[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





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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

                              ----------                              
                                                                   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

                              ----------                              


                        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:]


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    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.]
    [Material submitted for inclusion in the record follows:]



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