gain of the company. So they moved a lot of the manufacturing to low cost countries. China being one of the countries where that was predominant.
And you have to give China a significant amount of credit. There’s no country in the history of our planet that has moved more people from poverty to middle class because of their manufacturing prowess. And they make things today in almost every vertical, they do a really good job at it. They have a very cost-effective way of approaching it. And when you appreciate the fact that you go to Walmart and buy things a lot less today than they cost 20 years ago, it’s because of that capability in China to produce products at such a low cost model. So we have to take that into consideration when we think through this.
So we come back to this point about the fact of looking at options to mitigate the risks that’s involved with that that came, particularly through COVID, this exposure, and I think we’re all aware for those of us that pay attention to the news that there are a lot of geopolitical, economic, and military concerns. As example, their support of Russia, China’s support of Russia, their support of North Korea, they’re threatening the sanctity of Taiwan, they’re threatening the predominance in the South China Sea, and they’re now entering in countries in Latin America and in Africa in a very aggressive way to replace some of the failings of the US policies in these parts of the world and so forth. So we have to look at them as a significant economic threat.
And I believe the only thing that has saved the circumstances from getting worse is the business owners in the United States and the business owners in China recognizing that, hey, they have to abide by the political nature of what goes on in their capital in Beijing and what we do in Washington, but they also have their own relationships and their own things. If you happen to, again, paying attention to this, the leaders of almost every major American company and financial institution that has vested interest have been going to China now very frequently in the last year to keep the relationships going and deal below the rhetoric that we see politically and put out in the news by both Beijing and Washington. So the hope that I have is that the commercial interests will make sure that things stay to some degree in balance. You have all this rhetoric going on, but it will never become substantive because of the commercial interest that would be lost.

Mark Taylor:

So back on the commercial interest and then the Trump tariffs that came in, what were the numbers on those?

Tom Cook:

The two tariffs were 232 was aluminum and steel, and 301 was commercial products directly from China. The 232 impacted 10 countries besides China, but the 301 only impacted consumer products coming out of China, and it was a 25% surcharge.

Mark Taylor:

And that’s just across the board-

Tom Cook:

Across the board…

Mark Taylor:

… anything, whether it’s glassware, whether it’s-

Tom Cook:

Well, it’s listed by certain commodities. And in total, it represented about 40% of what we purchased from China fell into that category of additional tariff. The Trump administration allowed exemptions to be made so companies could appeal to the Department of Commerce and get an exemption so that they wouldn’t have to pay that tariff, and a lot of exemptions were issued. But in the first year of the Biden administration, those exemptions expired and he decided not to renew the opportunity for those exemptions to exist. So everybody reverted back to this additional charge. And just think about it, if you were paying $100 dollars for an item, that surcharge made it $125. Right? If you were making 25%, 30% margin, there’s your margin has been consumed by that additional cost. So who ultimately pays it really goes… Even in wholesale manufacturing and selling, eventually, it gets down to the consumer that has how to pay that.
And I think that you don’t hear about it too often, but I think one of the consequences of the inflation that we’re feeling now on our individual purchases, citizens in this country, come from the fact that there was a residual impact of those 301 tariffs, where those costs are now being passed on to the actual consumer. It took a while for that tap because you had existing inventories that were in warehouses that had not paid the 301 tariffs, they had exemptions that were available, and that’s all dissipated. So there was a residual timeframe for this to catch up to the actual public.

Mark Taylor:

When you’re working with companies who are importing largely from this and all of a sudden, they’ve got a 25% surcharge being tacked on to what they’re already paying, what are some of the strategies that you help them develop? What are some of the things that companies are doing to… I mean, obviously, when I say get around them, I mean, you could source from somewhere else. That’s one option, that’s not affected by the tariff. But in many cases, it’s going to take a decade to redeploy a company’s personal supply chain to another country, develop it, develop the relationships, et cetera, et cetera. So they’re going to be dealing with it for a while. So what are some of the strategies that you help your customers devise to get around these?

Tom Cook:

So what is is that at the end of the day, you’re looking to reduce the landed cost. You have to dissect what consumes as components of that landed cost. So your primary areas is your [inaudible 00:17:13] acquisition cost. Then you have freight to move it from point A to point B. Then as it comes through the board, you have customs clearance charges and you’re paying duties and taxes. So those are the big components that make up landed cost. There could be some other peripheral charges in there, but those are the big areas. One of the things that the US government allows is what’s called foreign trade zones. So let’s take a case study so that you make sense to your listeners is we had a company that was buying bicycles, completed bicycles in China from various suppliers, that those bicycles fell under the 301 tariffs. So if that bicycle cost them acquisition costs a $100, it now cost them $125 when that came in, plus the normal duty rate, which I believe was around 4.5%, 5%.
The US government has what’s called foreign trade zone. So this company that was based in San Diego, we turned around and said, “Listen, instead of buying finished products from China, let’s open up a foreign trade zone and let’s do that assembly work in the United States in a foreign trade zone,” so when the goods come through the border, there’s no responsibility to pay duty or taxes. And you’re now using US labor to do that manufacturer. So you now are bringing in a product in which you’ve been able to eliminate that 301 tariff. So you first deferred it for that manufacturing period, four or five, six months, maybe a year depending upon the manufacturing process. And then, so you’ve taken a step to mitigate that because you now have a product that’s different than what came in, parts came in, now with the bicycles coming out, it’s called tariff inversion. But in some cases, the administration has come aggressively after certain products coming out of China and raw materials to not give them the privilege, as it would for other countries.
So in this particular case, we moved that assembly facility into a maquiladora into Mexico, and this company was located in San Diego, so they were operating only 60 miles south of where they were. And that’s where they do that assembly. And they’ve totally eliminated their tariff in that process. And they didn’t disengage this supplier, they’re just saying a supplier, “Don’t assemble, to send us the materials and we’ll take them in,” so they take the tires, the rims, the pedals, the handlebars, and all the paraphernalia that goes into bicycle, send that as parts and raw materials, and then they do that assembly work at a facility in Tijuana, just south of the San Diego border. And so, we look at those types of solutions that could potentially happen. I’ll give you another example.

Mark Taylor:

Okay.

Tom Cook:

We had a fashion company that was buying product all over the world and shipping it into the United States into a distribution facility in New Jersey. The distribution facility broke down all the shipments and then reshipped it out to the retailers that were handling it, and they had an e-commerce business as well. So when we looked at the freight costs and how they shipped it, they had packaging that was utilized, that added 30% to 35% weight into the weight of the transaction, which when you look at the rate per kilo or per pound, they were paying for moving, not the material they were selling, but the packaging to actually move it from point A to point B. So all their clothing could be hung. So we arrange for specially the design containers that don’t require any packing. You just hang everything up in the container, so you’re maximizing space and efficiency, and you’re eliminating that cost of the packaging in terms of the space it took up and it’s weight.
And so, we were able to mitigate significantly about 25% to 30% of their costs by doing that process. And I’m oversimplifying the whole circumstance, but there’s ways of looking at how to do things. Give you another example. We had a company that was in Chicago, and they had computer peripheral parts that they purchased exclusively in China. And it was subject to the 301 tariffs. But when we looked at their supply chain, we noticed that almost half of their $20 million spend in freight was in air freight.

Mark Taylor:

Oh, wow.

Tom Cook:

Air freight is 18 times more expensive than ocean freight when you look at it as a cubic meter per kilo or per pound basis. So you’re sitting back saying, “Why in your supply chain do you have so much air freight?” So when we pick that apart, now you’re talking to their sourcing, their purchasing, customer service, demand planning people in this company, we realized that they had a floor in their demand planning process, which caused them to place orders too late, and therefore they had to expedite the shipment to get it into their supply chain. And we sat back and said, “Well, if we make certain changes in the demand planning process, we could move that 10 million of the spend into Ocean freight and reduce it by five or six million dollars a year, which is what we ended up doing.
And we are able to have them acquire a technology, which improved their demand planning process, and that eliminated almost completely the use of air freight of which they were paying that extremely high premium for in their supply chain. And a lot of companies, you have all these different silos and sometimes they don’t talk to each other or cooperate the way that they should. So as a consultant, we break those barriers down and we kind of get them to look at something more holistically for the benefit of the company. And you get away from personalities and people who control their own silos, and you get a CEO who sits fast and say, “Listen, what the consultant is saying is right, just make it happen.” In this case, in Chicago, it worked that way.

Mark Taylor:

So we first indirectly met, you were giving a Free Trade Zone discussion for the IWLA. It was a webinar. And at that time, I guess my impression of Blue Tiger was that you guys primarily help with free trade zones and implementing those, but in reality, Blue Tiger looks at how do we reduce supplier to landed cost. And basically, it’s changing the oil, it’s making sure that the machine is running as efficiently as possible.

Tom Cook:

Right.

Mark Taylor:

Because those three examples you just gave are vastly different, but they accomplish the same end goal.

Tom Cook:

So we opened up about asking about risk and so forth. So another risk that companies face in global supply chain is trade compliance. Right?

Mark Taylor:

Yeah.

Tom Cook:

So the concept there is that we have companies that for 20 years do things incorrectly relative to harmonized tariff numbers that they use, valuation issues, record keeping, all these things that there are very strict regulations that customs and various government agencies enforce. And they go along doing something and no one’s correcting it, so they think they’ve been doing it right, and then all of a sudden, bam, they get hit. And it could be arbitrary, or it could be a whistleblower, or it could be an unfriendly competitor who says, “Hey, they’re doing something they’re not supposed to be doing,” and they get caught. And we get pulled into a lot of those cases to help them deal with their… Now the fire is burning in their supply chain.
When we do our assessment, we also look at all their aspects of compliance. And so, you take apart making sure that they’re checking the denied parties list because the government has a list of companies and individuals that you’re not allowed to do business with as an importer or an exporter. So a lot of times, they’ll be buy-in from somebody that they’re not supposed to be buying from. Two is we look at the harmonized tariff numbers. A lot of times, they use the harmonized tariff number of the supplier, that’s not the same number that US Customs would use they want you to do it. They’re not using the right documentation. They have an invoice in Chinese, and you have to have the invoice converted to English, and they don’t want it in one. They want it in US dollars. So you have to have that capability.
They want to make sure that the valuation you use is not the valuation that you have in a relationship with the supplier, but what is the valuation according to US customs regulations. And a lot of times when you have related parties, the home or parent company or the sister company overseas could be $0 on the invoice, because there’s no money being exchanged, but that’s not the value declared for customs purposes. They want to see a realistic market value on that transaction, so we get brought into those cases.
And then, there’s a record keeper element, which you’ve got to keep your records for five years, which a lot of companies don’t do, and it has to create all the detail from the purchase order all the way through to the bills of lading, certificates of origin, and any of the communications that were related to the transaction have to be supported in a file system. We look at that because if you don’t do it right and you get caught, the risks can be pretty significant, sometimes as much as 11 to 13 times the value of the merchandise. And the biggest risk is if the government feels that the problem was willful or egregious, they can eliminate your ability to import and export because it’s not a constitutional right. It’s a privilege granted by the government agencies that govern those important export activities.

Mark Taylor:

So there’s a lot of defense as well as offense that you guys coach on.

Tom Cook:

Correct. But it comes from the fact of the experience that we have in helping companies that do get caught, right?

Mark Taylor:

Yeah, right.

Tom Cook:

And both US customs and the export agencies, the Bureau of Industry Security, the Office of Asset Controls and ITAR, International Traffic and Arms Regulation, they publish the cases that they pursue. So it’s very easy to go online to the government agencies and they show you, they give you the name of the company, they give you the name of the executives they’re dealing with, and how they pursued it and what ultimately came in the solution. So any of your listeners are welcome to reach out to us, bluetigerintl.com, and we keep a list of all these cases because that’s how when we’re talking to senior management, they say, “Hey, we’ve been doing it this way for 20 years. Why should we think about it?” We give them four or five examples of companies in their own business vertical that have paid millions of dollars in fines or have had other consequences that’s involved with the process. The last thing you want to have is one of the government agencies chasing you for a potential issue.

Mark Taylor:

Question, and this has randomly came up as you were talking, I was thinking about it. A lot of people will… The whole idea of creating an LLC, so you’ve got a layer of protection between you and your person, and so… But with the ability when these government agencies go after you, they publicly make… Of course, if somebody came after Mark Taylor at LLC, then not only is Mark Taylor, LLC going to be listed, but my name as the owner will also be gone after. Do they go after people, personally?

Tom Cook:

Yes. And civilly and criminally. Unfortunately, we deal every year with one or two cases that rise to the level of criminal activity. And the basis of that is generally the willfulness, personal gain, and egregiousness of the offense. And remember that customs sits out like the IRS does outside the constitution of the United States, so they don’t have to have a reasonable suspicion to go after and seize. They can do it very proactively. So we’re dealing right now in the world of imports with a lot of problems related to forced labor issues. So under the Biden administration, he’s integrated to the greatest extent that we’ve ever seen, what we call social compliance in the global inbound supply chain. And at the end of the day, to oversimplify this, they’re saying is, “Hey, if you as a US company buys from a company overseas and that company or any of its suppliers are using forced labor in the manufacturing or supply chain process, you can’t import that into the United States.” And the penalties and the consequences are significantly severe.
We’re dealing with at least five or six cases right now. We’re a mid-size potato in the whole field here of what we do, and we’re dealing with all these cases of companies that just got their goods seized and there’s no probable cause of it. They just happen to have buying it from a region where there might be some predominance. So now, you have to react to it by [inaudible 00:31:32] customs that there’s no forced labor in the supply chain. Think about, you have to go to your supplier and you have to go to their suppliers to get them to tell you. And there is a legitimate issue of forced labor being used in the Asian supply chain. So a lot of times they can’t make that statement. So you’re in a situation where your goods have been seized and you’re being penalized.
It’s a pretty serious issue. So if the government has a tendency to believe that you knew in advance that this was happening and you looked the other way or tried to hide it, that’s willful and egregious. And that’s where something might rise to that level goes away from just being civil, but being a criminal issue.

Mark Taylor:

So let’s say, because one of the magical things about what Amazon did when they basically crowdsourced all of their… Well, not all of it, but a lot of their inventory. So I think it was around 2006, they opened up to third party sellers. So people like you and me could say, “Hey, this coffee mug, I’ve never seen anything like it. We’re going to go and we’re going to get it made in China, and I’m just going to import a container every six months.” So you never go to China, you find a producer on Alibaba and you start bringing it in, you’re probably working with a trading company in China who’s working directly with the manufacturer. The onus… I mean, to go through the process and be able to verify that there’s no forced labor, it’s very, very challenging on a small… on somebody who’s doing that kind of a small operation.
My assumption is that most of the people that they’re really looking into are going to be the very large players. But eventually, it’s like once all the large players are verified, then you keep on going down until the entire supply chains cleanse. So I mean, I think it’s maybe only a matter of time, but it’ll be a long time before we get there. What would you say to… How are those people being affected in this as well?

Tom Cook:

I would just say that the only thing that when you said, which I would take issue with is that it’s not they’re not choosing larger importers over smaller importers. They’re looking at verticals.

Mark Taylor:

Okay.

Tom Cook:

So solar panel, food, certain consumer products, the automobile industry, areas where we’re seeing a predominance that they’re looking at. So it doesn’t make a difference whether you’re a large person in the solar industry or a small one, if you’ve harmonized tariff numbers which identify your product or fit that category, that’s what they’re looking at. It does make a difference the size of the company. And it has implications down the line to other people in the logistics industry. So the freight forwarder, customhouse broker gets brought into this equation because you’re helping facilitate and a warehouse that’s receiving this merchandise, let’s say it gets in and now custom decides to challenge it right now the warehouse is involved.
So a lot of the business that we’re involved with originates, not necessarily with the importer, but it’s the forward or the customhouse broker or the warehouse or the trucking company that’s now been brought into this problem because they’ve got possession of the merchandise that now is being challenged by US customs.

Mark Taylor:

Okay. So let’s say I’m a warehouse and this company that’s now imported a container or two into my warehouse of stuff that they can’t sell that we have to segregate and can’t do anything with. Let’s say they go belly up and then you’re on the hook for however much space that you’ve been housing those goods in. What then happens to… I mean, can a warehouseman then enact like a warehouse’s lien and liquidate the property to-

Tom Cook:

Sure. That’s always a possibility, but unfortunately, customs is not letting them hold the merchandise. They’re giving them 14 days to get it out of the country.

Mark Taylor:

Oh.

Tom Cook:

Okay. So we have a lot of freight that’s sitting now in Tijuana and Mexico that’s come in on the West Coast sports, moving it down there while they’re having this dispute going on. And two weeks ago, customs issued not a regulatory advice, but a functional advice, which is they’re not allowing you to move the merchandise in question into a foreign trade zone. You move it into a bonded location, but not a foreign trade zone.

Mark Taylor:

Okay. So what’s the difference between a bonded warehouse and a foreign trade zone?

Tom Cook:

A Bonded Warehouse is a physical location within the United States warehousing, generally commercially owned, that sits outside the US economy. So that when goods pass through the border and go into a Bonded facility, there’s no obligation to pay duties or taxes on it, until it comes out of that facility. And if the goods get exported, there’s never an obligation because goods would never have entered to the United States. So the first benefit of a foreign bonded warehouse is that you are deferring your tax and duty until a point in time you’re pulling it out and you’re selling it becomes a value. So that’s the primary purpose. But in a Bonded facility, you can only keep international freight. You cannot commingle domestic and international freight in the same facility, and you’re not allowed to manipulate it. You can repack it, remarket, relabel it, inspect it, do quality control. But if it comes in as a widget, it has to go out as a widget. And you have five years to do whatever you want to do and then disposition.

Mark Taylor:

So what’s the definition of commingling? Let’s say you’ve got a hundred thousand square foot facility and you put a gate down or a fence, you fence off 50 of it.

Tom Cook:

If you define certain space as bonded and non-bonded, it does make a difference, right? But if you make the whole facility Bonded-

Mark Taylor:

Then you can’t have domestic freight.

Tom Cook:

… you can’t have anything in there, but international freight.

Mark Taylor:

Got it.

Tom Cook:

In a foreign trade zone, the first, like the Bonded, when goods come through the border, there’s no obligation made due to your taxes. If it comes out, that’s the only time you’re obligated to pay and if it gets exported, you don’t have to pay. So those benefits are there. But in a foreign trade zone, there’s an indefinite period you can keep it in there. So there’s no five-year restriction. You can keep it in there forever. But the other benefits with the foreign trade zone is you could manipulate, assemble, manufacture in that location. So you can change something from raw materials components to a finished product, and that’s called tariff inversion, and potentially get something that comes out at a lower duty rate.
And the other aspect is that the cost of customs clearance, because of the merchandise processing fees being brought down to once a week versus it could be 50, 60 times a week, you could save literally hundreds of thousands of dollars, if not millions of dollars in your customs clearance transactional charges in a foreign trade zone. And it’s only an FTC that gives importers that benefit.

Mark Taylor:

Explain that benefit one more time.Tom Cook:

So when we import something into the United States, we have to pay what’s called the merchandise processing fee. So it’s a percentage against the value of the merchandise. It caps out at $574 a transaction. Custom says that when you do your customs entry is when you pay that $574, up to $574. But if in a foreign trade zone, you only have to do one customs clearance a week, you don’t have to do transactions. So if you had 50 imports in a week and you took 50 shipments out of it at the end of the week that goes into the economy, you only have to do one import transaction. So you pay $574 once, and you have the benefit of not paying it 49 other times. So 49 times 574 times 52 brings you up to over a million dollars of savings because you’re making one declaration in a foreign trade zone a week as compared to transactional out of a Bonded facility or your normal inbound transactions.

Mark Taylor:

So this is one more place where when a company like Walmart designates the entire container ship, they’re likely bringing it into a Free Trade Zone.

Tom Cook:

Correct.

Mark Taylor:

Yeah. And you feel like, well, in the whole process, it’s pennies, but 574 times 2,000 containers in a week or whatever you said, it starts adding up.

Tom Cook:

So if you looked at the automobile industry, all your major automobile companies in the United States, both American companies and foreign companies operate in foreign trade zones. So we were involved early on in the ’90s with BMW, and they set themselves up in Greer, South Carolina. So in that facility, they’re taking raw materials that come into the United States in components and parts, leather for the seats, tires for the car, engine blocks, electronics for the communications, all the different materials, glass things that brought in from overseas. Well, they come in at duty rates of 5.5, 6.5, 7.5, 8.5, 9% duty rates. But you bring them in, you don’t pay any duty on it because it’s going into a foreign trade zone.
You now assemble all those things into an mobile, a tariff inversion occurs. It doesn’t come out as a tire, it doesn’t come out as glass, it doesn’t come out as an engine block, it comes out as a car, and the duty rate for the car is 2.5%. So that tariff inversion gives you this huge benefit, because custom says in a foreign trade zone, you could look at the duty rate against the raw material or component against the finished product and use wherever you get the better advantage.

Mark Taylor:

… which is a great incentive to provide jobs in the United States as well.

Tom Cook:

Correct. And it’s a great option for companies to bring back manufacturing. They don’t necessarily have to bring back pure manufacturing. They can bring back assembly, where they buy semi-finished products, materials and so forth, and then just do that final assembly. The cautionary tale would be you have to be careful about things that originate from China because Trump put forward that executive order, which made things from China because we all mentioned earlier, he went a war with China, so through executive orders, he made it very difficult for us to take advantage of the things that we could do out of China. So you have to be careful of what the products or materials to make sure that they fit.

Mark Taylor:

As assembly processes and warehousing processes are becoming more automated, do you see that threatening any of this stuff? Because let’s say, okay, assembly is coming back, but where it used to may have provided a thousand jobs, now it’s only providing 150.

Tom Cook:

So one of the challenges that we face in bringing manufacturing or even assembly back to the United States, whether it’s just to a regular manufacturing facility or in a foreign trades zone, whatever it is, is qualified skilled labor to fulfill the roles, which we had plenty of people in the ’60s and ’70s, but as jobs migrated to China and other places around the world, that was lost. So now you’re trying to recreate it. And a lot of companies today in the United States, particularly as a result of COVID, lost the ability to have the number of people that they need. They’re still… Even through COVID, there’s still a problem a lot of companies getting in the right number of people in all ranks of their business, but particularly in the skilled labor for manufacturing is difficult.
We have a case going on in Oklahoma City where we brought back a manufacturing into a foreign trade zone there. They lost 80 jobs when they moved everything to China. Now they’re bringing a hundred percent of it back. They need a hundred people there. They’re struggling to get the hundred people [inaudible 00:44:13] skill level. We created an incentive program for them to pay their college tuition’s off to attract them, and that is working, but it’s an incentive like that that’s caused it to work. But labor in the United States in that skilled category for manufacturing is a problem.
So we’ve now filter that into one of the criteria when we bring back company, depending upon where they’re located, what’s the accessibility of personnel. And it’s true, if you took it the Mason-Dixon line in the United States, which was created around the Civil War period where you had the north and the south, the availability of skilled labor is greater south of that line than it actually is north of that line today.

Mark Taylor:

Shocking. I mean-

Tom Cook:

But it’s true.

Mark Taylor:

Yeah.

Tom Cook:

Right. And obviously, we have this huge immigration problem going on and so forth like that, but the immigrants that come in have no problem filling those jobs. A lot of them do bring skills with them that could take that job, and a lot of companies have training programs to quickly move people into the areas of being able to do this work. So I happen to believe if they handled the immigration problem correctly, they could easily fill a lot of these positions successfully. But as we all know, the government’s falling over itself. It’s not doing a really good job, one of handling the immigration problem specifically. But recognizing that if we manage it correctly, we can fulfill another issue. We have a country which is skilled labor in these blue collar manufacturing positions.

Mark Taylor:

Right. Well, I’ve heard for years now that the trends being electricians, welders, skilled artisans, if you will, are in higher demand and can make better money than many of the educated jobs, if you will.

Tom Cook:

Absolutely.

Mark Taylor:

Yeah.

Tom Cook:

Great. I have a huge family complex, and a lot of my nephews and nieces and my grandnephews and grandnieces who are coming out of high school, I’m sitting back saying to them, “You got to rethink the whole direction of college now. And there are a lot of trades that do just as well, if not better. You don’t lose four years and you don’t have the cost of those four years.” So it’s starting to see lot in our own family and our community move in that direction, become an electrician, plumber, landscaper, all these different positions, lot of money to be made.

Mark Taylor:

It was a testament to, I guess, American ingenuity decades ago that our highway system has outlasted all the projections that it was supposed to last in the first place. And so, I mean, we’ve largely been able to put off all this infrastructure, rebuilding and repairing and things like that. And I think you’re starting to see more and more bridges, this one needs to be repaired, this one is in disrepair, that kind of thing. And so, those skilled [inaudible 00:47:27], those journeyman type jobs are becoming, I think, even more and more important. But that’s a great thing for us and for our middle class.

Tom Cook:

Absolutely. Right. Also, just a subject of infrastructure for anybody who’s involved in traveling through the United States listening to this, just go to LaGuardia Airport and see what was done through the infrastructure investment of the federal government to turn around what was really a crap-

Mark Taylor:

It’s a beautiful airport now.

Tom Cook:

… crap hole to be state-of-the-art. And I’ve been to airports all over the world, and it competes head on with any place I’ve ever been to in some of the finest airports anywhere in the United States, and certainly around the world now, where they’ve taken that infrastructure money and it really made a beautiful airport.

Mark Taylor:

Yeah. So switching gears a little bit, I own operate a third party logistics company, and third nearshoring, friendshoring is such a hot topic right now. I feel like every single day, if you look in the Wall Street Journal or wherever you can find an article. Recently, it was announced that Mexico is now the number one trading partner. They were number two. Now, China’s bumped down to number two by a pretty significant margin. What can your third party logistics companies, what can your warehousing businesses do? How do we get on board and help? Where are the places you’re seeing holes and what are the ways in which we can help?

Tom Cook:

Right. So in our business model, we principally have been involved for more than 20 years with principal importers and exporters, and generally, I would say mid-sized to larger companies for the most part. So in the last seven or eight years, we’ve now seen a huge increase with third party logistics providers, warehousemen, trucking companies, freight forwarders, customhouse brokers come to us and now represented as much as 25% of our business. And it’s a win-win situation for everybody involved, because the example would be that we have a company in Los Angeles that was a Warehouse, through COVID, like all warehouses, they did a lot of business and they had more people knocking on their door than they could handle. But quickly, that business has dissipated. I happened to see an article in the Wall Street Journal about two weeks ago saying that warehouse space at the end of 2022 was at 98% capacity in the United States, and now it’s below 70%. So it’s dropped off very quickly and it’s trending to be worse.
So we took a company in LA that was in this general warehouse bubble now on the decline, and in a six-week period, we turned it into a foreign trade zone. And our program, besides helping them get to becoming a foreign trade zone, we also help them develop the business development side, which is the marketing and the outreach that they can do to their business community to develop opportunities coming into their firm. So we succinctly ran both the implementation process and the marketing process. So they’re now at 95% capacity, and they’re selling foreign trade zone space to third party companies as instead of them having to invest that in their own warehousing distribution, they’re using the benefit of somebody who’s already got that status and they get the benefits of that. And they’re providing not only the space as an FTZ, but they’re providing the technology needs to help manage the customs requirements for reporting freight coming in and out of an FTZ.
So they have another revenue stream besides warehousing is the technology side of a more advanced WMS system that they have. So they’re now in a much positive situation from a revenue standpoint, and their service is more important to their customer than it was just as a general warehouser. And if they had a problem with their customer, which happens in business, you’re going to have problems, they’re more likely to work it out than leave because there aren’t other FTZs you’re just going to walk into because they’re few and far between. They represent less than 1% of the marketplace at this point in time.

Mark Taylor:

It’s almost… Are you aware of the company Cube Works?

Tom Cook:

Yes.

Mark Taylor:

Yeah. So they’ll buy a warehouse, they’ll segregate it into 5,000 to 50,000, whatever chunks, and then they charge, if their rental rates 75 cents, they’ll charge a $1.10 or I don’t know the exact numbers, I’m just pulling them out, but that’s the idea. So it sounds like this customer though, not only are they servicing their own clients, but they’re saying, “Okay, well, you don’t want to go through the process of doing this, just come into our system,” And it’s almost like turnkey space for them where they get to utilize the WMS, the benefits of the free trade zone. And so, it’s almost like… They’re basically just the operating company, but that other company, I’m assuming, is holding their own insurance and things like that.

Tom Cook:

Correct. Everything. And it’s a really complete solution for them. And it’s immediate. They don’t have to file any papers with customs. It’s just declaration made to custom that you’re activating a new participant in the foreign trade zone. So the administration responsibility is all delegated to the third party, which they either [inaudible 00:53:08] process of doing it or already have that expertise available to facilitate that. We supplement the area of expertise, and so they can do it independently on their own as part of our responsibility. But the key is the immediacy of it and the administration is handed off to a third party.
And at the end of the day, when you look at the financial models, the 3PLs can generally do it more efficiently than an independent company can. And also, appreciate that every company in warehousing has a seasonal demand. So they remove that seasonal demand issue to the third party, and they don’t have to worry about it. So they have 20 warehouse workers, but there are times a year they need 30. So they have to worry about where am I going to get this additional 10. That’s now the problem with the 3PL who resolves that problem or easily, they have a dozen clients that have that same issue. So they’re resolving the problem as a group. So it’s much easier to deal with than for an independent company. So that seasonal demand issue is better handled by 3PLs than it’s generally by the principal company. And that’s also dependent upon where you’re located because it depends on your access to temporary personnel.

Mark Taylor:

Of course. So this is an interesting hybrid 3PL model, but it’s also kind of a thing where, let’s say, I know that eventually I need 200,000 square feet in 18 months, but right now I’ve only got the business to cover a 100. You get the FTZ designation, then you sublease or you kind of portion off or partition off half your Warehouse, sell it to them, sell it to two or three people, and then one by one you take over that person’s space and then it’s like now you can go and expand again.

Tom Cook:

Sure. We have a large warehousing group that’s based in Denver, and I know they won’t have a problem in mentioning their name because it’s good publicity for them, but it’s called the Cinch Warehousing Group, C-I-N-C-H. And we’re in the process of turning all their locations. They’ve got maybe about eight of them around the West Coast and the Northwest. And so, in the marketing program, they’re sitting back saying to companies, “Hey, we already have an existing foreign trade zone set up.” And different from every other Warehouse operator, they’re sitting back saying, “Besides offering you space and giving you customer service and doing your fulfillment and your distribution services, we can help you lower your landed cost.” Now, think about who’s saying that in their marketing material, not too many warehouses or 3PLs can say that, but here they actually can and they can show financially how they’re able to do that to a company.
And so, that’s a big difference, and that’s why 3PLs more and more of them are coming to us, but it really should be something that every one of them consider doing. And we’re doing ones in locations that you never think of, like Billings, Montana. You would never think of that as an area of international business, but there actually is a fair amount of companies that have import and export activity in that part of the world, not say as dense as LA or Chicago or New York, but they have enough to warrant a FTZ being put in that part of the world.

Mark Taylor:

I think we were speaking in one of our earlier conversations and you said something like, part of your process is not just getting a warehouse registered as an FTZ saying, “Here are your processes, follow them, good luck.” You’re also helping them develop their market strategy by going to the local chapters of whatever trade organization or trade group and identifying people who are importing from different things and compiling lists of, “Hey, call these people and offer your services.” And in that Billings, Montana thing, I think you said, what was the number of companies that could benefit from working [inaudible 00:57:15] a free trade zone.

Tom Cook:

We identified close to a thousand companies within a 200-mile radius that have import and export activity in their profile. So appreciate the fact that we, Blue Tiger International are partners with the Department of Commerce, one of several… Just a few handful of companies that have that status. So we have access to a tremendous amount of trade data. Every time we import and every time we export, there’s data passed to the federal government, to the Census Bureau that’s distributed to other government agencies that tells us: where we’re buying something from, what are we buying, where’s it going to in the United States. And the same thing with the export: who are we selling to, how’s it getting there, all that data is being collected in this information flow. We have access to that data. So you just take radius and you identify the zip codes in that area, and we can collect that data.
And that data is not proprietary to ourselves or just government. There’s other resources that you could buy to get access to that information, but it identifies the companies that would be potentially there. So part of the issue is not just identifying the companies, but we actually do outreach initiatives of foreign trade zone training programs: why should you consider this? What are the benefits? Here’s how it works, here’s what the challenges are, how do you make sure that this makes sense for you? We go through this whole process of educating a community. When we eventually did Cinch as example, we did an event like that in Denver, which is where that started for them for that location first. And so, where you have something set up now for the fall to do it in Billings and Bozeman in Montana.
So it’s educating people because a lot of times people don’t even know these things exist or they have these perceptions that, “Oh, this would be very costly or it would be very difficult to get.” And at the end of the day, it really isn’t. It’s not very costly, and it’s not a rocket scientist thing. It’s very simple. If you follow certain procedures and steps, you could get there. And the government in some of the offices can be very helpful as well. I know most people don’t think the government can be that helpful, but in certain offices, the customs offices are very helpful. The International Trade Administration out of Washington and their designated economic development agencies, World Trade Centers and places like that can be very helpful for companies to facilitate. We work with all these groups to help do it. And we’re one of several companies that do this. We’re not the only ones and those other companies out there that are promoting this and pushing it along.

Mark Taylor:

So I mean, with that said, it sounds like the US government probably doesn’t care. I mean, in fact, the more free trade zones, probably the better, just because it means that commerce is alive and well. And it also means that the level that there’s… Means that everything is being dealt with to a certain standard and a very trackable standard, as I understand it.

Tom Cook:

If you take BMW’s facility in Greer, South Carolina, which was originally put together, I think in the early to mid 1990s, the largest exporting state was Washington state [inaudible 01:00:37] because Boeing was up there and appreciate how many aircraft they sell to foreign governments. Right?

Mark Taylor:

Right.

Tom Cook:

They sell 777 for whatever it is, a billion dollars, right? So it makes it a big state. Number 2, 3, 4 where states like Texas, Illinois, New York, California, today, South Carolina is a close number two to Washington State because BMW’s facility, first of all now is a 3 million square feet, contiguous foreign trade zone manufacturing location, employing over 10,000 people. It’s made South Carolina the biggest export state because more than half of their production is exported out of the United States now, which has made the ports of Charleston and Savannah huge exports because they’re moving those cars out of both of those ports out of that location.
So you can’t measure the success economically it is to the United States by having that BMW foreign trade zone, which is why Toyota has one and Honda has one and GM has one, Chrysler, they all are doing it because of the benefit. But BMW is a perfect example of the ingenuity created by the Germans and Americans to move this whole facility there. And if you go down there, I mean, it’s really changed the South Carolina’s whole profile, particularly in that whole area of Greenville and Greer and South Carolina. There’s actually an exit off of the highway that says you’re entering the BMW foreign trade zone. It’s an exit just for their foreign trade zone. Pretty impressive.

Mark Taylor:

It is. So if somebody, let’s say we go and we pursue, we get this notoriety or we get not notoriety, but acknowledged and we conform to being a free trade zone, we’re checking all the boxes. Is there an investment required to bring somebody on? Or do you just have to bring a new company that you haven’t worked with before? Or do you just have to literally file the sheet with the custom [inaudible 01:02:45]

Tom Cook:

Actually, there are three pillars of bonded container freight stations and foreign trade zones that you have to be concerned with. The first is security. The facility has to have [inaudible 01:03:03] access to the facility, meaning you have to have some means of security preventing somebody from driving up in a car and walking into the foreign trade zone without being challenged. So government tells you not what you have to do, but you just have to have some level of protection. So perimeter fencing, cameras, locked doors, employee wearing badges, front desk screening people, right? Those type of things fit into that. [inaudible 01:03:32] Tight security is HR, because the government’s going to screen the people who are working in the FTZ, you need to have a screening process proactively to make sure that you don’t have people with felony convictions working for you in the FTZ because the government’s not going to allow that.

Mark Taylor:

Okay.

Tom Cook:

So security is the first [inaudible 01:03:49]. The next is compliance. You’re going to be importing and exporting, you got to make sure that you’re doing that correctly. And conforming to US Customs and other government agency regulations. If you have food or pharmaceutical, you got FDA issues, USDA issues [inaudible 01:04:07] CDC issues. So compliance becomes… Are we conforming to the regulation? So we do a compliance audit as part of that process. And the last is product accountability. The product accountability is the more difficult part because the government expects that you have the ability to demonstrate to them as goods come out from overseas and go into the foreign trade zone as they go into work in process or just inventory. And as they come out, then you’re able to identify that process and where anything is at any point in time at the product code skew or lot number level, so down to that level, which means you have to have a technology solution, which is why I was mentioning earlier about having a robust WMS and additional fields and integration capability.
So that’s what we focus on in getting a company up and running is those three pillars. And that’s where I say to companies, I think if you have a really intelligent logistics or supply chain people, they potentially could figure this out on their own. But it’s better to really use a professional resource because you’re also creating a liability if you don’t do this right.

Mark Taylor:

Which is that defensive strategy we were talking about towards the end-

Tom Cook:

Correct. Correct. So we get them where they want to be before you go to the government and ask them for permission to get to this status. So the question comes into play: do they have to hire people and do they have to create a whole totally different structure? And the answer is, at the end of the day, no. Running a foreign trade zone bonded becomes no different than running a regular warehouse with the exception that you have other things you have to do. So it adds on to the role of an existing warehouse manager or some of their team. You generally don’t have to add additional personnel. You probably do have to make upgrades to security and some upgrades to your product accountability system, which is really just upgrading your technology at the end of the day and it’s integration capability. And at the end of the day, it runs like normal facilities and so forth.
And I also promote is that there’s an association in Washington, which is called the National Association of foreign trade zones, NAFTZ, which we recommend for all companies that get involved to join because that association creates a group of professionals who cooperate with each other, collaborate and become a resource to each other. And they have various events through the year where they do training and bring new laws. And they also have a lobbying group in Washington that helps guide the government to where they need to be in these regulations.
So as an example, one of the fallacies in the United States of the foreign trade zone system is it doesn’t help e-commerce situations to get the benefits of 286 clearances. 286 clearances is that when we travel overseas as an individual and we come back to the United States, as long as we have $800 or less in value, we don’t have to pay any duty on those goods. So the same thing is e-commerce. So if somebody from China or somebody from the UK sells something to the United States through e-commerce and it’s less than $800 in value, you don’t have to pay duty on it.
Well, foreign trade zone would be a great place where they could bring in a container load of goods and then send out all these small e-commerce orders. But under the Trump administration order assigned to prevent foreign trade zones being used to get that benefit. While a lot of companies have gone to Mexico and Canada so they bring the containers in there, break them down, and their warehouses and distribution system gets the benefit of those 286 clearances. Because when the goods leave there, they’re coming into the United States, it’s something $800 in value. So no duty has to be paid.
So there’s a strong lobby of this National Association of foreign trade zone, the NCBFA, which is the National Customs Brokers, Freight Forwarders Association, lobbying Congress to change the rules so that you could get the benefit of bringing in a full container load of product, breaking it down in a foreign trade zone, and then shipping out these smaller orders less than $800, and getting the benefit of that not having to pay the taxes. It’s called 286 regulation. So I happen to be an advocate of that they should make that change because Toronto and Tijuana is getting a lot of business that we could bring back here to the United States.

Mark Taylor:

Of course. Of course.

Tom Cook:

So that’s one of another reason that association is something people should think about. It could be a 3PL or you could be a principal importer or exporter.

Mark Taylor:

And what was that organization, one more time?

Tom Cook:

NAFTZ, the National Association of foreign trade zone. So naftz.com is their email thing. And again, you can come to bluetigerintl.com [inaudible 01:09:11] and we can point you in these directions.

Mark Taylor:

Right. One thing, and I mean, I want to be sensitive of time, I know you’ve got to get out of here pretty quick, but could you just quickly explain the function of… like a maquiladora? What exactly is it? Because it’s like we hear it a lot, but how does a maquiladora work?

Tom Cook:

In the Clinton administration, which is where this thing really advanced itself was… It was a solution to the immigration problem, right? So why are all these Mexicans coming into the United States because they couldn’t find good paying jobs in Mexico. So how do we create good paying jobs in Mexico? Well, if we build the manufacturing capability in Mexico, this would be great. So the idea was, well, how do you give incentives for Mexico to have manufacturing program? Well, let’s set up these maquiladora. The maquiladora says if a US company or a foreign company or a Mexican company sets up maquiladora, and it’s just like setting up a foreign trade zone in the United States, you got to go to the Mexican government and get various levels of authority to do it. It says if you import raw materials and components to manufacture where the goods are going to end up in the United States or Canada, we’ll let you bring it into that facility without paying any duty to the Mexican government.
You can use Mexican labor now in that manufacturing location to manufacture or assemble or do whatever you want to do. There’s great tax incentives through the Mexican government to do that. And now when you bring that into the United States or Canada, there’s no tax of duty under the USMCA, previously called NAFTA agreement. So it’s a way of moving manufacturing to Mexico and basically eliminating the duties and taxes in that process and bringing manufacturer closer to the United States at a lower cost. And that’s what the maquiladora most simplified. Obviously, it has layers of complication, but that’s it. Which is why we employ a engineer down there to help us facilitate that, go through the local process, because the business models are a little different in Mexico than they are here in the United States. And the government application process is a little bit different there than it is here in the United States.

Mark Taylor:

Well, look, I can’t thank you enough for being here. We should do this again because I still want to ask about risks in Mexico, like dealing with the cartels. What about Canada? I mean, there’s just so many more topics. We didn’t even scratch the surface on other countries like Israel and Taiwan, [inaudible 01:11:50] but so we’ll have to do this again. But yeah, thank you very much for being here.

Tom Cook:

You’re welcome. I appreciate the opportunity, and your listeners are always welcome If they hear something and wanted to expand it to come into our website, my particular email address is [email protected]. Anybody’s welcome. There’s no cost or obligations. We have a huge concept of advocacy. It works to everybody’s best interest. So we’re part of all that.

Mark Taylor:

All right. Well, thank you. And thank you for everybody who’s listening.