[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]



 
                       FULL COMMITTEE HEARING ON


                       THE ROLE OF SMALL BUSINESS


                      SUPPLIERS AND MANUFACTURERS


                     IN THE DOMESTIC AUTO INDUSTRY

=======================================================================



                                HEARING

                               before the


                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD
                              May 13, 2009

                               __________

                               [GRAPHIC] [TIFF OMITTED] TONGRESS.#13
                               

            Small Business Committee Document Number 111-021
Available via the GPO Website: http://www.access.gpo.gov/congress/house



                  U.S. GOVERNMENT PRINTING OFFICE
49-616                    WASHINGTON : 2009
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing 
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC 
area (202) 512-1800 Fax: (202) 512-2104  Mail: Stop IDCC, Washington, DC 
20402-0001


                   HOUSE COMMITTEE ON SMALL BUSINESS

                NYDIA M. VELAZQUEZ, New York, Chairwoman

                          DENNIS MOORE, Kansas

                      HEATH SHULER, North Carolina

                     KATHY DAHLKEMPER, Pennsylvania

                         KURT SCHRADER, Oregon

                        ANN KIRKPATRICK, Arizona

                          GLENN NYE, Virginia

                         MICHAEL MICHAUD, Maine

                         MELISSA BEAN, Illinois

                         DAN LIPINSKI, Illinois

                      JASON ALTMIRE, Pennsylvania

                        YVETTE CLARKE, New York

                        BRAD ELLSWORTH, Indiana

                        JOE SESTAK, Pennsylvania

                         BOBBY BRIGHT, Alabama

                        PARKER GRIFFITH, Alabama

                      DEBORAH HALVORSON, Illinois

                  SAM GRAVES, Missouri, Ranking Member

                      ROSCOE G. BARTLETT, Maryland

                         W. TODD AKIN, Missouri

                            STEVE KING, Iowa

                     LYNN A. WESTMORELAND, Georgia

                          LOUIE GOHMERT, Texas

                         MARY FALLIN, Oklahoma

                         VERN BUCHANAN, Florida

                      BLAINE LUETKEMEYER, Missouri

                         AARON SCHOCK, Illinois

                      GLENN THOMPSON, Pennsylvania

                         MIKE COFFMAN, Colorado

                  Michael Day, Majority Staff Director

                 Adam Minehardt, Deputy Staff Director

                      Tim Slattery, Chief Counsel

                  Karen Haas, Minority Staff Director

        .........................................................

                                  (ii)




                         STANDING SUBCOMMITTEES

                                 ______

               Subcommittee on Contracting and Technology

                     GLENN NYE, Virginia, Chairman


YVETTE CLARKE, New York              AARON SCHOCK, Illinois, Ranking
BRAD ELLSWORTH, Indiana              ROSCOE BARTLETT, Maryland
KURT SCHRADER, Oregon                TODD AKIN, Missouri
DEBORAH HALVORSON, Illinois          MARY FALLIN, Oklahoma
MELISSA BEAN, Illinois               GLENN THOMPSON, Pennsylvania
JOE SESTAK, Pennsylvania
PARKER GRIFFITH, Alabama

                                 ______

                    Subcommittee on Finance and Tax

                    KURT SCHRADER, Oregon, Chairman


DENNIS MOORE, Kansas                 VERN BUCHANAN, Florida, Ranking
ANN KIRKPATRICK, Arizona             STEVE KING, Iowa
MELISSA BEAN, Illinois               TODD AKIN, Missouri
JOE SESTAK, Pennsylvania             BLAINE LUETKEMEYER, Missouri
DEBORAH HALVORSON, Illinois          MIKE COFFMAN, Colorado
GLENN NYE, Virginia
MICHAEL MICHAUD, Maine

                                 ______

              Subcommittee on Investigations and Oversight

                 JASON ALTMIRE, Pennsylvania, Chairman


HEATH SHULER, North Carolina         MARY FALLIN, Oklahoma, Ranking
BRAD ELLSWORTH, Indiana              LOUIE GOHMERT, Texas
PARKER GRIFFITH, Alabama

                                 (iii)



               Subcommittee on Regulations and Healthcare

               KATHY DAHLKEMPER, Pennsylvania, Chairwoman


DAN LIPINSKI, Illinois               LYNN WESTMORELAND, Georgia, 
PARKER GRIFFITH, Alabama             Ranking
MELISSA BEAN, Illinois               STEVE KING, Iowa
JASON ALTMIRE, Pennsylvania          VERN BUCHANAN, Florida
JOE SESTAK, Pennsylvania             GLENN THOMPSON, Pennsylvania
BOBBY BRIGHT, Alabama                MIKE COFFMAN, Colorado

                                 ______

     Subcommittee on Rural Development, Entrepreneurship and Trade

                  HEATH SHULER, Pennsylvania, Chairman


MICHAEL MICHAUD, Maine               BLAINE LUETKEMEYER, Missouri, 
BOBBY BRIGHT, Alabama                Ranking
KATHY DAHLKEMPER, Pennsylvania       STEVE KING, Iowa
ANN KIRKPATRICK, Arizona             AARON SCHOCK, Illinois
YVETTE CLARKE, New York              GLENN THOMPSON, Pennsylvania

                                  (iv)




                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page

Velazquez, Hon. Nydia M..........................................     1
Graves, Hon. Sam.................................................     2

                               WITNESSES

Reed, Mr. Carl, President & CEO, Abbott Workholding Products, 
  Manhattan, KS, On behalf of the Association for Manufacturing 
  Technology.....................................................     3
Smith, Mr. Wes, President & CEO, E & E Manufacturing CO., Inc., 
  Plymouth, MI, On Behalf of the Motor & Equipment Manufacturers 
  Association....................................................     5
Overton, Mr. Ron, Overton Industries International, Mooresville, 
  IN, On behalf of the National Tooling and Machining Association 
  and the Precision Metalforming Association.....................     7
Jones, Mr. Jim, Vice President, Dixia Industrial Finishing, 
  Tucker, GA, On Behalf of the National Association for Surface 
  Finishing......................................................     9
Norch, Mr. Chris, President, Denison Industries, Denison, TX, On 
  behalf of the American Foundry Society.........................    11

                                APPENDIX


Prepared Statements:
Velazquez, Hon. Nydia M..........................................    27
Reed, Mr. Carl, President & CEO, Abbott Workholding Products, 
  Manhattan, KS, On behalf of the Association for Manufacturing 
  Technology.....................................................    29
Smith, Mr. Wes, President & CEO, E & E Manufacturing CO., Inc., 
  Plymouth, MI, On Behalf of the Motor & Equipment Manufacturers 
  Association....................................................    34
Overton, Mr. Ron, Overton Industries International, Mooresville, 
  IN, On behalf of the National Tooling and Machining Association 
  and the Precision Metalforming Association.....................    42
Jones, Mr. Jim, Vice President, Dixia Industrial Finishing, 
  Tucker, GA, On Behalf of the National Association for Surface 
  Finishing......................................................    47
Norch, Mr. Chris, President, Denison Industries, Denison, TX, On 
  behalf of the American Foundry Society.........................    55

Statements for the Record:
KC Jones Plating Company, Warren, MI.............................    68
Vulcan Threaded Products, Inc., Pelham, AL.......................    70
"Detroit Should Hear From Obama", by Jamal Simmons [Article 
  submitted by Rep. Yvette Clarke]...............................    95

                                  (v)




                     FULL COMMITTEE HEARING ON



                       THE ROLE OF SMALL BUSINESS



                      SUPPLIERS AND MANUFACTURERS



                     IN THE DOMESTIC AUTO INDUSTRY

                              ----------                              


                        Wednesday, May 13, 2009

                     U.S. House of Representatives,
                               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 10:05 a.m., in Room 
2360, Rayburn House Office Building, Hon. Nydia M. Velazquez 
[Chair of the Committee] presiding.
    Present: Representatives Velazquez, Moore, Dahlkemper, 
Altmire, Clarke, Griffith, Halvorson, Graves, and Westmoreland.
    Chairwoman Velazquez. Good morning, everyone. This hearing 
is now called to order.
    For decades, the auto industry was a symbol of American 
innovation. But in the past few years, a combination of poor 
management, costly obligations, and dwindling profits has taken 
its toll. The resulting declines have done more than weaken the 
Big 3. They have crippled the small business community. As the 
automakers fight to stay afloat, countless entrepreneurs have 
been caught in their wake.
    All across the country, small suppliers are struggling. 
They are fighting to survive in an uncertain industry and are 
suffering more than their corporate counterparts. This is a 
serious concern. These businesses not only employ millions of 
workers, but they sustain the very industry we are trying to 
save. At the end of the day, strengthening and supporting small 
firms will be critical. Failure to do so will shrink the 
supplier base further, dealing a lethal blow to businesses like 
GM and Chrysler.
    In today's hearing, we will discuss the current state of 
the auto industry and will examine the impact of its decline on 
small businesses.
    Like most corporate giants, the automakers rely on 
entrepreneurs. The industry is sustained by a multi-tiered, 
nationwide network of parts providers. These businesses produce 
everything from carburetors to tire rubber, and the vast 
majority of them are small ventures. But do not let their size 
deceive you. They account for literally millions of jobs.
    Parts suppliers alone employ 3.2 million workers. But as 
the Big 3 continue to slide, an alarming number of small firms 
are following suit. In fact, experts predict half of the 
Nation's auto suppliers will be shut down by 2012. Many have 
closed their doors already.
    The impact of these bankruptcies is not isolated. When a 
small supplier goes under, it sparks a ripple effect, one that 
resonates throughout the entire economy. On the most basic 
level, we are talking about large-scale job losses. Already, 
thousands of workers in related industries have been laid off. 
If this trend continues, thousands more may lose their jobs.
    In the last few months, steps have been taken to shore up 
the big automakers. But despite these actions, little has been 
done to help small suppliers. If anything, efforts thus far 
have failed small businesses. That is a big mistake. Cutting 
entrepreneurs out of the process means more setbacks down the 
road, especially considering the end goal of these measures--
job retention.
    Ultimately, we are trying to save jobs and stabilize our 
economy, not prop up an industry that has failed to keep pace 
with the times. Small suppliers are the businesses actively 
looking to adapt. It only makes sense to give them the tools to 
do so.
    One of the greatest lessons of the financial crisis is that 
stability comes from the bottom up, not the top down. The 
automakers are no exception. It is critical that any 
restructuring accounts for small suppliers. Proposals to aid 
second-tier manufacturers, for example, will go a long way. But 
regardless of how the auto overhaul takes place, one thing is 
certain: It needs to be deep enough and comprehensive enough to 
reach small businesses. After all, that is the industry's 
foundation. That is where the jobs are, and that is our best 
bet for stabilizing and for rebuilding.
    I would like to thank all of today's witnesses in advance 
of your testimony, and I am glad that they were able to take 
time off from their jobs and from their businesses to be here. 
I look forward to hearing from you.
    So, with that, I would now like to yield to the ranking 
member, Mr. Graves, for his opening statement.
    Mr. Graves. Thank you, Madam Chair; and thank you for 
conducting this hearing today on the role suppliers play in the 
auto industry and how the current economic conditions are 
obviously impacting them.
    I also want to thank all of our witnesses for being here. I 
know you have come from all over the country; and I appreciate 
your taking the time, as the chairwoman pointed out, to come 
and be with us today.
    Nothing illustrates the state of our economy better than 
the state of the domestic auto industry; and it seems that 
every day there are new media reports highlighting job losses, 
production cuts, bankruptcy filings, and plant closures. But a 
significant part of the story is being underreported. Suppliers 
play an equally important role in the economy, and it is 
important that their concerns are not overshadowed by the Big 
3.
    According to data from the Center of Automotive Research, 
suppliers contribute over $388 billion to the U.S. economy and 
are responsible for over 3.29 million direct and indirect jobs. 
These two figures stress the impact of the industry to the U.S. 
economy, and it is important that we understand the 
significance of these numbers. Congress must do everything it 
can to create a favorable business environment for these folks 
to be successful.
    Auto suppliers are located throughout our country, and they 
include businesses of all kinds--from fabric makers and chip 
makers to die casters and surface finishers. They all have a 
vital role to play in the manufacturing of an automobile. When 
the economy struggles, the auto industry is affected, and its 
suppliers feel the ripple effect.
    It is imperative that, as Congress considers proposals such 
as climate change and card check, we do not impose new burdens 
on the already struggling economy. I also believe that as we 
engage China on issues such as currency manipulation and on 
piracy we must do whatever is necessary to level the playing 
field. As Congress begins to debate health care reform, we must 
identify a way to increase accessibility while increasing 
affordability without imposing some excessive mandates. Lastly, 
we must keep a watchful eye on our tax policy and not increase 
taxes on the people that we are asking to lift us out of the 
recession.
    Again, Madam Chair, I thank you for holding this hearing 
today. I look forward to hearing from our witnesses, and I look 
forward to hearing about how vital our Nation's suppliers are 
to the auto industry.
    Chairwoman Velazquez. Thank you.
    Chairwoman Velazquez. Now I welcome Mr. Carl Reed, our 
first witness.
    He is the President and CEO of Abbott Workholding Products 
in Manhattan, Kansas. Abbott Workholding Products manufactures 
chuck jaws, tooling columns, and various workholding fixtures.
    Mr. Reed is testifying on behalf of the Association for 
Manufacturing Technology, which represents American providers 
of manufacturing machinery and equipment.
    Welcome.

                     STATEMENT OF CARL REED

    Mr. Reed. Thank you, Madam Chairwoman and Committee 
members. Thank you for this opportunity to address you.
    I must say that Mr. Moore and I have had an association 
before when I was on the Manufacturing Technology Board, and he 
has been a strong advocate of small business and manufacturing. 
Even though he is not in my representation area in Kansas, I 
would vote for him if I were able to do that.
    Chairwoman Velazquez. That took 1 minute of your opening 
statement.
    Mr. Reed. Okay. Maybe it was worth it in today's market.
    The opening statements from both you, Madam Chair and Mr. 
Graves, are pretty much what we have identified very nicely in 
our document, which I would like to submit for the record.
    Chairwoman Velazquez. Without objection.
    Mr. Reed. These gentlemen, I am sure, will amplify those 
same types of observations. So it might be helpful for the 
Committee members to understand, maybe on a more personal 
basis, the tiered system that we talked about. We obviously 
know that money is not being funneled down to where it needs to 
go.
    In my particular case, I have two small businesses. One is 
in Kansas, and one is in Arizona. One is a foundry. So I am 
really on the bottom of the food chain. I actually sift the raw 
material, and I make the tooling that goes into the machine 
tool companies that some of these gentlemen have. They 
manufacture the product, and it goes on the line. So you are 
really talking about five or six different levels that need to 
be helped; and, at this point, no help has gone anywhere down, 
as you folks are well aware.
    It also should be pointed out, which I am sure you are 
aware of, that we are not just associated with the auto 
industry. Although that is a primary contact for all of our 
businesses, we are also deliberately working for other 
industries because you cannot afford to have everything in one 
area. So if the auto industry, a major player, goes down and us 
with it, it is going to affect aerospace, it is going to affect 
automotive, it is going to affect industrial, ag, medical, 
anything.
    So we have to be concerned that what we are doing in the 
areas of activity and help, hopefully, will allow the 
manufacturing sector to stay viable, especially the small 
businesses, which you probably are aware employs--about 80 
percent of the jobs in the country. So we need to make sure 
that whatever we do can go all the way through the 
manufacturing sector.
    Also, if we do not do something before too long, that 
American tradition of innovation and originality and 
entrepreneurship is going to be either bankrupt or it is going 
to be forced to go to other places to manufacture those 
products, which of course we do not want to do. Being a former 
Navy captain pilot, I do not want the military aspect to go 
aside, because we have to be able to provide products in a time 
of war or of urgency.
    So, with that, let me make a few suggestions that in my 
business--and I think some of the others would tend to agree--
might be helpful that we could do.
    First of all, as for the SBA program that exists, in the 
past, it has been primarily used for seed money to get new 
ideas going and so forth. A suggestion that I might make is if 
we could come up with a plan where the SBA could function as a 
local bank, which are now very limited to us. Give us some low-
interest loans, make it a 15-year amortization, a 5-year 
balloon, something like that, where it would give us an 
opportunity to get operation and working capital, not seed 
money. To stay in business, we need operation and working 
capital. So that would be one suggestion.
    Most of us offer--because we want to-- health insurance for 
all of our own folks. In my case, I am going to be spending 
$250,000 this year on health insurance alone. Just to give you 
an idea, my average employee small business pay is a $15-an-
hour rate. So if you fully burden that, you are looking at 
$4,000 a month. If you divide that into $250,000, I can keep 
eight more people employed, off the unemployment, working, if I 
had some relief from my health insurance costs.
    Another suggestion might be--and a very simple way-- is to 
let us eliminate or at least defer FICA charges for a while. 
That immediately puts 15.6 percent back in the employer's 
pocket right away. You do not have to go through the Washington 
bureaucracy and the politics, and we officially would have that 
capital right away.
    The last thing I think I would like to suggest is if we 
could get some straight infusion of cash and stimulus. That 
would be great, but I do not know how that is going to happen. 
But these other three, I think, are reasonable approaches.
    I must say, before I run out of time here, that the 
$250,000 number that is floating about as the line above which 
Congress is considering tax rate increases, I want you to be 
aware that, in most small businesses, if you end up fortunate 
enough to make $250,000, that goes back into the business for 
buying machinery and tooling and for paying for health care. We 
do not buy corporate jets. We do not buy Ferraris to drive down 
the street. So I would caution you about any kind of a tax 
increase whatsoever.
    Thank you so much for that opportunity.
    Chairwoman Velazquez. Your time is up, not because you were 
talking about taxes.
    [The statement of Mr. Reed is included in the appendix.]
    Chairwoman Velazquez. Our next witness is Mr. Wes Smith. 
Mr. Smith is the President of E&E Manufacturing Company in 
Plymouth, Michigan, a company whose products are found in 
millions of American-made vehicles. Mr. Smith is testifying on 
behalf of Motor & Equipment Manufacturers Association. Since 
1904, MEMA has exclusively represented and has served 
manufacturers of motor vehicle components.
    Welcome, sir.

                     STATEMENT OF WES SMITH

    Mr. Smith. Thank you very much.
    Again, my name is Wes Smith. I am the President and owner 
of E&E Manufacturing Company. I appreciate the opportunity to 
discuss the challenges we small suppliers in the motor vehicle 
industry face.
    My company, E&E Manufacturing, is one of these small 
suppliers. We are located in Plymouth, Michigan, and in Athens, 
Tennessee.
    We began our business over 45 years ago. In a sense, it has 
grown its footprint from a small, 5,000-square-foot shop to 
almost a half-a-million-square-foot, world-class service 
supplier of highly engineered stamped metal solutions; and we 
are proud to have several patents under our belt.
    We were the first metal stamping company also in the Nation 
to be awarded the Michigan Voluntary Protection Program Star 
award from OSHA for our outstanding safety program, and we are 
determined to continue to provide safe and meaningful 
employment to our over 200 employees. Again, this is actually a 
national program under OSHA, and we were the first metal 
stamper to receive that, and we are very proud of that.
    We are also currently on track to reach $50 million in 
sales this year. This projection, however, is only 50 percent 
which we had previously forecasted for our 2009 budget.
    That the economic climate is a difficult one is no news to 
anyone. Despite the significant challenges facing the motor 
vehicle supply industry, very little substance has been focused 
on small suppliers; and we urge the Committee to work with 
others to craft specific policies to address the needs of these 
suppliers.
    The auto industry and its supply base is one of the most 
intricate industrial complexes. On one side is the vehicle 
manufacturers. A dozen or so major original equipment 
manufacturers, OEMs, that dominate world production have sales 
measuring in the tens to hundreds of billions of dollars. On 
the other side are a dozen or so major material suppliers--the 
steel, aluminum, plastic providers--that, too, have sales 
measured in the tens of billions of dollars. Caught in between 
are the over 3,000 suppliers that produce the 10,000 parts that 
make up every passenger car and truck.
    All of these parts of the supply chain are interdependent. 
Just as an example, 51 percent of GM suppliers are also in the 
Ford Motor supply base. In revenue dollars, this 
interdependency is even more dramatic. Ninety percent of the 
dollar amount that GM spends is with suppliers who also supply 
Ford.
    Because of drastically reduced volumes and a nonfunctional 
capital market, this interdependent structure is in crisis. 
Financial assistance to suppliers has not provided small 
manufacturers with the capital and resources to survive. Let me 
give you three examples.
    Firstly, the U.S. Treasury program was designed to provide 
protection against bankruptcy risk of General Motors and 
Chrysler. The program targeted only direct, larger first-tier 
suppliers of GM and Chrysler. As such, smaller suppliers facing 
financial distress are completely dependent on their first-tier 
customers to provide financial assistance through the supply 
chain.
    Secondly, section 136 of the Energy Interdependence and 
Security Act of 2007 authorized grants and direct loans to 
eligible applicants for projects to re-equip, to expand, and to 
establish manufacturing facilities. The grant program had 
originally set aside money for small suppliers, but, in the 
end, the grant program has not been funded. Since the issuance 
of the rule last fall, the DOE has received over 100 loan 
applications. MEMA understands that a majority of the 
applications were component manufacturers, but it is highly 
unlikely that the smaller applicants will ever be able to 
qualify for these loans.
    Thirdly, the SBA programs have been the foundation of the 
small suppliers' support for decades. However, the SBA loan 
programs are limited to only $2 million. Since suppliers are 
expected to fund a great deal of research and development in 
large OEM projects, the loan amounts have limited their 
usefulness and our participation.
    Although small manufacturers should be able to turn to the 
SBA loan program, the current system is simply not designed to 
meet the needs of manufacturers with substantial raw material 
research, development costs, and working capital needs.
    Perhaps these are unintended consequences. Unintended or 
not, these are significantly detrimental to my company's 
ability to protect and to grow meaningful manufacturing jobs in 
Plymouth, Michigan, and in Athens, Tennessee. I, myself, have 
traveled to D.C. a number of times and have met with over 100 
Members of Congress, officials at the White House, as well as 
with the Departments of Commerce, Treasury, and the USTR to 
speak about manufacturing issues.
    In order for change to take place, everyone must join in 
this fight. We are pleased to work with the Committee members 
on initiatives laid out in my written statement. I would like 
to thank you for your time and efforts to making the millions 
of American manufacturing voices heard. Our only hope is that 
this message is heard, understood, and is acted upon before it 
is too late.
    Thank you.
    Chairwoman Velazquez. Thank you, Mr. Smith.
    [The statement of Mr. Smith is included in the appendix.]
    Chairwoman Velazquez. Our next witness is Mr. Ron Overton. 
He is the Vice President and General Manager of Overton 
Industries International in Mooresville, Indiana. Overton has 
specialized in carbide tooling for over 40 years.
    Mr. Overton is testifying on behalf of the National Tooling 
and Machining Association that represents the precision custom 
manufacturing industry. He is also testifying on behalf of the 
Precision Metalforming Association, which represents the $91 
billion metalforming industry of North America.
    Welcome, sir.

                    STATEMENT OF RON OVERTON

    Mr. Overton. Thank you.
    Madam Chair, Ranking Member Graves, and members of the 
Committee, thank you for the opportunity to testify today.
    My name is Ron Overton, President of Overton Industries, 
based in Mooresville, Indiana. In addition to my role 
overseeing the day-to-day operations of our tool and die 
manufacturing business, I also serve as the current chairman of 
the National Tooling and Machining Association, the NTMA, which 
is partnered with the Precision Metalforming Association, the 
PMA, in Washington to speak with one voice on behalf of small 
middle-market manufacturers, including thousands of North 
American automotive suppliers.
    My father founded Overton & Sons Tool and Die in 1968. It 
remains a family owned company, located in a quiet community in 
central Indiana.
    Today, we have 84 employees, down considerably from years 
past. Sixty-five percent of our business is manufacturing 
tooling, plastic injection molds, and other products for 
exhaust systems, shocks and struts, and interior body panels 
supplied to the automotive industry. While we do not ship 
directly to original equipment automotive manufacturers, we 
primarily serve the General Motors, Chrysler, and Ford supply 
chains.
    These are the worst times I have seen in my 30 years in 
this industry. Some experts believe that possibly 30 percent of 
these small companies will not exist 1 year from now unless the 
U.S. Government takes additional steps to support not only the 
automotive manufacturers in large Tier 1 companies but also 
downstream suppliers.
    The greatest risk to companies like ours is if a large Tier 
1 shuts its doors. At this time, Overton Industries has several 
million dollars in outstanding receivables from jobs for GM and 
Chrysler through Tier 1 companies. Members of the NTMA report 
that payments from Tier 1 suppliers can now take over 180 days, 
despite a recent survey that shows GM is paying their Tier 1 
companies on average within 58 days and Chrysler within 55 
days. This is for the tooling work that businesses like ours 
provide.
    Our overseas competitors receive progress payments and 
receive at least 90 percent of their payments before the 
product leaves their shores for the U.S.
    How can small middle-market companies like ours continue 
manufacturing in America under the current terms?
    The government established the Automotive Supplier Support 
Program and assumed the support of Tier 1 companies would 
trickle down to downstream suppliers. The government should 
help open the faucet, because the only thing trickling down 
right now are pink slips.
    The moment a lender or a receivables interest broker sees 
we are involved in the automotive industry, they immediately 
move us to a high-risk category, will not extend credit, or 
will transfer us to a third-party lender. They do not believe 
we are bankable due to our auto industry work. Some brokers are 
only insuring 10 percent of an accounts receivable of some open 
Tier 1 invoices. Whereas, in the past, they would typically 
insure 70 to 80 percent.
    A sample of automotive suppliers indicates that only 29 
percent of downstream suppliers surveyed have access to credit 
based on the receivables from Chrysler-related business, while 
37 percent of suppliers at GM have access to credit based on 
their receivables. A government guarantee of the receivables 
allowing safe passage of tooling payments through Tier 1 to 
these downstream suppliers will allow access to credit.
    Even under the Small Business Administration 7(a) loan 
program, lenders do not believe companies with Tier 1 
automotive supplier and manufacturer receivables are bankable, 
meaning we are too high of a risk for creditors. In addition, 
the 7(a) program requires all holders of 20 percent or more of 
a small business to personally secure the loans, which is 
something very few of us are willing to do in the current 
environment.
    Without access to credit and without the leverage to secure 
payments, small, family owned companies like ours are bearing 
the brunt of the automotive industry's problems. I believe the 
Federal Government can extend relief to our companies by 
insuring or by guaranteeing receivables of businesses supplying 
a vehicle manufacturer which receives taxpayer funds.
    For example, a tooling company like ours would register 
their purchase orders with the government, and it would either 
guarantee or insure or reinsure payment under certain terms. 
The government, as in the case under current U.S. and Canadian 
programs, could charge downstream suppliers a 1 or 2 percent 
fee depending on the service provided. The Federal Government 
would make money, and Tiers 2 and 3 suppliers could continue 
operations with the confidence that we would receive timely 
payment. This would also provide a significant comfort level to 
our creditors.
    The government should provide a safe passage mechanism of 
our receivables through a Tier 1 in the event of bankruptcy or 
disruption in the supply chain. The Federal Government has much 
more leverage and resources to collect on outstanding invoices 
than a company with 84 employees in quiet central Indiana.
    I cannot stress enough that this is not just an automotive 
industry problem. It impacts all Americans in all communities, 
especially small businesses.
    Thank you for the opportunity to testify today.
    Chairwoman Velazquez. Thank you, Mr. Overton.
    [The statement of Mr. Overton is included in the appendix.]
    Chairwoman Velazquez. The Chair recognizes Ranking Member 
Graves for the purpose of introducing the next two witnesses.
    Mr. Graves. Thank you, Madam Chair.
    Madam Chair, our next witness is Mr. Jim Jones. He is the 
Vice President of the Dixie Industrial Finishing Company; and 
he comes to us from Tucker, Georgia. He is testifying on behalf 
of the National Association for Surface Finishing.
    I believe you have got 100 employees in your company. It is 
kind of the perfect example of what we are trying to find out 
today as far as how a company goes and how you are affected. 
Thanks for being here.

                     STATEMENT OF JIM JONES

    Mr. Jones. Thank you, Madam Chair, Ranking Member Graves, 
and Committee members. It is a great pleasure to be here and an 
honor to participate in this hearing.
    For almost 50 years, Dixie Industrial Finishing has 
supplied surface finishing services for a range of industries 
that provide jobs and quality of life for Americans as well as 
products for consumers worldwide. My company and nearly 2,000 
operations like it are critical links in the automotive and in 
other major manufacturing supply chains.
    Over 80 percent of U.S. surface finishing job shops employ 
fewer than 75 people, and the majority of the industry has less 
than $10 million in annual sales. Yes, at one time we did have 
100. At the first of the year, we had 84. Now we are down to 
54.
    Like other key industries, surface finishing plays a 
significant, value-added role in auto parts and in the 
component supply chain. We use electric chemical technology to 
apply metal and other coatings onto literally thousands of 
different types of automotive parts. Our processes make the 
auto components that we finish look better, work better, and 
last longer.
    An estimated 20 percent of parts on automobiles require the 
electroplating of metals or related coatings. Functional 
coatings give parts friction reduction, wear resistance, 
corrosion protection, conductivity, or other characteristics. 
Certain coatings are so critical for a car and, for that 
matter, for a jet or a spacecraft that they cannot work without 
them. In fact, one finishing company located in the Chair's 
district provides surface finishing services for some of the 
most sophisticated components and equipment used by NASA and 
the Department of Defense.
    By volume, we estimate the automotive products account for 
nearly 50 percent of the total number of parts we service. The 
contribution of surface finishing to the broader manufacturing 
value chain has been estimated by some to approach $100 
billion. The value added from the metal plating or related 
coatings is often higher than the value of the parts 
themselves.
    The impact of the U.S. automotive crisis and its ripple 
effect through the supplier base has been extremely painful for 
the finishing industry. Those shops that service automotive 
directly, or through Tier 1 or Tier 2 suppliers, are currently 
facing the worst downturn we have seen in our lifetimes. As 
manufacturers, our economic livelihood depends on the health of 
our automotive and industrial customers.
    It comes down to basic economics. When our customers 
suffer, we suffer; and the steady jobs and benefits that we 
provide for over 100,000 American workers in the finishing 
industry are disappearing at an alarming rate. It is estimated 
that the finishing industry has shed approximately 30,000 jobs 
nationwide just in recent months. Automotive is not the sole 
driver, but it is a significant factor.
    Dixie Industrial Finishing Company serves a relatively 
diverse customer base. Our current revenues are just under 20 
percent automotive. Our sales have dropped from $8.5 million 
annually last year to a projected $5 million for 2009. As I 
said before, we have reduced our workforce by 35 percent, but 
many job shops in the auto supply chain have seen sales decline 
by as much as 70 percent. These are typically well-managed, 
quality-driven, and customer-focused companies. Yet they face a 
near or certain disaster that has absolutely nothing to do with 
their ability to drive a successful business.
    They have responded to massive production slowdowns by 
their large automotive customers by cutting shifts and by 
scaling back workweeks. Some have slashed every cost they can 
actually manage and are holding on until this crisis is over. 
Others have filed for bankruptcy. In the meantime, Chrysler's 
restructuring plans and GM's pending plant slowdowns create 
major uncertainties for the finishing industry of the future.
    There are several immediate challenges faced by small auto 
suppliers that need to be addressed.
    First, banks are not lending money. Very few, if any, small 
finishing job shops are able to get financing. We have not seen 
our job shops successfully using the SBA 7(a) guaranteed loan 
program for automotive-related programs. The program relies 
primarily on commercial lenders which are not financing 
automotive-related projects or manufacturing.
    I was told yesterday by one CEO in the industry that he 
asked for an SBA loan program at a major bank. The bank said it 
was not lending to anyone whose exposure is greater than 25 
percent, even with the SBA guaranteeing 90 percent of the loan 
and zero fees.
    Other Federal assistance in the form of loan or aid has not 
been accessible to job shops. The program out of the Treasury 
that guarantees or insures receivables for the suppliers of GM 
and Chrysler limits aid direct to suppliers of GM and Chrysler. 
Some of my colleagues in Detroit were enthusiastic when we 
first heard about the Energy Department's programs. The 
association's outside counsel reviewed the eligibility criteria 
that will have high hurdles to participate. We are not aware of 
any company in the finishing industry that is participating in 
the program.
    We have outlined a few recommendations in our written 
testimony that respond to the increasingly higher operating 
costs of the finishing industry and tax incentives for small 
manufacturers to invest in energy efficiency and environmental 
control. The problems that we face on a manufacturing front are 
repeated price concession demands from OEMs to the auto supply 
chain, the high structural costs for doing business in the 
U.S., off-shoring to Asia and to other low-cost countries, and 
unfair trade practices and currency manipulation by some of our 
trading partners.
    The global economy has changed the supplier base of the 
automotive industry and of U.S. manufacturing. To illustrate 
this point, my company has been forced to replace 100 percent 
of its sales dollars in the last 10 years. This means that no 
matter how excellent our quality and service are, no matter how 
lean we have become through automation and continuous 
improvements, no matter how competitive we price, our 
industrial customers and opportunities continue to disappear.
    In light of our challenges, we recommend to the Committee 
our broader agenda for helping finishers and other small 
manufacturers invest, innovate, and help create jobs for 
American workers. I have included this material in my written 
statement.
    I am sorry for running over. In the South, we talk a little 
bit slower, but thank you for the opportunity.
    Chairwoman Velazquez. I let you go because I did not notice 
it.
    [The statement of Mr. Jones is included in the appendix.]
    Mr. Graves. Thank you, Madam Chair.
    Our next witness is Chris Norch. He is the President of 
Denison Industries in Denison, Texas; and he is testifying on 
behalf of the American Foundry Society.
    I appreciate your coming today.

                    STATEMENT OF CHRIS NORCH

    Mr. Norch. Thank you.
    Good morning, Chairwoman Velazquez, Ranking Member Graves, 
and members of the Committee. Thank you for providing me the 
opportunity to comment on the vital role the metalcasting 
industry plays as a supplier to the domestic auto industry and 
how the downturn in the auto industry is having a devastating 
impact on many of our member companies.
    As President of Denison Industries, my metalcasting 
facility is comprised of 125 employees who specialize in the 
production of aluminum castings for the automotive, defense, 
aerospace, and commercial sectors. I am here representing the 
American Foundry Society, or AFS, where I serve on its national 
board of directors and also as a regional vice president.
    The AFS is a major trade and technical association for the 
North American metalcasting industry. It is comprised of more 
then 8,500 members, representing more than 3,000 metalcasting 
firms, their suppliers and their customers in every State in 
the country. The majority of our members are small, family 
owned businesses with an average workforce of 100 people or 
less, operating in small towns and cities across the country.
    The metalcasting industry is a critical supplier to the 
automotive industry and to the auto supply chain in general. It 
provides at least 100 castings in every lightweight vehicle 
produced in the United States, which equates to more than 600 
pounds of cast metal per vehicle. In fact, automobiles and 
other transportation equipment utilize 31 percent of all 
castings produced in the U.S., including engine blocks, crank 
shafts, brake drums, and transmission housings, to name just a 
few.
    The recent decision by Chrysler to file for bankruptcy and 
to shut down its plants during bankruptcy could not have come 
at a worse time for our parts suppliers, whose revenues have 
already fallen sharply. Our auto suppliers are already trying 
to figure out how to survive.
    The other recent surprise news is that GM will shut down 
many of its plants for most of this coming summer. These 
shutdowns could and will be disastrous to many metalcasters 
because they are already operating on paper-thin profit margins 
because of previous production cuts and because of the strong-
arm pricing tactics from the Detroit 3.
    Some of our small suppliers will have to liquidate, because 
they do not have the resources to reorganize in Chapter 11 
bankruptcy. Over the past 6 months, 15 metalcasters alone have 
been forced to close their doors or will close shortly, from 
Navistar's Indianapolis Casting Foundry, employing more than 
700 workers, to 25 workers at the Elmira Pattern & Foundry in 
New York. Other facilities closing are located across the 
country--from Monroe City, Missouri, to Warrenton, Georgia, to 
Van Nuys, California.
    In recent months, we have seen a surge of foundry layoffs 
directly related to the downturn in the auto sector in hundreds 
of communities. Grede Foundries, a Milwaukee-based company, 
operating eight foundries, has struggled with the severe 
downturn in the economy. It has had to lay off hundreds of 
workers at its Minnesota, Wisconsin, and Michigan plants. A 
factory manager at its St. Cloud, Minnesota, foundry recently 
reported that orders are down from the auto sectors by 65 
percent compared to a year ago. At the end of April, they have 
announced they will be closing their Greenwood, South Carolina, 
automotive foundry in an area that has already been hit with 14 
percent unemployment. The AFS estimates that we could lose 
another 30 foundries in the next 6 to 9 months if we do not see 
a rebound in the automotive sector and in the economy in 
general.
    With little attention being focused on the lower tier 
suppliers, we need Congress and the Obama administration's 
support to help ensure the survival of Tier 2 and Tier 3 
metalcasting suppliers. A recovery plan for GM and Chrysler is 
simply not viable unless it takes into account the entire 
automotive supply chain, including the metalcasting suppliers 
of small- and medium-sized businesses who supply Tier 1 
companies.
    In addition to the downturn in the auto sector, the 
metalcasting industry must overcome a multitude of domestic and 
international challenges. We are concerned with pending climate 
change legislation that would increase our energy costs 
significantly. We will not be able to compete against foreign 
manufacturers who already have huge labor regulatory and 
subsidy cost advantages. We are concerned about our 
government's current trade policies that have dramatically 
affected the viability of our industry and of the future of the 
U.S. domestic metalcasting industry, and its jobs are severely 
threatened by the increase of imported castings as offshore 
facilities have grown to meet more than 23 percent of the 
demand in the U.S.
    A number of our U.S. trading partners, most prominently 
China, have actively pursued policies that undervalue their 
currencies and subsidize the manufacturing sectors. Because of 
these lower costs, our association members continue to see 
their customers move offshore, but we urge you to support the 
proposed bipartisan currency manipulation bill, the Currency 
Reform for Fair Trade Act, which will be introduced today.
    We all have a stake in a strong automotive domestic 
industry. As Congress and the administration invest billions of 
dollars into Chrysler and GM, it is vital that we help ensure 
the survival of Tier 2 and 3 companies in the supply chain. A 
recovery plan for Chrysler and GM is simply not viable unless 
it takes into account metalcasting suppliers. Any restructuring 
plan must preserve jobs in the U.S. and not shift more of GM's 
and Chrysler's manufacturing footprints from the U.S. to Korea, 
India, and China. The future of our country is intertwined with 
the success of our manufacturing base. Our country is dependent 
on a strong economy, and we cannot have such without a strong 
manufacturing presence.
    Thank you very much for your time.
    Chairwoman Velazquez. Thank you, Mr. Norch.
    [The statement of Mr. Norch is included in the appendix.]
    Chairwoman Velazquez. The question I am going to ask is a 
very important question for the record, so I would like for 
each of the witnesses to answer it.
    I know that each of you represent a small business, but you 
are representing also five different associations, and I would 
like to ask you the following: To date, the administration has 
allocated nearly $38 billion to the domestic auto industry. How 
much of these resources, if any, are going to the small firms 
that supply the big manufacturers?
    Mr. Reed.
    Mr. Reed. I would have to check for sure, but my opinion 
is, in our area of machine tool manufacturing, I do not believe 
any dollars have gone in.
    Chairwoman Velazquez. Thank you.
    Mr. Smith.
    Mr. Smith. Although I do believe, in General Motors' case, 
that there are small suppliers that are signed up for either 
the early pay or for the receivable protection program and 
although it would be somewhat few, the reality is that most of 
those have not been--you know, the funding has not flowed, 
really, on any of that. Of the $38 billion, most of that went 
directly to the Original Equipment Manufacturers. The set-
aside, which was the $5 billion for the Tier 1s and in 
particular for the direct suppliers, that has not really been 
effective at this point.
    Chairwoman Velazquez. Thank you.
    Mr. Overton.
    Mr. Overton. I am not aware of--we represent primarily Tier 
2 and Tier 3 suppliers, so I am not aware of any of that $38 
billion that has trickled down to any of our members in either 
association, the National Tooling and Machining Association or 
the Precision Metalforming Association.
    Chairwoman Velazquez. Mr. Jones.
    Mr. Jones. On the surface finishing side, I only know of 
one surface finisher who does direct work with one of the Big 
3, and he would be able to participate. All other surface 
finishers are in the Tier 3 and Tier 4 levels.
    Chairwoman Velazquez. Mr. Norch.
    Mr. Norch. As far as the record to date from the American 
Foundry Society, we have seen no money trickle down. On the 
contrary, receivables are still being pushed out anywhere from 
over 60 to as many as 120 days. So the effect is devastating 
right now.
    Chairwoman Velazquez. Thank you.
    To all of the witnesses, with the extended shutdown at GM 
this summer and with the lingering potential for another 
bankruptcy filing, clearly, businesses like the ones that you 
represent will be bracing for more difficult conditions. Could 
bridge financing programs or other types of short-term Federal 
assistance help your members weather the storm?
    Mr. Reed.
    Mr. Reed. Yes, I would think that is an episode that we 
have to pursue. I must caution that most small business people 
do not necessarily want more regulation and the government 
involved, but we are in a situation where we do not have a 
choice.
    Chairwoman Velazquez. Okay, let me ask you another 
question. What size loan will be necessary to support 
businesses like yours through the downturn? What would be the 
average size?
    Mr. Reed. That is a tough question because we represent--
there are some folks whom I know who are $17, $18, $20 million 
in the hole. If you get down to the Tiers 4 and 5, $500,000 
would get someone through the next 6 months. I think that is 
what we should think about, getting everybody through for the 
next 6 months.
    Chairwoman Velazquez. Okay. Mr. Smith.
    Mr. Smith. From our standpoint, the issue is that most 
loans are based on receivables. Quite frankly, there are not 
any receivables out there, and that is the issue. The issue 
with the crisis in the auto industry is not so much "will my 
pre-petition bankruptcy amount get paid?" It is "what are we 
going to sell afterwards?" So I would like to see a program 
that is really going to help us not on the downturn but 
hopefully on the upturn. So when things turn around, you are 
going to do that from a base of no receivables, so you actually 
have no cash to go ahead and buy new raw materials or to fund, 
you know, your inventory buildup to start supplying. That is 
going to be the crisis for us.
    Chairwoman Velazquez. Mr. Overton.
    Mr. Overton. The possibility of a GM bankruptcy or shutdown 
is going to be devastating to our Tier 2 and Tier 3 members. We 
are already feeling it with Chrysler, but GM will be 
considerably worse than what the Chrysler effect is going to 
be.
    On the issue as far as loans, we are looking more to be 
paid for the receivables we have out there right now. We have 
got receivables. Typically with the payment practices of GM, 
Ford, and Chrysler in the part approval process, we have 
receivables out there for 6 months to 2 years that are several 
million dollars. If GM declares bankruptcy and being unsecured 
creditors and if all that money is lost, the effect on our Tier 
2 and Tier 3 members would be devastating.
    Chairwoman Velazquez. Okay. Let me ask you, would your 
business be willing to pay a nominal premium for credit 
insurance or for, perhaps, its receivables if you knew you 
would be paid in a timely manner and through a Federal program 
or financing facility?
    Mr. Overton. Absolutely. I think that is the answer. I 
think that is the cleanest, quickest answer.
    If it is comparable to what the Canadian government does 
with their EDC program in the export division of Canada, they 
charge a 1 or 2 or 3 percent fee to insure those receivables. I 
think that is the cleanest, quickest answer. We need that 
desperately to happen before GM files bankruptcy, to guarantee 
those outstanding receivables.
    Chairwoman Velazquez. Mr. Jones.
    Mr. Jones. Thank you.
    As we all know, cash flow is the life's blood of any small 
business, and if manufacturing opportunities are disappearing, 
then, consequently, that certainly affects the cash flow, 
whether it be with manufacturing through the Big 3 or whether 
it be through other support industries for the automotive. But 
certainly any infusion of cash into the small businesses would 
certainly help them.
    Chairwoman Velazquez. What would be the average size of the 
loan, if you were to take that route?
    Mr. Jones. It is difficult for me to say the financial 
structure of all of the industries. For ours, we are looking at 
about a less than 20 percent exposure on the automotive side. 
However, we are seeing opportunities that are disappearing and 
that are going out of the country in other sectors. Then, 
hopefully, we can start looking at some of the unfair trade 
practices and other issues that are affecting manufacturing, to 
try to bring some manufacturing back into the country. Then 
somewhere in the neighborhood of probably $1 million would--
    Chairwoman Velazquez. But would you agree with Mr. 
Overton's assessment of paying a minimal premium for credit 
insurance or perhaps a discount for its receivable if you knew 
that you would be paid in a timely manner? Would you support 
that?
    Mr. Jones. Yes.
    Chairwoman Velazquez. Mr. Norch.
    Mr. Norch. I agree with the comments made by Mr. Overton. I 
would add that it is difficult to assess the amount per each 
individual business based on what their leverage or exposure is 
with the auto markets.
    In conjunction with what Mr. Jones stated, as we are 
looking at propping up these Tier 2, 3 and 4 businesses, we 
also need to look at, really, drastically reviewing those trade 
policies and bringing manufacturing back, but we also have 
other issues where we could create work for the industries that 
we are all here representing in the form of technological 
advances in all of our services, providing work for renewable 
energy sources, alternative energy sources, and all kinds of 
things that we can make in this country. That is what built 
this country--making, manufacturing things.
    And we have other avenues where we should be putting some 
time and effort into as well. I think that will help prop up 
the hit that a lot of these businesses are taking. We would 
have to diversify and maybe be a little creative. But, again, 
the ingenuity and industrial sector is what built this country 
to begin with. I think, collectively, we can work together to 
pull out of a lot of these sectors.
    Chairwoman Velazquez. Thank you, Mr. Norch.
    Now I recognize the ranking member, Mr. Graves.
    Mr. Graves. Thank you, Madam Chair.
    We had a hearing--I do not know--3 or 4 years ago in a 
Subcommittee that I chaired dealing with piracy. I know this is 
a little bit of a side issue, but we kind of brought up some of 
you losing your businesses possibly to China. The question is 
for all of you:
    Does it concern you, you know, when you have got 
manufacturers trying to control costs, maybe going or looking 
for something like that? When we had that hearing on piracy, I 
mean, the products were absolutely identical. The quality was 
horrible in most cases, you know, but they were absolutely 
identical, even down to the packaging in many cases. Do you all 
worry about that? You know, is it a concern? Is it a growing 
concern, you know, shifting more towards those sub-quality 
products for a much cheaper price sort of thing and 
particularly, you know, with our piracy issues that are coming 
out of China right now?
    Mr. Reed.
    Mr. Reed. Yes, I would concur totally with that.
    There are two sides to my personal business. On the foundry 
side, as anyone knows and as the gentleman with the foundry 
association knows, you cannot compete with the Chinese market 
in that place. They will copy you. They will send stuff into 
the United States. I actually had an operation in China, which 
I have since cancelled, because of that situation. They were 
basically just pirating the activity.
    I think the problem that we are facing is we do not play on 
a level deck in America. You know, I think, with the number 
that we come up with, we are already starting like 25 percent 
behind the curve when we go compete against anybody else in the 
world because of our tax codes, because of OSHA, because of 
everything else.
    We have been able to be successful over the years because 
of the innovativeness and productivity of the American worker, 
and that is what is so critical to me right now, is that I 
see--and all of us were saying the same thing. Basically, we 
have to do something to keep the small businesses going with 
the technology and innovation that we have had for so many 
years.
    I think we have a lot of other issues other than piracy. 
Obviously, we have got our own problem internally right now. If 
we can get that solved, yes. Yes, sir, Mr. Graves. I think we 
need to pursue that in some order of fashion. You know, nobody 
wants the protectionist system, per se. We want to be able to 
do what we think we can do better than anybody else. That is 
what has made us do these things.
    By the same token, you would like to have some support from 
the government as well as from the international community to 
make sure that we are playing by the same rules.
    Mr. Smith. On behalf of MEMA, we have a large number of our 
members who get a large number of their sales from the after-
market business, and it is absolutely critical in terms of 
piracy. We see piracy in the stealing of jobs out of the U.S. 
that is destroying these businesses. The sales of pirated 
products coming in are absolutely astronomical.
    I know that there was legislation passed several years ago 
to address, you know, issues of piracy and copyright, but, 
quite frankly, these issues have not really been overseen or 
administered, I should say. There is nothing that has really 
been done about that. So we need to put some teeth into this 
legislation that is already out there and enact some of the 
current piracy legislation that is in place and really go after 
these folks in a hard way. I mean, there are several cases--
brake shoes made of sawdust. I know you have seen all of that, 
and it is very disturbing.
    Chairwoman Velazquez. Mr. Overton.
    Mr. Overton. We have seen the piracy issues firsthand even 
on the tooling side. We have had an opportunity to build some 
tools for China, and you know going in that you are going to 
get one opportunity, and then you are not going to see it again 
because those tools are going to be copied, so there is an 
immediate concern and a very real concern. We have had 
customers who have actually outsourced to China, either tooling 
or product development--product part run production--and they 
have actually created competition for themselves because China 
copied those tools. They copied those parts, and they have seen 
it on the shelves right next to their products from the very 
tools that they had built and parts they had run in China. So 
it is very real all the way down to the tooling side, the 
piracy.
    Mr. Graves. Mr. Jones.
    Mr. Jones. As I mentioned earlier, the surface finishing 
industry does not manufacture anything. We just make things 
look better, work better, and last longer. So we are dependent 
upon a strong manufacturing infrastructure in this country for 
the survival of our industry.
    What we are seeing in our customer base is that some of our 
customers are sending products to China, maybe to have it 
quoted, and they may not have taken advantage of the China 
price and kept it here in this country, and they may have used 
it to leverage some of the other costs down domestically. 
However, several months later, the same part they sent to China 
to have quoted they are seeing in a catalog from China up to 
the portion with their logo on it. So that certainly is 
pirating.
    Other things on the quality side, we have one of our major 
customers who competes worldwide, especially with China, on 
some product that is used in the construction industry. Two 
years ago, we had a chance to go over to China to take a look 
and see what they were doing and how they were doing it, and we 
looked at some of the heat treating they were doing on some of 
the product, and we said, what do they know that we do not 
know? We came back. We ordered some of the product or they 
ordered some of the product. They sent it out to independent 
testing labs--to 10 different independent testing labs 
throughout the country--and 7 out of 10 of those products 
failed the torsion and structural tensile tests that are 
required for that grade of product. Those products are used in 
safety and nuclear equipment.
    Mr. Graves. Mr. Norch.
    Mr. Norch. Thank you.
    In the metalcasting industry, we use a lot of tools and 
dies to make our products, so Mr. Overton and I may be a little 
redundant in some of our comments here.
    Just over the past decade or so, the metalcasting industry 
has just been besieged with tooling quotes, et cetera, coming 
from China. A product goes over there. It is absolutely 
pirated. Every type of domestic oil and gas drilling equipment 
has been prominently displaced over there--compressors, things 
of that nature.
    What we do as well in the automotive sector at Denison 
Industries is we make a lot of castings for the defense market, 
and we do a lot of scanning equipment, things in our industry 
that would go for--the base of the equipment that would find a 
life-threatening disease, things that would scan luggage at an 
airport to keep things out of the airports from people who are 
trying to harm us. We produce armaments and vehicles that 
transport and protect our troops and our defense systems.
    What is the next thing to go and be pirated over there? I 
hope that we do not fall into going after that for cost 
purposes alone.
    Chairwoman Velazquez. Mr. Moore.
    Mr. Moore. Thank you, Madam Chair.
    I would like to direct my first question to my fellow 
Kansan, Mr. Reed, and to Mr. Smith as well. If anyone else 
should care to comment, please do.
    There is no question that recent events in the auto 
industry, including Chrysler's bankruptcy filing and GM's 
announcement that there will be shutdowns this summer, could 
have huge impacts on small manufacturers and parts suppliers 
that will lack the cash flow to maintain operations. These 
problems are exacerbated by the fact that the freeze in the 
capital markets has been crippling for many small 
manufacturers.
    Could you tell me what problems you are facing with regard 
to receiving loans or lines of credit from banks and what you 
think are the most effective ways to ensure that viable small 
manufacturers and parts suppliers have access to the capital 
they need to maintain operations while the auto industry 
restructures and while the economy recovers?
    Should we be looking at the expansion of the automotive 
suppliers' support program, at a direct loan program 
administered to the SBA, or at a reconfiguration of 7(a) loan 
guarantee requirements to ensure that small manufacturers can 
participate even if they are dealing with cash flow problems? 
Do you have any comments on your situation?
    Mr. Reed. Yes, sir, Mr. Moore. I think I mentioned some of 
those in my opening statement.
    Personally, in my situation--in fact, in Kansas, just to 
give you an idea--I asked three local banks. There were 330 
banks in Kansas that were offered the TARP. Four of them took 
the TARP. The reason my local bank and others in Manhattan did 
not do that was the 9 percent cost of money that was put on 
that and the bureaucracy and the regulations that were further 
put on the banks participating. They did not want to pursue it.
    Now, my personal situation is such that I, at the current 
point, do not need the working capital there. I do need it in 
Arizona, but I do not need it in Kansas at this point. The 
problem we are facing is the banks, theoretically, are not 
necessarily increasing the level of qualification to get the 
loan, but they are not lowering it either. They normally look 
and say, what is your cash flow? That is what somebody said. 
You know, cash flow, cash flow, cash flow. If the receivables 
are down because we do not have the business base anymore and 
the cash flow is down, we need to have the working capital, 
which I mentioned earlier.
    Mr. Moore. Sure.
    Mr. Reed. The SBA does not do it under the current 
situation. That will not help us. But if we expanded it to the 
suggestion that I made earlier or to something like that, that 
would be very helpful.
    As far as the other activities, I think we are looking at 
90 days to 6 months. If we do not do something, an awful lot of 
these people are not going to make it. Again, nobody wants a 
handout, but, at this point, we have to have some way to keep 
the operation going, to keep the payroll going, and to keep 
those people employed. Because when it does turn--and it will 
turn--you are going to lose all of the qualified people, and 
that is more difficult to get started than before.
    So I think that addresses at least one of those, Mr. Moore.
    Mr. Moore. Thank you, Mr. Reed.
    Mr. Smith, do you have any comments, sir?
    Mr. Smith. Yes. In terms of the large Tier 1s--and that is 
a lot of our issue, the health of the large Tier 1s--we need to 
make sure they are healthy and that they get through this 
crisis.
    The MEMA, originally when the programs were put in place in 
the $5 million carveout, if you will, for the supplier early 
pay and receivables insurance program, it estimated that $14 
billion was needed, not $5 billion.
    Also, the timing of just getting these things done has been 
very cumbersome. For instance, a lot of the wait, if you will, 
is doing lien searches on all of your receivables. So with the 
time and with limited resources when lien searches are done, 
the OEs are acting as quickly as they possibly can, but, quite 
frankly, their hands are tied somewhat by, you know, the city 
and also by the Treasury Department in terms of getting these 
things through.
    We need to have a quicker response. We need to have the 
Tier 1s healthy so that the tooling industry gets paid and so 
that everyone is paid. We also need to have a program in place 
to help us. Again, when things turn back up, we have got to 
have the cash to be able to fund these things.
    In terms of the smaller companies, absolutely, the SBA 
needs to be redone. $2 million is not enough. At a minimum, it 
should be $5 million; and it needs to be able to be done 
quickly. Some of the requirements in the Ts and Cs that go 
along with that need to be really smoothed out. I mean, we 
appreciate the fact that the fees were waived for the 
automotive crisis, but it is not the fees, it is the timing, 
the amount, and some of the other requirements.
    Mr. Moore. Madam Chair, my time is about up. I yield back 
the balance of my time. Thank you.
    Thank you to the witnesses.
    Chairwoman Velazquez. Mr. Westmoreland.
    Mr. Westmoreland. Thank you, Madam Chairman.
    I thank all of you for being here.
    I realize the condition the auto industry is in, but for 
you guys in the manufacturing business, I think we have always 
seen a lot of the business manufacturing shipped overseas, and 
manufacturing is a key foundation to this country.
    So, Mr. Jones, I wanted to start out by asking a fellow 
Georgian a question. You said in your testimony that the 
problems for your industry are larger than the automotive 
crisis. I would like for everybody to answer this: Where do you 
see other segments of U.S. manufacturing headed? Because, to 
me, manufacturing has been hit harder than anybody else with 
job loss and, really, with company loss. So I would like to 
hear your answer to that.
    Mr. Jones. Thank you, Congressman.
    As I mentioned, Dixie Industrial Finishing has had to 
replace 100 percent of its sales within the last 10 years. The 
reason for that is the exodus of manufacturing in our region to 
other parts in the world, whether it be to Mexico or whether it 
be with manufacturers importing their product that they 
previously manufactured domestically and now are importing from 
China or India or from other low-cost-producing countries that 
do not have the same regulatory requirements that we have.
    They do not have the structural costs that we have. They do 
not have the tort. They do not have the taxes. They do not have 
the health care. They do not have the regulatory. They do not 
have the energy costs that we have. So, consequently, we are 
having to deal with their going elsewhere and our trying to 
find new business.
    Well, where is our new business coming from?
    Our new business is coming from those in our industry who 
have suffered far greater than we have, by closing their doors, 
and that is where we have been able to pick up some business. 
We have also been able to do a lot of things to keep some 
business here and to allow some of our customers to be able to 
compete in the world market through innovation and technology 
by productivity improvements.
    We have one product that we have processed over the last 7 
or 8 years to help one of our customers. We have increased 
productivity by over 300 percent. On other products, we have 
had as much as 200 percent and some 100 percent.
    So we are constantly investing, and we are constantly 
looking at new technologies. We are constantly doing things to 
try to protect our customer base and to protect the jobs here 
in the U.S. and to try to keep them from going elsewhere. At 
other times, we cannot do anything about it.
    Mr. Westmoreland. Now let me ask you this: Is that due to 
bad trade agreements? Is it due to overregulation? Is it due to 
environmental? Is it due to, as you mentioned, I guess, labor 
laws? Has that led to part of it or is it just bad trade deals? 
What is causing that?
    Mr. Jones. I think that it is probably a combination of 
many. On the regulatory side of our wastewater treatment, the 
water that we use for our processes and our environmental 
controls, we spend right at 10 percent of our sales dollar on 
regulatory issues. A gallon of water costs us .008 cents per 
gallon to purchase it. When it goes out our door after we have 
treated it, we tack another 3.9 cents per gallon onto that 
gallon of water. That is a cost associated.
    We have other things that we are looking at that we are 
having to face with some of our trading partners, certainly low 
wages, no regulatory. They have unfair trade practices such as 
currency manipulations. There are other issues as far as 
government subsidies and items that they export to the U.S.
    So these are some of the items that are affecting 
manufacturing domestically.
    Mr. Westmoreland. Any of you other gentlemen on the panel 
would like to address that?
    Mr. Reed. I think it goes along with what we mentioned 
earlier about the problem with dealing overseas, and even some 
of the American trading partners of ours where we have the 
inability to compete.
    At the risk of upsetting the Chairwoman again, we have to 
do something about the taxes. We are 25 percent behind the 
eight ball starting out--most of that is tax or import duties 
or things like that. Add the Federal situation and most of the 
States are hurting too. So what are the States going to do? 
They are going to be increasing the taxes, and the counties 
will too and so on. And by the time you get done, there is 
nothing left for anyone to do. And your margins are so small to 
be competitive, it really becomes very, very difficult.
    And then you add the health care cost issue, the coverage 
of which we all want to do. That is one of those things that we 
feel strongly about. It becomes a very, very difficult 
situation.
    So I do think that we have a short-term problem which we 
have kind of addressed here about how do we get cash infusion, 
how do we keep people alive for the next 6 months. But we 
really have a long-term problem in America among manufacturing 
in that we are kind of forgetting about how we got where we got 
to, and if we don't look into that, a lot of these industries 
are going to end up being forced out overseas.
    I have one gentleman in my association who last year had 
580 people. This year he has 210. He had four plants, and now 
he has one, and unfortunately, the one plant is in China, and 
that is just the nature of the beast.
    So we really need to look seriously at that once we get out 
of the hole we are in right now.
    Chairwoman Velazquez. Mrs. Halvorson.
    Mrs. Halvorson. I come from western Pennsylvania, an area 
that has been a traditional manufacturing area, and many of our 
small manufacturers also produce tier 2, tier 3, tier 4 
manufacturing for the auto industry.
    I guess I have a couple questions, and I am going to start 
back maybe more at the beginning.
    How much of where we are today do you think really was 
contributed by the fact that the auto industry's business model 
didn't maybe look to the future? And I will open that up to 
anyone who wants to address that.
    Mr. Norch. I agree wholeheartedly. Having many of our 
members do business with tier 1s and some direct to the Big 
Three, there has been just a blatant beating down of these tier 
2 and tier 3 metal casters to "you lower your cost," you do 
this, you--everything that comes in, you need to have a give-
back.
    We have one company here that I am aware of in the last 
month, they closed a plant and laid off 350 employees, moved 
the machining cell into the current facility because they had 
opened space from already having a major layoff. And their 
automotive customer, one of the Big Three, said, oh, now that 
you have moved that indoors, how much of that can you give back 
to us? Utterly amazing.
    And it goes back--you think, all of us small business 
people that are going back and cutting costs; becoming leaner, 
meaner; becoming more innovative, more creative. My foundry, we 
put out just as much product now with 125 employees than we did 
with 186. Why? We were creative, versatile, and we did things 
to keep ourselves moving forward. How can a company--when they 
think "slowdown offer," $2-, $4-, $6-, $8-, $10,000 rebates on 
vehicles to get off the lot, where was that money going all the 
other times, going out the door in bonuses and all of these 
other things that were poor business practice, and where was 
the saving for the rainy day that is here now?
    Mrs. Halvorson. Anyone else like to address that? Yes, Mr. 
Smith.
    Mr. Smith. I have to disagree. I think that the U.S. auto 
manufacturers that are currently in this crisis, they 
definitely have vehicles that are relevant. The fact is that we 
have a very fickle consumer society in that years ago, people 
said, how come there aren't more hybrids? Well, quite frankly, 
they can't give hybrids away today. It changes so quickly.
    The fact is the quality is on par with anyone, the vehicles 
are good-looking, they last, they are excellent products, and I 
think they are relevant. I think it is costs and, quite 
frankly, a cost cycle that has finally come up with them in 
terms of these same issues that we talked about. The pension 
liabilities that--you have to remember General Motors, the size 
of General Motors, where it is was 30 years ago versus where it 
is today, the number of employees that it is still obligated 
that they do what is right by the workers, and you compare that 
against the new domestics who are relatively--although they 
have been here 25 years or more, that is still relatively new 
when compared to a company that has been around for 100 years.
    Some of these cost cycles, I think that the thing we need 
to see in the industry is we just need to get over this. We 
need to put the right amount of money so they can come out of 
this thing strong and healthy. I know that it was stated that 
$38 billion has been dedicated so far to the industry. Well, 
quite frankly, we talked about that same number that was going 
to be needed in the fall time, but the money came too slow and 
not enough on time, quite frankly, as the way that I see it in 
that we have spent close to a trillion dollars in order to save 
or create 3.5 million jobs. Well, for less than a tenth of 
that, we could save and create 3.5 million jobs.
    And I think that when you take a look at my State of 
Michigan, the fact that Michigan has struggled with its 
unemployment numbers as much as it has, it has not just been 
the loss of the automotive jobs; what we have lost is the job 
creation factor of those jobs. For every tier 1 automotive job 
in the Midwest, it creates five to eight additional jobs. So 
when you lose a tier 1 automotive job, five or six jobs follow.
    Mrs. Halvorson. I think what Mr. Norch is saying is that 
the tier 2, tier 3, they have gone lean. I think that is what I 
have seen in my district are that those companies are producing 
with amazing efficiency. I am not sure that we saw that in the 
Big Three. And I come from a family where my brother-in-law was 
an executive at Chrysler for many years, and I am saying that, 
I guess, from my personal experience.
    Mr. Overton?
    Mr. Overton. I agree with most of Mr. Smith's comments.
    There is a distaste for the Detroit Three, or whatever you 
want to call it, in the United States right now. Most people 
looked at it and said, let them go bankrupt. What they didn't 
consider was the jobs that we create, the five to eight jobs 
for every one job that is in the Detroit Three.
    Mrs. Halvorson. I think that you have all done your jobs. 
That is what I am saying.
    Mr. Overton. A lot of this has been brought upon 
themselves.
    Chairwoman Velazquez. Mr. Griffith.
    Mr. Griffith. Thank you, Madam Chair.
    I am from Alabama. We in Alabama have been producing a 
great number of automobiles and think of ourselves as possibly 
the Detroit of the South.
    What I think are a couple of things that come to mind: 
Number one, do you think we are going to get back--we sold 16 
million units of automobiles in our heyday, maybe 17 million. 
We are probably down at 7- or 8 million right now. Doesn't look 
like we will ever get back to that number. And I keep hearing 
that we are expecting a recovery in 180 days now. If you guys 
know something, I would love to hear it. I think it will be 
much longer than that. So I think we have got a lot more choppy 
water to go through.
    The other thing that I hear is that throughout your 
testimony, you are talking about companies and American 
companies. And I think that is one of the myths that America is 
suffering through right now. We are recognizing that we are 
globalizing our economy, and we still think of these companies 
that grew up in America as having some or should have some 
loyalty to Americans, and we are finding they have none. They 
are our worst enemy, and they are within us, okay, as far as 
our manufacturing sector is concerned. They contribute to the 
Chinese copying our products and selling them back to us, okay? 
So they are responsible for their 90-day Wall Street report and 
actually have no loyalty to America at all.
    So it is probably going to be within our jobs to 
incentivize them to treat America as their home base just as 
China incentivizes its companies, India incentivizes its 
companies, but no one is incentivizing companies in America to 
stay home and take care of our manufacturing base. And we are 
in great, great danger of losing the ability to compete in our 
defense industry, our automobile industry, our health care 
industry, making whether it is METRONICS, whether it is making 
hips, whether it is making valves for the heart. We are in 
great danger of that. And I think we need to look at our 
American industries that we think should be helping us and 
recognize that they are not, and they are not going to pay 
attention to the small manufacturer unless we force them to 
with incentives.
    And I share your concern. I am very concerned, but I think 
America still has this idea that there are American companies 
out there that are loyal to American workers. That is not the 
case. They are loyal to a 90-day report, and they will do 
anything to make that report good to sustain their stock.
    The other thing that we are faced with here is that the 
titans of industry who said they were committed to the free 
market, the first cold wind that blew, we found out they didn't 
believe it at all. They were here in Washington with their hand 
out wanting to partner with the Federal Government.
    So we recognize how flexible we are in our principles, and 
I think we need to be just that flexible as small 
manufacturers, because they will throw us under the bus in a 
heartbeat for their 90-day report.
    So I appreciate each and every one of you being here, and 
we have got a serious problem, but I don't think it is going to 
be over in 180 days.
    Thank you, Madam Chair.
    Chairwoman Velazquez. Ms. Clarke.
    Ms. Clarke. Thank you very much, Madam Chair.
    I want to just highlight an article I read yesterday in 
Politico entitled "Detroit Should Hear from Obama," by Jamal 
Simmons. In this article, Mr. Simmons mentions the plight of 
African American dealers and the challenges they face within 
this niche market. He states, "African American auto dealers 
face a particular challenge because GM's plan to cut low-
performing auto dealerships will hurt their small ranks 
significantly if there is not a plan to maintain dealer 
diversity. According to one dealer and several news reports, 
many of these businesses were set up in lower-income, higher-
risk areas, which make them much more vulnerable in purely 
quantitative evaluation. Minority auto suppliers are in similar 
jeopardy."
    And I ask that we submit this article for the record.
    [The information is included in the appendix.]
    Ms. Clarke. I strongly believe that minority-owned small 
businesses in the automotive industry are a very important part 
of this equation and important to a subsequent solution to this 
crisis. As spending decreases, I, like many others, fear that 
many of the supply diversity programs implemented by the bigger 
auto companies, like GM, are in jeopardy of being cut or 
severely downsized. Moreover, minority suppliers, in 
particular, tend to be highly leveraged business owners who are 
located in urban environments and often employ minority 
employees. Their investment permeates throughout urban 
communities, helping to sustain local economies. In the event 
that these niche small businesses have to close or downsize, 
their investments in urban communities will disappear, creating 
a void in local support and employment.
    As a representative of an immensely diverse urban district, 
I am concerned that minority manufacturers, suppliers, and even 
dealers will indeed be left out of this discussion and 
subsequently left out of this part of the solution.
    In conclusion, it is my hope that in this discussion and 
many to follow, we, as a collective, can come up with solutions 
that will benefit all the small businesses that are the engines 
of employment in communities across this Nation, and who are 
affected or in danger of becoming affected by this automobile 
crisis.
    So my question is to Mr. Smith and to Mr. Reed. Given my 
remarks and the fact that you represent over 700 manufacturing 
companies, Mr. Smith, in your view, have the current market 
conditions caused a disparate impact on minority suppliers?
    Mr. Smith. You know, the issue with all suppliers, 
minority, you know, especially, has been since--and we talk 
about, in manufacturing, the recession since 2000. Since 2000, 
over 5 million jobs in manufacturing have been lost, and 
currently we had a record pace this year. You know, Dave Bing, 
who is the new mayor of Detroit, has a business that is very 
similar to mine, and we have done business over the years 
together and helped each other out when we were in times of 
trouble. I know he has had his struggles in his business, and 
we certainly have had ours. I think we are all in this boat 
together.
    I guess what I am saying is that unless we do something to 
make sure that the U.S. automotive manufacturing base is strong 
and can continue on both at GM, Ford, and Chrysler, minority 
dealers and minority programs for suppliers won't even matter. 
We need to make sure that these guys are healthy so they can 
continue on with the programs that they pioneered decades ago.
    Ms. Clarke. I hear you. I think certainly I believe in "the 
rising tide lifts all ships." I just wanted to point out that 
there oftentimes is a disparate impact because these companies 
tend to be located in smaller urban environments where their 
consumer base is something that they rely on as well.
    Mr. Smith. Again, with the dealership network, I really 
can't comment. But in terms of the supplier industry, I think 
that it is that we have been pretty much in the same boat 
together.
    Ms. Clarke. Very well.
    Thank you very much, Madam Chair.
    I am sorry. Mr. Jones.
    Mr. Jones. One of our customers is a minority-owned company 
in Atlanta, metro Atlanta. Two years ago they had 260 
employees. They provide component parts for both Ford and GM: 
headrest components, seat components, door latches, hood 
latches, trunk latches. They are now down to 60 employees. They 
are in survival mode.
    The 260 employees that they had were actually employees 
that had the ability and the capability to purchase the same 
products that the automobile manufacturers are building to 
sell. What we are seeing with the manufacturing decline in this 
country and when the automobile manufacturers and other major 
manufacturers are exporting jobs out of the country, then what, 
in fact, they are doing is they are destroying the market that 
they had helped create at one time.
    Chairwoman Velazquez. Mr. Reed.
    Mr. Reed. I just wanted to make a point from our industry, 
the machine tooling and so on. I don't think there is any 
difference from one company to the next. I have seen nothing 
whatsoever. We are all hurting, and, quite frankly, that hasn't 
even entered into the discussion at all.
    One of my companies is filled. I have a number of 
minorities. The first time I even thought about it was when you 
mentioned it. It makes no difference at this point.
    I do think on the dealer's side, I can't count on that; but 
certainly the manufacturing sector of our folks, we are all in 
this together.
    Thank you.
    Chairwoman Velazquez. There is a set of votes on the House 
floor, but before we adjourn, I would like to ask one question, 
a final question, to any of the witnesses whom I want to 
answer.
    How far down the supply chain will the auto suppliers 
support programs have to be expanded for it to provide support 
for a company such as yours?
    Mr. Overton. It has to go all the way down to tier 2, 3.
    Mr. Reed. If I can't get the product, it makes no 
difference. So you need to go the whole range. And the delta is 
obviously larger at the top going down.
    Mr. Overton. That is why this 1 or 2 or 3 percent, that 
would solve the whole problem. Everybody could apply for that, 
and it would guarantee receivables. It is a quick answer and is 
simple.
    Chairwoman Velazquez. Mr. Graves, do you have any other 
questions?
    So let me say in conclusion that the committee intends to 
work with the administration to make sure that the auto 
suppliers support program helps the foundation of the industry 
and will look at financing initiatives that could be able to 
support answers to the niche of the industry that you 
represent.
    I ask unanimous consent that Members will have 5 days to 
submit a statement and supporting materials for the record. 
Without objection, so ordered.
    Chairwoman Velazquez. This hearing is now adjourned.
    [Whereupon, at 11:30 a.m., the committee was adjourned.]
    [GRAPHIC] [TIFF OMITTED] 49616.001
    
    [GRAPHIC] [TIFF OMITTED] 49616.002
    
    [GRAPHIC] [TIFF OMITTED] 49616.003
    
    [GRAPHIC] [TIFF OMITTED] 49616.004
    
    [GRAPHIC] [TIFF OMITTED] 49616.005
    
    [GRAPHIC] [TIFF OMITTED] 49616.006
    
    [GRAPHIC] [TIFF OMITTED] 49616.007
    
    [GRAPHIC] [TIFF OMITTED] 49616.008
    
    [GRAPHIC] [TIFF OMITTED] 49616.009
    
    [GRAPHIC] [TIFF OMITTED] 49616.010
    
    [GRAPHIC] [TIFF OMITTED] 49616.011
    
    [GRAPHIC] [TIFF OMITTED] 49616.012
    
    [GRAPHIC] [TIFF OMITTED] 49616.013
    
    [GRAPHIC] [TIFF OMITTED] 49616.014
    
    [GRAPHIC] [TIFF OMITTED] 49616.015
    
    [GRAPHIC] [TIFF OMITTED] 49616.016
    
    [GRAPHIC] [TIFF OMITTED] 49616.017
    
    [GRAPHIC] [TIFF OMITTED] 49616.018
    
    [GRAPHIC] [TIFF OMITTED] 49616.019
    
    [GRAPHIC] [TIFF OMITTED] 49616.020
    
    [GRAPHIC] [TIFF OMITTED] 49616.021
    
    [GRAPHIC] [TIFF OMITTED] 49616.022
    
    [GRAPHIC] [TIFF OMITTED] 49616.023
    
    [GRAPHIC] [TIFF OMITTED] 49616.024
    
    [GRAPHIC] [TIFF OMITTED] 49616.025
    
    [GRAPHIC] [TIFF OMITTED] 49616.026
    
    [GRAPHIC] [TIFF OMITTED] 49616.027
    
    [GRAPHIC] [TIFF OMITTED] 49616.028
    
    [GRAPHIC] [TIFF OMITTED] 49616.029
    
    [GRAPHIC] [TIFF OMITTED] 49616.030
    
    [GRAPHIC] [TIFF OMITTED] 49616.031
    
    [GRAPHIC] [TIFF OMITTED] 49616.032
    
    [GRAPHIC] [TIFF OMITTED] 49616.033
    
    [GRAPHIC] [TIFF OMITTED] 49616.034
    
    [GRAPHIC] [TIFF OMITTED] 49616.035
    
    [GRAPHIC] [TIFF OMITTED] 49616.036
    
    [GRAPHIC] [TIFF OMITTED] 49616.037
    
    [GRAPHIC] [TIFF OMITTED] 49616.038
    
    [GRAPHIC] [TIFF OMITTED] 49616.039
    
    [GRAPHIC] [TIFF OMITTED] 49616.040
    
    [GRAPHIC] [TIFF OMITTED] 49616.041
    
    [GRAPHIC] [TIFF OMITTED] 49616.042
    
    [GRAPHIC] [TIFF OMITTED] 49616.043
    
    [GRAPHIC] [TIFF OMITTED] 49616.044
    
    [GRAPHIC] [TIFF OMITTED] 49616.045
    
    [GRAPHIC] [TIFF OMITTED] 49616.046
    
    [GRAPHIC] [TIFF OMITTED] 49616.047
    
    [GRAPHIC] [TIFF OMITTED] 49616.048
    
    [GRAPHIC] [TIFF OMITTED] 49616.049
    
    [GRAPHIC] [TIFF OMITTED] 49616.050
    
    [GRAPHIC] [TIFF OMITTED] 49616.051
    
    [GRAPHIC] [TIFF OMITTED] 49616.052
    
    [GRAPHIC] [TIFF OMITTED] 49616.053
    
    [GRAPHIC] [TIFF OMITTED] 49616.054
    
    [GRAPHIC] [TIFF OMITTED] 49616.055
    
    [GRAPHIC] [TIFF OMITTED] 49616.056
    
    [GRAPHIC] [TIFF OMITTED] 49616.057
    
    [GRAPHIC] [TIFF OMITTED] 49616.058
    
    [GRAPHIC] [TIFF OMITTED] 49616.059
    
    [GRAPHIC] [TIFF OMITTED] 49616.060
    
    [GRAPHIC] [TIFF OMITTED] 49616.061
    
    [GRAPHIC] [TIFF OMITTED] 49616.062
    
    [GRAPHIC] [TIFF OMITTED] 49616.063
    
    [GRAPHIC] [TIFF OMITTED] 49616.064
    
    [GRAPHIC] [TIFF OMITTED] 49616.065
    
    [GRAPHIC] [TIFF OMITTED] 49616.066
    
    [GRAPHIC] [TIFF OMITTED] 49616.067
    
    [GRAPHIC] [TIFF OMITTED] 49616.068
    
    [GRAPHIC] [TIFF OMITTED] 49616.069
    
                                 
