[Senate Hearing 111-548]
[From the U.S. Government Publishing Office]
S. Hrg. 111-548
MANUFACTURING CLOSURES IN NORTH
LOUISIANA: IMPACT ON SMALL BUSINESSES
AND LOCAL COMMUNITIES
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
UNITED STATES SENATE
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
__________
APRIL 14, 2009
__________
Printed for the Committee on Small Business and Entrepreneurship
Available via the World Wide Web: http://www.access.gpo.gov/congress/
senate
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COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
ONE HUNDRED ELEVENTH CONGRESS
----------
MARY L. LANDRIEU, Louisiana, Chair
OLYMPIA J. SNOWE, Maine, Ranking Member
JOHN F. KERRY, Massachusetts CHRISTOPHER S. BOND, Missouri
CARL LEVIN, Michigan DAVID VITTER, Louisiana
TOM HARKIN, Iowa JOHN THUNE, South Dakota
JOSEPH I. LIEBERMAN, Connecticut MICHAEL B. ENZI, Wyoming
MARIA CANTWELL, Washington JOHNNY ISAKSON, Georgia
EVAN BAYH, Indiana ROGER F. WICKER, Mississippi
MARK L. PRYOR, Arkansas JAMES E. RISCH, Idaho
BENJAMIN L. CARDIN, Maryland
JEANNE SHAHEEN, New Hampshire
KAY R. HAGAN, North Carolina
Donald R. Cravins, Jr., Democratic Staff Director
Wallace K. Hsueh, Republican Staff Director
C O N T E N T S
----------
Opening Statements
Page
Landrieu, The Honorable Mary L., Chair, Committee on Small
Business and Entrepreneurship, and a United States Senator from
Louisiana...................................................... 1
Vitter, Hon. David, a United States Senator from Louisiana (not
present)....................................................... 4
Alexander, Hon. Rodney A., a Representative in Congress from
Louisiana...................................................... 5
Hawkins, Hon. Clarence W., Mayor, City of Bastrop................ 8
Glover, Hon. Cedric B., Mayor, City of Shreveport................ 12
Witness Testimony
Juarez, Joseph, Regional Administrator, Department of Labor,
Dallas, Texas.................................................. 16
Trichel, Tana, President and CEO of Northeast Louisiana Economic
Alliance, Ferriday, Louisiana.................................. 21
Ricks, Michael, District Director, Louisiana District Office,
United States Small Business Administration, New Orleans,
Louisiana...................................................... 26
Dupuy, Corinne L., Director, Manufacturing Extension Partnership
of Louisiana, Lafayette, Louisiana............................. 32
Nardini, Karen G., Acting Louisiana State Director for Rural
Development, United States Department of Agriculture,
Alexandria, Louisiana.......................................... 37
Dembrozinski, Amy, Department of Commerce........................ 45
Wilkerson, Mary Lynn, State Director Louisiana Small Business
Development Center............................................. 52
Alphabetical Listing and Appendix Material Submitted
Alexander, The Honorable Rodney A.
Opening statement............................................ 5
Prepared statement........................................... 6
Chart titled ``Weeks of Unemployment Benefits Before July 2008''. 88
Dembrozinksi, Amy
Testimony.................................................... 45
Dupuy, Corinne L.
Testimony.................................................... 32
Prepared statement........................................... 34
Questions answered for the record............................ 82
Fleming, The Honorable John
Letter dated April 9, 2009, to the Hon. Mary L. Landrieu..... 60
Statement for the record..................................... 61
Glover, The Honorable Cedric B.
Opening statement............................................ 12
Prepared statement........................................... 14
Hawkins, The Honorable Clarence W.
Opening statement............................................ 8
Prepared statement........................................... 10
Juarez, Joseph
Testimony.................................................... 16
Landrieu, The Honorable Mary L.
Opening statement............................................ 1
Questions for the record..................................... 72
Locke, Gary......................................................
Letter dated April 7, 2009, to the Hon. Mary L. Landrieu..... 87
Nardini, Karen G.
Testimony.................................................... 37
Prepared statement........................................... 39
Ricks, Michael
Testimony.................................................... 26
Prepared statement........................................... 29
Simek, Diana M.
Statement for the record..................................... 62
Trichel, Tana
Testimony.................................................... 21
Prepared statement........................................... 24
Vitter, The Honorable David
Prepared statement........................................... 4
Questions for the record..................................... 80
Wilkerson, Mary Lynn
Testimony.................................................... 52
MANUFACTURING CLOSURES IN NORTH
LOUISIANA: IMPACT ON SMALL
BUSINESSES AND LOCAL COMMUNITIES
----------
TUESDAY, APRIL 14, 2009
United States Senate,
Committee on Small Business
and Entrepreneurship,
Shreveport, LA.
The Committee met, pursuant to notice, at 9:30 a.m., in the
Shreveport Convention Center, 400 Caddo Street, Shreveport,
Louisiana, Hon. Mary L. Landrieu (chair of the committee)
presiding.
Present: Senator Landrieu.
OPENING STATEMENT OF THE HONORABLE MARY L. LANDRIEU, CHAIR, AND
A UNITED STATES SENATOR FROM LOUISIANA
Chair Landrieu [In progress]. Our hearing today is looking
to provide a snapshot on the impact of manufacturing closures
on North Louisiana communities. In South Louisiana, we have the
lowest unemployment in Terrebonne Parish at 2.9 percent, and as
the Congressman knows, the highest unemployment in West Carroll
Parish at 16 percent. Some of the plant closures, as Mayor
Hawkins will testify today, for instance, in his town of
Bastrop have doubled the unemployment rate of the parishes such
as Morehouse. So we range from parishes that have low
unemployment and fairly strong and robust economies to those
that are really challenged by the economic situation of the
country and our region. So the field hearing today is to talk
through some of that, and we have asked our panelists to
provide their insights for our Committee.
North Louisiana has been especially hard hit, in
particular, in the last year alone, with more than 2,000
manufacturing-related layoffs, including Georgia Pacific
Plywood in Logansport, 280 employees; General Motors in
Shreveport, 422; International Paper in Bastrop, 550;
Weyerhaueser strand products mills in Simsboro and Dodson, 185.
For communities in this area, a loss of 10 jobs and 20 jobs
there, let alone hundreds, it is a serious blow to communities
that rely in large measure on these large employers.
The closing of the International Paper mill in Morehouse
Parish last year was particularly tough for Bastrop and the
surrounding communities. I want to applaud Senator Alexander--
Congressman Alexander--my apologies for elevating you to the
Senate. Some say the House and Senate are equal branches of
Congress. [Laughter.]
Sometimes I disagree with that terminology, the equal
branches, the House and the Senate. But Congressman Alexander
and the work that he has done to come to the assistance of
Bastrop and other communities in his district should be
commended. But, again, last month we received word from
Pilgrim's Pride that it would be closing its Farmerville
facility, 1,300 employees, 260 or more independent growers.
Operations in Athens, Choudrant, and Arcadia are challenged.
I want to applaud the State's efforts along with the
congressional delegation, but the State and the State
Legislature primarily for coming up with an opportunity for a
$50 million investment to try to keep that operation moving
forward. As I understand it, those negotiations are ongoing as
we speak. We are hopeful that that would work out in a positive
way, but they are very complicated and difficult negotiations
from what I understand. We are very hopeful. I visited the
parish just yesterday.
Now, on a more positive note, while we have had some
closures that are affecting small businesses--and that is what
we want to hear about this morning--there are also some great
assets in this community that we will not go into in full
detail today, but obviously our forestry industry is the same
in north Louisiana for many years, wood products, food
processing, auto manufacturing, and the millions--thousands, I
should say, of small businesses that are dynamic and expanding.
Barksdale Air Force Base, which we just got some exciting news
over the last several weeks about Global Strike Command being
located right here in Shreveport-Bossier area, bringing an
additional 1,000 jobs and opportunities for small businesses to
be part either of contracting or indirectly supplying that
operation.
Obviously, sustaining in north Louisiana for many, many
years, decades, the oil and gas industry. The Haynesville Shale
is underway. That development, despite the depressed price of
natural gas, which is now about $4, is still going very
strongly.
So there are great natural assets, the gaming industry, the
riverfront development, but these manufacturing closings are
causing a challenge, and all over the country manufacturing
closings of large companies are affecting small businesses, and
we want to talk about that today and talk about strategies that
we might apply to help the situation. And please do not let me
forget--and I will submit more for the record--to mention the
four universities in this region--UL at Monroe, Louisiana Tech,
Grambling, LSU-Shreveport, Centenary College, and Southern
University in Shreveport--excellent universities in this region
that are really bringing forward to help promote economic
development in this area.
Let me also mention the film industry in north Louisiana. I
had the pleasure to visit with some of the leading citizens in
that area last night, and it is very exciting. The Robinson
Film Center typifies how Shreveport is developing, becoming a
center for film, music, and art. And, of course, the health
care industry sustains the community as well.
Now, this is not a comprehensive list. I do not mean to
leave anyone out, but I want the testimony to be balanced. We
do have challenges related to these plant closings. We do have
some tremendous assets in north Louisiana that we are proud of,
and that is true of every community in America. And our Small
Business Committee wants to explore this issue.
But today's hearing will cover these and other important
issues, and without further ado, since Congressman Alexander
has to leave, I understand, to be the keynote speaker in
Monroe, let me now open it up. He needs no introduction,
Congressman Rodney Alexander, who is from Quitman, Louisiana,
represents the 5th Congressional District. He was first elected
in 2002. He knows this district well, having graduated from
Jonesboro-Hodge High School and Louisiana Tech University. He
also served in the U.S. Air Force Reserves, and he serves now
on the Appropriations Committee, the Agriculture Committee, and
I can tell you he has been a terrific Congressman for our State
and a great partner to me in representing the areas that we
share in common. I thank him for his aggressive efforts in many
ways.
So we will start with the Congressman, and then we will
move to Mayor Glover, the City of Shreveport, who is helping us
host this event today. We are grateful. A lifelong resident of
Shreveport, Cedric Glover was educated in public and private
schools in Caddo Parish. He served as a member of the city
council and he was the youngest person ever elected to the
council. In 1995, he was sent down to Baton Rouge to represent
this community in the House of Representatives and then he was
elected mayor of Shreveport, the first African-American mayor
to serve in this post.
Clarence Hawkins has been a veteran mayor in our State,
serving in public service for over 40 years. He attended school
in Laurel and Jackson, Mississippi. He received his degree from
Grambling. He worked as a teacher in Morehouse Parish, received
his Master's of Education from Northeast Louisiana University.
He was elected the 33rd mayor of Bastrop. He served for five
terms. He served as Past President in the Louisiana Municipal
Association Executive Board.
So we have three outstanding leaders. Congressman, why
don't we start with you, and then I would invite the
Congressman to join me on the dais for as long as he can stay
for the hearing. Thank you.
[The prepared statement of Senator Vitter follows:]
[GRAPHIC] [TIFF OMITTED] 51031.001
STATEMENT OF HON. RODNEY ALEXANDER, A REPRESENTATIVE FROM THE
STATE OF LOUISIANA
Mr. Alexander. Thank you, Senator, and good morning. I do
apologize for having to leave. I need to be in Monroe by noon
for a luncheon there. But it is a pleasure for me to be here
this morning and to sit with these distinguished gentlemen to
my left and who I consider not only to be colleagues but good
friends, having worked closely with them over the years. Mayor
Glover and I had the opportunity to work together on the Health
and Welfare Committee as State legislators, and as you can
tell, we are both extremely healthy. [Laughter.]
Mr. Alexander. I have worked with them over the years, and
it is a pleasure for me to be sitting here with them. And,
Senator, I want to thank you for being here today and thank you
for the work that you have done. Thank you for allowing us to
work with you on projects that affect not only the 5th
Congressional District but the State of Louisiana. And there
are many sitting in the audience behind me that I want to thank
for their participation, the quick response that we have had.
Oftentimes the public is quick to criticize governmental
agencies, but we do not do as much as we need to do to applaud
agencies when they perform their duties successfully and
quickly.
We have had, as you said, some disasters in north
Louisiana, especially northeast Louisiana, over the past year.
Mayor Hawkins probably as well as anybody can testify to the
fact that business has been devastated in his district, but
there are many behind us that [inaudible] with your help,
Senator. You allowed us to sign on as cosponsors of the letters
to [inaudible] from Washington to Baton Rouge to assist in the
problems there.
We are not out of the woods, of course. I was glad to see
just yesterday the President lifted the travel ban to Cuba. I
have been to Cuba. I look forward to the chance that we will
open more trade to that country, helping small businesses
across the State of Louisiana and across the South. So there
are some reasons for us to be optimistic about the future, but
at the same time be cautious about the concerns that we have.
As you said, timber and timber-related businesses in
Louisiana have driven the State for many years as the number
one product. But times change and there is not the need for
timber like we have known in the past, and there are some
adjustments that have to be made. And it is working with
agencies that care about the future that make it easier for us
to overcome some of the problems that we have.
But we ultimately [inaudible] for all of us. It can be
better for those that come after us, and that is what we are
all charged with, is doing what we can to make sure that life
is just a little bit better for those who come after us.
Thank you for allowing me to be here, and I just want to
say thank you to the people that have allowed me to be a
spokesman for them in Washington for the last few years. And we
enjoy working with you and look forward to working with you in
the future. Thank you.
[The prepared statement of Mr. Alexander follows:]
Prepared Statement of Hon. Rodney Alexander
[GRAPHIC] [TIFF OMITTED] 51031.002
[GRAPHIC] [TIFF OMITTED] 51031.003
Chair Landrieu. Thank you, Congressman. Again, you are
welcome to join me up here for the time you have remaining.
Mayor Glover.
Mr. Glover. Thank you, Senator. I do not want to deviate
from the protocol that you have laid forth, but my mother would
expect me to ask, since I am serving as the host here today, if
it might be appropriate for me to yield to my guest, my dear
friend Mayor Hawkins, and allow him to proceed.
Chair Landrieu. Your mother raised you well.
Go right ahead, Mayor Hawkins.
STATEMENT OF HON. CLARENCE W. HAWKINS, MAYOR, CITY OF BASTROP
Mr. Hawkins. Thank you, Honorable Mayor Glover. Thank you
for passing the buck. [Laughter.]
Mr. Hawkins. Senator, thank you for allowing me the
opportunity to come, and I was ecstatic when I received the
invitation to come and appear before this Committee and allowed
the opportunity to speak. Thank you as well for what you have
done for this State and for this region, and our Representative
Alexander as well.
As you have spoken about the closures that have occurred in
northeast Louisiana, we can truly say that our State and
Federal officials have been extremely responsive to us. This
catastrophe that has occurred in our Nation, and specifically
we speak for north Louisiana, has been devastating. But to know
that the folks that we elect to serve us at higher levels
personally care enough to come to our small communities, that
really makes a difference, that [inaudible].
The closures that have happened in Bastrop, in particular,
were not immediate. Both of you have been involved since 2005
and prior to then. The closure of IP was the culminating event
in a series of events that have occurred over the last 20-plus
years as we reflect historically. International Paper Company,
which has been in Bastrop for almost a century now, has been
going through spates of closure since the 1980s. Bastrop had
over 2,000 employees involved in the paper-making industry back
during that time. It diminished to about 550 when they finally
closed earlier this year.
One of the things that we have learned as we have done an
analysis, with the help of the State and Federal Government, is
that these closures are the end result of some indicators that
if we paid attention to, I think we would be ahead of the game.
Maturing and declining industries have signs when they stop
growing. They have signs and indicators for small businesses as
well. When maturing and declining industries stagnate, small
businesses lose their opportunities. Entrepreneurship stops
developing. And I think we have been extremely reactive, and
the reactions that have taken place in the Louisiana Department
of Economic Development from the State and Federal Government
are very appropriate. But had we been corrected and read the
signs, I think we would have made it a little bit more
palatable.
We are surviving. It has been emotionally and economically
devastating to us. [inaudible] perspective, International Paper
Company represented about 20 percent of my operating budget.
Emotionally, there are many factors that deal with elections,
but we had an election on April 4th, and it is true that I have
served Bastrop for 20 years. We had none of the negatives that
usually go with incumbents being not reelected: no malfeasance
in office, no criminal charges; to use one of our favorite
Governor's terms, not being caught with a dead girl or a live
boy. None of that kind of stuff happened. But the attitude of
the people was they wanted change. That was not the major
reason, but that was a contributing factor to the
sustainability of government. When economic devastating
activities happen, people lose hope. They lose their rational
capacity to think wisely--not that I should have been elected,
but they start looking for life preservers, and change might be
a life preserver.
One of the interesting situations that happened just
recently--and we can attribute it, I think, to the closure of
IP--is a staple in most communities, Kentucky Fried Chicken
closed in Bastrop. That sounds comical to me to learn that if a
chicken place closed in the South, that is a signal. And I use
that to indicate that plant closures, economic conditions,
whether globally inspired or because they were maturing or
declining, definitely have an impact, and it reduces the
potential of small businesses to grow.
Thank you.
[The prepared statement of Mr. Hawkins follows:]
[GRAPHIC] [TIFF OMITTED] 51031.004
[GRAPHIC] [TIFF OMITTED] 51031.005
Chair Landrieu. Thank you, Mr. Mayor.
Mr. Glover.
STATEMENT OF HON. CEDRIC B. GLOVER, MAYOR, CITY OF SHREVEPORT
Mr. Glover. Thank you, Senator. It is indeed a privilege to
have the opportunity to be able to be here today. I want to
thank you for your leadership as well as your commitment and
your vision for Louisiana. Your continual presence throughout
the entirety of the State, Senator Landrieu, is a great
inspiration and has really been appreciated. I am also
extremely honored to have the opportunity to be able to sit
here at the table with my former chairman, Rodney Alexander. He
and I served together, but there is only one individual who I
continually refer to as ``my chairman'' whenever I have a
chance to be in his presence, and that is Congressman
Alexander, because when I was a member, he was the Chair of the
House Committee on Health and Welfare.
Chair Landrieu. And what Committee did you two terrorize?
[Laughter.]
Chair Landrieu. Health and Welfare?
Mr. Glover. Absolutely. He led with great courage and
aplomb, and it was always a pleasure to have the opportunity to
be in his presence and to work with him, to do, I believe, some
things that hopefully made the State of Louisiana a little bit
healthier as well.
I am also greatly honored to be here today with an
individual that I respect. In 1992, when I was a young cub
member of the Shreveport City Council and was given the great
pleasure and privilege to be a part of what was called
``Leadership Louisiana,'' and [inaudible] down to Alexandria to
meet my fellow participants, and I was just simply awed by the
room of individuals assembled. I wondered how it is that a
young 26-year-old could find himself in the midst of such
distinguished individuals as Mayor Hawkins and Kathleen Blanco
and so many others who were a part of that class of 1992. So I
thank you for giving me the chance to be here to participate
today.
I also want to express my appreciation for all the various
individuals from the Small Business Development Center,
[inaudible] Shreveport and the leadership there, as well as our
Chamber, our Development Foundation, my staff, the city of
Shreveport, and all of the citizens who came out and
participated yesterday, as well as those who are here this
morning.
Our community, Senator and Congressman, has suffered some
serious blows in the area of jobs, most notably, the
elimination of the entire ship at GM Shreveport. There are
numerous suppliers and vendors who have had to downsize their
operations as well. The loss of even one job to the citizens of
Shreveport causes me great concern. As mayor, I hold economic
development as one of my primary responsibilities.
Studies have shown that approximately 85 percent of new job
growth comes from existing businesses. Of those new jobs, 75
percent are created by small business. Business retention and
expansion are two elements of my administration. Government
often creates obstacles that limit small business growth. We as
a government must focus on developing partnerships with the
business community to address and eliminate these obstacles.
While we will continue to [inaudible] manufacturing,
distribution, and retail companies relocating to our region, we
must focus on the bird that is in our hand. Some of the finest
companies in America are right here right now in northwest
Louisiana.
The number of jobs lost always seems to be bigger news than
jobs gained. Just last month, we celebrated a groundbreaking by
[inaudible], adding approximately 450 new jobs to the
Shreveport economy. This is an existing business that decided
to expand right here in Shreveport. It had opportunities to go
other places, but we made the case for northwest Louisiana, and
that case prevailed.
In addition to growth in the oil and gas industry, our film
industry is also [inaudible] a cushion to help soften the
impact of the nationwide recession. The expansion of digital
media in our area has served as a catalyst for the growth of
many small businesses in this field. These industries attract
and retain young, vibrant entrepreneurs. Shreveport has been
recognized in the last 2 years by MovieMaker Magazine as one of
the top five places to make movies, [inaudible] production and
to engage in these creative endeavors. For the last year alone,
over $280 million has been spent in the production of film and
media here within the Shreveport area. And with the help of the
Louisiana Legislature, we hope that that success will continue
for years to come.
We have strong, dependable, healthy small businesses all
over our community. Now is the time for those businesses to
thrive. The city of Shreveport will do its part and join hands
with each one of these businesses to help them flourish,
because we understand that small businesses and the workers who
populate them are the backbone of our economy.
Successful efforts in economic development depend on the
ability to provide those resources that are critical to job
development. The Federal Government seeks to provide assistance
through valuable programs such as the Small Business
Administration as well as the Economic Development
Administration. These programs and others provide education,
training, increased access to capital, and direct financial
assistance to small businesses. But we can do better. We pledge
to work with you and with small businesses to make them better.
City government will continue to serve on the front line of
economic development and job growth. We will continue to use
all available resources to promote job growth. While the loss
of even one job is tragic, the gain of one job by any one of
the citizens of Shreveport is a blessing. We will count our
blessings one job at a time, and one job at a time we will
emerge from this recession.
Thank you, Senator, for giving me the opportunity to come
before you today.
[The prepared statement of Mr. Glover follows:]
Prepared Statement of Cedric B. Glover
[GRAPHIC] [TIFF OMITTED] 51031.006
Chair Landrieu. Thank you both very much for very
insightful comments about the situation that you are both
facing, and I thank you both for being optimistic and forward-
looking and continuing a positive vision, which is why you two
have been excellent leaders for so long in our State.
Let me ask both of you, if I could, the first question, and
I will do a round of about 10 minutes of questions, and then we
will move to our second panel.
In your communities, what Federal programs have you found
the most helpful in situations when either plants have closed
or workers are laid off or business is impacted? And there are
any number of programs offered, I think, through the SBA,
Commerce, and other agencies. Can either one of you talk about
either the Department of Labor in terms of the TAA funds for
Bastrop workers, transitional assistance, HUD renewal programs,
USDA Rural Development? In your experience, in your current or
previous offices, have you found any Federal programs to be
particularly effective?
Why don't we start with you, Mayor Hawkins.
Mr. Hawkins. Especially going from the proactive approach,
the renewal community [inaudible] available for employers as it
relates to employees is extremely beneficial, and this
[inaudible] of diagnosing and prescribing situations to address
potential closures [inaudible] community is extremely
important. [inaudible] audience with the authority [inaudible]
development. And even though the renewal community--the growth
in the renewal community [inaudible] is extremely good, its
limitations are it is on a census tract basis, and census tract
based on population, poverty, [inaudible]. And in many cases,
the industries that need to be impacted are outside of the
[inaudible] census tracts. So we were able to [inaudible] help,
get some concessions made. The International Paper Company as
an example was not in the census--original renewal community
designation. That program is extremely beneficial as well as
Labor coming in doing the things that they do, the TIA, TAA,
whatever it is called, and the displaced worker program, the
[inaudible], all those are extremely beneficial.
Chair Landrieu. And have you heard specific stories from
some of the workers about the training that they have received?
Do they find it to be quality training? Is it helping them
actually connect to other jobs either in the region or
somewhere else in the State? Just your general sense of the
quality of these training programs.
Mr. Hawkins. Absolutely. It is always amazing, the people
[inaudible] every dark cloud has a silver lining, and many of
the individuals who were impacted by IP and Jordache Apparel
back in 1996 took advantage of the Federal and State retraining
program, and they have launched careers that they ordinarily
would not have gone into had the status quo. So, naturally, we
did not want to lose the industries, but thank God for the
government being, the Federal and State government being there,
to provide them assistance and redirecting them to [inaudible].
Chair Landrieu. I know the Department of Labor is here.
They may be able to answer this question if you do not know the
specifics. But in terms of the unemployment benefits for the
workers in Bastrop, these 550, can you generally describe what
those benefits are or have been? And if not, I want to ask the
Department of Labor, if they have that information, to come
forward.
Mr. Hawkins. And I would be calling on them for more
specifics, but one of the criticisms that we heard [inaudible]
was that the unemployment benefits in Louisiana have a
disconnect. We [inaudible] with the program in Louisiana versus
Arkansas as it related to the period of time that was covered.
I think there were some attempts made in Louisiana to change
that, but----
Chair Landrieu. Will the Department of Labor come forward,
please, and see if you can give this testimony for the record
if you know it? If not, we will have to submit it in writing.
Mr. Juarez, what is the general situation that--and you are out
of the Dallas Office. Could you identify yourself?
Mr. Juarez. Yes, Joseph Juarez. I am the Regional
Administrator of the Dallas office.
Chair Landrieu. Could you comment on the situation as it
relates to the 550 workers, either specifically in Bastrop or
generally, the unemployment benefits for people laid off and
opportunities through your department for either retraining or
low-interest loans or trying to move them to self-sufficiency?
Mr. Juarez. Certainly. The first line of defense would be
the basic unemployment insurance, which in Louisiana
[inaudible] $284 a week. You have got the basic 26 weeks. As
you are certainly aware, it has been extended where you can
draw now up to at least 52 weeks, depending on what the State
determines the people [inaudible].
Chair Landrieu. Could you repeat that? What are the maximum
benefits?
Mr. Juarez. $284 in Louisiana a week, and the basic
entitlement would be for 26 weeks.
Chair Landrieu. Could it be extended at the option of the
State?
Mr. Juarez. Absolutely, extended benefits, and the Federal
Government is paying that extended benefit now, an additional
26 weeks, for a total of 52 weeks. And then the State would
have the option to extend further. That would require State
legislation.
Also, I think a benefit which was alluded to are the
training benefits that are provided. The Louisiana Workforce
Commission, Workforce Investment Act, we provide extensive
retraining to individuals who cannot go back into those jobs,
and training could, again, go out to 2 years, provide
assistance while they are being trained, a myriad of supportive
service programs to include child care, transportation,
assistance with supplies and equipment that they might need for
training.
Chair Landrieu. And is that training done on site? Or does
that training occur off site in a community college? And what
kind of training? And what are the costs associated with it?
Mr. Juarez. The training could take various forms. It could
be on-the-job training. It could be customized training that we
would develop with the employer. A lot of training is through
community colleges. It could be through private training
institutions.
The average cost will vary. It will depend if you do short-
term training, if someone just needs short-term training to get
back in.
I also should mention incumbent worker training, the State
has discretionary dollars that they can use for incumbent
worker training. That also would apply to the State of
Louisiana, which I think has one of the more aggressive
incumbent worker training, which you have provided general
revenues through the unemployment insurance tax for incumbent
worker training.
So the training can take a myriad of forms, be provided,
again, on-site, in community colleges, and other training
institutions.
Chair Landrieu. Are you aware or Mayor Hawkins, you may be
aware of the specific new training or options for training that
was designed specifically in the Morehouse incident, the
incident of the plant closing there? Was there a special
training program developed either designed by the management in
anticipation of lay-offs or by the workers themselves who
anticipated this might happen or by the leaders of the
community what training might be more beneficial than others,
health care, construction, IT, et cetera? Do you know any
specifics about that?
Mr. Hawkins. One of the things that we are doing--and this
is looking forward. We are in the middle of a [inaudible] study
which will help our community determine its direction in the
future. We have been single-industry dependent for generations.
The paper mill was our [inaudible]. People looked forward to
going to work there, retiring from there, and receiving the
benefits forever.
So historically the training that has taken place through
the workforce development of the State has been training that
was specifically related to the paper-making process almost
until the closure, because nobody felt that the paper
industry--the paper mills in Bastrop would close. So the
training [inaudible] related to the paper-making industry, now
people who are taking basically--taking basic inventory tests
to determine what their likes are and what their potential is
to see where they will go.
Regrettably, in small communities, in small rural
communities, especially in north Louisiana, the training that
people become involved with, unless it is [inaudible] related
in most cases, the training that people will acquire will also
cause them to have to leave because there are not that many
opportunities for employment there.
Chair Landrieu. Well, I think you raise a good point, and I
have a question for Mayor Glover, and then we are going to move
to our next panel. While incumbent training programs are
absolutely, I think, very important to partner with businesses
to make sure that their current workforce as well as training
for the jobs they are doing, I do not think that we can do that
at the expense of aggressive retraining programs for employees
that, through no fault of their own, even having worked
faithfully for 15, 20, sometimes 25 years, find themselves in a
period in their life where their one skill is no longer
required in that industry. And I think that is what government
needs to ensure, that we have the right programs and
partnerships to give that particular family an opportunity to
honor their lifetime work and service. And that is what I want
to really focus on.
In addition, it occurs to me about what is happening in
these communities that since now many families are dual-income
families and one spouse is laid off, let's say, from one of the
plants up in north Louisiana, the other spouse is employed at
an ongoing concern, but the one spouse that is unemployed has
to relocate for work, locate outside of a 2-hour driving
distance, if the spouse then has a choice to either follow the
spouse to work and quit their job or to maintain that job and
commute--which some couples do. My husband and I actually did
that ourselves. But I understand that if the spouse left their
job to accompany the family to another location to work, that
person is not entitled to unemployment compensation under our
current law.
I think that we have to very strongly consider the
flexibility required in our laws today to try to accommodate as
many of the families' choices that are very tough choices that
these families are making and really honor the family unity and
honor the spirit of the family being together. We have had many
families separated through just terrible catastrophes and
disasters.
There is a young man I just met working, Mr. Bair, at one
of your hotels, and with sort of sad eyes he looked at me and
said, ``Senator, you do not recognize me, but I am from New
Orleans. And part of my family is there, and part of my family
is here.'' Just as an example, I hear that every day. And he is
enjoying it here, but he wants to get home.
So I think that our laws, particularly as from our
perspective, from Louisiana's perspective, need to really be
sensitive to the many challenges that families are dealing with
to stay intact and to keep that check or checks coming through
that front door to maintain themselves.
Mayor Glover, let me ask you, what programs in your
experience as mayor have been most effective? What would you
want to suggest, anything that we might adjust or modify any of
those programs? And if you could give any specifics, that would
be helpful.
Mr. Glover. Well, I am going to have to join, I believe,
the chorus that has already stressed the success that both the
Department of Labor has managed to achieve [inaudible] in terms
of [inaudible] indirectly remember as a younger man dealing
with the initial contraction, downsizing and ultimate closure
of the AT&T Western Electric plant, an operation at one point
that employed somewhere in the neighborhood of 6,000 people,
and in a similar fashion as Mayor Hawkins just described, the
very course [inaudible] downsized, reduced its employment
numbers until its eventual closure as a result of the
retraining provisions, workforce training provisions, education
provisions within the Department of Labor for folks who are in
those types of situations.
One of the areas in particular I know that was enriched
here in the Shreveport area that there are legions of folks who
are now within the health care industry who were formerly
employed with Western Electric, General Motors, or other
companies that downsized, shut down, and individuals found
themselves in situations having to acquire skills that allowed
them to support themselves and their families. We are thankful
that health care is such a significant part of this area's
economy that those individuals could stay here and find
themselves employment situations that were not only stable but
that afforded them an opportunity to livable wages as well as
to be on a career track that could lead to additional growth
and additional opportunities.
And so we are beginning to see some of the initial phases
of that manifest itself again within this area with the General
Motors situation as I am counting the individuals throughout
this region who are once again availing themselves of those
opportunities. And what appears to be even one reality of our
situation is that no matter how dire or how down the economy
can be, if you are within the health care industry, especially
those who [inaudible], then they are able to be able to find
not just employment but the kind of employment that allows them
to support themselves and their families in a decent fashion.
Chair Landrieu. Well, I am glad you raise that issue, and
it is right on point. I was at a dinner last night, and I
understand that there is a requirement, I believe, a 30,000 gap
in the number of nurses required in Louisiana right now. Now, I
do not know how much it is region to region, but right now
hospitals and the health care industry could hire an estimated
30,000 qualified nurses.
So when you think about how much effort government puts
into running after a manufacturing plant here and the money
required to put up to save 1,000 jobs there, it seems to me
that a very smart strategy might be to eliminate whatever
barriers and obstacles there are right now to training nurses
required to meet that requirement. And from my perspective as a
United States Senator, I am often asked to extend H-2B visas to
people coming in with special skills, and I am happy to
accommodate the industry of a State that continues to cry for
skilled workers, and I understand, particularly in places like
Terrebonne Parish, with a 2.9-percent unemployment rate. But it
is hard for me to justify that action when I am looking at
Morehouse Parish with a 16- or 13-percent unemployment rate, or
Shreveport-Bossier with a 6- or 7- or 8-percent unemployment
rate or other places. And I am questioning: What is the
disconnect between our resources and assets to train our people
for jobs that are here now waiting to be filled?
So I hope that the series of these hearings will help
develop some strategy and call attention to some of these
issues, and I am hoping that some of our panelists can expand
on that on the second panel about what some of these options
are.
Do you have any comments about that from the Department of
Labor? Are you all involved in any kind of way working in
partnership with States to identify the career options that are
available even in these difficult times?
Mr. Juarez. Yes, Senator. One of the, I think, strong
services provided by the Louisiana Workforce Commission is
labor market information. And you are absolutely right, and
certainly you are aware that this Administration strongly
supports putting people in training in high-growth industries
where there is a future. The stimulus dollars, the Recovery Act
dollars to provide an additional 80 percent or so of what we
already put into the system we hope doubles the number of
individuals that will be in training. But it has to be the type
of training that you are discussing. It can't be the short-term
training that as the economy gets better, but it goes down,
then the person is out the door. And I think the health care
industry is an excellent example of the type of training.
Remedial training is also available to our training system
and I think provides those stepping stones, if you will, for
individuals that do not have that education, that they can get
into this higher type of education that is needed for these
types of careers.
Chair Landrieu. Well, let me just mention for the record as
we close--and I invite this other panel to come forward. But
under education and training, the State has received $718
million through the Economic Recovery Act for education and
training. In addition, $188 million for Special Education Part
B State grants to improve educational outcomes for individuals
with disabilities, raising the Federal contribution to nearly
40 percent. The level established by the law was authorized
more than 30 years ago. Finally, a $5 million grant for a State
employment service grant to match unemployed individual job
openings through State employment service agencies and allow
Louisiana to provide customized reemployment services.
There is a $9.8 million dislocated workers grant that has
been authorized for the State. There is an $8.8 million
Department of Labor adult State grant. There is a $20 million
Department of Labor youth State grant. There is a $9.8 million
grant for vocational rehabilitation. And that is just to list a
few of the additions and investments that the Federal
Government is making in this specific area for the State of
Louisiana.
So we are hopeful that the State and the local officials,
nonprofit organizations, and community-based organizations will
take advantage. I know, Mayor, you and Mayor Hawkins have a
copy of this document that our office provided. I am very proud
that our office was the first Senate office to provide a
customized document to our own State. This, I understand, is
now being modeled throughout the Senate. We provided this to
our elected officials weeks ago so we could get comfortable
with what is in this recovery package and fashion some remedies
that will help our people throughout the State face the
challenges that are here and before us.
So, without any further ado, I thank this panel for your
testimony, and I thank Mr. Juarez for answering our questions.
Thank you both. And the record will stay open, if you have any
further things to submit, for 2 weeks.
Mr. Glover. Thank you, Senator.
Mr. Hawkins. Thank you very much.
Chair Landrieu. Thank you all.
While the next panel is coming forward, let me recognize
the elected officials that are in the audience. Senator Lydia
Jackson is here.
If the next panel will come forward, Karen Nardini, Acting
State Director, Rural Development, U.S. Department of
Agriculture; Michael Ricks, Louisiana Small Business
Administrator; Corinne Dupuy, Director, Manufacturing Extension
Partnership of Louisiana; and Tana Trichel, president and CEO
of Northeast Louisiana Economic Alliance.
We will give Mr. Ricks a minute to come to the witness
table.
While we are waiting for Mr. Ricks, let me begin by
introducing Ms. Tana Trichel first. As I said, she is the
President and CEO of Northeast Louisiana Economic Alliance. In
this capacity she represents over 14 parishes for economic
development and works with State and local groups to create and
retain jobs. The Northeast Louisiana Economic Alliance is also
responsible for the two largest U.S. Department of Housing and
Urban Development renewal community areas in the United States:
the Northern Louisiana Renewal Community and the Central
Louisiana Renewal Community.
Corinne Dupuy is the Director of the Manufacturing
Extension Partnership of Louisiana. She received a bachelor's
degree in mechanical engineering from the University of
Louisiana at Lafayette, ULL, in 1986 and her master's degree in
engineering from the same university in 1995. She has been part
of the Extension Partnership program since its inception and
was Deputy Director of the program in Louisiana from 2001 to
2004.
Michael Ricks is Louisiana District Director of the SBA. He
was born and grew up in New Orleans, received his bachelor's
degree from the University of Houston, graduated from the Naval
Postgraduate School, an MBA from Troy University in Alabama. He
is medically retired from the army, and is a former infantry
officer. Thank you for your service, Mr. Ricks. And he has
served as Louisiana District Director for the SBA since last
year. Prior to that he was District Director in Alabama.
And, finally, last but not least, Karen Nardini is Acting
Director of Rural Development of the U.S. Department of
Agriculture. She is a native of Alexandria, Louisiana. She was
appointed Administration Director in 1996. She began her career
with USDA in 1979.
So why don't we start with you, Ms. Trichel, and thank you
for your written testimony. But if you could summarize that
testimony in the 5 minutes that has been allocated to you
today, I would appreciate it.
STATEMENT OF TANA TRICHEL, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, NORTHEAST LOUISIANA ECONOMIC ALLIANCE
Ms. Trichel. Okay, thank you very much, Senator. We
appreciate your efforts in our work with the renewal community.
You have been out in the region working and promoting this
benefit that has been so important to our region.
We can document that the Commercial Revitalization
Deduction Allowance has created 3,000 jobs since 2002, and that
there has been over $250 million newly constructed businesses
within these two renewal communities, the two urban renewal
communities.
The good news is that the program is working. The bad news
is that we were progressively unemployed and progressively poor
to qualify for the program in the first place. I appreciate
Mayor Hawkins' comments regarding this program, because I
believe that the extension of these benefits will be critical
to helping rescue us from the problems that we are now
experiencing in this difficult economic time.
Our job is, of course, to create jobs and to help whenever
we can. When IP shut down in Bastrop, we worked and partnered
with the Louisiana Workforce and local economic development
leaders to put on a work fair, and we did this one differently.
We invited companies only that had openings that were similar
in their labor needs, and we were able to get jobs for 100
people of the 264 who came to the work fair.
Additionally, I am glad you mentioned the educational
component because we invited the technical schools and
universities to come, and we had 160 interviews for people who
were encouraged to seek educational opportunities in high-
demand fields.
We have success stories in the region that can demonstrate
the effectiveness of the Renewal Community Benefit Program. A
small business in Winnsboro added four employees, built a new
structure, and doubled their business. We have a company in
Arcadia that added 235 employees and expanded their building.
Union Tank testifies that renewal communities were an important
component of their locating in Alexandria, Louisiana, and we
have story after story and testimony that we could offer you.
We feel that this program is currently at risk. However, it
was recently costed at $11.5 billion to extend the renewal
community program, but the Department of Housing and Urban
Development can document that the program thus far, which was
regionally cost at $11.5 billion at its inception, has cost
about $3 billion. So we are very [inaudible] we feel that the
extension money does not cost that much at all. And we
appreciate your efforts and encouragement and are hoping that
this bill gets the attention that would be important to our
area.
When Pilgrim's Pride lost 1,200 jobs in Farmerville, we
provided community economic triage. Assuming the worst, we
looked at food, shelter, education, how were we going to handle
people who did not have health care and could not pay for it.
And I must say that it was a shining example of what a
community can do if it works together, partners, and has a
common goal.
The risk to jobs in that area was so much higher, the
impact has been estimated at 5,000 jobs if we lose the 1,300
jobs at Pilgrim's Pride. That is a loss of services in the
city, the loss of services in the parish. The school cannot be
supported at its current level. So it is so much more
devastating than just the loss of jobs, other small businesses
closing, as Mayor Hawkins alluded.
One of the bright spots we have in our area--you were
talking about training, and although [inaudible] is not here, I
would like to mention the fast-track training program which we
will give to any employer a trained workforce or we will train
them for free. This new program that is modeled after Georgia
was key in our luring Gardner Denver Thomas to put their
headquarters in Monroe, moving it from Sheboygan, Wisconsin.
Another bright spot in our region is Franklin Farm. You are
so familiar with that initiative. But it is at the moment the
only State-owned site being marketed to the manufacturing
industry. We have focused on the automotive industry, and we
have not let up on those efforts. We have pent-up demand in
changing--the changing automotive environment means there are
still opportunities out there. But the objective is to create a
massive number of jobs at one time. We have been poor forever.
We have had wonderful initiatives to help us in our poor
situation, but jobs cure poverty. And this is our wonderful
opportunity to make that happen in northeast Louisiana.
In fact, we are now ranked in the top growth sites in the
Nation. With a little more work, we are hoping to [inaudible]
we hope to encourage them. We believe that this site can be
moved to the number one spot in the Nation.
We realize that we face as many challenges as we have
opportunities, but we do not want to lose any of our
opportunity efforts.
We appeal to Congress and we appeal to you to give Federal
consideration to the passage of the EZ, EP, RSD legislation.
Those are various versions of the same initiative, and most
every State in the United States has one of those programs, and
that we [inaudible]----
Chair Landrieu. Does it have a real name?
Ms. Trichel. Yes, the EZ-EP-RSD Coalition effort to--it is
Senate bill--it does not have a number this year, but I will
get that information to your office for sure.
[The information follows:]
Ms. Trichel. We are grateful for your dedication and your
commitment. I want to say thank you personally for saving
Louisiana after Katrina. You know, that----
Chair Landrieu. Thank you. There were a lot of people that
helped with that, and it is still in the works, particularly
with the people from Morehouse Parish, the challenges before
them in a parish of 24,000 and how difficult this 1,400 loss of
jobs is going to be and the potential impact of an additional
5,000 jobs in the area. That is not necessarily counting the
impacts of the hundreds of growers that are in the region, and
if a solution is not found, it could have ripple effects all
the way through south Arkansas and that plant shutting down as
well. And there is only a part of the processing plant to be
kept intact. But I will share that the public in St. Bernard
lost--the community of St. Bernard lost every home and every
business in St. Bernard Parish in Katrina. And it will be the
4-year anniversary this August, and that is a 100- percent loss
of homes, physical loss of homes, and 100 lost businesses. That
parish is slowly but surely, through just the heroic efforts of
the people of that parish and the help that the rest of us have
been able to provide for them, they saw a future that looked
extremely dim 4 years ago.
So you always have to put these things in perspective. As
difficult as things may be, there is a road forward, and there
is a way up. And if you put the right strategies in place,
which is what this hearing is about in some measure, we can
grow better and stronger communities, even out of, you know,
these very frightening and troubling and in some ways
catastrophic situations.
Do you have any closing remarks? Because your time is
almost up for testimony.
Ms. Trichel. One more thing, and I hate to end on a
negative, but I failed to mention the $1 billion farming
disaster that we had last year that we are recovering from all
over the State. But we appreciate your efforts, again, Senator
and thank you for having this hearing.
[The prepared statement of Ms. Trichel follows:]
[GRAPHIC] [TIFF OMITTED] 51031.007
[GRAPHIC] [TIFF OMITTED] 51031.008
Chair Landrieu. You are speaking about the losses from Ike
and Gustav?
Ms. Trichel. Yes.
Chair Landrieu. That was about a $1 billion--almost a $1
billion loss to our State, somewhere calculated by Commissioner
Strain between $700 million and $1 billion. I am happy to
report that we were able to secure under the American Recovery
Act $750 million to help our farmers. Now, not all of that
money will come to Louisiana, but a good portion of it. I am
thinking that approximately 50 percent, based on what
Commissioner Strain has been able to negotiate, will come
directly to the impacted parishes that were really not--the
Federal Government was not as helpful as I thought they should
be, and one of the things I was able to get in the recovery
package was $752 million help through the Department of
Agriculture. Those funds are on their way, and they are being
worked out now. So that will be very helpful to counties in the
south and particularly the parishes in Louisiana.
Mr. Ricks.
STATEMENT OF MICHAEL RICKS, DISTRICT DIRECTOR, LOUISIANA
DISTRICT OFFICE, U.S. SMALL BUSINESS ADMINISTRATION
Mr. Ricks. Chairwoman Landrieu and distinguished members of
the Small Business and Entrepreneurship Committee, thank you
for the opportunity to testify before you today on the topic of
manufacturing closures in northern Louisiana and the impact
that these closings will have on small Businesses and
communities in general.
The Small Business Administration is acutely aware of the
difficult economic situation being experienced by small
businesses in the State and throughout the Nation. Recent
closures of several large businesses in northern Louisiana has
severely impacted many small businesses in our community that
depend on these large firms for revenue and jobs.
SBA's Louisiana District Office stands ready to assist
small businesses in this area by providing access to capital
through our guaranteed loan programs and also through the
provisions included in the American Recovery and Reinvestment
Act of 2009, counseling through our entrepreneurial development
program, our SBDCs and Women's Business Centers, and also SCORE
chapters throughout the State, and also procurement contracting
opportunities that small businesses can leverage through our
procurement counseling representatives that work with Federal
agencies to ensure that small businesses have an opportunity to
participate in Federal contracting.
SBA's entrepreneurial development programs delivered by
Louisiana Small Business Development Centers have worked in
partnership with the Entrepreneurial Development Office and
also the university system, and they provide 11 centers across
the State to deliver that service. In addition, we have six
SCORE chapters throughout the State and two Women's Business
Centers--one located in New Orleans, and I think that you were
very instrumental getting it started, and also another on in
Lafayette, Louisiana.
The numbers speak for themselves, and last year, our total
counseling resource partners served 13,380 clients, and based
on performance to date this fiscal year, we are expecting a 21-
percent increase. So, understandably in difficult economic
times, we are seeing an increase in requests for assistance,
and the SBA will work to ensure that we can deliver the
requested services and in an efficient way.
Consistent with overall credit markets, the SBA loan volume
under our guaranteed loan programs is below fiscal year 2008
levels. In Louisiana, as you mentioned, the lending activity
here in this State is not as bad as across the country, but we
are still pacing at only 72 percent of 2008 levels. Early
indications are that some of the changes that were made by the
Economic Recovery Act are having a demonstrable impact on
lending activity in the State. Loan approvals, for example,
over the last 2-week period have increased 148 percent over
what we were experiencing in the first few weeks of this
current fiscal year. So I believe that it is possible, given
these trends, that in Louisiana our loan volume could actually
exceed last year's with these changes.
Commenting on that, providing guarantee percentages up to
90 percent from our normal 75 percent in our standard 7(a) loan
program has had a significant--is a significant factor in
increased participation by SBA lending partners. It is clear
that these risk mitigation steps have been effective in
increasing participation by our lending partners. The
elimination of borrower and lender fees on SBA-guaranteed loans
has also had a positive effect not only on lender
participation, but has also provided substantial benefits to
small business borrowers. While I was preparing this statement,
I took a call from one of our lending partners in Monroe,
Louisiana, who had used SBA to fund a restaurant and a
pharmacy, and he called back with very positive statements
about how the SBA quickly and efficiently provided a $15,000
and a $13,500 refund back to these businesses after the loans
had already been closed. It is these kinds of things that the
SBA has to maintain and continue to do to assure--to
demonstrate that we have a commitment to our lending partners
to efficiently deliver our services and that the SBA is
committed to implementing effectively and efficiently these
policies to increase economic activity.
Government contracting under the 8(a) loan program has been
robust. We have 115 certified 8(a) firms in the State of
Louisiana, and over the last 3 fiscal years where we have
complete data, a total of $656,704,651 with 773 contracts and
contract modifications have been earned by these 8(a) firms. As
Hurricanes Katrina, Rita, and Wilma recovery construction
contracts reach their conclusion, we are seeing a drop-off in
contracting opportunities for these 8(a) firms, but even though
these are dropping off, we are still seeing contracting dollars
maintained at levels higher than prior to post-2005. So
indications are that we are going to continue to have robust
growth in the program.
Chair Landrieu. One more minute, please.
Mr. Ricks. Yes. Everyone is rightly concerned about the SBA
HUBZone certification program. Currently, we have 291 certified
HUBZone firms in Louisiana, and the administration has begun an
aggressive site visit plan to ensure that these small
businesses are in compliance with the requirements.
Again, I thank you for the opportunity to address the
Committee, and I appreciate the opportunity not only to answer
your questions, but also to hear what other people have to say
so that I can more effectively do my job.
[The prepared statement of Mr. Ricks follows:]
[GRAPHIC] [TIFF OMITTED] 51031.009
[GRAPHIC] [TIFF OMITTED] 51031.010
[GRAPHIC] [TIFF OMITTED] 51031.011
Chair Landrieu. Thank you, Mr. Ricks. I will have a few
questions as we come back after the panel has completed the
testimony.
Ms. Dupuy.
STATEMENT OF CORINNE L. DUPUY, DIRECTOR, MANUFACTURING
EXTENSION PARTNERSHIP OF LOUISIANA
Ms. Dupuy. Good morning, Senator Landrieu. I would also
like to take the opportunity to thank you for the work that you
have done in the State, and especially for manufacturers. You
have been of great assistance to our program as well.
As you mentioned, I am the Director of the Manufacturing
Extension Partnership of Louisiana, and I very much appreciate
the opportunity to talk here today about the MEP. We are the
NIST MEP affiliated center in the State of Louisiana hosted by
UL-Lafayette. The mission of the MEP is to provide Louisiana
manufacturers value-driven best practice solutions that
increase profitability and productivity. With a field office
located right here in Shreveport, we have firsthand
appreciation of the difficulties Louisiana manufacturers are
facing. In the last 3 years, eighteen manufacturing facilities
have closed in north Louisiana with an estimated loss of 5,243
jobs. While the current economic downturn poses serious
challenges for Louisiana manufacturers, I believe it also
provides an impetus for companies to consider their future.
Now, more than ever, the Louisiana manufacturers require access
to tools that allow them to cut costs and increase productivity
but also position their companies for growth through the
identification of new markets and new customers--both in the
U.S. and abroad.
MEPOL and the entire MEP network of centers are working to
provide manufacturers with those tools. We are making a
difference. In 2008, in Louisiana alone, we helped our clients
generate new and retained sales of $120 million, achieve cost
savings of $73 million, and create and retain more than 1,977
jobs. This data comes directly from measurements by the
companies once we finished work with those companies.
In supporting Louisiana manufacturers, we work with many
partners, including the Louisiana Small Business Development
Centers, the [inaudible] Technical Assistance Centers, USDA
Rural Development, the Southwest Trade Adjustment Assistance
Center, Louisiana Economic Development, and the Louisiana
Workforce Commission.
A recent success was our work with a company called
Louisiana Binding Service. Louisiana Binding was devastated by
Hurricane Katrina in 2005. They are an archival products
manufacturer specializing in custom high-end document binders.
Owners and brothers Pat and Scott Williams made the tough
decision to relocate to DeRidder, a small community in rural
Beauregard Parish near the Texas border, after losing their
facility in Harvey, Louisiana, which is near New Orleans.
Following the relocation, they had numerous issues and
challenges with the workforce and training them and having
skilled workers. Only a couple of their previous employees with
the necessary skills permanently relocated with the company.
They needed training for their new workers. LED asked MEPOL to
come in and assess their situation.
MEPOL assessed their workforce issues and coordinated
training. The company underwent leadership and motivational
classes to combat work ethics and morale issues. After training
was complete, with a more cohesive team in place, Louisiana
Binding began a series of lean training to streamline and
standardize their process.
As a result of the devastation of Hurricane Katrina, which
included widespread mold and water damage, an innovative
solution to protecting important documents was realized by the
Williamses. The Williams brothers designed a ``Disaster Safe
County Binder,'' and in late 2007, with the help of MEPOL,
filed for a provisional patent.
The services Louisiana Binding received from MEPOL
attributed to $12 million in increased and retained sales,
$750,000 in cost savings, and 115 jobs create or retained in a
very rural community. And as we understand, by the end of this
year, they plan to open a second facility back in the New
Orleans area with hiring initially 30 people.
I believe that with additional resources, new
collaborations, and expanded partnerships, MEPOL and the entire
MEP network will be positioned to not just help companies
survive in the near term, but also work with these
organizations to set them on a path to sustained and profitable
growth. Much like our response to the recent natural disasters,
we are ready to pull together in this economic disaster with
targeted responses to meet Louisiana manufacturers' most
immediate needs and provide tools to help them prepare for the
future.
I would just like to add that we also were successful in
receiving USDA Rural funds for manufacturers in the rural areas
of the State with your support, and also through LED's small
and emerging business program, we received a small amount of
funds to help manufacturers become involved.
Thank you.
[The prepared statement of Dupuy follows:]
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Chair Landrieu. Thank you very much, and I particularly
appreciate your sharing the specific story about a success,
because it really helps us to learn of the opportunities that
business lost and people think they could recover, but through
the tragedy they found a great need to find a new way to
protect documents from natural disasters. Whether it is a
hurricane, a tornado, or an earthquake, I would say that is
quite an expanding business model or opportunity considering as
the country searches for solutions to prepare themselves better
for a disaster. So we are very encouraging by what you shared
about that business, and please give the owners my
congratulations.
Ms. Dupuy. Thank you.
Chair Landrieu. Ms. Nardini.
STATEMENT OF KAREN G. NARDINI, ACTING LOUISIANA STATE DIRECTOR
FOR RURAL DEVELOPMENT, U.S. DEPARTMENT OF AGRICULTURE
Ms. Nardini. Senator, thank you for the opportunity to
discuss the opportunities for business and industry available
through USDA Rural Development.
USDA Rural Development is committed to the future of rural
communities. Nationally we administer over 40 programs that
help provide infrastructure, housing, community facilities, and
job creation and retention. Our economic and community
development mission is supported by a diverse program
portfolio.
We strive to help build and expand Louisiana's workforce
through our business and cooperative programs. We help build
strong infrastructures in Louisiana's rural communities through
our electrical, water and waste, community facilities, and
telecommunications programs, in addition to our mission to
finance homes and apartment complexes in rural areas.
During the past 5 years, USDA in rural development has
invested about $2 billion in rural Louisiana through our
business, community, and housing programs. We also seek to
increase the impact of Federal funds by partnering with other
Federal and State agencies as well as nonprofits, to respond
flexibly and efficiently to the needs of Louisiana residents,
businesses, and communities. When a rural community is facing a
crisis, we respond by working with local, State, and Federal
partners to identify ways to provide assistance.
In recent months, as plant closures were announced, USDA
Rural Development worked with LED, Louisiana State University
Agricultural Center, Louisiana Department of Agriculture and
Forestry, Louisiana's Governor's office, and the Small Business
Administration to identify ways to assist impacted communities.
Our agency also worked with Louisiana's Commissioner of
Agriculture, Louisiana's Commissioner of the Office of
Financial Institutions, and Louisiana State University's
Business and Technology Center to examine financial options for
closed plants.
We deployed our staff to communities in crisis to provide
the information on USDA Rural Development funding
opportunities, and we regularly follow up with partner
agencies, community leaders, and borrowers, to assess those
needs and address those needs.
In the two parishes most impacted by recent plant closure
announcements, Morehouse and Union, USDA Rural Development has
invested almost $73 million. Our portfolio includes hospitals,
community water systems, a farmers' market, homes, apartments
for families and the elderly, fire departments and equipment,
law enforcement facilities and equipment, community waste
systems, and more.
This investment could be greatly influenced by adverse
impacts of any plant closures. We are committed to working with
the affected communities to restore a healthy, growing economy.
When nature's storms struck Louisiana, we joined forces
with our partners to help Louisiana's communities recover. Now,
as Louisiana faces an economic storm, USDA Rural Development is
working with our partner agencies to help Louisiana's
communities recover.
We will protect our investment and continue to work to find
financial solutions to the economic problems in Louisiana.
Senator, thank you for the opportunity to present this
information on behalf of Rural Development today.
[The prepared statement of Ms. Nardini follows:]
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Chair Landrieu. Thank you very much, and I want to by
thanking you, Ms. Nardini, for being so quick in following up
on the hearing yesterday where I suggested that maybe the SBA
and the USDA could work more in partnership, because the Small
Business Administration--which I now have direct oversight of
as the Chair of this Committee, it occurs to me that many of
the programs that we are operating are very similar to the
USDA. And if we can join forces in Louisiana, I think we can be
even more effective through our communities. So I thank you
very much, and I understand you have already had a discussion
this morning with the SBA representatives, and I appreciate
that, Mr. Ricks.
Let me ask--and I think someone from the Department of
Commerce is here--if you would just come forward, if you could
and give us a little bit more--I think it is Amy Debrozinski.
Thank you, Amy. I may have butchered that name there, but could
you correct me for the record?
Ms. Debrozinski. Most of the folks call me ``Amy D,''
Senator.
Chair Landrieu. ``Amy D,'' all right. But thank you for
being here. Could you just comment in a little bit more detail
about this Manufacturing Extension Partnership Program. I
understand it was created by law and funded in 1996, so it has
been around for over a decade. Can you describe the Federal
Government's perspective on this program and maybe add
something to what has already been testified to by Ms. Dupuy?
Ms. Debrozinski. Yes, I would love to. Thank you for the
opportunity today. The program actually started in 1989. It
went national in 1996, so we have been operating for 20 years,
two decades, and Corinne has given a great example of what
happens at the local environment, and the national program
brings together all of these resources so we are able to share
best stories and best practices across the country and to bring
observations that we may see in one State, bring it to bear to
the local communities.
Also, she highlighted a very important part of our program.
We strongly believe in partnership. It is in our name, and we
have tried to seek out other government agencies, whether they
are at the local, State, or Federal level, to do just what you
have indicated. We need to leverage the resources we have.
Everything is going to be constrained in the future, and what
we really need to do is build on those investments so that it
comes to the benefit of these small businesses and
manufacturers.
Chair Landrieu. Can you give, besides Ms. Dupuy's, an
example or two from Louisiana or from any State that might come
to mind, some success story that typifies the kind of work that
you all try to do on behalf of this program?
Ms. Debrozinski. I don't have one specifically from
Louisiana. We submitted one for the record from Louisiana
[inaudible] an interesting one for today is our program to work
with companies, and specifically in the Midwest, we have
identified the impact on the auto industry and [inaudible]
pertains to the South as well, but the idea of market
diversification. As Corinne indicated in her example, the idea
that companies have to recognize that they may go into
different industries. And our experience [inaudible] to help
companies comply with regulations and new standards, whether
they are national standards or international standards, gives
us the opportunity to help those companies realize that they be
more than an auto supplier. They could get into the medical
industries, into new technologies, and things like that, and
that is the area that we are very focused on right now.
The people of Louisiana, their association with the
university is a great opportunity for us to really take the
technology and research that is happening in the universities
and move that out to our small companies. So that is what we
are looking forward to.
Chair Landrieu. Thank you. And, Ms. Dupuy, state for the
record where you all are currently located, and you have, I
think, three offices in Louisiana.
Ms. Dupuy. Yes, ma'am. We are headquartered at UL-Lafayette
in Lafayette, Louisiana. We have an office in Shreveport
[inaudible], and we also have an office at LSU in Baton Rouge
serving the [inaudible].
Chair Landrieu. I am very interested, and I am going to
pursue this program to learn more about it through the
Department of Commerce. I do understand that it was scheduled
for elimination annually under the last administration, and
Congress stepped forward to keep this program running. So I
would like to learn more about it, as I was a part of helping
to keep this program operating, and see how it can be even more
effective here in Louisiana.
Let me ask you a few questions, Mr. Ricks. I know you are a
New Orleans native but your recent experience has been in
Alabama. I am very pleased to hear you say that in the last 2
weeks, according to your testimony, the loan approvals have
increased 148 percent. I would suggest and ask you if you agree
or if you could comment, there would be some other pressures
pushing these numbers, that this would probably be a direct
impact of the Economic Recovery Act that, again, reduced the
fees--eliminated the fees, which can be in some instances
substantial for these small businesses and banks. We have
eliminated those fees and raised the guarantee of these SBA
loans from 75 percent to 90 percent in our attempt--and we hope
a successful attempt--to unfreeze the credit markets and get
credit flowing to business that have proven profitable and
sustainable for decades that now look out and see the next year
or two as a very difficult time to manage through. And we want
to do what we can to unfreeze those credit markets and thought
that perhaps this action--I am hoping that these reports that
you are giving us for Louisiana are being reflected around the
Nation.
So my question is: Is that the record that you submitted?
And do you have any indication that these numbers are jumping
like this around the country?
Mr. Ricks. I don't have any specifics to point to, you
know, I do not have any broad data that shows where the
increase is across the country. But indications are, based on
my cursory analysis of what is going on not only in Louisiana
but other districts that are in our region, we are seeing an
increase in lending activity. It is my opinion that the reason
why the numbers are going down is because of the changes in the
Economic Recovery Act.
Increasing the guarantee percent at 59 percent actually has
a couple of effects. Number one, it provides a greater risk
mitigation for the lender, makes him more likely to make the
loan, since their exposure goes down significantly; but also an
important factor [inaudible] as you know, the guarantee rate on
an SBA business loan does not count against a lender's lending
limits. So right now we are having this--when you look at the
credit market that is clogged up, one of the reasons is--the
banks, they have money to lend out, but because of lending
limits imposed by regulators in the interest of institutional
safety, they cannot do it. Well, the guarantee percentage, that
SBA guarantee percentage does not count against their lending
limits, so 90 percent of the loan that they make does not
count.
So, in theory, what you could have is you could have $10
million in loans that you can have and would like to make, but
your lending limits are only going to let you make a million
dollars in loans rather than lending out the whole $10 million,
because if you take each loan and you put a 90-percent
guarantee on top of it, of course, do the math, you only have
10-percent exposure, so there is only $1 million of the $10
million that you are actually making count against the lending
limit. Lenders are starting to see this, so I think you are
going to begin to see more activity.
Some other changes, the secondary market, the creation of
the secondary market by the administration I think sent a
positive impact nationally. These kinds of programs have a
limited effect on Louisiana because most of our lenders here in
Louisiana want to make loans and keep them on the books. There
is not a real market for secondary market sales, but we are
seeing that. We do have some [inaudible] lenders that operate
in that space, like Chase Bank, [inaudible] of Houston, and I
expect to see some numbers increase there as well.
But that, I think, is going to have a big impact on getting
some of the larger national lenders back in the business of
making loans. They are going to be able to sell those loans in
the secondary market, free up the money, and then make more
loans.
The elimination of lending fees, I think--of course, it has
a direct impact on the businesses because that puts more money
in their pockets. I mentioned in my opening statement that--and
that is just while I was preparing the document. I get calls
all the time from people telling us that this is going to have
a significant impact on their ability to keep their doors open
because now they have got more money in their pocket.
So, you know, if do the math, $15,000 or $13,500, that is a
significant impact on a small business, and so, yes,
eliminating the fees I think has had an impact. But as far as
lenders are concerned, it is a lot easier for the lender to
sell the concept of an SBA guarantee to a potential borrower
when there are no funding fees attached. One of the key
obstacles that you have with lenders participating in the
program is, you know, all of our lenders are in competition
with each other; they are all out there looking for the best
loan deals. And when a potential borrower is sitting across the
table from them and they do the risk analysis and determine,
well, you know what we could do, this is with an SBA guarantee,
well, now that loan officer has to sell the idea of a loan, an
SBA loan, to that potential borrower. When there is a 3.5-
percent funding fee on top of that, it makes it a lot more
difficult.
What ends up happening is, you know, they may leave and
they may go to another bank, and the truth of the matter is
that actually extends the capital access problem. You know, the
worst thing you can do when you find yourself in an economic
bind is to drag it out. You need money, you need it as soon as
possible.
Chair Landrieu. You need it today.
Mr. Ricks. Right, and it is a psychological barrier. And I
think what we are seeing is it is a lot easier for a bank to
say, ``I've got to do an SBA loan. What is it going to cost
me?'' Nothing. You know, there is no funding fee. So it makes
it a lot easier for banks. It makes it easier for them, sort of
a package, didn't cost--require them that they do not have
large--the smaller the bank, the less likely they are going to
have a dedicated staff for government-guaranteed lending, and
if we can--so they have to outsource that service to third
parties. And not having to pass that funding fee on to other
people makes it a lot easier for them to absorb that cost.
So, overall, I think it has had an impact here in
Louisiana. I would venture to guess--and I will be happy to
provide you with some more specific details later, but it is my
opinion that these changes are going to have more of an impact
in Louisiana than you are going to see in other parts of the
country because of the unique characteristics of the banks that
we have here. Our banks want to stay in the State; they want to
make money in the State. They want to make money--they want to
[inaudible] in the State.
Chair Landrieu. And they are generally very healthy.
Mr. Ricks. They are very healthy. We don't have to paint
them with a broad stroke, but, generally speaking, community
banks in Louisiana are significantly healthier than other
community banks across the country, and they are certainly a
lot healthier than the national banks across the country. So I
think that these--since they have money to lend, all they need
is a method to either get around lending limits or also
mitigate some of the risk factors, and that is what these
changes in the Economic Recovery Act have done.
Chair Landrieu. Well, let me follow up by asking you this:
Given that--and I agree 100 percent with what you have just
outlined. That has been my observation, which is why my Ranking
Member, Senator Snowe, and I fought so hard to get this
included along with our colleagues in the House, in the House
Committee, to have this included in the stimulus package, the
American Recovery and Reinvestment Act. But what is SBA
planning to do? And as you know, Mrs. Mills, it was her first
day on the job, the Administrator, on Monday. Her confirmation
went through the Senate Thursday before we left. So she is very
new to the job, but not new to the area.
What is the SBA doing specifically and maybe you could say
what you are doing in this region to reach out to Louisiana
community bankers--those that are federally chartered as well
as State chartered--to educate them about these new rules, the
elimination of fees, and to encourage them to be partners with
the SBA? Because I understand--I always am puzzled why only--I
think it is less than 50 percent of our banks participate, and
I would like to actually see a 100-percent participation rate
so that the people that I represent can walk into any community
bank in their own town and avail themselves of the
opportunities offered by that bank, stand-alone or in
partnership with the Federal Government through the SBA. And I
have been puzzled for many years about why that is not the
case. So would you comment, please?
Mr. Ricks. Yes, thank you. Well, first, what we have been
doing since the change in administrations is we have had a
significant focused effort by the Office of Field Operations to
outreach to community banks and get them more on board. I will
say this: That is something that I did in Alabama, and I did
here in Louisiana even before the change of administrations. I
agree with you, Senator, that our goal should be to try--the
best opportunity for a small business to succeed is to develop
a relationship with their local banks.
In the past, in previous administrations, it did not
really--it wasn't that kind of focus. It was more of, you know,
if we can get money--if a non-bank, out-of-State lender can
make a loan to somebody, then that is great. And don't get me
wrong. I certainly appreciate our out-of-State non-bank
lenders. Certainly they do offer a significant service. But I
think that in the long run a local bank is going to give the
borrower not only more favorable terms, but also the service
that they are going to need as a relationship with their lender
to guarantee success. I have to say that because that has
always been our focus. You know, we have been outreaching to
banks.
One of the principal problems we have when you are trying
to market to local community banks like that, my experience is
they are all in competition with each other. So it is not
realistic to say, hey, let's all have a big meeting and talk
about SBA lending, because they do not want to do that. And
that is fine. I understand that.
So our approach has always been one on one. You know, you
really have to fight these battles one at a time, go from
lender to lender to lender, because each lender has a different
business model, and you have to understand what they want to do
and develop a training strategy that fits with their business
model.
Chair Landrieu. Well, also--and I understand that. I have
been puzzled by this myself, particularly when there is a 90-
percent guarantee that the Federal Government is willing to
absorb. I mean, we are absorbing the risk and are in a position
to be able to do it. Of course, we are lending--you know, there
are standards of lending. You must meet a certain standard, and
you must be creditworthy. But we give a little more leniency
than potentially a bank standing on risking their own capital,
but that is what Government can do and what it should do.
But there has got to be some incentives that potentially
the Federal Government or the State, particularly those that
are State chartered, in terms of encouraging banks, you know,
not with a stick but with a carrot, to be aggressive in really
seeking out opportunities to lend, because I will tell you, on
the small business side--we have had many small businesses
testify before the Committee. We did not structure this
particular meeting this way because we needed to enlist this
information for the record first. But I intend to follow up
with panels of small business owners. We hear from small
business owners in a variety of different fields their
inability to access loans from banks or from traditional credit
lenders and that the markets are frozen to them. Their lines of
credit are being reduced. Their interest rates are being
increased. And we will never find our way out of this recession
unless we are aggressively identifying creditworthy emerging
businesses and give them the money and get out of their way and
let them expand to create the jobs to take the place of the
1,400 that we potentially are going to lose at Pilgrim's. We
need to make up those 1,400 jobs somewhere. It is going to take
a lot of small businesses to get the assets and resources. This
archives company is an example that could potentially pick up
two or three of those workers, or four or five or six or seven.
Is there coordination between MEP and SBDC on this issue?
Ms. Debrozinski. I can provide the answer from a national
perspective, and Corinne Dupuy can provide the answer for the
local level. But we have been working with the SBDC centers,
and specifically Antonio Doss, the Assistant Associate Director
at the SBA, who is in charge of the SBDC programs.
Chair Landrieu. Say what SBDC is for the record.
Ms. Debrozinski. Small Business Development Centers. And so
we have been able to work together with him, and so our
national network of centers who are focused on [inaudible],
their national network of centers who are focused on small
businesses, the larger population, have been able to work
together and identify--the Small Business Development Centers
work more with the folks at the entrepreneurial level to really
identify how to start that business. We think that [inaudible]
manufacturers and the operational level and the technology
assurance.
Chair Landrieu. Do you want to add anything, Corinne?
Ms. Dupuy. Absolutely. I would just like to say that the
Louisiana SBDCs and the MEP of Louisiana have signed an MOU, a
cooperative agreement indicating that we promote such programs.
And the way that pretty much works, for instance, I will talk
about in the Lafayette area, the Small Business Development
Center and UL-Lafayette, when they get a manufacturer that
comes in and they need assistance beyond the business plans or
starting--entrepreneurial starts, they will send them to the
MEP to take it a step further. We might have an entrepreneur
that comes in with a new product design. The Small Business
Development Center will take them to a certain point; then they
are referred to us, and we help them get patent applications,
create prototypes, help them with marketing, and other things.
So it sort of takes it a step further.
When we are done with the portions that we work on, we
refer them back to the SBDCs, and so it works out very well.
The SBDCs sort of act as a marketing arm for the MEP program.
They are in a lot more locations than we are. So it really
works out well.
Chair Landrieu. And I understand that Mary Lynn Wilkerson,
our State director, is here. Would you mind coming forward if
you would like to add anything? And while you are maybe
thinking about that, let me ask Mr. Ricks: You said that in the
8(a) program in Louisiana we have 115 certified 8(a) small
businesses. Can you share with us how they are divided around
the State? Do you have the regions broken down inside of
Louisiana?
Mr. Ricks. I don't have that specifically, but I will tell
you that a concentration of 8 (a) firms are--and this is true
across the country--aware of what the Federal contracting
opportunities are. We have a significant number of 8(a) firms
that participate with Army Corps of Engineers projects along
the intracoastal waterway and also the greater New Orleans
area. So we have a concentration of 8(a) firms there.
We also have concentrations of 8(a) firms around Federal
installations like Fort Polk and Barksdale Air Force Base as an
example, and that is really mostly construction-related 8(a)
opportunities. According to the Federal Regulations, these are
locality based so it makes sense that they are near, in and
around these areas. But we have a number, and I will be happy
to supply specifics as to where they are located and get that
back to you. But we do have a number of 8(a) firms that really
are not locality based, where they are in the State but they
actually leverage 8(a) contracts in other district offices as
well. So they might be based here in the State, but they are
actually leveraging contracts elsewhere.
Chair Landrieu. And do you have any information, either
during your time of service or prior, about how many companies
apply to be 8(a) in Louisiana, how many are accepted, and how
many are denied? A general, rough estimate or percentage.
Mr. Ricks. Many times what ends up happening, it is
difficult to tabulate that information because people drop off
at different times. We have a number of people that express
interest in the program, and then when they come to our
certification seminars--we are going to have one today, as a
matter fact. Once they realize what the 8(a) program is all
about, they realize that it is not really something for them.
It is really a program just for people who want to leverage
Federal contracting opportunities. So if you are a restaurant,
you know, there is not going to be a whole lot of
opportunities.
So it really is focused on different kinds of business
sectors and what kind of opportunities are available. My guess
is probably about for every 8(a) firm that comes into the
program, you have at least four others that express some
interest in the program, and when they drop off really depends
on--most of them drop off on their own, and once they get into
the application process and they realize what the reporting
requirements are going to be and some of the unintended costs
of actually participating in the program, they elect to
withdraw prior to completion.
But I will get that to you. I don't know how many actually
make it through the application process and actually drop off,
but most--the SBA over the last few years has been very liberal
in its interpretation of what is socially disadvantaged. So we
have a number of people who come into the program that really
do not fit the traditional dispatch business category. We have
any number of women-owned businesses that operate in
predominantly male fields, and the current interpretation is
that is a social disadvantage, and they come into the program
as well. People with disabilities is another one.
Chair Landrieu. And the point of this program is to try to
promote opportunities for entrepreneurs from socially
disadvantaged groups. I support the goals of the program. I
want to try to make sure that the quality of this program and
the effectiveness is made stronger. I think we can all work on
strengthening. And I say that because the Federal Government is
a major buyer of services, just like any large corporation
would be. And our Committee, both Republicans and Democrats,
actually feel very strongly about having small businesses in
America be able to provide services to the Federal Government
and not have small businesses shut out of opportunities that
are right there in their own backyard just because they are
small. They can be very profitable, very efficient, and very
well run. But just like any large corporation, large
corporations are comfortable dealing with their peer groups.
And it is very hard to get a large corporation to divide up
their big contracts in small enough chunks that small
businesses can get involved. And it is very important for the
Federal Government in my view to try to do that, because a
Federal contract sometimes could help a small business at a
very critical time in their growth and then really help them to
go to that next step and then grow.
So it is a strategy for growth as well as economic
opportunity. And, I don't know, Mary Lynn, if you have anything
you wanted to comment about that or something else.
Ms. Wilkerson. Mary Lynn Wilkerson, State Director for
Louisiana Small Business Development Center. Thank you,
Senator.
I would just reiterate what Corinne said. Right after the
national program signed the memorandum of understanding, we
here in Louisiana signed a memorandum of understanding, and I
think we have had it at least 3 years. We probably in our
network see about 300 manufacturers in any given year. That can
be from thinking about it to in. My centers tell me all the
time anecdotally that they send people to the Manufacturing
Extension--MEPOL here in Louisiana, and we do--they come back
to us. We do not formally track them, but we know that there is
a significant number of the folks we work with that are
referred to MEPOL.
In addition, with the contracting, we also--there is a
Federal memorandum of understanding with the PTAC program. And
Sherrie Mullins and Kelly Ford are here with the PTAC program.
We do use that exactly as you said because some of these small
businesses are seeing a downsizing in their sales, or
strategies for Government contracting, State contracting,
international trade. So we look for any opportunity. We work
for lots of people through the PTAC program, and I know that
they have significant contracts, last year probably about $1
billion in contracts, Louisiana companies, which is
significant.
So, you know, you have three Federal programs that are
working very closely together here in Louisiana.
Chair Landrieu. Well, I think people would be encouraged by
that because, you know, many of our experiences, including mine
as an elected official, and citizens generally, sometimes think
that there is not as much coordination as there could be or
should be between Federal agencies, and it seems complicated
and duplicative. But I am very pleased to see that in this
particular area there seems to be a fairly substantial level of
understanding and cooperation among your individual programs
and how you can maximize the Federal investment, which is
substantial to get the maximum benefit of being helpful and
supportive on Main Street, on the ground in our communities,
large and small, throughout the State, which is where our focus
is going to be.
I am prepared to wrap up in just a few minutes. I do not
mind at all having the Procurement Technical Assistance Centers
come forward if you would like to just say a word for the
record, if you would like to. While they are thinking about
that, is there anybody else that wants to add something to this
record before we close? Mary Lynn?
Ms. Wilkerson. One thing I did forget to say is we have
also leveraged funding through U.S. Rural Development. We do
have dollars and, in fact, have just requested reprogramming
some of those dollars for northeast Louisiana since the
problems we have had up there, so we will be trying to do some
of that. And we are actually working with some ag people at the
University of Louisiana-Monroe to develop task management so we
can begin to work with the chicken farmers and other people to
help them streamline their financials.
Chair Landrieu. And do you know how much money you are
asking to reallocate?
Ms. Wilkerson. Well, we just sort of added all the
parishes. I have about $190,000 right now left in that grant,
and we have got--you know, so I can--it is not per parish, I do
not believe specifically.
Chair Landrieu. But you are trying to allocate it and focus
it for north Louisiana?
Ms. Wilkerson. Yes.
Chair Landrieu. I appreciate Mayor Hawkins staying with us.
But the Pilgrim's Pride situation hopefully will work with the
partnership between two private entities with the State serving
as a financier in this situation. But if it does work, there
could continue to be a need to help these growers particularly
refocus and reorganize themselves so they become more
diversified. And they are growing not only chickens but
potentially thinking about the opportunity to grow something
else so that if this happens again, they will have some sort of
diversified product base.
There are all sorts of options, which brings me to a
meeting I did yesterday on broadband technology, because
getting high-speed Internet to some of our businesses, to our
farmers, to our ag communities is absolutely crucial to
strategic, strong economic development in the whole State, but
particularly in rural areas.
Again, I am very proud that the recovery package--and
President Obama and his administration feel very strongly about
this and have invested $7 billion for the Nation. Now, some
people testified that they could use $7 billion in California
alone to accomplish this goal. So it sounds like a lot of
money, but the needs of the Nation are great. We are
positioning Louisiana, I am trying to position Louisiana to get
as aggressive as possible in this effort because this is a
lifeline to many of our small businesses who do not have access
to high-speed Internet. If they did, they could more easily
change or strengthen their business model. Not only do we want
our businesses to have access, but we need them to have
affordable access. Fifty dollars a month for a residence or
several hundred dollars a month for a business is sometimes
very difficult to achieve. So we are looking for some creative
solutions as to how we get our businesses, you know, on high-
speed broadband and getting access in every corner of this
State. And I am going to take that on as a special project and
working with anybody that would like to work with me on it.
Let me ask you, if you could, to please identify yourself
and you want to give a word or two about PTAC, Procurement
Technical Assistance Centers, and identify your funding source.
Ms. Mullins. We are funded through the U.S. Department of
Defense, and we have to have local matching money. The program
that I represent is based at UL-Lafayette. We are called the
statewide program. The program that Kelly runs covers ten
parishes in west Louisiana. It strictly depends on where our
funding money comes from.
The program at UL has been there since the late 1980s. The
past 5 years' worth of contract documentation we have collected
from our clients indicates we have seen over $2.6 billion of
contracts awarded at the Federal, State, and local level to our
contractors, and those were folks that we have signed
documentation----
Chair Landrieu. Is that nationwide?
Ms. Mullins. No. This is in Louisiana only. I do not have
the Federal numbers. I know that the Association of Procurement
Technical Centers at this particular time is compiling the data
for 2008.
We do work with some large businesses also. One of our
success stories has been actually working with Textron over in
the New Orleans area and working with them on their small
business subcontracting plans, which includes our small
businesses. So the majority of our contracts come from small
businesses, but we also have a hand in the private contractors,
which is an excellent way to connect up those small businesses.
Chair Landrieu. And why don't you share for the record--
because it is something I am particularly proud of since I
helped to keep the Textron plant open. Explain to the public
what they manufacture.
Ms. Mullins. Now you are asking me something tough here
because I am not the one that is in that facility.
Chair Landrieu. Well, let me help you out. They manufacture
an armored security vehicle which is mine resistant and is a
vehicle that is in great demand in Iraq and Afghanistan, as our
troops patrol the areas and are subject to sniper attack and
explosive device attacks, which is a pattern of warfare in that
area, and the armored security vehicles, which are manufactured
for the whole Nation here in Louisiana, at the New Orleans
plant and the Slidell plant were subject to be closed. And our
delegation fought to sustain them, and then the Army after the
attack of 9/11 ordered 400 vehicles. It was a huge contract,
and I think what you do is step in to see that potentially some
of the small businesses could participate in that project worth
millions of dollars to contract to buy these vehicles. So you
stepped in and worked with whom?
Ms. Mullins. We worked with the small business office,
their small business liaison office, actually put together a
subcontracting plan, which is a requirement that they use small
businesses. And our contractor--or, excuse me, my councilman in
that area is a retired contracting officer, and he actually
spent day after day after day working with them, formulating a
small business plan, and put it together to comply with the
Federal guidelines. And then we worked with them on an event
that they did where they brought in small businesses to meet
with them.
Chair Landrieu. Okay. Ms. Trichel, do you have any other
closing comments? I would like to wind down our panel. Just
close for a minute or so, something that you want to testify to
that you might have passed over.
Ms. Trichel. Well, I would like to discuss the SBA lending.
I was the first certified lender in the State of Louisiana for
Small Business Administration, and my experience in that
banking position and since, working with small businesses to
acquire loans, is that small banks in particular perceive SBA
loans as [inaudible] making a bad loan good instead of making a
good loan better. And I believe that if there was an awareness
campaign I believe if there were some incentives for small
banks to become certified lenders or ``preferred lenders,'' as
it is called today, the decision process would be easier.
Chair Landrieu. Thank you.
Mr. Ricks, anything?
Mr. Ricks. Just in light of that, I agree, I think that a
goal, a worthy goal to get banks, local banks more involved in
SBA lending would be to bring them on board as certified
lenders, and the SBA does have two programs for that, the
express program and the standard preferred lender program. That
does make things a lot easier, but ultimately what we have to
do is we have to do a very good job or a better job of
convincing banks that SBA is their business model and how SBA
fits and how the analysis needs to happen. And we are doing
that now, and hopefully we will be able to get more people on
board and make that work better for everybody.
Chair Landrieu. Thank you.
Ms. Dupuy.
Ms. Dupuy. I would just like to say that earlier you had
asked about specific examples in the State of Louisiana, and we
have submitted some to you for the record.
Chair Landrieu. Yes.
Ms. Dupuy. Specifically north Louisiana, we have already
done that. But we have many more success stories, and we have a
lot of data that is substantial. If you need any of that
information, we would be happy to give that to you.
We would like to also offer you the opportunity to tour any
of the facilities that we have worked with. A lot of the folks
that we have worked with are very proud of the changes and the
transformations that have taken place, and we would love to
have you come in and see it.
Chair Landrieu. Well, I am very and specifically very
interested in this because there is a great clamor around the
country and a call that the manufacturing base in America is
declining and collapsing, and I think there is another story to
be told. I think there is some traditional manufacturing that
has moved overseas. It has been very disruptive and very
difficult for communities. The textile industry comes to mind.
The petrochemical industry is challenged by that as well, which
we see in the State. And as things move internationally, I
believe that I can see real opportunities for new kinds of
manufacturing, using cutting-edge technology across the board.
And we want--I would like our manufacturing sector in the whole
Nation to be strengthened. But, of course, my focus is to see
it strengthened in Louisiana, and I want to look for
opportunities, and I want us to be smart about the assets that
are already here and making them work.
So, Ms. Dupuy, I may want to take you up on a follow up, if
not an official field hearing, a roundtable discussion to
highlight some of these success stories.
Ms. Dupuy. Well, I think you would be pleasantly surprised
at what you may find, what Louisiana can offer in terms of
manufacturing.
Chair Landrieu. Thank you.
Ms. Nardini.
Ms. Nardini. Thank you, Senator. I just want to summarize
by saying Rural Development has about a $2.4 billion portfolio,
and of that portfolio, about $235 million of that is our
business cooperative programs. But the remainder of that money
is in every other aspect of the rural communities, that all the
things you heard me talk about today, the community facilities,
the water, the sewage, the housing. So truly Rural Development
has a big investment in rural communities, not just in the
businesses but in all of the other things in the communities
that are needed to sustain these businesses. And we truly are
committed to the rural communities throughout the State and
devising everything that we can to help them build and grow and
sustain that growth.
Thank you.
Chair Landrieu. Thank you very much, and for the record--
and I am going to submit this for the formal record, which is
just an outline of the additional funding brought into the
State through the American Recovery and Reinvestment Act. In
the Department of Agriculture, there are substantial increases
in the Aquaculture Assistance Grant Program, the Forest Service
Grant Fire Management Watershed Program; the National School
Lunch Program, which people do not realize is funded through
the Department of Agriculture; rural broadband, which I spoke
about; rural business programs, grants, and loans; rural
community facilities grants and loans; rural utility grants
programs; and rural water and waste.
Now, these are block grants that have come from the Federal
Government in addition to the annual appropriations through the
stimulus package to try to in some cases double and triple the
amount of money that the Federal Government normally sends to
the State, to try to get projects underway, hire people, you
know, keep local government and nonprofits moving forward.
So I hope that people will be focused on what substantial
help some of this funding can be for the programs and how small
businesses in these rural areas can benefit directly and
indirectly.
Any closing comments or remarks from the panel?
Ms. Debrozinski. No. We just appreciated the opportunity
and your focus on manufacturers and small businesses.
Ms. Wilkerson. Thank you on behalf of the College of
Business. You have helped us. We are going to create the
incubator in northeast Louisiana. It is the only region of the
State that has not had one, and I think that is going to be
beneficial to the region as well. And your support to small
businesses has just been incredible, and we appreciate that.
Chair Landrieu. Well, I intend to get even stronger now
that I am the Chair of this Committee. I have been able to help
somewhat as a committee member, but now as the Chair, I may be
able to really bring additional focus to the SBA. Both Senator
Snowe and I believe it should be elevated to a Cabinet level
position. We have asked the President for that designation.
Whether it comes or not, we remain hopeful, and that request
will get due consideration by the President. The SBA was under
the Clinton administration--part of the Cabinet, and we would
like for it to be again. I think it is very important for small
business to have a seat at the table when these major
negotiations are going on about the credit markets and the TARP
monies and the bailout funding. And I think that our idea, at
least my idea as a Senator is to get help as quickly as
possible to the Main Streets of Louisiana and to our other
States. And I would like to see the Main Street ambassador in
Columbia and Tallulah and in places like Concordia Parish that
could use a great deal of help and support, and right here in
Bossier and Caddo Parish region. So that is what the hope of
this Committee is. We want to strengthen the SBA. We have
already seen good comments and actions from this administration
about increasing funding to the SBA. But I will say I will
speak to this at a later venue about keeping taxes reduced and
particularly on industries like oil and gas, which fund in
large measure and support any number of small businesses
throughout the country. It is under the Finance Committee's
jurisdiction. But regulations, taxes, and effective programs do
affect the amount of money for small business, so my Committee
will track these issues and provide, where needed, a voice or
forum for small business priorities.
Thank you, panelists, and for anybody in the audience that
wants to submit testimony, the record will be open for 2 weeks.
You could submit it in writing, and I will be here for another
20 minutes to take any personal comments that anyone has.
Thank you. We also have copies of the American Recovery and
Reinvestment Act. This is a preliminary guide to competitive
grant funding specific to Louisiana, and it was the first
guide. I am very proud of our office. We worked with our other
members of the delegation, but we led the effort to create this
for the State, and we were the first Senate office to prepare
it so our agencies here in Louisiana and our local communities,
our mayors, our police jurors, our nonprofits understand what
is available through competitive grants in large measure, some
formula funding, but in large measure competitive grants that
must be applied for to use this funding that is now available.
So, the Small Business Committee meeting will adjourn.
Thank you.
[Whereupon, at 11:30 a.m., the Committee was adjourned.]
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