[Senate Hearing 110-774]
[From the U.S. Government Publishing Office]
S. Hrg. 110-774
REBUILDING THE GULF COAST: SMALL BUSINESS RECOVERY IN SOUTH LOUISIANA
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FIELD HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS
AND ENTREPRENEURSHIP
UNITED STATES SENATE
ONE HUNDRED TENTH CONGRESS
SECOND SESSION
__________
FEBRUARY 20, 2008
__________
Printed for the use of the Committee on Small Business and
Entrepreneurship
Available via the World Wide Web: http://www.access.gpo/gov/congress/
senate
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COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
ONE HUNDRED TENTH CONGRESS
SECOND SESSION
JOHN F. KERRY, Massachusetts, Chairman
CARL LEVIN, Michigan OLYMPIA J. SNOWE, Maine
TOM HARKIN, Iowa CHRISTOPHER S. BOND, Missouri
JOSEPH I. LIEBERMAN, Connecticut NORMAN COLEMAN, Minnesota
MARY LANDRIEU, Louisiana DAVID VITTER, Louisiana
MARIA CANTWELL, Washington ELIZABETH DOLE, North Carolina
EVAN BAYH, Indiana JOHN THUNE, South Dakota
MARK PRYOR, Arkansas BOB CORKER, Tennessee
BENJAMIN L. CARDIN, Maryland MICHAEL B. ENZI, Wyoming
JON TESTER, Montana JOHNNY ISAKSON, Georgia
Naomi Baum, Democratic Staff Director
Wallace Hsueh, Republican Staff Director
C O N T E N T S
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Page
Opening Statements
Landrieu, Hon. Mary L., a United States Senator from Louisiana... 1
Vitter, Hon. David, a United States Senator from Louisiana....... 8
Witness Testimony
Cornelius, Eugene, District Director, U.S. Small Business
Administration, Washington, D.C................................ 15
Roach, Hon. Randy, Mayor, City of Lake Charles, Lake Charles,
Louisiana...................................................... 22
Landry, John T., Director of Development, University of Louisiana
at Lafayetteville, and Chairman, Infrastructure Committee,
Louisiana Recovery Authority, Abbeville, Louisiana............. 30
Swift, George, President and Chief Executive Officer, Southwest
Louisiana Chamber of Commerce, Lake Charles, Louisiana......... 49
Manuel, Carl, Owner, Anna's Pies, Inc., Lake Charles, Louisiana.. 60
Little, Donna, Director, McNeese State University Small Business
Development Center, Lake Charles, Louisiana....................
Darbone, David, President, Grand Oaks, Inc., Lake Charles,
Louisiana...................................................... 73
Lazare, Sheri, Director, Enterprise Consortium of the Gulf Coast
Women's Business Center, Lafayette, Louisiana.................. 77
van de Werken, Donald C., Director, New Orleans U.S. Export
Assistance Center, New Orleans, Louisiana...................... 80
Alphabetical Listing and Appendix Material Submitted
Cornelius, Eugene
Testimony.................................................... 15
Prepared statement........................................... 18
Response to post-hearing questions from Senator Landrieu..... 94
Darbone, David
Testimony.................................................... 73
Prepared statement........................................... 75
Landrieu, Hon. Mary L.
Opening statement............................................ 1
Prepared statement........................................... 4
Landry, John T.
Testimony.................................................... 30
Prepared statement........................................... 33
LRA Economic and Workforce Programs, disaster funds
allocated, and new requests................................ 127
Response to post-hearing questions from Senator Landrieu..... 109
Lazare, Sheri
Testimony.................................................... 77
Prepared statement........................................... 79
Business Establishments within Rita-Damaged Areas, map....... 126
Response to post-hearing questions from Senator Landrieu and
Senator Vitter............................................. 117
Little, Donna
Testimony.................................................... 66
Prepared statement........................................... 68
Response to post-hearing questions from Senator Vitter....... 114
Manuel, Carl
Testimony.................................................... 60
Prepared statement........................................... 62
Roach, Hon. Randy
Testimony.................................................... 22
Prepared statement........................................... 25
Response to post-hearing questions from Senator Landrieu..... 99
Swift, George
Testimony.................................................... 49
Prepared statement........................................... 51
van de Werken, Donald C.
Testimony.................................................... 80
Prepared statement........................................... 82
Response to post-hearing questions from Senator Landrieu and
Senator Vitter............................................. 120
Vitter, Hon. David
Opening statement............................................ 8
Prepared statement........................................... 10
Comments for the Record
Questions and comments from the audience......................... 144
REBUILDING THE GULF COAST: SMALL BUSINESS RECOVERY IN SOUTH LOUISIANA
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WEDNESDAY, FEBRUARY 20, 2008
United States Senate,
Committee on Small Business and Entrepreneurship,
Washington, DC.
The Committee met, pursuant to notice, at 1:38 p.m., in the
Buccaneer Room, Lake Charles Civic Center, 900 Lakeshore Drive,
Lake Charles, Louisiana, Hon. Mary Landrieu, presiding.
Present: Senators Landrieu and Vitter.
OPENING STATEMENT OF HON. MARY L. LANDRIEU, A UNITED STATES
SENATOR FROM LOUISIANA
Senator Landrieu. If everyone would take their seats,
please, I would be happy to call the meeting of the Senate
Small Business Committee to order, a field hearing, our first
one in the State of Louisiana, I am proud that Senator Vitter
and I could direct this meeting here in Lake Charles,
Louisiana, in southwest Louisiana.
I want to begin by thanking the Chair of the Committee,
Senator Kerry, and the Ranking Member, Senator Snowe, for
allowing us to have this field hearing in Louisiana. Both
Senator Vitter and I have the pleasure of sitting on the Senate
Small Business Committee. We asked specifically if we could
have a field hearing in Louisiana and chose this site because
of our focus on small business development, how it is being a
part of the recovery from Hurricanes Rita and Katrina, and how
small business has been impacted and how it is growing after
the storms, and what the outlook looks like.
So we have a very full panel. I want to also thank the
staffers of Senator Kerry and Senator Snowe who have joined us.
I want to acknowledge that while he has not been asked to give
formal testimony today, we are pleased to have the Small
Business Director from the Dallas Region, our region, the
office in Dallas, Joe Montez. Joe, would you please stand? We
welcome you and thank you for being here.
[Applause.]
Senator Landrieu. I am also pleased to have in the audience
Michael Ricks, who is the new Regional Director for our region.
He will not be testifying officially, but will be available for
questions and comments. Michael, would you please stand?
[Applause.]
Senator Landrieu. And Mr. Eugene Cornelius, who will be
testifying today, has been the Director of our region here in
Louisiana for the last several years, has just been relocated
to another part of the country, so will be delivering the
testimony as he has been really the engineer of most of this
recovery.
Let me also thank Mayor Randy Roach. Mayor, thank you and
your city council for hosting us today. And I also want to
thank all of the other State and local officials that have been
part of this hearing and the small business leaders, the
chamber that helped us to put this hearing together today.
So we have a wonderful list of panelists. I will introduce
them in just a moment. We are going to have two panels. We hope
to move through this in the next 2 hours. But let me just make
very brief opening remarks, and then I will turn it over to my
colleague, Senator Vitter.
The hurricanes, both Hurricanes Rita and Katrina, were two
of the costliest hurricanes in the history of our country.
Hurricane Katrina's eventual or to-date cost is $81.2 billion.
Hurricane Rita caused $11 billion in damage. Together, almost
$100 billion in a double-whammy, two-punch hit to the Gulf
Coast, but particularly to the southern coast of Louisiana,
both on the southwest side with Hurricane Rita hitting and then
on the southeast side as well.
All of us, homeowners and businesses alike, felt the
brunt--our public institutions, our libraries, our schools, our
colleges, and our universities. But the small business
community, you could argue, maybe took the greatest hit of all
because small business by its very nature has less resources
than large business or public entities. Our business owners,
20,000 of them, were impacted in the State of Louisiana, were
directly--their businesses either destroyed or severely
damaged, their physical infrastructure. If their business was
not destroyed or damaged, their markets were most certainly
impacted by the loss of over 1.3 million people that fled this
area for higher ground. And some of our people are just now
returning after 2 1/2 years, trying to re-establish their
homes, their churches, their businesses, and their schools.
So this hearing is really to focus on the recovery of small
business; what we have done that has helped; and what we need
to continue to do. I would like to note that for the port of
Lake Charles, which is a very significant entity here, we were
pleased to pass a WRDA bill, Water Resources Development Act,
that has some additional infrastructure improvements and
investments to the port. That port alone helps to generate
about 31,000 jobs in this area. Many of them are jobs
associated with small businesses, contractors, fabricators,
importers, exporters, et cetera.
We also are very proud in southwest Louisiana to have 20
percent now of the Nation's natural gas supply coming through
southwest Louisiana. So I spend a great deal of my time
reminding people in Congress that this just isn't any dot on
the map. This is a very significant place, not only for the
people that live here and call South Louisiana home, but it is
a very significant place on the map for the United States of
America and our oil and gas supply that is dependent on the
vitality and economic strength of the business community here.
And, in addition, we are going to hear some testimony about
specifically the small businesses, the 6,700 businesses, some
of which are here in the southwest area, that were helped
through the Small Business Administration, and then what is
left to do, because there is a great deal of work left to do.
But I am proud to be a member of this Committee. I know Senator
Vitter is as well. And our continued focus in this Committee's
bipartisan efforts to help the SBA to be a better effective
advocate, to help the LRA, to help the State, and to help the
small businesses in any way that we can to grow and expand
right here at home.
[The prepared statement of Senator Landrieu follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Vitter?
OPENING STATEMENT OF HON. DAVID VITTER, A UNITED STATES SENATOR
FROM LOUISIANA
Senator Vitter. Thank you, Mary, and welcome to all of you.
Thanks for being here.
I also am excited to help bring this field hearing here
specifically to southwest Louisiana, and we wanted to do that
for a number of reasons, including that we always need to
remind Congress and the Nation of one word, ``Rita,'' in the
grand scheme of things and everything we have dealt with since
2005. So this is another great opportunity to do that.
It is largely a ``good news'' story here in terms of
recovery. There are plenty of hurdles and challenges that
remain, but I think the recovery in this part of the State has
been very impressive. And although we are going to talk about a
lot of Government programs and opportunities, the fundamental
reason is the people of southwest Louisiana, your
determination, your grit, your attitude to just get it done. I
saw that from the moment I was on the ground here with Mayor
Roach and others 2 days after the event. And that is what
pulled this region through and served you so well.
Having said that, there are challenges and hurdles that
remain, and there are things we must do more effectively in all
levels of government. We are certainly going to talk about
those today. One issue that will certainly come up is the lack
of available and affordable insurance. That is a major limiting
factor in terms of our recovery throughout South Louisiana, as
well as South Mississippi. A flood insurance reform and
reauthorization bill is before the Senate now, and I am working
hard with Mary and others to use that opportunity to help focus
on not only updating the Federal Flood Insurance Program but
getting the requisite attention on the wind and liability side,
which is a huge constraint for small business and for
individuals.
Just last week, I met with Senators Cochran and Wicker from
Mississippi, and, of course, we worked closely with Mary on
those issues.
GO Zone incentives have been very positive for all areas of
the GO Zone, including here, and I would certainly like to work
with Mary and many others to extend those to the greatest
extent possible to continue to get that positive impact here in
southwest Louisiana.
Taxation of Road Home grants is a continuing problem, and
Mary and I have both authored legislation to try to fix that,
are working hard to try to include that in legislation this
year, because that is an unfair situation.
Small business challenges in general, sometimes small
businesses are just deluged with paperwork from Government, and
that is why I have introduced the Small Business Paperwork
Relief Act, could affect small business after a disaster, could
affect small business in many other situations as well.
And then, finally, and perhaps most specifically in terms
of the recovery, Mary and I have joined the Chair of this
Committee, Chairman Kerry, and Ranking Member Snowe to author a
bipartisan Small Business Disaster Loan and Improvements Act.
It is fully bipartisan. It is very positive. It tries to take
some of the lessons from Rita and incorporate them for the
future. But we certainly hope to learn more lessons today. It
does a lot of things, quicker action, quicker disbursement of
loans, increasing the disaster loan amount significantly,
trying to integrate the private sector and banking and other
resources better in the process. So it is a good, working
product, but we will certainly look to improve it based on the
testimony today. We have actually now passed it through the
Senate twice, and we will continue to improve it and work with
the House to pass it into law.
So, with that, I look forward to all of the testimony.
Mayor, thank you for hosting us and the city for hosting us,
and I look forward to really listening and absorbing the
experience of all of you who have lived through some very
trying times.
[The prepared statement of Senator Vitter follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Landrieu. Thank you, Senator Vitter.
Let me begin by just briefly introducing the panelists and
then start in the order of the introduction. We have asked each
panelist to limit their remarks to 5 minutes, and then we will
have one round of questioning, and two if necessary, and then
move to the second panel.
Eugene Cornelius, a native of Chicago, but has been a
trusted partner with us in the rebuilding effort as he served
as the SBA Louisiana District Director for the last several
years. He has had experience with the SBA since 1999. We are
pleased to have him with us today.
Mayor Randy Roach was first elected in the year 2000 for an
unexpired term. He was re-elected again in 2001 and 2005. He is
a native of Lake Charles, received his undergraduate and law
degree from LSU. Randy, we thank you for your really
extraordinary leadership here before, during, and to this day
after the storm.
And Mr. John Landry is a resident of Abbeville, but he
honors us by serving as Development Director for UL in
Lafayette. After the storms, he was appointed to the Louisiana
Recovery Authority. He also serves as Chairman of the
Infrastructure and Transportation Committee for the LRA, and we
thank you and the other members of the LRA. There are other
members--I think Laura Leach and Tom Hanning and others from
this area have served, and we thank you for your really just
tireless service on behalf of the State's recovery, Mr. Landry.
But let's start with you, Mr. Cornelius, if we could.
STATEMENT OF EUGENE CORNELIUS, DISTRICT DIRECTOR, U.S. SMALL
BUSINESS ADMINISTRATION, WASHINGTON, D.C.
Mr. Cornelius. Thank you. Good afternoon, Senator Landrieu,
Senator Vitter, members of the Committee, and audience and
guests.
Senator Landrieu. Can you speak into your microphone,
please?
Mr. Cornelius. Am I not on?
Senator Landrieu. Yes. There. I think you are on. You just
have to speak more closely into it.
Mr. Cornelius. OK. Thank you. Thank you for inviting me to
discuss these efforts and progress and improvements that are
being made on behalf of the disaster of 2005 and the role
specifically that SBA played and is continuing to play as it
provides assistance to the victims of Hurricanes Katrina, Rita,
and Wilma. I am Eugene Cornelius, and I was recently the
Louisiana District Director for the last 4 years.
I am proud to lead the local team that was dedicated to the
point and being the direct point of service between the SBA and
this community and the great response that we had in this
agency. During the rescue, relief, and restructure of the Gulf
to date, SBA received over 422,965 loan applications, of which
364,491 were homeowners and over 58,000 were business. Of
those, SBA approved 161,000 loans for almost $11 billion. Since
then, as with all major disasters, we have had a number of
cancellations, so the net number of loans approved is
approximately 120,000 for $6.9 billion. And that money is at
work in the Gulf right now rebuilding homes and businesses and
supporting local economies.
More specifically, over $390 million has gone directly to
the parishes in the south region of Louisiana. In total, over
$3.7 billion in SBA loans have been disbursed to Hurricane
Katrina, Wilma, and Rita victims here in Louisiana. In
addition, another $290 million has been disbursed to victims of
Rita, and I am pleased to share with the Committee today only
700 loans--the total amount of 700 loans of Rita have been
completely disbursed or partially disbursed, and those
borrowers who have not yet disbursed, we are ready to disburse
those loans upon their services. But they have elected not to
have the disbursement, not SBA.
In the first several months after Katrina, SBA had a
tremendous difficulty in meeting the needs of the people of the
Gulf Coast, and I am proud of the great progress we have made
in the Gulf and in disaster recovery, more importantly focusing
on the last 18 months. With our new Administrator coming
aboard, we were able to meet the challenges that our agency
faced. We were able to retool our arsenal and our resources and
re-employ different people in different capacities to meet the
needs that our agency was not meeting at the beginning. And we
have done so in a very, very effective way.
In June of last year, SBA presented to the Committee an
agency Disaster Recovery Plan--an agency Disaster Recovery
Plan. After months of deliberations and countless hours of
work, the agency committed to critical steps that are being
taken not only by us but by Federal agencies as well to prepare
and respond to other national recoveries. But we are not
finished. This is a working document, and we continue to review
and update it appropriately.
Our improvements to the disaster assistance process include
an accelerated loan application decision process, improved
processes and tools for loan closing and fund disbursement.
This was critical and this was the major flaw of SBA that we
were not able to keep up with, given the magnitude of our
disaster. So having had these policies in the last 18 months I
think has significantly improved our service to this community
and will prove as great service to our Nation in the future.
Additionally, in the Gulf, we have continued to be active
in the Government contracting process both at the Federal level
and local levels. Small business participation exceeds the
Federal Government's 23-percent contracting goal by 5 percent.
Our preliminary data shows that small businesses have received
over 28 percent of the nearly $18 billion awarded for the
recovery efforts. Of those, 8.1 percent has gone to small
disadvantaged businesses; 4.2 percent has gone to women-owned
businesses; and 4.2 percent has gone to HUBZone firms.
Furthermore, I know the Committee is interested in the
performance of the Federal Government in contracting to local
businesses. And as noted in a GAO report of March 2007, local
businesses of all sizes in the Gulf Region received nearly 28
percent or $4.99 billion of the $18 billion in contracts. Of
that $4.99 billion, approximately 57 percent went to local
small businesses here in Louisiana. And in Louisiana, 67
percent of our local district office portfolio of 8(a) firms
received Government contracts.
SBA remains committed to making sure that our small
business customers receive a fair opportunity to help in the
restructuring efforts. Soon after Katrina struck, SBA dedicated
personnel to assist in identifying small business contracting
opportunities. Five Procurement Center representatives were
specially assigned to work with Federal agencies----
Senator Landrieu. Gene, excuse me. Could you try to wrap
up? I am sorry. I didn't----
Mr. Cornelius. Oh, my time expired?
Senator Landrieu. Yes, your time has expired. But go ahead,
take 30 seconds----
Mr. Cornelius. Well, we did so much, I want to just make
sure you know it all. But I will wrap it up right here.
We worked with the Department of Defense, Homeland
Security, and General Services, and we made sure that these
local businesses got Government contracts so they could employ
people locally and we could keep money in versus building on
debt with only our loan program. So I wanted to make sure we
made a point of that.
I will end at that. I just want to give one recognition to
our service providers in the Small Business Development Centers
and SCORE were critical in helping these businesses retool
after the storm and get the money that they needed faster.
[The prepared statement of Mr. Cornelius follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Landrieu. Thank you. And if you all want to
summarize your testimony, and we will try to give you a 1-
minute warning or nudge, if you would, and then the rest of
your statement will, of course, be submitted to the record.
Mayor Roach?
STATEMENT OF HON. RANDY ROACH, MAYOR, CITY OF LAKE CHARLES,
LAKE CHARLES, LOUISIANA
Mayor Roach. Thank you, Senator Landrieu. And before I
begin my 5 minutes, let me just officially welcome both of you.
Senator Landrieu. Yes, take that off of my time, not his.
[Laughter.]
Senator Landrieu. Go ahead.
Mayor Roach. I want to thank both of you for coming here
and hosting this first session here in Louisiana at the Civic
Center. We appreciate it very much. You know, in the aftermath
of Hurricane Katrina, this room did not look quite like this.
We had people all through the Civic Center, over 3,000 people
were at one point domiciled here, and then, of course,
Hurricane Rita came, and we have been doing a lot of work since
then. But we appreciate you being here, and we want to thank
both of you for the help and the support that you have given to
us to get us to this point.
I also want to just thank Mr. Cornelius for all the work he
has done, because he did an incredible job supporting small
business here in southwest Louisiana, and I want to thank him
for that. Again, we appreciate it.
Now, start that clock.
[Laughter.]
Mayor Roach. All right. The aftermath of Hurricanes Katrina
and Rita has created an opportunity for this State to help to
find the solutions to some of the most challenging
socioeconomic issues of the 21st century facing America. So
far, we have been focused on the immediate needs of recovery.
This has forced us to look at traditional programs and policies
to meet these immediate needs. But the world has moved on to
other issues, yet thousands of people in Louisiana and
Mississippi are dealing with the long-term effects of the
hurricane season of 2005.
The shortage of housing became one of the primary problems
to face southwest Louisiana following the storm, and this issue
continues to persist for people in the middle-income ranges. It
is also contributing to the manpower shortage that we are
experiencing in this area and in other areas along the Gulf
Coast. In southwest Louisiana, immediately following Rita, a
labor shortage occurred. FEMA and other relief agencies hired
workers for clean-up and reconstruction efforts at artificial
salaries. Refineries and petrochemical plants had to increase
wage scales by $4 an hour and offer sign-on bonuses. Even
Burger King and McDonald's had to offer sign-on bonuses. Some
workers were brought in from other areas. Many small businesses
could not afford to pay those higher wages and had to cut back
on operations.
While the situation has somewhat abated, it did force some
businesses to close. Those businesses which rely on workers
making minimum wages or even in the area of $8 to $15 an hour,
such as restaurants and contractors, are still experiencing
difficulties in finding workers. The city of Lake Charles and
other communities are finding it harder to find qualified
workers. A local general contractor who has been one of the
primary road construction contractors in the area recently
decided to stop doing road construction business because of the
difficulties he has continued to experience in finding a stable
workforce.
The rest of the country will soon experience the same
problems with their workforce. Many regions already are. They
just have not recognized the problems. The solutions will
require that our State and Federal Governments be willing to
think outside the box and find creative solutions to these
problems.
In Biblical times, people were warned about putting new
wine into old wineskins. We would do well to remember that and
resist the temptation of trying to fashion solutions to these
and other recovery issues by relying on existing programs and
policies.
The discipline of socioeconomics can produce some rather
harsh results if we are not careful. History is proof of that.
We can either think creatively and solve some of these problems
before they become a crisis, or wait until the system collapses
and rebuild a new set of policies to deal with the issues. I
think we would all agree that it is better for all concerned,
particularly for our children and grandchildren, if we act now.
I want to conclude my remarks by quoting from a study that
was done for our area by Dr. Michael Kurth and Daryl Burckel
from McNeese State University. It is dated October 24, 2007,
and here is what they concluded relative to the workforce
shortage in our area: There appears to be a significant labor
shortage at the low-end of the wage spectrum (under $10 an
hour) characterized by extended job vacancies, the hiring of
under-qualified employees, and the importation of workers from
other areas. This situation existed prior to Hurricanes Katrina
and Rita, but it was made worse by the storms. There also
appears to be a labor shortage among skilled craftsmen,
construction and technical workers at all wage levels
characterized by rising wages and recruitment of workers from
outside the region. This situation did not exist prior to the
hurricanes.
Among medium-wage workers, however, there appears to be a
labor surplus characterized by underemployment and lack of
labor force participation. This situation existed prior to the
hurricanes, but has become more apparent due to the contrast
with the situation in the other segments of the local labor
market. There are a number of reasons for this which are not
unique to southwest Louisiana: (1) since World War II,
education policy in the United States has emphasized college
over technical training; the labor force participation of women
has risen sharply over the last three decades; in many
families, the woman's career is secondary to their spouse's,
with the result that many women are tied to a geographic area
and unable to take advantage of higher wages elsewhere; and (4)
few women are employed in the construction trades and crafts.
Thus, in the aftermath of the hurricanes, many females lacked
the labor market mobility to take advantage of higher wages
elsewhere, and they lacked the skills and training needed to
replace the males who took higher-paying jobs elsewhere.
This ``structural'' unemployment presents both a challenge
and an opportunity for the local economy. With the appropriate
training, many medium-wage workers will be able to find higher-
paying jobs and satisfy the needs of local employers, but this
will require restructuring and refocusing our educational
institutions. Moreover, when it comes to economic development
efforts, all jobs are not equally desirable. For example, firms
that require workers in segments where there presently is a
labor shortage are likely to have difficulty recruiting workers
and to be disappointed with the quality of those workers they
do hire.
It is our recommendation the educational institutions and
economic development initiatives in southwest Louisiana work
hand-in-hand to ensure that our population has access to the
training and skills needed in our local labor market, and that
the firms that locate here are able to find an ample supply of
appropriately trained and educated workers.
The report focuses primarily on the labor shortage, but
Senator Vitter and Senator Landrieu have both mentioned the
problems that insurance is creating for small businesses in
this area. And I would have to say that that probably is one of
the most serious problems facing the entire Gulf Coast area. In
Lower Cameron Parish, you cannot find insurance, and we are
having increasing problems in this area of finding affordable
insurance. So it does require, I think, a concerted effort and
a creative solution to deal with both of those problems.
Thank you.
[The prepared statement of Mayor Roach follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Landrieu. Thank you, Mayor Roach. I really
appreciate that input on the workforce. We are hearing that
more and more places, and we will come back to that in the line
of questioning.
Mr. Landry?
STATEMENT OF JOHN T. LANDRY, DIRECTOR OF DEVELOPMENT,
UNIVERSITY OF LOUISIANA AT LAFAYETTEVILLE, AND CHAIRMAN,
INFRASTRUCTURE COMMITTEE, LOUISIANA RECOVERY AUTHORITY,
ABBEVILLE, LOUISIANA
Mr. Landry. I think next time I am going to take a tip from
Mayor Roach. He has big print so I think he can speak faster.
[Laughter.]
Senator Landrieu. Well, the older we get, the bigger print
we need.
Mr. Landry. That is right. Senator Landrieu, Senator
Vitter, thank you both. I am grateful to have the opportunity
to share with you today the ways in which we have strategically
invested our Federal dollars to fund innovative programs to
meet our current needs with an eye to the future. I also want
to share our continued challenges facing economic recovery that
demand attention from all levels of Government and private
interests.
The State has made great strides since the dark days of
2005. Immediately following the storms, the State dedicated $10
million in State funds to a bridge loan program to provide gap
financing for more than 370 impacted small businesses as they
waited for SBA loans or insurance proceeds to kick in. As
Federal funds were committed to Louisiana, the LRA Board then
carved out another $350 million from much needed infrastructure
repair funds to assist in the recovery of the State's damaged
businesses and workforce. While these funds were not nearly
enough to address the significant challenges to the State's
economic recovery, the LRA with its State agency partners
developed a strategic approach to addressing the retention and
stabilization of the business community and its workforce in
hopes of stimulating recovery in key economic sectors. I would
like to quickly walk you through the highlights of some of
these programs.
In the area of business recovery, the State first added
another $35 million into the existing bridge loan program which
provided loans up to $100,000 to another 380 businesses. Again,
the bridge loan was intended as gap financing for eventual SBA
loans or insurance payouts. As it became clear in the fall of
2006 that SBA loans and insurance were both taking longer than
expected to pay out, the State set aside more than $200 million
for a grant and loan program for small businesses. The first
phase of the Business Recovery Grant and Loan program, which
was developed by the LRA and is administered by LED, launched
in January of 2007 and has made possible nearly 3,500 grants of
up to $20,000 to small businesses and loans of up to a quarter
of a million dollars or more for 350 more businesses. A second
phase of this program to be launched in April 2008 will help an
additional 1,500 small businesses.
The State is using our Federal funding to create
innovative, long-term initiatives in our community. As part of
this program, LED and the LRA established a revolving loan fund
to create long-term investment in these communities.
Additionally, the LRA and LED designed a technical assistance
program for small businesses.
In the area of workforce recovery, the State received an
initial Federal allocation of more than $10 million from the
U.S. Department of Labor for the Pathways to Construction
program in an attempt to meet the demands of the construction
industry. The State put an additional $5 million into this
program. Since early 2006, the program has trained
approximately 10,000 entry-level construction workers.
The LRA established the Recovery Workforce Training program
in June of 2007 to address the shortage of labor faced by
employers in key recovery sectors, including construction,
health care, oil and gas, transportation, advanced
manufacturing, as well as the cultural economy.
Administered by the Workforce Commission, the $38 million
program will train and place more than 7,000 people in
occupations that range from entry-level laborer to skilled
registered nurses.
Some other sector initiatives. The Recovery Tourism and
Marketing program, developed in conjunction with the Department
of Cultural Recreation and Tourism, provided $28.5 million for
support of local tourism and marketing. The LRA and the
Louisiana Board of Regents used another $28.5 million to
develop a research, commercialization, and educational
enhancement program. This program has provided dollars to
rebuild science and technology-related research programs and
related workforce development programs at 11 severely damaged
universities that can lead to economic development outcomes.
The LRA also set aside $19 million under the Fisheries
Infrastructure program to rebuild and repair the infrastructure
critical to this badly damaged industry. These awards will be
announced in the near future.
What remains to be done? It is clear that in the immediate
future there are a number of different needs that are required
to stimulate the economic recovery of the most heavily impacted
parishes. A number of additional measures are outlined below
that would provide a comprehensive approach to economic
recovery. I will not have time to go through each one, but I
will touch on a few points.
Small businesses are the backbone of our State's economy.
More than 90 percent of Louisiana businesses have 20 employees
or less, and these businesses are responsible for more than 80
percent of the new jobs created. So we need assistance in
providing low-cost financing, capital, and technical assistance
to small business and entrepreneurs during the recovery. We
need to develop a fund to support an awareness and marketing
campaign to promote Louisiana as a tourist destination and
correct some of the misconceptions about Louisiana and New
Orleans. And we need to assist in the commercial fisheries
industry. There was more than $400 million in lost
infrastructure, but unfortunately, all we have is $19 million
to allocate to that industry.
So we need to provide adequate, equitable resources for the
recovery of our commercial as well as recreational fisheries.
We need to ensure FEMA tasks the Coast Guard by mission
assignment or interagency agreement with the responsibility of
conducting a comprehensive marine debris removal program, as
was done in Alabama and Mississippi. We got the short end of
that stick.
Provide sufficient funding for NOAA to complete their Gulf
Coast Survey work along the entire Gulf Coast. We need to
address the acute domestic labor shortages, and we are asking
for support of additional funds for the State's Recovery
Workforce Training program, and, again, I have listed some
other items, as well as the GO Zone Act being extended.
In recovery models in prior catastrophes were based on
assumptions that proved invalid post-Katrina and Rita. The
broader recovery issues associated with the rebuilding of the
regional economy--lack of qualified workers, housing, etc.--
pose unique challenges for the recovery of small businesses. We
know that you and your colleagues both in the Senate as well as
in the House have been hard at work at such programs. We want
to thank you for your significant efforts on our behalf.
I want to thank you both again for your continued vigilance
in support of South Louisiana. We would not be able to report
such progress were it not for your tireless advocacy for the
State's continued needs. We thank both of you.
[The prepared statement of Mr. Landry follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Landrieu. Thank you, Mr. Landry.
If we could start now just our first round of questioning,
and if we have time at the end, we can take some questions from
the audience, but we have to check our time.
Mr. Cornelius, when the storms struck, I was actually
shocked, as you know, to see that the small business disaster
plan that was implemented. It was about 2 inches thick, very
difficult for anybody in Washington to read, let alone people
here, under feet of water, several feet of water. So we, by
virtue of our Committee, directed the SBA to streamline that
plan, adopt a new one so that, as Mayor Roach testified, we can
keep our eye not just on the current challenge but in the
future trying to do a better job than what was done.
Can you give us an update as to where that plan is, the
mandates by our Committee for SBA to restructure itself so that
these 90 percent of our businesses that have less than 20
employees--most of them can't employ full-time accountants or
lawyers or lobbyists--can figure out what they can do after a
disaster like this? And could you just give us a brief update
of how that is being implemented right now?
Mr. Cornelius. Well, as I said earlier, the agency has
submitted to the Committee a Disaster Recovery Plan. What we
did was our new Administrator, Steve Preston, came aboard, and
the first thing he looked at was the critical path of how a
disaster loan comes in, when it comes in, what we do, how we do
it, and what is going on. And he restructured teams within SBA,
and these teams are now structured in place. They have reduced
the time that it takes to process loans all throughout
disasters, not only in our disaster but we use it nationally.
If you look at what happened in his restructuring in his
plan and what has been implemented, what normally took us 90
days to 120 days after Katrina now takes us less than 30 days,
and that is because we assign resources, not only our human
resources but also our IT resources that came in in situations
that we can improve technology to get evaluations on property
and damages so we could secure that.
So that plan that was submitted to the Committee is
actually being implemented by this agency.
Senator Landrieu. Could I ask, Joe, would you mind maybe
just stepping up and giving a comment for the record? I hope
that my staff told you that I may be asking you for this. But I
think this is very important for the businesses here, the 700
businesses in southwest Louisiana who were successful in
getting a small business loan. That may be the good news. But
the bad news is there may be thousands that attempted and just
finally gave up because of the kind of process that was just
not in place to be of help to them at a very desperate time.
So could you just comment briefly on how you were
implementing this new disaster plan? And how many people do we
have, you know, in place in Louisiana, South Louisiana, to take
care of this if this happens again?
Mr. Montez. We have here in Louisiana a staff of about
eight or ten people in the New Orleans District Office who are
assigned responsibility for the entire State of Louisiana with
regard to what we refer to internally as our regular SBA
programs, that is, 7(a) business loan programs, 504, the
Government contracting such as the 8(a) programs, and then in
conjunction with the SBDCs and SCORE, the technical assistance
programs.
What we have beyond that for disaster response is a cadre
right now of approximately--and I don't know what the exact
head count is, but approximately 1,200 people at the Disaster
Processing Center in Fort Worth, which is a headquarters entity
that all disaster loan applications will be processed through
there.
Now, when Eugene references teams, it is at that facility
where they have teams of four or five individuals who are
assigned a batch, if you will, of applications that will drive
those applications quicker and more thoroughly and more
efficiently through the disaster loan application process.
Senator Landrieu. Has there been any talk--and I am going
to move on in just a minute--which came up after the storms, of
using the local banks and the local lending community that is
familiar with these small businesses to maybe partner with you
all in a way that can expedite the loans? And the other point,
B, is the streamlining of the paperwork that was required. You
know, people were asked to submit tax returns back 5 years.
Well, heck, if they had their tax returns in a house that was
dry--but the tax returns went out the window with everything
else. I mean things like that that were just mind-numbing for
us to try to move this bureaucracy to understand what our
people were dealing with.
So, A, are you working in any way with banks, yes or no,
and if there is a possibility, and streamlining the paperwork
required for our small businesses.
Mr. Montez. It is my understanding, Senator, that the
headquarters people are working with the local lending
communities, private banks, if you will, to join us in
processing some of these applications, and perhaps taking the
first step in actually doing the loan, that is, issuing the
funds, disbursing the funds, and we come back and guarantee
that.
Now, where we are with regard to that, that is something
that is made--that decision is made in Washington, and I think
that would probably be a question better asked of the
Administrator or the disaster program people at headquarters,
because they ultimately will have the responsibility for
outlining the parameters of such an agreement.
With regard to the requirements of such things as 5 years'
worth of tax forms, et cetera, et cetera, I believe that has
been largely eliminated. Those requirements are eliminated,
particularly in instances where such as occurred here with Rita
and in New Orleans with Katrina. It just did not make sense.
Senator Landrieu. No, it does not make sense for people to
have to give you titles and insurance policies and tax returns
that were flooded, you know, lost in the flood and, you know,
they cannot go forward until they retrieve that paperwork. And
not to go on, but it was mind-numbing that if you needed their
tax returns, the SBA just could not call the IRS, you know,
which is like right next door, and get the tax returns that are
on record somewhere. But yet our people were forced to go dig
through debris to literally try to find their tax returns.
Now, we have eliminated that, but I just want to make sure
that you are cognizant that in the future we hope that these
procedures will be clearer. It is only one of about a hundred
things I could talk with you about.
Mayor Roach, and then we will be finished my turn in just a
minute. Would you be a little bit more specific in your
conversations--because I know you have been one of the leaders
that both Governor Blanco and Governor Jindal are depending on
to help give advice about this workforce development issue,
because I think this is really crucial. And I appreciate the
time that you spent talking about the report. Have you made any
specific suggestions other than the one that you made about
making sure the State is investing in our technical colleges?
Could you elaborate a little bit? We would like to take away
one or two really specific suggestions from a mayor trying to
rebuild a city, a regional leader trying to rebuild a region.
You have got fisheries. You have got energy. You have got port
fabrication. You have got retail. You have got tourism. You
know, you have got a lot of different kinds of petrochemical.
So you are hearing from a lot of different kinds of employers
about this. What have you shared with the State that maybe
Senator Vitter and I could take back to Washington to be
helpful in terms of this job training piece?
Mayor Roach. Well, what we have talked to the State about
is the idea of taking the opportunities that we have with
Sowela Tech and our local high schools and to begin at the high
school level a job training curriculum, because there are many
children who are not college-bound and who, quite frankly, are
not challenged enough at the high school level, and working
with local high schools and Sowela to develop an articulation
agreement so that they can begin training in high school and
then take that training and have that credit transfer into the
technical--or the community college setting and thereby
encourage them to develop job training skills and introduce
them to the different types of skills and the different types
of opportunities that are available in the job market today.
What we are finding is that many young people today simply
are not aware of the opportunities that are out there and are
not being adequately exposed to the job opportunities in terms
of what those jobs involve. For example, we just met just
yesterday with the local school board, and we are looking at an
opportunity where the city will help through a cooperative
endeavor agreement to expand the job training facilities that
exist to introduce into the high school level a curriculum that
gives hands-on experience, hands-on training, and expose
children not just to books but to an applied application of the
math and science principles that they are learning in school,
and hopefully at the same time challenge them to actually do
better in school.
What we have found in some cases is that some children are
not stimulated by just learning from a book, that when they see
it and they can do it with their hands and they can understand
it, then it becomes a little more meaningful and a little more
real. And some of those students actually improve in terms of
their academic performance.
So we are looking at that in a different approach to job
training. Workforce development has had traditionally a focus
on either college age or even post-secondary-age workers. We
are looking at training those workers and reaching workers in
the high school level.
Senator Landrieu. Well, let me suggest this, and then I
will turn it over to Senator Vitter. We were successful in
allocating about, as I recall, $435 million for restart money
for the State schools. This was 2 1/2 years ago. Some of that
money, John, may still be available, and I would like to pursue
the opportunity to look there, as well as maybe some additional
Federal funding that we could direct this way for a pilot to
see if we could, you know, really find some successful pilots.
This is a great need throughout all of our State with an
unemployment rate of about 3.9 percent, but a dropout rate in
our high schools exceeding 50 percent. There just seems to be
such a disconnect between the demand for jobs and the
availability of our students.
So there is a lot of discussion, without taking too much
time going on, in the education reform circles about retooling
high school curriculums. And I see Ann Knapp, who used to chair
the Sowela Tech Board taking notes. But if we could work, would
you be willing to help us fashion a pilot program?
Mayor Roach. We talked about a pilot program yesterday with
some representatives from the school board. So this would be an
excellent opportunity.
Senator Landrieu. Great.
Mayor Roach. I wish I had the presentation and you had the
time to see it, but it would be--I think we have got something
that could fit very well with what you are talking about.
Senator Landrieu. But I think it underlines one of the
important challenges besides the insurance issues that we have
raised. It is really the workforce, lack of workforce
development opportunities that hit small businesses that cannot
compete with some of the larger businesses for the higher
salaries. And it puts businesses of all walks of life at a real
disadvantage. And it is something that we could in a Government
public-private partnership, I think, really address.
Senator Vitter?
Senator Vitter. Thanks, Mary.
As I start, let me just repeat that if anyone in the
audience has a concise comment or question, I think there are
index cards being passed around or available in the back.
Please write it down. If it is about these subjects, we will
try to get to them in the discussion. If it is about anything
else, I certainly have staff in the back, and we will try to
meet or respond to other issues as well, perhaps after the
meeting. And thanks to all of you for being here.
Mr. Cornelius, the 700 figure, I just want to back up and
understand it. That is the number of Rita loans that have not
been disbursed?
Mr. Cornelius. Correct.
Senator Vitter. And in each and every case, as I understand
your testimony, that is because of a change of heart or a
factor on the applicant side?
Mr. Cornelius. Yes.
Senator Vitter. So as far as you know, every Rita SBA loan
has been dealt with in terms of your SBA responsibilities as of
now?
Mr. Cornelius. Well, as of what SBA can do given that they
have not gotten information or where the applicant wants to go.
We are at that point, yes.
Senator Vitter. OK. And so if that is the case with the
applicant, you obviously tell them you need to do A, B, and C.
Mr. Cornelius. Correct. Some of them we have not located.
Some have canceled, want to cancel. Some have decided not to
pursue. But in every instance that I named, yes, that is pretty
much the case. We have to have the applicants do something in
order for SBA to go further.
Senator Vitter. OK. And, also, with regard to the disaster
plan and the need for sort of what I would call surge capacity,
basically you pointed to the disaster staff in--is it Dallas?
Fort Worth. I assume in an event big enough, like Rita--that is
not big enough. I assume if you have a big enough event, you
need an extra surge. So what is the plan for the quick,
efficient surge beyond your employees, No. 1? And, No. 2, is it
better to plan on hiring and training more people immediately
or partnering with folks in the private sector, as Mary
mentioned?
Mr. Cornelius. Those are the permanent staff in the Fort
Worth area, but nationwide SBA has a cadre of people that they
can call up in an emergency or in a disaster where we need it.
We do not have the means or the resources to have those people
on for full-time because there is no justification for full-
time jobs in that situation. But here in Louisiana, we have
over 700 people who have been through the experience of Katrina
and Rita and Wilma that we can call on, SBA can call on, and
they can become employed in our cadre and be ready to face a
disaster if one hits in our State.
Senator Vitter. And you are basically saying you think that
is adequate even for a big, big event, not a typical tornado,
et cetera?
Mr. Cornelius. Absolutely, because if you look at what
happened with Katrina, we had 450 people coming in on a
rotating basis. We looked at the numbers. It was somewhere
around 270 that were really--when we were at our height of
getting the contracts done and getting the applications done
and getting things moving under the new plan that Administrator
Preston did.
Now, we did also allocate certain staff to certain areas,
such as New Orleans City Hall, that helped us with the Road
Home situation, with getting mortgages and titles and all the
things that Mary was pointing out as far as documents. And we
found that it was more feasible to have those people in those
situations, and we used less resources because they were
concentrating on getting the bottleneck of the problem in the
Road Home situation.
Senator Vitter. OK. Mayor Roach, what is your observation
about what various GO Zone incentives have done in this area in
terms of the recovery?
Mayor Roach. Well, I think the GO Zone--I was talking with
one of the tax attorneys in town the other day, and he said,
you know, in the next couple of years, by the next 2 or 3
years, you are going to see more investment in this area than
you have ever seen before. And he attributed it to the GO Zone,
particularly to the 50 percent depreciation allowance that is
afforded under the provisions of the Act. That tends to be the
provision that gets the most attention, but there are other
provisions and other benefits in there. But I think the GO Zone
Act is a tremendous incentive, and I think that it really is
the type of thing that America works best with. It creates an
incentive. It does not mandate a particular investment. It just
gives credit for investment, and it encourages American
business to go to work, and it gives a great incentive to do
that.
And so if there is any message coming out of this
particular situation as far as we are concerned, it is to just
give American business the incentive to go to work and get out
of the way and watch them go to work, because they can do
tremendous things. That has been our forte, so to speak. And
that to me is the significance of the GO Zone Act.
Senator Vitter. You may have just answered this question,
but let me make sure. I was going to ask, there are a menu of
different GO Zone incentives. We are trying to extend them
basically all in time. We may be able to extend some, but not
all. So what would be at the top of the list. The 50-percent
depreciation?
Mayor Roach. The 50-percent depreciation, that would be
probably top of the list. But I would also say that what--you
know, it is kind of a chicken-and-egg situation, and we have
had this problem in other areas. But many people wonder why
recovery does not work faster than it works. And I was talking
with a local physician, and he just opened his new office. He
just opened his new office. He made the decision to build a new
office 2 years ago. And that is just one person, and that is
one office. It is the amount of work that has to be done before
you can actually complete the project. And with the rules and
regulations and policies, all well intentioned and all well
intended and--I am not saying we should repeal them, but there
are so many hoops that we have to go through in order to get a
project not only permitted, but then we have to worry about
funding and other things that we have to do. So it takes more
time.
So I would say to Congress, we have created this set of
rules and regulations to do things and policies, environmental
and otherwise, that we say need to be taken care of, but to do
that on such a large scale when you are--it is not just one
building. It is an entire region that we are trying to rebuild.
It just is going to take time. The workforce shortage has
created pressure.
Just to give you an example, we are finding that concrete,
the staple for reconstruction, is at a premium, and concrete
now is $100 plus a yard. And so that--I mean, it is just the
availability of the raw materials that are necessary for
reconstruction is making the whole process a little bit more
difficult.
So time is of the essence. We know we need to rebuild. We
know that GO Zone works. But we know that in light of the
magnitude of the devastation, it is going to take time in order
to complete that rebuilding. So if we want the GO Zone to
really have its intended benefit, then we have to have a little
bit more time.
Senator Vitter. Thank you. And, Mr. Landry, thanks for all
your work with the LRA. You mentioned bridge loans, which the
State LRA did some of. I don't know if you know this off the
top of your head, but do you know the overall default rate from
that experience and, therefore, the overall conclusion about if
it really got businesses to a point that it could work or not?
Mr. Landry. I have invited Robin Keegan with our staff, who
handles this on a daily basis. But before she comments, though,
it occurred to me, as Mayor Roach was talking about the GO
Zone, the bonus depreciation, Senator Landrieu, you mentioned
that a lot of the small businesses do not have the luxury of
attorneys and accountants. And so I guess in a perfect world, a
lot of these small businesses could take advantage of the more
complex--I mean, it is difficult for the sophisticated business
people to take advantage of some of these complex depreciation
bonuses. So I don't know how--that is just a thought. Some kind
of way of simplifying that goes on for very small businesses
might be something to consider.
Robin, do you want to address that?
Ms. Keegan. Thank you. I am Robin Keegan. I am the Director
of Economic and Workforce Development for the Louisiana
Recovery Authority. Thank you for the question.
The first phase of the bridge loans were small loans
$25,000. That phase had a very high payback rate in a very
quick amount of time.
The second and third phase were loans up to $100,000, 0
percent interest for 6 months, and then we knew that people
were needing more time, as Mayor Roach eloquently spoke,
because SBA was having challenges paying out many of these
loans. These were supposed to be gap financing to SBA or
insurance payouts. So we extended those bridge loans for two
periods, and we are just now in the process of reclaiming those
loans. So I do not have a firm answer for you at this point,
but I can get it for you. We are having some challenges with
getting repayments simply because people are taking a lot more
time to be able to be financially and fiscally stable, which is
the desperate need for more low-cost financing that we need for
our business community. But I will get you the specifics.
Senator Vitter. Great. Well, I would be really interested
in tracking that and seeing the----
Ms. Keegan. Definitely.
Senator Vitter. I guess what I am after is the eventual
success rate. In other words, what percentage of these
businesses that get bridge loans make it and what percentage
don't? Because, obviously, we all--that is the whole point, a
bridge to somewhere.
Ms. Keegan. Exactly. I will get that to you.
Senator Landrieu. I think that would be very helpful, and I
just want to add, before we call the other panel up, it would
also be helpful if we could get the SBA--and despite our really
heroic efforts, if I have to say so myself--to get the SBA to
not require full payment of their loans that they have made
when people receive their Road Home grants which be extremely
helpful. We have tried to pass this legislation, and we have
been thwarted by the administration, by the SBA itself and the
administration. We have support from Members of Congress from
both political parties. So we are going to try again to get
that waived so that if a person took out a 20-year small
business loan, they actually have 20 years to pay it back. And
they don't have to pay it back the week after they get their
Road Home grant, which just puts them right back where they
started the first place, and then maybe they can pay off, you
know, the loan that Senator Vitter was speaking about, if the
Federal Government could wait in line.
Second, I want to just say one thing, John, with what
Randy, the mayor, mentioned. The GO Zone has been very
effective. We hear nothing but positive things. But it is
apparent to me that the larger you are, the stronger you are,
the more quickly you can get your application in, the more
lobbyists you can hire to go to the Bond Commission and others
to get your billion dollars.
Small businesses do not have that, and with the fisheries
situation here--which, I will admit, we have not been able,
despite our efforts, to bring enough attention to our fisheries
industry. I wish, John, that we could think maybe at the State
level to either set aside or hold back some of that allocation
to help our fisheries industry stand up, because these guys
have really been fighting hard to get their boats back in the
water and get their ice back on the docks, et cetera. And if we
do not try to do something like that at the State or local
level, you know, Mayor Roach, the big guys could come in, sop
up all the GO Zone bonds, and, you know, you are sort of left
with the smaller businesses really struggling. And I know we
are trying to extend another $5 billion, we have been asked. I
don't know if we can find that. We are going to try.
And then the second point on this concrete, just to show
you how these things are interlocking, I believe--if Senator
Vitter knows, he could add something. I believe one of the
largest concrete distributors is on the ``MR. GO,'' which is
the Mississippi River Gulf Outlet, which we are closing, we
have to close because of St. Bernard Parish. We have a request
in for $160 million to help relocate some of those businesses,
and one of them is a scrap metal business, and one of them is a
concrete distributor, which is the largest, I think, in the
region, the whole Southern Region.
So you know, people really need to understand how this is
tied and what is driving some of these prices up is because
there is so much work being done to sort of relocate
businesses, reshift channels, et cetera, after this great
flood.
All right. Thank you all very much. Let's go to our next
panel. Thank you so much.
Senator Landrieu. If we could have George Swift, President
and Chief Executive Officer of Southwest Louisiana; Carl
Manuel, owner of Anna's Pies; Mr. David Darbone, President,
Grand Oaks, Inc.; Ms. Donna Little, Director, McNeese State
Small Business Development Center; Sheri Lazare, Director,
Enterprise Consortium of Gulf Coast Women's Business Center;
and Donald van de Werken, Director of the U.S. Export
Assistance Center in Louisiana.
This is quite a large panel. We thank you all for being
cooperative. We are going to ask you to limit your opening
remarks, if we could, to 3 minutes each so that we can get
through the panel and get to some questions. And if we have
time, we will open it up to questions from the audience. We are
going to go in the order that you all were introduced, and if
you don't mind, I am not going to go through any further
introduction to try to save time. But thank you all, and all of
your appropriate biographical information is in the record of
the hearing.
Let's start with you, George, and thank you so much for
your leadership through a very difficult time as the Chamber
leader for Southwest Louisiana, and we will being with you.
STATEMENT OF GEORGE SWIFT, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, SOUTHWEST LOUISIANA CHAMBER OF COMMERCE, LAKE CHARLES,
LOUISIANA
Mr. Swift. Thank you, Senator Landrieu, Senator Vitter, and
staff members. We are glad to have all of you here. Thank you
for coming to southwest Louisiana. We sometimes do feel
forgotten, and we know we are not forgotten with you and those
who are represented here. So we appreciate that.
I am not going to go into a lot of the topics that have
already been covered, but certainly insurance, workforce, and
affordable homes are the topics that are really holding us
back, but I will get right to the small business segment.
Immediately after Hurricane Rita, the Chamber Southwest
building was transformed into a Business Recovery Assistance
Center. We had all of the agencies coming together, many of
which had lost their location, such as the Small Business
Development Center and many organizations including the SBA
were with us. We received over 8,800 telephone calls and 3,200
businesses came to our Recovery Center to get assistance of
various forms.
One of the things that was most helpful to the people was
the thought that we were going to get some assistance from SBA.
And while many were helped and we had much assistance on hand,
the end result was that we ended up with more of a promise of
assistance than actual assistance. And we realized that the
event, Rita and Katrina, and the scope of it has never been
felt before. And so we are dealing with gigantic proportion.
But what we found was that many businesses were unable to get
the assistance they needed. It caused them great hardship, and
they basically gave up on the SBA process after some period of
time.
The Louisiana Recovery Authority bridge loans were very
effective for those that were able to get those, and I think if
we could come up with a more rapid response similar to
individuals received FEMA assistance immediately, $2,000, if we
could have an assistance fund for small businesses--and we are
talking about the very small businesses, ten, five employees
and under, that if they could receive $5,000 right away, this
could help keep the doors open; it could help them restock; it
could help them get the utilities turned back on, pay employees
until they could go to their banks. Many times they were not
able to get with their banks because the banks were closed or
they were not able to fill out a lot of complex records
because, as you indicated, Senator Landrieu, they did not have
those records. And so some kind of quick response we think
would be very helpful.
We have some suggestions that if a disaster recovery plan
is put into place, that we have maybe businesses are instructed
to keep a disaster or emergency toolkit that has their vital
business information--insurance, major vendors, and licenses--
all in one place so that they could keep those. And then after
a disaster, if we could have a quick response from SBA within
48 hours, mainly on information that they need, and then as we
said, access to capital, a financial grant of at least $5,000
per impacted business, it would help businesses in the
immediate recovery.
We also think that, you know, within 60 days we should be
able to establish microloans, grant or loan combinations to
small businesses at competitive terms. We think it is a good
idea to use existing financial institutions to process those
loans. It worked very well with the State LRA bridge loan
program.
And then businesses we find need technical assistance such
as helping to recompile their financial records, and maybe a
voucher for assistance with the financial records would be
beneficial.
So these are just some of the suggestions that we have. We
do think that the true impact has not been felt on our small
businesses yet. We think it will take 3 to 5 years to really
measure the impact that Hurricane Rita has had on our small
businesses. Many folks--and we had an informal discussion with
some of the staffers from the Small Business Committee earlier
today. They maxed out their high interest credit cards, they
cashed in savings and retirement just trying to keep their
businesses open. So I think the jury is still out on the real
true impact.
But, again, thank you both for being here and to all of you
for helping to realize that we have some problems and a lot of
opportunities that we need to take advantage of, but we need
some more assistance to get through this challenge.
[The prepared statement of Mr. Swift follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Landrieu. Thank you very much.
Mr. Manuel, Anna's Pies, thank you for your testimony. Go
right ahead.
STATEMENT OF CARL MANUEL, OWNER, ANNA'S PIES, INC., LAKE
CHARLES, LOUISIANA
Mr. Manuel. Delighted to be here. Can you hear me?
Senator Landrieu. Can you pull it a little closer to you?
Mr. Manuel. A little bit better?
Senator Landrieu. Thank you.
Mr. Manuel. OK. We were affected by Hurricanes Katrina and
Rita. When Katrina hit New Orleans, we lost all of our
customers from New Orleans and surrounding areas. We were
unable to make deliveries or contact our customers while the
city and surrounding areas were shut down. No one in, no one
out, was the ultimate problem.
A few weeks later, we were hit very hard by Hurricane Rita.
For weeks, our city was shut down. Meanwhile, we still had
bills to pay and no cash-flow. Once we were allowed back into
the city, we were lucky to walk into a building that was still
standing. All of the sheetrock on the walls and ceilings had
come down from the rain. Water was everywhere in the building.
The coolers, freezers, and ovens were not working properly due
to the damage from the storm. A day or two later, after the
clean-up process had begun, the State health inspector, along
with the Federal agents, stopped by to see and inspect damages
and also inform us that we were not allowed to make or produce
anything until they came back and gave us the OK. We were
short-handed. Actually, all employees were still out of the
city. So that caused us 6 more weeks of clean-up and lost the
profits before we could open.
Our employees ended up not coming back because they had
relocated. So we were really in a bind physically, financially,
and emotionally. We applied for Federal loans, and it is now 3
years later, have not heard one word from the SBA in either
denying us or not. We never heard one word.
We had about $10,000 worth of damage due from wind and rain
damage, not including getting the damaged equipment fixed. We
did what it took to get back on our feet. Little by little,
with sheer determination, we were able to get back up. New
Orleans and surrounding areas is barely back up for us because
so many businesses in New Orleans had closed down.
In closing, I would like to give a few suggestions to the
panel.
The Small and Emerging Business with Mr. Adrian Wallace has
given us unwavering support. Mr. Wallace worked diligently with
us to help us get back in business. I would recommend them to
anyone needing assistance.
No. 2, the McNeese Small Business Development Center
located at McNeese State University, with Ms. Donna Little,
gave me real assistance and information. I would also recommend
Ms. Little and the center to others.
The SBA Assistance Program was not very helpful of any.
They turned deaf ears on us. They didn't even bother to answer
the application after we tried contacting them and everything
else. I feel as a Government entity that they should have--that
they should be more receptive to small business trying to
recover.
Thank you.
[The prepared statement of Mr. Manuel follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Landrieu. Thank you, Mr. Manuel. Would you state
for the record your location? Were you in Lake Charles and in
New Orleans?
Mr. Manuel. We manufacture our pies here in Lake Charles,
and we run a route in New Orleans.
Senator Landrieu. OK. And what is your current address, or
what was your address in Lake Charles?
Mr. Manuel. It is 2323 Moeling Street, Lake Charles,
Louisiana.
Senator Landrieu. OK. And how long had you all been in
business?
Mr. Manuel. Sixteen years.
Senator Landrieu. All right. Thank you. We will come back
for questions.
Ms. Little?
STATEMENT OF DONNA LITTLE, DIRECTOR, MCNEESE STATE UNIVERSITY
SMALL BUSINESS DEVELOPMENT CENTER, LAKE CHARLES, LOUISIANA
Ms. Little. Thank you. Senator Landrieu, Senator Vitter,
and distinguished guests, thank you for the opportunity to tell
you about the work the Louisiana Small Business Development
Center has done and is currently doing in small business
recovery in South Louisiana and to tell you of the challenges
our small businesses still face. I am Donna Little, Director of
the LSBDC at McNeese. We are an SBA partnership program with
the State of Louisiana and participating universities. We
operate nine centers in the State. Our mission is to build
small businesses.
Senator Landrieu and Senator Vitter, we deeply appreciate
the leadership you, Chairman Kerry, and Ranking Member Snowe
provided in securing additional funds for the SBDC network for
fiscal year 2008. I am very proud to say that every member of
the Louisiana delegation supported your effort. The increase
restores funding we lost in fiscal year 2001 after the 2000
census showed slower population growth in Louisiana.
Let me start by saying that small businesses still need in-
depth technical assistance just as we provided after the
hurricanes. We helped thousands apply for SBA disaster loans,
staffed State business recovery centers, worked in DRCs, and
listened to owners. We provided small businesses with an
average of 5 hours of loan assistance, time that an SBA
disaster loan officer cannot spend. What we have achieved in
assisting the small business community with recovery is pretty
impressive. Since October 1, 2005, we have provided one-on-one
consulting to 6,750 small businesses across South Louisiana,
training to nearly 14,000 persons, and believe me, we did not
count everything. Our clients have created 356 new businesses
and 2,000 new jobs, with more than $104 million in debt and
equity funding, significant numbers.
Now, in going forward, we are focused on helping small
businesses make sure that their business model is relevant,
helping them adjust, helping them analyze financial statements,
figuring out how to innovate and serve clients and markets with
fewer employees, prepare disaster plans so the next time they
will be ready, compete in a global market. This is not the time
to cut technical assistance.
Since Hurricane Rita, small businesses face these problems:
personal debt that they cannot refinance, insurance costs,
expensive construction, finding good workers.
Two weeks after Rita, I returned to Lake Charles. McNeese
was still closed. I worked at the Chamber Southwest using my
laptop, a borrowed printer, and a folding table. One person
serving five parishes, I spread the word to the LSBDC that
McNeese was helping small businesses while other LSBDC
personnel were doing the same across South Louisiana. I held
eight seminars on SBA disaster loans in four different towns,
going through the applications line by line, doing my own news
releases and photocopying, hauling boxes of forms around in my
car. I held clients' hands while they cried. The owner of a
party goods store with contracts for Christmas parties and
Mardi Gras balls was in despair over those lost sales. I
suggested she reduce her operations and lease part of her
building to another business, which is what she eventually did.
I prepared them for the months between the application and the
actual disbursement of funds. The bad publicity after Katrina
made many decide it just was not worth the effort. They did not
even apply.
I suggested credit unions or other quick money to keep them
alive, explaining cash-flow and repayment ability, things that
they had not really thought about because, before Rita, they
survived on almost nothing, with no debt. They had a hard time
figuring out how to start over.
The LSBDC at McNeese is a very small office. My total
operating budget is just over $150,000, including SBA, State
funds, and funds from McNeese. Eighty-eight percent of my
budget is for personnel costs, provides for one director, one
business consultant, and one admin person--minimum staffing.
With this staff, we expect to provide individual in-depth
consulting to approximately 175 existing businesses and
entrepreneurs and training to approximately 400 over this
fiscal year.
If another storm hits this summer, we will be in as bad a
shape as we were before Rita, although we have learned some
very good lessons.
Thank you.
[The prepared statement of Ms. Little follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Landrieu. Thank you, Ms. Little. Let me just ask
you, did you put in your testimony that right after the storm,
you received a budget cut from the State of Louisiana?
Ms. Little. Yes, it is in my written testimony.
Senator Landrieu. All right. Ms. Lazare--I am sorry. Did I
miss that? I am sorry. Mr. Darbone?
STATEMENT OF DAVID DARBONE, PRESIDENT, GRAND OAKS, INC., LAKE
CHARLES, LOUISIANA
Mr. Darbone. Thank you. Senators Vitter and Landrieu, thank
you for inviting me here today to discuss what I think are
important issues that we face in our region.
As a local general contractor and commissioner of the port
of Lake Charles, I have been immersed in the day-to-day
rebuilding efforts of our city. When Hurricane Rita came
blowing through our city, I was one of those people who decided
to stay and weather the storm. My home and family did manage to
make it through the storm with no one being injured and minimal
damage to our home. Unfortunately, many others did not have the
same result as we did.
The day after the storm, I assessed the damage in my
neighborhood and some of the surrounding area. I managed to
gather my crew from wherever they had taken refuge and brought
them to my house. We used a generator for electricity and went
to work clearing trees off of homes and trying to do as much
hurricane triage as possible.
As people started returning to their homes, the intensity
picked up in terms of everybody trying to get their homes
repaired at the same time and contractors trying to do as much
as they could to help. With approximately 100 licensed
contractors doing as much as they could as fast as they could,
the job was overwhelming.
The local Home Builders Association became a critical part
of helping people by providing information about local licensed
contractors, and over time we helped rebuild our community. Our
regional and local Senators have done a great job of working
together to overcome insurance increases that hurricane victims
have to deal with by trying to stabilize the cost that people
have to add to an ever decreasing income. The Home Builders
Association continues to provide continuing education to
builders about hurricane code changes, new laws that the State
now requires, and our challenge today is to try to educate
faster than the new regulations are being implemented. So we
are working hard to try to do that to get some of the
contractors up to speed and stay on top of that.
As Chairman of the Commissioners for the Port of Lake
Charles, I am proud to say that we have been able to work with
our Senators and Representatives, local and regional, to get
their help in providing funds to allow us to grow our
community. The port of Lake Charles is the 12th largest port in
the country and the 4th largest port in Louisiana. We think we
are the No. 1 port in Louisiana in heart and energy, and the
port and surrounding businesses along that channel provide an
economic impact of $4.5 billion in business revenue, $2.3
million in personal income, $250 million in State and local
taxes, and like Senator Landrieu said, 31,000 jobs.
The passing of the WRDA, the Water Resources and
Development Act, was critical to the port. This bill provided
$15 million to install rock along the banks of the channel to
prevent erosion. The port continues to maintain our channel,
which is not only critical to our community but to the Nation
as well. With the completion of Sempra LNG, our channel
corridor will provide 20 percent of the Nation's natural gas
supply and 4 percent of the Nation's oil supply. This is the
reason that we continue to ask our Senators to fight for more
funds for us to maintain the channel.
At this point, we have $14 million in our budget to do
that, but that leaves us with a deficit of $7 million from what
the total cost is. We are faced with a need of over $400
million over the next 20 years to maintain our channel. And our
need is great, but what would happen to the Nation if we could
not provide them with heat in the winter?
Finally, we are thankful for the GO Zone opportunity. The
port of Lake Charles helped the Lake Charles Co-Gen Plant
secure $1 billion on GO Zone funds, and those bonds helped to
build the new gas plant here that is going to provide about 350
high-paying jobs. We have on our radar two companies that we
are on the short list with right now that if this deal goes
through with those two companies, using the GO Zone bonds would
be tremendous in helping them, and they are going to provide
1,500 jobs to this area. And so we think that the GO Zone
opportunity is a great opportunity, and we would really like to
suggest extending that as much as we can, and the 50 percent
part of that is really what helps attract some of those
businesses to our area.
The port is not only focused on bringing in new jobs, but--
--
Senator Landrieu. Please wrap up.
Mr. Darbone. The port is not only focused on bringing in
new jobs, but closing the labor gap by offering scholarships to
places like Sowela Community College, and the reason that we
want to do that is because we think that if we bring in jobs
and high-technical jobs to our area and we do not have the
skilled labor to do it, then we are going to find ourselves in
a quandary. So we are asking that if you take a look at places
like Sowela, I think it is an emergency, the need that they
have. We have students in trailers at this point, and I think
at a minimum they have a need of about $30 million to get that
college up to speed so that we can start preparing people to be
prepared to take these jobs that we are bringing to Lake
Charles.
[The prepared statement of Mr. Darbone follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Landrieu. Thank you very much.
Ms. Lazare?
STATEMENT OF SHERI LAZARE, DIRECTOR, ENTERPRISE CONSORTIUM OF
THE GULF COAST WOMEN'S BUSINESS CENTER, LAFAYETTE, LOUISIANA
Ms. Lazare. Thank you, Senator Vitter, and thank you,
Senator Landrieu. Again, I am Sheri Lazare with the Enterprise
Consortium of the Gulf Coast Women's Business Center, and I
also want to personally thank you, Senator Landrieu, in helping
us get that center approved and get the grants from SBA to get
it started. So we are real excited to be able to do what we can
for South Louisiana.
As many citizens and you well know, the small businesses in
our community are truly what drive our economic base. And after
the hurricanes, we saw that the biggest sector that was hit was
service and retail, and that was across the board.
Now, after the second quarter 2006, most of South Louisiana
had returned to within 1 percent of its pre-storm firm count,
with the exception of Cameron Parish, which was down still 20.8
percent.
Now, the difficulty that the business owners are finding
and experiencing in not only re-establishing growing and/or
beginning new businesses is, as you have heard throughout the
day, funding. It is the bottom line that they across the board
are needing.
In addition to the funding, the workforce pool is less
experienced and less educated. That is what we are hearing from
these business owners across the board, which, again, is
draining more money from their pockets to then have to train
the employees because they do not come with the necessary
training that they need.
The additional types of technical assistance that are
needed vary greatly depending on the industry which we are
talking about, but the common voice that appears throughout as
far as TA goes is software assistance and just understanding,
like you were saying, getting QuickBooks back up to speed,
understanding the new Vista, understanding Office-07. In
addition to that, the workforce that is coming in, where they
may be technically savvy in being able to surf the Internet and
things like that, they are not always technically savvy in the
utilization and use of these programs.
Additionally, with small businesses in the area, they hire
two out of every three people, which, again, shows that
encouraging small business growth will not only bring business
and economy, but it will also bring labor force and employment
opportunities.
As far as women-owned and minority-owned businesses, the
numbers are growing drastically. Just in Louisiana in 2002,
there were over 86,000 women-owned firms. That was a total of a
23-percent increase, up from 1997, and it generated over $12
billion in revenues. Now, this does not include jointly owned
businesses with women and men nor married partners with
businesses as well. So, that would, of course, increase that
number greatly.
As for Hispanic-owned firms, in 2002 there were 7,646,
which is an increase of 15 percent from 1997, and black-owned
firms numbered 40,252, which is an increase of over 56 percent.
So you can see that the need for minority- and women-owned
assistance is growing greatly, as they are the largest
populations which are starting businesses.
As I stated, being that we are a part of the Enterprise
Consortium of the Gulf Coast, in 2006 we assisted over 750
people, and 40 percent of those were women. In addition to
that, 15 percent of them were pre-startup businesses, and 82
percent of those pre-startup businesses were all minority-owned
and minority-initiated; and of all the 750 that we assisted, 95
percent of them were at economic disadvantage. As they stated,
individuals have been dipping into their personal funds in
order to make up for what the business has not been able to do,
and as a result, putting both their business and themselves in
financial jeopardy.
[The prepared statement of Ms. Lazare follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Landrieu. Thank you very much.
Our final witness, Mr. van de Werken.
STATEMENT OF DONALD C. VAN DE WERKEN, DIRECTOR, NEW ORLEANS
U.S. EXPORT ASSISTANCE CENTER, NEW ORLEANS, LOUISIANA
Mr. van de Werken. Thank you. I will try to summarize my
comments and give my time back to Eugene back there.
My name is Don van de Werken. I am with the U.S. Export
Assistance Center, and we are part of the U.S. Department of
Commerce International Trade Administration. Our mission at the
USEAC is to help Louisiana small- and medium-sized enterprises
find international markets for goods and services. We have
offices in most major embassies and consulates around the
world, and we also have several offices through most large
metropolitan areas throughout the United States. In Louisiana,
we have our main office in New Orleans, and we have folks
scattered throughout the State.
International trade plays a key role in Louisiana's
economy. In 2007, Louisiana exports were $30.4 billion compared
to $23.5 billion in 2006. Louisiana exports have grown 29.2
percent in 2007, more than double the overall U.S. rate of 12.1
percent. And I will also point out I just saw something in the
Miami Herald that their growth rate was only 10 percent. So we
tripled the amount of exports. The value of export shipments
for agricultural products throughout Louisiana's lower
Mississippi River ports account for 50 percent of all U.S.
grain exports, and it was particularly high showing an almost
40-percent increase over last year.
In fiscal year 2004, before Rita and Katrina, our office
met with about 500 companies in about 1,600 counseling
sessions. We reported about 81 export successes from 35
companies. As you can expect, those numbers drastically
decreased in 2006. But I am happy to report that that picture
is improving. And as I said, I am summarizing this stuff. I
submitted the full remarks here.
I want to point out that it was the leadership of the
District Export Council, various other economic development
organizations, George right here was instrumental in helping
spread the word that exporting is important, even though you
are suffering a disaster.
I also want to thank Senator Landrieu's office for helping
us realign some of our export service costs, and it was a big
boost to some of our smaller companies. To date, 39 companies
used our reduced-price services, and that was a big boost.
I also want to thank both Senators for encouraging our
folks back in Washington to do an issue of our Export Magazine
Commercial News USA, focusing on hurricane-affected companies
and there are some copies in the back for those of you who
would like to look at it.
On the topic of Katrina and Rita, I just want to highlight
two important things that are happening.
Senator Landrieu. If you could try to wrap up, you have got
about 30 seconds.
Mr. van de Werken. OK. Real quick is that we did see trade
volume increases after the storm. We do not know what happened,
but I think what was most important is that--and I can hear it
from the rest of the folks talking--the companies that were
export ready, those that had a plan, that were able to react
quickly and were able to refocus those goods and services to
other markets, survived much better than those that did not
have a plan.
That ends my comments.
[The prepared statement of Mr. van de Werken follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Landrieu. Thank you very much. I have a line of
questioning, and then I will turn it over to Senator Vitter.
And if we have time, we will take a question or two, if we can.
But let me begin with this school renovation piece. We were
able to push through against, again, the advice or support--
without the support of FEMA or Homeland Security a special Act
that was just signed by the President to expedite the
rebuilding of our elementary and secondary schools. These
project work order sheets, we have billions of dollars stuck
basically in a pipeline. And we were successful in passing that
bill through for elementary and secondary schools.
I am going to commit today to do a similar bill for our
higher ed and vo-tech schools and call it the emergency that it
is. I do not understand why the Federal Government is resisting
our efforts--and we both support this; our whole delegation has
supported this--to do basically a global sort of reimbursement,
a streamline reimbursement to get our technical colleges and
universities up, which is a key, to me, to helping support the
growth of all business in Louisiana, but particularly as we
have heard testimony from almost all of you on this subject
today.
Second, based on a question, I think, Ms. Little, that you
brought up, or a comment, I would like Mary Lynn, if you do not
mind, just to stand up because there is a special program that
we did implement for software that Microsoft is giving to small
businesses. You do not have a microphone, but would you speak
loudly enough so the testimony can go on the record, of what
Microsoft has agreed to do for all small businesses--and it has
been unprecedented--in this hurricane recovery. Go ahead. Can
you bring her a microphone just to get this on the record?
Ms. Wilkerson. Senator Landrieu brokered a deal with
Microsoft, who literally committed millions of dollars in
Microsoft software for small businesses. Essentially what they
would do is go to their regular retailer and check into that.
Then they would come to the SBDC to be vetted and approved.
This process takes about 2 weeks, and we are going to be
offering training in conjunction with that so that people can
understand how to use the software effectively and efficiently.
There is a lot of confusion about the five license. That is
really not nearly as bad as it seems. The site licenses--there
are five--can be a mixture of any kind, and you really only
have to have two computers to make that work. And so what we
are doing is helping people explore. You might want to do
Internet development, so you need that software for Web pages
or whatever. But they are going to pay the first year of that
license to your local distributor so there are no funds lost in
the State of Louisiana.
Senator Landrieu. Which is a value of about, what, $7,000 a
year?
Ms. Wilkerson. It can be up to, I think, about $12,500, as
much as. So it just depends on the packages you buy, and it
really is an inexpensive way. It is less expensive than going
to major suppliers of software when you do it this way, and
they understand that a business may not be able to pay year two
and three. But you make a commitment, and you can upsize or
downsize, no payment penalties. It is a great program, and it
is a partnership with Microsoft.
Senator Landrieu. Well, we thank Microsoft, and I just
wanted to bring that to the attention of this hearing because
we are, many of us--not just the two of us but others--trying
to think outside the box, offer new solutions, try to engage
with the private sector to bring help to our small businesses,
and that was one of the specific ideas that I had remembered.
Let me just ask one more question, and then I will turn it
over to Senator Vitter for his line of questioning.
Mr. Manuel, I am glad for your testimony today because your
testimony is typical, with all due respect to the SBA, of many
of our small businesses that really struggled to try to reach
to them and were left wanting. What would you recommend to them
in the future so that the SBA could be more accountable to you,
more appropriate to your needs at the time? You had been in
business successfully for 16 years. You were known to the local
lending or banking community. What could the SBA have done--you
know, what do you want them to do in the future?
Mr. Manuel. Send a letter. If I could have gotten some kind
of a response--you know, they left me hanging in the balance.
When the lady, Mr. Swift's--on their floor over at the Chamber,
when she helped me with my application, that took 4 or 5 days.
We had to go and find those documents we were talking about
that were all messed up and disheveled and everywhere. She
said, you know, we are really swamped right now, but you will
hear from us, you will get a letter, you know, you will hear
back from us.
I heard nothing. I never got anything saying, hey, you were
turned down, this is what we are doing, apply back. Nothing.
Senator Landrieu. Well, we hope that some of that has been
solved. We do not know, and only time will tell. And,
unfortunately, we are going to probably face another disaster
somewhere along the Gulf Coast. We hope that the SBA is taking
steps that we have mandated through our Committee. There have
been some mandates through other committees and some work that
SBA has taken on by themselves administratively. But the fact
of the matter is that just the number of loans out the door
does not tell the whole story. We are proud, I think, of the
700 loans out the door to southwest Louisiana, but what we are
also concerned about is the loans that never got out the door
to small businesses that decided to close up and give up
because they just could not wait any longer.
And one more question. We have talked about this credit
crunch, or a lot of businesses, when I have asked them, well,
how did you survive, they said, I just used my credit card,
Senator, and I have got $20,000 or $40,000 on my credit card.
Now with the downturn in the housing industry and that
collateral losing some value because of the subprime mortgage
crisis around the country--thank goodness we are not in the
forefront of that, but we have still been affected. Is there
something that any of you would want to suggest as maybe a way
that we could get some kind of lower interest rate or longer
repayment on some of those credit cards that might smooth out
this debt? Not forgive it, but smooth out the debt so that
businesses could maybe pay it over a longer period of time and
not have that running monthly punitive interest that the credit
card companies provide?
Ms. Lazare, have you proposed anything like this for a
special sort of emergency situation?
Ms. Lazare. We are in discussions about it with Acadiana
Regional Development District, the local SCORE, and the SBDC at
UL currently.
Now, one of the things that we have discussed in terms of
that is, like you stated, giving them not only a longer time,
but as the credit card companies, many of them did right after
the hurricanes, forgiving the interest rate for a period of
time and just letting them--whatever balance they already had,
allowing them to start paying that down, and then maybe 6
months, 9 months later, attach the interest rate back; or even
giving them longer times with less penalties, because so many
of them now are actually in the process of either claiming
bankruptcy or actually losing their homes because they have
invested so much of their personal assets into their business.
Senator Landrieu. Senator Vitter?
Senator Vitter. Thank you, Mary.
Well, Mr. Manuel, I, too, was distressed to hear your
experience, and we will look into that specific experience to
understand what happened and get back to you with that. And
thanks to all of you for your testimony. I am going to forego
specific questions. I will follow up with you individually so
we can have at least some comments and questions from the
audience, and then we will be wrapping up. But thank you very,
very much.
Senator Landrieu. OK. If there are any questions, you can
turn them in in writing to this desk here, and I will sort
through some of them, if we have time.
George, before you all leave, while I am looking at those,
do you have any other comments that you want to make for the
record about anything, any other suggestions we could take
back?
Mr. Swift. Well, your suggestion about the technical
community colleges and the assistance, we have a workforce
crisis here with all the announced projects that we have and
the needs right now. We are estimating about 6,000 workers are
needed in the petrochemical industry, aviation industry, and
construction and trades. The quickest way--and, also, the study
that Mayor Roach referred to showed that we have a lot of
underemployed people and a lot of people with general degrees
but lack skills, if they could get some skills through the
technical community college, they can earn very good. Aviation
jobs, $70,000, $80,000 a year; petrochemical, the same range;
welders, pipefitters, and so forth, very good careers with
opportunities for advancement.
So if we could jump-start the facilities to enable us to
get more people into the workforce training, you have to have
some certification or some skills to get these jobs, but that
would get us over the hurdle. So that would be a major factor
if that could be accomplished.
Senator Landrieu. Well, I plan to take this message back to
Washington with renewed energy, because we are asked to provide
constantly additional H-1B visas for people to be brought in to
do the work that needs to be done. And while I am open to the
needs of the industry for that, it is just very disheartening
to know that we are not doing the kind of training right here
to teach our own native workforce and give them the opportunity
for these $70,000, $80,000, $90,000 jobs.
So Senator Vitter and I and the other Senators really have
to balance the request of the industries to allow us to
expand--I think it is a $60,000 annual limit on H-1B visas,
when we know that we are not investing in the kind of
instruction and opportunity that could provide that workforce
here. So that is something I am going to take back with renewed
energy.
Ms. Lazare. If I can add to that as well?
Senator Landrieu. Ms. Lazare?
Ms. Lazare. Because I know one of the concerns from the
workforce as well, in conjunction with the vo-techs and the
community colleges, is a lot of times they cannot get the
necessary training unless they actually enroll in that
institution, and a lot of times that is very discouraging for
individuals to enroll for a class or a training and then leave
again. So I know there has also been talk about offering it as
continuing education courses through either the universities or
the vo-techs and community colleges so they do not actually
have to enroll and they can do it and still earn the necessary
credits and requirements, but without having to enroll.
Senator Landrieu. OK. You all have been an excellent panel.
If there are any questions, I will look at them now, but we
have got to wrap up. And if not, all of these comments that are
being submitted, we will put them into the record.
I think this is a question about the H-1B visas with the
shortage of workforce. Is the Federal Government considering
making Louisiana exempt from the quota given the skilled
workforce is limited? And we just discussed that. We said, yes,
we are very sensitive to the needs of our business, but I for
one--and Senator Vitter can speak for himself most ably. But I
am very concerned that we are not doing what we need to do here
to train our own people for these very excellent jobs, and
particularly giving our high school students that are
struggling an opportunity, kind of a career track, starting in
their sophomore, junior, or senior year going right into work.
And if they wanted to go back to college, they most certainly
could. I mean, nothing in this track prevents them from seeking
a higher degree or a master's or a Ph.D. But at least when they
graduate, they are ready to go to work and can always go back
to school, is kind of the process we want to create.
All right. We will take all of these other comments that
were sent in and put them in the record of the hearing. This
hearing will remain open, the record, for 2 weeks, to submit
any further comments to the record. I thank again Senator
Vitter for joining me, and thank you all. You were an excellent
panel.
The meeting is adjourned.
[Whereupon, at 3:13 p.m., the Committee was adjourned.]
APPENDIX MATERIAL SUBMITTED
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COMMENTS FOR THE RECORD
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