[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]




 
    TRADE ADJUSTMENT ASSISTANCE FOR U.S. FIRMS: EVALUATING PROGRAM 
                   EFFECTIVENESS AND RECOMMENDATIONS

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

                                HEARING

                               before the

                SUBCOMMITTEE ON GOVERNMENT ORGANIZATION,
                  EFFICIENCY AND FINANCIAL MANAGEMENT

                                 of the

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                           NOVEMBER 14, 2012

                               __________

                           Serial No. 112-190

                               __________

Printed for the use of the Committee on Oversight and Government Reform


         Available via the World Wide Web: http://www.fdsys.gov
                      http://www.house.gov/reform



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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                 DARRELL E. ISSA, California, Chairman
DAN BURTON, Indiana                  ELIJAH E. CUMMINGS, Maryland, 
JOHN L. MICA, Florida                    Ranking Minority Member
TODD RUSSELL PLATTS, Pennsylvania    EDOLPHUS TOWNS, New York
MICHAEL R. TURNER, Ohio              CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina   ELEANOR HOLMES NORTON, District of 
JIM JORDAN, Ohio                         Columbia
JASON CHAFFETZ, Utah                 DENNIS J. KUCINICH, Ohio
CONNIE MACK, Florida                 JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan                WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma             STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan               JIM COOPER, Tennessee
ANN MARIE BUERKLE, New York          GERALD E. CONNOLLY, Virginia
PAUL A. GOSAR, Arizona               MIKE QUIGLEY, Illinois
RAUL R. LABRADOR, Idaho              DANNY K. DAVIS, Illinois
PATRICK MEEHAN, Pennsylvania         BRUCE L. BRALEY, Iowa
SCOTT DesJARLAIS, Tennessee          PETER WELCH, Vermont
JOE WALSH, Illinois                  JOHN A. YARMUTH, Kentucky
TREY GOWDY, South Carolina           CHRISTOPHER S. MURPHY, Connecticut
DENNIS A. ROSS, Florida              JACKIE SPEIER, California
FRANK C. GUINTA, New Hampshire
BLAKE FARENTHOLD, Texas
MIKE KELLY, Pennsylvania

                   Lawrence J. Brady, Staff Director
                John D. Cuaderes, Deputy Staff Director
                     Robert Borden, General Counsel
                       Linda A. Good, Chief Clerk
                 David Rapallo, Minority Staff Director

   Subcommittee on Government Organization, Efficiency and Financial 
                               Management

              TODD RUSSELL PLATTS, Pennsylvania, Chairman
CONNIE MACK, Florida, Vice Chairman  EDOLPHUS TOWNS, New York, Ranking 
JAMES LANKFORD, Oklahoma                 Minority Member
JUSTIN AMASH, Michigan               JIM COOPER, Tennessee
PAUL A. GOSAR, Arizona               GERALD E. CONNOLLY, Virginia
FRANK C. GUINTA, New Hampshire       ELEANOR HOLMES NORTON, District of 
BLAKE FARENTHOLD, Texas                  Columbia


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on November 14, 2012................................     1

                               WITNESSES

Ms. Patricia M. Britton, Vice President of Business Development, 
  Topflight Corporation, Glen Rock, PA
    Oral Statement...............................................     5
    Written Statement............................................     8
Mr. Thomas G. Zieser, President and CEO, Jace Systems, Cherry 
  Hill, NJ
    Oral Statement...............................................    10
    Written Statement............................................    14
Mr. Drew Greenblatt, President, Marlin Steel Wire Products, 
  Baltimore, MD
    Oral Statement...............................................    18
    Written Statement............................................    20
Mr. Bryan Borlik, Director, Trade Adjustment Assistance for 
  Firms, Economic Development Administration U.S. Department of 
  Commerce
    Oral Statement...............................................    31
    Written Statement............................................    33
Mr. Williams J. Bujalos, Director, Mid-Atlantic Trade Adjustment 
  Assistance Center
    Oral Statement...............................................    41
    Written Statement............................................    44
Mr. J. Alfredo Gomez, Acting Director, International Affairs and 
  Trade, U.S. Government Accountability Office
    Oral Statement...............................................    48
    Written Statement............................................    50

                                APPENDIX

The Honorable Todd Russell Platts, Member of Congress from the 
  State of Pennsylvania, Opening Statement.......................    77
The Honorable Gerald E. Connolly, Member of Congress from the 
  State of Virginia, Opening Statement...........................    79
The Honorable Elijah E. Cummings, Member of Congress from the 
  State of Maryland, Opening Statement...........................    81
Western Trade Adjustment Assistance Center, Clarification 
  Memorandum.....................................................    83


    TRADE ADJUSTMENT ASSISTANCE FOR U.S. FIRMS: EVALUATING PROGRAM 
                   EFFECTIVENESS AND RECOMMENDATIONS

                              ----------                              


                      Wednesday, November 14, 2012

                  House of Representatives,
          Subcommittee on Government Organization, 
              Efficiency, and Financial Management,
              Committee on Oversight and Government Reform,
                                                   Washington, D.C.
    The subcommittee met, pursuant to call, at 10:18 a.m., in 
Room 2247, Rayburn House Office Building, Hon. Todd Platts 
[chairman of the subcommittee] presiding.
    Present: Representatives Platts, Lankford, Towns, Connolly, 
Norton, and Cummings (ex officio).
    Staff Present: Alexia Ardolina, Assistant Clerk; Molly 
Boyl, Parliamentarian; Katelyn E. Christ, Professional Staff 
Member; Linda Good, Chief Clerk; Mark D. Marin, Director of 
Oversight; Tegan Millspaw, Professional Staff Member; Jaron 
Bourke, Minority Director of Administration; Beverly Britton 
Fraser, Minority Counsel; Jennifer Hoffman, Minority Press 
Secretary; Adam Koshkin, Minority Staff Assistant; and Elisa 
Lanier, Minority Deputy Clerk.
    Mr. Platts. The committee will come to order. I want to 
welcome everybody here and first apologize for keeping everyone 
waiting with my delayed arrival, and especially for our 
witnesses on both panels. I appreciate your understanding with 
rescheduling this hearing from back in October when--it was the 
first time I had to cancel a hearing and you would not have 
wanted to be with me. I was unfortunately very under the 
weather and couldn't speak literally because of a throat issue, 
but we do appreciate your patience and returning here today to 
share your testimony.
    Today's hearing will evaluate the Trade Adjustment 
Assistance for Firms program, or TAAF. TAAF is a program 
administered by the United States Department of Commerce and it 
has helped small and medium sized companies in the United 
States stay competitive with overseas markets for the past 50 
years. TAAF operates out of the Commerce Department's Economic 
Development Administration and has been helping firms since it 
was first put in place in 1962.
    The program is currently authorized through 2013 at an 
annual spending level of $16 million. TAAF support is provided 
to eligible firms through a network of 11 EDA funded Trade 
Adjustment Assistance Centers, or TAACs, located throughout the 
country. The director of the TAAC for the Mid-Atlantic region, 
Mr. Bill Bujalos, is here with us today.
    Consultants at each TAAC work along side eligible trade 
impacted firms to develop business recovery plan or 
``adjustment proposals'' that are tailored to increase 
productivity for their specific business model. Companies have 
5 years to implement proposals once they are approved with EDA 
typically covering up to 50 percent of the implementation cost.
    According to the American Business Council, 829 were firms 
assisted nationally through TAAF from 2006 through 2010. More 
recently in 2011, 149 American firms with average sales of $20 
million and approximately 100 employees each received a total--
I'm sorry, received a total of $12 million in financial 
assistance through TAAF. The vast majority of these small 
companies were in manufacturing in an industry that is still 
struggling nearly 4 years after the 2009 recession.
    Today's hearing will evaluate the extent to which TAAF has 
increased the productivity of participating firms. According to 
EDA's most recent annual report, firms receiving funds in 2009 
now report that average sales actually decreased by 1.6 
percent, average employment decreased by 1.9 percent. This low 
productivity is thought to be temporary, however, as companies 
often need time to adjust to their new business strategies. 
Firm performance must also be considered alongside broader 
economic indicators like the nationwide unemployment rate which 
has remained considerably strained for the past several years.
    Mr. Bryan Borlik, Director of TAAF at EDA, is here today 
and will be part of our second panel to explain the operation 
of TAAF along with some of these long-term performance 
considerations.
    Another goal of this hearing is to determine how Congress 
can improve execution of TAAF. In 2010 the United States 
Government Accountability Office claimed the impact of Federal 
assistance to firms through TAAF was unclear. In September of 
this year the GAO released an updated report arguing that the 
program has been useful for participating firms. We will hear 
from GAO today as well about their recommendations of how to 
make TAAF even more effective going forward.
    Today we will also hear from companies in our first panel 
of witnesses that have participated in the TAAF program. This 
subcommittee is honored to have these job creators from these 
firms with us who have received TAAF assistance to testify how 
they've been impacted. And we welcome Ms. Patricia Britton of 
Topflight Corporation in Glen Rock, my home district. We are 
delighted to have you here with us to share your knowledge and 
insights. We also have Tom Zieser of JACE Systems in Cherry 
Hill, New Jersey and Drew Greenblatt of Marlin Steel in 
Baltimore which is located in the full committee member's--the 
full committee's ranking member's district, Mr. Cummings. We 
sincerely appreciate all the witnesses being with us today and 
thank them for their willingness to share their knowledge and 
insights regarding the TAAF program.
    There is no doubt that trade is critical to the prosperity 
of our country. The United States is the world's largest 
trading nation. In 2011 alone we exported goods and services 
totaling over $2.1 trillion. These exports supported nearly 10 
million jobs. It can therefore be easy to overlook what a 
devastating impact increased overseas competition has had on 
the profitability of our small businesses. It is a well known 
fact that small businesses are key engines of new job creation 
and that small U.S. Companies are struggling in the face of 
international competition.
    So today we want to focus on these firms, on the severe 
economic dislocation that businesses today often face when 
trying to meet their bottom lines on a daily basis.
    We must ensure that in doing right by our Nation's trade 
impact and employers we also protect the financial interest of 
all American taxpayers. I look forward to hearing from our 
witnesses about how we can help continue the TAAF program and 
make it even stronger so that the firm should participate or 
not just survive but will prosper in an increasingly 
competitive and globalized world in which we live.
    I'm now honored to recognize the distinguished ranking 
member and the former chair of the full committee, Mr. Towns 
from New York, for his opening statement and again, Ed, 
appreciate your patience with my late arrival.
    Mr. Towns. Thank you very much, Mr. Chairman, and thank you 
for holding this hearing.
    I'm pleased to join you today to talk about the Trade 
Adjustment Assistance Program for firms. It is important that 
we focus on and celebrate those initiatives that are aimed at 
preserving American small businesses and creating jobs.
    The Economic Development Administration and the Department 
of Commerce has done a terrific job at improving the Trade 
Adjustment Assistance Program through the Recovery Act of 2009. 
As a result hundreds of United States companies have been able 
to turn around businesses, business loss, due to important 
competition and create or preserve much needed jobs. This is an 
important program and I hope that we can do something today to 
make sure that it continues and even that it's expanded.
    In the last 10 years United States free trade agreements 
with countries like South Korea, Panama and Colombia have 
increased goods imported into this country by $1.3 trillion. 
Naturally many small businesses struggle to compete with 
imported goods and some are plunged into economic distress. 
Others who cannot make the right adjustment simply go out of 
business. Many struggling businesses are built by people who 
have worked for years, sometimes decades maintaining those 
businesses. Some of those companies are the foundation of an 
entire community, either as the largest employer or the largest 
provider of important services. Others support the livelihood 
of countless families and businesses with their presence.
    I am pleased to welcome the representatives of a few of 
those companies here today. You have unique and impressive 
stories of change and development. Thank you all for taking the 
time to share your journey with us on the impact of trade 
assistance.
    Too many here in Congress take the position that the 
government should not take any part in whether private 
businesses succeed or fail. But I think that view is too short-
sighted. Global trade rules may confer benefits, but they can 
also have consequences that may be severe for certain workers 
and certain businesses. I do not believe there's a single trade 
impacted company just sitting around waiting for a government 
handout for its survival. Rather, there are hard working 
companies needing a helping hand and tools to make them better 
positioned in the globalized economy. Sometimes that is all a 
small business needs to remain competitive. The Trade 
Adjustment Assistance Program does just that.
    I look forward to hearing the testimony from you. And just 
before I get going I want to make certain that I have the 
correct pronunciation of your name. Is that Mr. Zieser or Mr. 
Zieser.
    Mr. Zieser. Mr. Zieser, sir.
    Mr. Towns. Okay, fine. Thank you very much. I'm helping the 
members of the committee. Thank you, I yield back.
    Mr. Platts. I thank the gentleman and yield to the 
gentleman from Virginia, Mr. Connolly, for an opening 
statement.
    Mr. Connolly. Thank you, Mr. Chairman. And I want to thank 
you. I think this is I think your penultimate hearing as 
chairman of this subcommittee, one more, yeah. And I just want 
to thank you for your friendship and your leadership. You have 
approached issues with judicious analysis, you have avoided 
strident headlines, you have avoided bitter partisanship, and I 
think you are a model that many could learn from and as a 
member on this side I just want to tell you how much I've 
appreciated your friendship and your collegiality.
    Mr. Platts. Gerry, I appreciate the kind words, and members 
of my local media that are shadowing me here today are going to 
think I paid you.
    Mr. Connolly. If it helps him back home, he's the most 
strident Republican I have ever met.
    Mr. Towns. Would the gentleman yield?
    Mr. Connolly. I certainly would yield.
    Mr. Towns. I would like to associate myself with the 
remarks of the gentleman of Virginia.
    Mr. Platts. Appreciate it. Gerry, Ed and I have traded 
seats here where I was chairman and he was ranking member and 
then he was chairman and I was ranking member and now we're 
back.
    Mr. Connolly. I hope to do that with James.
    Mr. Platts. I think one of the hallmarks of our 
subcommittee, not just for that but from our members, is that 
approach that you just referenced. It is about policy, about 
issues, not partisanship. So I certainly thank you for your 
kind words.
    Mr. Connolly. This subject is also a terribly important 
one. I come from a district that very much is supportive of 
free trade. And if you look at what's happened both to our 
export performance and the value of trade, it clearly overall 
has been beneficial to the United States and we need to put 
more pressure on export driven parts of our economy, because 
compared to so many other economies it is actually a small 
percentage of our GDP. And the 14 trade agreements we've had in 
the last number of years I think on balance clearly have 
benefited the United States as well as our trading partners. 
However, it does, the fact of the matter is trade 
liberalization leaves some behind. That's why this subject is 
so important in terms of the adjustment programs we've got and 
how are we doing. And it's important both from an economic 
point of view in trying to help communities under distress, but 
also frankly from a political point of view in terms of trying 
to broaden the stakeholders in free trade. If we fail to do 
that, if we fail to adequately address the fair part of free 
trade, we're going to lose a fragile coalition in this country 
of support for broadening and further liberalizing trade 
regimes.
    So I look forward to the testimony. I think GAO has done a 
great job. And again Mr. Chairman, I thank you for having a 
hearing on this committee that doesn't begin with a conclusion.
    Mr. Platts. I thank the gentleman. We will keep the record 
open for 7 days if anybody wants to submit additional 
statements or extraneous materials for the record.
    I am delighted to welcome our first panel: Ms. Patty 
Britton, as I said, Vice President of Topflight Corporation in 
Glen Rock, Pennsylvania; Mr. Tom Zieser, President and CEO of 
JACE Systems in Cherry Hill, New Jersey; and Mr. Drew 
Greenblatt, President of Marlin Steel in Baltimore, Maryland.
    Pursuant to committee rules, if I could ask all three of 
you to stand and raise your right-hand and we will have you 
sworn in.
    Do you solemnly swear that the testimony you are about to 
give this committee will be the truth, the whole truth, and 
nothing but the truth?
    [Witnesses sworn.]
    Mr. Platts. Thank you. You may by seated and let the record 
reflect that all three witnesses affirmed the oath.
    We will set the clock at 5 minutes. Ms. Britton, we will 
start with you, but if you need to go over that, it is kind of 
a guideline but we want to make sure we get a chance to have 
your testimony. We do appreciate the written testimonies. I got 
through my final one that was revised yesterday last night late 
but that gives us an opportunity to be better prepared for 
today's hearing. So we appreciate you submitting them in 
advance.
    Ms. Britton.

                       WITNESS STATEMENTS

                STATEMENT OF PATRICIA M. BRITTON

    Ms. Britton. Good morning, Mr. Chairman and members of the 
committee. Thank you for having me here today.
    Since 2003 I have worked at Topflight Corporation in Glen 
Rock, Pennsylvania in a variety of roles, most recently as Vice 
President. Topflight is a printer and convertor for the medical 
electronics, consumer and cosmetics industry with customers 
primarily in the U.S., as well as a few in Europe and Asia. We 
are a privately held, family-run organization initially formed 
in 1943 to manufacture airplane parts for World War II.
    In the forties, Topflight made hundreds of thousands of 
small parts, such as rivets, bolts, nuts and connectors. In 
fact, employees at the time found that handwriting the 
identification tags for so many parts was in some cases more 
time consuming than actually producing the parts. So with good 
old-fashioned American ingenuity Topflight invented one of the 
first desktop label printers in their machine shop and began to 
label these parts with what looked like printed Scotch tape.
    Once the war ended Topflight embarked on a business 
reinvention, the first of many business reinventions over the 
years. Mr. Huber, Topflight's owner, convinced Black & Decker, 
our very first customer, who is still a customer today, to 
replace the metal name plates which were bolted on to their 
hand tools with a pressure sensitive adhesive label. This was a 
revolutionary concept at the time, and as a side note, Mr. 
Huber's contemporary with Stan Avery, who you will recognize 
the name of Avery Dennison. Mr. Huber went on to create many 
patents, including the first tamper-evident label, which was 
more than 20 years before the Tylenol scare, and an entire 
business and industry was born during those years out of 
innovation and manufacturing.
    Since that time Topflight has undergone changes, many 
changes in customers, product lines and capabilities, as I'm 
sure almost all businesses do that survive for that long period 
of time. However, in recent years the pace of technological 
change and intense competitive pressure have resulted in a 
business climate unlike any I have seen in the past. For 
example, instead of pricing escalators being written into our 
contracts as they were many years ago, we are now negotiating 
contracts where customers expect year over year price 
decreases, the most recent one when a major customer asked for 
a 7 percent price decrease. In order to continue doing business 
with them it is a requirement. This means that as our costs 
rise and our prices decrease, our margins erode unless we find 
ways to become more efficient.
    Reverse auctions on top of that have allowed overseas 
competitors with a much lower cost basis to drive down pricing 
to unsustainable levels in some of our markets. Often these 
companies are not held to the same quality or regulatory 
standards as U.S. companies, so again their costs are lower. 
And in addition their overhead in general is less.
    I believe that Topflight and many other manufacturers have 
risen to the challenges of continuous improvement and have 
found ways to become more lean in response to these issues. 
However, that strategy can only go so far in sustaining and 
growing a business. By the end of 2009 Topflight was feeling 
the effects of the economic slowdown and unprecedented pricing 
pressures. In fact, our revenue had decreased within 2 years by 
almost 30 percent. And most of this was from competition from 
offshore manufacturing locations. Many of our consumer products 
customers were moving their lines overseas.
    The erosion of the business had begun and in face of the 
new reality Topflight needed to do something different. In 2009 
Topflight worked with Mantec, a manufacturing consulting 
company based in York, Pennsylvania, on a program called 
Eureka, which was intended to create a process and environment 
of innovation. In the course of those meetings representatives 
from Mantec mentioned that Topflight may qualify for assistance 
from MATAAC based on the amount of business we were losing to 
the overseas competitors. The timing couldn't have been better.
    I contacted the MATAAC group and began the required 
paperwork. We were assigned a consultant, Todd Shevlin, who was 
able to provide guidance and insight into where we might 
benefit from the program. In the course of his management 
interviews, it became clear that many of the problems facing 
our business came back to lack of critical data and technology 
integration. For example, we didn't know the true cost of 
producing products. We didn't know which product lines and 
customers were the most profitable. In many cases the time it 
took to process an order was longer than what was required to 
make the order, very similar to our innovation problems back in 
the 1940s.
    Many manufacturing and paperwork processes were manual, 
which wasted time and introduced errors, and our estimating 
software was not integrated with our costing system so we 
couldn't tell if we made the product as specified. Basic 
information needed to analyze the business was missing, making 
strategic planning almost impossible and largely based on 
educated guesses.
    So Topflight, with MATAAC's input, decided to use the funds 
in 2011 to implement an ERP system that integrated all 
functional areas of our company from estimating to cash 
collections, including the entry of shop floor manufacturing 
data. We chose Radius, a printing and packaging system tailored 
to our industry, and launched the software in February of this 
year. Going through the management interview process and 
obtaining the grant was a key factor in deciding to go forward 
with this investment.
    Although it's too early to analyze the full effects of this 
implementation, I can say that since 2009 all of Topflight's 
key indicators and metrics are moving in the positive 
direction. Most notably, we are on track to replace revenues 
lost to offshore locations and have been able to increase our 
revenue per employee by 20 percent. On the qualitative side 
managers are now having in-depth conversation about costs, 
profits and margins now that were not possible with our old 
system. Inventory accuracy increased, which has reduced our 
carrying costs and raw materials, one of the major expenses.
    Based on Topflight's experience with MATAAC, I am a very 
strong believer in this program. In order to compete in today's 
ultra competitive global environment manufacturers need to be 
willing to do things differently, to innovate, to train and to 
respond to constant change. MATAAC and its team helped us do 
just that.
    Thank you for your time and attention.
    Mr. Platts. Thank you, Ms. Britton.
    [Prepared statement of Ms. Britton follows:]

    [GRAPHIC] [TIFF OMITTED] T7041.001
    
    [GRAPHIC] [TIFF OMITTED] T7041.002
    
    Mr. Platts. Mr. Zieser.

                 STATEMENT OF THOMAS G. ZIESER

    Mr. Zieser. I thank you, Mr. Chairman, for the opportunity 
to testify before the committee regarding the effectiveness of 
Trade Adjustment Assistance for Firms. Since 1999 I have been 
President an CEO of JACE Systems.
    JACE Systems is a medical device manufacturer and medical 
services provider in Cherry Hill, New Jersey, approximately 8 
miles east of Philadelphia. Our products are used by patients 
recovering from orthopedic surgery to their joints. The company 
manufactures devices that exercises the patient's affected 
joint in a passive manner immediately following their surgery. 
This is commonly referred to as continuous passive motion 
therapy, and the devices used in CPM therapy are identified as 
CPM machines. Most common application is after surgery of the 
knee, usually total knee replacement, or sports injuries like 
anterior cruciate ligament, or ACL, repair. Other applications 
for our product include the hand, wrist and toe. Surgery to the 
hand and wrist are usually a result of trauma and injuries in 
the workplace. These products are particularly helpful for 
complex injuries that involve bone, soft tissue and nerve 
damage. The devices are used to prevent the formation of scar 
tissue, adhesions, reduce swelling and edema and reduce the 
need for pain medication.
    The company also manufactures a neuro muscular electro 
stimulation device, MNES, JACE TriStem, that is used to reduce 
pain and swelling and also retrain damaged muscles, soft tissue 
and nerves. When the knee ECPM is at the end of range of motion 
the CPM pauses and the TriStim stimulates the muscles through a 
small electrical current via attached skin electrodes. The net 
result is the flexion and extension of the joint, combining 
with electro therapy hasten the rehabilitation of the joint. 
Patients return to work and resume daily activities as a result 
of our therapy.
    The company has been in business since 1990. Our products 
are used throughout the United States and also exported to 
Europe and Japan. The company is an FDA licensed medical device 
manufacturer with ISO 9001 and ISO 13485 certifications. The 
company is also recognized by Japan as a foreign medical device 
manufacturer. The K 100-A knee CPM is also recognized by the 
European Union to display the CE Mark on our product.
    My business experience includes an undergraduate Bachelor 
of Science degree from Northland College in Ashland, Wisconsin 
and a Masters of Business Administration from Seton Hall. My 
entire career has been in health care. I have held positions at 
Nations Healthcare, Haemonetics, Baxter international, 
Fresenius USA and so on. Positions held range from sales rep, 
product manager, sales director, sales of business development 
manager, vice president and general manager.
    JACE Systems competes in the highly regulated medical 
device industry. Over the last several years the demands and 
complexity of foreign regulations have had significant impact 
on our manufacturing operations and opportunity. Our flagship 
product, the K 100-A knee CPM, was introduced in 1994. It is 
electrically powered and controlled by a sophisticated hand 
controller that is micro processor controlled through a soft 
push button panel and viewed on a liquid crystal display. There 
is also an interface on the controller for the TriStem that is 
often used to retrain and exercise muscles affected by the 
surgery.
    Prior to the formation of the European Union most countries 
accepted the U.S. FDA 510K product registration as proof of 
acceptance and under the underwriters UL seal for electrical 
safety. The Medical Device Directive Council of the EEC of 14 
June 1993 concerning medical devices, is intended to harmonize 
the laws relating to medical devices within the European Union. 
The M.D. Directive is a new approach and consequently for a 
manufacturer to legally place a medical device in the European 
market the requirements of the medical directive had to be met. 
Manufacturers products meeting harmonized standards have a 
presumption of conformity to the directive. Products conforming 
with the directive must have a CE Mark applied. The directive 
was most recently reviewed and amended in 2007 and a number of 
changes were made.
    Compliance with the revised directive became mandatory in 
March 2010. These included products currently distributed in 
the EU. Consequently there was no grandfathering for our 
products. JACE Systems had to be retested to the new standard. 
We were essentially excluded from selling new products in the 
European Union and our dwindling sales efforts were only for 
the replacement parts for the existing fleet of machines.
    Consequently, without the CE Mark our sales declined, 
beginning in 2004 and 2005, and caused decreased profitability. 
JACE Systems was forced to reduce overhead and lay off 
employees. I was discussing our predicament with the U.S. 
Commercial Team and they recommended I contact MATAAC to 
discuss our situation. I applied for a grant and submitted the 
necessary documentation, and in February 2008 we were approved 
for a matching grant of $73,000. That is for every dollar JACE 
invests in a MATAAC approved project MATAAC will match it 
dollar for dollar.
    In April our grant was approved and project work began. The 
electrical safety testing was done at BEC Laboratories in 
Pottstown, PA at a cost of 15,000 and 6,000 respectively. The 
ISO registrations and quality management systems were completed 
by Enterprise Strategy Group at a cost of 24,000. After the 
tests were completed additional engineering and design had to 
be done. Nelson Design Services in Willow Grove reviewed our 
circuit board for compliance to the new standard at 17,000. And 
none of these projects would have been done in the short 
timeframe without the MATAAC matching grant assistance program.
    Since acquiring a CE Mark in ISO registrations we have seen 
our sales to Germany increase to 177,000 in 2011 from a low of 
76,000 in 2007. In addition, we have hired one new employee in 
2010. But the real impact of the assistance, however, is not 
just seen at JACE Systems and the test laboratories and design 
services we contracted with. We are an assembly operation. We 
purchase parts and assembly for many companies in our area and 
throughout the USA. The grant assistance helped JACE design new 
tools and first articles that reduced cost, improved design and 
made us more efficient. For example, C&K Plastic, Metuchen, New 
Jersey, redesigned our tools that vacuum formed the plastic 
pieces for the K 100-A knee CPM at a cost of $9,970. The new 
design reduces waste and evens out our parts inventory 
imbalances. Kaiser Medical designed a new anatomical hinge 
movement for $10,000 that reduced cost and increased flexion 
and range of motion from 120 degrees to 130 degrees. Pittsville 
Plastics, Pittsfield, Massachusetts, created first articles for 
$30,000 for injection molded parts that reduced our unit cost 
and increased assembly efficiency. JACE Systems is the export 
engine for the many companies that do not export at all. JACE 
Systems is the tip the of spear in all of our export efforts.
    The MATAAC grant has not only helped the companies listed 
previously, it also had a trickle down effect that aids in the 
sales growth and development of many other small companies in 
the past year. Cardinal Precision, Oreland, PA received no 
grant assistance but they fabricated the metal parts that are 
the product of the MATAAC funded Kaiser Medical anatomical 
hinge that netted Cardinal sales of $27,000. Youngtron 
Electronics, Hatfield, PA, designed the circuit boards and the 
electronic layouts that make us compliant to the CE 
requirements. That netted the sales of $9,000 to them.
    Should I stop?
    Mr. Platts. Go ahead and finish.
    Mr. Zieser. Okay.
    In addition to helping small companies grow JACE made 
significant purchases from large companies like Merkle Korff in 
Chicago, $23,000; Thomson Linear, Radford, VA for 30,000.
    Gaining the CE Mark has also helped JACE develop businesses 
in Turkey. Turkey signed a Customs Union agreement with the 
European Union in 1995. The CE Mark enables us to sell our 
products in Turkey and enabled JACE to establish a beachhead in 
that part of the world and distribute our products to the 
Middle East region, a rapidly growing market for Made in 
America medical products. We have shipped 1 knee CPM to Turkey 
and it is being evaluated in a large hospital group, and I 
expect positive results after the trial period. We also 
received inquiries from the UAE, Saudi Arabia, Kuwait, Egypt 
and other countries in that area, and because of the language 
and cultural differences and time it is difficult for a small 
company to establish business relationships in that part of 
world. I sincerely believe that our partner in Turkey will help 
JACE establish business in the Middle East.
    So the data and information gathered from the K 100 was 
extremely helpful in establishing our presence in Mexico. 
Mexico does not require a CE Mark, they do require medical 
device manufacturers registration and approval by the Mexico 
Health Authority to market and sell in Mexico. We identified a 
distributor while participating in the U.S. Commercial Trade 
Winds event in Mexico City. The distributor, Kuxtal DME, 
assisted us in getting our knee CPM approved and registered 
with the Mexico Health Authority. Much of the technical 
information and test data we completed for the CE Mark was also 
required by the Mexico Health Authority. Having this data 
available greatly accelerate our product registration. 
Consequently, Kuxtal was successful in selling five knee CPMs 
in a public tender to the Mexico Defense Department in June of 
this year, and there are other tenders coming in the next few 
months and I feel it will be equally successful to penetrate 
Mexico and establish a beachhead for Central and South America.
    In conclusion, I want to thank the committee members for 
allowing me to share my JACE Systems journey. I encourage you 
to support the TAAF and other programs like Trade Winds the 
Americas offered by the U.S. Commercial Service. They are a 
valuable resource for small companies like JACE to compete in 
the world and provide jobs for JACE employees and the many 
suppliers throughout the USA, and thanks again for your time 
and attention.
    Mr. Platts. Thank you, Mr. Zieser.
    Mr. Zieser. That was over 5 minutes.
    Mr. Platts. We are glad to have your knowledge and to hear 
your story, and one of the aspects of your story, and I know in 
Mr. Greenblatt's testimony, is not just dealing with the 
competition from abroad but is actually helping you to export 
products from America abroad and that's an important part of 
what this program is all about.
    [Prepared statement of Mr. Zieser follows:]

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    Mr. Platts. So Mr. Greenblatt.

                  STATEMENT OF DREW GREENBLATT

    Mr. Greenblatt. Thank, Mr. Platts. Good morning to the 
members of House Committee on Oversight and Government Reform.
    My name is Drew Greenblatt. I'm the owner of Marlin Steel. 
We make wire baskets, sheet metal fabrications all in Baltimore 
City. We export to 36 countries, we import nothing. The Trade 
Adjustment Assistance for Firms program, TAAF, is one of the 
many tools that we have used to help us create a dramatic 
turnaround for our company. We were established in 1968. Right 
now we're rocking and rolling, we're growing. We won the INC 
5000 honor roll. We are the 162nd fastest growing company 
manufacturer in America out of 223,000 companies, and we hire 
only people from the city of Baltimore. We have had many 
distinguished visitors in our factory, including Secretary 
Geithner, Senator Mikulski, Senator Cardin, amongst many other 
representatives from the State of Maryland. We have embraced 
many new ideas to grow, but TAAF is one of the ones that has 
really helped ignite us.
    MATAAC is the organization that works with us so very 
closely. The value of assistance in helping us grow can be best 
understood to understand where we came from. I sold a security 
system company that was small, I used that as down payment to 
buy Marlin. We made bagel baskets. I felt like a genius when we 
bought it because there was a bagel basket boom in the nineties 
and we were going to grow to the Moon we thought. We were 
quickly in a bad way, it was a perfect storm.
    The first thing that happened was the Atkins diet. I don't 
know if you remember the Atkins diet in the late nineties. Last 
place you want to be if you own a bagel basket manufacturer. 
All of a sudden everybody stopped eating bagels because of the 
carbs. Also China started dumping bagel baskets into America. 
They started selling bagel baskets for cheaper than I could buy 
steel. So I couldn't pay my employees. I couldn't have them 
weld, I couldn't pay rent or I couldn't have a marketing 
campaign, couldn't do health insurance to compete with China.
    So we were in a devastating position. We were about to 
close. We were losing a lot of money, we were hemorrhaging 
cash. We had to transform. Right around that time we had a 
fortuitous phone call from an engineer at Boeing who needed a 
custom made basket. We designed it, engineered it, and sent it 
to them. They were delighted and this was the epiphany that 
saved my company.
    We morphed from commodity bagel baskets, which was a 
disastrous business model, to precision engineered sheet metal 
fabrications and wire baskets and it that has taken us and 
grown us and that's why we are doing so well.
    We have invested over $3 million worth of robots. We don't 
fear the competition anymore, we actually love shipping 
overseas. That's 25 percent of our business and 25 percent of 
our employees' compensation. When I first bought the company 
the average employee was making 6 bucks an hour and their 
health insurance plan was you walk to the emergency room. Now 
they have Blue Cross/Blue Shield and we've come a long way.
    The beauty of TAAF is that it makes manufacturers have skin 
in the game. We pay 50 percent, TAAF pays the other 50 percent. 
So we're really focused on making sure our money is spent well, 
but it is like giving our money steroids so it is amplified and 
accelerated, the benefits are pushed forward faster. So it 
helped us graduate out of bagel baskets much quicker into this 
precision manufacturing.
    TAAF has done things like help us get ISO, like Mr. Zieser, 
and it has also helped us with other products like business 
software. For example, we bought an American made laser, we buy 
steel from Pennsylvania and we export this part to Japan, a 
Japanese automotive factory, okay, 100 percent USA made, made 
in Baltimore City. The training for my engineers was done 
through a TAAF program. It is very expensive. I had to fly them 
to Connecticut, they had to spend over a week there. We sent 
six people to learn how to run our laser to its fullest extent. 
And that's why Japanese automakers are buying from a Baltimore 
company using American made lasers and American made steel so 
that we could ship to Japan.
    See, American manufacturers have a significant challenge. 
We're competing with Vietnam where they pay a buck an hour. We 
are competing with China where they pay $2.50 an hour. We are 
paying our guys $20, $25 bucks an hour. And for us to meet that 
kind of competitive head winds we have to be much more 
productive. We have to work smarter, not harder. You have heard 
that line. So it is imperative that we arm our employees with 
the best training and the best skills and the best technology 
so that we can beat them. That's imperative, and that's going 
to grow jobs in this bad recession.
    It's critical that we coddle American manufacturing in our 
country. $75,000 is the average compensation of an American 
manufacturing employee. You can send a kid to college, you can 
buy a home, you can take vacation with that kind of livelihood.
    So in conclusion, please support TAAF. It is critical for 
us growing and being able to compete with foreign competition.
    [Prepared statement of Mr. Greenblatt follows:]

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    Mr. Platts. I want to thank each of you for your testimony 
and certainly wish each of your companies continued success in 
going forward. As Mr. Greenblatt, I think you had it in your 
testimony, which I think captures now we export wire forms to 
China made in the USA. How cool is that? That's a perfect 
summation of what we want to help do, is to promote American 
products, American workers and competing throughout the world.
    Let me ask if each of you could give me one thing we want 
to look at is how the program is benefiting companies and each 
of you shared that, but also the operation of the program, and 
so if you could share from the time you first learned of the 
program, one, were you on a waiting list, did you have to wait 
at all before you were able to start participating? And if you 
were or were not, what would be the general time frame when 
from when you first learned of it, submitted materials for 
certification and then were actually able to access grant or 
technical assistance to start putting it to use in your 
companies? Go left to right.
    Ms. Britton. The entire process from us, actually we were 
more of the holdup on our end just trying to gather the 
documents but start to finish it was about 7 months.
    Mr. Platts. And so really not a waiting list issue for you.
    Ms. Britton. No waiting list at all, no, very efficient.
    Mr. Platts. Mr. Zieser.
    Mr. Zieser. Yeah, I would say about 6 months from the 
initial meetings to--the hardest part was for us to get the 
necessary documentation and the financial data that MATAAC 
required.
    Mr. Platts. And the 6 months, was that until were you 
certified as eligible or until when you actually had an 
approved----
    Mr. Zieser. It was a 6-month process to get the approval.
    Mr. Platts. Of your certification.
    Mr. Zieser. Yes.
    Mr. Platts. And then from there going forward actually 
accessing grant funds.
    Mr. Zieser. Yeah. We had to gather the 8 most recent 
quarters of financial history and sales and personnel records, 
that kind of thing, head count, and we submitted it to, you 
know, to Bill and they analyzed it and they'd come back with a 
few more questions. So it was a process. It was good for us to 
understand our business better by just going through that 
effort. And the analysis that they provided was very helpful 
too. Upon approval they gave us a written report about 
weaknesses within our company that we needed, we should 
address, that kind of thing.
    Mr. Platts. And that kind of gets into the second question 
I had, it wasn't just financial assistance but the managerial 
expertise.
    Mr. Zieser. Yes. Yes, of course the whole spectrum of the 
organization. It was business, manufacturing, but financial, 
also more strategic 5-year type of plan, that type of thing. As 
opposed to just here is your money and do it, it was very good 
assistance.
    Mr. Platts. Mr. Greenblatt.
    Mr. Greenblatt. There was no waiting list for us, it was an 
extended process for us. I think a lot of small companies to 
survive the recession have had to streamline their 
organization. And unfortunately that means we are running 
extremely lean and thin and we don't have a lot of talent to 
spend the time to do the paperwork. I don't think it is 
MATAAC's fault. I think they have a tremendous number of 
regulations they have to adhere to do their job. I would 
recommend, this is constructive criticism, to streamline the 
paperwork. It is a lot of paperwork and I think that probably 
inhibits the growth of this program because the people you most 
want to embrace this have a tremendous challenge organizing all 
that paperwork and getting it over. And again, MATAAC was doing 
their job adhering to the law; however, if you want to grow 
this program, my suggestion to you is massively reduce the 
paperwork necessary because it is very cumbersome and it is 
challenging for us to accomplish that when we are so lean and 
we are obviously fighting these Chinese imports.
    Mr. Platts. Yeah, you are for the most part small companies 
to begin with, maybe medium, so you are smaller staffed and so 
you're struggling to keep the doors open from a prioritization 
of manpower.
    Once you went through the certification process and then 
were then receiving some technical assistance or grant 
assistance, can you share how MATAAC, and I think all three of 
you were part of MATAAC for the mid-Atlantic, how they stayed 
with you through that process, because I think, Mr. Zieser, you 
just said they didn't just say here is money, good luck. But 
can you share how they kind of partnered with you as you moved 
forward with your implementation plan?
    Mr. Zieser. Well, all projects have to be approved. You're 
right, why do you think this project would help with your 
business. There was some conversation around why I need to get 
this tool made to improve the efficiency of the thermaform 
plastics. They were very understanding, and they agreed with 
the logic behind it when you saw the inventory imbalances in 
the stockroom. And we did have discussions with John Mercer, 
was our contact and he has since retired from MATAAC, but he 
was very helpful along the way.
    Mr. Platts. But stayed with you kind of moving through that 
implementation stage?
    Mr. Zieser. Uh-huh, yes.
    Ms. Britton. Our experience was very helpful as well 
through both the analysis and the implementation. Our 
consultant helped us really formulate some of the arguments 
that we needed to go to the owner of our business about making 
a technology purchase. Our owner is 92 years old, went through 
the Depression, is very technology averse. So we had to spend 
quite a lot of time really truly understanding the depths of 
how this would change our business and improve it and allow us 
to change going forward. So I would say the most value that 
they brought through that implementation was helping us hone 
that argument with the owner.
    Mr. Platts. Okay. I yield to the ranking member for the 
purposes of questions.
    Mr. Towns. Thank you very much, Mr. Chairman. You know, 
listening to the comments, and evidently the program was 
extremely helpful, let me ask this question. Do you believe the 
companies would be in its current position of growth and 
profitability if it did not participate in TAAF? Do you believe 
the company would have been?
    Just right down the line.
    Ms. Britton. I do not, because I can say that this help was 
the deciding factor in us going with this technology. And in 
savings alone from previous technology we are probably looking 
at about $120,000 worth of savings, that's hard savings. In 
addition we've been able to save on raw material inventory. We 
think that is going to come out to almost $200,000 a year. In 
addition, we now know about our profit lines, profitable 
products. We are on track this year to improve our EBITA by 
about 12 percent. I don't think any of those things would have 
been possible without this grant, it just wouldn't have 
happened.
    Mr. Towns. Mr. Zieser.
    Mr. Zieser. Our particular problem is being in the medical 
device industry, it is highly regulated, and the regulations, 
especially in Europe and throughout the world, are moving 
targets. There used to be, like I said in my presentation about 
the FDA to be the bellwether for the world, but the Europeans 
have cleverly outwitted us and really putting burdensome 
regulations and testing that needs to be repeated and repeated 
and repeated. And without this MATAAC money I certainly 
couldn't afford the design for circuit boards and sophisticated 
things like that. We just don't have that talent pool within 
our business. We are an assembly operation, we put parts 
together. We utilize the software programs for the machines, 
which the body doesn't change; a leg moves the way it moved 
centuries ago. It is really a no-brainer, why they put all 
these burdensome and heavily expensive regulations in front of 
us. It just--we are going through it now again in Japan with 
this IEC 60601-1, which is a new standard for electrical 
safety. They had to put our machine into a humidity chamber, 90 
percent humidity for I don't know 8 hours to see if it would 
short out. You know, you don't take these machines into a 
sauna. So why they make this regulation so intense it is just 
ridiculous.
    Mr. Towns. Mr. Greenblatt. Thank you very much.
    Mr. Greenblatt. I think it is an accelerant, it cranks you 
up, you get to the results faster rather than being pokey. 
We're in a recession now so everybody needs to get super 
charged. We have to get fired out of this recession fast.
    Mr. Towns. Do you have a message for the Members of 
Congress that are responsible for the TAAF budget in the 
future; do you have a message?
    Ms. Britton. Anything you can do to accelerate innovation 
and help manufacturing is absolutely imperative. Manufacturing 
has been moving away from this country and it provides jobs and 
that flow needs to stop and reverse.
    Mr. Towns. Thank you.
    Mr. Zieser. I say again we're at the tip of the spear, many 
of the people and vendors and suppliers that we do business 
with would never export anything, but we're the assembly 
operation that collects their output, puts it in a package and 
moves it across the border. And for those reasons small 
companies like myself are really dependent upon this type of 
grant assistance to push us over the mark and keep us 
competitive.
    Thank you.
    Mr. Greenblatt. This helps American manufacturers that have 
been hit by trade improve their game so they can be profitable 
and retain their employees and hire new ones and prosper in the 
future.
    Mr. Towns. Thank you very much. On that note, Mr. Chairman, 
I yield back.
    Mr. Platts. Mr. Connolly.
    Mr. Connolly. Thank you, Mr. Chairman, and I was 
particularly struck, Mr. Zieser, by what you said a lot of 
other manufacturers would never export anything. And I happen 
to believe that may be part of the problem with the U.S. 
economy. We're rather insular, we have a huge domestic market, 
we don't have to. Or at least historically we didn't have to. 
But frankly as you look at the global economy we have got to 
reposition ourselves to be competitive. And I very much 
appreciate all three of your stories in terms of how this 
program--and I want to pick up on what you just said Mr. 
Greenblatt. It isn't just help us survive, it actually is 
reposition us to be competitive against Chinese, to pick one 
country. I was particularly struck, I love your story, I mean, 
bagel baskets, and now we're doing precision, custom fit, laser 
guided products for very sophisticated clientele and we're out 
of the bagel businesses, and we have ceded it to the Chinese, I 
guess, but you have been able to create a new niche, with this 
help, I wonder if you could tell us a little more about that 
story. If the Chinese are paying $2.50 an hour for a worker and 
you're paying $25. I mean on its face it sounds like you're 
doomed, you can't possibly compete with that, and yet you are. 
I wonder if you could just expand a little bit on that 
transition and how you've in a sense gone global too with what 
you're doing.
    Mr. Greenblatt. We're using three techniques to beat China, 
quality, engineering, quick. We are not going to be the 
cheapest guy in town, but we're going to give the best quality 
parts in the world. So for example our laser, it cuts plus or 
minus 4/1000ths of an inch. Okay, our punch, our sheet metal 
punch is punching plus or minus 4/1000ths of an inch. China 
can't touch that. We have a press break in the back that when 
it bends 132 tons of force, it's like 66 cars, it's doing it 
plus or minus 10 microns.
    So we're offering the best quality. We're also offering 
engineering. 20 percent of my employees are degreed mechanical 
engineers. So we are coming up with innovations that blow away 
our competition. So we are figuring out ways to hold parts in 
baskets so that, for example, Toyota, a big client of mine, is 
able to run their factory more efficiently. So they are getting 
33 percent improvement in their product lines and their 
projects, okay, they don't have to hire 33 percent more people 
or they don't have to build 33 more factories. They just need 
to use my baskets which are engineered and so innovative that 
it makes sense to buy from us.
    And the third reason is quick. We ship faster than anybody 
else in the world. Two weeks ago we got an order for 4,500 
baskets that a Chinese company couldn't deliver and we did it 
in 4 business days. We never made these baskets before. So we 
go from 0 to 60 faster than anybody else.
    So again it is quality, it is engineering and it is quick. 
That's the critical secret sauce for our effectiveness.
    Mr. Connolly. When were you in the bagel basket business 
were you in the export business?
    Mr. Greenblatt. We were in Brooklyn, New York, and an 
export to us was shipping to the Bronx.
    Mr. Connolly. Now you are in the export business.
    Mr. Greenblatt. But now we ship to 36 countries.
    Mr. Connolly. How did you develop the expertise to do 
business overseas? How did you make that--I am thinking about 
what Mr. Zieser said because it is so true about so many people 
are just not export oriented and yet you made that transition 
quite successfully and it is now a key part of your business 
model.
    How did you do it?
    Mr. Greenblatt. It's a great point. I mean, 11 percent of 
American manufacturers export. It's 25 or so--28 percent in 
Canada. And they're very similar to us. But it's 45 percent in 
Germany. So we're missing a key strategy to grow. If we were to 
grow at 20 something percent, like the Canadians, the recession 
is over. It's all done.
    So what we need to do is get manufacturers to focus on 95 
percent of the world's consumers. We're just 5 percent.
    Mr. Connolly. How did you do it?
    Mr. Greenblatt. We did it by--we have a significant 
Internet presence. We've translated our Web site into multiple 
languages. And what happened also is we get a lot of referrals. 
So we sell to Americans transplants. So like a Japanese factory 
that's built here will have engineers that talk with the mother 
office and refer us. So we ship to--as Congressman Platts 
mentioned, we ship wire forms to China now.
    Mr. Connolly. Yeah, but you had to, if I can, just one 
second, Mr. Chairman, if your idea of export was to the Bronx, 
and today you're shipping to 36 countries, you had to learn--
you had to learn about laws governing entrance to other 
markets, you had to learn about free trade or unfree trade laws 
that might have tariff and non-tariff barriers to your ability 
to export. You had to look at their laws in terms of, like Mr. 
Zieser was talking about, European standards that are an 
impediment actually to your exporting your product, maybe 
deliberately to protect domestic markets. You had to learn all 
that. You had to deal in other cultures and other languages you 
weren't used to doing. How did you manage that successful 
transition? Did that cost a lot of money?
    Mr. Greenblatt. It's a challenge. Mostly, we're dealing 
with mechanical engineers--degreed mechanical engineers, 
process engineers, and in many of these countries they speak 
English fluently. So there was less of a language topic. Number 
two, we're not selling a product that a consumer's using in a 
medical environment. We're selling a wire basket that goes into 
a factory in another country. So there's less--the Singapore 
equivalent of the FDA is not going to be focusing in on me. So 
I have some advantages over some of the medical firms out 
there; smaller medical firms.
    So it's a challenge. The biggest challenge is the cost 
differential. I mean, making something in America costs 20 
percent more than it does in Canada or in Germany or in France. 
So that's our biggest disadvantage. And we have to get more 
competitive with these countries so that we can thrive and 
prosper more.
    Mr. Connolly. If the chairman would allow.
    Mr. Zieser. You know, it's funny, he mentions Canada. 
Canada is our largest trading partner. Unless you're registered 
with Health Canada--and that application fee, I believe, is 
like $35,0000--you can't export over there. And then they also 
have to charge you a certain percentage of your sales in 
Canada. So talk about these regulations, it is a trade barrier 
between USA health care companies or private medical device 
manufacturers and trading in Canada. And that's something that 
maybe not this committee, but I would just like to bring that 
to your attention.
    The other thing about medical devices, small companies, I 
rely a lot upon the services of the U.S. Commercial Service. 
They have market sector specialists in all these countries. 
They help you identify. They do a gold-key search program. They 
identify potential distributors, customers. You can go on a 
site visit like with this fellow in Turkey; I met him once. We 
do Skype over the Internet for training. Because after you sell 
our products, you have to warranty them and you've got to make 
guarantees to the customer that you're not going to be stuck 
with a lemon and how do you repair and reprogram the devices? 
There are sophisticated electronics involved.
    So it's kind of a challenge to set up an operation in a 
foreign land, especially for a small company. And I rely a lot 
on the U.S. Commercial Service and all the services that they 
offer.
    Mr. Connolly. Thank you, Mr. Chairman.
    Mr. Platts. Thank you.
    One quick final question and we'll wrap up this panel. You 
basically have all addressed this but not stated this 
specifically. In dealing with your TAAC--MATAAC, in this case--
it sounds like the expertise of the staff you're dealing with 
all were very good matches for what your needs were. Because of 
the loss of one our witnesses, we're not going to have another 
TAAC represented.
    But is that an accurate statement, that when you were 
seeking that expertise, that the staff at the TAAC or those 
consultants that you worked with through the TAAC all really 
were good matches for the level or the type of expertise for 
your specific industry, your specific needs, whether it was 
regulatory help or working through other countries or data 
gathering and really getting the knowledge base that you needed 
internally? Is that a fair statement, that they had that level 
of expertise?
    Ms. Britton. No, I wouldn't say it was anything down to the 
technical level or specific product knowledge of the technology 
at all. I think it was more the business processes around it. 
He asked enough questions. He surfaced enough conversation. 
Sometimes they say in metrics and manufacturing what you look 
at gets--what you measure gets changed. And there's a large 
amount of truth in that with the MATAAC group. Because they 
have your entire management team focusing and talking and 
taking time out of their day-to-day operations to think about 
improvement and what's better. And just that breakaway--and as 
you were saying--Mr. Greenblatt was saying--it's very lean--and 
it is for all of us very lean--the mere fact that we broke away 
and spent that time generated a tremendous amount of 
improvements and thoughts that I don't think we would have 
gotten without that assistance.
    Mr. Platts. Based on that, so it's a fair statement then 
that when we look at the funding of this program, that the 
funding of the TAAC staff that facilitated that communication 
is an equally important part as the actual grant money that go 
out to a company to implement some changes.
    Ms. Britton. There is no question. Because if somebody just 
drops money on you and you go along doing business the same way 
you've always done it, then nothing fundamentally has changed 
except maybe your bank balance. So I think it's absolutely 
critical.
    Mr. Platts. Thank you.
    Mr. Zieser. I agree with Ms. Britton. What you measure, you 
will improve upon. You've got to measure the right stuff. And 
they certainly helped us measure the
    yardsticks and set goals and mileposts and so on. And I 
really appreciated their help.
    Mr. Platts. Great. Mr. Greenblatt.
    Mr. Greenblatt. We worked with Todd Shevlin. And he was A-
plus.
    Mr. Platts. I want to thank each of you again for your 
testimony, both written and your testimony here today, and 
giving us some good insights of where the rubber meets the 
road. We hear a lot about programs here, but how they actually 
are implemented and benefiting or not. Clearly, as you shared, 
they are, in this case, benefiting your companies. And we wish 
you a great continued success. Thirty-six companies today, 50 
tomorrow, and keep climbing. Thank you again.
    We're going to take a very short break while we reset for 
the second panel. And we'll stand in recess for about 5 
minutes.
    [recess.]
    Mr. Platts. We'll reconvene our hearing here. I appreciate 
our second panel of witnesses. One, I appreciate, again, your 
patience with the change in date from earlier in the fall, as 
well as your patience here today.
    We are delighted to have three individuals who have some 
great insights to share with us: Mr. Brian Borlik, Director of 
the Trade Adjustment Assistance for Firms program at the 
Commerce Department's Economic Development Administration; Mr. 
Bill Bujalos, Director of the MidAtlantic Trade Adjustment 
Assistance Center, and we heard great testimony about your 
center and your staff and your assistance to our previous 
witnesses; and Mr. J. Alfredo Gomez, Acting Director of 
International Affairs and Trade for the Government 
Accountability Office.
    Now that you're seated, if I could ask you to stand so I 
can swear you in. I apologize for having you to get up and 
down. Will you raise your right hand?
    Do you solemnly swear or affirm that the testimony you are 
about to give this committee will be the truth, the whole truth 
and nothing but the truth?
    The record will reflect that all witnesses answered in the 
affirmative.
    As with our previous panel, the clock will be set at 5. 
Kind of a guideline. If you have need some extra time, that's 
fine. And we'll look forward to your testimony and then getting 
into a Q and A with you.
    Mr. Borlik, if you'd like to begin.

                   STATEMENT OF BRYAN BORLIK

    Mr. Borlik. Chairman Platts, Ranking Member Towns, and my 
own Member of Congress, Mr. Connolly, Congressman Connolly, 
thank you very much for the opportunity to provide testimony 
today on behalf of the Department of Commerce's Economic 
Development Administration on the Trade Adjustment Assistance 
for Firms, TAAF, program. I'd also like to quickly thank some 
of the TAAF directors for being here today. Bill here, Dave 
Hansberger, and of course, some of our important clients, JACE 
Systems, Topflight Corporation, and Marlin Steel Wire, for 
being here.
    Through the Trade Adjustment Assistance for Firms program, 
the Department of Commerce is committed to helping firms 
throughout the United States adjust to import competition and 
to increase their own competitiveness and to save and create 
jobs. The mission of the TAAF program is to help U.S. firms 
regain competitiveness in the global economy, and as a result, 
save and create jobs. The program has received high marks from 
participating firms, as well as from GAO, whose new report 
finds that the program has a positive impact on the firms that 
it helps.
    Through the TAAF program firms can receive matching funds 
that expand markets, that strengthen operations, and increase 
competitiveness. The program essentially provides cost-sharing 
technical assistance in the development of business recovery 
plans, which are known as adjustment proposals, or APs, and 
also matching funds to implement projects outlined in those 
proposals. Firms contribute a matching share to create and 
implement their recovery plans.
    The TAAF program supports a national network of 11 Trade 
Adjustment Assistance Centers, or TAACs, to help U.S. firms in 
all 50 States, the District of Columbia, and the Commonwealth 
of Puerto Rico. Firms work directly with the TAACs to apply to 
EDA for eligibility for assistance in the preparing and 
implementing strategies to strengthen their competitiveness.
    As you've heard today from other witnesses, TAACs add great 
value to the TAAF program. The expertise and structure of the 
TAACs allow them to provide technical assistance to firms on a 
timetable customized to the unique needs of each firm. TAAC 
directors and their staff bring extensive business experience, 
knowledge of information systems, management, marketing, and 
quality to identify projects
    best-suited to improve the competitiveness of each unique 
firm that they serve.
    Upon the creation of the Trade Adjustment Assistance 
division at the Economic Development Administration in late 
2009, we developed a 2-year strategic plan to address 
challenges the program was facing in terms of operational 
efficiency and customer service. And since then, the average 
turnaround time for EDA certification of petitions has 
decreased from 89 days to 36 days, while the average turnaround 
time for the approval of adjustment proposals has decreased 
from 20 to 16 days. And this was achieved despite significant 
increases in the number of petitions from firms and APs 
submitted to EDA for approval. Also, 100 percent of EDA grants 
to the Trade Adjustment Assistance Centers are now being 
processed on time and all payments being disbursed on time to 
the TAACs.
    And finally, relationships have improved between EDA and 
the TAACs as well as among TAACs themselves as a result of 
several meetings that we've held between TAAC staff, EDA, and 
program stakeholders, including Congress.
    Looking forward, EDA intends to focus on developing an 
improved performance measurement process for all of our 
programs, including this program, TAAF, over the next couple of 
years. To assist with this effort, EDA has partnered with the 
University of North Carolina Chapel Hill and George Washington 
University to develop draft performance measures utilizing 
state-of-the-art performance measurement and program evaluation 
techniques.
    Looking at recent TAAF program evaluations, the fiscal year 
2012 Senate Report on Appropriations directed the Office of 
Inspector General at the Department of Commerce to review the 
administrative costs of the TAACs and also called on GAO, of 
course, to evaluate TAAF program operations and effectiveness. 
And this past May, the Department of Commerce OIG completed 
their report, stating that they did not determine the level of 
administrative costs of the TAACs to be unreasonable.
    GAO's newly released report contains positive findings 
regarding the effectiveness of the TAAF program, including that 
program participation has resulted in a 5 percent to 6 percent 
increase in sales, and a 4 percent increase in productivity. It 
also found that manufacturing firms reported that the program 
was associated with increased sales and productivity. An 
impressive 73 percent of the firms reported the program helped 
them with profitability, 71 percent said it helped them retain 
employees, and 57 percent reported that the program helped them 
actually hire new employees.
    Just as a quick aside, I must say how impressed I was with 
the professionalism and the thoroughness of the GAO team. It 
was truly a pleasure to work with them. And I truly and EDA 
truly appreciates their report, and thank them for that.
    So with that, I'd like the thank you for the opportunity to 
provide testimony. We look forward to working with you and 
continuing to work to improve the Trade Adjustment Assistance 
for Firms program. Thank you. And I'll be happy to answer any 
questions you have when you like.
    Mr. Platts. Thank you, Mr. Borlik.
    [Prepared statement of Mr. Borlik follows:]

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    Mr. Platts. Mr. Bujalos.


                STATEMENT OF WILLIAM J. BUJALOS

    Mr. Bujalos. Thank you, Mr. Chairman. I am Director of the 
MidAtlantic TAAC, responsible for administration of TAAF in New 
Jersey, Pennsylvania, Virginia, West Virginia, Maryland, 
Delaware, and the District of Columbia. My testimony has been 
submitted earlier, so let me just briefly outline it so that 
there should be some time for questions.
    I've been the director of MATAAC for the last 13 years, and 
I have to tell you, I am struck by the utter uniqueness of this 
program. I could be wrong, but in my humble opinion, there's no 
other agency or endeavor in the Federal Government that does 
what we do. TAAF is an example of the government acting smart 
by doing only a little. And doing it well. It's not a 
manufacturing assistance program. It's not a jobs program. It's 
not a corporate welfare program. Firms in the program receive 
no public money. TAAF doesn't pick up the pieces after 
catastrophic layoffs have taken place and attempt to create new 
careers out of whole cloth.
    We're not consultants. We don't sell projects to keep our 
employees busy. In other words, we don't compete against the 
private sector with public money. It is a firm stabilization 
program. It is a trade remedy aimed at small firms under 
existential threat. Let's be clear. I believe in free trade. 
Let me say that again. I believe in free trade.
    Further, I believe that it should be the policy of this 
government to support the eventual elimination of all barriers 
to global free market. Our focus is exclusively on heretofore 
competitive small enterprises. Heretofore they were 
competitive, blindsided by tides of imports, in many cases. 
Sure, they should have kept up with the latest news about 
pending trade agreements that might affect them. Sure, they 
could have mitigated the damage had they done so. Of course, it 
wasn't smart to ignore the necessary business process upgrades 
so that they wouldn't be surprised as imports ballooned. Shame 
on them for spending so much time trying to make payroll by 
Thursday afternoon.
    We've heard from previous testimony how lean some of these 
companies are. And I can tell you from personal observation, 
that's not quite an accurate statement. It's beyond that, in 
many cases. More often than not, by the time I see them, 
they've spent the last few years burning working capital--
burning it--in a vain attempt to remain competitive through 
price cutting. I mean, that's all they had, just that.
    For example, the aggregate profile of firms entering TAAF 
in my region include the following: A 20 percent sales decline, 
a 10 percent productivity decline, a 60 percent earnings 
decline, and more than 12 percent of the employees have been 
let go. More than simply not sustainable, this profile is a 
death spiral for a small business. And there are ripple 
effects. More than three-quarters of the firms that I deal with 
are located in rural areas where they are either the primary 
employer or, in some cases, the only employer in the township.
    We only do three things: One, we prove trade injury; two, 
we develop business plans unique to each firm's specific 
circumstances. Three, we partner with them in engaging outside 
consultants to implement change. In other words, to take on the 
risks associated with not doing the same things over and over 
again and expecting different results.
    Our overarching mission then is the upgrade of global 
competitiveness, something that only they can achieve. That's 
why they have so much skin in the game. Not only do they not 
receive any public money--and actually, they have to pay into 
the program--but they also must do something to get any benefit 
out of it.
    Does it work? Well, nationally we surveyed just under 1,000 
active clients. Nationally. This isn't just MidAtlantic, or 
MATAAC. These are the aggregate results since program entry. 
Aggregate results. Some companies do better. Some don't do as 
good. These are the aggregate results: 4 percent jobs growth, 
26 percent sales growth, and 21 percent productivity growth.
    And by the way, I'm not foolish enough to believe that
    TAAF can claim sole responsibility for those results. We 
played a part, as did the consultants that we engaged and the 
managers that provided leadership, and the employees who 
learned how to work a lot smarter than they used to. This isn't 
trivial, in my view. When then entered the program, every 
company was seriously injured and unable to compete against 
imports. What we did at the end of the day was facilitate an 
environment where entrepreneurs--and you've seen some of them 
today--could execute change that heretofore was financially 
unattainable, at least immediately. Probably in several years, 
if they had some luck.
    Could the program be improved? I believe it can be. For 
instance, if our mission is the upgrade of the global 
competitiveness of the trade injured--that specific 
classification of company--then what's the best methodology we 
should use to measure, track, and score that achievement? 
Secondly, what's the optimum deployment of resources that we do 
engage? Third, what minimum levels of acceptable performance 
should be evaluated, scored, ranked and held accountable 
against the TAACs? And would it be worthwhile at some multiyear 
interval, yet to be defined, to rank TAACs by their score and 
subject the lowest one to a rebidding of their cooperative 
agreement? And given the importance of our mission, shouldn't 
we require substantial--and I'm using that word deliberately--
substantial business credentials of all key hires going 
forward?
    And finally, we've all heard the term AP or adjustment 
plan. This is an adjustment plan. When we add the financials, 
it's about a hundred pages. It's not trivial documentation. 
Shouldn't approval of the adjustment plans be devolved to the 
TAAC directors by virtue of the fact that these tones are 
robust business plans unique to each firm's financial, 
organizational, and operational circumstances, and that short 
of actually remedying themselves, nobody external to the TAAC 
is qualified to evaluate them in any meaningful way.
    Make no mistake, even if none of what I've just
    outlined, those four or five things, if none of those 
things were ever implemented, TAAF is still an impressive, 
agile, focused and effective trade remedy as it is. Its 
business model is such that I would argue should we ever get 
serious about the revitalization of the Nation's small business 
sector, we would be well advised to at least consider it a 
platform of choice.
    I thank the committee for giving me this opportunity to 
share my point of view on TAAF, but I only help manage it. It's 
more important that you listened to and you heard the actual 
entrepreneurs that have benefited from what we do, because 
they're at the front line. The friend that was sitting right 
here, they're at the tip of the spear, not us.
    Thank you very much for at least allowing me to be part of 
the discussion.
    Mr. Platts. Thank you, Mr. Bujalos.
    [Prepared statement of Mr. Bujalos follows:]

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    Mr. Platts. Mr. Gomez.


                 STATEMENT OF J. ALFREDO GOMEZ

    Mr. Gomez. Mr. Chairman, Ranking Member Towns, Mr. 
Connolly, good morning. I'm pleased to be here today to discuss 
the Trade Adjustment Assistance for Firms program administered 
by EDA.
    Over the past decade, U.S. imports have almost doubled, 
reaching $2.7 trillion in 2011. During the same period, the 
U.S. entered into free trade agreements with 14 partner 
countries.
    Mr. Chairman, as you noted in your opening statements, 
although trade expansion can be beneficial for all trade 
partners, many firms and workers experience difficulties 
adjusting to import competition. The program, through 11 
centers, or TAACs, across the country provides technical 
assistance to these firms so that they can remain competitive 
in the global economy.
    My statement today is based on a report that we issued 
recently in response to a mandate that we review the operations 
and effectiveness of the program. I will focus on three main 
areas: First, the results of recent legislative changes in the 
program's operations; two, the performance measures and data 
that EDA uses to evaluate the program and what these tell us 
about the program's effectiveness; and three, how program 
funding is allocated and spent.
    First, we found that the changes that Congress enacted in 
2009 contributed to improvements in program operations and 
increased firm participation. For example, the creation of a 
director and other full-time positions for the program reduced 
the time to certify firms. Also, the inclusion of service 
sector firms and the expansion of the look-back period from 12 
months to 36 months resulted in additional firms participating 
in the program.
    Second, we found that EDA's performance measures and data 
collection for the program provide limited information about 
the program's outcomes. EDA does not systematically maintain 
data collected by the centers on the firms they assist, 
resulting in gaps in centralized data that EDA could use to 
evaluate the program and need reporting requirements. Given the 
weaknesses we found in the data collection, we undertook 
further analysis to determine the program's impact. So our 
economic analysis showed that there is a small positive and 
statistically significant relationship between program 
participation and sales. Firms participating in the program 
experienced a growth of 5 to 6 percent in sales, although other 
factors had a stronger effect on performance.
    So we also conducted a survey of 163 firms that 
participated in the program. The survey showed that the program 
had a positive effect. The graphic on page 7 of my statement 
shows some of the survey results. So, for example, we found 
that more than 90 percent of the firms reported that they were 
satisfied with the services they received from their center and 
the consultants. And you heard some specific examples from the 
first panel this morning. Also, 82 percent of the firms 
reported that the program helped them stay in business.
    Third, in terms of how funds are allocated and spent, we 
identified several weaknesses pertaining to EDA's funding 
formula. EDA has allocated funding to the 11 centers. However, 
its formula does not take into account the potential number of 
firms in need of the program and differences in cost across the 
centers. Consequently, centers that may have a greater number 
of trade-impacted firms receive similar funding as those 
centers serving a much smaller number of firms. A revised 
formula should use reliable and appropriate measures of need in 
each State or region.
    In summary, although funding for the program at less than 
$16 million is small relative to the rise in imports over the 
past decade, our economic analysis and survey results show that 
the program has delivered positive results for firms. The 
changes that Congress enacted in 2009 gave EDA and the centers' 
officials more flexibility in certifying firms and increased 
firm participation.
    Lastly, EDA's allocation formula does not factor in 
differences in program need and cost across the regions. We 
have recommended that Commerce establish more effective 
performance measures, improve its data collection efforts, and 
allocate funds in a way that considers program needs and costs.
    Mr. Chairman, Ranking Member Towns, Mr. Connolly, this 
completes my statement. I would be pleased to respond to any 
questions.
    Mr. Platts. Thank you, Mr. Gomez.
    [Prepared statement of Mr. Gomez follows:]

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    Mr. Platts. I will yield myself 5 minutes for purposes of 
questions. Most of my focus is going to be on really a cross-
section of all three of your testimonies and the administration 
of the program. Because clearly, from the previous panel, 
companies are benefiting from the program. And certainly the 
three that were here today and their interactions with MATAAC 
shared their great appreciation and, in fact, they perhaps 
wouldn't still be in business today, but for that assistance. 
But looking at the big picture is what I really want to try to 
focus on on this panel.
    Mr. Borlik, in your written testimony as well as today, you 
talk about improving your performance evaluation of the 
program. I think that's critically important. In your written 
testimony, you say EDA intends to focus on developing an 
improved performance measurement process over the next 2 years.
    I guess a two-part question. One, is that performance 
measurement process that you're looking at going to include 
annual review of the TAACs? My understanding is their contracts 
are renewed annually. Is that accurate?
    Mr. Borlik. That is correct. The grants are made annually. 
They are for several years, usually. But several years. But 
yes, annually.
    Mr. Platts. As far as this new approach on performance, is 
there going to be a more involved review or evaluation of that 
performance of each of the 11 TAACs as part of this new 
process. And then you talked about in your testimony that in 
putting this new process in place, that it's going to take 2 
years. The second part of my question is: Why is it is going to 
take 2 years?
    Mr. Borlik. Right. So the performance analysis process, 
performance improvement process that we're working on with the 
University of North Carolina and George Washington is going to 
include the TAAF program and the intent is certainly to develop 
a whole suite of performance measures where EDA with its 
regular programs now focuses on investment leveraged and on 
jobs created. With the TAAF program, we look at a number of 
performance measures, including the sales and employment and 
productivity of participating firms at the time of 
certification, after 1 year following certification, and 2 
years after completion of the program.
    So the point of this performance measurement improvement 
system is going to result in an increased larger suite of 
performance measures. And we plan to work in collaboration with 
the TAACs and with a great amount of EDA grantees and also with 
Congress along the way to develop what those metrics will be, 
and then yes, the intent would be to apply the relevant metrics 
to the TAAF program in close consultation with the TAAC 
directors.
    Mr. Platts. But specifically, to the evaluation of the 11 
TAACs, is there going to be a strengthened, enhanced annual 
review of those? Again, why the 2 years?
    Mr. Borlik. Right. So yes, the performance metrics that we 
develop would be applied to the TAACs. We don't know exactly 
what those will be quite yet. We'll work in consultation with 
the TAACs to make sure those make sense, but the intent is to 
apply those to each of the 11 TAACs, whatever those end up 
being.
    The 2 years, that takes into account the GPRA, or the 
Government Performance Reporting Act, requirements for forms 
that need to be filled out by grantees. But it's not as if we 
won't be able to do anything for 2 years. We're going in 
phases. And we anticipate fairly soon, hopefully over the next 
6 months or less, 3 to 6 months, to actually begin piloting 
some of these measures and sharing those with the Trade 
Adjustment Assistance Centers.
    We're in the process right now with the our research 
partners of developing a suite of what those measures might be 
like. It's not going to take 2 years to completely develop 
those. The 2 years is the whole process when you include the 9 
months for developing the forms for GPRA reporting.
    Mr. Platts. I won't be in this position a year from now and 
the coming 2 years. Perhaps Mr. Connolly or Mr. Lankford. As 
two retiring Members, Ed and I won't be here, but we know our 
colleagues that still will.
    When I read your testimony in preparation for the hearing--
and I am glad you're focusing on performance evaluation--but 
we're talking about a 2-year plan to put that in place and then 
begin. I hope it's 3 to 6 months and not just as a pilot but 
that--that is one heck of a long time.
    Related to that specific evaluation of the TAACs, do you 
know when--and I know you're relatively new in your position in 
the division being stood up--but when the last time any one of 
the TAAC's contracts was put out for bid; rebid?
    Mr. Borlik. No. They have not been. They traditionally have 
not been. I know that that--the Department of Commerce's OIG 
alludes to that--not alludes, but recommends that we consider 
doing that.
    Mr. Platts. My understanding, it's been 30 years. Is that 
accurate?
    Mr. Borlik. Right. Yes, I think it has been about 30 years.
    Mr. Platts. When I read that, it seemed like 30 years we've 
not rebid any of these seems pretty much a closed market. And 
competition for those companies that are participating for the 
government itself, the fact that we're not looking at is there 
something else in that region, wherever it may be, that may 
able to do it better, we don't know unless we ask.
    Mr. Borlik. Right. It's a great question. I think the 
Department of Commerce is open to that possibility. We would 
want to work very closely with Congress on that because I do 
know that we have some stakeholders in Congress who feel 
strongly about whether or not to bid it out. But I would say 
the Department of Commerce is open to that.
    Mr. Platts. Well, any of my colleagues that want to stand 
in front of the camera and say they don't think it's a good 
idea to rebid taxpayer contracts on a regular basis, I would 
love to stand next to them and tell them why I think it's a 
good idea. Because to me, when I read that, I hope that's part 
of that reinvigorated performance process, is that these are 
11--no disrespect, Mr. Bujalos to yours. I don't have the data 
to compare you to the other 10. But the fact that we're not 
saying, Hey, here's what you're doing. Let's see if somebody 
else can do it better or not. But the fact that we're not even 
asking the question over 30 years is just unacceptable.
    Mr. Borlik. Point very well taken.
    Mr. Platts. To my colleagues that will be here, I hope that 
question is followed up on very closely.
    I've got a whole host of other questions that relate to, 
Mr. Bujalos, your testimony. And Mr. Gomez. But we'll come back 
around for a second round. But I'll yield to the ranking member 
for purposes of questions.
    Mr. Towns. Thank you very much, Mr. Chairman.
    Let me ask, if you have companies that are not failing 
because of trade injury, do you think this model would work?
    Mr. Bujalos. Oh, yeah. I mean, I can't be any more specific 
than that. I've had a long history of working in companies. And 
in my last gig before I took this gig, I was vice president of 
one of the East Coast's largest management consulting firms. 
And I've spent a long amount of time with a lot of companies 
that weren't trade-injured. And I spent that time with 
companies that were in the Fortune 500 and also in the Inc. 
100. The majority of them were family-owned. Some were traded 
publicly.
    There is something magical--and I'm using that word 
deliberately--there's something magical about not giving 
somebody welfare but convincing them, and in many cases, 
against their own initial intuition, to make changes that 
they're not used to that are not part of their default. And 
working through that exercise, almost emotionally in some 
cases, where they say, Okay, if I have a partner that will 
partner with me and guide me during that process, then it might 
work, because all we are is seed money. It's just a seed.
    We have to get a company--in many cases, they're in crimson 
red ink--off the edge of the table in mid-air by the time we 
see them. And all I've got to do is get them to the point where 
they have the confidence and they're looking at black ink and 
the training wheels can be taken off and they're own their own 
and doing their own investments.
    One of the things we do in the plans, we write these 
Adjustment Plans for the entire turnaround of the enterprise. 
Not for $75,000. Does anybody really think it takes $75,000 to 
turn around a $10 million business? No. It's closer to a 
million by the time you throw in hardware and software and 
equipment and robotics and a whole bunch of other things. We 
want them to get to the point where they willingly and can 
afford to invest on their own on a routine basis. And that's 
the objective of what we do.
    Mr. Towns. You know, thinking about the fact that you only 
have $16 million, how are you able to reach and have such a 
great return--reach all these people and have such a great 
return? How can you do it?
    Mr. Bujalos. It's not universal. I don't want you to walk 
away with the impression that they're all successful. They're 
not. We're dealing with a bell curve, right. And we're dealing 
with a certain part of the business bell curve--the extreme 
left-hand side of it; those that are injured. By the time we 
see them, they are injured. They're not part of the normal 
universe of companies.
    By the time we see them, there is a higher percentage of 
those owners and chairmen and CEOs that have been mugged and 
they're willing to listen now. This isn't a sales pitch
    anymore. This is existential discussion. And I have a 
sneaky feeling that that has a greater impact by that point 
than the same discussion a year earlier would have had. And I 
think that has something to do with it, too.
    You put yourself in their shoes. You've risked your 
children's education. You've risked your ability to make your 
mortgage payments on your house. You've risked, in some cases, 
your marriage. And all of that now is in jeopardy. And somebody 
comes along and says, I want you to take even a further risk. 
But I'm going to be your partner in that effort and we're going 
to measure it one step at a time. And that has an effect on 
people. It really does. And I suspect that that platform, the 
fact that they get no money, that they have to put their skin 
in the game, and that we set it up so we that can measure the 
metrics on a short time interval so they can see the 
improvements that are taking place, it changes attitudes and it 
changes peoples' default behavior. And I think that's 
applicable to business in general, not just the trade injured. 
But that's just my opinion.
    Mr. Towns. Right. The uncertainty of 2011 in terms of 
budgetary and all of that, how does that play--does it play in? 
Because the point is the uncertainty around whether it's going 
to be there or not there.
    Mr. Bujalos. It's a worry. See, all of our--I shouldn't say 
all, but darn close to all of our outreach is associated with 
some sort of referral. Somewhere, somebody referred somebody to 
us as a result of people like me making speeches and doing 
presentations to trade organizations, banking consortia or 
their consultants that will send their clients here or clients 
will talk to other clients during the rubber chicken meals. 
When the word gets out that this possibility is going to go 
away, well, there's--I've gotten many, many calls and emails 
from companies saying--I mean, it's an investment. Put 
yourselves in their shoes. You're going to invest the better 
part of a year. Why should you if now you figure what, I'm 
going to get a piece of paper and that's it?
    It is the same kind of effect as uncertainty has in 
general. Businessmen loathe uncertainty. Business in general 
loathes it. Not just for TAA but for taxes and regulations and 
a whole bunch of things that you all know about. Uncertainty 
for TAA is just as injurious as uncertainty generally.
    Mr. Towns. Thank you very much, Mr. Chairman.
    Mr. Platts. Yield to the gentleman from Virginia for 
questions.
    Mr. Connolly. Thank you, Mr. Chairman. It's been a 
fascinating discussion. Of course, as has been the case, every 
time we have a witness from the 11th District of Virginia, 
there's a certain aura that's projected. And, Mr. Borlik, you 
certainly are keeping that tradition. So thank you.
    Mr. Gomez, let me just say in the GAO report, you look at, 
Commerce should establish more effective measures of program 
outcomes. It should improve its data collection. And it should 
allocate funds in a way that considers program needs and costs. 
Those almost sound like generic critiques of any Federal 
program. There's nothing unique about this. And I heard Mr. 
Borlik say how grateful he was to the GAO and so forth, but it 
just seems to me one could bore down a little bit more to be 
more helpful than these kinds of generic critiques.
    In those critiques, would one part of the solution be: 
Let's invest more in technology so we can do that stuff?
    Mr. Gomez. Well, in regards to the first recommendation 
that we made to have Commerce look at developing more 
performance outcome-oriented measures and goals is that the 
whole purpose of our study was to look at the impact of the 
study, or to look at the impact of the program. So from the 
performance measures that Commerce has and the data that they 
have, we weren't able to determine what's the impact. So we put 
together an economics model, we did a regression model, where 
we looked to isolate the impact that participation in the 
program had while controlling for other factors.
    Mr. Connolly. Mr. Gomez, I appreciate that. I'm just trying 
to get at a simple question: Would more investment in more 
technology, IT capacity, help them help this entity better 
comply with your recommendations?
    Mr. Gomez. We didn't look specifically at that, but I think 
that's something that perhaps Mr. Borlik could answer if that 
is a specific need.
    Mr. Connolly. Mr. Borlik, do you think that might be part 
of the solution in terms of looking at the GAO recommendations 
and going, how are we going to implement those or better comply 
with those?
    Mr. Borlik. I certainly do, yes.
    Mr. Connolly. Mr. Bujalos, I was absolutely fascinated by 
your testimony. But as somebody who's in the consulting 
business--and I heard you say you were a management 
consultant--it sounds like that's what you do. You ticked off a 
whole bunch of stuff we don't do and I'm sitting here thinking, 
Then what is it you do do? And obviously you feel passionate 
that there's great value added in what you do. But if I'm 
sitting here as a layman, and I am, trying to understand your 
mission in life, I don't understand what your value added is.
    Mr. Bujalos. We don't want our clients to think of as 
consultants. So we don't use that term. A lot of what we do----
    Mr. Connolly. I don't want my clients to think of me as a 
politician. We don't use that term. But I don't always succeed.
    Mr. Bujalos. We bring to the table all the things that you 
and I both know about. And why do we do it? We do it because it 
works.
    Mr. Connolly. But in fact, you function as a consultant?
    Mr. Bujalos. Yeah.
    Mr. Connolly. All right. So, all right. We don't want the 
term, but. With the time that's left me, because I was thinking 
about the bagel baskets, give us an example, if not two, walk 
us through a successful example or an unsuccessful one from 
soup to nuts how you functioned and how it made or did not make 
a difference. Because I think you made a very impassioned 
example of what's at risk; what some of these small businesses 
risk. Just walk us through how it works.
    Mr. Bujalos. I'll give you two. One is not in MATAAC. This 
one is in northwest United States. And the company no longer 
exists because it was acquired and split up and--the function 
still exists, but it's is not there anymore. I think the owner 
now lives on an island someplace.
    The company made--and I tell this in a lot of my 
presentations because I've done the research to make sure it 
was true because I couldn't believe it at first. The company 
was a family-owned company that made ceramic clay flower pots, 
the kind you buy at Home Depot. High tech? Not so much. 
Expensive? Not so much. They did it for like 50-plus years 
until a family in Taiwan realized they could do the same thing, 
ship them across the Pacific, offload them up and down the West 
Coast of the United States, and sell them for a price that was 
less than our client's cost.
    Now flash forward 6-1/2 years. A ceramics engineering 
company was hired and a marketing firm were hired. The company 
was sill in the ceramics business, but now they were making 
ceramics for Boeing Aircraft. Not everybody survived. About 70 
percent of the employee base decided to stay on the train, but 
they had to listen to something that modified their behavior 
and was not necessarily pleasant; i.e., you've got to go back 
to school. But I've got a family to raise, I've got this and 
I've got that. But that is why God made nighttimes and 
weekends.
    So now they're making a much more sophisticated product 
mix. They're making it for a customer mix that isn't very 
tolerant of an occasional chip or crack. Not very forgiving at 
all. And they have to understand--and now they do--that they 
are in a kind of a business where somebody on this planet is 
going to clone it in 9 months--and probably cheaper than you're 
doing it. That means they had to become pretty masterful at 
creating new products quick time; knowing also that 80 percent 
of the time, your new product is going to be a miserable 
failure, or even mediocre, at very best. So you've got to do a 
lot of them and you've got to be prepared for a lot of failure. 
But one or two of those are going to be the blockbuster that 
are going to pay for all the other mistakes. That's the kind of 
world they're living in now. It's not necessarily comfortable, 
but it's quite rewarding. That's the first example.
    Second example. This one does exist right now in your 
State. And I like it because it's not sexy. This is the kind of 
a business and a kind of an industry that the experts and the 
gurus like us would have said 30 years ago: Give it up. Don't 
mess with it. The world's going away from this stuff. It's 
going to Indonesia. It's going to Vietnam. It's going to China. 
It's going to wherever. The company makes shoes. Shoes. Feet, 
shoes.
    The company was in mid-air, in red ink, bought by a former 
salesman from another shoe company. I think he bought it out of 
bankruptcy but I'm not sure about that fact. They were in very 
bad shape. Joined with us. The problem was we didn't get to 
join with them until the third year. That's why lots of time 
they're burning their working capital like crazy, figuring they 
can compete by simply slashing prices. Whey they finally 
realize that that's not working, it's really dangerous.
    One of the first projects we did after they were certified 
and given the grant was we decided to hire a small software 
company, a three-man shop, and they were able to work with the 
company's CEO and his engineers to come up with an RFID tag. If 
you don't know what that means, it's a tiny little grain of 
sand that's a radio frequency identification. And the company 
inserted one RFID tag in every single shoe in inventory.
    Now as a side bar, understand if you're in the business of 
making shoes, it's shocking, I know, but they tend to walk at 
the end of each shift. So you have what is called inventory 
shrinkage occasionally. Putting an RFID tag in each shoe 
eliminated that by a Monday morning, saving about a million 
dollars worth of inventory costs. That began to turn red ink 
into black ink.
    Second thing. Hired another software company. Because 
consider something, if you're in the rag trade you have bolts 
of fabric and you use geometry to figure out what the pattern 
has got to be and use a cutter or laser to cut out maybe a 
thousand sheets of fabric to come up with the dress or the 
shirt or the suits of whatever you're doing. But if you're in 
the business of making shoes, you're not dealing with a perfect 
rectangle. You're dealing with an animal hide. Each one is 
unique. But you still have the same yield problems, you still 
have the same waste problems. So how do you deal with it?
    So we had another software company that took a table like 
this, but made it a light table with a camera up in the ceiling 
so that the company could take the hide, place it on the table, 
a picture was taken of it, digitalized. The software then 
arranged the geometry of the pattern that was unique to that 
piece to maximize the yield from that piece and a laser cut it 
out. And then the next one and on and that sort of thing. I 
don't know what the savings was. It wasn't as great as the 
millions dollars, but it was significant. And it also gave this 
particular company a niche no one else ever thought of.
    The third thing. And this one is still in process and it's 
failed twice, so I don't know if this is going to work. But in 
the shoe industry, traditionally, there has been an in-elastic 
market, a niche in-elastic market. The very high end. Some 
people have seen the movie called ``Prada.'' There's a shoe 
called Prada, where people are willing to pay thousands of 
dollars for well-made Italian leather luxury shoes. Those 
particular customers don't care if it costs $1,500 or $2,500.
    Well, our client wants to make an American Prada. One way 
to do that, aside from branding, because it's just like with 
Toyota and Lexus, you have to use a different distribution 
channel, different names, different Web sites, different 
everything, but also, he has to have new talent. So we've tried 
so far twice to hire a retired Italian artist, but there was a 
cultural problem with south Virginia and Rome. So we're trying 
it again this next summer to see if that works. Because my 
friend is determined to see if he cannot be successful in--it 
won't be called Prada, obviously--but to create something 
equivalent to that and proudly put a gold USA stamp in it.
    Mr. Connolly. Thank you.
    Mr. Platts. I thank the gentleman. Ms. Norton, did you have 
questions? I yield to the gentlelady.
    Ms. Norton. Thank you, Mr. Chairman.
    Mr. Gomez, I was fascinated by the ratio of funding to 
imports here. According to your report, $16 million available 
for these 11 centers to deal with a universe of
    $1.3 trillion in imports.
    I have a couple of questions. You look at how the funds, 
this small amount, are divided to these 11 centers and the one-
third allocated to the centers, according to what you call 
three variable factors, look like it has to do with the 
effectiveness of those centers: Approved business recovery 
plans, employees in approved recovery plans, and firms 
achieving expected results. That's really an effectiveness 
measure, is it not?
    You indicate as what needs to be done, and I am quoting 
here: ``A funding allocation formula should distribute funds 
according to the needs of respective populations.'' Now I need 
you to define for me what you mean by ``needs,'' given the 
diversity of the so-called populations that these centers deal 
with. The needs of firms, the needs of the geographic area. I'm 
not certain I understand.
    Mr. Gomez. Right. So two-thirds of each of the centers' 
budget is--essentially, they all get the same amount of base 
funding. The one-third that you're referring to is based on 
those three variables. The point that we were making on the 
funding formula is that each region has different firms in 
need. So we were asking Commerce to look at revising its 
formula allocation to look and see the number of firms that may 
be in need. So they may differ from one center to another.
    Ms. Norton. So if a center had a----
    Mr. Gomez. Greater need, for example, perhaps that should 
be taken into account in their funding formula.
    Ms. Norton. Rather than this base equal.
    Mr. Gomez. Correct.
    Ms. Norton. That's very interesting. I know that when 
you're in Congress everybody wants to make sure they get the 
same thing everyone else gets. But when you're dealing with 
such a small, tiny amount of funds, it does seem to me the 
highest and best use needs to be taken into account.
    I have to ask you, given the small amount available to 
these centers and it really miniaturizes when you divide it 11 
ways, are there case studies, is there any way to make this 
replicable to other small businesses, such as my colleague's 
question, to give an example, to go through what a firm goes 
through. You help a business. That business learns. Is there 
any way that other businesses, either in that area or in the 
larger universe can learn from that experience or is that--
forgive me the term--lost, because it helps one firm and nobody 
ever hears about it and can replicate it himself or herself.
    Are there case studies? Should those be done so that firms 
see what other firms have done and perhaps one can get a bigger 
bang out of this small amount of funds. Could I ask your views 
of the three of you? And if not case studies that were 
publishable, is there any other way to share whatever a firm 
gets from its relationship with one of the centers?
    Mr. Bujalos. We do at least one every month.
    Ms. Norton. One what?
    Mr. Bujalos. Case study.
    Ms. Norton. And you publish that?
    Mr. Bujalos. Yes. Well, we send it to the head office. 
There is a book of them. We do them quite often.
    Mr. Borlik. We've collected a great amount of those. And 
the Trade Adjustment Assistance Centers have done a terrific 
job in sharing those with us at EDA. They're busy as it is, and 
we've asked for a little bit more in collecting these case 
studies so that we can share them both within the Department of 
Commerce, across the administration, and eventually, hopefully 
on a Web site where we can promote the best practices. We do 
have to be careful about confidentiality.
    Just real quickly for an example--we don't have to use the 
names of the companies--but there was a food processing plant 
operating out of Salem, Oregon, and also in Kentucky, losing 
sales to less expensive imports from both China and Chile. And 
the Northwest TAAC in Portland, Oregon, helped them develop a 
business recovery plan that was aimed at increasing market 
share, sales and profitability, new product development. The 
project started in 2005. And since completing the projects out 
that were identified within the adjustment plan, they've 
created 231 jobs, not only saving the business, but created 231 
jobs and increased sales by $37.4 million, which for a small 
business is a great increase.
    I think it's a great question about whether or not we 
collect examples. We do on a regular basis. We have quite of a 
few of them. And the intent is to try and share those as much 
as we can.
    Ms. Norton. When you consider the small amount of money 
obviously is not going to be get larger in this Congress and 
perhaps in successive Congresses. It does seem to be that it is 
perhaps the most valuable thing you could do. Otherwise, this 
one-on-one as magnificent as it may be to each individual lucky 
enough, and I use that word advisedly, because with the need 
that may be out there, part of being one who gets this service 
may indeed be luck. The value of making as much information 
available to the larger universe of companies seems to me to 
multiply many times what conceivably you do for an individual 
firm.
    I would like to ask Mr. Gomez whether or not GAO attempted 
the gold standard of taking firms, or anyone has done this 
perhaps with the program of taking firms that did not receive 
the assistance and comparing them with firms that did, perhaps 
in the same business or trade or category. Has that ever been 
done, if not, should it be done?
    Mr. Gomez. So in our study, that other group that you're 
referring to is referred to as the control group.
    Ms. Norton. Yes.
    Mr. Gomez. So we had difficulty finding that control group. 
So instead, the analysis that we did is we essentially compare 
the firm to itself so we compared and gathered data for each of 
the firms before they participated in the program and then 
after participation. So that was the analysis that we did. We 
did not find the information for that control group so you know 
where the funds are that did not take advantage of the program 
and why perhaps.
    Ms. Norton. Oh, thank you very much, that's very helpful.
    Mr. Platts. I thank the gentlelady, will yield to myself 
for additional questions.
    I want to come back on the issue of how we are evaluating 
the TAACs and how it relates to the funding of the TAACs. And 
it's my understanding that--and this was an issue raised by Mr. 
Gomez's testimony in the study about the way the funding is 
distributed, that in the 2010, 2011 fiscal year that there was 
one TAAC, I believe the western TAAC that received the same 
funds as New England, mid Atlantic and the western TAAC only 
submitted one adjustment plan petition for a single company for 
the entire year. One, is that accurate Mr. Borlik, to the best 
of your knowledge?
    Mr. Borlik. I would have to go back and look at that, I 
know that that particular TAAC does produce many fewer 
petitions than the other TAACs, I think that's accurate. I 
don't recall whether it is one or not but it definitely 
produced fewer.
    Mr. Platts. That's my understanding, that in the entire 
year, they had one adjustment plan petition submitted. And this 
goes to, again, the evaluation. If that's accurate, and there's 
other TAACs that have a waiting list, and it's my understanding 
that mid Atlantic and New England have a backlog, I'm not sure 
if this is a current number, it might have been in that same 
fiscal year, but a backlog of over $6 million in unfunded 
projects.
    So we have some regions that have a backlog, and then we 
have another one submitted just one plan. Again, that seems 
like a natural to evaluate what's that TAAC doing, or I would 
contend not doing to assist, because my guess is they've got 
companies in as great a need as New England does or mid 
Atlantic does, but they are, for whatever reason, not 
performing, yet there is no annual review of that and no 
consideration of making a change. And it really makes a point 
of what I asked earlier about the fact that we haven't rebid in 
over 30 years any of these. It just doesn't sound logical. And 
it goes to the GAO recommendation that one of the flaws of the 
program--again, we're trying to--how can we help raise issues 
that will ultimately strengthen the program? That's the goal of 
this as an oversight committee, the GAO's recommendation is to 
change the funding formula so it's better allocated based on 
where the need is and is being identified. And if we have 
certain regions with a waiting list, we have companies saying, 
hey, we need this help, and that TAAC is short of funds and 
can't help all of those in need, but we have another TAAC 
that's got funds they're not using. It is not a question of we 
need more money, it is a better use, better distribution of the 
money.
    Mr. Gomez, you used a term, I think beneficiary equity is 
the term used in your testimony, that the current formula 
doesn't achieve that. That you could have a company in 
California, you know, and a company in Pennsylvania that don't 
have the same opportunity for assistance because of there's a 
waiting list in Pennsylvania and there's excess funds. Is that 
an accurate assessment or statement of what your report finding 
is?
    Mr. Gomez. That is correct, yes.
    Mr. Platts. Is that something you're looking at at EDA and 
to have the TAAF division to look at a change in how you're 
distributing funds?
    Mr. Borlik. Absolutely it is. We have for the first 2 years 
of the TAAF division, we focused on operations and getting up 
to speed in terms of quicker turnaround times in petition 
review, and in the review and approval of the adjustment 
proposals, moving forward and not just moving forward from now, 
but over the past year, the TAACs and I have met and talked 
about performance. We held--I think it was this past February 
where we held a meeting in Washington with all 11 TAACs, and 
the focus was almost entirely on performance, on what 
performance accountability should look like, on what the 
changes to allocation formula should look like. And the fact 
that we all think, I believe, I certainly do, I know that EDA 
does, and I know that many TAAC directors believe that this 
allegation formula should be focused on performance. Now that 
we with have kind of gotten through that initial phase of 
improving the operations, we are heavily focused on 
performance.
    And I should clarify when the 2-year point is about EDA's 
overall development of a performance measurement system for all 
of its programs, by no means does that mean that we have to 
wait to make changes to the TAAF allocation formula.
    Mr. Platts. Okay.
    Mr. Borlik. We are working on it now.
    Mr. Platts. Understood. In the issue of performance of the 
TAACs, for the fiscal year ended September 30th, did you have 
some TAACs turn back money while you had others that had a 
waiting list?
    Mr. Borlik. We had TAACs turn back money, yes, we did. In 
terms of a waiting list----
    Mr. Platts. Unfunded projects----
    Mr. Borlik. Unfunded projects in other TAACs. And EDA asked 
for that money--well, required that money to be returned and 
reobligated and reobligated solely to projects, not to 
administrative costs, but solely to projects. And so we did 
take that money back.
    Mr. Platts. Is that a new approach? Because again, my 
understanding is that, when I see in Mr. Bujalos's testimony, 
14 times returned for every dollar that we are investing in the 
program, there's a $14 returns to taxpayers because of the 
productivity, because of economic growth that occurs. So it is 
not a question of we need more money, but just the money we 
reappropriating gets well used.
    Mr. Borlik. Right.
    Mr. Platts. And my understanding in the past we had TAACs 
returning money, and other TAACs have unfunded liabilities, and 
that goes to the beneficiary equity issue. So what you're 
telling me now for the fiscal year that just ended, we are 
changing that approach?
    Mr. Borlik. That's entirely correct. It has always been, to 
my understanding, again, I've been doing this for 2 years, that 
any funds that have not been spent have been returned and then 
equally divided per the allocation formula across all TAACs. 
What we did this past year, and again, this is part of the new 
approach under a new TAAF division, is to take those funds 
back, and to redistribute those to be focused solely on the not 
administrative costs, but on the backlog of services for 
clients of unfunded projects for clients.
    Mr. Platts. And that's where I'm hoping to get to in a 
greater, in a more timely manner, meaning not just once a year 
toward the end, but perhaps on a quarterly basis, if you've got 
New England, you've got this waiting list of projects that have 
been identified, certified, hey, these companies need help; 
they have got a plan, but we just need that seed money that 
would generate a $14 return for every dollar we spend. We have 
other money sitting out in western or wherever TAAC not being 
used in access, especially if there's, my information is 
correct, one plan even submitted in that fiscal year, to do 
that on a more time sensitive, because those companies that are 
in need can't wait, they need the help now.
    And so it sounds like you're trying to move towards that 
direction and that comes back to where I started my question 
which is, performance evaluation of the TAACs, as the TAACs are 
looking at how the companies are using money, the division, and 
EDA, and ultimately the department need to look at how the 
TAACs are using the money, and to make sure that we're getting 
the biggest bang for the buck here. And that doesn't seem to 
have been the approach in the past, whether it was in the lack 
of any rebidding in 30 years, whether it was in the way of 
distributing funds.
    And then a final question, and this goes, Mr. Bujalos, you 
raised it in your testimony when you highlighted a number of 
suggested reforms. I appreciate that you stated even if none of 
them were adopted you see the benefit of the program day in and 
day out. You listed six different suggestions, one of which 
was--I'm trying to find it here, but you talked about the 
qualifications of those who are part of TAACs and the skill 
set----
    Mr. Bujalos. Yes.
    Mr. Platts. --because in your own testimony, I appreciated 
you listed your background, which is obviously very, very 
extensive business background from management, project manager, 
project processing engineer, project manager engineering--you 
clearly have had a very extensive background. For your own 
TAACs, could you comment about the staff you have, what type 
of, I'll say real-world experience do they have, similar to 
what you have?
    And then, Mr. Borlik, is there, in that evaluation process, 
are you looking at putting in place a more definitive 
requirements for the type of staff that should be manning these 
TAACs that they have real-life business experience to provide 
the level of expertise and assistance that these companies 
need. Mr. Bujalos, if you want to go first.
    Mr. Bujalos. You know what my checkered past is, the 
previous panel mentioned that Todd Shevlin they worked with, 
and also Dr. Mercer. Dr. Mercer is a Ph.D. In management, a 
Bachelors in finance, he's retired, but we see him 
occasionally. Todd Shevlin is a relatively young guy, he's in 
his middle 30s, he's got a bachelor of science in finance. He's 
got a bachelor of science in IT, Information Technology, and he 
has an MBA with a finance subset, some from Villanova, some 
from Penn.
    We have another individual who doesn't work too much with 
clients but works in the back office and takes care of the 
certification work who has a bachelor of science in accounting 
and finance. She has worked with Watson Wyatt worldwide and a 
few other large companies. Todd has also been a founder of two 
companies that he has since sold. His predecessor was a Salman 
Jean, who also founded several restaurants and has a degree in 
engineering.
    Mr. Platts. So they were out dealing with these issues?
    Mr. Bujalos. He's still making payroll by Thursday 
afternoon and that's all that has to say about it.
    Mr. Platts. That's what came through in your testimony of 
your own experience sounds like those who are working with you 
and----
    Mr. Bujalos. I just want to add, we have seen, and I'm sure 
my friend from Virginia can back this up, when you're working 
with business owners, if you can sit in front of them and prove 
to them that they are not going through anything you haven't 
already gone through, it's much easier for you to argue the 
points you want to argue.
    Mr. Platts. That, Mr. Borlik, goes to, my question to you 
is, my understanding is, currently there is no requirements or 
input from EDA or the division of what the staff training or 
backgrounds are of those staffing the TAACs. Is that something 
you're looking at to try to, again, better ensure that these 
TAACs have expertise that really does relate to the real world 
to these companies that are in great need?
    Mr. Borlik. We can certainly do that to the greatest extent 
possible. I should point out that all grants that are made to 
these trade adjustment assistance centers have both standard 
terms and conditions from the Department of Commerce and 
special terms and conditions within each award. And I'm not 
entirely clear as to the level of detail that they get into in 
terms of requirements and qualifications of staff, but it 
certainly--they certainly address that in terms of making the 
point that we expect there to be the highest quality staff 
available and that the TAACs should be held accountable to 
that. So that is, in one way or another, within the conditions 
of the award.
    Also mention I do conduct site visits myself. I'm not able 
to do as many as I would like because of--EDA's travel budget 
isn't exactly the highest. But I do make site visits to meet 
the staff myself. I also--and to tell you the truth, I've been 
very impressed with the staff that I've met. I have also, am 
responsible for reviewing the qualifications--I wouldn't say 
approving, but reviewing and concurring with any changes or 
hires and key personnel, that's part of the special terms and 
conditions of the awards.
    So I do that regularly and certainly pay very close 
attention to what those resumes look like, make sure that they 
are appropriate. And then we, the TAAF program staff and I meet 
on a regular basis and discuss program operations, certainly 
including how the interaction is going between our TAAF program 
staff, and the staff within the Trade Adjustment Assistance 
Center. So that is something we pay close attention to.
    Mr. Platts. And again, I appreciate that in taking on the 
role as director of the division and getting the division stood 
up, and as you talk about moving to the next phase, that 
performance evaluation is a big part of it, and what you just 
said was having the best qualified staff out there possible, 
and that will bring me back to where we started. If we're not 
doing any rebidding of saying of these 11, these two or three 
are the lowest performing, so this year we're going to look at 
those two or three in the coming year to rebid and see maybe 
there is a team of--because you said the key is the best 
qualified people doing the work that taxpayers are paying for.
    So my hope is, and I will summarize, and I kind of have 
three areas I raised with you, annual review, the fact you 
haven't done it in 30 years, to see if there is any way we can 
do it better. I hope that's something that's going to stop. 
While I'm leaving the staff on both sides, the committee staff 
will continue to work, and Mr. Connolly and others, returning 
Members can look at. The inequity, I'll say the not well-
thought-out funding distribution that results in beneficiary 
inequity that you have a company need, can't get assistance, 
and have dollars sitting out in another region where there is 
no one asking for the assistance that we're not addressing 
that, and then making sure that we do have the best people 
possible in these important positions.
    So you're focused on performance, I think, in the end will 
take a good program and make it great, hopefully that $14 
return will be $16 or $18, because it's not a question of, from 
what I'm hearing, more money, but how we're using that money, 
or better allocating it.
    Mr. Borlik. I can assure you I will take all of that back 
to our leadership.
    Mr. Platts. I appreciate it. I know we're all on the same 
page here, and we're all after the same thing and this is good 
government and whatever dollars we spend result in a good 
return for the American people, and especially when we are 
helping save American companies that are now shipping products 
to China, instead of receiving products from China, so we're on 
the same page. I'm going to wrap up, Mr. Connolly, do you have 
any closing remarks or final questions?
    Mr. Connolly. I did, Mr. Chairman, if you don't mind.
    Mr. Platts. Yes.
    Mr. Connolly. Real quickly, Mr. Borlik, Mr. Bujalos, and 
Mr. Gomez, for that matter, when Mr. Greenblatt testified, one 
of the things he cited as a small businessman and a champion of 
the program was the paperwork requirement. It is onerous, it's 
costly, and a lot of small companies working at thin margins, 
just, it's a struggle. You concur that we could streamline the 
process, I think, Mr. Bujalos, you held up something that 
ultimately is something that's 100 pages. Can we streamline it? 
Can we make it more user friendly for our clients?
    Mr. Bujalos. Absolutely. For instance, last week, I sent 
out to all of our consultants, it's about 700 of them, but the 
active bunch is about 500, a small piece of computer code that 
has a graphic of the American flag on it, and I requested that 
they put that on each one of their Web sites with the title 
Federal assistance, TAAF. That will take whoever goes to their 
Web site and wants to discuss it, they push it, it takes it to 
my--our Web site in MATAAC, where we have added another page 
that begins the process of applying online.
    Now that isn't as necessarily as cool as it might sound. 
There is a lot of paperwork, there is a lot of look-back that 
we have to verify because of the statutory requirements, but 
there is a silver lining in this effort also that I don't want 
people to ignore. It's a good thing to work hard for something, 
and if we can take a company through the paperwork as quickly 
as we possibly can, and force them to be in a position where 
they have to look back 4 years in their finances for a company 
that you and I might operate that merely amounts to swiveling 
in our chair and reaching into a cabinet and pulling out some 
folders.
    For a lot of these companies who have shaved everything 
down but bone, that's a task. Okay, well there's a benefit for 
them learning what that task is all about, and the value of 
going through that. And that helps people like me to help 
people like them to automate what they should have automated 
already. So it's not all bad, but there is a lot of paperwork. 
It probably should be looked at two or three more times before 
we're sure of it.
    Mr. Connolly. And you concur, Mr. Borlik?
    Mr. Borlik. I do concur. I do think it is way too much 
paperwork. I realize, of course, that there is the statutory 
need to prove import impact, there is a statutory requirement 
to prove that there is injury, financial injury, sales losses, 
employment losses, the regulations, I do believe, I don't know 
what my office of chief counsel will think about this when I 
get back, but I do believe the regulatory requirements coming 
out of the statutes are very complex and require a lot of 
paperwork.
    Mr. Connolly. Sometimes up here we don't want to admit, Mr. 
Chairman, we're part of the problem, and the requirements we 
sometimes impose. Mr. Gomez?
    Mr. Gomez. Mr. Connolly, I wanted to add, many of the firms 
that we spoke with during our study did have that common 
complaint, it is a lot of paperwork requirements. It is, as Mr. 
Borlik noted, that it is the requirement that firms have to 
demonstrate that have been trade-impacted. So having to look 
back a couple of years to show whether the impact was on the 
sales or the employees, it's that sometimes they didn't have 
that information readily available and they have to get it. I 
think you heard it also from the three firms this morning that 
that was something that held them up also.
    Mr. Connolly. Well, let me ask you a question about that, 
though. I mean, Mr. Bujalos and his colleagues, aren't they in 
the business of certifying that someone has been negatively 
impacted? So what's wrong with having them do the certification 
rather than the onus on the potential client having to prove it 
themselves? Come on in, and you decide whether I am eligible 
for help.
    Mr. Bujalos. My suspicion however is that this requires a 
statutory chain.
    Mr. Connolly. Okay. I have one final question, and I do 
want to echo what the chairman said, there is a certain irony 
in not rebidding. Our mission here is to help companies regain 
their competitiveness if we can, but we're not competing. And 
maybe we found the ideal 11 who just can never be perfected and 
nobody can touch them, and they should be ad infinitum those 
11. But I think we ought to hold ourselves to the same 
standards of the efficiencies that can be achieved through 
competition. And so I think we ought to do a little self-
examination there.
    But final question, going back to you, Mr. Bujalos, you 
gave us two great examples. Help me understand what your role 
was. Were you the ones making the recommendation, put in the 
radio identification so you cut down on loss? Were you the ones 
who said, you know, let's digitalize this so that we can look 
at that piece of leather and be more efficient in what to do 
with it. Were you redesigning shoes or showing competition?
    Mr. Bujalos. No.
    Mr. Connolly. What was your role that helped them with 
those two stories you told us.
    Mr. Bujalos. Well, the first story about the flower pots, I 
wasn't there physically, that was in the northwest United 
States.
    Mr. Connolly. When I said ``you,'' I meant the center.
    Mr. Bujalos. Okay. In the second one, I was physically 
there, that was one of my personal clients. I wrote the 
adjustment plan for that company and I got to know the owner 
quite well. The short answer is no. What I really did was, I 
think, I'm not sure about this, I think what I did over a 
period of time, because I visited with them physically, 
extensively, in one case, spent the entire day with them 
interviewing every one of their C level executives and also 
their key plant people as well as the chief executive, 
individually and collectively.
    All I think I really did was provide an environment where 
they could start thinking about something other than trying 
make that order this afternoon to get on the loading dock. 
Sometimes it depends on leadership, sometimes you have a 
problem because there is no leadership in a company, and I will 
grant you that. But in this particular case, the leadership 
happened to be there, and the kinds of people we picked for his 
particular staff were there. What they really needed was the 
time and the ability behind a door that was closed and phones 
that weren't ringing. And it took place. I don't think I did 
any more than that, to tell you the truth.
    Mr. Connolly. Thank you, Mr. Chairman.
    Mr. Platts. Thank you, Mr. Connolly. And it really kind of 
goes to Ms. Britton's testimony in the first panel that the 
assistance of the TAAC helps facilitate those internal 
discussions that they actually took the time to sit down and 
start to have that dialogue as opposed to just trying to get 
the products, the next order out the door.
    So a couple final comments, one on the statutory 
impediments to streamlining, Mr. Borlik and GAO and the TAACs, 
we certainly, as a body, we are always glad to have 
recommendations, we know what you intended, but the way you 
wrote the statute is asking for things that are not relevant to 
our assessment of whether someone is trade-impacted or injured. 
Those kind of recommendations, I know Mr. Connolly would 
welcome those for the new session as far as how we can 
strengthen this program going forward and lessen that statutory 
burden.
    When I talked about the yearly rebidding, I wasn't 
suggesting every year you should be rebidding 11 TAACs,
    that would not be very efficient--and Gerry, thank you for 
great input, Mr. Connolly.
    Mr. Connolly. Thank you, Mr. Chairman.
    Mr. Platts. But that probably every year maybe one or 2 
should be being looked at for multi rebidding process, so it's 
not 30 years since we've done any.
    And finally, in closing, I think goes to the really heart 
of this program and leveraging a small amount of money that 
ultimately generates a huge reinvestment in return for the 
companies, and ultimately taxpayers, is Mr. Bujalos, in your 
testimony, something that stuck out to me, when he says ``We 
don't pick up the pieces after catastrophic layoffs have 
occurred and try to create new careers out of the old cloth. 
Our job is to help prevent catastrophe in the first place. It 
is a lot cheaper and immensely more effective.''
    And I think that captures the importance of this program. 
This is trying to not help retrain workers, and my one brother, 
his steel company, his job went away, he went back to get 
retrained but the job was gone, it is to try to help that steel 
company stay in business in the first place.
    To each of you, I appreciate your testimony, I appreciate 
what you do day in and day out. Whether it is at the TAAC, at 
the division, GAO, we're grateful for your work and your 
testimony. We will keep the hearing testimony open for 7 days 
for any other materials you want to submit. With that this 
hearing stands adjourned.
    [Whereupon, at 12:42 p.m., the subcommittee was adjourned.]

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