[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
H.R. 4692, THE NATIONAL MANUFACTURING STRATEGY ACT OF 2010
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON COMMERCE, TRADE,
AND CONSUMER PROTECTION
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
__________
JULY 14, 2010
__________
Serial No. 111-143
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
_____
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COMMITTEE ON ENERGY AND COMMERCE
HENRY A. WAXMAN, California, Chairman
JOHN D. DINGELL, Michigan JOE BARTON, Texas
Chairman Emeritus Ranking Member
EDWARD J. MARKEY, Massachusetts RALPH M. HALL, Texas
RICK BOUCHER, Virginia FRED UPTON, Michigan
FRANK PALLONE, Jr., New Jersey CLIFF STEARNS, Florida
BART GORDON, Tennessee NATHAN DEAL, Georgia
BOBBY L. RUSH, Illinois ED WHITFIELD, Kentucky
ANNA G. ESHOO, California JOHN SHIMKUS, Illinois
BART STUPAK, Michigan JOHN B. SHADEGG, Arizona
ELIOT L. ENGEL, New York ROY BLUNT, Missouri
GENE GREEN, Texas STEVE BUYER, Indiana
DIANA DeGETTE, Colorado GEORGE RADANOVICH, California
Vice Chairman JOSEPH R. PITTS, Pennsylvania
LOIS CAPPS, California MARY BONO MACK, California
MICHAEL F. DOYLE, Pennsylvania GREG WALDEN, Oregon
JANE HARMAN, California LEE TERRY, Nebraska
TOM ALLEN, Maine MIKE ROGERS, Michigan
JANICE D. SCHAKOWSKY, Illinois SUE WILKINS MYRICK, North Carolina
CHARLES A. GONZALEZ, Texas JOHN SULLIVAN, Oklahoma
JAY INSLEE, Washington TIM MURPHY, Pennsylvania
TAMMY BALDWIN, Wisconsin MICHAEL C. BURGESS, Texas
MIKE ROSS, Arkansas MARSHA BLACKBURN, Tennessee
ANTHONY D. WEINER, New York PHIL GINGREY, Georgia
JIM MATHESON, Utah STEVE SCALISE, Louisiana
G.K. BUTTERFIELD, North Carolina
CHARLIE MELANCON, Louisiana
JOHN BARROW, Georgia
BARON P. HILL, Indiana
DORIS O. MATSUI, California
DONNA M. CHRISTENSEN, Virgin
Islands
KATHY CASTOR, Florida
JOHN P. SARBANES, Maryland
CHRISTOPHER S. MURPHY, Connecticut
ZACHARY T. SPACE, Ohio
JERRY McNERNEY, California
BETTY SUTTON, Ohio
BRUCE L. BRALEY, Iowa
PETER WELCH, Vermont
Subcommittee on Commerce, Trade, and Consumer Protection
BOBBY L. RUSH, Illinois
Chairman
JANICE D. SCHAKOWSKY, Illinois CLIFF STEARNS, Florida
Vice Chair Ranking Member
JOHN SARBANES, Maryland RALPH M. HALL, Texas
BETTY SUTTON, Ohio ED WHITFIELD, Kentucky
FRANK PALLONE, Jr., New Jersey GEORGE RADANOVICH, California
BART GORDON, Tennessee JOSEPH R. PITTS, Pennsylvania
BART STUPAK, Michigan MARY BONO MACK, California
GENE GREEN, Texas LEE TERRY, Nebraska
CHARLES A. GONZALEZ, Texas MIKE ROGERS, Michigan
ANTHONY D. WEINER, New York SUE WILKINS MYRICK, North Carolina
JIM MATHESON, Utah MICHAEL C. BURGESS, Texas
G.K. BUTTERFIELD, North Carolina
JOHN BARROW, Georgia
DORIS O. MATSUI, California
KATHY CASTOR, Florida
ZACHARY T. SPACE, Ohio
BRUCE L. BRALEY, Iowa
DIANA DeGETTE, Colorado
JOHN D. DINGELL, Michigan (ex
officio)
C O N T E N T S
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Page
Hon. Bobby L. Rush, a Representative in Congress from the State
of Illinois, opening statement................................. 1
Prepared statement........................................... 3
Hon. Ed Whitfield, a Representative in Congress from the
Commonwealth of Kentucky, opening statement.................... 6
Prepared statement........................................... 8
Hon. Robert E. Latta, a Representative in Congress from the State
of Ohio, opening statement..................................... 11
Prepared statement........................................... 12
Hon. Phil Gingrey, a Representative in Congress from the State of
Georgia, opening statement..................................... 14
Hon. Gene Green, a Representative in Congress from the State of
Texas, prepared statement...................................... 14
Hon. Lee Terry, a Representative in Congress from the State of
Nebraska, opening statement.................................... 15
Hon. Betty Sutton, a Representative in Congress from the State of
Ohio, opening statement........................................ 16
Hon. Cliff Stearns, a Representative in Congress from the State
of Florida, opening statement.................................. 16
Hon. Bruce L. Braley, a Representative in Congress from the State
of Iowa, opening statement..................................... 17
Hon. Tim Murphy, a Representative in Congress from the
Commonwealth of Pennsylvania, opening statement................ 18
Hon. John D. Dingell, a Representative in Congress from the State
of Michigan, opening statement................................. 19
Hon. Steve Scalise, a Representative in Congress from the State
of Louisiana, opening statement................................ 20
Hon. Janice D. Schakowsky, a Representative in Congress from the
State of Illinois, opening statement........................... 21
Hon. Daniel Lipinski, a Representative in Congress from the State
of Illinois, opening statement................................. 21
Prepared statement........................................... 23
Hon. Joe Barton, a Representative in Congress from the State of
Texas, prepared statement...................................... 101
Witnesses
Aneesh Chopra, Associate Director for Technology & Chief
Technology Officer, Office of Science and Technology Policy.... 29
Prepared statement........................................... 32
Answers to submitted questions............................... 143
Scott N. Paul, Executive Director, Alliance for American
Manufacturing.................................................. 41
Prepared statement........................................... 43
Answers to submitted questions............................... 150
Mark A Gordon, Director, Defense Research Programs, National
Center for Advanced Technologies............................... 52
Prepared statement........................................... 54
Answers to submitted questions............................... 154
William M. Hickey, Jr., President/CEO, Lapham-Hickey Steel Corp.. 62
Prepared statement........................................... 64
Answers to submitted questions............................... 162
Owen E. Herrnstadt, Director of Trade and Globalization,
International Association of Machinists & Aerospace Workers.... 69
Prepared statement........................................... 71
Answers to submitted questions............................... 168
Kevin A. Hassett, Senior Fellow and Director of Economic Policy
Studies, The American Enterprise Institute..................... 75
Prepared statement........................................... 78
Submitted Material
National Manufacturers Association, Manufacturing Strategy, June
2010, submitted by Mr. Whitfield............................... 106
Letters of support from various organizations to Mr. Lipinski.... 120
American Iron and Steel Institute............................ 120
The Association for Manufacturing Technology................. 122
National Tooling & Machining Association/Precision
Metalforming Association................................... 123
Aerospace Industries Association............................. 124
National Defense Industrial Association...................... 125
Coalition for a Prosperous America........................... 133
American Manufacturing Trade Action Coalition................ 134
Motorola, Inc................................................ 135
United States Business and Industry Council.................. 136
Statement of National Association of Manufacturers, submitted by
Mr. Rush....................................................... 140
H.R. 4692, THE NATIONAL MANUFACTURING STRATEGY ACT OF 2010
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WEDNESDAY, JULY 14, 2010
House of Representatives,
Subcommittee on Commerce, Trade,
and Consumer Protection,
Committee on Energy and Commerce,
Washington, DC.
The Subcommittee met, pursuant to call, at 2:04 p.m., in
Room 2322 of the Rayburn House Office Building, Hon. Bobby Rush
[Chairman of the Subcommittee] presiding.
Members present: Representatives Rush, Schakowsky, Sutton,
Green, Gonzalez, Barrow, Braley, Dingell, Whitfield, Stearns,
Terry, Murphy, Gingrey, Scalise and Latta.
Also present: Representative Lipinski.
Staff present: Michelle Ash, Chief Counsel; Angelle Kwemo,
Counsel; Tim Robinson, Counsel; Peter Ketcham-Colwill, Special
Assistant; Will Wallace, Special Assistant; Brian McCullough,
Senior Professional Staff; Shannon Weinberg, Counsel; Robert
Frisby, Detailee; Sam Costello, Legislative Assistant; and Ike
Brannon, Committee Economist.
OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ILLINOIS
Mr. Rush. The subcommittee will come to order. I want to
thank the members of the subcommittee who have joined us today
for participating in this legislative hearing. This afternoon,
we will examine a very important bill introduced in February by
my dear friend from Illinois, Congressman Dan Lipinski, and I
want to commend him for his leadership on this issue. And at
this point, I want to ask unanimous consent that Congressman
Lipinski be allowed to join us on the dais, be allowed to make
an opening statement, and be allowed to ask questions for 5-
minutes at the conclusion of the opening statements and also
the questioning by members of the committee. Hearing no
objections, so ordered.
The Chair recognizes himself for 5 minutes for the purposes
of an opening statement. H.R. 4692, the National Manufacturing
Strategy Act of 2010, has bipartisan support from members of
Congress, including many who serve on this subcommittee.
Addressing manufacturing issues is not new to this
subcommittee. Last year, we highlighted the need to make the
exportation of manufactured goods a national priority for the
simple fact that America's manufacturing sector is an essential
foundation of our Nation's economy. Consider the fact that in
2009 the manufacturing sector employed more than 11.5 million
people.
Ladies and gentlemen, that number, though significant, is
not as good as it could be when you consider that 10 years ago
America's manufacturing sector employed 17.3 million people,
meaning that our Nation actually lost 5.8 million jobs between
1999 and 2009. The bill we are considering today seeks to make
a significant difference in helping to restore and reposition
our Nation's manufacturing capacity so that American workers
can better compete in today's global economy. Today, we are
still fighting our way through a global financial crisis, and
we are facing aggressive competition from other industrialized
nations as well as emerging countries. Some of our
manufacturing competitors have designed and implemented 5 or
10-year strategic plans to allow their economies to not only
compete globally, but also to export their goods to our market
here at home. The sad fact of the matter is that these
international markets are not reciprocating by welcoming U.S.
goods to their marketplace.
In recent years, the U.S. has actually lost market share to
growing export countries like China, Southeast Asia and India.
If we do not act now, this steady decline will increase. We
simply cannot allow that to happen and, thankfully, President
Obama agrees. I commend the President for the significant steps
he has already taken to strengthen our manufacturing sector.
The President's Council of Advisors on Science and Technology
continues its assessment of the state of our Nation's
manufacturing sector, its policies and its initiatives. Their
efforts are moving steadily toward a set of recommendations
designed to strengthen our Nation's manufacturing sector.
With H.R. 4692, the bill we are considering today, we take
a major step toward this shared goal. This bill requires the
President to undertake a deep and broad analysis of the
Nation's manufacturing sector, including the international
economic environment, related technological developments,
workforce elements, the impact of governmental policies and
other relevant issues affecting domestic manufacturers. Based
on this analysis, the President, in collaboration with key
cabinet officials within his Administration as well as
governors, state and local elected officials and other key
stakeholders in the public and private sectors will develop a
4-year national strategy that identifies goals and makes
recommendations to improve our Nation's economic growth. Key
provisions of this legislation include a provision requiring
that the proposed national strategy be delivered to Congress
and that it be published on a web site to allow the American
people to be able to monitor for themselves our efforts to
change course as we work to return the American workforce to
the front line in terms of manufacturing skills and innovation.
With that, I look forward to hearing from my colleagues on
this subcommittee as well as our invited guests. Thank you, and
I yield back the balance of my time. The Chair now recognizes
the ranking member, Mr. Whitfield, for 5 minutes for the
purposes of an opening statement.
[The prepared statement of Mr. Rush follows:]
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OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF KENTUCKY
Mr. Whitfield. Mr. Chairman, thank you very much, and I
certainly want to thank Mr. Lipinski for this legislation, and
I know that we have people on our side of the aisle that
support it. I do want to give some constructive criticism of
this legislation. I think when we criticize, we also need to
try to come up with suggestions to improve it because all of us
are concerned about manufacturing. But I read through this bill
three times, and I was quite concerned about it. First of all,
we have a sense of Congress on 18 issues of concern regarding
manufacturing, which is fine, and things like creating high
quality jobs and increasing productivity, those types of
issues. And then we have a task force that would be appointed
by the President, and on that task force everyone on the task
force are government employees. And then after the appointment
of the task force, it says at a minimum they must consider the
following issues, and there are 22, 23 of those issues.
Now the task force is to make recommendations. In addition
to the task force, the President is supposed to appoint a
National Manufacturing Strategy Board and there were 21 people
that belonged to that board, and they should make
recommendations to the task force. Now I noticed that the first
report is due on February 28, 2011, and that is not very far
from now. And when you consider all the things that have to be
considered and you look at all the guidelines there also must
be goals set and they spell out the specific goals that must be
looked at, and then they make recommendations to fulfill those
goals. Then you have the Strategy Board itself, and, as I said,
it has 21 members, and of course after the first report is made
the Government Accounting Office 3 years following that first
report is supposed to do a review to determine whether or not
there has been any success in fulfilling the recommendations
made by the task force.
In addition to that, in developing each National
Manufacturing Strategy the President acting through the Office
of Science and Technology and Policy, which I believe will be
on the panel today, must enter into an agreement with the
National Academy of Sciences, and I am not sure if they are
with us today or not. But the legislation points out what
things they must consider, and then it talks about when the
first report is due. And then in addition to that there are
further required studies in order to inform future national
manufacturing strategies not later than 60 days after enactment
of this act the President shall enter into an agreement with
the National Academy of Sciences to develop three more reports,
one not later than 14 months after entering into the agreement,
two not later than 20 months after entering into the agreement,
and three not later than 24 months after entering into the
agreement.
And while I have not had the opportunity to look at this in
great depth, it would appear to me that there may be some ways
to make this legislation more effective than it would be by
maybe merging the Strategy Board and the task force and
bringing in the private sector people along with the government
people on the same board. So as I read through this, like I
said, I think it is a wonderful idea. We are all concerned
about manufacturing but this bill is really complex and there
are so many reports due in this bill that I am quite concerned
really about the overall effectiveness of it. Having said that,
I am open to being swayed by our distinguished panel here, and
I would like to also, Mr. Chairman, just ask unanimous consent
to place into the record a manufacturing strategy for jobs in a
competitive America that was developed June, 2010, by the
National Manufacturers Association in which they set out a
number of recommendations and policies that they think would be
helpful to reinvigorate the manufacturing industry in our
county. And if there is no objection, I would just like to
enter that into the record.
Mr. Rush. Hearing no objection, so ordered.
[The information appears at the conclusion of the hearing.]
Mr. Whitfield. And with that, I yield back the balance of
my time although you were kind enough. I still see I have 5
minutes left.
[The prepared statement of Mr. Whitfield follows:]
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OPENING STATEMENT OF HON. ROBERT E. LATTA, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OHIO
Mr. Latta. Thank you, Mr. Chairman, and Ranking Member
Whitfield. Thank you for holding the hearing today on H.R.
4692, which relates to a subject that is very near and dear to
my heart in the 5th Congressional District which is
manufacturing. As many of you are aware, the heart of the
Midwest is dependent on manufacturing and agriculture to
maintain a viable and strong economy. In these tough economic
times, it is important that Congress protect these dedicated,
hard-working Americans. Ohio employs roughly 629,500
individuals in the manufacturing sector, and my congressional
district is the largest manufacturing district in Ohio and the
20th largest in Congress. I do have some concerns, as Mr.
Whitfield pointed out, with the legislation, and other pieces
of legislation that have gone through the committee as we
continue to see an expansion in federal bureaucracy and the
creation of new studies in other federal programs as well as
the creation of new commissions.
When it comes to a National Manufacturing Strategy to
strengthen our manufacturing sector and help create jobs and
business, we do need a common sense approach. Many companies
and organizations are instituting their own National
Manufacturing Strategy and one that does not need the taxpayer
dollars and studies to accomplish it. Congress needs to create
better tax policies and extend current tax reductions for
businesses, small and large, who keep Americans employed and
create jobs for the unemployed, not to burden businesses and
the American people with job preventing legislation such as cap
and trade and the health care legislation but pass the pending
free trade agreements to create a level playing field with
other countries and not impose harmful rules and regulations
that burden or hinder industries, hinder economic growth and
create much uncertainty that keep dedicated, hard-working
Americans from retaining jobs.
With that, Mr. Chairman, I look forward to today's
witnesses and working with the committee on manufacturing
issues that face our country today. Thank you, and I yield
back.
[The prepared statement of Mr. Latta follows:]
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Mr. Rush. The chair recognizes Dr. Gingrey for 2 minutes.
OPENING STATEMENT OF HON. PHIL GINGREY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF GEORGIA
Mr. Gingrey. Mr. Chairman, thank you. And I want to thank
you for calling today's hearing on H.R. 4692, the National
Manufacturing and Strategy Act of 2010. Improving manufacturing
needs to be a major focus for us to get people back to work and
to grow our economy. Mr. Chairman, I appreciate your
willingness to have the subcommittee receive testimony on this
important issue. Over the past decade, we have seen a once
robust sector of the economy in decline. As the majority memo
for this hearing indicates, we have lost 5.8 million
manufacturing jobs since 1999. Given the success of this
industry in the past, this statistic is decidedly negative.
Furthermore, manufacturing continues to represent a smaller
portion of the overall economy given that we have lost market
share to our foreign competitors. Mr. Chairman, two to three
times a year, I convene a meeting of leaders from across the
industry, I call it my manufacturing and advisory committee, to
advise me on how policy coming from Washington affects their
ability to run their businesses. This is, of course, in my 11th
Congressional District of Georgia.
I held one of the meetings on Monday, just this past
Monday, at Dow Chemical in Marietta, Georgia, and during that
round table session the message I received from them was
overwhelmingly clear, current Washington policies are not
helping create jobs or lower the cost of doing business.
Instead, proposals like cap and trade and the newly enacted
health care law, Patient Protection and Affordable Care Act of
2010, are only adding to regulatory burden placed on these
companies. Additionally, we have not helped these companies
expand their markets by enacting existing free trade
agreements, Panama, Colombia, South Korea. We have not provided
incentives to foreign companies to invest in United States by
lowering our corporate tax rate.
One of the largest manufacturers in my district even told
me that foreign manufacturing companies, his company, and I
won't mention the name of the company but it is a Japanese
company, they want to bring jobs to hard-working Americans.
They will hold off on making those investments because of the
current policies being pursued by this Administration and
Congress, and, more importantly, the uncertainty of really not
knowing how to deal with what is coming next. So, Mr. Chairman,
I do applaud my colleague and good friend from Illinois, Mr.
Lipinski, for raising awareness of these important
manufacturing issues. I look forward to hearing from our panel
of witnesses on how to grow manufacturing in the United States.
Indeed, we look forward to that. And I yield back my time.
Mr. Rush. The chair recognizes Mr. Green for 2 minutes.
OPENING STATEMENT OF HON. GENE GREEN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF TEXAS
Mr. Green. Thank you, Mr. Chairman, for holding the
hearing. I want to thank our colleague, Mr. Lipinski, for
introducing this important piece of legislation, which I am a
co-sponsor. It is important that we closely examine the issue
of domestic manufacturing and how we can bolster our economy by
supporting our domestic manufacturing capabilities. I am a co-
sponsor of this bill because I believe it takes the right
approach toward analyzing our country's capabilities. This bill
directs the President to develop a long-term plan for
supporting our domestic manufacturing and ensuring that it
includes the input of an array of private sector participants.
Currently, there are many federal programs aimed at increasing
our manufacturing sector, and I am concerned that these
programs lack coordination, efficiency and are reactive to
events and may leave our workers and companies unprepared for a
challenge that will present them in the future. It is important
that we put Americans back to work, and one of the ways we can
accomplish this is by improving our capacity of manufacturing.
Our district in Houston has a great deal of manufacturing
related to the oil and gas production, refinery, and chemical
industry, but we have capacity to do more. This is the story
across the country. While our unemployment has fallen from its
peak, we must remain focused on job creation in short term and
long term. I believe this bill represents a long-term remedy
and will give Congress, the President, and private sector
stakeholders the tools necessary to spur growth in
manufacturing. Again, Mr. Chairman, thank you for your
leadership on calling the hearing, and I yield back my time.
Mr. Rush. The chair recognizes Mr. Gonzalez for 2 minutes.
Mr. Gonzalez. I waive opening.
Mr. Rush. The chair recognizes Mr. Terry for 2 minutes.
OPENING STATEMENT OF HON. LEE TERRY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF NEBRASKA
Mr. Terry. Thank you, Mr. Chairman, and I am anxious to
hear from our esteemed panel here, the breadth of what this
bill will allow with the new committees to look into this. I
would like to know if we are working under a premise that the
Administration's report that they put out is incomplete and
therefore necessary to duplicate it in some manner with this
bill. I wonder and would like to have input whether or not
these panels will look at, as Mr. Gingrey said, look at cap and
trade. Will it look and say, oK, if we are going to raise
electric rates, natural gas rates, and transportation fuel
whether that will impact decision making by manufacturers to
stay in the United States or move overseas. Look at the health
bill where now we have a health bill, most manufacturers are
over 50 employees, even the smaller ones that are around my
district, and all make more than 25,000, so they will have more
bureaucratic responsibilities with none of the benefits from
this health care bill. They will even go far as if they buy
pizza for their employees on Fridays that they will have to
1099 Pizza Hut now.
Are those the type of bureaucratic things that you will
look at to determine if that provides a lack of incentive to
manufacturers to stay within the United States. Also, look at
OSHA. And I have a letter here from one of our manufacturers in
Nebraska who has one of the best proven safety programs, so
what do they get instead of congratulations? They get a letter
saying your establishment was selected from a list of low rate
establishment and high rate industries. Congratulations. You
get an additional audit. And we wonder why our manufacturers
are moving to China. There is less government interference in
China than there is in the United States now.
And, by the way, this was so intrusive that they personally
pulled all of the employees off the line for interviews. They
walked into every doctor's office and hospitals in the area
asking for employee records. Why? Because they had a successful
safety program. Our bureaucracy is chasing our jobs overseas.
It is not a secret. I yield back.
Mr. Rush. The chair recognizes the gentlelady from Ohio,
Ms. Sutton, for 2 minutes.
OPENING STATEMENT OF HON. BETTY SUTTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OHIO
Ms. Sutton. Thank you, Chairman Rush, for holding this
important hearing on the National Manufacturing Strategy Act.
Manufacturing is the backbone of our economy, our national
security, and our country, and it is long past the time but we
must stand up for U.S. manufacturing. Now I am proud to say
that I am a product of a manufacturing household. When I grew
up it was the time when people could count on a good
manufacturing job to put food on the table and cover health
care costs and supply a pension. But, unfortunately, our Nation
has witnessed the loss of millions of good manufacturing jobs
due to unfair trade practices and policies that put our
companies and our workers at a disadvantage. Over the last
decade, the U.S. has lost roughly six million manufacturing
jobs. In Ohio since 2000, we have lost more than one in three
manufacturing jobs. Many of these jobs have gone to China.
According to a recent Economic Policy Institute report unfair
trade with China has cost our Nation 2.4 million jobs between
2001 and 2008, and that is unacceptable.
Ohio has lost nearly 92,000 jobs because of China alone. In
my congressional district, 5,700 jobs have been lost as a
result of China's current fee manipulation and other illegal
subsidies and unfair trade barriers. These are good-paying jobs
that pay families supporting wages, and they have a multiplier
effect. Each manufacturing job can generate at least four other
jobs in the private sector. So I am proud to be an original co-
sponsor of this bill and there must be coordination among the
various agencies to develop a cohesive strategy. We just focus
on replacing policies that reward businesses for outsourcing
jobs with incentives and sensible tax policies that will help
businesses and workers make it right here in America. We must
develop a trade model that puts an end, an enforceable end, to
current fee manipulation, illegal subsidies, and product
dumping, one that requires reciprocity of market access, and
one that ensures that products produced elsewhere will be safe
for consumption here in the United States. With that, Mr.
Chairman, I thank you again for holding this hearing, and I
yield back.
Mr. Rush. Mr. Stearns is recognized for 2 minutes.
OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF FLORIDA
Mr. Stearns. Thank you, Mr. Chairman. I want to welcome our
witnesses and also thank you for having this hearing. I would
say to Ms. Sutton and others who have sponsored the bill that
you should be aware that there is a report by the Executive
Office of the President, December, 2009, entitled A Framework
for Revitalizing American Manufacturing. And a lot of the
things that you have mentioned are already in this report. So I
think like others I am a little concerned that by passing this
bill, we will duplicate what has already been done and we are
going to create a brand new commission, like entities. Of
course, that means all new government employees and all that
goes with it when we actually have a report here that is
outlining what should be done to the President, and, frankly,
Mr. Chairman, I think the President has the power and
responsibility to call up any manufacturing CEO in this country
and ask them what should be done. He could canvas them every 6
months, every 3 months, whenever he wants, and, lo and behold,
he could find out all this information without passing H.R.
4692.
The other thing I have concern about is people talk about
the loss of manufacturing jobs, and I think that is true, but I
think one of the reasons is because the corporate tax rate is
too high in the United States. I got a graph here in 1981 the
United States was over 40 percent corporate tax and most of the
OECD countries were at 45 percent. Do you know what it is
today? The United States is at 35 percent and the OECD
countries on average are less than 25 percent. So right there
is something that immediately, Mr. Chairman, do we lower the
tax rate for corporations? That would be a big incentive for
corporations to continue manufacturing.
Also, I think, as mentioned, signing free and fair trade
agreements to open up new markets is a good idea for American
products, obviously, providing regulatory relief and creating
investment tax credit for new manufacturing investment. I bet
you if we went to the Manufacturing Association and asked them
which approach they would rather have is the corporate tax
relief, investment tax credits, free markets, I think they
would all approve of that perhaps better than setting up new
commissions and new entities and new government employees. So I
think we should caution ourselves as we move forward but I
certainly welcome the panel and am interested in their
comments. Thank you, Mr. Chairman.
Mr. Rush. Mr. Braley is recognized for 2 minutes.
OPENING STATEMENT OF HON. BRUCE L. BRALEY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF IOWA
Mr. Braley. Thank you, Mr. Chairman, and thank everyone for
the time and attention they give to this very important topic.
It is true that the President has talked about a National
Manufacturing Strategy but it is incumbent upon us to take the
underlying cause of why we have slipped so far in our country's
strong history of manufacturing as a model for what we need to
do to right the ship and go forward. My friend from Nebraska
made the comment that there is less government intrusion in
China than in the United States. Many of the Chinese
manufacturers are, in fact, arms of the Chinese government so I
fail to see how that is relevant to the conversation we are
having here.
The reality is that in states like Iowa, which has a long
history of being a part of the Midwestern Rust Belt, we have
seen some of our most reliable employers like Maytag, Amana,
and companies like John Deere, Caterpillar, other companies
that have been a part of the fabric of our state for over a
century start to ship jobs overseas because of the failure of
this country to have a coherent National Manufacturing
Strategy. That is why this bill is important. That is why this
hearing is important. And I look forward to hearing the
testimony of our witnesses as we move forward. Thank you, Mr.
Chairman.
Mr. Rush. Mr. Murphy is recognized for 2 minutes.
OPENING STATEMENT OF HON. TIM MURPHY, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA
Mr. Murphy. Thank you, Mr. Chairman. For more than 100
years the U.S. has ranked number one in the world of
manufacturing output. Next year for the first time since we
overtook at the turn of the 20th century, the U.S. is going to
give up that title to China, which displaced more than 2.3
million U.S. manufacturing jobs in the last decade often
selling defective products like toxic drywall and poisonous
pacifiers, which we have had hearings on before. While
unemployment has remained above 9-1/2 to 10 percent in this
country, we have passed bills that have been by all accounts
measure to actually lose jobs in America, cap and trade, health
care, and others. And although we certainly want to see jobs
come out as in the green energy issue such as wind and solar
and also insulating buildings, I would much rather see us also
employing thousands of workers to build clean coal power
plants, nuclear power plants, and rebuilding America's energy
infrastructure which is hopelessly outdated.
Our country does need a comprehensive manufacturing
strategy, and, quite frankly, I would like to see our committee
playing a key role in this rather than necessarily
relinquishing it to someone else. Part of that is to make sure
that we are pushing to hold China and other countries
accountable for unfair and illegal trade practices like the
Currency Reform Act that Congressman Tim Ryan and I have put
forth ensuring American dollars intended to create American
jobs are invested in American steel and American equipment,
provide American manufacturers with tax relief, tax credits,
loan guarantees, job training, and other financial incentives
all to create American jobs, not create federal agencies and
there is more intrusiveness.
One of the questions I want this panel to be prepared with,
I want to know how many of you have signed the front of a
paycheck, how many of you have created manufacturing jobs, and
if we create some other panel in the federal government, I want
those people who have actually done this for a living, not
people who talked about it, read about it, or stayed at a
Holiday Inn last night. Thank you.
Mr. Rush. The chair recognizes the Chairman Emeritus of the
full committee, my friend from Michigan, Mr. Dingell, for 5
minutes.
OPENING STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
Mr. Dingell. Mr. Chairman, thank you, and I commend you for
holding a hearing on H.R. 4692, the National Manufacturing
Strategy Act of 2010, of which I am an original co-sponsor with
my good friend from Illinois, Mr. Lipinski, who is the
principal author. I commend him and I thank him. I would also
like to extend a warm welcome to all of our witnesses today. I
very much regret that Ron Bloom, who played a key and greatly
appreciated role in diverting the disaster in the domestic
automobile industry, cannot be with us today to express his
views on the bill. I strongly disagree with the views of those
who consider manufacturing an anathema to advance economies.
Rather, it is an essential component of these economies. Right
to the contrary. Several of our most prominent trading partners
employ national strategies to support domestic, economic growth
in manufacturing. China and Germany, most notably, use these
strategies to aid their continued global leadership in,
manufactured goods.
Indeed, as is particularly the case with Germany, these
manufacturing exports need not be low value added but are
rather technologically advanced goods of consistently high
quality produced by very skilled workers. For example, as the
global demand for clean energy technology continues to grow the
strategy mandated under H.R. 4692 would help the United States
develop and maintain a competitive position in this very
important market which is so essential to our continued world
leadership and economic strength. In brief, I view this
legislation as part and parcel of the federal government's
ongoing effort to create much-needed jobs and to adapt the
country's economy to the future. I am quite gratified to see
that H.R. 4692 rightly directs that the manufacturing strategy
mandates include an examination of the detrimental effect of
unfair trade practices on domestic manufacturing, a very much-
needed activity by the federal government.
I firmly believe that the federal government must do all it
can to ensure that our trading partners play by the rules in
order to foster sustainable employment growth here as a part of
a shared advantage to all countries from this kind of practice.
I note this bill comes at a time when my home state of Michigan
continues to endure record unemployment levels largely due to
the hemorrhaging of manufacturing jobs caused by a decade of
unfair trade practices and policies. I believe H.R. 4692 will
serve in good part to right past failed policies, and as such I
passionately support its expedited consideration and adoption.
I look forward to a frank discussion with our witnesses today
about their views on H.R. 4692. I thank you for your courtesy,
Mr. Chairman, and I yield back the balance of my time.
Mr. Rush. The chair recognizes the gentleman from
Louisiana, Mr. Scalise, for 2 minutes.
OPENING STATEMENT OF HON. STEVE SCALISE, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF LOUISIANA
Mr. Scalise. Thank you, Mr. Chairman. I am pleased that our
subcommittee is examining the manufacturing industry and the
need for a National Manufacturing Strategy. I applaud my
colleagues for bringing attention to this issue. As all my
colleagues know, manufacturing is a major economic driver of
our state's economies. In Louisiana alone, manufacturing
employs over 140,000 people and accounts for over $40 billion
in economic output. I would also like to point out that the
chemical and petroleum industries are tops among the
manufacturing sectors in my state although I question whether
these industries will continue to lead the manufacturing sector
in Louisiana, given the reckless policies being pursued by this
Administration such as the cap and trade energy tax and the
moratorium on energy exploration in the Gulf of Mexico.
The United States must continue to lead the world on
manufacturing. Congress must enact policies that ensure we do.
The legislation before us today seeks to do. The legislation
before us today seeks to undertake a broad analysis of the
manufacturing sector and develop a National Manufacturing
Strategy. I support the intent of this bill. We should look at
strategies to help promote the manufacturing industry so we can
determine what policies will help manufacturers compete in the
global marketplace. But the industry does not need another
study. It needs sound policies. If a manufacturing strategy is
the goal all we have to do is look to the National Association
of Manufacturers, the voice of manufacturing in the U.S., the
very association that advocates for manufacturers, and they
have developed a strategy, the manufacturing strategy for jobs
in a competitive America.
It is a comprehensive approach for making manufacturing in
the United States more competitive and productive. And what
does the national voice of manufacturing say should be our
strategy? It calls for lower taxes, less government regulation,
and free access to foreign markets. It calls for effective
policies that spur innovation, promote job growth and provide
immediate results. Unfortunately, we have been getting the
opposite from this Administration who has given us higher
taxes, out of control government spending, and reckless
policies like the President's moratorium on domestic energy
production that is costing us thousands of jobs and reducing
America's energy independence. It is no wonder that this
reckless agenda has cost our Nation millions of jobs at a time
when we should be sharply focused on creating jobs. I look
forward to hearing from our panelists today on the merits of
H.R. 4692, and on manufacturing strategies that have already
been proposed. Thank you, and I yield back.
Mr. Rush. The chair recognizes the vice chair of the
subcommittee, the gentlelady from Illinois, Ms. Schakowsky, for
2 minutes.
OPENING STATEMENT OF HON. JANICE D. SCHAKOWSKY, A
REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS
Ms. Schakowsky. Thank you, Mr. Chairman. I am really
excited that we are having this hearing today. I think it is
probably one of the most important questions that we can deal
with in our country. The manufacturing sector has taken an
enormous hit in recent years, over 10 years from 1999 to 2009
nearly 6 million manufacturing jobs, more than a third of the
entire sector, were lost. There have been many factors which I
am sure a lot of people have talked about including tax
incentives for companies that move jobs overseas. The House has
passed a number of bills to rein in those tax advantages, but I
think more should be done. Under the bill before us, every 4
years the President would have to issue a manufacturing
strategy that considers federal policies including tax policy
and how they promote or harm domestic manufacturing.
I think a critical component is the promotion of domestic
manufacturing, and I will continue to advocate for rewards for
businesses that create a real partnership with American
workers, engage in good corporate practices, and improve our
standing in the global marketplace. I have introduced a bill
called the Patriot Corporations of America Act, which would
reward companies that are good corporate actors by moving them
to the front of the line for government contracts and giving
them a 5 percent reduction in their taxable income. To qualify,
those businesses would have to produce at least 90 percent of
their goods and services in the United States and spend at
least 50 percent of their research and development budgets in
the United States.
There is no good reason that the trend of job loss in the
manufacturing sector can't be reversed. There is great
potential in our American companies. In Illinois, academic
researchers in private labs are doing amazing things with nano
technology while smart thoughtful individuals are transforming
educational systems to educate our children in ways that will
prepare them for advance manufacturing careers. I am optimistic
about the future of manufacturing in America, and I hope this
hearing will help us better understand what our next steps
should be. I thank you again, Chairman, and I yield back the
balance of my time.
Mr. Rush. The chair recognizes now the author of the
legislation that we are considering, the gentlemen from
Illinois, Mr. Lipinski, for 2 minutes for the purpose of
opening statement.
OPENING STATEMENT OF DANIEL LIPINSKI, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ILLINOIS
Mr. Lipinski. Thank you, Mr. Chairman. I would like to
request unanimous consent that my written statement be put in
the record.
Mr. Rush. Hearing no objection, so ordered.
Mr. Lipinski. I would like to thank my good friend,
Chairman Rush, as well as Ranking Member Whitfield and the
subcommittee for scheduling today's hearing. The Strategy Act
has over 50 bipartisan co-sponsors in the House in support of a
wide-ranging organization. At this time, I would like to
request unanimous consent to enter into the record letters of
support for this bill from some of these organizations.
Mr. Rush. Hearing no objection, so ordered.
[The information appears at the conclusion of the hearing.]
Mr. Lipinski. I would also like to request unanimous
consent for the record to remain open for 3 days to allow other
pending letters of support to be entered.
Mr. Rush. Hearing no objection, so ordered.
Mr. Lipinski. Thank you, Mr. Chairman. I look forward to
hearing testimony from our witnesses. I would especially like
to welcome Bill Hickey, President of Lapham-Hickey Steel, a
family-owned steel manufacturer located in my district. Almost
1/3 of domestic manufacturing jobs have disappeared in the past
decade and manufacturing share of GDP is roughly half of what
it was in 1980. It is clear that allowing this trend to
continue will further undermine the American economy and the
middle class and also undermine our defense capability leaving
us strategically vulnerable. To help avoid this, I introduced
the Strategy Act. Although we currently have numerous federal
programs and policies designed to support American
manufacturing, they are generally disjointed, ad hoc, and
reactive diminishing their impact. The goal of the strategy is
to harmonize manufacturing policy and make a more unified,
coherent, forward looking and result oriented.
It is important to point out that this is not an industrial
policy or command market approach. Instead, it is a way to
coordinate policy to better support American entrepreneurship
and job creation. This bill was developed over many months with
input and feedback from large and small businesses, academic
trade associations and labor groups. I look forward to hearing
from the witnesses and working with the members of the
committee and others to examine ways we can improve upon this
bill. I have heard some recommendations for changes we may make
to this bill and I am looking forward to working with members
of the committee and others, as I said, and incorporate some of
these changes and make this a better bill because that in the
end is a goal to make manufacturing stronger in America because
it is certainly something we need for our economy and for our
national defense. I yield back.
[The prepared statement of Mr. Lipinski follows:]
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Mr. Rush. It is now my privilege to officially welcome the
witnesses who have sacrificed their enormous and important time
to be with us this afternoon for the purposes of this hearing.
On my left, the Honorable Aneesh Chopra. He is the Associate
Director for Technology and he is the Chief Technology Officer
for the Office of Science and Technology Policy. Seated next to
him is Mr. Scott N. Paul. He is the Executive Director of the
Alliance for American Manufacturing. Seated next to Mr. Paul is
Mr. Mark A. Gordon, who is the Director, Defense Research
Programs for the National Center for Advanced Technologies. And
seated next to Mr. Gordon is Mr. William M. Hickey, Jr.,
President and CEO of Lapham-Hickey Steel Corporation, and an
outstanding citizen of the State of Illinois, I might add. And
next to Mr. Hickey is Mr. Owen E. Herrnstadt. He is the
Director of Trade and Globalization for the International
Association of Machinists and Aerospace Workers. And seated
next to Mr. Herrnstadt is Mr. Kevin A. Hassett. He is the
Senior Fellow and Director of Economic Policy Studies for the
American Enterprise Institute. I want to welcome each and every
one of you here and welcome all to this subcommittee. It is the
practice of this subcommittee to swear in witnesses. So I will
ask that you please stand and raise your right hand.
[Witnesses sworn.]
Mr. Rush. Please let the record reflect that the witnesses
have all answered in the affirmative. And now I want to
recognize the witnesses for their opening statement to be
followed by questions from the subcommittee. Mr. Chopra, we
will begin with you, and you have 5 minutes for your opening
statement.
TESTIMONY OF ANEESH CHOPRA, ASSOCIATE DIRECTOR FOR TECHNOLOGY &
CHIEF TECHNOLOGY OFFICER, OFFICE OF SCIENCE AND TECHNOLOGY
POLICY; SCOTT N. PAUL, EXECUTIVE DIRECTOR, ALLIANCE FOR
AMERICAN MANUFACTURING; MARK A. GORDON, DIRECTOR, DEFENSE
RESEARCH PROGRAMS, NATIONAL CENTER FOR ADVANCED TECHNOLOGIES;
WILLIAM M. HICKEY, JR., PRESIDENT/CEO, LAPHAM-HICKEY STEEL
CORP.; OWEN E. HERRNSTADT, DIRECTOR OF TRADE AND GLOBALIZATION,
INTERNATIONAL ASSOCIATION OF MACHINISTS & AEROSPACE WORKERS;
AND KEVIN A. HASSETT, SENIOR FELLOW AND DIRECTOR OF ECONOMIC
POLICY STUDIES, THE AMERICAN ENTERPRISE INSTITUTE
TESTIMONY OF ANEESH CHOPRA
Mr. Chopra. Thank you, Mr. Chairman, and Ranking Member
Whitfield and other members of the subcommittee. It is indeed
my distinct pleasure to be with you today to discuss the Obama
Administration's strategy for revitalizing American
Manufacturing with particular focus on advanced manufacturing.
With your permission, I have submitted a more formal statement
for the record but I would like to share a few remarks in
advance of your questions. This is background. My mission and
my responsibility in the Administration is to harness the power
and potential of technology, data, and innovation to transform
the Nation's economy and to improve the lives of every day
Americans. Now building on the President's strategy for
American innovation which was released last September and its
framework for revitalizing American manufacturing, which was
released in December, I would like to summarize my remarks on
how we are investing in the creation of new technologies and
business practices with emphasis on three key areas.
Number one, manufacturing research and development. The
Administration is committed to doubling the basic research
budgets of 3 key science agencies, the National Institutes of
Standards and Technology, the National Science Foundation, and
the Office of Basic Science within the Department of Energy. In
my capacity as the co-chair of the National Science and
Technology Committee on Technology, I am particularly focused
on improving coordination across our agencies with a goal of
establishing U.S. leadership in advanced manufacturing
technologies. For example, the Defense Advance Research
Projects Agency, DARPA, is currently investing approximately
$200 million a year or roughly $1 billion over the next 5 years
to synthesize and integrate high value manufacturing efforts.
The goal is to shorten by five-fold the delivery time from
concept to first production unit for complex electro mechanical
defense systems by development of system designs, tooling,
materials, and democratized design that enables the advantages
of large scale manufacturing in quantities of one.
Second, I would like to highlight computational modeling
and simulation. One technological capability that we believe
holds great promise for enhancing manufacturing competitiveness
is computational modeling and simulation. These tools impact
several key elements of manufacturing competitiveness, quality,
cost, flexibility, and time to market. Yet, they are not
exploited by small and medium size manufacturing organizations
who constitute over 90 percent of the U.S. manufacturing
enterprises and contribute nearly half of the value added jobs.
They lack access to this fundamental innovation.
As the co-chair of the National Science and Technology
Council's Committee on Technology, I stood up a fast track
inner agency subcommittee to identify gaps and challenges in
computational modeling and simulation and to make
recommendations within 90 days. The committee's report was
posted on line for public input on June 24. I obviously welcome
your feedback. By the way, for those interested, the web site
is opennstc.ideascale.com. Input we have received thus far
suggests among other instruments that establishing regional
innovation centers that focus on bringing small and medium-
sized enterprises into the digital manufacturing age through
collaboration efforts or through their supply chains and
software vendors is an immediate and near term opportunity.
Third, I would like to highlight one particular sector that I
believe holds great promise for the manufacturing economy in
the United States, and that is to highlight catalyzing
breakthroughs in the Nation's smart grid.
This particular area, we believe, is poised for growth. By
the way, a topic that happened to have occupied my morning at a
hearing we held at the Brookings Institution a full day seminar
on how we might take full advantage of the economic
opportunities both in terms of manufacturing as well as the
efficiencies that will be gained by the American people as we
modernize the Nation's electrical grid. As you may recall, the
Recovery Act did include $4.5 billion of investment. In a
sense, that investment will help to expand our manufacturing
base of companies that can produce the smart meters, the smart
appliances, the smart transformers, and other components for
smart grid systems that service both the United States and we
believe could be potential for export around the world
representing a significant and growing export opportunity for
our country and new jobs for the American people.
In conclusion, we do believe that the United States still
remains a land of tremendous opportunity and has a wonderful
future. We retain that honor because of America's scientists,
engineers, entrepreneurs and public officials understood the
importance of applying the power of American curiosity and
ingenuity to the biggest economic and societal challenges. I
certainly would welcome any questions the committee may have.
Thank you.
[The prepared statement of Mr. Chopra follows:]
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Mr. Rush. Mr. Paul, you are recognized for 5 minutes.
TESTIMONY OF SCOTT N. PAUL
Mr. Paul. Thank you very much, Mr. Chairman. I want to
thank you, Mr. Whitfield, members of the subcommittee, and Mr.
Lipinski for inviting us here today to testify. We want to
comment Representative Lipinski for his authorship of the
National Manufacturing Strategy Act, and assuming that you can
agree on some improvements, we urge you to pass it into law.
There is no question that America needs a manufacturing
strategy to revitalize this sector as there is simply no
department of manufacturing, and I am not arguing that there
should be, but it makes perfect sense to harness the best minds
as well as to coordinate among the appropriate agencies to
focus on a government wide strategy to advance manufacturing in
both employment and output terms. Like most issues that come
before you every day, there is no simple solution to strengthen
the manufacturing sector but passage of this legislation would
compliment ongoing and anticipated efforts that I will detail
later in my testimony.
Now the idea of a manufacturing strategy is hardly a
radical concept. Alexander Hamilton constructed America's first
manufacturing strategy in 1791. Setbacks during the War of 1812
due to a lack of domestic capacity to build naval vessels and
military equipment cemented the determination of the federal
government to grow manufacturing, a policy that continued until
the end of World War II. Globalization and economic approaches
such as a strong dollar policy favoring domestic consumption
have helped to steadily erode manufacturing as a percentage of
gross domestic product, private sector employment and by other
key measures.
The idea of a manufacturing strategy is also not a partisan
one. President Reagan, spurred on by Democratic congress,
adopted a flurry of measures to counter a grossly imbalanced
trade relationship with Europe and Japan in the 1980's. The
Plaza Accords, which raised the value of currencies in Japan
and Europe relative to the dollar in a managed way, had a
positive effect on lowering our trade deficit. Key government
investments in the semiconductor industry and other
technologies spurred their development and commercialization.
President Reagan signed into law enhanced Buy America
requirements for certain infrastructure projects to boost
domestic employment. His administration implemented the Market
Oriented Sector Specific, or MOSS talks, with Japan that
focused on market access with measurable results.
Most recently, and has been mentioned by several members
here, the Obama Administration released its framework for
revitalizing American manufacturing. The document recognizes
the importance of manufacturing to America's economic future
and talks about a number of important issues, including access
to credit, skills and training, creating new markets for
manufacturing, and improving the efficiency of the industry.
But it is not a substitute for a strategic plan and for
harnessing the best minds within the federal government to
focus on this issue day after day. You have pointed out in
excellent briefing materials the significance of manufacturing,
and I am not going to repeat those statistics and the crisis
that it faces, but I do want to mention and add a few new
thoughts to this.
The crisis we have seen in manufacturing has really been
turbo charged over the last decade, and I attribute it to 2
fundamental things. First is the emergence of China as a key
competitor and the way that we approach that by passing PNTR in
2000, and, second, and most acutely, is the collapse of the
auto and housing markets that we have seen recently. We have
seen problems with manufacturing in the Bush administration.
While the U.S. economy expanded 17 percent from 2002 to 2007,
manufacturing expanded only by 5 percent. We have also seen
50,000 manufacturing facilities close down over the last
decade, which is an extraordinary rate, and according to
Richard McCormick, who is the editor of Manufacturing News,
there are only a thousand facilities in the United States that
employed more than a thousand people now. Consider that in our
manufacturing history.
The trade deficit in manufactured goods has quadrupled
since 1997, and we already have significant and growing trade
deficits in both high technology and green technology products.
Now there are a lot of issues on which we could focus, and we
submitted a letter today that I am happy to submit to the
record to the Speaker of the House detailing a number of steps
that we think would be advantageous to supporting manufacturing
that would compliment some of the ideas that had been suggested
by the National Association for Manufacturing. I also would
submit to you that we issued a book and gave it to every member
of Congress last July called Manufacturing, a Better Future for
America, which was written by a number of key industry experts,
including a former Reagan administration official with more
than 300 pages of suggestions on how to improve the
manufacturing sector. I commend that to your attention as well.
I want to close by saying that this is an issue, if for no
other reason, for not economic reason or policy reason, is
simply a matter of what your constituents want. We commissioned
a poll, which was conducted recently, on a bipartisan basis by
Mark Mellman and Whit Ayres. It found overwhelming support for
the idea of a National Manufacturing Strategy. Seventy-eight
percent of the American people supported it, want to help
manufacturing. The support is broad and deep. It is Tea Party
members. It is union households. It is in the south. It is the
Midwest. So we commend that to your attention as well. We thank
you for having the hearing today.
[The prepared statement of Mr. Paul follows:]
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Mr. Rush. The chair recognizes Mr. Gordon for 5 minutes.
TESTIMONY OF MARK A GORDON
Mr. Gordon. Good afternoon. Chairman Rush, and members of
the committee, I am Mark Gordon, Director of Defense Programs
at National Center for Advanced Technologies, and a member of
the Executive Committee of the Manufacturing Division at the
National Defense Industrial Association. On behalf of our 1,700
corporate members, including 83,000 individual members, I am
pleased to appear before the House Subcommittee on Commerce,
Trade, and Consumer Protection to emphasize the importance of
manufacturing and to support H.R. 4692 in calling for a
National Manufacturing Strategy. Based upon your request to
discuss topics of import in consideration of the Bill, I would
like to address three questions, is manufacturing important to
our country, do we need a National Manufacturing Strategy at
all, and are there modifications to the bill which may
strengthen the process and the resultant strategy.
First, we have already heard a lot of numbers about the
importance of manufacturing. I won't add to those, but I will
say that one of the critical elements about manufacturing is
that it creates wealth within the U.S. by producing something
of value from common components or materials. This is
critically important in comparison to wealth transfer or other
service sectors. The jobs produced by the manufacturing
activities are generally high paying and represent an entree
into the middle class for a number, a large portion, of the
workforce. Also, manufacturing multiplies each dollar spent in
that sector into an additional $1.37 in economic activity,
higher than any other sector.
In terms of national security, we depend heavily upon our
domestic manufacturing capabilities. The Defense Department
relies upon domestic manufacturing to equip our war fighters,
and our national security is supported by economic strength and
viability. So, obviously, we need active support from Congress
to support manufacturing. Do we need a manufacturing strategy?
Absolutely. There are many groups from government, for
industry, and academia which are chartered to further domestic
manufacturing agenda. They are not sufficient or strategic
enough to deliver the goals of H.R. 4692, a national strategy
for manufacturing in the U.S. Government bodies continue to
work on policy technology and other concerns but there are the
implementation path of a strategy and not setting that
strategy. Industry groups like NGIA and a host of others
propose investment changes, policies, incentives, and a level
playing field which are vital issues but they do not represent
that comprehensive strategy, and academia pursues activities
that furthers the body of knowledge in manufacturing but does
not have that strategic division.
We need to have these existing groups work together, and I
believe that that over arching strategy from this bill will fit
that need. A Quadrennial Manufacturing Strategy, as proposed by
4692, would also provide a stable, well-planned national vision
for aligning public-private academia investment opportunities
at the highest level. And we have heard about the dangers of
uncertainty. I believe that private industry responds to
certainty and stability with investment, and so the existence
of a strategy could lower a greater corporate investment
domestically. There are also structural problems that are
talked about in papers by George Tassey, a senior economist at
the National Institute of Standards and Technology, that talks
about the flaws in classic neoclassical economic theory to the
high tech industry where the Law of Comparable Advantage and
reactions to that law do not hold up in terms of the data that
we are seeing in our last three recessions.
In addition, in a March, 2010 letter to Secretary Locke,
the Department of Commerce's Manufacturing Council also
addressed this structural change in our economy which has led
to a high degree of uncertainty and will require a
comprehensive set of solutions to resolve. Finally, I note that
the President has recently set an ambitious goal of increasing
the exports of the U.S. by three times. Considering this goal,
especially in the context of manufacturing being the largest
export sector, it is quite obviously that a manufacturing
strategy would be a major enabler of this effort. Modifications
to the bill would strengthen the process and the strategy, I
believe. While the overall content and the intention of the
bill is excellent, there are some changes during the markup of
4692 that can strengthen the purpose, process, and eventual
strategy.
First and foremost, its relationship between the President,
the task force, and advisory bodies. I would propose that the
Manufacturing Strategy Task Force make recommendations to the
President of a draft strategy instead of simply recommendations
based upon analysis. Additionally, I would further suggest that
the listing of Subsections 1 to 23 of analysis in Section 3b be
changed to allow the President and the task force the latitude
to define and prioritize the scope of that analysis without
requiring duplicate and detailed analysis of all 23 areas. And,
finally, the modification that may be necessary is a schedule
taking into account the initial stand up period of the
President' cabinet and advisors. NDIA and its members strongly
endorse H.R. 4692 requiring the President to conduct a
Quadrennial Manufacturing Strategy. I look forward to your
questions.
[The prepared statement of Mr. Gordon follows:]
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Mr. Rush. The chair now recognizes Mr. Hickey for 5 minutes
for purposes of an opening statement.
TESTIMONY OF WILLIAM M. HICKEY, JR.
Mr. Hickey. Thank you, Congressman. Thank you for the kind
words before. I want to thank Mr. Whitfield for his comments
about manufacturing. I am Bill Hickey, President of Lapham-
Hickey Steel Corporation of Chicago. Lapham-Hickey Steel is a
family owned and managed steel service center founded in
Chicago in 1926. Today we have several locations in the States
of Illinois, Wisconsin, Ohio, Minnesota, Connecticut, and
Alabama. We currently employ about 550 people. The steel
service center industry is at the heart of the manufacturing
economy of the United States. We, as an industry and a company,
purchase large quantities of steel products from producing
mills and either distribute those products in smaller
quantities or process that steel through specialized machinery
to allow our customers lower cost in the manufacturing of their
products.
Our company processes steel and sells that processed
product to customers across North America. We have thousands of
customers in transportation, construction, metal fabrication,
HVAC, machine tool, power generation, wind energy, just to name
a few of the industries in which our customers produce
manufactured products. We are also in a very strategic position
as a company to view the full spectrum of the manufacturing
economy in the United States. I say this since our major
suppliers are the steel companies that manufacture steel in the
United States and the vast majority of our customers are
consuming the products we sell to them in the United States.
Now that I have given you some background on my 35 years of
working in the U.S. economy and what economic function the firm
I lead performs, I have to tell the subcommittee that I believe
we, as a country, have to grow, mine, and manufacture for our
economy to create the wealth needed by our citizens and our
government. We, as a country, have experienced much economic
and social pain in the last several years. I believe this
economic pain was caused by the massive imbalances that have
occurred in our economy. Part of these economic imbalances have
been the large scale destruction of the manufacturing economy
in the United States in the past 10 years. Here are some of the
facts which we have already mentioned, but these are the facts
that I live--these are our customers that have been devastated
over the last 19 years. The U.S. manufacturing workforce has
declined from 17,250,000 in 2000 to 11,549,000 in 2010. This is
a reduction of 1/3 of the manufacturing employment in 10 years.
What happened? Why do we have this huge drop in jobs in just 10
years?
During the same period the United States had 42,400
factories that closed. This included 36 percent of all the
factories that employed more than 1,000 workers. And I can tell
you when these large factories close the communities where they
are located are devastated. Why are we losing these factories?
I have seen these factories close in Ohio, Indiana,
Pennsylvania, Michigan, Minnesota, Illinois, across the
Midwest. The case for H.R. 4692. These two facts about plant
closings and having 1/3 of manufacturing jobs or almost 6
million disappear in just 10 years, in my judgment, is
justification to enact H.R. 4692. How do we create sustainable
economic growth and increase employment? This is the first
point in the policies that this Congress should promote and
will be required once this Act is passed into law.
A focus of this Act that I believe is needed today is the
Manufacturing Strategy Task Force. I am a member of the
Department of Commerce Industry Trade Advisory Committee-12.
This committee advises the Department of Commerce and the USTR
on trade policy. Even with this insight, I find it very
difficult at times to understand what our Nation's strategy is
on manufacturing. I actually think the strategy today is policy
of reacting to a crisis instead of planning for the future. A
recent example of this lack of focus on national economic goals
was the Import-Export Bank refusing to finance mining equipment
for Bucyrus International, a Wisconsin based company, for
reasons that seem to be the whim of the appointed official. If
we had a National Manufacturing Strategy in place in the last
10 years, would we have lost or greatly diminished our
manufacturing capacity in television, auto parts, bicycles,
cell phones, furniture, toys, computers, textiles, and a large
cross section of industries that I won't have time to go into
to talk about.
I keep wondering if the theory about outsourcing our
manufacturing and having our economy become based on financial
services has finally shown the imbalances that were created.
With the National Manufacturing Strategy, we, as a country,
will now have the opportunity to have a real debate on how we
help Main Street provide jobs to our citizens versus having
Wall Street bailed out by our taxpayers. I want to thank
Congressman Dan Lipinski for his leadership. This National
Manufacturing Strategy Act is put a small sample of the
commitment Congressman Lipinski has to the Third District of
Illinois and the American people. Thank you, Congressman.
[The prepared statement of Mr. Hickey follows:]
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Mr. Rush. The chair now recognizes Mr. Herrnstadt for 5
minutes.
TESTIMONY OF OWEN E. HERRNSTADT
Mr. Herrnstadt. Thank you, Mr. Chair, and members of the
committee for the invitation to be here today, and thank you,
Congressman Lipinski, for introducing the bill which is the
subject of today's hearing. IAM members, that is, the
International Association of Machinists & Aerospace Workers
members, work in a variety of manufacturing industries,
including aerospace, electronics, defense, shipbuilding,
transportation, and woodworking. We believe that a strong,
domestic industrial base is one of the essential elements
needed to restore our economy and build a prosperous and
sustainable future. As has already been said, U.S.
manufacturing serves as the bedrock for our Nation's economy.
That said, it is no secret that U.S. workers and their
communities are in a crisis. Over 8-1/2 million jobs have been
lost since December, 2007, and the unemployment rate remains
exceedingly high. Despite the importance of manufacturing to
our Nation's economy and our defense capacity millions of U.S.
manufacturing workers have lost their jobs contributing to our
high unemployment. As has also been said and has been pointed
out in the fact sheet provided by the committee nearly 6
million manufacturing jobs have been lost since 1999.
Some industries that were once great contributors to our
economy like auto, shipbuilding, and machine tools are barely
shadows of what they once were. Jobs in other leading edge
industries like aerospace are being outsourced to other
countries. Renewable energy products that are considered to
represent the future of manufacturing here at home also are to
a great extent being manufactured abroad. While there are many
reasons for the decline in manufacturing one of the fundamental
reasons is that the U.S. does not have a National Manufacturing
Strategy and has not established a framework for creating one.
A National Manufacturing Strategy could establish general and
specific programs for coordinating policies as well, policies
related to tax incentives that reward corporations to move jobs
overseas, research and development, trade, employment, currency
evaluation, export initiatives, domestic procurement, and many,
many others.
Other countries have embraced manufacturing strategies as
has also been discussed. A few years ago the European
commission presented its new industrial policy noting ``A
flourishing manufacturing industry is key to fully exploiting
the European Union's potential for growth and sustaining its
economic and technological leadership.'' Separately, over 20
European countries have adopted sophisticated offset policies.
Offsets occur when one country demands a transfer of technology
and/or production in return for a sale. Countries like Germany
have sophisticated manufacturing policies that have helped the
country weather the current economic crisis and, oh, yes, there
is China who has also engaged in very comprehensive strategic
and targeted industrial and manufacturing policies which are
credited with that country's economic growth far too often at
the expense of our own manufacturing industry and far too often
at the expense of our U.S. workers.
We simply can't be complacent with the hope that
manufacturing is cyclical and will recover with the passage of
time. The changes we are witnessing in H.R. 4692, the National
Manufacturing Strategy Act of 2010, requires the President to
prepare a Quadrennial National Manufacturing Strategy, and it
certainly represents a much-needed and key step forward in
developing a response to the current economic crisis and the
current state of manufacturing today. We have submitted, of
course, some recommendations to strengthen that bill, and we
have also submitted recommendations that constitute more steps
to be taken. These steps must be urgently taken given the
crisis that manufacturing workers are certainly facing today as
particularly have been pointed out by my colleague on this
panel, Mr. Hickey. In addition to that, we also recommend very
simple fixes such as requiring Congress and the Administration
to adopt simple common sense policies that link certain
government activities immediately to their effect or impact on
U.S. employment making sure that domestic sourcing requirements
are closely examined to make certain that they do indeed result
in the most number of domestic jobs being created and supported
as possible.
Manufacturing workers are in a crisis. They have witnessed
millions of their jobs disappear over the past few years. Their
pain is real. As their desperation increases and their hopes
fade, it is critical that we develop a comprehensive National
Manufacturing Strategy that will in reality make a difference
in their lives and in doing so ensure a vibrant and sustainable
economy. Thank you for the opportunity to share our views with
you today, and I look forward to your questions.
[The prepared statement of Mr. Herrnstadt follows:]
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Mr. Rush. Mr. Hassett is recognized for 5 minutes.
TESTIMONY OF KEVIN A. HASSETT
Mr. Hassett. Thank you, Chairman Rush, and Ranking Member
Whitfield. In my view the economic science supporting this Act
is essentially nonexistent. Accordingly, passing it into law
would be a policy error. Whether the policy error is major or
minor would depend on whether the Strategy Task Force and
Strategy Board are, like most such entities in Washington,
irrelevant. If they are not, then the Act could significantly
harm the business environment in the United States. In the
front of my testimony, I talk about the decline in
manufacturing and wonder whether it isn't parallel to a decline
in agriculture that we have seen that stretches even further
back and is just a natural tendency for the economies to
experience as they mature. Now I don't know what the right
share of GDP for manufacturing is, and I would submit that the
members of the committee don't either, and so pursuing a
strategy that focuses specifically on manufacturing as opposed
to trying to make the overall economy healthy would seem to me
to be in error.
Ever since the seminal work of Diamond and Mirrlees in
1971, economists have known that optimal economic policy should
not tax intermediate goods or distort productive efficiency.
This means that the allocation of capital that emerges in
response to market forces should not be disrupted by special
treatment for some inputs but not others. The Diamond and
Mirrlees result indicates that an optimal policy will not favor
production in one area at the expense of another. The Act we
are discussing today appears to insist that manufacturing
receive special treatment that advantages manufacturing
relative to everything else. Such a focus of policy is not
defensible on economic grounds. If business activity is viewed
by Congress to be disappointingly low, and with today's retail
sales information I think it is even worse than we thought,
then it is wholly inappropriate to consider measures that would
stimulate it across the board.
But when politicians pick winners and losers, they
interfere in the natural economic process and inevitably cause
harm. In my many years in Washington, I have acquired the
opinion that we tend to appoint task forces and commissions
when we know what the right thing to do is but are unwilling to
do it. Commissions and task forces make for nice speechifying
but almost always have a negative policy impact because they
allow elected officials to appear to be addressing key problems
without actually doing anything. Business activity in our
Nation is indisputably disappointing at the present time. It is
urgent that policy changes be enacted before it is too late,
but we do not need a commission or task force to study the
issue. We know why the business climate in the United States is
so terrible.
The biggest problem is our corporate tax system. Figure 3
in my testimony plots the U.S. corporate tax rate from 1981 to
2010 and compares it to the average tax rate of our OECD
partners. Currently, the U.S. tax rate is 35 percent and the
average for the OECD is 23.9 percent. I should note that this
chart understates our disadvantage because it excludes state
and local taxation. So if you are wondering why the U.S. is
hemorrhaging business, why people are locating plants overseas,
that corporate tax is a big part of the story. I would remind
the members of the committee that many of these plants that are
being located overseas are heavily capital intensive. It is not
differences only in labor costs that is driving this force.
Now some notes on the specific legislation. On the
abstract, it is impossible to oppose having a strategy or
performing a study. I am concerned about what that strategy
might entail. The development of a strategy and performance of
the task force could well be beneficial, but the bill as
written looks to be an invitation for destructive meddling. In
particular, the biggest cause for concern is the possibility
that the Act be used as an excuse to increase protectionism.
The language of the Act seems to invite anti-trade actions and
to glorify central planning. Many of the catch words used by
protectionists are present in the wording of the bill,
including charges to monitor specific industries that face
``critical'' challenges and the ``identification of emerging or
evolving markets, technologies and products that the Nation's
manufacturers could compete for.'' Those were quotes.
Is the government to pick winners and losers within the
manufacturing sector? While it is clear that at some point a
manufacturing capability has national defense implications,
even this angle is subject to abuse by protectionists. It would
be easy to envision that a strategy to enhance manufacturing in
the U.S. might bear a striking resemblance to the policy sought
by Bastiat's candlemakers, who argued that the government
should pass a law requiring individuals to keep their window
shades down during the day because of unfair competition from
the sun. Such a policy would, of course, increase the demand
for candles, but would it make us better off? The pernicious
government meddling that this Act may invite is perhaps best
illustrated by the emphasis that policies should promote
sustainable growth. As Nobel winning economist Robert Solow has
written, the notion of sustainability is extraordinarily
elusive.
I am now quoting. ``It is very hard to be against
sustainability,'' Solow wrote, ``the less you know about it,
the better it sounds.'' To carry sustainability out literally,
Solow writes, would be to ``make no use of mineral resources;
it would mean to do no permanent construction or semi-permanent
construction; build no roads, build no dams, build no piers.''
While the notion of leaving the world the same way we leave a
campsite, without a trace of our presence, seems romantically
attractive, open quote again from Solow, ``I doubt that I would
feel myself better off if I had found the world exactly as the
Iroquois left it.'' Solow struggles in his piece, and develops
a definition of sustainability that is, to an economist, quite
sensible, but it seems quite far removed from the nebulous
notion that those who invoke the word have in mind. But the key
point I raise is that the Act seems to place a high priority on
creating a strategy for sustainable growth, even though, again
quoting Solow, ``sustainability is an essentially vague
concept, and it would be wrong to think of it as being precise,
or even capable of being made precise. It is therefore probably
not in any clear way an exact guide to policy.''
Now it is hard to conceive of what good would be
accomplished by the elevation of this notion to a place at the
center of U.S. manufacturing policy, but easy to conceive of
bads that might follow.
Mr. Rush. Mr. Hassett, would you bring your----
Mr. Hassett. Yes, I have got one sentence left, sir. The
clock is so far away, I can't quite see it. On balance, the
same can be said for the entire Act. Thank you for your
attention.
[The prepared statement of Mr. Hassett follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Rush. Thank you so very much. A vote now occurs on the
floor so we are going to have to recess until--there are three
votes. It should take us approximately a half an hour. It will
only take a few minutes. Can the witnesses remain until after
we reconvene for a series of questions? Thank you so very much.
The hearing now stands in recess until 10 minutes after the
last vote occurs.
[Recess.]
Mr. Rush. The subcommittee will now reconvene for the
purposes of asking the questions of the witnesses. I must
announce to the committee and to all other who are gathered
here that Mr. Chopra had to leave. He could not remain beyond
the 3:30 hour so he was excused from the witness table, and any
questions that the subcommittee members might want to direct to
him can be forwarded to him via staff in writing. That said,
the chair recognizes himself for 5 minutes for the purpose of
questioning. One of the main objectives of the National
Manufacturing Strategy Act is to create jobs. Mr. Hassett, some
time ago, I think in March of this year, you wrote in an
article that what was considered a great recession for white
Americans has been actually a depression for black Americans.
This is an issue that I think we all can agree on. In addition
to the disproportionate impact on minority communities in hard
times, we also know that there can be a disproportionate impact
on jobs based on differences within the manufacturing industry.
Manufacturers may require large or small facilities that
may be located in urban or suburban areas and so on and so on.
Mr. Herrnstadt, do you agree that the President should develop
a manufacturing strategy to include regional and industrial
areas with specific employment needs?
Mr. Herrnstadt. I think it would be helpful, but once again
I think it also has to be part of a coordinated national
strategy to make sure that we move forward as a country in
terms of manufacturing. A variety of manufacturing industries
have suffered. Aerospace, for example, over 500,000 workers
have lost their jobs over the past 20 years, so, you know,
there needs to be some concentration on that.
Mr. Rush. Can you expound on your conclusions? Take about a
minute and a half. I don't have but a small amount of time.
Mr. Hassett. Thank you so much, Mr. Rush, for the question.
That specific article that you mentioned, in fact, was
discussed in the proposal that is sort of an unusual bipartisan
one that has been put forward by myself and Dean Baker, who is
a well-known economist, where we discussed job creation policy
that would, we think, disproportionately benefit minorities who
have been hardest hit and would be quite a bit different from
the subject of this hearing. But the basic idea is that right
now when you lay a worker off, then if you lay the whole worker
off then they get unemployment insurance, and what we would
like to do is make the unemployment insurance, economists call
it like fractional, so that you could lay someone off 20
percent during a recession and then they could get 20 percent
of their unemployment insurance. This would encourage employers
to maybe reduce hours and wages of five guys 20 percent rather
than one whole guy.
Mr. Rush. I get the picture. Thank you so very much. OK. I
come from the south, as you know, and I have seen the
devastation in all communities that I represent for the most
part, Inglewood, Chatham, Woodlawn, all those communities. The
downturn could be traced back to when U.S. Steel closed down,
and the steel industry, not your company and I congratulate you
for it and I commend you for it, but most of them kind of moved
offshore or moved into the sun belt without jobs, without the
jobs, entry into the middle class. Can you expound on that
historical picture just for a moment, if you would, and as
briefly as you can? Am I correct that the----
Mr. Hickey. We are, Congressman. As a matter of fact, my
grandfather, who was one of the founders of the company I
worked for was Consen steel which was another south side steel
mill, and he left that company in 1926 to start the company I
work for. But what has happened is that certainly the economies
of scale changed. The cost of the production--the South Works,
the last thing that was being produced at South Works was
structural steel and they couldn't compete against the electric
furnace producers that could do--or they re-melt scrap, and
what has happened is that the technology evolution and steel
production, when South Works closed probably 30 percent of the
steel in the United States was made through electric furnace.
Today it is 60 percent, so what has happened is the technology
has changed and those old facilities became obsolete. Now they
didn't relocate them there, and I don't know if that is an
issue with the city because all those steel mills that were
located in Indiana and the southern states, all of them have
incentives from local states.
All of them do. I mean there is such massive incentives.
Kentucky has got some--and I am not making a judgment one way
or the other but that is the reality of it. You got to bring
jobs back to the cities. You got to bring jobs. You got all
kinds of land in the south side of Chicago that would be great
for manufacturing and some of it has to do with there is
pollution issues on the property, et cetera. Congressman, why
they don't develop the old South Works, it is what, 200 acres
sitting on Lake Michigan? It is a gorgeous piece of property.
Mr. Rush. Thank you. I yield back the balance of my time. I
recognize the ranking member, Mr. Whitfield.
Mr. Whitfield. Thank you. And thank you all very much for
your testimony. And, Mr. Hickey, I certainly would like to
congratulate you. Any family that can keep a business going for
84 years deserves a big pat on the back, so thank you. Mr.
Paul, you and Mr. Gordon both in your comments made some
reference that you thought this bill could be improved and some
amendments could be made to it. Is that correct?
Mr. Paul. Yes. Having worked on Capitol Hill, I know that a
bill rarely ends up in the form that it started, and I think
many of the suggestions that Mr. Gordon made are appropriate
ones, but I will emphasize that I do think that the thrust of
Mr. Lipinski's bill is sound and is very necessary in part
simply because there simply is no department of manufacturing.
The Department of Commerce has some responsibility for
manufacturing but the Secretary of Commerce is also responsible
for oceans and fish and weather and a lot of other things, and
so you need that coordinated voice to have a sound strategy.
Mr. Whitfield. Well, I think we all agree that this is a
good piece of legislation. At least its purpose is. And
although I do also agree with Mr. Hassett that I can think of a
lot of industries that need some particular attention like the
coal industry in Kentucky, and like agriculture and so forth.
But how many of you--I know Mr. Hassett's position, but the
other four--Mr. Herrnstadt, do you think this bill needs any
changes or do you feel pretty good about the way it is right
now?
Mr. Herrnstadt. You know, I would associate myself with Mr.
Paul's comments. I think it is an important bill, as I
testified to, I think that the thrust of it is excellent and
much needed. I have supplied in my written testimony, I think,
two or three what I would consider to be minor recommendations
I think that would strengthen it.
Mr. Whitfield. I know Mr. Hickey in his testimony talked
about 36 percent of all factories that employed more than 1,000
employees had closed down in some period of time. Now to me
1,000 employees or more is a pretty large manufacturing
facility. This legislation makes reference to small
manufacturers, exclusively. I know on page 6, line 14, it talks
about small manufacturers. On the Strategy Board, page 16, line
1, coming from small manufacturers. And it seems to me that if
you are going to deal with manufacturing you should not be
excluding a large group versus a small group. That was one
comment I would make. And then second of all when I read this
legislation you look at this Manufacturing Strategy Board
versus the task force, the task force is all government
employees. The chairman is going to be a government employee.
The strategic board, 21 people, some labor union, some
manufacturers, whoever, but the co-chair is going to be
government employees also.
And then it says that both of them, the task force and the
strategic board, will make recommendations to the President.
And I sort of got the sense that the strategic board was to
branch out in areas other than government which I think is good
because we need testimony from people outside of government as
well, but within the task force it talks about sub groupings
which would also include people outside of government. And then
when you consider all of the studies and all of the reports, I
mean the GAO report, the second year of the President, the
first year was a 4-year term. The reports by the Academy of
Sciences, 14 months, 20 months, whatever, after. It just seems
to me, and I may be wrong, that it would have made more sense
to try to combine the strategic board and the task force to
eliminate a whole layer of activities, but do any of you have
any thoughts on that?
Mr. Paul. Mr. Whitfield, I would submit that I think there
is a role for both, and the reason I say that is that I know
from my experience who speaks for the voice of manufacturing
within a particular administration. It is difficult. We have
had manufacturing czars. We have had assistant secretaries.
There has been a lack of coordination. I will say frankly that
at the end of the day when it comes to a strategy dealing with
a topic like China, for example, that the recommendations of
the State Department or the Treasury Department often times
trump the recommendations that an agency representing
manufacturing might. And for that reason, I think it makes
sense to have more coordination. I also see a fundamental role,
and I agree with you, for outside involvement in informing the
policy. And I don't pretend to be an expert on boards and
commissions, so if there is a way to perfect it, I would be
happy to look at that, but I do see a distinct role for both.
Mr. Whitfield. And you don't feel that large manufacturers
should be excluded?
Mr. Paul. I read the legislation. I don't think there is
any exclusion of large manufacturers in particular.
Mr. Whitfield. It specifically says small manufacturers.
Mr. Paul. Well, I think that, you know, that often makes
sense because large manufacturers have a large voice, and I
represent a number of large manufacturers as well. I think
often times just as the Congress and the federal government
does very eager to look out for the interest of small
businesses, and I think that goes within the spirit of what
that goal tries to accomplish.
Mr. Rush. The gentleman's time has expired. Ms. Sutton is
recognized for 5 minutes.
Ms. Sutton. Thank you, Mr. Chairman. Thank you all for your
testimony. Let me begin, I think, Mr. Hickey, it was you who
spoke directly on the point of making things and the creation
of value and why that is so important as opposed to, for
example, other sectors perhaps we saw before the recession hit
in this go round. We saw a lot of people making money by moving
money around. Can you just amplify a little bit about why
manufacturing is essential to creating real value?
Mr. Hickey. Well, Congresswoman, when you hear the
opportunity to take inputs and take the intellectual capital of
your employees and their efforts and turn it into a value
product that is a higher value than the inputs, you are always
going to create wealth. Sometimes you will make mistakes and
you will make stuff that people won't buy, et cetera, et
cetera, but the reality is that the way to wealth is through
creation of taking--you grow it, you mine it. Congressman
Whitfield talked about the mining in Kentucky and the corn
farmers. This is how you create wealth. And manufacturing is
creating wealth. Every country in the world wants to
manufacture products and ship them to the United States. The
trade deficit came out yesterday. What was it, $42 billion, 20
plus billion with the Chinese? They aren't selling us paper.
The point is what we are doing is we have to have--the reason I
came back in support of the Congressman's effort, under the
last administration there was a study by the Department of
Commerce by Grant Aldonas, who was the Undersecretary of
Commerce. I don't know if anybody--I actually had an
opportunity to talk to the undersecretary several times on this
program, very complex, very comprehensive study. The last item
was about currency manipulation by our training partners.
And I talked to at the time Undersecretary Aldonas and said
you told me this was going to be highlighted. He said I lost to
the Treasury. Well, if we don't have the whole government
looking at why we are losing 6 million manufacturing jobs in 10
years why we have had 42,000 manufacturing plants close.
Somebody has got to stand up and say these are the reasons.
This is why I think Congressman Lipinski's bill makes so much
sense because we have got to look at all of them. One of the
other things that we probably should have is the Department of
State because we do trade agreements with people because the
Department of State says this is how things are going to work.
Ms. Sutton. Thank you, Mr. Hickey. I concur with your
assessment. That was a very powerful answer, and I appreciate
you bringing that up. I would like to just, if I could, Mr.
Hassett, just ask you a couple of questions about the free
market. Do you think that we are operating in some sort of
global free market economy where free market principles exist
across the globe?
Mr. Hassett. To a varying degree, yes. Obviously, there is
a lot of variation across countries and how free the markets
are.
Ms. Sutton. Right. So you would agree that countries
manipulate their markets and entities manipulate their markets?
Mr. Hassett. Some do, yes.
Ms. Sutton. OK. Do you think that China under values its
currency and manipulates its currency?
Mr. Hassett. I can't answer that. I don't know what the
right level of the currency for China is. Yes, I am not a
currency expert. I can't tell you.
Ms. Sutton. Does AEI have a position on that?
Mr. Hassett. AEI doesn't take positions on anything. But I
have colleagues that I would be happy to forward your question
to.
Ms. Sutton. OK. I would certainly be interested----
Mr. Hassett. In fact, if you asked me the question what do
people at AEI say about this, then I would be happy to give you
a lengthy answer.
Ms. Sutton. OK. Well, since we don't have time for a
lengthy answer right now, I think your answer will suffice.
Your answer is that you don't know if China manipulates their
currency. OK. And, you know, we saw, and I know a lot of you
will be well aware of this, and probably all of you, in the
last year we saw a decision come through the ITC regarding oil
country tubular goods that were being unfairly subsidized by
the Chinese dumped into our market. And, Mr. Hassett, I would
want to hear your opinion on this. Now the ITC eventually after
months of going through the hearing process determined that
indeed this was taking place and the President moved ahead with
the recommendations to place anti-dumping and countervailing
duties in that instance.
Is that the way that you think we can--you talked about
there not being economic science behind all this. I also know
that AEI is about dealing with problems, right, where they
arise, so is that a sufficient answer or do you agree that
there is some need to have a more proactive, you know, forward
thinking manufacturing strategy that might deal with these
problems before they happen and people in Ohio are out of a job
for 9 months, 12 months before we get these duties in place?
Mr. Hassett. I think that there are certainly cases where
there are abuses, and that is why we have the systems that we
do. The problem that I have is that if you were to ask what is
the impact of trade on the welfare of Americans, I think that
it is indisputably that it improves it. What is the impact of
trade on the welfare of specific workers, then it is more of an
open question. Maybe Ohio is an area that has particular
challenges because there are foreign competitors that for
whatever reason, maybe abuse, can out compete them. I think
that my position is that there are things that there is not
really a dispute about.
The fact that right now our companies, including Mr.
Hickey's company, has to pay a higher tax than his competitors.
It is obvious that that is harmful. And so my concern is that
we have got this sort of elephant in the room of a really big
disadvantage for everybody, and then we don't like some of the
effects of that like maybe there is not enough R&D so we have
an R&D creditor. The manufacturing may be disproportionately
hurt because it is easier to locate manufacturing offshore and
then we want to do special subsidies for manufacturing. I think
the better solution is to just fix the problem in the first
place.
Ms. Sutton. And, if I could, I know that my time is up, but
I appreciate that your shift back to the issue of the tax
structuring. Certainly, I want our tax structure to make sense,
but that really doesn't answer the other question. I think you
would have to agree that perhaps the efficiency in the approach
that we have where we have our U.S. manufacturing and the
workers subjected to a process that takes a year where they are
sitting out of a job because somebody is cheating that perhaps
we can do better.
Mr. Rush. The witness can answer the question, but I just
want you to know that--do you want to answer the question?
Mr. Hassett. I agree. I agree. I said, yes, we should do
better.
Mr. Rush. The chair recognizes Mr. Murphy.
Mr. Murphy. Thank you, Mr. Chairman. Thank you, panel. You
have heard my comments before. I think it is important on an
issue so important. I do appreciate all of your passion about
helping to build up America's manufacturing particularly
because of what I mentioned before about China is about to
overtake us, and I don't think there is a person in this room
that wants to sit back and let that happen. But I also think it
is important, two elements in the legislation. One is that I
want to make sure we are not abdicating our role as members of
Congress. Certainly among 435 members of Congress, none of us
are experts on everything but all of us are experts on
something, and that is why we look to panels like you and other
groups to provide that information to use to make sure we are
passing legislation that works for the best interest of this
Nation.
So along those lines, I wanted to ask you. How many of you
own a company? All right. And now, as I understand, sir, in
your company, your steel products distribution, but I think in
your testimony you also said you are a supplier also for
manufacturers as well as purchasing for manufacturers?
Mr. Hickey. Our supply base would be U.S. Steel, New Core.
Mr. Murphy. OK. Now so that is important for all of us to
know that because I think also we would think if we knew our
child was being taught by a teacher who had no teaching
certificate or even the principal knew nothing about education,
we would be concerned. I doubt if any of us would go to a
hospital to be treated by a doctor who never practiced
medicine. But I still want to hear your opinions, I think, so I
am going to run through this panel, this board that is supposed
to--Manufacturing Strategy Task Force. I wonder if any of you
know, do any of these following people have any manufacturing
experience. Secretary of Defense, Robert Gates. Fine man. All
these people are great people. As far as I can tell, he
doesn't. Treasury Secretary Tim Geithner. Does anybody know?
Good man. I don't think he does either. Gary Locke, Secretary
of Commerce. One of our colleagues, Hilda Solis, Secretary of
Labor. Steven Chu, Energy. The head of the National Economic
Council, Lawrence Summers, anybody know if he has any
manufacturing experience? National Economic Advisors head
Christina Romer. I don't know either.
Head of OMB, Peter Orszag. How about the Office of Science
and Technology Policy, does the head of that have any
manufacturing experience, John Holdren? I don't know if he
does. Director of Domestic Policy Council, Melody Barnes. Now I
believe that Karen Mills, the head of the Small Business
Administration, has worked for General Foods and also a company
that manufactured hardwood flooring, refrigerator motors, and
plastic injection molding. But how about the head of the NSC,
does anybody know who the head of the NSC is and does this
person have any manufacturing experience? Does anybody know who
the head of NSC is?
Mr. Paul. I believe it is Admiral Jones.
Mr. Murphy. It is actually the President of the United
States.
Mr. Paul. The head of the--oh, I am sorry. The head of the
National Security----
Mr. Murphy. The head of the National Security Council. I
believe that is one listed here.
Mr. Paul. I am sorry. I thought you meant the National
Security Advisor.
Mr. Murphy. OK. But my point is in this that the two things
that I want to make sure that we have is--now this is leading
up to my question. I would like all the panelists to answer
quickly. Who do you think should be on a panel to really give
us based upon a wealth of experience information on
manufacturing, they should actually be on a decision panel, who
can we look to who really knows this and give us--we want
expertise here. This committee wants expertise. I will just run
by it. Where should we look? Mr. Paul.
Mr. Paul. I think fundamentally there is a role for
government to be on the side of manufacturing. I think that
process should be----
Mr. Murphy. I understand but so far we haven't come up with
anybody who knows about it.
Mr. Paul. But I think that process should be informed by
people who are in manufacturing. I would argue that if you look
in past administrations, I would include the Clinton
administration, both Bush administrations, there has been a
paucity of people who have a familiarity with manufacturing.
That has been one of the challenges.
Mr. Murphy. OK, next person. I need some answers.
Mr. Gordon. I believe people that understand manufacturing
but because of the structural problems and the fact that they
are strategic, I would say you need people with economic
backgrounds as well as policy background.
Mr. Murphy. OK.
Mr. Hickey. Mr. Murphy, there is a National Manufacturing
Strategy group now or a national manufacturing group. I know
there is a company in Ohio that is in the machine tool
business. I believe Dan Damico from New Core is on it, so that
is a group that would be a good core to make part of this
group.
Mr. Murphy. All right.
Mr. Herrnstadt. I think it would also be helpful to include
workers who actually make the manufactured goods and have the
experience from all levels.
Mr. Murphy. Good. Thank you. Mr. Hassett.
Mr. Hassett. And I disagree strongly with your point. I
think that you don't have to own a theater to know Shakespeare,
and I think that what we need if we are going to have this
commission, which I hope we don't, is people who understand the
importance of the neutrality of government policy, and that is
probably not people who have a lot of manufacturing experience.
Mr. Murphy. I don't have to own a theater to know
Shakespeare but if you are going to own a theater you ought to
know about owning a theater. So I would just look upon this and
make a recommendation, Mr. Chairman, that perhaps there are
some folks we could also have before us at some point as we are
looking at legislation to look at some other people working
this. I think they could help us strengthen this and improve
upon some aspects of that bill. I think some good ideas came
out of this panel. Thank you, Mr. Chairman.
Mr. Rush. Thank you. Mr. Gonzalez for questions for 5
minutes.
Mr. Gonzalez. Thank you very much, Mr. Chairman. I am going
to commend Mr. Lipinski in his effort and I am going to make
some assumptions that the Board, the task force will be in
consultation, will include many sources and resources as they
proceed but they will have a charge, and I think this whole
effort here is to identify the need, have the structure, and
then bring in all the necessary resources and it is going to be
up to this committee and others to make sure that we have the
oversight and that they do their job. Mr. Hassett, my
observation with my staffer was I have never seen anybody enjoy
testifying as much as Mr. Hassett, and that is a good thing
because you have enthusiasm.
Now I am not going to agree with you. You made a statement
that the only way this would work would be if the board and the
task force would be irrelevant because you see that if they are
relevant they can only do harm because they are going to
meddle, is that correct?
Mr. Hassett. That is, I guess, the most likely outcome, I
would think, yes.
Mr. Gonzalez. So I doubt if we are going to agree on a
whole lot, and I know that you said that Mr. Hickey can't be
competitive because he pays more taxes. I mean that is the
whole reason that he can't be competitive because he pays more
taxes.
Mr. Hassett. That is not what I said. What I said is that
that is a really big disadvantage that he faces relative to his
trading partners, and that on that we know in the United States
that everybody has that disadvantage in manufacturing and in
other industries as well. So my point is there is an elephant
in the room.
Mr. Gonzalez. And we could have a really good discussion as
to where we are in economic development in our point in history
and why and lessons learned that requires what we do today. Now
we are going to have a difference of opinion to the degree but
there are many things out there, and I think it is interesting,
and I am going to quote from Harold Myerson in the Washington
Post, December 15, 2009. ``America's production of goods no
longer receive the level of investment that had made it the
engine of our economic growth from the mid-19th century through
the 1970s. The change began at the outset of the Reagan years
when the percentage of corporate profits retained for new
investment dropped sharply. In the prosperity years of 1946 to
1979 dividends constituted 23 percent of profits. From 1980 to
2008, the constituted 46 percent.''
And it is something that my colleague, Ms. Sutton, pointed
out. How we make money, how we invest money in this country has
been a way from manufacturing into something that maybe we make
money out of money, and we know what happened in the financial
sector. Let us go back to regulation, which I think you have a
certain disdain for. Had we had that regulation, had we had
that oversight, we would have noticed what was going on in the
financial sector that led to the economic meltdown. So
regulation is necessary in all aspects, but I would hope that
this task force and this board will be able to identify what is
going on out there. Where is the investment being made in
America and why is it an easier dollar to be made away from a
solid investment in manufacturing. Those are the questions that
I think will be pointed out. And the fact that maybe we
encourage not investing in a manufacturing base.
I will ask you this because I know Mr. Hickey is in
competition with foreign companies and such. Do you believe in
the minimum wage? Should we have a minimum wage? Do you believe
in OSHA?
Mr. Hassett. Yes.
Mr. Gonzalez. Why? Shouldn't the employer just rise to the
responsibility of taking care of an employee and have safe
working conditions? Why wouldn't you just trust the situation?
Mr. Hassett. In part because not all employers are
necessarily going to work to the benefit of their workers.
Mr. Gonzalez. Do you believe in the Clean Water Act?
Mr. Hassett. Absolutely.
Mr. Gonzalez. Do you believe in the Clean Air Act?
Mr. Hassett. Yes.
Mr. Gonzalez. Do all those other countries that are
competitors have anything similar to what I just described?
Mr. Hassett. Some do, some don't.
Mr. Gonzalez. Mostly don't, wouldn't you agree, seriously?
Mr. Hassett. In the developed world, they do. The air and
the water is clean----
Mr. Gonzalez. Well, the developed world. You know, Germany,
gee, we compete with those German made vehicles and such, but
do they have any advantage over maybe a domestic manufacturer?
Mr. Hassett. They have a tax advantage for sure.
Mr. Gonzalez. Any other advantages other countries may
enjoy? Health care paid for by the government.
Mr. Hassett. But they are taxed to pay for that, so it is
not clear if it is a more efficient method.
Mr. Gonzalez. But there are advantages out there----
Mr. Hassett. But, again, the thrust of my testimony is that
if we make money because someone in the U.S., because somebody
invents a very cool piece of software that helps people do
something better or because someone makes a great movie that
they make millions of dollars in revenue from having people all
around that will go to it, that that is good too, but what we
need to do is make policy--not have policy decide what we are
going to do in the future but make it a vibrant place to do
anything that is productive.
Mr. Gonzalez. Well, then you would say basically have no
policy, no regulation, no law because, don't worry, markets
will take care of themselves and everybody is going to do the
right thing by their investor and so on. I mean we have example
after example of that recently. Everyone did the right thing.
But, no, that is not true, and I think what you espouse--and I
understand you may feel very strongly about it, but I think it
is exaggerated. You are not entirely wrong. I think it is a
question of degree. But what I think the other witnesses were
testifying to is the attention and the energy that is required
of this government to examine the loss of manufacturing jobs in
America and to determine whether we have policies that work
against it, can we have policies that will encourage it.
Mr. Rush. The gentleman's time is up. The chair recognizes
Mr. Lipinski for 5 minutes.
Mr. Lipinski. Thank you, Mr. Chairman. I want to thank the
witnesses for their testimony and for their recommendations for
improving this bill and thank the members of this committee for
their recommendations. I think that there certainly is always
room for making things better, and I appreciate the suggestions
when I work with you as we move forward on this. A couple
things I did want to raise though, Ranking Member Whitfield had
raised the only talking about small manufacturers. It really is
just talking about in particular by small and medium size
manufacturers and because the problem is often faced by these
small and medium size manufacturers relative to large
manufacturers and unfortunately I think a lot of times the
large manufacturers are the ones that get the most focused, but
it is not exclusive to them.
And Mr. Murphy had raised the issue about everyone on the
task force being from the government and heads of departments
and agencies, and also it says in the bill that there will be
subgroups to advise the task force including members from the
private sector. And I certainly agree, and I think that is why
all these recommendations have been very constructive that we
do need to make sure we are listening to those who are on the
front line, people like Mr. Hickey who have been working for
years in manufacturing. A couple things I wanted to talk about
and ask a couple questions if I have time is, first of all, I
certainly feel and I think most of us, maybe not everyone here
agrees that manufacturing is something that is especially
important for our country. Many other countries certainly
believe that it is important for their country, it is not only
China, India that we are talking about, United Kingdom, Brazil,
Canada all have manufacturing strategies. Mr. Dingell mentioned
Germany also.
And the reason for this is, I think, what Mr. Hickey spoke
about is that manufacturing actually produces wealth, and I
think that is something that the American people after we saw
the financial crisis and said what are we doing in our country
that actually produces wealth. And I think that is why there
are a lot of concerns out there, and certainly the polling
shows that people would like to see promotion of manufacturing.
I think it is important for our country. But I want to ask a
question of Mr. Gordon because the other part of manufacturing
that I think makes it particularly critical for our Nation is
for defense. I just want to ask Mr. Gordon, have you seen what
you believe the diminution of our defense capabilities or
potential diminution in the future with what has happened with
manufacturing in our country.
Mr. Gordon. Absolutely. Every month our manufacturers that
may be secondary suppliers or may be a primary supplier for a
defense system and they are going out of business, there are
multiple reasons for that, and that does weaken our national
security for a couple different reasons. One is when you go off
shore with a manufacturer, you don't have an assured source of
supply that is free of any political or other issues. And also
you need a trusted source of supply so there is many--there are
about 50 or 60 suppliers that go out of business for the
Defense Department every month, and these are listed in the
DMSMS working group, which is a small area.
Mr. Lipinski. Thank you. I wanted to ask Mr. Hickey, as a
member of a Commerce Department advisory committee, do you see
that it is especially important from your experience there,
especially important that we have a National Manufacturing
Strategy that is coordinated from the top level from the
President in order to make sure that we actually are having
some kind of coordinated policy rather than a lot of disjointed
policies and program that may not really work well together and
promote manufacturing.
Mr. Hickey. Congressman, this is exactly my frustration on
this. I have been on this committee for about 10 years. We
advise the USTR and the Department of Commerce on trade
policies that has to do with the steel industry. We get a lot
of discussion but there never seems to be a coordination. I
will come back to the best study I saw in a long time done by
the Commerce Department under Mr. Aldonas back in, oh, I don't
know, it was probably '94 or '95, and he basically said, you
know, this is the best I could do because there is way too many
different people who don't really have a value for
manufacturing. You know, and it may be an assistant secretary
here or whatever. You have to have the President of the United
States say this is a priority for our country. The Defense
Department is even the--we don't have enough steel today to
make certain plates that we need for the military applications
we have going on today. We are importing them from other
countries.
Mr. Lipinski. Thank you. I yield back. Thank you, Mr.
Chairman.
Mr. Rush. The chair will entertain one additional question
from any member who desires. Is there any member who desires an
additional question? Ms. Sutton, would you like to ask an
additional question?
Ms. Sutton. Sure, Mr. Chairman. Thank you very much. Mr.
Paul, you mentioned that Germany has an integrated strategy on
manufacturing, and, Mr. Herrnstadt, your testimony also
referred to China and the European Union. And I would just like
for you to expand upon that a little bit because this isn't
something that we are just doing in a vacuum but others are
obviously taking action so if you could elaborate on how those
countries' strategies compare to the National Manufacturing
Strategy that we are contemplating in this bill and whether
there are additional countries with the National Manufacturing
Strategy and whether you believe those strategies have placed
them at an advantage.
Mr. Herrnstadt. I would be happy to respond briefly, and I
think it is a terrific question. First, there are strategies we
don't want to pursue like China's which is heavily
mercantilist. I don't think anyone wants to see our factory
workers working for $250 a month. That is not a tenable
manufacturing strategy for the United States. Germany, on the
other hand, which in many cases has higher compensation cost
for workers, faces an extraordinary high level of regulation,
is able to succeed. In fact, Germany has held its share of
production and of exports as the U.S. shares of these have
dropped over the past decade and China's have dramatically
risen. The reason is because manufacturing strategy is
important to the German government. It is important across
party lines.
And I would add it represents a lot of labor management,
academic, and governmental cooperation working together on
research production, skills and training, a very aggressive
trade policy, and a policy that is designed to keep innovations
in Germany. I mean, for instance, German is one of the world
leaders in wind and solar production, but Germany is not a
windy place. It is not a sunny place. But they make the stuff
because they have a manufacturing strategy and they want to
sell to the rest of the world.
Mr. Rush. The chair now recognizes Mr. Dingell of Michigan
for 5 minutes.
Mr. Dingell. Mr. Chairman, you are most courteous and kind.
Thank you. This is to Mr. Paul, Gordon, and Herrnstadt. H.R.
4692, as currently written, requires the President to draft a
National Manufacturing Strategy based on the input of a
Manufacturing Strategy Task Force and Manufacturing Strategy
Board. Do you believe that these two agencies should
collaborate to draft the National Manufacturing Strategy
instead of the President? Yes or no.
Mr. Paul. I think at the highest level the President needs
to take ownership for the strategy.
Mr. Dingell. Yes or no. Should they do it instead of the
President? We will come to that point then.
Mr. Paul. They should certainly submit the recommendations.
I think the President should make the ultimate call.
Mr. Dingell. All right. And now Mr. Gordon.
Mr. Gordon. I would say yes. I think that in my testimony I
said that the task force should draft a strategy and the board
should inform it.
Mr. Dingell. Thank you. Mr. Herrnstadt.
Mr. Herrnstadt. I will agree with that has already been
said.
Mr. Dingell. You do or don't?
Mr. Herrnstadt. I think they should make recommendations to
the President. That is ultimately where it rests.
Mr. Dingell. All right. So you think that they should make
recommendations that the President should submit the policy to
us, to the Congress, is that right, that statement that you are
making, gentlemen? All right. All except, I guess, Mr. Gordon,
but I don't see you are too much out of pace. All right,
gentlemen, thank you. Now, again, to Mr. Paul Gordon and Mr.
Herrnstadt. Further, should the membership of the Manufacturing
Strategy Task Force be expanded to include the Department of
State, the United States Trade Representative and U.S. Import-
Export Bank? Yes or no, starting with Mr. Paul.
Mr. Paul. Only if they say the right thing.
Mr. Dingell. I am sorry?
Mr. Paul. Only if they say the right thing. I think they
should be included but they are often particularly unhelpful.
Mr. Dingell. I am not sure we can censor at best what they
had to say. If you would please, Mr. Gordon.
Mr. Gordon. I would say the state absolutely. I would also
suggest Homeland Security and National Science Foundation.
Mr. Dingell. Thank you. Mr. Herrnstadt.
Mr. Herrnstadt. Yes. I think they should be included.
Mr. Dingell. Do you have some brief words of explanation as
to why you feel this way, gentlemen?
Mr. Gordon. I would say the state has a great deal to do
with export control and manufacturing and trade. I believe that
Homeland Security also has a rather large role in terms of
making sure that you have assured sources for Homeland
Security, and the National Science Foundation makes a lot of
the R&D policy and investment in our next generation
manufacturing technologies.
Mr. Dingell. Of course, I have got to admit that the
Department of State has at least to me been a tremendous
disappointment with regard to trade matters. I sometimes wonder
whether they represent us or somebody else. Now, gentlemen,
again, Mr. Herrnstadt notes in his written testimony that the
Manufacturing Strategy Board established pursuant to H.R. 4692
would not be chaired by a representative of organized labor.
You have brought to my attention a concern I think we may
share. Do you believe a representative of organized labor
should be denied the opportunity to co-chair such a board? Yes
or no.
Mr. Herrnstadt. Absolutely not. I think they should be a
member of the co-chair.
Mr. Dingell. OK. Thank you. Do you have a reason that you
would like to give us for that? Is there a reason you would
like to say that that should be done that way, that they should
have an opportunity to co-chair?
Mr. Herrnstadt. Sure. Keeping in framework of the way the
task force has been formed it looks like it is trying to
attempt some sort of well balance to bring divergent views to
the forefront, and if you only leave chairs of folks that don't
represent workers, particularly workers in the manufacturing
era, you deny that opportunity to bring that.
Mr. Dingell. Again, to Mr. Paul, Gordon and Herrnstadt.
Gentlemen, H.R. 4692 requires the President to appoint members
of the Manufacturing Strategy Board after consultation with
industrial organizations. Do you believe that such industrial
organizations should include labor unions? Yes or no, starting
with Mr. Paul.
Mr. Paul. Speaking as someone who represents both labor and
business, I do, yes.
Mr. Dingell. OK. Mr. Gordon.
Mr. Gordon. Yes, I do, because I believe that they have a
great stake in that.
Mr. Herrnstadt. Yes.
Mr. Dingell. Gentlemen, the same three witnesses, if you
please. H.R. 4692 requires the President to release the
National Manufacturing Strategy by the end of the second year
in office. Now the calendar here may give us pause. Should this
be modified in light of the fact that the current President's
second year is halfway done? What are your comments on that, if
you please, starting with Mr. Paul.
Mr. Paul. I think, quite honestly, if we want a robust
document, I think there is a reasonable possibility it should
be put back to give them a little more time.
Mr. Dingell. Give them enough time to do the job, is that
what you are saying?
Mr. Paul. Absolutely.
Mr. Gordon. I would agree with that, absolutely.
Mr. Dingell. And you, Mr. Herrnstadt?
Mr. Herrnstadt. Yes, I agree there needs to be adequate
time, but I also think that this urgently has to be done.
Mr. Dingell. I think your counsel as to how we do it
urgently and at the same time give them enough time will be
earnestly sought for the record. I note, Mr. Chairman, you have
courteously given me more time than I am entitled to. Thank
you. Thank you, gentlemen.
Mr. Rush. The chair now recognizes Mr. Lipinski.
Mr. Lipinski. Thank you, Mr. Chairman. I just want to ask
Mr. Herrnstadt, are there things that you believe would be
especially important for a manufacturing strategy from what you
have seen in manufacturing?
Mr. Herrnstadt. I think one of the hopes of the task force
and the board the way you formulated it is that all the
stakeholders will be at the table to give some give and take to
develop the strategy, and I think it will address this issue in
the long term and also I think it is important that this will
be a permanent and institutionalized task force, so it is not
just a one-shot deal where it just issues a report and then
everything goes away. And I think the thrust of that is very
important, but in the meantime I think there is a lot that has
to be done. As Congresswoman Sutton and others have talked
about, and as my members are experiencing, they are losing
their jobs every day, every week, every month. And some sort of
strategy, at least short term, needs to be implemented as soon
as possible to help alleviate this and to help rebuild our
economy.
Mr. Lipinski. Thank you. And I want to thank Chairman
Dingell and Ms. Sutton and Mr. Whitfield, and especially
Chairman Rush for the opportunity to discuss this bill, and
thank you for your recommendations and especially thank the
witnesses for your testimony.
Mr. Rush. The chair thanks all the witnesses for appearing
today. You have been more than gracious with your time, and you
provided us some wonderful insight into this whole area of
discussion and you have empowered this subcommittee with your
grasp of the issue. Thank you so very much. Before we adjourn,
I do have a unanimous consent request that a statement of the
National Association of Manufacturers on the National
Manufacturing Strategy Act, H.R. 4962, be submitted for the
record, and hearing no objection, so ordered.
[The information follows:]
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Mr. Rush. The committee now stands adjourned.
[Whereupon, at 4:52 p.m., the Subcommittee was adjourned.]
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