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Black & Decker is a global manufacturer and marketer of power tools and accessories, plumbing fixtures and locksets, and automated fastening systems. It sources materials and manufactures in many countries, and it sells its products in more than 100 nations. In all, Black & Decker's import and export activity includes tens of thousands of parts that span many classifications within the Harmonized Tariff System database. Its global trade compliance department is responsible for meeting all of the import and export requirements around the world, and is also responsible for maximizing the benefits of free trade agreements in regions where it can take care of preferential programs.
Black & Decker's Power Tool and Accessories Division has long understood that participation in preferential trade programs could generate significant duty savings if done properly and with the necessary audit trails, but it also understood that a number of issues stood in the way of taking full advantage of the growing number and importance of free trade agreements. For example:
• Global trade management and the management of free trade agreements is a niche market that requires experts with deep knowledge that must constantly be kept up to date. Did the company have the in-house experience required to manage and administer such programs effectively?
• The company's global trade department was already stretched to handle the complexity and detail associated with participation in numerous free trade programs. Should the company invest in the infrastructure and support needed to leverage these programs?
Six years ago, Black & Decker had to make a decision: either invest internally or outsource some or all of its trade compliance and NAFTA qualification work to a provider. In deciding, Black & Decker looked at the complexity and compliance issues associated with growing import activity and leveraging free-trade agreements. It then looked at the investment needed to build the internal expertise, resources or technology to do the job efficiently and cost-effectively.
For Black & Decker's Power Tools and Accessories Division, the decision was to outsource the majority of the management of its U.S. import compliance operations to JPMorgan Global Trade Services. It also decided to outsource its NAFTA trade agreement management for North American produced and sourced products.
"Our company is taking full advantage of NAFTA with the help of JPMorgan Trade Services," says Gail Morin, director of global trade compliance for Black & Decker, in Towson, Md. "By hiring JPMorgan, we are able to leverage a knowledge base and technological infrastructure that already exists. The trade experts and technology from JPMorgan are being leveraged to minimize duty payments, get goods across the border more efficiently, and provide a comprehensive audit trail for customs."
Among the services provided to Black & Decker by JPMorgan Trade Services are:
1. Harmonized Tariff Schedule classification
2. Duty management through special trade programs like NAFTA and GSP
3. Performance of compliance audits
4. Post-entry management.
Outsourcing these functions has provided many benefits to Black & Decker, including an enhanced ability for the trade compliance team to take on a more global trade perspective.
"By outsourcing a portion of our U.S. global trade management activities to JPMorgan, we have shortened our import cycle times by reducing import clearance related delays, improved broker management through consistency of classifications and implementation of a rigorous audit process, improved our NAFTA qualification process and significantly reduced our import duties," says Morin. "Thousands of our parts and products are qualified annually for NAFTA. In 2003, Black & Decker recorded approximately $3m in NAFTA savings."
According to Morin, savings for Black & Decker are estimated at close to $7m for 2007, an increase of 240 percent over four years. Through its automated qualification process, JPMorgan Global Trade Services has identified savings that Morin says her company would never have been able to pursue on its own. Additionally, JPMorgan has improved the company's U.S. trade compliance and its ability to provide its customer base with NAFTA information as needed and quickly.
"The end result is the qualification of far more products for NAFTA. We now capture 95 percent of eligible preference savings associated with cross-border shipments. This is savings that Black & Decker would not have otherwise realized due to the required investment in time, people and technology."
Today, Black & Decker is one major global importer and exporter that is taking full advantage of duty savings associated with new preferential free-trade programs such as NAFTA. Just as important, the tool company has not had to add significant staff or resources to meet the growing challenge of dealing with the customs and trade compliance issues surrounding its ever-expanding import and export activity or its participation in free-trade agreements.
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