[Senate Hearing 112-312]
[From the U.S. Government Publishing Office]
S. Hrg. 112-312
MAKING IT IN AMERICA: INNOVATE LOCALLY, EXPORT GLOBALLY
=======================================================================
FIELD HEARING
before the
COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
JUNE 27, 2011
__________
Printed for the use of the Committee on Commerce, Science, and
Transportation
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SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
JOHN D. ROCKEFELLER IV, West Virginia, Chairman
DANIEL K. INOUYE, Hawaii KAY BAILEY HUTCHISON, Texas,
JOHN F. KERRY, Massachusetts Ranking
BARBARA BOXER, California OLYMPIA J. SNOWE, Maine
BILL NELSON, Florida JIM DeMINT, South Carolina
MARIA CANTWELL, Washington JOHN THUNE, South Dakota
FRANK R. LAUTENBERG, New Jersey ROGER F. WICKER, Mississippi
MARK PRYOR, Arkansas JOHNNY ISAKSON, Georgia
CLAIRE McCASKILL, Missouri ROY BLUNT, Missouri
AMY KLOBUCHAR, Minnesota JOHN BOOZMAN, Arkansas
TOM UDALL, New Mexico PATRICK J. TOOMEY, Pennsylvania
MARK WARNER, Virginia MARCO RUBIO, Florida
MARK BEGICH, Alaska KELLY AYOTTE, New Hampshire
DEAN HELLER, Nevada
Ellen L. Doneski, Staff Director
James Reid, Deputy Staff Director
Bruce H. Andrews, General Counsel
Brian M. Hendricks, Republican Staff Director and General Counsel
Todd Bertoson, Republican Deputy Staff Director
Rebecca Seidel, Republican Chief Counsel
C O N T E N T S
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Page
Hearing held on June 27, 2011.................................... 1
Statement of Senator Rockefeller................................. 1
Witnesses
Hon. Suresh Kumar, Assistant Secretary for Trade Promotion and
Director General, U.S. and Foreign Commercial Service, U.S.
Department of Commerce......................................... 5
Prepared statement........................................... 6
Judy McCauley, District Director, Small Business Administration.. 9
Prepared statement........................................... 11
Mark R. Julian, Director, Business and Industrial Development,
West Virginia Development Office............................... 13
Prepared statement........................................... 15
Randall T. Moore, Sub-District Director, United Steel, Paper and
Forestry, Rubber, Manufacturing, Energy, Allied Industrial and
Service Workers International Union (USW), AFL-CIO............. 20
Prepared statement........................................... 23
Don Gallion, Founder, former President, CEO, and Chairman, FCX
Systems........................................................ 26
Prepared statement........................................... 28
MAKING IT IN AMERICA: INNOVATE LOCALLY, EXPORT GLOBALLY
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MONDAY, JUNE 27, 2011
U.S. Senate,
Committee on Commerce, Science, and Transportation,
Charleston, WV.
The Committee met, pursuant to notice, at 10:06 a.m., in
the Ceremonial Courtroom, Seventh Floor, Robert C. Byrd U.S.
Courthouse and Federal Building, 300 Virginia Street East,
Charleston, West Virginia, Hon. John D. Rockefeller IV,
Chairman of the Committee, presiding.
OPENING STATEMENT OF HON. JOHN D. ROCKEFELLER IV,
U.S. SENATOR FROM WEST VIRGINIA
The Chairman. Good morning, everyone.
[Audience response.]
The Chairman. I have never been a judge before. I kind of
like it.
[Laughter.]
Female Voice. We are not guilty.
The Chairman. You know, I spent some time last night going
over all of the names of the people who are here as witnesses,
not just the formal witnesses, but all of you, and it is a
very, very distinguished list. If you could see it--well, you
can see each other. I mean, there are people who are absolutely
at the top of their professions, and I am very happy about that
and very pleased about that.
So the Senate hearing is called to order. I will make a
statement. And then we will go on to our panelists, and we will
have a discussion. And this will be very good.
This is the first time I have held a full committee
meeting, since I have been Chairman, outside of Washington.
First time, obviously, I have had one in West Virginia. That is
very important to me because this subject is massively
important to all of us.
I would like to thank everybody, as I indicated, for
joining us this morning. It is some time out of your day. I
hope it will be worthwhile. It certainly is for those of us who
work on the Commerce Committee.
West Virginians have delivered a constant message to me
everywhere I go, and that has been true for years, has it not?
What we need in this state is more jobs. And that is what it
is, is more jobs, more jobs, more jobs.
People campaign on that. People talk about it. And the
question is, are we doing all that we need to be doing about
that? And I think the answer to that question is no, which is
why we are having this hearing.
It is everybody's top priority. From Whitesville to
Weirton, from Barboursville to Berkeley Springs, that is what
people talk about, and that is understandable.
But you know, we have lost about a third of our
manufacturing jobs in the last number of years. Our exports
have picked up by 50 percent, which is very interesting. Don
Gallion will know about that. Our exports have really picked
up.
Coal is sometimes considered a part of exports, but
actually, it is not exactly. It is not a manufactured good. It
is a resource. It has gone up 200 percent in terms of exports.
So, evidently, the export market is wide open, and are we
taking advantage of it? I think that we are probably not.
I have talked with traditional manufacturers and high-tech
companies, as well as workers at all stages of production. This
economy that we are going through now obviously has hurt West
Virginia, and it has hurt everybody else. Does that mean that
we wait until it gets better before we start talking about
this? No. This is exactly the right time to be talking about
it.
In fact, one of the interesting things is that this
economy, which has sort of made people slimmer, so to speak,
has caused companies to slim down and become more efficient.
Now that is good. That is a good practice. The economy itself
is a bad practice. But that will get better when it gets
better, and there is nothing we can do about that here this
morning.
My general feeling is that we have to do whatever we can to
create more jobs for people in this state. And I don't say just
particularly for people from the middle class, but I do mean
particularly for people from the middle class. Because people
that have more education and more resources are probably more
likely to be able to find jobs.
West Virginia companies can grow if we increase our
customer base. Well, that is an obvious statement. If we export
our goods to more countries and find more customers abroad, our
companies will grow and more workers will be hired. That is
self-evident.
Let me be clear. West Virginia companies have done an
impressive job in promoting their products abroad and exporting
them abroad. They have done a very impressive job. But the
point is there is always room for growth. There is always room
for improvement. Not all of our companies are doing that.
Some of them are doing that. A lot of our large companies
do that automatically. A lot of our smaller companies are doing
it just by dint of hard work and discovering that the world is
a big oyster out there, and we can make money from it.
And Don Gallion is going to be talking to us about that, I
hope, Don. And you are also chairman of the Export Council.
Mr. Gallion. Yes, sir.
The Chairman. So we have great companies with the best and
most productive workers in our country. We always say that, and
I always believe that. And we build products that consumers
across the world want to buy. Therefore, what is our problem?
The problem is to get those products to people who want to buy
them, to make them aware of it and then have them buy them.
We just need to connect the right companies with the right
buyers. And that can often be complicated, and it is a hard
thing to do. This area is an area in which the Federal
Government can be helpful. I repeat, the Federal Government can
be helpful.
[Laughter.]
The Chairman. And it really can. And that is one of the
mindsets that we have to overcome that we will do it ourselves,
and the Federal Government, all they do is get in the way.
Well, maybe that is true sometimes, but it is not true in
this case. It is not true in this case. There are a lot of
people who work for the Department of Commerce and other
agencies who care tremendously about making themselves
available to you. Any manufacturers who want to export or to
grow or simply want to do better within this country, they are
available.
We have actually, I think, people in, what is it, 170
different embassies? Something like that. An enormous amount,
their job all over the world is simply to help expedite people
who want to promote exporting. So, actually, that is 75
embassies around the world.
The Federal Government does have expertise. They do have
knowledge about consumers worldwide. Why wouldn't they? They
are out there. We are not, as much. And they have a strong
record of connecting American manufacturers with foreign
buyers. That is a good thing.
There is a newly announced program in the Commerce
Committee called CommerceConnect, and there are lots of nice
names around these days. But this is a program that really does
work, and I am sure that our Honorable Assistant Secretary is
going to be talking that. The Department of Commerce is
establishing ``One Stop Shop, and it really is designed to
assist manufacturers who are looking to grow.
Additionally, the government has an important role to play
to protect companies from unfair trade practices--another big
subject, unfair trade practices--and to enforce trade laws. We
have several treaties that are coming up with South Korea and
Panama and Colombia.
And these things have to be considered very carefully.
Ordinarily, people are not for those things in West Virginia
because they somehow think they will take away jobs. Well, let
us discuss whether or not they do take away jobs or, in fact,
whether they open up new jobs. Because if you have a trade
agreement with another country, nobody is as open and honest
and plays by the rules as much as the United States does. We
understand that.
But there is a lot of buying power out there. I mean,
Russia is a really hot territory these days. We don't think of
that. China always has been. South Korea has been. There is a
lot of it going on around the world, and we are not taking
advantage of it.
So selling products abroad should never mean giving up
trade secrets, the whole question of patents--large subject,
which we can discuss--or allowing other countries to unfairly
dump their products in the United States. I have spent more
personal time in front of the International Trade Commission
than I have in front of any other government agency.
Every time I walk in, they get glum because they know they
are going to get another speech on American steel or somewhere
else where we are being treated badly by other countries, and
what are they going to do about it? Well, there are things they
can do about it. We have agency representatives here that can
discuss the ins and outs of exporting and the government's
trade enforcement role.
So I called this hearing to highlight opportunities for
expansion and job creation here in West Virginia. That is my
whole purpose. It is my whole purpose.
I am Chairman of the Commerce Committee, and I have been
focusing on increasing jobs. And that is my focus for the next
number of years, however long I should be there. And I want
that to be the focus because it is the most important thing we
can do, and we are ideally situated to do it because we have
oversight of the Commerce Department and others, and it is a
very powerful committee with a wide range of skill sets
underneath it.
We have to revitalize the American manufacturing sector. I
am looking into everything from tax proposals to reforming the
Department of Commerce itself. But most importantly, I am eager
to know of any new ideas from West Virginians, manufacturers or
otherwise.
And what I am telling you now is that I will keep the
record open on this hearing so that you have a chance, as ideas
occur to you--hopefully, in the next several days--to send
those directly to my Committee, and we will make that available
to you. So that they will then become a part of this official
hearing record.
So, off we go. The West Virginia manufacturing community,
it is powerful. It is good. It is diminished. Severely
diminished, best-paying jobs in the state. What are we going to
do about it? Do we accept that as our fate, or do we decide
that we have to work together doubly hard to change it?
I am for the latter, and I am for momentum. I believe in
momentum, and I believe in optimism.
So, having said that, I will now turn immediately--
instantly, I want to say that Maryam Khan, who is Senator Kay
Bailey Hutchison's representative, is here. Where is Maryam?
There. OK. Thank you.
And Jack Smedile, who works with Senator Blunt, is here. He
is from Missouri, and I am very happy that they are here. So
they are actually Senators. They are just seated over there,
but they are actually Senators.
So I want to introduce our panel, and then I will do that
one by one, and then they will give their testimony, and then
we will go into questions and have ourselves a good discussion.
Mr. Suresh Kumar is Assistant Secretary of Commerce and
head of the U.S. and Foreign Commercial Service. Susan Schwab
used to be head of that, wasn't she, under George Bush?
Mr. Kumar. Thank you.
The Chairman. And she was a very good friend.
It is a very powerful position. Have you heard of that
position? Maybe not. Have you heard of the U.S. and Foreign
Commercial Service? Probably not. Is it a potentially huge
factor in your lives? You bet it is.
So, Mr. Kumar, I would like to introduce you and have you
give your testimony.
STATEMENT OF HON. SURESH KUMAR, ASSISTANT
SECRETARY FOR TRADE PROMOTION AND DIRECTOR
GENERAL, U.S. AND FOREIGN COMMERCIAL SERVICE,
U.S. DEPARTMENT OF COMMERCE
Mr. Kumar. Thank you, Senator Rockefeller, for those kind
words and the opportunity to testify here today, to appear to
discuss manufacturing and export promotion.
I am particularly delighted to be here in West Virginia. It
is an exceptionally pretty place, and the great state of West
Virginia is perhaps the right place to have this field hearing.
The United States is the world's largest and most
productive manufacturer, but competitors abroad are
increasingly producing quality goods at less cost. Our
companies and workers must have access to programs that will
help us out-innovate the competition to win the future.
We must install programs that help American workers
constructively engage in international markets. Companies win
by exporting higher-value manufactured goods that the world's
consumers need and by leading the development of new
industries. Workers win because export-driven jobs pay 18
percent more than the average U.S. manufacturing job.
The National Export Initiative is one of the economic
strategies to win the future. The NEI, as we call it, is off to
a good start. Exports last year comprised 12.5 percent of our
GDP, up from 11.2 percent recorded in 2009.
In West Virginia, exports of merchandise grew 34 percent in
2010, and that is double the national growth rate of 17
percent. Thus far for 2011, we remain on track to achieve the
NEI goals.
The National Export Initiative creates deep market linkages
and connects innovation to the marketplace. The U.S. and
Foreign Commercial Service has a network of 1,452 trade
specialists, and it provides comprehensive business counseling
and support. We call it the ``soup to nuts'' service, and our
programs are available across 109 offices in the United States
and across 129 offices in 79 embassies.
Our trade specialists Leslie Drake and Diego Gattesco at
our USEACs in Charleston and Wheeling work with West Virginia
exporters every day to identify opportunities and help them
export to new markets.
I am pleased to announce today that the Department of
Commerce will roll out its CommerceConnect initiative to
Charleston next month. Through counseling, by working directly
with West Virginia businesses, and through our collaboration
and leveraging of services with local and state governments and
of the Appalachian Regional Council, our West Virginia offices
recorded 53 export successes, totaling over $11 million last
year.
Some examples of such partnerships are FCX, who you will
hear from later today, and another is Kanawha Scales and
Systems in Poca, a world leader in batch loading systems for
the mining industry. The U.S. Commercial Service worked with
Kanawha and helped facilitate a representative agreement with
an Indian coal mining company that led to a $3.5 million order
with a large steel and coal company there. Two new full-time
jobs were created within the company to support their growing
exports to India.
I would like to acknowledge your leadership, Senator
Rockefeller, in passing the Small Business Jobs Act bill, which
was signed into law. Your work passing this bill has provided
rural America's manufacturing base a powerful tool to compete
in global markets.
The administration recognizes that increasing global trade
provides opportunities for growing America's small and medium
enterprises. That is why the trade agreements with Korea,
Colombia, and Panama are a priority for the Obama
administration. More than $10 billion in increased exports of
goods alone, supporting more than 70,000 American jobs, are at
stake.
In West Virginia, manufacturing companies will see
increased competitiveness and growth in exports as a direct
result of these trade agreements. In 2010, West Virginia
chemical exports to Korea, Colombia, and Panama totaled $73
million, and primary metals manufacturers made up another $22
million in exports.
The passage of these trade agreements will significantly
reduce tariffs, which, in some cases, will be completely
eliminated within 10 years. This will spur growth and improve
West Virginia's chemical and primary metal manufacturers'
competitiveness in the global marketplace.
While the FTAs will allow us to win the future and add
jobs, we also have our obligation to retrain and reposition
American workers. Knowing that trade positions American
products in the competitive global marketplace also means
adjustments for the American worker.
The administration is committed to a strong and robust
renewal of Trade Adjustment Assistance, or TAA, and supports
workers who need training and other services when their jobs
are adversely affected by trade.
The administration's renewed focus on trade through the
National Export Initiative has resulted in exports increasing
17 percent last year to $1.84 trillion, the second highest ever
in our nation's history. Last year, we assisted 18,000
companies to export, of which 16,000 were small and medium
enterprises.
As a result, nearly 5,600 companies exported for the first
time or increased their exports overseas. Eighty-five percent
of these were small and medium enterprises. We posted 12,300
export successes, and I am absolutely delighted to report that
for every $1 invested in the U.S. and Foreign Commercial
Service, $135 by way of facilitated exports was returned to the
American taxpayer.
Thank you again for the opportunity to appear before you
today. I look forward to answering your questions.
[The prepared statement of Mr. Kumar follows:]
Prepared Statement of Hon. Suresh Kumar, Assistant Secretary for Trade
Promotion and Director General, U.S. and Foreign Commercial Service,
U.S. Department of Commerce
Chairman Rockefeller, thank you for the opportunity to appear today
to discuss manufacturing and export promotion. I am delighted to be in
West Virginia.
America's long-term goal to out-educate the competition and spark a
new wave of American innovation will create jobs for the next
generation and guarantee that America can win the future. This not only
helps create greater sustainable employment but also helps us become
more competitive around the world.
Of those companies that export, 58 percent export to only one
country. With 95 percent of consumers living outside our borders, we
must help companies expand their global footprint to reach more
customers worldwide. In 2010, West Virginia companies exported to a
total of 132 countries. Recent statistics show exports of manufactured
goods support an estimated 18,000 jobs in West Virginia and over 17
percent of all manufacturing workers here depend on exports for these
jobs. Of the companies exporting goods from West Virginia, Small and
Medium sized companies generate more than one-quarter (27 percent) of
the total exports. There is a world of opportunity for West Virginia
manufacturers and businesses particularly for export growth in areas
like chemical manufacturing, primary metals manufacturing and the
machinery sectors.
As Secretary Locke stated in his March 2 testimony before this
committee, the Obama administration believes that manufacturing is
essential to America's economic competitiveness. Manufacturing is a
vital source of good middle-class jobs. The manufacturing sector makes
up 11.7 percent of the overall U.S. GDP. In 2010, more than one in ten
private sector jobs were in the manufacturing sector with11.5 million
Americans employed directly in manufacturing. And it is a key driver of
innovation, with 70 percent of all private sector R&D spending done by
manufacturing companies.
The United States is the world's largest and most productive
manufacturer but competitors abroad are increasingly producing quality
goods at less cost. Our companies and workers must have access to
programs that will help us out-innovate the competition to ``win the
future.'' We must install programs that help American workers
constructively engage in global markets. Companies win by exporting
higher value manufactured goods that the world's consumers demand and
by leading the development of new industries. Workers win because U.S.
manufacturing jobs supported by exports pay 18 percent more on average.
Clearly we can, and must, do more to ensure that U.S. businesses
capture the full potential of economic opportunities that exist
internationally.
The National Export Initiative (NEI) is at the forefront of the
Obama Administration's short and long term economic strategy for
winning the future. The President's goal of doubling U.S. exports in
five years serves as a catalyst to enhance our competitiveness, create
sustainable jobs and build a stronger America. What sets the NEI apart
is that it is the first time the United States has a Presidential-led,
government-wide export promotion strategy.
The Appalachian Region is an example of hardworking Americans who
have the skills and dedication to produce the best products in the
world--America's exporting future starts here.
The NEI is off to a good start. Exports comprised 12.5 percent of
U.S. GDP in 2010, up from the 11.2 percent recorded in
2009. Exports contributed nearly half of the 2.9 percentage point
growth in real GDP in 2010. The $1.84 trillion in exports of U.S. goods
and services represents the second-highest annual total on record, with
exports growing 17 percent since 2009. In West Virginia, exports of
merchandise grew 34 percent in 2010 much faster than the national
average growth rate. Thus far for 2011, we remain on pace to achieve
the NEI goal. In April 2011, U.S. exports of goods and services
increased to a record high of $175.6 billion, with record exports of
goods at $126.4 billion and services at $49.1 billion. The monthly
export values for U.S. industrial supplies ($43.4 billion) and capital
goods ($41.0 billion) were also the highest on record. Overall for
2011, exports are up 16.7 percent, which is higher than the 14.8
percent Compound Annual Growth Rate (CAGR) needed to double exports by
2015.
The NEI requires us to create deep market linkages and connect
innovation to the marketplace. The United States and Foreign Commercial
Services' (US&FCS) global network of trade specialists allows us to
provide comprehensive service and programs to assist U.S. businesses.
Approximately 1450 trade specialists across our 108 domestic U.S.
Export Assistance Centers (USEACs) and 126 offices in our embassies and
consulates across 79 countries provide soup to nuts programs that
include:
-- Market research
-- Market entry plan development
-- Information and help on securing access to finance and working
capital
-- Assistance on navigating foreign customs and regulations
-- Classic matchmaking; vetting potential distributors and joint
venture partners
-- Advocacy to ensure our businesses have a level playing field in
public procurement projects
-- Commercial diplomacy that provides solutions to programs such as
nontariff barriers
Our trade specialists, Leslie Drake and Diego Gattesco at our
USEACs in Charleston and Wheeling work with West Virginia exporters
every day to identify and help them export to new markets. They make
West Virginia businesses aware of opportunities and the various
programs that the International Trade Administration (ITA) and USFCS
has to offer such as:
-- Trade missions to different markets
-- International Buyer Programs at various trade shows and
-- Regional trade fairs
Our USEACs work closely with state and local economic development
partners as well as the Appalachian Regional Commission (ARC). ARC's
support of small and medium-sized exporters in the region has allowed
these firms to reach more world-wide markets in recent years. Through
the guidance of the Export Trade Advisory Council (ETAC), ARC provides
annual support to international delegations of Appalachian businesses.
Through ETAC's ongoing ``Appalachia USA'' program, ARC will provide
support this year for a delegation of wood product firms participating
in a U.S. certified trade show in Shanghai. 2011 was the fourth
consecutive year that ARC served as a major partner in supporting Trade
Winds, which has helped send 23 West Virginian companies to Brazil,
Mexico City, Poland, and Turkey.
Through counseling and directly working with West Virginia
businesses and through our collaboration and leveraging services of
local, state and of the ARC, our West Virginia offices recorded 53
export successes totaling over $11 million.
In meeting these needs, however, U.S. companies face challenges to
exporting, but they don't have to go it alone. American enterprise,
particularly small and medium-sized businesses have the full support of
the U.S. government in connecting potential exporters to global
partners and markets.
Kanawha (Ka-NAH) Scales and Systems, in Poca, is a world-leader in
Batch Loading systems for the mining industry. The U.S. Commercial
Service worked with Kanawha and helped facilitate a representative
agreement with an Indian coal mining company that eventually led to
$3.5 million order with a large steel and coal company. Two new full-
time jobs were created within the company to support their growing
exports to India.
The Charleston and Wheeling U.S. Export Assistance Centers
regularly assist West Virginia companies in expanding their reach into
the global market place.
We are committed to continued collaboration with rural
manufacturers and to working with the companies like Kanawha Scales.
Along with our International Trade Administration sister units, Market
Access and Compliance, Manufacturing and Services, and Import
Administration, we are working to further open markets through the
pending Trade Agreements, provide sector and market intelligence that
will help U.S. businesses to compete more effectively and to ensure we
are not subject of unfair competition. At the end of last year, Import
Administration had approximately 300 Antidumping Duty and
Countervailing Duty orders in place, covering over 120 products from 40
countries.
In addition to President Obama's leadership on the NEI, I would
like to acknowledge your leadership, Senator Rockefeller, in passing
the Small Business Jobs Act which was signed into law. This bill
significantly expanded financing capacity and long-term support for
SMEs looking to export, which coincides with one of the
Administration's NEI goals. This law created a new $60 million grant
program to help states expand their trade and export promotion efforts.
The State Trade and Export Promotion (STEP) pilot initiative was
announced in March 2011 and awards for the first year of the grant
initiative are anticipated this summer. Your work passing this bill has
provided rural America's manufacturing base a powerful tool to compete
in the global market place.
In addition to STEP grants, the Small Business Administration also
offers loan programs specifically designed to assist rural America's
businesses. In particular the Rural Lender Advantage initiative and the
Export Express Loan Program provide local banks with the ability to
assist small businesses throughout America's heartland. The benefits of
these programs including simple application processes, expedited
processing, and loan guarantees of up to $500,000 allowing small
businesses the opportunity to expand their workforces throughout rural
communities.
The Administration recognizes that increasing global trade provides
opportunities for growing America's SMEs. The Administration is working
with our trading partners to provide access to new markets: those who
seek access to U.S. markets must also remove barriers to trade and open
their markets to U.S. products. This is why the trade agreements with
Korea, Colombia and Panama are a priority for the Obama Administration.
More than $10 billion in increased exports of goods alone, supporting
more than 70,000 American jobs are at stake.
In West Virginia, manufacturing companies will see increased
competitiveness and growth in exports as a direct result of the trade
agreements. In 2010, West Virginia chemical exports to Korea, Colombia
and Panama totaled $73 million and primary metals manufacturers totaled
$22 million. The passage of the trade agreements will significantly
reduce tariffs on U.S. Exports which in most cases will be eliminated
within 10 years. This will spur growth and significantly improve West
Virginia's competitiveness in the global marketplace.
While the trade agreements will allow us to win the future and add
jobs, we also have our obligation to retrain and reposition American
workers. Knowing that trade positions American products in the
competitive global market place also means adjustments for the American
worker. The Administration is committed to a strong and robust renewal
of Trade Adjustment Assistance (TAA) that supports workers who need
training and other services when their jobs are adversely affected by
trade. TAA is a key component of our comprehensive legislative agenda
for trade policy. Preparing American workers for the transition into a
new era of global trade policy is essential to maintaining America's
economic dominance.
This Administration's renewed focus on trade through the NEI has
resulted in exports increasing 17 percent last year to $1.84 trillion--
the second highest in our Nation's history. Last year, the
International Trade Administration's U.S. Commercial Service assisted
18,000 companies to export, of which 16,000 were SMEs. As a result
nearly 5,600 companies exported for the first time or increased their
exports overseas, 85 percent of which were SMEs.
I look forward to our working with the manufacturers like those
found in West Virginia to help create a vibrant, robust, and resilient
American economy; an economy which produces well paying jobs at home,
increases our competitiveness globally and helps America lead the way
in creating global prosperity.
Thank you again for the opportunity to appear before you today. I
look forward to answering your questions.
The Chairman. Thank you, sir, very much.
Next will be Ms. Judy McCauley, who is the West Virginia
District Director of the Small Business Administration.
Actually, Judy McCauley was at one of my roundtables this year.
This was called ``Teaming To Win,'' and she is very, very good,
and I am very happy that you are here.
Please give your testimony.
STATEMENT OF JUDY McCAULEY, DISTRICT DIRECTOR, SMALL BUSINESS
ADMINISTRATION
Ms. McCauley. Thank you, Senator Rockefeller. And thank you
for the opportunity to join you today.
The Chairman. Pull that mike right up close. Please.
Ms. McCauley. I have served as the District Director for
the Small Business Administration since 2004. As a native of
West Virginia, I will tell you this is an honor and a
privilege.
I consider myself lucky. I found a great job in West
Virginia, a job where I could make a difference. Now, my job
includes making sure the next generation, like my daughter, has
the same opportunity.
In order to allow us to get down to the technical
questions, I have brought a couple of specialists with us.
First, I would like to introduce Patrick Hayes. Patrick is our
regional manager for the U.S. Export Assistance Center. Patrick
will be visiting our banks today and tomorrow to explain the
advantages of using our export working capital loans and our
international trade loans, thus giving the banks a 90 percent
guarantee.
Also with us today is Emma Wilson. Emma is our Branch
Manager here in Charleston, and she is our Senior Lending
Specialist.
My background is not in lending. I come from the federal
contracting arena, where I served as a contracting officer and
a small business specialist. I have always said, yes, we can
help you get a loan, but you have to get the work, and you have
to pay that back. But if we can help you get a federal
contract, then you have the work, and you will inevitably
create jobs.
Exporting works a lot the same way. Last week at our West
Virginia Export Council meeting, I met the fourth-generation
owner of Wheeling Truck Center in Wheeling, West Virginia. He
was telling us about his company and his success with
exporting.
I asked him how he got involved in exporting. He told me he
started an online business to get rid of the old truck parts
that had been lying around collecting dust. That put him in the
international trade world. In less than 18 months, he was
exporting to over 50 countries, and he had to hire two
additional people.
Yes, exporting creates jobs. And for Wheeling Truck Center,
it began simply by creating a website. The demand was already
there. Wheeling Truck Center just needed a tool to get those
products to the buyer.
Our job is to educate the small businesses on ways to get
their products to the markets and to provide them the tools
they need to accomplish their goals. I would like to talk a
little about both.
Just down the road in Huntington is a business called
Rubberlite, founded in 1986 by Allen Mayo. Through an initial
SBA-backed loan of $300,000 of startup capital and then three
subsequent guaranteed loans during the early stages of
development, Rubberlite's product line has grown to include
many innovative products and processes.
They manufacture high-tech engineered rubber and plastic
foam. They have an unbelievable array of uses--from shoes to
bras to trucks and to the Space Shuttle. Rubberlite is in the
midst of expansion and recently received two more SBA-backed
loans to expand their facility from 8,000 square feet to
300,000 square feet.
They are creating jobs. And with this expansion, they will
be creating a lot more. All we had to do was give them a few
tools along the way.
In addition to financing and technical assistance, SBA has
an excellent website with free courses, business plan
templates, and online tools to help entrepreneurs quickly and
easily find answers to their questions, and it directs them to
the appropriate resources for additional assistance.
Our newest online resource--sba.gov/exportbusinessplanner--
features the six steps to export success. This site was
developed by SBA and the Department of Commerce to help
entrepreneurs begin exporting.
But I think our biggest asset in West Virginia is our
partners. West Virginians are known for their hard work, their
ethics, and their dedication. We each have specialties, and we
rely on each other's expertise. But our ultimate goal is the
same--economic development and creating jobs.
I admit I still have my personal goal. I want to keep my
daughter home. I want to ensure that she has the opportunity to
find a great job so that she can live and prosper in this great
state. But that takes teamwork.
The SBA has funded the Small Business Development Centers
for more than 25 years. Our SBDCs offer existing and future
entrepreneurs free one-to-one expert business advice and low-
cost training. In West Virginia, we have 14 centers located
strategically across the state and housed here with Mark, the
West Virginia Development Office.
Two weeks ago, the Department of Commerce joined us at our
state-wide SBDC summit to provide detailed training on
exporting and their services to all of the SBDC's counselors.
Senator, the day after you spoke at Teaming to Win, the SBA
offered 3 hours of training. The first hour was dedicated to
exporting, with the Department of Commerce as our guest
speaker.
Our next event will be on August 25 in Wheeling. Commerce
wants to bring our experienced exporters together with our new
companies and our resource partners to help them find mentors
and the tools they need to begin exporting.
Yes, Senator, we are collaborating. We have to. Finding new
markets through exporting offers the greatest potential for
growth among West Virginia's small manufacturers. The
individuals that work in this field have heart. They are
dedicated, and they are making a difference.
Last year, West Virginia exported $6.4 billion, 34 percent
over the previous year and has doubled since 2006. We are going
to double it again by 2015.
Our problem isn't working together. It is truly our limited
resources. We have just too small and too few resources. The
Department of Commerce has two Commercial Services
representatives in West Virginia, and SBA has eight employees.
With your help, we can build on the momentum we are seeing to
ensure that more small businesses like Rubberlite and Wheeling
Trucking have the tools they need to create and retain jobs
through exporting.
So, Senator, how can you help? By doing exactly what you
are doing today--by serving as our leader, by working with us,
and by continuing to raise the awareness of the importance of
exporting. We sincerely thank you for all that you do for us
and our small businesses.
[The prepared statement of Ms. McCauley follows:]
Prepared Statement of Judy McCauley, District Director,
Small Business Administration
Good Morning, Senator Rockefeller.
Thank you for the opportunity to join you today. I am Judy
McCauley; I have served as the District Director for the Small Business
Administration since 2004. As a native of WV, I will tell you; this is
truly an honor and a privilege. I consider myself lucky; I found a
great job in WV, a job where I can make a difference in my great state.
Now, my job includes making sure the next generation, like my daughter
has the same opportunity.
In order to allow us to get down to the technical questions, I have
brought a couple of specialists with me.
First, I would like to introduce Patrick Hayes. Patrick is our
Regional Manager for the U.S. Export Assistance Center. Patrick will be
visiting our banks today and tomorrow to explain the advantages of
using our Export Working Capital Loans and our International Trade
Loans, thus, giving the bank an up to 90 percent Federal guarantee on
exporting loans. (Patrick has brought folders of SBA exporting
assistance information for you)
Also, with us today is Emma Wilson. Emma serves as our branch
manager here in Charleston and is our Senior Lending Specialist.
My background is not in lending, I come from the Federal
contracting arena where I served as a Contracting Officer and a small
business specialist. I have always said, yes, we can help you get a
loan but you have to secure work and pay that back. But, if we can help
you get a Federal contract, you have the work and you will inevitably
create jobs.
Exporting works much the same way.
Last week at our WV Export Council meeting I met the fourth
generation owner of Wheeling Truck Center in Wheeling, WV.
He was telling us about his company and his success with exporting.
I ask him how he got involved in exporting. He told me he started an on
line business to get rid of truck parts that were lying around
collecting dust. That put him in the International Trade World. In less
than 18 months he has exported to over 50 countries and had to hire two
additional employees.
Yes, exporting creates jobs. And for Wheeling Truck Center it began
simply by creating a website. The demand was already there, Wheeling
Truck Center just needed a tool to get the products to the buyers.
Working with our resource partners and our tools, SBA can help with
that.
Our job is to educate the small businesses on ways to get their
products to these markets, and to provide them the tools they need to
accomplish these goals.
Let's talk about both.
Just down the road in Huntington is a business called Rubberlite,
Inc., founded in 1986 by Allen Mayo. Through an initial SBA-backed loan
of $300,000 for start-up capital and three subsequent guaranteed loans
during the early years of development, Rubberlite's product line has
grown to include many innovative products and processes. They
manufacture high-tech engineered rubber and plastic foams that have an
unbelievable array of uses--from shoes to bras to trucks and the space
shuttle. Rubberlite is in the midst of expansion and recently received
two SBA-backed loans to expand their facility from 8,000 square feet to
300,000 square feet. Last week I watched them receive an award for
their exporting initiatives. They are creating jobs and with this
expansion they will be creating more.
All we had to do was give them some tools along the way.
In addition to financing and technical assistance, SBA has an
excellent website with free courses, business plan templates, and
online tools to help entrepreneurs quickly and easily find answers to
their questions and it directs them to the appropriate resources for
additional assistance.
Our newest online resource sba.gov ``slash'' export business
planner features the six steps to export success. This site was
developed by SBA and the U.S. Dept of Commerce to help entrepreneurs
begin exporting. It also features direct links to the SBA Export
Express and Export Working Capital Programs.
But, I think our biggest asset is our partners.
West Virginians are known for their hard work, their ethics and
their dedication.
We each have specialties and we rely on each other's expertise.
But, our ultimate goal is the same, economic development, creating
jobs. I admit I still have my personal goal, remember? I want to keep
my daughter home. I want to ensure that she has the opportunity to find
a great job, so she can live and prosper in this great state! That
takes team work.
The Small Business Administration has funded the Small Business
Development Centers (SBDC) for more than 25 years. Our SBDCs offer
existing and future entrepreneurs free one to one expert business
advice and low cost training. In WV we have 14 centers located
strategically across the state and housed by the WV Development Office,
along with the WV Dept of Commerce.
Two weeks ago, the U.S. and State Departments of Commerce joined us
at a state-wide SBDC Summit to provide detailed training on exporting
and their services to all of the SBDC counselors and employees.
Senator, the day after you spoke at our annual Teaming to Win
Conference, the SBA offered 3 hours of training for WV small
businesses.
The first hour was dedicated to exporting with the U.S. Department
of Commerce as our guest speaker.
Diego also joined us as an instructor for our Veteran's Conference
this year.
Our next event will be on August 25 in Wheeling. The U.S.
Department of Commerce wants to bring experienced exporters together
with new companies and our resource partners to help them find mentors
and the tools they need to begin exporting.
Yes, Senator, we are collaborating. We have to. Finding new markets
through exporting offers the greatest potential for growth among WV's
small manufacturers.
The individuals that work in this field have heart, they are
dedicated and they are making a difference. Last year, WV exports
totaled 6.4 billion. They grew 33 percent over the previous year and
have doubled since 2006. We are going to double them again by 2015.
Our problem isn't working together. It is our limited resources. We
are just too small and our resources are just too limited. The U.S.
Department of Commerce has two Commercial Services representatives and
the SBA has 8 employees in the state. With your help, we can build on
the momentum we're seeing to ensure that more small businesses like
Rubberlite and Wheeling Trucking have the tools they need to create and
retain jobs through exporting.
So, Senator, how can you help? By doing exactly what you are doing
today; by serving as our leader, by working with us and by continuing
to raise awareness of the importance of exporting. We sincerely thank
you for all that you do for us and our small businesses.
The Chairman. Thank you, Ms. McCauley.
I want to instantly mention something which is important.
This is being done live also. This hearing is being done live
in Clarksburg, in Wheeling, and in Martinsburg.
So I want to say to--and they have crowds there, and they
have people there. So I want to say to each of them that we are
very glad that you decided to hook on, and you also--we hope
that you will send us questions that we can put in the record.
And we can't communicate back and forth with you as easily
as we would like, but you are with us, and we appreciate that
very much.
Our next witness is Mark Julian. He is Deputy Director of
the West Virginia--this is the longest title I have ever heard.
[Laughter.]
Mr. Julian. With no extra pay, right?
The Chairman. I am going to give it to you. Deputy
Executive Director of the West Virginia Department of Commerce,
its Development Office, and Director of Business and Industrial
Development for the West Virginia Development Office.
Now, Mr. Julian, with a title like that, you have got to
have a lot to say.
[Laughter.]
STATEMENT OF MARK R. JULIAN,
DIRECTOR, BUSINESS AND INDUSTRIAL DEVELOPMENT,
WEST VIRGINIA DEVELOPMENT OFFICE
Mr. Julian. If you remember, I said I was going to need
more than 5 minutes.
Senator Rockefeller, it is a pleasure to be here with you
today.
And your focus on manufacturing, this is a sector that I
have been involved with my entire career, and I cannot offer my
thanks enough to focus on this issue. It has been ignored too
long.
We all know that our industrial capability to manufacture
is vital to our economic health and security of our state and
our nation. And simply put, it is a job creator. You know, we
can discuss the multipliers for each specific sector of
manufacturing, but there is no debate about the value it adds
to the economy. And I appreciate to be here today to contribute
to the discussion.
But I think it is important to reflect on history just a
little bit since we are here in West Virginia. As we all know,
energy and manufacturing powered this state from the 1920s on,
for the world's first petrochemical plant located here in the
Kanawha Valley, and we soon became over the years home to
chemicals, steel, glass, metal, and on.
In the 1940s, most West Virginians worked in goods-
producing industries. However, we all know what the 1980s did.
For various factors, we were hit hard. One third of our
manufacturing base was lost between 1979 and 1985.
Let us fast forward to 2000. There were 75,900
manufacturing jobs in 2000. By 2008, there were 56,500. In 2008
to 2009, we lost another 11 percent, but we weren't alone. The
same period, Ohio lost 18 percent. Pennsylvania decreased 12
percent. Kentucky dropped 15 percent, and Virginia dropped 11
percent.
We are working hard to diversify West Virginia's economy.
Partnerships that have been mentioned are key to this.
Government, business, labor, the education community have been
working extremely hard to diversify our base.
However, please understand that we have a strong commitment
to manufacturing. Even in our targeted sector strategies,
manufacturing is integral to what we do.
Some of my peers in other states have written off
manufacturing. We are not willing to do that. It has never been
a part of our strategy. It won't be a part of our strategy. We
know how important it is to our history and definitely to our
future.
Growing exports are key. It has been mentioned that in 2010
our exports reached a record level of $6.4 billion. Obviously,
we must continue to focus on that because it is a great, great
diversification strategy.
I am also happy to report that since 2005, we have had more
than $15.2 billion in new business investments, many of which
were in manufacturing--medical products, construction
materials, automotive, building products, printing, specialty
plastics, fulfillment and distribution, and business services.
But we must do more.
The U.S. Department of Commerce recently reported that our
GDP increased 4 percent in 2010. That was the fifth most
improved GDP in the nation.
Critical also to our future is the stability of government.
West Virginia has done a great job in managing government. And
I have to tell you, and my colleagues at the Development Office
will tell you, that as you look to the future, we have a
significant amount of attention now because of the way we have
managed government.
The surpluses that we have, all at the same time of
reducing corporate net income tax and on message or on track to
eliminate business franchise by 2014, this is selling very well
to investors. And again, it is going to take partnerships.
The workforce. We all know the history of West Virginia's
workforce and the productivity and the loyalty of our
workforce. It is well known. But, however, we must continue to
work and are working hard to diversify our skill sets.
It is interesting that despite the abundance of labor in
this country, employers still communicate here and in other
states that they cannot find qualified workers. We are working
hard to provide that workforce. To that end, many
partnerships--the Community and Technical College System, in
partnership with the Department of Commerce, Workforce West
Virginia, higher education--are all working together to
accomplish that.
And in fact, the CTCS system is currently working to build
two state-of-the-art advanced technology centers in Fairmont
and the Kanawha Valley to meet these needs, an investment of
$30 million. That is very indicative of our commitment to the
transitional economy we are in and for the skills of the
future.
This is vital why? Because 60 percent of the fastest-
growing new jobs in West Virginia will require at least a two-
year degree or some type of certification. We are identifying
opportunities aggressively. We are working very hard to capture
them, and we must continue to work together to succeed.
West Virginia has its foot on the accelerator. But we
believe it is time to reaffirm our commitment to manufacturing,
business assistance, workforce development, financing programs,
and the support of research and technology development. This
must include state and federal partnerships.
And I know the budget times are tough, but a key point that
I want to leave with the Committee is the federal partnerships
that we have are integral to what we do, what I do every day to
retain, expand, and attract investment to West Virginia.
Just to mention a few--the U.S. Small Business
Administration, their support of our SBDC program and our small
businesses. 95 plus percent of our businesses are small, 50 or
less.
The loan programs. The loan guarantees that they have are
absolutely critical to encouraging that entrepreneurship and
that innovation that we are known for.
The U.S. Department of Commerce. Their support of our U.S.
Export Assistance Centers in Charleston and Wheeling are
absolutely critical. Also, the U.S. Economic Development
Administration within the Department of Commerce works very
closely with us, particularly in the last year, in doing
various deals and the need for infrastructure and support to
make deals happen.
And also, the National Institute of Standards and
Technology's support of the Manufacturing Extension Partnership
Program. And rural development programs, the U.S. Department of
Agriculture.
And last, but not least is the federal partnership to
retrain our workforce for the future, and that is Department of
Labor's support of the Workforce Investment Act funding, which
I have to tell you that I keep being advised that there is less
and less money for that program at, very frankly, a very
critical, critical time.
We have many state partners that I have mentioned in my
written testimony. But again, it is an extreme pleasure to be
here, to be a part of this discussion, and I look forward to
any questions.
Thank you.
[The prepared statement of Mr. Julian follows:]
Prepared Statement of Mark R. Julian, Director, Business and Industrial
Development, West Virginia Development Office
Chairman Rockefeller, members of the Committee, and other
distinguished guests, I'm grateful to be here today and for your
focusing attention on manufacturing innovation, technology and business
diversification. Our industrial capability to manufacture is vital to
the economic health and security of our state and our Nation.
I appreciate the opportunity to contribute to these discussions as
we review where we have been, assess where we are now, and communicate
a strategy to take us to where we need to be.
Traditionally, mining and manufacturing were the engines that drove
West Virginia's economy. In 1920, Union Carbide Corporation built the
world's first petrochemical plant in Clendenin, West Virginia. The
state soon became home to chemical, steel, glass, metal and textile
manufacturing. In the 1940s, most West Virginians worked in goods-
producing industries, but these blue collar jobs began to disappear in
the decades that followed.
The recessions of the 1980s and other economic factors hit West
Virginia hard. Employment in our steel, glass, and chemical
manufacturing, as well as mining, fell by a third between 1979 and
1985. During the 1990s, the economy began to improve, aided by energy
demands, trade, tourism, the aerospace industry, and an investment in
informational technology firms and Federal projects such as the FBI's
fingerprint identification division.
There were 75,900 manufacturing jobs in West Virginia in 2000. By
2008, there were 56,500. In 2008-2009, we lost 11 percent of
manufacturing jobs, but our state wasn't alone in that loss. During the
same time period, Ohio's manufacturing jobs dropped 18 percent;
Pennsylvania's decreased 12 percent; Kentucky dropped by 15 percent;
and Virginia, 11 percent.
Our state's economy has long been tied to the energy markets,
rising when the energy markets rise and falling when the markets are
less than ideal. So in order for West Virginia to reach its full
potential, it is imperative that we continue working to diversify our
business base. The need for continued diversification is real and
urgent.
Fundamental to that effort is partnerships. Consequently, West
Virginia's governmental, business, labor and educational communities
have been working closely to expand and diversify our state's economy
while continuing our strong commitment to manufacturing which has been
so important to our history and remains critical to our future.
Historically, West Virginia has a greater percentage of employment
in certain industrial sectors as oil and gas, chemical products, power
generation, metal manufacturing and forest products, to name a few.
This was confirmed by a 2011 National Governor's Association Study on
Economic Performance. That same study revealed that we are on focus
when reviewing our targeted development strategy.
Today, the key emerging industries in West Virginia include
biometrics/biomedical technology, advanced energy and distribution,
automotive, aerospace, business services, chemicals and plastics,
information technology, printing, tourism, fabricated metals and value-
added wood products.
Building economic strength in these diverse sectors builds
stability in the economy--and that is good for all business, large and
small. We are focused on these targets in our development strategy and
are pursuing these diversification opportunities daily.
Equally important are our exports. If asked what West Virginia
exports, most would say coal, which is critically important, however
they also include polymers, machinery, wood products, chemicals,
automotive, and aeronautics, just to name a few. Growing our exports is
a key strategy for the continued diversification of West Virginia.
We must continue to aggressively educate state businesses, large
and small, on the benefits of exporting.
In 2010, West Virginia's exports reached a record level $6.4
billion.
The state's exports grew by 33 percent over last year,
outperforming the U.S. export growth rate of 21 percent.
Last week, 49 West Virginia businesses received the
Governor's Commendation for International Market Entry,
honoring companies that have successfully exported to 90
different countries just in the past year.
I am also happy to report that businesses have continued to invest
in our state. Since 2005, more than $15.2 billion in new business
investments have been made in West Virginia's economy. For example:
Alcon, the world's largest manufacturer of intraocular
lenses, recently completed its second plant in Huntington, a
$25 million investment. Alcon employs more than 800 workers.
Essroc invested more than $600 million in their Martinsburg
facility, tripling their previous production capacity. One-
hundred fifty people are employed at the facility.
Toyota Motor Manufacturing West Virginia recently invested
$64 million to increase production of its six-speed auto
transmissions. Employment at the plant is now at 1,100.
CertainTeed, a wallboard manufacturer, invested $200 million
in their Marshall County plant. The company employs 90 workers.
Quad/Graphics is an especially good example, as West
Virginia's stability and productivity played a large part in
their decision to expand. (Over $15 million in upgrades to its
Martinsburg plant; added 400 new jobs; total employment of
1,000 workers.)
Kingsford Charcoal invested $22 million in their Tucker
County facility that employs 109 people.
Klockner Pentaplast, a manufacturer of rigid plastic films,
invested $34 million in their Raleigh County plant that employs
60 people. This location is a ``Center of Excellence'' for
them. This plant contains the latest technology available in
that sector.
Macy's chose West Virginia over 157 other locations for its
new 1.3 million-square-foot fulfillment center in Berkeley
County. This $150 million investment will create 1,200 full and
part-time jobs, as well as 700 seasonal positions.
These investments and many more are helping West Virginia diversify
and advance in our development efforts.
It was recently reported by the U.S. Commerce Department's Bureau
of Economic Analysis that West Virginia's growth in real gross domestic
product (GDP) increased 4 percent in 2010. West Virginia's GDP was
$55.992 billion in 2010, up from $53.842 billion in 2009. The state
ranks fifth for most improved GDP in the Nation. This is good news.
Also, critical to future development is the management of
government. The ability to offer businesses a stable and predictable
investment environment. To that end,
West Virginia closed its 2010 Fiscal Year with a surplus of
more than $102 million; the fifth year in a row with a
surplus--without a tax increase.
The Governor's budget office projects general revenues will
grow at better than 7 percent in Fiscal Year 2012 over the
current year.
West Virginia has one of the strongest Rainy Day funds of
any state, which will reach 17 percent of the state's General
Revenue Fund Budget this year.
West Virginia is one of only 18 states that have not had to
borrow Federal funds to pay unemployment compensation benefits.
These are all impressive accomplishments that are selling very well
to investors. This has been accomplished while reducing Corporate Net
Income Tax rates and the phase out of our Business Franchise Tax.
Instead of digging in and merely trying to hold on until the
economy rebounds, we are aggressively promoting our state's stability
and the many benefits we can offer for business investment. We're in a
financial position that few states are.
A key component of our current success and our future opportunities
is our workforce. West Virginia has been investing in developing the
skill sets of our work force. Despite the unemployment and available
workers, employers across the country continue to have trouble finding
workers qualified to fill positions. Businesses want and need qualified
applicants with the fundamental as well as specialized skills, who are
ready to be productive. West Virginia is working hard to provide those
workers.
To that end, the Community and Technical College System of West
Virginia (CTC) governmental agencies such as Department of Commerce,
WorkForce West Virginia, Higher Educational Policy Commission, and
other partnering entities are working directly with industry and
collaborating with each other. Their goals are to develop programs that
prepare prospective employees with the skills businesses need today,
and to prepare workers for the occupations that are emerging. In fact,
the CTC System is currently working to construct two Advanced
Technology Centers to meet these needs--an investment of $30 million
dollars. These are being located in Fairmont and the Kanawha Valley.
This is vital because, as we know, nearly 60 percent of the fastest
growing new jobs in West Virginia will require at least a two-year
college degree.
Rather than view these challenging economic times as something to
weather, we've been viewing it as strategic opportunity to bring
attention to West Virginia and what we have to offer. We are passionate
about our efforts.
We are identifying opportunities and aggressively working to
capture them. We continue to work with our established businesses in
assisting them to succeed and working with our workforce to prepare
them to compete.
West Virginia has its foot on the accelerator. We believe it is
time to reaffirm our commitment to business and manufacturing
assistance, workforce development, financing programs and support of
technology development. This fundamentally must include state and
Federal partnerships and programs. They are important to our efforts.
Just to name a few of our partners at the Federal level:
Appalachian Regional Commission
U.S. Small Business Administration SBDC Program and Loan
Programs and Loan Guarantees
U.S. Department of Commerce--U.S. Export Assistance Centers
(Charleston and Wheeling) and U.S. Economic Development
Administration
U.S. Department of Agriculture Rural Development
U.S. Department of Labor WorkForce Investment Act funding
Some partners at the state and regional level include:
Robert C. Byrd Institute for Advanced Flexible Manufacturing
(RCBI)
West Virginia Export Council
West Virginia Manufacturing Extension Program
Discover the Real West Virginia Foundation
West Virginia Tech Connect
Bioscience Association of West Virginia
West Virginia High Technology Foundation
I-79 Development Council's West Virginia Biometrics
Initiative
In summary, West Virginia's future is bright and we are working
extremely hard to capture every opportunity. Thank you for the
opportunity to be here today.
The Chairman. Thank you very much.
You mentioned, I think, the America COMPETES Act, and that
causes me to want to say two things before going on to you, Mr.
Moore. The Commerce Committee is--I don't know if this is
historically the case but it is very much the case in the years
that I have been there and particularly--it is extremely
bipartisan.
And I know that those of you who are listening or watching
think that the problem with Washington is that everything is
politics. And each party wants to get the other, and it is not
a very pretty sight. And there is truth in that. But that truth
does not extend to all parts of government, or the legislative
branch.
The Senate Commerce Committee is probably the most
bipartisan of all committees in the Senate. As a result, we
pump out more legislation than any other committee. I have over
the next 3 weeks 11 bills--Mr. Kumar, you will be horrified to
know--that I am going to submit on manufacturing and all kinds
of things like that.
Kay Bailey Hutchison, who is the Ranking Member, is from
Texas, is superbly knowledgeable as a lawyer, as a very
practiced businesswoman, of what it takes to make things work.
Not just manufacturing, but everything else.
We are very, very close friends. I talk to her in Austin,
Texas, sometimes, and I talk to her at her office a lot, and we
talk during hearings a lot, which is probably not appropriate,
but we just do.
And as a result, we reach out toward each other because we
know that to get legislation, you have to have accommodation.
And there is nothing wrong with accommodation so long as you
are not giving away core principles.
And we both understand that, and that is why I am very
pleased that not only Senator Hutchison's staff person is here,
but also Senator Blunt, who came over from the House.
I was at Sargent Shriver's funeral. He was sort of my all-
time hero, probably because he got me here to West Virginia,
but in general. And I saw Roy Blunt sitting to the right in
front of me on a bench.
And I went over to him, and I didn't know him, but I said,
``I have heard a lot of things about you, and they are all
good. And I really look forward to working with you.'' And that
is his attitude also. I mean, he is very bipartisan.
And you have to understand that is a suspect statement when
you think about Washington, but it is not in our committee. I
mean, it just simply isn't. That is one of the things that has
to happen. It doesn't matter who gets credit. What matters is
that we get results.
One thing that was mentioned also--and I apologize to the
two remaining witnesses. But the America COMPETES Act was a
very good example of that. America COMPETES. I mean, you get
all these names, right? I mean, all these names, agencies, and
bills and all that, and nobody knows what they mean.
Well, America COMPETES, we reauthorized that. And Kay
Bailey Hutchison and Lamar Alexander, who was Governor when I
was Governor and whose wife is on my wife's public television
station--so we are very close friends--Kay Bailey Hutchison and
myself and Lamar Alexander took a $44 billion bill and made it
into law.
I mean, the President had to sign it, that is an important
formality.
[Laughter.]
The Chairman. But we got it done the day before the lame
duck session ended, or a couple of days before it ended. So the
House had a chance to pass it, and it was a remarkable thing
because it was a little bit--it was a $45 billion bill at that
point, and we were just standing in the center aisle in the
Senate. And Kay Bailey Hutchison said to me that is a little
bit rich.
So I said, well, let us take $1 billion off of it. Will
that help? And she said that will help. And she said there is
one little program in it which I think is not really necessary.
And I called Ellen Doneski, who is sitting over there, and I
said--who is the head of the Committee--and I said, ``Do we
really need this?'' She said, ``No, we really don't need
this.'' So I said that to Kay Bailey Hutchison, and so she
said, ``I am in.''
So that left Lamar Alexander because there were five
Republicans who had holds on the bill, who have holds on all
bills. And Lamar Alexander has two personalities. One is when
he is being a part of the leadership, which he is, and also
when he is being Lamar Alexander, who he also is.
He was being Lamar Alexander and then became part of the
leadership. So it was his job to get all five of those holds.
You understand that any Senator by objecting can prevent a bill
from being considered on the floor. It is not a good rule, but
it is a rule.
And so, he went and he got all of those five lifted, and so
the bill passed with unanimous consent, no vote taken. The
House passed it. President signed it. And then that bill does
extraordinary things because it takes on the subject of
science, technology, engineering, and math and also a lot of
other things that we are talking about here today, things that
we need to do in America, things that we need to get better at.
And it funds those. It is a 5-year bill.
And so, I just say that to you to say that there are people
on the committees who are really trying in Washington to get
this right, and it is not easy because of all of the
jurisdictions the different committees have, and they are
worried about somebody invading their jurisdictions and all
that kind of thing. But we can get a lot of things done if the
mood is right and if the people, if the Senators are willing to
do that. And we are.
And so, I just say that before I introduce you, Randy
Moore, and I am very happy that you are here. You are vice
president of the West Virginia AFL-CIO, the international
representative of the United Steelworkers of America. Had a lot
of experience with you, Weirton Steel, a lot of other places.
Randy was invited--that is you, Randy--due to your role
with the steelworkers, but more importantly, because of your
role of what happens when things don't go right. I mean, I
remember Weirton Steel when there were 13,000 people working
there, and now there are 1,000 people working there.
Well, there are reasons for all of that, and so you bring
the perspective of how do workers adjust? What does TAA mean,
Trade Adjustment Assistance, when people are put out of work
because of foreign invasion, so to speak, has taken their job
away, and what do we do about all that kind of thing?
So, Randy Moore, you are on.
STATEMENT OF RANDALL T. MOORE, SUB-DISTRICT
DIRECTOR, UNITED STEEL, PAPER AND FORESTRY, RUBBER,
MANUFACTURING, ENERGY, ALLIED INDUSTRIAL AND
SERVICE WORKERS INTERNATIONAL UNION (USW), AFL-CIO
Mr. Moore. Thank you, Chairman Rockefeller.
I welcome the opportunity to be here today to testify on
behalf of my union, the United Steel, Paper and Forestry,
Rubber, Manufacturing, Energy, Allied Industrial and Service
Workers International Union.
The Chairman. Anything else included there?
Mr. Moore. The United Steelworkers.
[Laughter.]
Mr. Moore. The focus of today's hearing is to explore the
issues that relate to the state of manufacturing in West
Virginia and the opportunities and challenges presented by
exporting. In the past 12 years, I have had the painful
displeasure of watching over 5,000--and mind you, that has
nothing to do with the steel industry--over 5,000 USW-
represented, family supporting manufacturing jobs disappear in
West Virginia.
Keep in mind these employees did not lose the means to
support their families because of outdated facilities or
inefficient procedures, chemical plants, or steel processors.
These employment opportunities have left my state primarily
because of unfettered free trade and ineffective policies to
address what should be the top priority of everyone in this
room today--a forward-thinking approach to supporting those
jobs that remain and policies that will create new jobs in the
future.
These stories of so many plant closings, so many jobs, so
many families have been told so many times that I sometimes
wonder if Americans are turning a deaf ear when they hear these
devastating stories. Sadly, many are forgetting that these
aren't just today's statistical realities in a global economy.
There is a human element to these events.
We are talking about real people and often entire
communities that are tragically affected. Many of my members
who have lost their jobs can't reconcile their employment past
with their new reality--going to a food bank, minimum wage job,
or, worse, relying upon government programs for their
existence.
In my view, to disregard the pain these people are living
through, slogging through years of doing next to nothing toward
long-term commitments to revitalize our manufacturing base and
job creation is both irresponsible and insensitive.
Our nation is being victimized by free trade ideologues and
policymakers who want to discuss theory, rather than recognize
reality. Our trade, tax, and investment policies, the
globalization of production, and the failure to have a national
manufacturing strategy helped create this situation.
New Department of Commerce data shows that nationwide,
companies cut their workforces in the U.S. by 2.9 million
during the 2000s while increasing employment overseas by 2.4
million. The technical and industrial capacity offshored
quickly became imported goods and a major contributor to our
crushing trade deficits.
Between 1998 and 2010, we lost approximately 6 million
manufacturing jobs, with over 2 million of those occurring from
2007 through 2009. At the same time, some 57,000 manufacturing
facilities closed.
What is often forgotten, those manufacturing jobs that were
lost led the reduced need for jobs in engineering, designers,
scientists, and more that has eroded the nation's working
middle class and dangerously undermined our technical,
industrial, and innovative capacity. The nation will not be
able to double net exports, reduce our trade deficits
substantially, nor meet our economic and security needs unless
we produce more of what we consume.
Our nation's future success, the reclamation of the
American dream, in fact, depends on revitalizing our
manufacturing sector. We believe that a strategy matters. The
U.S. needs to recognize that all our major global competitors
have national manufacturing strategies.
Advanced developing nations like China, India, and Brazil
all have one. The leading developed nations like Germany,
Japan, and the Scandinavian nations all have them. We do not,
and it is killing us.
The differences in approach are dramatic. Our competitors
consciously seek manufacturing as a critical jobs and
prosperity strategy for their nations. Our blind free market
approach theorizes seeking cheaper prices for consumers is
better than jobs and income. They target industries and
technologies seeking to generate competencies and
opportunities. We do not.
Economic success is not measured simply by the price of a
flat-screen TV, but how well one can feed, clothe, house their
families, how they can have access to healthcare and education,
how they can look forward to a secure and dignified retirement.
On that basis, we are falling further and further behind.
Other nations align their tax policies and government
investments to achieve their goals and objectives. Our tax
policies encourage offshoring, and we quibble over ``Buy
America'' policies that are less broad than our competitors own
domestic procurement laws.
They invest in training and education linked to their
employment and economic strategies. We invest in training and
education without clear employment strategies or goals.
We believe a healthy and robust manufacturing sector is
central to a sustained economic recovery and to our national
security. The following elements are essential to a
comprehensive program and a national manufacturing strategy to
restore domestic manufacturing.
Get our trade house in order and enforce our laws.
Aggressively enforce our trade laws. We need to address China's
trade violations and establish our own strategic priorities and
policies.
A recommitment to investment in infrastructure. America's
infrastructure needs--energy, roads, transit, bridges, rail,
water, et cetera. The demands are huge. We have a $2.2 trillion
infrastructure deficit, according to the American Society of
Civil Engineers.
A tax structure that encourages manufacturing investment.
Eliminate tax incentives and loopholes that encourage financial
speculation rather than investment, outsourcing and offshoring
production, and enact tax incentives for companies that produce
domestically.
Investment in a 21st century energy infrastructure. We must
invest in 21st century energy infrastructure technologies on a
similar scale to our investment in replacing the failing
infrastructure of the last century.
Innovation for American manufacturing. The United States
continues to be the world's engine of innovation, but that lead
is declining. There is a direct correlation between R&D and
production, and we must protect our nation's innovative
leadership.
And last, but I think very importantly, workforce
development policy. America and West Virginia continue to have
the best and most innovative workers. They stay ahead of the
competition. However, we must constantly upgrade our skills and
training.
Revitalizing our manufacturing sector requires that we make
investments in our people to ensure that they are equipped to
meet the needs of industry. Now is the time to renew and expand
investments in our people. Congress must increase access to
training funds for people who are out of work, as well as those
seeking to enhance their skills.
Ultimately, a high-skills workforce must be one whose
rights on the job and ability to speak up are protected and
thus made real through strong labor laws and strong unions.
While the economic crisis that began in 2007 has done
massive damage to our country, the truth is our problems run
far deeper and none is more fundamental than the catastrophic
decline of U.S. manufacturing, which has occurred over a long
period.
The health of the economy, the success of our people, our
national security are intrinsically tied to a vibrant and
innovative manufacturing sector. We must revive U.S.
manufacturing as a clear centerpiece of our nation's economic
and security strategy. This Congress and the administration
have the opportunity to take steps to restore our nation's
manufacturing capabilities. Mr. Chairman, the United
Steelworkers is committed to working with you to do so.
And once again, I appreciate the opportunity to speak
before the Committee today.
[The prepared statement of Mr. Moore follows:]
Prepared Statement of Randall T. Moore, Sub-District Director, United
Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied
Industrial and Service Workers International Union (USW), AFL-CIO
Thank you, Chairman Rockefeller. I welcome the opportunity to be
here today to testify on behalf of my union, the United Steel, Paper
and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and
Service Workers International Union--the United Steelworkers (USW).
The focus of today's hearing is to explore the issues related to
the state of manufacturing in West Virginia and the opportunities and
challenges presented by exporting.
In the past twelve years, I have had the painful displeasure of
watching over 5,000 USW represented family-supporting manufacturing
jobs disappear in West Virginia. Keep in mind, these employees did not
lose the means to support their families because of outdated facilities
or inefficient producers, chemical plants and steel processors. These
employment opportunities have left my state primarily because of
unfettered free trade and ineffective policies to address what should
be the top priority of everyone in this room today, a forward-thinking
approach to supporting those jobs that remain, and policies that will
create new jobs in the future.
These stories of so many plant closings, so many jobs, so many
families have been told so many times that I sometimes wonder if
Americans are turning a deaf ear when they hear these devastating
stories. Sadly, many are forgetting that these aren't just today's
statistical realities in a global economy. There is a human element to
these events. We are talking about real people, often entire
communities that are tragically affected. Many of my members who have
lost their jobs can't reconcile their employment past with their new
reality--going to a food bank, a minimum wage job or worse, relying
upon government programs for their existence.
Our trade, tax, and investment policies, the globalization of
production, and the failure to have a national manufacturing strategy
helped create this situation. It doesn't have to be this way. However,
consistently, when a discussion is presented, and legislation proposed
on a national level to address this slow moving disaster, the
legislative approaches are reframed by many of those free trade at any
costs policy makers who helped facilitate this mess. Those groups
manipulate the public's view of these proposals by categorizing them as
nothing more than government intervention that will lead to bigger
government and cause a disruption of free market forces. In my view, to
disregard the pain these people are living through, slogging through
years of doing next to nothing towards long-term commitments to
revitalize our manufacturing base in job creation is irresponsible and
insensitive. Our nation is being victimized by free trade ideologues
and policymakers who want to discuss theory, rather than recognize
reality.
New Department of Commerce data shows that nationwide, companies
cut their work forces in the U.S. by 2.9 million during the 2000s while
increasing employment overseas by 2.4 million. The technical and
industrial capacity offshored quickly became imported goods and a major
contributor to our crushing trade deficits. Between 1998 and 2010 we
lost approximately six million manufacturing jobs with over two million
of these occurring from 2007-2009. At the same time some 57,000
manufacturing facilities closed. What is often forgotten, those
manufacturing jobs that were lost led the reduced need for jobs in
engineering, designers, scientists and more that has eroded the
Nation's working middle class and dangerously undermined our technical,
industrial and innovative capacity. This nation will not be able to
double net exports, reduce our trade deficits substantially nor meet
our economic and security needs unless we produce more of what we
consume. Our nation's future success, the reclamation of the American
Dream, in fact, depends on revitalizing our manufacturing sector.
Strategy Matters
The U.S. needs to recognize that all our major global competitors
have national manufacturing strategies. Advanced developing nations
like China, India and Brazil all have one. The leading developed
nations like Germany, Japan and the Scandinavian nations all have them.
We do not and it is killing us. The differences in approach are
dramatic. Our competitors consciously seek manufacturing as a critical
jobs and prosperity strategy for their nations. Our blind free market
approach theorizes seeking cheaper prices for consumers is better than
good jobs and income. They target industries and technologies seeking
to generate competencies and opportunities. We do not. Economic success
is not measured simply by the price of a flat-screen TV, but how well
one can feed, clothe and house their families, how they can have access
to health care and education, how they can look forward to a secure and
dignified retirement. On that basis, we are falling further and further
behind. Other nations align their tax policies and government
investments to achieve their goals and objectives. Our tax polices
encourage offshoring and we quibble over Buy American policies that are
less broad than our competitors own domestic procurement laws. They
invest in training and education linked to their employment and
economic strategies. We invest in training and education without clear
employment strategies or goals.
Innovation Strategy is Key for our Future
The USW recognizes the critical steps government has taken to
stabilize the economy by helping ensure the survival of a domestic auto
industry, investing in needed infrastructure and a diverse efficient
clean energy economy, securing jobs from those investments with Buy
America requirements, and putting critical financial reforms in place.
This work is far from finished. But, today we see Congress mired in
a debate that we can somehow downsize our way to success. The economy
doesn't work that way. Congress needs to complete efforts begun last
year when the House passed a series of bipartisan bills that included a
National Manufacturing Strategy, currency, rare earth and other
manufacturing legislation. This year the Administration has proposed
needed new investments in small business, research and development,
clean energy manufacturing, and infrastructure.
Democrats in the House of Representatives recently announced their
Make It in America Agenda that identifies steps that should be taken to
revitalize manufacturing and job creation here at home. It's an
important foundation both parties embraced last year. It should not be
a partisan issue in this Congress and we hope that Republicans will
embrace the effort and join in promoting policies that will enhance
national and economic security.
We believe a healthy and robust manufacturing sector is central to
a sustained economic recovery and to our national security.
The following elements are essential to a comprehensive program,
and a national manufacturing strategy, to restore domestic
manufacturing:
Get our trade house in order and enforce our laws:
Aggressively enforce our trade laws. We need to address China's
trade violations and establish our own strategic priorities and
policies. We should view success not as the number of trade
agreements that are signed, but by the results they achieve.
Our trade agreements should be designed to empower workers to
share in the fruits of their labor and enable them to enter the
middle class with respect and just compensation for their
efforts.
A re-commitment to investment in infrastructure:
America's infrastructure needs--energy, roads, transit, bridges,
rail, water, etc., the demands are huge. We have a $2.2
trillion infrastructure deficit, according to the American
Society of Civil Engineers. Not only will spending here employ
people right away, it will lay the foundation for economic
growth in the future. Funding for infrastructure must be built
on a foundation that aggressively promotes, ``Buy American
Policies''. Americans want to know that their tax dollars are
being used to create American jobs. An improved America is the
legacy we should leave to our children and grandchildren.
A tax structure that encourages manufacturing investment:
Eliminate tax incentives and loopholes that encourage financial
speculation rather than investment, outsourcing and offshoring
production, and enact tax incentives for companies that produce
domestically.
Investment in a 21st Century Energy Infrastructure:
We must invest in 21st century infrastructure technologies on a
similar scale to our investment in replacing the failing
infrastructure of the last century. And, again, investments in
this area must support and promote domestic job creation and
supply chains.
Innovation for American Manufacturing:
The United States continues to be the world's engine of innovation,
but that lead is declining. There is a direct correlation
between R&D and production and we must protect our Nation's
innovative leadership. Doing so requires that we maintain
strong intellectual property protections to ensure that
companies have the incentive to make investments in plant and
equipment here at home. Increased support for research and
development in the United States, coupled with support for
testing and deployment of those new technologies in our
factories, will ensure that our manufacturing capabilities
expand. R&D investments financed with public dollars (grants,
tax credits, etc.) must be accompanied by employment
accountability requirements.
Workforce development policies:
America continues to have the best and most innovative workers. To
stay ahead of the competition, however, we must constantly
upgrade our skills and training. Revitalizing our manufacturing
sector requires that we make investments in our people to
ensure they are equipped to meet the needs of industry. Now is
the time to renew and expand investments in our people.
Congress must increase access to training funds for people who
are out of work as well as those seeking to enhance their
skills.
Ultimately, a high skills workforce must be one whose rights on the
job and ability to speak up are protected and thus made real
through strong labor laws and strong unions.
While the economic crisis that began in 2007 has done massive
damage to our country, the truth is our problems run far deeper and
none is more fundamental than the catastrophic decline of U.S.
manufacturing which has occurred over a long period.
The health of the economy, the success of our people and our
national security are inextricably tied to a vibrant and innovative
manufacturing sector. We must revive U.S. manufacturing as a clear
centerpiece of our Nation's economic and security strategy. This
Congress and the Administration have the opportunity to take steps to
restore our Nation's manufacturing capabilities. The USW is committed
to working with you to do so.
The Chairman. Thank you, Mr. Moore, very much.
I call now upon Don Gallion, who I have known for 35 years?
Mr. Gallion. Probably.
The Chairman. And I have to tell this story on Don because
it is classic. I first met Don Gallion, who is from Wayne
County, in what I could gregariously pronounce as kind of a tin
shed where he was making something, up in Morgantown. And there
were a couple of light bulbs around. There were a couple of
workers around. And Don Gallion was around.
And he just had this idea, and the idea was every time--and
now you have expanded since then, and I understand that. You
have become this----
[Laughter.]
The Chairman.--huge, international--I mean, it is an
extraordinary story, Don. I am really glad that you are here.
But what Don had figured out, Mr. Gallion had figured out--
this is a hearing--was that there are all kinds of airports
being built all over the country. Probably 1,500 to be built
yet in China, and it is going to keep on going once the economy
returns on a worldwide basis.
And that when you land an airplane in the winter, it is
probably a good idea that you have something that you insert
into the airplane which pumps warm air in. That is not such a
good idea in summer. So, in summer, you have to pump in cold
air, cool air.
And Don Gallion had perfected a technology, which simply
wiped out the competition, and I can't explain how he
understood that and why he took off. But you can't--this is
probably the only day this month that Don Gallion will be in
West Virginia. He travels all over the world, and every place
that he goes to, he has got all of China locked up. He has got
pretty much every place locked up.
Everybody that builds a new airport has to call Don Gallion
so they can get this system in place. And it is one of the most
inspiring stories that I know of when an individual Wayne
County fellow who, on his own, comes up with this idea and then
takes it on a worldwide basis, exporting it everywhere that
there is.
Now with that humble introduction, Don, your testimony
better be good.
STATEMENT OF DON GALLION, FOUNDER, FORMER PRESIDENT, CEO, AND
CHAIRMAN, FCX SYSTEMS
Mr. Gallion. Thank you, Chairman Rockefeller. I appreciate
that introduction greatly.
Well, as said, I am Don Gallion, a founder of FCX Systems,
Inc., which is located in Morgantown, West Virginia, over 24
years ago. We sell power supplies and air conditioning
equipment to the aviation industry in 78 countries on all 7
continents. I also serve as Chair of the West Virginia Export
Council on which I have been a member for over 21 years.
West Virginia manufacturers are much like most U.S.
manufacturers. They are currently on a downturn. Manufacturers
who are exporting are doing better than those who aren't. This
is due to the fact that many foreign countries are seeing a
quicker economic recovery than we are in the United States.
Excluding the slow economy, the biggest barrier faced by
manufacturers in West Virginia is tight money. Many
manufacturers have to turn down work because they can't buy the
inventory needed to do the job. If cash were available,
companies could start their recovery quicker and, therefore,
start our nation's recovery quicker. This would actually start
creating jobs.
As far as exporting goes, it is important that we look at
why exporting needs addressed besides being a good market at
the moment. It is really simple, two words--global economy. Our
world is no longer an independent economy, unaffected by the
rest of the world.
Today, with our ever-shrinking world, thanks to computers,
cell phones, jet aircraft, and the Internet, we live in a
global economy. Our economy is impacted not only by us, but by
what happens on the other side of the world and vice versa. So
this means that the world now impacts how we feed our families,
our jobs, and our markets, just to name a few areas.
Today, our competitor is no longer someone down the street
or even across a state or our vast country. Today, our
competitor is someone half way around the world. If we are not
selling on his soil, he will be selling on ours.
We could wake up 1 day to find he has taken our customer
base, and we are out of business. So unlike several years ago
when only Fortune 500 companies even considered exporting,
today we all need to participate in exporting to ensure our
survival.
It is my opinion every company needs to export to have a
chance to survive long term in our global economy. Having
stated that, it is even more important to help West Virginia
companies export. The West Virginia Development Office
International Division is a great source for our West Virginia
companies. This group operates on only West Virginia funds and
helps companies make their first or their 100th trade trip.
West Virginia companies have their hands held and are shown
the ropes, thus taking the fear out of exporting. They work
extremely close with the Department of Commerce's USEAC offices
located in the state. The USEAC group calls on exporters to
ensure they are export ready, answer questions, help with goal
keys, and other programs. This group is a great use of federal
taxpayer dollars.
The Chairman. What is USEAC, Mr. Gallion?
Mr. Gallion. USEAC stands for United States Export
Assistance Centers. Excuse me.
They do a lot with a little, very little budget. If we want
to get our money's worth, we should spend more on the
Department of Commerce. This alone could be the secret to get
our export sales to where we need them.
Both of these groups work closely with the West Virginia
Export Council. This group helps to answer questions, talks
with future exporters, puts on seminars, and speaks on behalf
of exporting. Both of the above groups help the West Virginia
Export Council in all these endeavors.
The West Virginia Export Council is a volunteer group of
experienced exporters or related job activities and are
appointed by the Secretary of Commerce. Their mission is
simple, to help West Virginia companies export.
By having all three of these groups, coupled with the SBA
for export financing, West Virginia does better than any state
around, even with the limited budget we have to work with.
I also spent 7 years as head of the National District
Export Council, working with our 1,600 members and 61 DECs, the
Department of Commerce, and states all over the country. From
this experience, I can tell you no one works together better
and gets more bang for their buck than West Virginia export
assistance organizations.
Due to this cooperation and hard work, West Virginia has
come a long way. In the last 5 years, we have doubled our
exports from $3.2 billion in 2006 to $6.4 billion in 2010. That
is saying something.
While West Virginia is doing well, we still have a ways to
go to get there, to get everyone onboard. A couple of barriers
that are slowing us could be stops for new exporters as well.
The first big barrier is a lack of a level playing field.
West Virginia companies, as well as U.S. companies as a whole,
can compete with anyone on a level playing field. That does not
exist today due to free trade agreements, or the lack thereof.
First off, every nation has more free trade agreements than
we do. This makes U.S. companies' products cost more due to
taxes imposed on their product and not our competitors'.
This is putting our nation behind and delaying U.S. exports
and job growth. It is simply solved by approving the free trade
agreements awaiting congressional approval and insisting we get
out there and make more trade deals.
The second barrier is the ability to get our customers
visas to come to the U.S. to see products they are buying,
train their service personnel, and conduct meetings. I truly
understand terrorism and the need to protect our borders, but
what we are doing now is wrong and not working.
Our choice for deciding who gets a visa and who doesn't is
way off base. There needs to be another way. We are losing
projects and jobs because of this issue. The bottom line is we
must remove barriers, and we must get our companies exporting,
for their sakes as well as the sake of our nation.
Thank you for this opportunity to speak today, and I look
forward to addressing your questions.
Thank you.
[The prepared statement of Mr. Gallion follows:]
Prepared Statement of Don Gallion, Founder, former President,
CEO, and Chairman, FCX Systems
I am Don Gallion, a founder, former President, CEO and Chairman for
22 years of FCX Systems, Inc. which was started February 10, 1987. In
2009 I stepped down to Senior Vice President of the Company to allow a
new Investor Company to put their own President in place. FCX Systems
is a design and manufacturing company located in Morgantown, West
Virginia. We design, manufacture, and sell power supplies and air
conditioning equipment to the aviation industry, both military and
commercially. FCX started exporting in 1988 and currently sells product
in 78 countries on all seven continents.
I am and have been a member of the West Virginia Export Council for
21 years and Chairman of the West Virginia Export Council for the past
19 years. The West Virginia Export Council is one of 61 DECs (District
Export Councils) throughout the United States. DECs were formed when
the President of the United States in 1960 asked the Secretary of
Commerce to enlist the efforts of U.S. business in enlarging export
opportunities for American Firms. Responding to the challenge, the
National Expansion Council was formed. From the recommendations of this
Council, the President signed an Executive Order in 1973. This order
directed the Secretary of Commerce to establish District Export
Councils throughout the U.S. In 1974 the Secretary established the
first 41 DECs, which West Virginia was one of these. Under the
Secretary's guidelines, the District Export Councils were created to
specifically promote Exports in their local communities. This is still
our mission today: try to help West Virginia Companies to Export. This
is done a number of ways. We do one-on-one meetings with potential
export ready companies. We hold seminars and conferences explaining how
to do certain export-related activities. We speak to groups, schools,
and organizations about exporting. We visit clients with the West
Virginia Development Office as well as the DOC offices in the state. We
also help be the coordinator in our state (West Virginia) to keep all
the various Export Assistance Help Groups on the same page and working
together.
We are extremely fortunate in West Virginia in that all Export
Assistance groups work together to accomplish the most good for West
Virginia Companies. We have the State Development Office, Department of
Commerce (USEAC), West Virginia Export Council, SBA, EXIM Bank,
universities, and many Representatives' and Senators' Local Offices.
These are great sources for West Virginia Companies. Unlike other
states, these groups all work together to help our West Virginia
manufacturers. This unified approach is very rare and unique to West
Virginia. I also spent 7 years as head of the National District Export
Council, spending a lot of time with our 1600 members, Department of
Commerce, and states from all over the country. From this experience I
can tell you that no other state comes close to working as well as West
Virginia does with all its Export Assistance Partners. Other states are
envious of West Virginia in this function. This working relationship
allows the most help for the fewest dollars spend and greatly benefits
West Virginia exporters.
West Virginia manufacturers are much like most U.S. manufacturers,
currently on the downturn. Those that have an export piece to their
business are doing better than those that do not. Many international
economies are recovering much faster than the United States. FCX
Systems is currently seeing 72 percent of its future near term business
potential from overseas. The biggest barrier facing Manufacturers aside
from a slow economy is tight money. Everywhere I go I hear the same
complaint. ``I can't get credit.'' ``Credit has dried up.'' ``There is
no cash for inventory purchases.'' This is holding back companies from
being able to recover more so than the lack of orders.
Let's take a look at why exporting is so important to companies
aside from the fact they are a good market opportunity. It is simple,
the global economy. Everyone has heard about the global economy more
times than you care to think about. We have heard it on the TV, in
newspapers, magazines, radio shows, and business Journals to just name
a few places. It has had a lot of traction for a number of years. Did
you ever stop to think about what the global economy really is? Well
let's dissect it a little. First there is global, which must mean the
whole world. What about the whole world? What does our economy have to
do with the whole world?
Next we have economy. What does the economy really mean? It is a
word that is used a lot, but what does it really mean? After debating
this for a sometime, I decided to look it up. I went to the dictionary
and it said economy is a system of producing and distributing the
material needs of a society. Therefore, the global economy is telling
us the world is impacting our system of producing and distributing the
material needs of our society. Our material needs, our distribution,
and our society is all now world based. That could be a little scary.
We all thought we knew what the global economy was all about, but
when you put in these terms, it is quiet profound. We are dealing with
a worldwide economy, in which our economy is just a little piece of the
pie. We no longer have independent economies based solely on local or
state or even country actions. These actions still impact us, but they
also impact people half way around the World from us. Those people's
actions also impact us. This means our ability to work for a living,
feed our families, save money and even our market is now a world
affair.
Today our world is a much smaller place than it used to be. Cell
phones, computers, faster and faster jet aircraft, and the Internet,
have all contributed to the smaller world we find ourselves in today.
Our world has forever changed and will continue to shrink with newer
and newer technology. It is getting smaller by the day, at least in
terms of how we travel around it, how we deal with communications and
create deals throughout the world. It is now easy to see, why today, no
one can ignore the global Economy.
Not that many years ago, any company could be content selling
product in its neighborhood, its state, or at least on a national
basis. Only large Fortune 500 companies dared to EXPORT. The rest of us
would never consider it. Today, if a company is not exporting, they
will wake up one day and find they are out of business. Out of business
you say, how that can be? It is real simple, thanks to the global
economy; their competitor is no longer someone down the street or even
two states away. Today their competitor is half way around the world.
If they are not selling on his soil, be assured, he will be selling on
theirs. Some day in the not too distant future, they may wake up and
find their competitor has taken their customer base. They are suddenly
left without a business. They can't just sit there and let this happen.
They produce a quality product that is desired around the world. They
can and must Export. All companies must export.
Without export participation, a company will not be a long-term
player. It is my opinion; all companies must participate in the global
economy to survive in the long term. You not only need to export as a
company, we must export as a nation. We have seen our core businesses
change as the global economy has impacted our competitiveness, but our
Nation must export more today than ever before. Throughout history,
Presidents have pushed our Nation to export. Here is what a couple have
had to say:
President Reagan--``We have the talent, the skills, and the
products to compete. We just need to encourage American business to
take the challenge.''
President Clinton--``World trade, whether conducted in person, on
paper, or on-line, remains the cornerstone of America's economic
growth.''
Additionally, a cornerstone of President Obama's Economic Recovery
was to ask American business to double their exports in the next five
years.
So it is easy to see that exporting is important to our national
economy. All our companies make high quality products that are desired
around the world. They can all export. All we have to do is make an
effort and reach out to any of the number of West Virginia export
assistance organizations that are available for help. They need to know
where to get answers to their questions and they need to take the fear
of exporting away. We have that to offer, we just need to be sure our
companies know about it. I previously talked about these organizations,
but I just wanted to list them with a small explanation of the export
assistance they provide.
West Virginia Development Office, International Division--This
group takes West Virginia companies on trade missions to various
countries. They take companies to trade shows in other countries as
well. They call on West Virginia companies to help them with all
aspects of exporting. They work closely with all export assistance
groups, but practically with the Department of Commerce Export
Assistance Centers (USEAC) in Charleston and Wheeling and the West
Virginia Export Council.
West Virginia Export Council--They work one on one with West
Virginia exporters answering any concerns or questions they have. Their
very experienced membership, consisting of both experienced exporters
and export-related occupations and are all appointed by the Secretary
of Commerce, can address any export question or problem that comes
along. They hold seminars and teach various aspects of Exporting. They
have conducted a class for the last eight years in conjunction with
West Virginia University called the Export Management Class. This class
has helped over fifty West Virginia companies export for the first
time. It has also trained over 300 students in exporting operations.
Additionally we talk at schools and other organizations promoting
exporting. We also contribute funds we raise to help companies attend
state-sponsored trade trips. We also act as the overseer to all the
other export groups to see we do not compete, overlap, or head in the
wrong direction.
Department of Commerce (USEAC)--These offices located in Charleston
and Wheeling do a great job for West Virginia. In my opinion this might
be the best spend Federal dollars to come into our state. If this group
had more to spend, we could see West Virginia exports rise in
accordance to the Budget supplied these amazing people. They council
people, set up Gold Key appointments, get information from overseas
offices, conduct training, help the Development Office with trade
missions and shows, as well as speak on behalf of exporting. They also
work with the West Virginia Export Council, serving as its Executive
Secretary.
Small Business Administration and EXIM Bank--Both Groups work
together and independently. EXIM has the high balances of loan
available, but also the most red tape. They both offer special loan
programs for U.S. Companies that export. In some cases they will even
loan your foreign customer the money to buy your product. Export
receivable insurance is offered as well giving you the ability to offer
more favorable terms and increase your export sales.
The above are the biggest export assistance help West Virginia
Companies have. It is great and it has brought West Virginia a long
ways in just a few years to truly understanding exporting. We all still
have a ways to go to continue this education process, but it is nice to
see progress. The last five years, West Virginia has outpaced the
Nation in export growth. See below.
West Virginia Export
Year U.S. Export Growth Growth
2006 14% 25%
2007 12% 23%
2008 12% 42%
2009 14% 18%
2010 21% 33%
As this shows, West Virginia is making big steps in getting West
Virginia companies to export. As I discussed earlier, President Obama
has asked the Nation to double exports in five years. Last year West
Virginia doubled its exports in the last five year period. In 2006 West
Virginia exported $3.2 billion. In 2010 we had grown exports to $6.4
billion. So it is easy to see West Virginia is making big strides in
exporting. This is extremely important when you consider the global
economy.
Also it is important when you consider that 98 percent of the world
customer base is outside the United States. Of all exporters in the
U.S., 95 percent are small business, 85 percent are selling to only one
country, and we must not forget, our competitor is now half way around
the world and we must compete. We must go out and get our fair share.
Barriers facing exporters are problems that the Federal Government
needs to address. First we don't get to compete on a level playing
field. All of our foreign competitors have trade agreements with other
countries where they trade with each other tax free or nearly tax free.
Our products are taxed coming into the countries; therefore our sale
price is higher than our competitors. We need the Senate to approve
existing trade deals and help U.S. companies create the jobs our Nation
needs. We need to push the President to negotiate more trade deals and
give U.S. Companies a fair chance. After all, most of these countries
enjoy free trade status with the U.S. anyway. So they sell their
products to us tax free, but we don't get the same treatment while
selling our products to their countries. We can compete with anyone,
put not when the playing field is leaning toward our competition. This
can be very discouraging especially to new companies trying to export
for the first time.
Another barrier, we as exporters face is trying to get our
customers into the U.S. to see the product they want to buy or are
buying, to train customer service personnel, and to conduct meetings. I
understand terrorism better than most. I have to worry about it almost
every day as I travel throughout the world. However, we must put some
sense back into the visa application process. At the moment it is like
the bully at the school yard that gets a charge out of beating people
up because they can. Our agents seem to get a charge by denying our
customers visas and then refusing to even talk about it. Exporters, me
included, lose sales every day because we can't get the customer a visa
to make a legitimate business trip to our country. I lost two sales
opportunities totaling over a half million dollars this week alone.
Yes, we need control, but we also must control those dictating visas.
There must be a better way.
Both of these laws have a very negative impact on U.S. exporters
and will slow if not stop new exporters. In summary, West Virginia
manufacturers are doing well if they are exporting. The need for more
credit is a big problem for not only West Virginia manufacturers, but
manufacturers as a whole. We have spent billions of dollars trying to
create jobs. Surely we can create cash for our nations' banks to help
free up cash to small business. I believe we created a program to do
this, but I can tell you, it is not working. We are doing better with
exports in West Virginia, but we need to continue to push harder for
more companies to get involved both in West Virginia and throughout the
country. The Federal Government needs to address the barriers they have
thrown up for exporters and give us a more level playing field. The
Department of Commerce is one government agency that is helping this
Nation's business. Let's quit trying to reduce their budget year after
year and give them monies they need to not only continue to help
American business, but expand their programs so they can help even more
American business. If we try to address these issues, we all will be
better off.
The Chairman. Thank you, Mr. Gallion.
I would like to make a general plea to some kind soul. I am
sitting in a chair which makes me feel like I am sitting on the
floor, and I need some kind soul to find somewhere a nice, big,
fat cushion.
[Laughter.]
The Chairman. So I can put it underneath me and be
comfortable for the very first time. I apologize for that
interruption.
[Laughter.]
The Chairman. Let me just start with you, Mr. Kumar and Mr.
Julian. It is just a very simple question, which has been
raised by all the witnesses. What are the first steps a company
should take to begin exporting, and how can your offices help?
And don't use government acronyms. Say what they are.
Mr. Kumar. Thank you, sir.
I couldn't help reflect on USEAC, and it is not lost on me.
We go by so many different brand names, which is exactly what
we don't require. We don't need acronyms, but we do need to
know that as exporters, we don't need to go it alone.
And that is what we tried to provide with the U.S. and
Foreign Commercial Service. We may go with acronyms called
USEAC here, but it is a comprehensive set of services to make
sure that exporters don't need to engage in external markets on
their own. We have trade specialists in your state, in your
backyard. We have--we call it ``soup to nuts'' because they
connect with 129 offices across 79 countries.
And as I heard, Mr. Gallion, you go to 78. We have got to
change that. We have got to get you to the 79th country, where
we can provide you support.
What we need to do is publicize and make people aware. It
is not the Commerce Department alone. We cannot do what we do
without the support of the other people around the table.
And Senator, I hope it came loud and clear that we do this
through collaboration with the SBA, with the Eximbank, with the
state economic development agencies. But we need to get that
message across better to every business that we do.
We do it through seminars, webinars, meetings such as this,
and I thank you again. The convening of meetings such as this,
which is being telecast across West Virginia, is incredibly
powerful for us to get people to know what we provide. We do
market research. We do public--we do problem solutions.
Nothing is too small for the Commercial Service in the
support of export businesses, whether it is who to contact,
what forms to fill, to help you if your goods are stuck at a
customs counter, or, indeed, look at working with you in terms
of how you can engage in exporting and provide you suggestions
which country to export to.
So we are--I am incredibly delighted. When I took this job,
you had posed me a similar question during my confirmation
hearings. We are here, and 1,450 of the people across the
Commercial Service are here to engage with businesses across.
Again, we do not operate trade in a vacuum. Trade is
competition. We need boots on the ground, and through leverage,
we acquire more. But where the Committee can support us is also
through making sure that the boots on the ground continue to be
available to businesses not only in West Virginia, but across
this great country.
The Chairman. Our people are sometimes a little bit nervous
about engaging overseas. It is sort of an Appalachian
characteristic. Not a bad one at that, but in this case, it is
not as helpful. So that the Assistant Secretary makes that
point, these services are available.
Now there is a big gap between saying something is
available and then having it well enough known or available
enough to people like young Don Gallions and others who are
entrepreneurs who have an idea that they think could do well
overseas, but don't quite make the step to make that
connection. Could you talk about that?
Mr. Julian. Yes. You know, Senator, that is an issue
whether you are talking about exporting, technology adoption,
or part of the diversification strategy of doing business with
the federal government or state government, for that matter. So
it comes back to an education and awareness.
The partnership that we have with U.S. Department of
Commerce Export Assistance Centers and our International
Division is almost seamless. There is a strong partnership
there, but it is an engagement. It is awareness, which our
office does a very good job of. But it does get down to
resources.
I believe we have two trade specialists that work on that.
They do an excellent job. We do a lot of visiting with
companies, direct mail, different strategies of awareness. But
anything that we can do with you to expand that awareness, to
get people engaged, to get them to a comfort level because,
again, it is an issue whether you talk about export or
technology adoption or whatever strategy you may want to talk
about to compete and expand their business base.
The Chairman. You know, it is more difficult perhaps in
Appalachia than in more international, so to speak, parts of
the country for people to have an opportunity, let us say, in
Vietnam or India or in Germany or Great Britain or whatever and
sort of reach out to say, ``I want that opportunity.'' It is a
bigger step psychologically in West Virginia than it might be
in some other state, like in California.
Does that mean that the Commerce Department and the SBA and
you have identified these folks and you go after them because
you think they should be doing this?
Mr. Julian. Right.
The Chairman. Or do you wait for them to come to you?
Mr. Julian. Both ways. But our people, our staff are
aggressive, and they do an excellent job in understanding the
company's capability and trying to match up to the markets that
they research and line up. But again, I can't emphasize enough
the partnership that exists between the government, the federal
government and the states.
But if you can get them engaged and look at their
capabilities and match up with opportunities, there is no doubt
that the staff can get them to a comfort level to engage and,
no doubt, succeed because we are all aware of the quality of
the product and the commitment of our people here.
The Chairman. OK, I noticed that, Secretary Kumar, you're
having a White House Business Council, and the Charleston Area
Alliance, that you're holding a roundtable on precisely this
subject this afternoon, to hear directly from West Virginia
businesses.
Where will that be?
Mr. Kumar. Yes, sir, it's later today. It's slated in the
city to meet with West Virginia businesses.
The White House, as you may be aware, has made a commitment
to have almost 500 of these roundtables.
The Chairman. Right.
Mr. Kumar. We need to hear directly from the businesses. At
best, administrations and governments create a framework, but
we serve the needs of the businesses to create jobs. And this
is one of those meetings where we go directly.
But I do want to reference a couple of things here in the
spirit of this question and the last one. Businesses across the
Appalachian Region can go to Export.gov to see what is the
range of services provided by not only the Commerce Department
or my service, but the entire range of agencies which in some
way or shape help impact exports.
The Chairman. Export.gov?
Mr. Kumar. Export.gov. We also reference CommerceConnect is
coming to Charleston. It is an attempt to bring together a one-
stop shop, a one-stop window, as you said, to make sure that we
have one common portal where all the services are detailed.
In a physical sense, where possible, we will co-locate, not
only amongst us, but the other agencies of the U.S. Federal
Government, to come together in one place.
The third, also in a physical sense, while doing this in a
portal sense, we do it, and we also have 1-800-number telephone
services, where people who want to learn about exports can do.
In addition to all of that, since none of us can do this
alone, but together America has a potent, leverageable amount
to services which we can provide, we divide and conquer. New-
to-export companies can be tackled by the SBDC Ms. McCauley
talked about earlier and also through collaboration with the
University of West Virginia, where we've actually set up and
worked with them to set up a spring export course in their
curriculum.
So this way we can bring the new-to-export companies, while
freeing ourselves to concentrate and work with current
companies in West Virginia and beyond who export, so that they
can get all the services. We can export the number of exporters
in the first instance, and yet provide better service to the
exporters who are currently doing that.
That is the way we will win the future, which the President
alludes to, so that the combined resources of the federal
government and the state government could be leveraged to the
benefit of U.S. businesses.
The Chairman. Thank you.
Mr. Gallion, it strikes me that there are several kinds of
entrepreneurs in West Virginia. Some, like you were many,
several decades ago, you were young, you were from Wayne
County, you had this particular gift, which you may or may not
have known about, but you weren't Dow Chemical. You weren't
General Electric. You were Don Gallion from Wayne County, and
that's one kind of entrepreneur.
And I'm referring to what the Assistant Secretary has said,
that we're available, we can help you, we can respond to your
needs.
Then there's another kind of entrepreneur, who is more
practiced, because, perhaps, he belongs to a bigger chemical
company or a bigger general company, and they know those
practices. They know the services available.
How do you crack through to Don Gallion when he was 30
years old, that these services--you did it evidently, or maybe
you didn't. Maybe you just did it on your own.
See, the federal government, it's that old thing, ``I'm the
federal government. We're here to help.'' That usually draws
laughter. It doesn't show laughter in this courtroom, because
it's true.
How do you respond to what I say?
Mr. Gallion. Well, basically, to be perfectly honest, the
Department of Commerce has been a great source for exporters
for many, many, many years. I mean, when I started exporting, I
never heard of the Department of Commerce, other than the name.
As far as what it did, I had no idea.
Today, they're much more out in the community, more
focused, more getting the word out, than they did 25 years ago.
That's not to say that it's perfect yet. We've still got a long
ways to go. We've still got a lot of companies that we need to
get to. We've got a lot of people we need to get the word out
that it's available, that these organizations even exist to
help them.
As you said earlier in your comments, when the federal
government comes knocking at a company's door, sometimes they
go hide in the basement rather than answer the door. So you
have to face that problem. But first you have to get them to
know that they're even going to come to the door.
And that's one of the big areas that I know that for at
least the last 20-some years I've been involved in some way or
fashion with Commerce and exporting is that's been trying to be
improved. I think we've made great strides or they've made
great strides in getting the word out. And they've got the word
out in a lot of ways, not only with their own organization, but
with other export organizations, like the development office
here in West Virginia, the Export Council.
We've all been out there talking to people, letting people
know about us, know about them, know about what we do, know
about how they can be helped. And the Assistant Secretary
talked about teaming with the groups in the state, and that's
been the key. I think that's been very important, particularly
in a state like West Virginia where there are not a lot of
dollars to spend on anything, let alone exporting.
You have to have a lot of people out there working, beating
the bushes, talking about exporting. As an example, the Export
Council even goes to schools. We go to public schools and talk
about exporting.
The Chairman. How do you do that? What you tell them?
Mr. Gallion. We tell them that it's a great opportunity.
It's going to be part of their future, whether they like it or
not, because if they're not exporting when they grow up,
they're going to have real issues. They'll have tough times
finding jobs.
It also opens up a dialogue, I think, with mom and dad when
they get home, in terms of what did Johnny learn in school
today. Well, we learned about exporting. And dad may suddenly
say, oh, well let's hear more about this. Maybe this exporting
thing isn't so bad.
A lot of people look at exporting as something that's going
to steal their job rather than create jobs.
The Chairman. Plus, isn't it also true that West Virginia
has, in fact, by virtue of the Internet and smart phones and
all the rest of it, changed dramatically from very young levels
on up?
In other words, I can remember going to Horace Mann, I
think it was here in Charleston, and there was a third grade
class--would that be about 6- or 7-year-olds, 8- or 9-year-
olds?
Anyway, they were doing a live conversation with an
astronaut who was meant to make the final shuttle flight the
next day. It didn't take off, but that wasn't the point. They
had a streaming conversation. They were built into sections of
people who were solving computer problems--these are just
little kids, and they were solving computer problems. Some of
them had to make spaceships. And they were incredibly engaged.
The degree of intensity and the focus of these very young
children was overwhelming to me, overwhelming. And I've see
that repeated in other parts of the state in age groups of that
level.
So I think they grow up with a much better sense of what is
out there in the world, don't you?
Mr. Gallion. Yes, that's very true. I mean, I think
particularly the Internet connections that are available to
West Virginia schoolchildren are fabulous.
I think you, as one individual, have strived hard to help
make that happen. And I really thank you for that. That's
helped a lot of school-aged kids throughout our state, even on
the college level.
The Assistant Secretary talked about the class that's held
in conjunction with West Virginia University, our export
management class. That's a program we've proudly put on now for
8 years with the West Virginia Export Council, the Department
of Commerce, and the university working together to make that
program happen. And it's a program where we put not only
companies but students in a classroom together and, basically,
teach them to export.
You know, we've had over 50 West Virginian companies
graduate that program and export for the first time. So we're
pretty proud of that.
Along with that, we've had about 350 students learn about
exporting, many of them getting jobs with export-related
companies or export-related occupations. And we actually
broadcast that class across the Internet in different locations
around the state as well. So we're pretty proud of that
happening also.
The Chairman. Good.
Mr. Moore, one of the abiding problems of a lot of states,
including West Virginia, is the psychological crushing of what
happens when a major industry closes down. I mean, you can look
at Weirton Steel, you can look at Century Aluminum, you can
look at all kinds of different places.
There's a mayor in a town that I had never heard of in
Tennessee who lost 1,900 jobs, and he said it was like being
hit with a nuclear bomb.
So the whole construct of a worker who goes through that--
and that's not uncommon. I mean, you saw that in the textile
and sneaker industry in West Virginia.
People have to rebound. But that's an easy statement to
make. It's a very hard thing to be able to do.
And so that brings up the question of, are we, in your
mind, maybe not for the worker himself or herself, but maybe
also for that worker, but certainly their children, how do you
evaluate our ability and our willingness and our resources
spent?
There's a lot of talk about it, but I want your view about
how good it is, on educating people for jobs that exist. I've
never believed that it was fair to tell a West Virginia
student, like a college student or a high school student, that
you have an absolute obligation to stay in West Virginia even
if you don't have any work. What I've said is sometimes it pays
to go to another state for 4 or 5 years where you can find a
job, and then we're working to try to create jobs that will
match your skill set and other skill sets back here. And when
we have them, they will come back, because West Virginians
always come back when they have a chance.
But how do you see this whole question of training skill
sets, or not sufficiently doing it?
Mr. Moore. The first thing we see, Senator, when we go
through the closures and we start looking for some help and
assistance to retrain and reeducate and to try to get people
that have been in one particular industry--and normally were
dealing with people in their 40s and 50s.
You know, that's something that's happened to us in the
state of West Virginia. A lot of our manufacturing industries
here are old, well-established, well-founded industries. And
unfortunately, there's not a whole big market out there for
folks that are in their 50s and late 40s.
But through the TAA, which you have helped us so much with,
and we appreciate that, through the TAA, these folks are able
to sit down and rethink where they want to be or where they
need to be in life.
But all too often, what's offered through those classes
aren't really classes for the majority of the elderly
population and the not-so-elderly population. We find them
ending up in the medical field, a whole lot more in the medical
field. And that's due primarily to the continued loss, I feel,
of manufacturing jobs here in West Virginia.
However, I do want to point out that through the 1980s,
most employers, especially in unionized settings where we did
have good apprenticeship programs, good government-approved
apprenticeship programs that were college-accredited, college-
degree programs, we had those for years. When industries
started cutting, and they had to start cutting as we started
into this downswing, especially in the steel and metals
industry, that was some of the first spending levels that were
cut out as being not essential, as being nonessential at the
time, which over the years has come back to really, I think,
cripple the industry.
And for the manufacturing that we have left, not only in
West Virginia, but across the country now, where we're trying
to build back, we have a serious shortfall of skilled people.
And it's a tough problem to deal with.
The employer doesn't want to take on that accountability,
that responsibility. The individuals, when they do have the
ability to go to some type of school, we find that there is a
lack of adequate training facilities. I heard here this morning
they're talking about working on them. I'm glad to hear that.
I think in this country in general there is a stereotype
concept that college is only for academics and it's not for
anything else. And that's far, far, far from truth. We have to
lose that mentality and look toward skilled workers as we move
forward with higher levels of education.
We have to have that. We have to make it more affordable to
them. We have to do that.
But until we can stop the bleed, put the finger in the dam,
so to speak, of jobs going overseas. I'm glad to hear Mr.
Julian and some of the statistics he gives about our exports.
I'm glad to hear that.
We see a little bit of it in the aluminum industry and
other areas. We see a small amount.
But the export of our jobs far exceeds the export of
products here, not only in West Virginia but across this
country.
The Chairman. Let's talk about that for a moment, because
it brings up the very sensitive subject which you referred to,
and that is that the free trade agreements as being a bad thing
because they cause jobs to leave.
The other side of that is that if you don't have a free
trade agreement--and this is open for anyone on the panel--if
you don't have a free trade agreement, and I voted for some and
I voted against some of them, then they're going to put a
tariff on your goods. If you don't have a free trade agreement,
they're going to respond by putting a tariff on the goods that
you try to export, and, therefore, you're going to lose and
somebody else is going to be able to export, and you can't.
The other side is that most countries don't play by the
rules. America is sort of unique that way. And I guess either
appropriately or inappropriately, naive that way, that we do
play by the rules. And we are infuriated when people steal our
patents, which is common practice overseas, when people don't
meet our standards, which is pretty much impossible for most
countries to do. Our standards are so high in America. But they
tear us to shreds.
So you come down to this situation of, do you want to join
the opposition and change them by disallowing their right to--
because it's WTO stuff, et cetera--you disallow them to put
tariffs.
And that's where I spend my time, in front of the
International Trade Commission, because of all these tariffs
that are put on unfairly. And it's often with countries that we
do not have free trade agreements with.
So I mean, I see your argument, but I see the other side of
the argument too, and I'd like to have a little discussion
about that.
Mr. Kumar. Thank you, Senator.
First, on the jobs issue, I just want to make the facts
clear. Over the last 15 months, 2.1 million jobs have been
added to the economy. Over the last 6 months, 1 million jobs
have been added.
And you're absolutely right, the President has made it
clear: to win the future, we need to out-innovate, we need to
out-educate, and connect to markets.
I think we've heard about the need for education, whether
it's retraining or just training our children to more
sufficiently and robustly engage in the markets.
But let's talk to the free trade agreements. This
Administration has always stood for free and fair trade. And I
think that's the resonance which is coming from most of the
panel members today.
With respect to Korea alone, $95 million in goods alone
were exported from West Virginia between 2008 and 2010. Of
this, chemicals and metals find a large part.
Upon signing, upon the KORUS, the Korea free trade
agreement, coming into existence, the duties on chemicals in 50
percent of cases will be immediately phased out, all the
duties.
The Chairman. And the duties are up to what level?
Mr. Kumar. 6.7 percent is the average, but it goes up to 50
percent in some instances.
So immediately upon signing, 50 percent would have no
duties levied. And the balance would go away in 10 years, which
is exactly the point you made, is we need to engage in the
world because other countries--trade is not in a vacuum--are
signing these deals. And we cannot have American industry at a
disadvantage, because by signing a similar deal with the
European Union, we will disadvantage ourselves to the extent of
3.8 percent, in terms of levees and duties alone.
So doing this is the right thing. If we look at it in the
context of agriculture, $67 million of agriculture exports
spanning poultry, eggs, beef, and dairy from this great state
to Korea happen. On two-thirds of these, duties will
immediately go away upon signing.
I only highlight this as an example of being competitive in
the marketplace and the advantages which could accrue. So it is
to ensure--and you, Senator Rockefeller, have taken the
leadership in the several bills, and you referenced 11 more
coming in the pipeline. Whether it's Strengthening America's
Trade Laws, Domestic Jobs Innovation Bonus, Manufacturing
Reinvestment Act, Currency Exchange Rate Transparency Act.
The Chairman. What, did my staff give you a note?
[Laughter.]
Mr. Kumar. Some of us are well-acquainted with your staff.
Thank you.
But the fact of the matter is, these are all efforts to
protect to make sure that while winning in the marketplace by
engaging, doing so to ensure that not only is it free trade,
but fair trade happens.
I have enough statistics on the other ones, too, because we
need to ensure that American workers have a free and fair and
level playing field, because we believe that on a level playing
field, we do extremely well.
The same thing happens with Colombia, $14 million in
exports, manufactured goods, between 2008 and 2010; 87 percent
of duties will be eliminated in the case of the Colombia free
trade alone; 90 percent of imports from Colombia don't attract
duty. This is what you referred to their already having the
benefit. Why should we deprive American companies of having
similar benefits as we sign these deals?
All these additional competitiveness-building measures mean
jobs in this country. Jobs is our number one priority, and
exports are seen as a means to jobs.
In crafting the National Export Initiative, the President
called upon us to double exports in 5 years. That is a 15
percent compounded annual growth rate. We are currently running
at 17 percent. We did 17 percent last year; running rate today
is 17 percent.
But the President also said, while creating those exports,
that we needed to support at least 2 million additional jobs,
which are well-paying jobs, paying 18 percent more than the
average manufacturing jobs here at home.
So these are the right things to do, and we need to put in
place and make sure that the American companies benefit, we
engage constructively in the marketplace, and in doing that, we
create good-paying jobs here at home.
The Chairman. Thank you. We'll give Mr. Moore a chance to
respond to that, as I'm sure he wants to.
There's another major problem, which is patents and the
outright stealing or leveraging or reverse engineering of
patents. And it's a common practice, particularly in the Asian
part of the world, but presumably in other parts of the world
too, where you come with an idea, they buy your company, they
offer a good price and then they take all of your ideas and
they become their ideas. And there are much cruder forms of
doing it, too.
The stealing of patents. Patents is what we're talking
about. It's innovation. It's the endgame of science,
technology, engineering, and math. It's the endgame of all
that, to come up with a patent, which is an idea which nobody
else has, which is exclusively yours, which you build a
business on. And then you start doing business overseas and
that patent gets taken away from you.
Can you address that for a moment, before we get to Mr.
Moore?
Mr. Kumar. Glad to, Senator.
Before taking up my job, I spent over a quarter century in
corporate America running businesses internationally. I know if
patents and stealing were not an issue, all of us would be
exporters today.
So in the real world, we need to ensure that American
innovation is protected. And we ensure that through every one
of our bilateral and multilateral conversations with every one
of our trading partners, not just one or two countries, to
impress upon them the need to go with the international patent
regime and the laws which are in place.
It's not just paying lip service. Is it is ensuring this
happens.
The Chairman. But I can't trust that. I spent a lot of time
out in the world. And people, they say that, but we don't have
the people to enforce those laws, whether it's free trade laws
or patent laws or whatever. We talk about it, but we don't do
it. Because they belong to the WTO, that doesn't mean that they
suddenly clean up their act. This is the way they've been doing
business for centuries.
Mr. Kumar. Senator, if I may just highlight a few of the
programs or the approaches, in terms of how this is done.
First is educating our companies on patent protection. And
that we do through having several education programs, in
dealing with 19 different countries, how to go about pre-
exporting protection. The Commerce Department has that. We also
have a website, StopFakes.gov, which indicates what are the
challenges you're faced with, how to deal with it, and who to
contact within Commerce who could help.
In addition to the education inbound, we also do education
outwards. With our partners, we have the Commercial Law
Development Program, CLDP, where we actually teach and work
with judiciary and law enforcement officers in different
countries on not only the law relating to patents, but how to
enforce them, because it's enforcement which is key.
We have, as I said, toolkits, which is on a country-by-
country IPR basis. And we also have a multilingual twist to
this now. We do this in English, French, and Spanish. And on a
pilot basis, we're also engaging in Latin America in Peru,
rolling this out through the Chambers of Commerce there and the
government.
So while patent protection will always be important and may
not be perfect, there are a number of programs educating our
businesses on how to engage the services which I mentioned
through the Department of Commerce and the U.S. and Foreign and
Commercial Service, where we are able to work with you in
implementing, affecting, and enforcing this with foreign
governments.
So the question is extremely important to us. American
enterprise is just that. We are enterprising and we have
innovation, and we need to put in place the mechanisms which
will work day in, day out.
The Chairman. Manipulation of currency?
Mr. Kumar. Senator, it's so recent that I've seen your
Currency Exchange Rate Transparency Act. It's an important one.
I can't say that I'm expert in that law. It's fresh, as you
know. And I know that the Administration is taking a look at
it, and it's an important issue, which we're working on.
The Chairman. All right, Mr. Moore, you're more than
patient, but I have to ask, Mr. Gallion, did you ever have any
problems with patents?
Mr. Gallion. We've never had an issue with patent, because
since we are doing so much business internationally, and in
order to have an international patent, you have to actually
spell out exactly how you do what you do for the whole world to
see. We decided it was better to work with the trade secrets--
--
The Chairman. I didn't realize that.
Mr. Gallion. Pardon?
The Chairman. What's an international patent? I wasn't
aware of that.
Mr. Gallion. Yes, there's an international patent that can
be filed as well as a U.S. patent, if you're doing business
internationally, which the international patent is recognized
by most countries, just like the U.S. patents are recognized
here.
The Chairman. So you spell out everything that you do?
Mr. Gallion. You spell out exactly how you do whatever it
is you do, so it's very easy for somebody to take your patent
and copy it. You are protected for a number of years, but it
will come out eventually. And it could go to another country,
and a lot of other issues that come about with it.
So we've dealt with trade secrets rather than going the
patent route.
The Chairman. But by that time you've established yourself,
and you just beat the competition.
Mr. Gallion. Right. We make changes periodically to keep
our product ahead of the game.
One thing I might add, if I can, on the free trade
agreements. I understand the issue Mr. Moore has raised about
jobs going overseas. But it would be my contention that jobs go
overseas more from a lack of free trade agreements than with
free trade agreements.
Without the free trade agreement, companies will have to
find ways to compete. And one of the ways to compete is to make
the product in that country.
So I really think it's more a lack of free trade agreements
that take jobs overseas than the actual having free trade
agreements.
The Chairman. Mr. Moore, the floor is yours.
Mr. Moore. Thank you, Senator.
Mr. Kumar, I do appreciate your remarks about where we need
to be with the training and education.
The Chairman. Mr. Moore, could you get up to the
microphone, please?
Mr. Moore. Your remarks about fair trade, I appreciate
President Obama's position for that. We follow the
Administration closely along those lines.
I want to make one thing perfectly clear from the
standpoint of the United Steelworkers Union: We are not against
free trade. We are against unfair free trade. That's what we're
against.
You spoke about the chemical. I didn't catch the numbers
but you said exported over a 2-year period here from the state
of West Virginia. You know I find those--I just would like to
know the numbers that that would've been 10 years ago, when in
this very valley where we sit right now, as you know Senator,
was known as Chemical Valley. They're gone. All those jobs are
gone. For the most part, they're gone.
I sat through a meeting, took a walk around the facility,
right down here in Nitro, West Virginia, with an international
CEO of a chemical company. And he said, ``I want to have a
discussion with you, Randy.'' He said, ``I want to tell you,
you have done a tremendous job working with us here. I can't
say anything about your union except good. I can't say anything
bad. It's all good. Your safety and health, your productivity,
your people rise to the occasion. But,'' he said, ``we're going
to China and there's nothing you can do about it.''
I said, ``Well, why? What do I say to my members?'' He
said, ``You can't work for what we're taking this business to
China for.''
And I've gone through industry after industry after
industry with that.
Now, we can't wait. We can't sit around and wait. I
disagree with you that we have to export all of these jobs to
be able to save jobs. I don't understand that thinking.
We can't sit around and wait. We've got to be innovative,
but just like the three with South Korea, Colombia, and Panama
that's coming up, the Steelworkers alone have at risk over
350,000 jobs in those agreements, especially with Korea, as
they relate to the metals industry, as they relate to the
automotive industry, and all ancillary jobs that are tied to
them.
So my question is, why do we continue going down the same
path until we can fix the path? I think everybody in this room,
if I'm hearing right, says we need free trade, but we need fair
trade. We need fair trade with countries that have humanitarian
benefits similar as we do.
Colombia is deplorable. Their record is deplorable for
their humanitarian benefits.
Why do we not try to balance out what we have now, learn
from that, and work from that, and continue to expand our
trade, because we have to export our products? We'd sure all
like to see a lot more products made in America here. We want
them made here. I think there's a great market and a great
opportunity that still exists in this country for that. But at
the same time, the new horizon is to sell across the foreign
waters. It is.
The Chairman. And that's of concern, either the three of
you.
And there's sort of almost a psychological--maybe I'm quite
wrong on this and tell me if I am--almost like a psychological
pressure that if you're in the same business as another company
is, and you see that company go overseas because of the
advantages of so doing, that there's more pressure on you to do
that, or on your board to do that.
So decisions are made for financial reasons and, by virtue
of that, don't necessarily include worker reasons.
How would you comment on that? I mean, is there a sense of
inevitability? There shouldn't be.
Mr. Kumar. Senator, America is at its best when we're
inventive. Let's not forget that the motor car, the airplane,
and yes, even the Internet and the GPS, were all invented here.
When we have invented, we have prevailed.
And that's why this Administration places so much emphasis
on the need to out-innovate the rest of the world and compete.
Let me reflect on the two questions and the facts, which
was requested.
Our exports--goods from West Virginia to Korea--were $95
million between 2008 and 2010. I referenced that much of the
duties which are imposed will go away. In a competitive basis,
Korea is going forward with free trade with other countries.
And while the U.S. was Korea's biggest trade partner in 2003,
we today are the fourth largest exporter to that country. We
just cannot afford to be passive and see it go away.
On the other hand, through investments in newer businesses,
in better technologies--and this great state of West Virginia
has invested $13 billion in new businesses since 2005. You have
created newer areas of engagement--biometrics, natural gas,
reserve and exploitation of natural gas.
These are the ways we're investing in whatever we are
investing. We have an obligation to the workers, and that is
through the TAA and otherwise, in terms of their retraining,
and ensure that our workers are never at a handicap for
something else.
Free trade is a reality. Trade is a reality. And it is
becoming increasingly global.
American workers have demonstrated time and time again,
when we have invented, we have prevailed. We need to build and
put in place programs which help our workers engage and compete
in their field. And that's precisely what this Administration's
policies are meant for.
The Chairman. And Ms. McCauley and Mr. Julian, can we do
that, because I'm a very strong advocate for TAA, a very, very
strong advocate. But that in and of itself doesn't solve a
problem. That allows a family to eat. It doesn't allow them,
necessarily--you know, you're talking about 40- and 50-year-
olds not being wanted in industries. Maybe that's not entirely
true.
I mean, I know that there are a lot of industries in West
Virginia that are looking for workers now who have skills and
experience. And they can't get them. So where's my disconnect?
Mr. Julian. OK, where do I start?
Back to Mr. Moore's comments about the mentality of whether
you're going to get a 4-year degree or a 2-year degree, we do
need to prioritize technical occupations.
And one of the things that we've try to do at a state-
level, and I've been involved for the last 4.5 years, is to
clearly communicate to the educational facilities, particularly
the community colleges, as to the job creation that we're
seeing, as to their planning, the clustering that we're seeing.
And we're doing a better job of that, but we need to
continue to work on communicating to the workforce that either
is out of school or looking to retrain of the strategy that we
have for diversification.
So our community colleges in particular are working hard in
clustering their strategies toward job development in their
regions.
But back to the Secretary's comments, if you look at just a
few examples that I mention of the $15.2 billion since 2005
that the development office has been directly involved in
project management, a Swiss eye company--you're very familiar,
Senator, with Alcon in Barboursville, just building their
second facility in West Virginia. They're going to employ over
800 people, a highly FDA-regulated facility, the world's
largest producer of intraocular lenses, and their new insertion
device plant that physicians will use in that surgery here in
West Virginia.
Toyota, we're all familiar with their success.
A little small facility in Beckley, Klockner Pentaplast, a
German company, you'll find the latest technology in that
facility in the world, in that specialty plastics facility.
Again, a foreign investment.
I mean, this is the reality of the marketplace. And I go
back to the Secretary's comments of this transitional position
we're in, in manufacturing, to where if you go back in
history--what?--34 percent of the employment in the country at
one point was manufacturing. I think in doing some research
last week, I think probably in this country we're to maybe
around 12 percent of jobs in America are in manufacturing.
But it's clear that the job creation in that sector is
those that are technology-based that we need to work harder on
for the skill sets.
And West Virginia is a part of that. If you just go through
the list of investments, and I can provide this committee the
entire list from 2005, many of which are international, that
this targeted strategy are in those areas that there is a high
degree of technology in those facilities.
It's not the old manufacturing of mass production, but
highly targeted, very niche kinds of investments involving the
technology. I mean, that's the path we're on.
I think we have to focus to get our people trained to
compete as aggressively as we can that, with the idea that the
skill sets are going to have to change toward the technology
curve and the intelligence that Secretary Kumar talked about.
The Chairman. One of the things we have to do, I feel very
strongly about--not that that should influence your answer--but
young people don't believe that manufacturing is their future,
because they think of manufacturing as huge companies and,
therefore, they can't possibly get into that. Or they think of
it as something which is of an earlier part of America.
When I'm thinking of it and spending the next years and
years on the Commerce Committee emphasizing manufacturing, and
I want to say to them, don't think like that, that's a
stereotype on your part. It isn't a problem with the industry.
It's a stereotype on your part.
Now, granted that Toyota, they hired workers from, I don't
know, 40 of our 55 counties.
Mr. Julian. It's significant.
The Chairman. It's extraordinary. And they tend to be in
their 20s and 30s, yes, because the Japanese like to train
people in their way of doing business. Then they'll send them
over to Japan for a while. They send groups of them and then
have them come back and send more. And so you grant that.
And you go through that factory and you see incredibly
motivated, highly productive--and actually, one of the first
things I thought, Mr. Moore, was that a lot of those employees
had to be ex-coal miners who had been laid off in the coal
fields because they had very high technology skills, which you
have to have now to be a coal miner. And the answer was no,
there are only three. This was back when they only had 300
people working. There were only three.
These were basically young people from rural parts of West
Virginia who just wanted to work. And they heard about this
plant and they came to this plant. And this plant has never
stopped expanding, and it still hasn't stopped expanding.
I mean, they're going have to run out of the northern
panhandle before they stop expanding, because they won't let
them expand in Pennsylvania.
[Laughter.]
The Chairman. But you understand my point? Please.
Ms. McCauley. I think that a lot of the young people that
you're talking about don't really think of themselves as
manufacturers as much as they think of themselves as
entrepreneurs. They're creative. They create. They innovate
something. And they may send it somewhere else to be originally
manufactured, or they may just start very small, but they're
not thinking, ``I'm going to be manufacturer.'' They're
thinking about an entrepreneurial idea, something they can
innovate and sell.
And they do become manufacturers. But that's not the way
they're trained or that's not the thinking of today, much.
The Chairman. Mr. Julian?
Mr. Julian. Yes, you have to ask yourself, where does this
start? And it starts at home, and as a parent, what do we
communicate to our child? Have we done enough research as to
what the job opportunities are?
At the end of the day, we hope our children get jobs,
right? So the idea that you're not successful in life unless
you've got a 4-year degree is really not being fair to that
child. There are a lot of opportunities.
Let's go back to my remarks that 60 percent of the jobs in
West Virginia in the near history will be of a 2-year degree or
some type of certification. I mean, those are the job
activities we're seeing.
But that doesn't mean that in that process that you would
get an associate degree, that you're not on a career path to
someday have a 4-year degree to be an engineer or whatever.
So it starts at home, and I think it's a disservice to not
emphasize the importance of technical occupations. The idea
that if some child goes to a vo-tech center, they're not
successful is really a disservice to the country, to the state,
to the family, to the child.
We need to emphasize the importance of technical
occupations. Those are the job creation activities that we're
seeing. The skill sets are desperately needed.
You can go right up to Belle. I mean, DuPont is going to be
filling over the next few years 100-and-some positions of
chemical operators. Those are going to require high-end skills.
Does it require a 4-year degree? Most likely not. But I
guarantee you it's going to be some level of certification or a
2-year degree requirement.
And to the point of manufacturing not being emphasized, I
saw this constantly in my prior job coming back to the
development office as chief operating officer of Robert C. Byrd
Institute at Marshall University. I did it for 13 years.
And how you get through to kids, we used to bring high
schools in to let them see modern manufacturing. And we'd have
a pizza for them and have lunch with them. I can't tell you the
number of kids that I asked, ``Hey, what did you think?'' It's
like, ``Man, we had no idea. We thought manufacturers were
still on dirt floors.'' It's high-tech, some of the highest
technology equipment that you'll see.
And that is a motivator for children, the technology. If
you want to get the kids interested, show them the technology.
That's their life. That's what they live every day.
And so back to Judy's point, if you look at many, many of
the manufacturers that are in West Virginia, many of which we
worked with at the institute over the years, they're small
manufacturers, single startups that have grown into nice
companies.
And the best innovation, the best product development that
you see is at that level.
So I think we need to step back and look at what are we
promoting, what are we emphasizing to make someone feel like
they're successful. We're doing a lot of that through the CTCs
and other efforts to focus on technical occupations and
communicate clearly as to what these future occupations are,
because they need guidance. That's their market realities.
The Chairman. You know, a lot comes down to debt, what you
owe, loans, student loans. And you don't have to be a graduate
student to have those. You can have those owning a house and
out of the job.
One of the things--I just throw this out, because I'm
working it through in my mind. I'm very interested in health
care. This is not directly on subject, but it obviously
interests me.
We have a problem in this state and in so many other rural
states where people decide at a young age in college or in
medical school that they want to be primary care doctors. They
want to go into rural West Virginia and they want to work with
people in rural West Virginia. Or they decide they want to be
OB-GYNs or they decide they want to be geriatricians, work with
older people. And so they train in that, and then they go to do
that and they find that they can't make enough money in that
compared to the amount of money that they owe for having gone
to medical school.
And it strikes me that we're just chopping our head off on
that, because people are going into fields for which they're
not as well-trained. They're not necessarily happy. And yes,
you can make a lot more money as an anesthesiologist than you
can as a geriatrician. But some people want to be geriatricians
and want to be primary care doctors. And God bless them, that's
what we need.
So one of the things I'm thinking about, and I'm going have
to wait until this country gets a little bit more prosperous
again, is that the government--I mean, these people have loans
of up to $200,000, $250,000, that the government comes to the
point--and don't think of this as socialism, please--just think
of this as common sense--that the government pays for certain
kinds of medical education whole cloth.
So that people who want to go into primary care, who want
to go into geriatric medicine, can do so because they won't
have to worry about paying off a loan.
And that's kind of, you know, sure that's government
involvement, but maybe that's for the good of us. I got a bill
passed, which obviously nobody knows anything about, because it
can't really take effect for another number of years, but it's
signed, which said that if you stay in something called public
service--now what is public service? Public service could be--
you could be a teacher, you could be a firefighter, you could
be an EMT, you could work at a hospital, you could be a nurse.
I mean, there are endless definitions of what public service
is. But if you stay in public service for 10 years, upon
graduation--and it doesn't have to be the same job, you can go
to four or five different aspects of that job--all of your
college loans are forgiven by the government.
You want people in public service? That's one way to get
it. People stay away from public service because they think if
they're going to be a social worker, they're going to work with
kids with autism and all kinds of other problems, they stay
away from it, because they can't afford to, but they want to.
So incentives are important. They're very important in
guiding decisionmaking for younger people and for people beyond
that.
So I don't buy the fact that young people should turn away
from manufacturing. I'm switching again, but I don't buy that
fact.
I'm buying the fact that they are, but I don't buy the fact
that they should. And I think it's part of our responsibility,
and part of the reasons that we're having this hearing is to
get the word out there that manufacturing is good. And yes,
we've lost a third of our manufacturing jobs, and so have a lot
of other states. But that doesn't mean it has to be a permanent
situation.
So I think that's what we ought to be focused on, bring
parts of our traditional economy back, buttressed by an entire
new generation of people who understand the world, who
understand technology in ways that we never did, and bet on
them.
And yes, do some free trade agreements and don't do others,
maybe depending upon the country and some of their practices.
But you know, we have to take risks. We have to get out of
our ideologies a little bit. And this is part of what the
modern world is about.
Now look, I'm turning into a preacher, and I don't mean to
do that.
[Laughter.]
The Chairman. But I liked it.
[Laughter.]
The Chairman. Look, I haven't gotten into--and you have a
1:30 appointment, do you not?
Mr. Kumar. Yes, sir.
The Chairman. I haven't gotten into the effect on small
towns, the Century Aluminum, Alcan, 650 workers.
There was an extraordinary story--did any of you see it out
there in the audience, in USA Today, about Ravenswood? It's an
extraordinary story.
Let's print it up and make it available. How do we make it
available? Well, we've got your names. That's how we make it
available.
[Laughter.]
The Chairman. I mean all of you there.
But it was an extraordinary story of what happens to a
community when somebody makes the decision they're going to
shut down and move overseas, or they're going to shut down and
move somewhere else. And it's a cruel story. It's a
heartbreaking story, but it's a real story. And we have to deal
with that, as part of all of this.
Mr. Kumar and Ms. McCauley, I was going to ask you what can
your agencies do to help small, struggling communities, but
I've decided that's not a fair question at this point, because
there's so much to do.
What I think we ought to understand is that--and I'm going
to bring this hearing to a close--is that manufacturing,
adjusting ourselves to training our skill sets, taking the
enormous advantage that our young people have because of their
technical ability and their interest in innovation and
technology anyway, and thus the America COMPETES Act and all
the emphasis that's going to be put on math and science and
engineering and technology, so that science teachers and math
teachers in high schools are trained to be science and math
teachers. They're not somebody brought in from some other
field.
We have to have that. We have to stay up with the rest of
the world. And it's actually a very exciting prospect, because
America was on top. We still are on top on a lot of things.
We're still the biggest economy. But we're facing pressure, and
we've got a lot of economic problems right now, and so does the
rest of the world. Ours just seem worse to us, because they
are.
But you don't quit because times are bad. You don't quit
because you only have two SBA people as opposed to 15. You
don't quit. That's when you have to work harder.
Any closing comments from the witnesses?
Mr. Gallion, you look like you have something you want to
say.
Mr. Gallion. I really have nothing else to add, at this
point in time, but I was just agreeing with your comments, sir.
The Chairman. You see, that's Wayne County Mr. Gallion,
see?
[Laughter.]
The Chairman. Short and to the point, very direct. Moving
right down.
Mr. Moore?
Mr. Moore. Thank you, Senator. I do appreciate an
opportunity again today to tell you that we appreciate being
here.
And there is thriving industry here in West Virginia that
the Steelworkers work with, and not very far from here, that
need your help, and we need your committee's help to help us
open some doors to further expand some export opportunities
that we do have, especially in the aluminum industry. We'd
welcome the opportunity to work with you with that. Thank you.
The Chairman. Thank you.
Mr. Julian?
Mr. Julian. Senator, I want to thank you for bringing
attention to manufacturing. It has been a part of my career
entirely. And I'll say that any way that we can help you fight
the good fight, we're here to help.
Manufacturing has been a part of our history. It will
continue to be. As I indicated, it's a part of our economic
development strategy.
We know the productivity and the quality of our people. We
are seeing success and our foot is on the accelerator, so any
help that you can bring to make sure that our partnership
resources are there, workforce training and all the other
efforts, we thank you.
And, again, anything we can do to help you, all you need to
do is just let us now.
The Chairman. What occurs to me is the question of, are we
living up to our obligations to our people? And I think right
now the answer is no. And, therefore, it becomes important for
us to turn that around, and that's what this hearing is for.
Mr. Julian. As you go through the budget discussions,
hopefully there'll be a surgical knife to make sure that we
don't cut fundamental programs that are important on a daily
basis that I mentioned before, that as we work to retain and
expand and attract investment that are so critical.
But your ideas, for example, on workforce training and the
loan issue. I mean, that's the kind of thinking, I think
outside of the box, that need to be thought about, because
would you rather do that or pay unemployment? It's an
investment.
And if you can get an industrial policy and a workforce
policy that thinks a little differently, that helps us compete,
as the Secretary indicated, for those manufacturing jobs with
the intelligence, the knowledge, the technology. That's where
the market is moving, that should be our strategy.
So aligning those policies I think are very critical for
the United States and, importantly, West Virginia.
Thank you.
The Chairman. Do you know what it would cost if the federal
government underwrote the education of doctors? About $2
billion a year, maybe a little bit more.
So it's a radical idea, but is it a wrong idea? And what is
it that we pay and lose in the way of people who don't get
health care, because we don't do that, because people decide to
do something else, and they're not where they're needed.
So everything is a tradeoff of ideas.
Ms. McCauley?
Ms. McCauley. Thank you, Senator Rockefeller.
I think my main question would be, tell me your ideas on
what we need to do to better live up to our obligations?
The Chairman. You want me to do that right now?
[Laughter.]
The Chairman. As I'm trying to close down the hearing?
[Laughter.]
Ms. McCauley. OK, just your top two.
The Chairman. I think the main thing is that you don't get
down.
Ms. McCauley. OK.
The Chairman. And that we are going through a horrible
budget crisis, and heavens knows what's going to happen with
this debt ceiling thing and the amendments that are attached to
that, if they're going to be attached. But we face a very tough
number of years coming. And my attitude toward that is, OK, so
we've been there before, we'll be there again.
And we keep fighting, because we believe in our people. We
believe in what we can do to help.
Ms. McCauley. Thank you.
The Chairman. Mr. Kumar?
Mr. Kumar. Thank you, Senator Rockefeller, for the
privilege of testifying to this committee. Not a day goes by as
an immigrant, as someone who immigrated to this country,
without my realizing that I have the opportunity to live the
American dream.
But I do believe, as we spoke on manufacturing, as we spoke
on the greatness of this country and what it has to offer, that
we should never forget that 95 percent of the world's
population lives outside the United States. Our obligation is
to train and put in place mechanisms for our companies in the
United States to constructively export and engage with those
countries.
That's why I took up the job I do. And I have 1,500
passionate people who work with me to connect American
businesses to those opportunities.
Here in West Virginia, as I reflected on manufacturing,
there are three companies I'd like to showcase, because we do
not showcase our successes as we ought to.
All these three--one of them testified, Mr. Gallion here--
are in the manufacturing field. And they engage. They may not
be the sexy sectors of manufacturing, but they're commercially
important, viable sectors.
FCX, working with our USEAC, was able, through counseling
some time ago, at the Farnborough aviation show, to connect and
land a $300,000 export business.
Swanson in Morgantown, who is a manufacturer and repair
service of hydraulic cylinders in offshore oil, worked with us
on a Gold Key Service and International Company Profile, and as
a consequence, in October last year, landed an initial $1
million order.
Now, the big companies generally tend to get the press but
unknown are the several smaller companies who are the
foundation of their success. GE Aircraft Engineering works with
Star Technology adhesives, which have its manufacturing
facilities here in West Virginia. Through our advocacy center,
107 F414 engines were exported--a contract to export was signed
with the Department of Defense of the Indian Government.
In this export, 492 different parts are sourced from Star
facilities in West Virginia. Yes, they manufacture screws,
ducts, and several other parts which go into those engines.
These are the foundations which build aircraft engines.
These companies exist here and in many ways would be the unsung
heroes.
I made a commitment, as I went through my confirmation
hearings with your committee, to say that the U.S. and Foreign
Commercial Service is, like these manufacturers, the best-kept
secret. And I committed to you that we will make it the least-
kept secret.
I chose to do that not through marketing, branding, and
other such initiatives, but through community engagement, by
seeding our people in the communities where these exporters and
the companies exist, to work with the other witnesses and folks
such as these who exist to work with American businesses every
day.
We sometimes forget to showcase those successes, and that's
what can come in the way. I believe we can. I know that the
budgets are tough. We need feet on the ground, and people on
the ground can connect inventive American businesses to the 95
percent of consumers who live outside these United States. So I
thank you very much.
The Chairman. Thank you, sir.
And I would say to everyone in attendance, we welcome any
ideas you may have, and the record of this hearing will be held
open for 10 days for you to write thoughts that you may have as
a result of this hearing, or thoughts that you had coming into
this hearing which were not addressed at this hearing. And
there will be plenty of those. But just thoughts that you have.
That's the greatest source of information. It's not just
state, local, federal, et cetera, government and entrepreneurs.
It's what people think, ideas that people have. And I see some
very smart people in this audience, so we welcome your ideas,
and I expect to have a large stack of them before long.
With that said, I'm grateful to everyone. I'm grateful to
Martinsburg, Parkersburg, and Wheeling for attending this
hearing also, through live video.
And you've done, I think, a real service to kicking off the
idea of not giving up in West Virginia and not giving up on
manufacturing, not giving up on people, but assuming that if we
do the right things together that life will be much better.
That's what we're here for.
This hearing is adjourned.
[Whereupon, at 12:45 p.m., the hearing was adjourned.]