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

    H.R. 5865, THE AMERICAN MANUFACTURING COMPETITIVENESS ACT OF 2012, AND
     H.R. 5859, A BILL TO REPEAL AN OBSOLETE PROVISION IN TITLE 49, UNITED
         STATES CODE, REQUIRING MOTOR VEHICLE INSURANCE COST REPORTING

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

                                    HEARING

                                   BEFORE THE

               SUBCOMMITTEE ON COMMERCE, MANUFACTURING, AND TRADE

                                     OF THE

                        COMMITTEE ON ENERGY AND COMMERCE
                            HOUSE OF REPRESENTATIVES

                          ONE HUNDRED TWELFTH CONGRESS

                                 SECOND SESSION

                                   __________

                                  JUNE 1, 2012

                                   __________

                               Serial No. 112-146

          Printed for the use of the Committee on Energy and Commerce

                            energycommerce.house.gov

                                   ----------
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    79-794 PDF                       WASHINGTON : 2013

    For sale by the Superintendent of Documents, U.S. Government Printing
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                        COMMITTEE ON ENERGY AND COMMERCE

                              FRED UPTON, Michigan
                                     Chairman

    JOE BARTON, Texas                    HENRY A. WAXMAN, California
      Chairman Emeritus                    Ranking Member
    CLIFF STEARNS, Florida               JOHN D. DINGELL, Michigan
    ED WHITFIELD, Kentucky                 Chairman Emeritus
    JOHN SHIMKUS, Illinois               EDWARD J. MARKEY, Massachusetts
    JOSEPH R. PITTS, Pennsylvania        EDOLPHUS TOWNS, New York
    MARY BONO MACK, California           FRANK PALLONE, Jr., New Jersey
    GREG WALDEN, Oregon                  BOBBY L. RUSH, Illinois
    LEE TERRY, Nebraska                  ANNA G. ESHOO, California
    MIKE ROGERS, Michigan                ELIOT L. ENGEL, New York
    SUE WILKINS MYRICK, North Carolina   GENE GREEN, Texas
      Vice Chairman                      DIANA DeGETTE, Colorado
    JOHN SULLIVAN, Oklahoma              LOIS CAPPS, California
    TIM MURPHY, Pennsylvania             MICHAEL F. DOYLE, Pennsylvania
    MICHAEL C. BURGESS, Texas            JANICE D. SCHAKOWSKY, Illinois
    MARSHA BLACKBURN, Tennessee          CHARLES A. GONZALEZ, Texas
    BRIAN P. BILBRAY, California         TAMMY BALDWIN, Wisconsin
    CHARLES F. BASS, New Hampshire       MIKE ROSS, Arkansas
    PHIL GINGREY, Georgia                JIM MATHESON, Utah
    STEVE SCALISE, Louisiana             G.K. BUTTERFIELD, North Carolina
    ROBERT E. LATTA, Ohio                JOHN BARROW, Georgia
    CATHY McMORRIS RODGERS, Washington   DORIS O. MATSUI, California
    GREGG HARPER, Mississippi            DONNA M. CHRISTENSEN, Virgin
    LEONARD LANCE, New Jersey            Islands
    BILL CASSIDY, Louisiana              KATHY CASTOR, Florida
    BRETT GUTHRIE, Kentucky              JOHN P. SARBANES, Maryland
    PETE OLSON, Texas
    DAVID B. McKINLEY, West Virginia
    CORY GARDNER, Colorado
    MIKE POMPEO, Kansas
    ADAM KINZINGER, Illinois
    H. MORGAN GRIFFITH, Virginia

                                     ______

               Subcommittee on Commerce, Manufacturing, and Trade

                           MARY BONO MACK, California
                                     Chairman
    MARSHA BLACKBURN, Tennessee          G.K. BUTTERFIELD, North Carolina
      Vice Chairman                        Ranking Member
    CLIFF STEARNS, Florida               CHARLES A. GONZALEZ, Texas
    CHARLES F. BASS, New Hampshire       JIM MATHESON, Utah
    GREGG HARPER, Mississippi            JOHN D. DINGELL, Michigan
    LEONARD LANCE, New Jersey            EDOLPHUS TOWNS, New York
    BILL CASSIDY, Louisiana              BOBBY L. RUSH, Illinois
    BRETT GUTHRIE, Kentucky              JANICE D. SCHAKOWSKY, Illinois
    PETE OLSON, Texas                    JOHN P. SARBANES, Maryland
    DAVID B. McKINLEY, West Virginia     HENRY A. WAXMAN, California (ex
    MIKE POMPEO, Kansas                      officio)
    ADAM KINZINGER, Illinois
    JOE BARTON, Texas
    FRED UPTON, Michigan (ex officio)

                                      (ii)

                                 C O N T E N T S

                                  ----------
                                                                       Page
    Hon. Mary Bono Mack, a Representative in Congress from the State
      of California, opening statement...............................     1
        Prepared statement...........................................     4
    Hon. G.K. Butterfield, a Representative in Congress from the
      State of North Carolina, opening statement.....................    21
    Hon. Adam Kinzinger, a Representative in Congress from the State
      of Illinois, opening statement.................................    22
    Hon. Gregg Harper, a Representative in Congress from the State of
      Mississippi, opening statement.................................    23
    Hon. Janice D. Schakowsky, a Representative in Congress from the
      State of Illinois, opening statement...........................    27
    Hon. Edolphus Towns, a Representative in Congress from the State
      of New York, prepared statement................................   108

                                   Witnesses

    Hon. Daniel Lipinski, a Representative in Congress from the State
      of Illinois....................................................    27
        Prepared statement...........................................    30
    Hon. Mike Kelly, a Representative in Congress from the
      Commonwealth of Pennsylvania...................................    34
        Prepared statement...........................................    36
    Phillip Singerman, Associate Director for Innovation and Industry
      Services, National Institute of Standards and Technology,
      Department of Commerce.........................................    42
        Prepared statement...........................................    44
    Zach Mottl, Director of Development, Atlas Tool & Die Works......    53
        Prepared statement...........................................    55
    Mark A. Gordon, Executive Committee Member, Manufacturing
      Division, National Defense Industrial Association..............    58
        Prepared statement...........................................    60
    Deborah L. Wince-Smith, President and Chief Executive Officer,
      Council on Competitiveness.....................................    66
        Prepared statement...........................................    68
    Jack Fitzgerald, Owner, Fitzgerald Auto Mall.....................    94
        Prepared statement...........................................    96
    Joan Claybrook, President Emeritus, Public Citizen, and Former
      Administrator, National Highway Traffic Safety Administration..    98
        Prepared statement...........................................   101
        Answers to submitted questions...............................   111

                               Submitted Material

    H.R. 5865, A Bill to promote the growth and competitiveness of
      American manufacturing, submitted by Mrs. Bono Mack............     6
    H.R. 5859, A Bill to repeal an obsolete provision in title 49,
      United States Code, requiring motor vehicle insurance cost
      reporting, submitted by Mrs. Bono Mack.........................    20
    Letter, dated May 31, 2012, from Mitch Bainwol, President and
      CEO, Alliance of Automobile Manufacturers, to Mrs. Bono Mack
      and Mr. Butterfield, submitted by Mr. Harper...................    25

    H.R. 5865, THE AMERICAN MANUFACTURING COMPETITIVENESS ACT OF 2012, AND
     H.R. 5859, A BILL TO REPEAL AN OBSOLETE PROVISION IN TITLE 49, UNITED
         STATES CODE, REQUIRING MOTOR VEHICLE INSURANCE COST REPORTING

                                  ----------

                              FRIDAY, JUNE 1, 2012

                      House of Representatives,
     Subcommittee on Commerce, Manufacturing and Trade,
                              Committee on Energy and Commerce,
                                                        Washington, DC.
        The subcommittee met, pursuant to call, at 9:37 a.m., in
    room 2123, Rayburn House Office Building, Hon. Mary Bono Mack
    (chairman of the subcommittee) presiding.
        Members present: Representatives Bono Mack, Blackburn,
    Harper, Lance, Cassidy, Guthrie, Olson, Pompeo, Kinzinger,
    Butterfield, Gonzalez, Rush, Schakowsky, and Sarbanes.
        Staff present: Paige Anderson, Commerce, Manufacturing, and
    Trade Coordinator; Gary Andres, Staff Director; Charlotte
    Baker, Press Secretary; Michael Beckerman, Deputy Staff
    Director; Kirby Howard, Legislative Clerk; Brian McCullough,
    Senior Professional Staff Member, Commerce, Manufacturing, and
    Trade; Gib Mullan, Chief Counsel, Commerce, Manufacturing, and
    Trade; Shannon Weinberg, Counsel, Commerce, Manufacturing, and
    Trade; Michelle Ash, Democratic Chief Counsel, Commerce,
    Manufacturing, and Trade; Felipe Mendoza, Democratic Senior
    Counsel; and Will Wallace, Democratic Policy Analyst.

     OPENING STATEMENT OF HON. MARY BONO MACK, A REPRESENTATIVE IN
                 CONGRESS FROM THE STATE OF CALIFORNIA

        Mrs. Bono Mack. The subcommittee will please come to order.
    Good morning, all.
        Last year when I became chairman of this subcommittee, I
    encouraged my colleagues to join me in an effort to make made
    in America matter again. Since then, we have had hearings,
    forums and some really great discussions on ways to keep
    American jobs and create new American jobs. Now it is time to
    roll up our sleeves and to do our job and pass legislation
    which will help our economy to grow and prosper in the years
    ahead.
        The Chair now recognizes herself for an opening statement.
        Throughout our Nation's long history, a growing and robust
    manufacturing sector has helped to make America great. It has
    been a driving force in our economy since the Industrial
    Revolution. But as our Nation has moved from the atomic age to
    the space age to the information age, manufacturing has not
    kept up, losing nearly 6 million American jobs since the
    beginning of the 21st century.
        Aging, rusting and abandoned factories litter the U.S.
    landscape. Statistics show the manufacturing sector was the
    hardest hit in terms of job losses during the Great Recession.
    While manufacturing accounts for just a tenth of our Nation's
    jobs, manufacturing suffered a third of our Nation's job
    losses. We have a chance now to reverse this trend, and I
    applaud the hard work of Mr. Lipinski and Mr. Kinzinger in
    developing a bipartisan plan for improving manufacturing in the
    United States.
        The American Manufacturing Competitiveness Act of 2012,
    H.R. 5865, calls for two presidential reports to Congress
    outlining a strategy for promoting growth, sustainability and
    competitiveness in the manufacturing sector. The reports are
    due in April 2014 and in 2018.
        The act establishes the American Manufacturing
    Competitiveness Board, consisting of 15 members, five from the
    public sector, including two Governors, and 10 from the private
    sector. The five public appointments are made by the President
    while the 10 private sector members are appointed by the House
    and Senate. The Board would be co-chaired by the Secretary of
    Commerce and one of the private sector members.
        The duties of the Board are, one, to advise the President
    and Congress on manufacturing issues; two, conduct a rigorous
    analysis of the manufacturing sector; and, three, develop a
    national competitiveness strategy which would be made available
    for public comment and submitted to the President. The Board
    will then develop and publish for public comment a draft
    manufacturing strategy based on its analysis and any other
    information the Board determines is appropriate. This strategy
    will include short-term and long-term goals for improving the
    competitiveness of U.S. manufacturing as well as
    recommendations for action.
        The second bill before us today, H.R. 5859, repeals an
    obsolete provision in the United States Code requiring motor
    vehicle insurance cost reporting. I also want to commend Mr.
    Harper and Mr. Owens for their bipartisan work on this
    legislation.
        Here is the problem: In 1993, NHTSA issued a final rule
    requiring new car dealers to make available to buyers a booklet
    containing the latest information on insurance costs. The
    information is updated by NHTSA annually based on date from the
    Highway Loss Data Institute. The information required by this
    regulation is rarely sought by consumers and its value is
    highly questionable. Insurance premiums are based primarily on
    factors that are unrelated to the susceptibility of damage to a
    particular vehicle, including the driver's age, driving record,
    location and miles driven. Additionally, a recent survey of 815
    members of the National Automobile Dealers Association reported
    96 percent of its dealers have never been asked by a customer
    to see the insurance cost booklet that is at issue.
        Clearly this is yet another example of where the cost of a
    Federal regulation outweighs its potential benefits. As a
    nation competing in a tough global economy, we simply can't
    keep doing business this way.
        America is at an important crossroads right now. One
    direction, lined by job-killing regulatory hurdles, a punitive
    Tax Code and indecisive political leadership, will lead
    ultimately to a further erosion of our manufacturing base and
    lost prosperity for future generations of Americans. The other
    direction, where smart policies and smart minds eventually
    intersect, could lead instead to resurgence in U.S.
    manufacturing, putting millions of Americans back to work again
    and breathing new life into the beleaguered middle class.
        Both of the bills being discussed today are a step in the
    right direction, and as chairman of the subcommittee I plan to
    bring them up for favorable consideration in the very near
    future.
        Now I am happy to recognize the gentleman from North
    Carolina, Mr. Butterfield, for 5 minutes.
        [The prepared statement of Mrs. Bono Mack and the proposed
    legislation follow:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    OPENING STATEMENT OF HON. G.K. BUTTERFIELD, A REPRESENTATIVE IN
               CONGRESS FROM THE STATE OF NORTH CAROLINA

        Mr. Butterfield. Let me thank you, Chairman Bono Mack. To
    the witnesses today, thank you very much for your testimony.
        Our first bill today, H.R. 5865, the American Manufacturing
    Competitiveness Act, would require the President with the
    assistance of an appointed board to conduct a thorough analysis
    and then publish a national strategy on how to best promote the
    U.S. manufacturing sector in both 2014 and 2018.
        As we all know, changes in the global economy led to many
    job losses in U.S. manufacturing over the past 3 decades. I
    think we can all agree that we want a stronger manufacturing
    sector. Manufacturing jobs are high-quality, good-paying jobs.
    I am heartened that the U.S. manufacturing sector has recovered
    as strongly as it has from the recession with what is now 33
    consecutive months of expansion. But to be truly strong in the
    area of manufacturing, we must plan for competitiveness in the
    long term. To his great credit, President Obama understands
    this.
        The administration's manufacturing initiatives fully
    recognize that the future for U.S. manufacturing will only be
    successful if the American people are successful. Every child
    must have the chance to learn math and science and have a
    familiarity with technology, and adults must have the chance to
    get the education or training that will qualify them for the
    job that they want.
        The administration has published a plan endorsed by a wide
    variety of private sector leaders promoting advance to high-
    tech manufacturing. It is Make It In America, manufacturing,
    extension, partnership. It aims to create public-private
    partnerships to encourage the development of new products that
    can be manufactured here in our country. And it has an ongoing
    campaign of reshoring, also referred to as in-sourcing, where
    it works with States to encourage companies that outsource jobs
    abroad to bring them back to the United States. These are just
    a few of the many manufacturing initiatives underway in the
    Obama administration.
        Today we are discussing a proposal to add to the Federal
    work underway on manufacturing. A National Manufacturing
    Strategy as proposed by the bill before us is already a staple
    in several other industrialized countries around the world. If
    we go in the same direction, it will be worth our while to
    ensure that this additional effort compliments steps already
    being taken. I look forward to working with Mr. Lipinski and
    all of my colleagues to make sure that that is the case.
        Our second bill today would repeal a little known provision
    that requires NHTSA to annually provide auto dealers with a
    booklet comparing the insurance costs associated with different
    cars consumers might purchase. As any car owner can tell you, a
    car that gets damaged more easily is one that is likely to
    carry higher auto insurance rates for its driver. But when
    shopping for a car it is not so easy to tell how brittle a car
    is just by looking at it.
        As it is said, information is power and this provision in
    the 1972 law, the Motor Vehicle Information and Cost Savings
    Act, sought to give consumers that power. However, very few
    consumers know that this insurance cost information is
    available to them at the dealership and some question whether
    the format in which NHTSA publishes the information is actually
    useful. Therefore, these booklets are rarely used. These are
    problems that I would be more than happy to work with all of my
    colleagues to fix them.
        We all agree that regulations that are burdensome or do not
    serve their intended purpose should be revisited. This bill
    gives us that opportunity to do so, revisit a regulation that
    may not be meeting its intended purpose. I hope as we do this
    review, we do not just assume that we must throw away the idea
    that it is reasonable for consumers to know what type of
    insurance costs they will face if they buy a particular car.
        Madam Chairman, I look forward to discussing these bills. I
    would like to once again thank our witnesses as well as you for
    convening this hearing today. Thank you. I yield back.
        Mrs. Bono Mack. Thank you, Mr. Butterfield.
        The chair now recognizes the gentleman from Illinois, Mr.
    Kinzinger, for 3 minutes.

     OPENING STATEMENT OF HON. ADAM KINZINGER, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF ILLINOIS

        Mr. Kinzinger. Thank you, Madam Chair, for the time and for
    your diligent work on bringing the American Manufacturing
    Competitiveness Act before the committee. I would also like to
    recognize the hard work of Gib Mullan, Brian McCullough, Paige
    Anderson and Shannon Weinberg Taylor.
        You know, some things in Congress aren't partisan, believe
    it or not, and don't need to be, and this is one of those. It
    is an honor to work with my colleague and friend Congressman
    Lipinski and the other members of the subcommittee on the
    American Manufacturing Competitiveness Act. I think
    specifically of Mr. Guthrie and Mr. Pompeo.
        Over the past several months in this committee we have
    heard about the importance of creating an environment that will
    allow American manufacturers to thrive in a global economy. We
    are on the brink of a new manufacturing renaissance in this
    country. The only barriers that may impede this renaissance
    will be government created.
        I am worried about the disappearing middle class, the
    decline of the middle class, and I think one of the biggest
    drivers to the decline in the middle class has been the
    disappearance of manufacturing from the United States of
    America.
        In this Congress we have rightly talked a lot about jobs
    and the role government can play in creating or destroying
    jobs. There is no sector in our economy that is providing more
    highly paid and economically advantageous jobs than
    manufacturing. This has been true since the dawn of
    manufacturing at the turn of the 20th century.
        During an address to Congress in 1912, President Taft said
    that manufacturing concerns are running at their full capacity
    and the demand for labor was never so constant and growing.
    Following World War II, the United States became the world's
    strongest economy, and it is no coincidence that we were also
    the leading producer of manufactured goods in the world.
        The decline of manufacturing from the 1990s until today is
    due in no small part to increased global competition. We must
    encourage an environment that will allow business to compete
    globally. While we may not be able to predict where the next
    growth sector for manufacturing will be, we should not try to
    implement a top-down government policy that would benefit
    manufacturing. We should instead insist upon a long-term
    strategy constructed by private sector and government leaders
    to focus our attention on the challenges inhibiting our global
    competitiveness. This is an easy but necessary step to joining
    together private interests and public in the process of
    recommending how the government can make American manufacturing
    more efficient, more friendly and more competitive, and we can
    increase the size of the American middle class by getting
    people back to work and bringing our overall rate of
    unemployment down with good high-paying jobs.
        I am excited to discuss this bipartisan legislation today
    and am hopeful that we can work quickly to bring this
    legislation to a markup with broad bipartisan support. Again I
    would like to thank my friend Congressman Lipinski, and I yield
    back my remaining time.
        Mrs. Bono Mack. I thank the gentleman. The chair now
    recognizes Mr. Harper for 2 minutes.

      OPENING STATEMENT OF HON. GREGG HARPER, A REPRESENTATIVE IN
                 CONGRESS FROM THE STATE OF MISSISSIPPI

        Mr. Harper. Thank you, Madam Chair, and I am proud to be
    the lead sponsor with my good friend Bill Owen of New York as
    the lead Democrat of H.R. 5859, a concise one-page bill that
    will repeal an obsolete mandate that costs the taxpayers
    hundreds of thousands of dollars.
        I welcome the witnesses today. I am glad to have many years
    of automotive retailing experience with Mr. Fitzgerald and
    Congressman Mike Kelly from Pennsylvania on the panels. I am
    also proud to have Mike as a cosponsor of H.R. 5859. He is no
    doubt the voice for car dealers on Capitol Hill, and I
    appreciate his support on this.
        Since 1991, the Department of Transportation has been
    annually distributing by mail a document entitled Relative
    Collision Insurance Cost Information. This information is sent
    by mail to new vehicle dealers who are required to make the
    information available to perspective new vehicle customers upon
    request.
        NHTSA has spent hundreds of thousands of dollars
    distributing this booklet over the past 21 years. While this
    information is of value to insurance actuaries, it has been of
    little to no use to consumers for whom it is primarily
    intended. A recent survey by the National Automobile Dealers
    Association confirmed what we expected. Out of 800 new car
    dealers polled, an overwhelming 96 percent of the dealers
    answered that not a single customer has ever asked to see the
    booklet. I would like to note here that the information will
    still be available and NHTSA can still provide this information
    to consumers on their Web site.
        This simple and bipartisan bill, if passed, would show that
    Congress is serious about efforts to alleviate burdensome and
    unneeded regulations on businesses across this country. The
    President states that it is a priority of his administration to
    identify and eliminate costly, outdated and unneeded
    regulations, and I say Congress should lead now with H.R. 5859.
        I would like to thank the chairwoman for presiding over
    this important hearing. Madam Chair, I would ask for unanimous
    consent to include a letter from the Alliance of Automobile
    Manufacturers in support of H.R. 5859 in the record.
        Mrs. Bono Mack. Without objection.
        [The letter follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Harper. Thank you, Madam Chair. With that, I yield
    back.
        Mrs. Bono Mack. I thank the gentleman. The chair now
    recognizes Ms. Schakowsky for 5 minutes for her opening
    statement.

           OPENING STATEMENT OF HON. JANICE D. SCHAKOWSKY, A
         REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS

        Ms. Schakowsky. Thank you, Madam Chairman.
        I am glad that this subcommittee is holding a hearing to
    discuss H.R. 5865, the American Manufacturing and
    Competitiveness Act. President Obama has overseen the most
    dramatic increase in employment in the manufacturing sector
    since the 1990s, and we must work to build upon that progress.
    And I want to congratulate my colleague from Illinois, Mr.
    Lipinski, for drafting and pushing and sponsoring this
    legislation as a means of strengthening Congress' commitment to
    American manufacturing.
        A strong manufacturing base is the foundation of our
    middle-class. Good middle-class jobs ensure that workers earn a
    living wage, that families have clothes on their back and food
    in their stomachs, and that their children grow up in
    communities with good schools and safe streets. A National
    Manufacturing Strategy will help ensure that the goods we buy
    are made in America and that the jobs our economy supports are
    American jobs.
        I don't share the same enthusiasm for H.R. 5859. That
    legislation would eliminate valuable consumer information at
    the point of sale because consumers don't request it. Well,
    consumers don't request the information because they really
    don't know that it exists. We should not be in the practice of
    eliminating valuable information because we do a bad job of
    publicizing it.
        I look forward to working with my colleagues to move
    forward with legislation to bolster our manufacturing base and
    to reconsidering our actions to remove information from auto
    dealerships.
        I yield back. Thank you.
        Mrs. Bono Mack. I thank the gentlelady.
        Now we turn our attention to the panel. We will have three
    panels of witnesses joining us today. Each of our witnesses has
    prepared an opening statement that will be placed into the
    record, and, as we all know, each will have 5 minutes to
    summarize that statement and their remarks.
        On our first panel we have two of our colleagues, and we
    welcome you both, the Honorable Daniel Lipinski of Illinois and
    the Honorable Mike Kelly of Pennsylvania. They both represent
    States with histories deeply rooted in manufacturing.
        We are going to go a little bit out of order and recognize
    Mr. Lipinski first just because we are considering the bills in
    that order. So with that, Mr. Lipinski, you are recognized for
    5 minutes for your opening statement.

    STATEMENT OF HON. DANIEL LIPINSKI, A REPRESENTATIVE IN CONGRESS
                       FROM THE STATE OF ILLINOIS

        Mr. Lipinski. Thank you, Chairwoman Bono Mack. I want to
    thank you, Ranking Member Butterfield and members of the
    subcommittee for holding this hearing today and for inviting me
    to testify.
        The American Manufacturing Competitiveness Act, H.R. 5865,
    will bring the public and private sectors together to forge an
    actionable, bipartisan plan to revitalize America's
    manufacturing sector. I would like to thank my friend and
    colleague, Mr. Kinzinger, for working with me on this bill and
    cosponsoring this bill, and also thank Mr. Pompeo and
    Chairwoman Bono Mack for their work on this bill in moving it
    forward.
        Manufacturing is critical for our Nation. It is essential
    for national security so that we don't need to rely on other
    countries for our defense. Successful manufacturing provides
    huge numbers of jobs. Not to pick on Facebook right now while
    it is down, but Facebook employs about 3,000 people. Boeing
    employs 172,000 Americans. Wages and benefits paid in
    manufacturing are one-third higher than in other jobs. Plus
    manufacturing has greater secondary effects in the labor
    market, with each job supporting five others. As a source of
    two-thirds of private sector R&D, manufacturing drives high-
    tech innovations. When we lose manufacturing due to
    outsourcing, we lose the ability to create the breakthrough
    technologies of tomorrow.
        American manufacturing still has great strength and
    potential. It boasts the highest productivity in the world; it
    employs 11 million people, and produces $1.7 trillion annually.
    Encouragingly, U.S. manufacturing employment has increased by
    about half a million in the last 2 years. But after the loss of
    one-third of all U.S. manufacturing jobs over the past decade,
    we have a long way to go. This bill will help create the
    domestic environment that is most conducive to America's
    private sector taking full advantage of our strength to grow
    American manufacturing.
        Last Congress a similar version of this bill passed the
    House with very strong bipartisan support, 379-38. In this
    Congress it has again attracted bipartisan support and backing
    from a variety of industry, labor and other groups. In
    addition, conversations with members of the subcommittee as
    well as committee staff have resulted in numerous beneficial
    changes to the bill.
        To briefly summarize, the legislation creates a
    Manufacturing Competitiveness Board with a strong private
    sector and bipartisan representation. The President will
    appoint the Secretary of Commerce, two State Governors of
    different parties and two other former or current executive
    branch officials. Ten private sector representatives will be
    appointed by House and Senate leaders, three by the majority
    and two by the minority in each Chamber.
        The Board will conduct a comprehensive analysis of the U.S.
    manufacturing sector, covering everything from trade issues to
    taxation to new markets and technologies. Based on this
    analysis, it will develop specific goals and specific
    recommendations for achieving those goals. Consolidation of
    government programs, regulatory reforms, improved education and
    training, better coordination between the public and private
    sectors, as well as actions taken by all levels of government,
    universities and stakeholders are to be contemplated under this
    legislation.
        To promote follow-up to this strategy, the President's
    budget will have to state how it is consistent with the goals
    and recommendations of the strategy.
        Finally, the first strategy is to be completed in 2014 and
    the second in 2018.
        I want to be especially clear on one point: This
    legislation is not about the government dictating anything to
    the private sector. It is about bringing the public and private
    sectors together to form a bipartisan consensus plan for action
    that produces an environment for American manufacturing to
    flourish. America lost 6.2 million manufacturing jobs between
    1998 and 2010. We must adopt smart policies that encourage
    innovation, entrepreneurialism, efficiency and investment in
    American manufacturing. Passing this bill would be a good
    start.
        When I am home, my constituents keep asking me, what is
    Washington doing to help spur job creation? This bill can be an
    important answer to that question. Seventy-eight percent of
    Americans favor a National Manufacturing Strategy, including 74
    percent of Republicans and 78 percent of independents. Now,
    many Americans don't think Congress listens and don't think we
    can work together to get anything accomplished. I hope we can
    get this commonsense, bipartisan bill passed and help America's
    manufacturers create the jobs that we need.
        I look forward to answering any questions that you may
    have.
        [The prepared statement of Mr. Lipinski follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mrs. Bono Mack. Thank you very much, Mr. Lipinski.
        Mr. Kelly, welcome. You are recognized for 5 minutes.

    STATEMENT OF HON. MIKE KELLY, A REPRESENTATIVE IN CONGRESS FROM
                    THE COMMONWEALTH OF PENNSYLVANIA

        Mr. Kelly. Thank you, Madam Chairman Bono Mack and Ranking
    Member Butterfield.
        I really appreciate having the opportunity to testify. I
    think it is so rare in Washington that people that actually do
    what you are trying to regulate get a chance to come to the
    table and talk about it a little bit. I have grown up in it and
    it is part of my DNA. We started our business in 1953 and
    employ about 110 people.
        My view on H.R. 5859 is maybe a little bit different than
    some other folks in government, because dealers are actually
    the ones that have to provide this material and they are under
    penalty of law to provide it and there are great consequences
    financially if you don't.
        Now, when I talk about my experience, I am talking about an
    automobile dealership where I actually sit on the floor, I talk
    to people all the time. We get somewhere between 800 and 900
    people a month that come into our dealership, so about 10,000
    people a year come into the dealership to talk about buying a
    new car. Now, I have got to tell you, in my years, starting
    back in 1967, I never talked to one person that came through
    those doors that said to me, hey, by the way, Kelly, I need to
    look at that information on, let me see, what is it, the
    relative collision insurance cost information. It doesn't
    happen. It just doesn't happen.
        I made a call to the dealership when I was going to testify
    and I asked our guys in the Thursday morning sales meeting, I
    said, do me a favor. Ask our sales force if they have had this
    experience.
        Now, we have over 250 years of sales experience. Not one
    person in that room has ever talked to a prospective owner
    about this booklet; never been asked about it, never been
    questioned about it. Now, people do want to know what it is
    going to cost to insure their car. And I will tell you what, I
    have got to tell you, the answer is with the insurance agents.
    This is an irrelevant piece of information.
        I don't know if you have this, I would like to submit it to
    the record, the actual booklet that we have to provide, and I
    will leave it for you. But it is kind of interesting, the
    booklet itself. This is what it says. This table presents
    vehicles' collision loss experience in relative terms, with 100
    representing the average for all passenger vehicles. Thus a
    rating of 122 reflects a collision loss experience that is 22
    percent higher, which means a worse cost than average, while a
    rating of 96 reflects a collision loss experience that is 4
    percent lower or better than average. Now, it is unlikely that
    your total premium will vary more than 10 percent depending on
    the collision loss experience of a particular vehicle. And it
    goes on to say to obtain completely information about insurance
    premiums, what you need to do is contact your insurance
    company.
        Now, we were wondering about this, so the staff called
    NHTSA's hotline last night. And I would like you all to mark
    this number down. It is 888-327-4236. Now, the representative
    that answered the phone has absolutely no idea about this
    booklet and told our staff to call your insurance agent. Now, I
    got to tell you, there is not a lot of things that the current
    administration and I agree on, but the Obama administration
    seems to agree that this provision is without merit, and in
    their explanatory document accompanying their draft highway
    bill that was presented to the House Energy and Commerce
    Committee as technical assistance, it states that the data in
    the booklet is rarely used and not useful. The administration's
    document also stated that a prospective buyer does not need a
    brochure from the Federal Government to obtain this information
    since insurance agents are trained to provide advice on how
    model selection affects insurance premiums, and I completely
    agree with the administration.
        Now, the other side of the coin is if the dealers don't
    provide this, if somebody comes in and we don't have it
    available for them, the fine is $1,000 per occurrence with a
    cumulative penalty of $400,000. Now, I know those numbers don't
    mean anything in a town like this where we throw around money
    like it really doesn't matter, and, of course, it doesn't,
    because it is not our money, it is taxpayer money. But this is
    a tremendous disservice to taxpayers and it is an unnecessary
    burden on businesses. And it just is amazing to me that we
    actually have gotten to a point where we are having a hearing
    to rescind or to repeal a law that is so onerous and places a
    burden on job creators that they just don't need.
        Now, there are some people that say, well, you know what?
    The problem isn't that the material is useless. The problem is
    that we haven't told enough people about it. Well, we have
    cranked out more useless pieces of paper in this town than
    anybody could imagine.
        I appreciate what you are doing, Mr. Harper and Mr. Owen.
    This does release a burden on dealers to provide a piece of
    information that nobody has ever asked for, nobody needs,
    nobody is going to find useful. It does fall on the part of the
    consumer. They call their insurance agent to find out what it
    is going to cost to insure a car. They would hardly look at
    this piece of material and come up with any idea.
        In fact, I am going to leave it. I want you all to look
    through this. Look through this, and you please tell me after
    you look through it what in the world you would gain from this,
    what information you would gain as a buyer that would help you
    make a decision on what your ultimate cost of a vehicle is
    going to be and ownership is going to be.
        So, again, I thank you for the opportunity to come before
    you. I also have been only been here for a year and after. I
    spent all my life on the floor of a dealership so I do know a
    little bit of what I am talking about, and I think that it is
    time to start listening to the people that actually have to
    abide by these rules to find out what possible use this has for
    the American taxpayer or the American consumer.
        Thank you very much, and I appreciate the opportunity to
    testify.
        [The prepared statement of Mr. Kelly follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mrs. Bono Mack. Thank you very much, Mr. Kelly.
        I do not have any questions of the panelists, but I will
    recognize any of our colleagues that do.
        Mr. Butterfield. I think I may have one or two for Mr.
    Lipinski.
        Mrs. Bono Mack. I will recognize Mr. Butterfield for 5
    minutes.
        Mr. Butterfield. Again, Mr. Lipinski, thank you very much
    again for your testimony today and all the hard work you do
    here in the Congress. This isn't the first time that the Energy
    and Commerce Committee has taken up your legislation calling on
    the President to prepare a National Manufacturing Strategy. In
    fact, in 2010 we reported a different version of this bill out
    of the full committee by a voice vote and passed it on the
    House floor under suspension of the rules. Obviously, efforts
    to promote and revitalize American manufacturing are something
    everyone here can get behind. We were able to work together to
    get a bill through the House before and I am sure we can work
    together to do it again.
        So I share Mr. Lipinski's view that we must on an ongoing
    basis do a better job with strategic thinking and planning to
    maintain the competitiveness of the U.S. manufacturing sector.
    This sector is vital to job creation, innovation and even to
    our national security.
        Nonetheless, I want to acknowledge the Obama
    administration's increasing emphasis on the manufacturing
    sector. The first time we passed Mr. Lipinski's bill we weren't
    aware of the many manufacturing initiatives that were bubbling
    up through the administration, and since that time we have seen
    Congress put even more emphasis on strategic planning and
    policy making related to manufacturing.
        Let me just share a few examples of what I am talking
    about. At the end of 2009, the Obama administration issued a
    framework describing the state of manufacturing and setting out
    the administration's current policies and initiatives. That was
    year one of the Obama administration.
        In mid-2011, President Obama's science, technology and
    innovation advisers followed up with another report that
    prompted him to establish the Advanced Manufacturing
    Partnership to promote high-tech manufacturing. This past
    December, the President created the new White House Office of
    Manufacturing Policy within the National Economic Council to
    coordinate manufacturing efforts across departments.
        Congress in fiscal year 2012, in the 2012 Consolidated
    Appropriations Act, calls for the Secretary of Commerce to
    establish a task force on job repatriation and manufacturing
    growth. The accompanying House Report requires the Secretary of
    Commerce to update a 2004 report on manufacturing. It also
    requires the Secretary to establish an Economic Security
    Commission to advise the administration and Congress on long-
    term strategic competitive manufacturing challenges. So we must
    all focus on bolstering American manufacturing and that we
    don't squander scarce government resources on efforts that are
    redundant.
        Mr. Lipinski, would you agree with me, sir, that any new
    efforts by Congress to promote and grow the manufacturing
    sector should not duplicate existing efforts?
        Mr. Lipinski. I certainly agree that we should not be
    duplicating any existing efforts, and I applaud the
    administration and also Congress in the past couple of years,
    especially Chairman Frank Wolf of the CJS Appropriations
    Subcommittee has requested some reports, and I think we have
    definitely made progress in focusing on manufacturing since I
    first introduced the version of the bill in the last Congress.
        One of the purposes of this bill is to try to cut down on
    redundancy. We have a lot of redundancy already in the Federal
    Government, and my intention certainly in this bill, and I
    think we can work to make sure that we utilize what is being
    done already and sort of fold that into what will be done with
    the National Manufacturing Strategy.
        Mr. Butterfield. Thank you. Will you agree that any new
    efforts by Congress to promote and grow the manufacturing
    sector should try, to the extent possible, to bring together
    all of the different moving parts that have been put in place
    by Congress and the White House? Would that be valuable?
        Mr. Lipinski. That is one of the big purposes here, is to
    put together all these moving parts that have already been put
    in place or in motion.
        Mr. Butterfield. All right. We are going to try to work
    together to make it happen. Thank you. I yield back.
        Mr. Lipinski. Thank you.
        Mrs. Bono Mack. I thank the gentleman.
        The chair now recognizes Mr. Harper for 5 minutes.
        Mr. Harper. Thank you, Madam Chair.
        Mr. Kelly, if I could ask you a question, and you may have
    had the opportunity to review the statement of Joan Claybrook,
    who will testify I believe on the third panel today, and I want
    to just read one portion of what she said and get your response
    to this in one of the paragraphs in her opening statement. Here
    is what is in her letter. It says, ``I can understand why car
    dealers want to keep consumers in the dark about insurance
    collision cost information. Dealers want to sell the cars they
    have on their lot. If consumers have access to information
    about a vehicle that might show expensive repair costs and that
    discourages a sale, the dealer might lose a customer and the
    sale.''
        How do you respond to that type of an insult?
        Mr. Kelly. Well, I think that most of those insults come
    from people who have never been in our business and don't
    understand the relationship between the business owner and the
    people that keep them alive, and that is our customers or our
    buyers. So anybody that I have ever been in contact with in my
    business is probably one of the most stable people in that
    community. And I tell people all the time, if you really wonder
    about the integrity and the value of your car dealer, if your
    son played little league baseball, look at whose name is on the
    outfield fence. If your daughter marched in the marching band,
    look who is in the program.
        So, I mean, it is absolutely--that is foolhardy and
    irresponsible to make that statement. There is absolutely no
    reason why anybody would want to keep anybody from knowing
    about the vehicle that they want to purchase, and we do provide
    all kind of information. But the information we try to provide
    is usually relevant. And only again from people who live in
    some other galaxy do you get these kinds of comments. When you
    are actually on the ground, you are face-to-face with people
    every day and your ability to make sure that the checks that
    you issue every 2 weeks are cashable, that relationship that we
    have with the customer is absolutely critical.
        So I want everybody to be completely comfortable with what
    they buy, and so do all my dealer friends.
        Mr. Harper. And when you referred to the table, the stuff
    that is here for the collision insurance loss numbers that they
    keep, a consumer is not going to look at that and gain any
    information. They are going to call their insurance agent, just
    as you said, to get the true cost of what that potential
    vehicle would cost.
        Mr. Kelly. Well, the variables are great, the gender, the
    age, where you drive the car, business or pleasure, where you
    live. There are so many different variables in it, so there is
    no one size fits all.
        Mr. Harper. And there is no way to create a government
    document chart that is going to tell the insurance company what
    they are going to be charging for that premium.
        Mr. Kelly. Yes, and I think history would probably show
    that there hasn't been very many government documents that
    really come to a realistic value of what a vehicle is and the
    purchasability of it.
        Mr. Harper. Thank you, Mr. Kelly. I appreciate it. I yield
    back.
        Mrs. Bono Mack. Thank you. The chair now recognizes Dr.
    Cassidy for 5 minutes.
        Mr. Cassidy. To my colleague Mr. Lipinski, I like the
    general kind--knowing that you thought about this, I ask these
    questions not to challenge, but just to pick your brain. It
    really seems like our manufacturing right now has been driven
    by natural gas, the hydraulic fracturing, that sort of lowered
    energy cost, decreasing input cost, encouraging companies to
    bring their resources back to the United States, and that has
    actually happened quite independently of a manufacturing
    policy. In fact, you could even argue that it has happened
    despite the administration's efforts to inhibit that.
        So I guess my question is, and, again I am not challenging,
    I am just exploring with you, my question here is if we had had
    a manufacturing policy 4 years ago, it seems like it would have
    emphasized renewable energy sources. Solyndra, for example, was
    an example of such a policy, not to knock it, but just to give
    an example of where the administration's emphasis was, as
    opposed to what happened just by market forces and by private
    enterprise, where hydraulic fracturing took place and now Dow
    is expanding, ExxonMobil is about to build a huge new plant, et
    cetera.
        So your bill, I guess I am struggling to see if we see that
    what is happening that is good in manufacturing is a result of
    kind of the private sector unimpeded, or despite an impediment,
    how would your bill add to that?
        Mr. Lipinski. Well, certainly it makes a difference to have
    the much cheaper natural gas here, and that certainly helps
    manufacturing. I wouldn't say that that has been everything
    that has helped spur the creation of half a million
    manufacturing jobs. But what we are looking at here is across-
    the-board what can be done. And I think that the idea of having
    this board with buy-in from not only whoever the administration
    is in 2014, but also from both Houses of Congress, both
    parties, to look broadly across what can be done, energy policy
    perhaps will be part of that. I would expect it to be part of
    that. But there is a lot more to any sort of manufacturing
    strategy.
        So I think that if we looked broadly at everything that can
    be done, I think we could be even further along in promoting
    manufacturing, having more manufacturing jobs. But that is not
    to say that energy policy isn't part of that. It is part of it,
    but it is only one piece of it.
        Mr. Cassidy. Then the next thing, again, not to challenge,
    just to explore, if you look McKinsey Quarterly will have white
    papers on what we need to improve manufacturing, the Chamber of
    Commerce will, I am sure labor unions do, institutes for tax
    policy. It almost seems like we know the answer is out there.
    Our tax rates are uncompetitive, we have, a high debt to GDP,
    et cetera. How would this add to that which is available in the
    private sector?
        Mr. Lipinski. Well, I think we have seen a lack of having a
    well-coordinated policy. And a lot of these studies, and there
    is probably a lot of truth in them, but we need to bring all of
    that together and to have action. I mean, that is really the
    key here. I think there is much more that can be done to create
    the environment for the private sector to have the best
    opportunity, the best incentive to create more manufacturing
    jobs. I don't think that we have done that. There have been a
    lot of studies, but I don't think that--many of them have not
    been followed up on, I believe, and this is one way to try to
    make sure that we put out a plan and encourage follow-up by
    Congress and by the President.
        Mr. Cassidy. Thank you. I yield back.
        Mrs. Bono Mack. I thank Dr. Cassidy. And with that, we
    thank both of our panelists for your testimony today and for
    doing all you can to help manufacturing in America and to
    create new jobs.
        We will have a brief recess as we seat our second panel. I
    do ask unanimous consent from the subcommittee to allow our
    colleagues to sit on the dais as joyful witnesses, but not
    participants. With unanimous consent, you are welcome to join
    the dais.
        So a brief, brief, brief recess as we put the second panel
    in place, please.
        [Recess.]
        Mrs. Bono Mack. On our second panel we have Zachary Mottl,
    Director of Development at Atlas Tool & Die Works. Next we
    have, not in this order, next we have Mark Gordon, Executive
    Committee member, Manufacturing Division, National Defense
    Industry Association. Also testifying is Phillip Singerman,
    Ph.D., Associate Director for Innovation and Industry Services
    at the National Institute of Standards and Technology for the
    U.S. Department of Commerce. Our fourth witness is Deborah
    Wince-Smith, President and CEO for the Council on
    Competitiveness.
        Good morning, everyone. You will be recognized for 5
    minutes for your opening statements. To keep track of time,
    please look at the lights on the timer in front of you. When it
    turns yellow you have one minute left. So if you will please
    make sure to turn the microphone on and bring it close to your
    mouth so we can all hear you clearly. With that, we will go
    ahead and recognize you in the order you are seated and begin
    with you, Dr. Singerman, for 5 minutes.

        STATEMENTS OF PHILLIP SINGERMAN, ASSOCIATE DIRECTOR FOR
        INNOVATION AND INDUSTRY SERVICES, NATIONAL INSTITUTE OF
     STANDARDS AND TECHNOLOGY, DEPARTMENT OF COMMERCE; ZACH MOTTL,
       DIRECTOR OF DEVELOPMENT, ATLAS TOOL & DIE WORKS; MARK A.
      GORDON, EXECUTIVE COMMITTEE MEMBER, MANUFACTURING DIVISION,
     NATIONAL DEFENSE INDUSTRIAL ASSOCIATION; AND DEBORAH L. WINCE-
       SMITH, PRESIDENT AND CHIEF EXECUTIVE OFFICER, COUNCIL ON
                            COMPETITIVENESS

                     STATEMENT OF PHILLIP SINGERMAN

        Mr. Singerman. Thank you, Chairwoman Bono Mack, Ranking
    Member Butterfield, and members of the subcommittee. I am
    honored to be here today to share the administration's strategy
    to promote growth, sustainability and competitiveness in the
    manufacturing sector.
        We all know manufacturing matters. As President Obama has
    said, ``An economy built to last demands that we keep doing
    everything we can to keep strengthening American
    manufacturing.''
        Over the past 2 years, U.S. manufacturers have created
    nearly half a million jobs, the longest period of sustained
    manufacturing job growth since the 1990s. In addition,
    manufacturing is helping us to advance our national priorities.
    For example, manufacturing is a key driver of U.S. exports. In
    2011, the United States exported nearly $1.3 trillion in
    manufactured goods, an all-time record, which supports
    Secretary Bryson's goal of building it here, selling it
    everywhere.
        Last summer's report on advanced manufacturing by the
    President's Council of Advisers on Science and Technology,
    PCAST, reminded us why manufacturing remains essential.
    Manufacturing that is based on new technologies can provide
    high quality, good paying jobs for American workers.
    Manufacturing is crucial to our balance of trade, representing
    60 percent of U.S. exports, and manufacturing drives
    technological innovation, accounting for 70 percent of private
    sector research and development.
        The report also made clear that the government should play
    an important role through the development of an innovation
    policy. While the United States should avoid industrial policy,
    we should be aggressively supporting an innovation policy that
    provides the best overall environment in which to do business
    and fosters the development of powerful new technologies.
        The report looked at a broad range of approaches to help
    sustain and grow the sector. In addition to research and
    development, the report looked at such areas as tax, trade,
    workforce, small business and education, and how each helped
    the manufacturing sector. Today I want to briefly highlight the
    importance of innovation on advanced manufacturing.
        In June of last year, the President called for the private
    sector to lead the formation of an Advanced Manufacturing
    Partnership whose purpose is to bring together industry,
    universities and the Federal Government to identify emerging
    technologies and supportive policies that will create high
    quality manufacturing jobs and enhance our global
    competitiveness.
        To complement this public-private partnership, the
    administration also strengthened the Interagency Organization
    for Advanced Manufacturing. The Advanced Manufacturing National
    Program Office was established at NIST to coordinate Federal
    agency efforts to accelerate the pace of innovation, promote
    technology transfer, and more rapidly integrate technology
    breakthroughs into the commercial market. This interagency
    effort currently involves not only the Department of Commerce,
    but the Departments of Energy, Defense, Education, the National
    Science Foundation and NASA.
        NIST also works in support of manufacturing through its
    Hollings Manufacturing Extension Partnership Program, MEP, and
    its Technology Partnership Office. MEP is a longstanding
    public-private partnership whose work leads small and mid-sized
    manufacturers to new sales, new product development and market
    expansion.
        In March, the President announced a new initiative, the
    National Network for Manufacturing Innovation, which is a
    proposed one time, $1 billion Federal investment to catalyze
    collaboration among industry, academia, to perform research and
    development that will accelerate innovation for advanced
    manufacturing, build a stronger innovation system, and link
    innovations more directly to domestic production capabilities.
    The Institutes for Manufacturing Innovation will help bridge
    the gap between basic research and product development, provide
    shared assets to help companies access cutting age
    capabilities, and create an environment to train students and
    workers in advanced manufacturing skills.
        The President also announced that the administration will
    take immediate steps to launch a pilot Institute for
    Manufacturing Innovation based on existing programs and funding
    within the Department of Defense, partnering withEnergy,
    Commerce, NASA and the National Science Foundation. The key to
    the success of these efforts is partnerships. The leverage from
    these partnerships enables the share resources and creative
    spark needed to drive innovation here and at home.
        Madam Chair, in closing let me say how much we appreciate
    the committee's work in support of a vibrant and dynamic
    manufacturing sector in the 21st century, and we look forward
    to working with you on legislation to further the
    administration's efforts to support U.S. manufacturing. Thank
    you again for the opportunity to testify.
        [The prepared statement of Mr. Singerman follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mrs. Bono Mack. Thank you very much, Dr. Singerman.
        Mr. Mottl, you are recognized for 5 minutes.

                        STATEMENT OF ZACH MOTTL

        Mr. Mottl. Good morning. Thank you very much, Chairman Bono
    Mack and Ranking Member Butterfield and members of the
    committee, for providing me the opportunity to speak before you
    today.
        Manufacturing is a subject very dear to my heart. I am the
    fourth generation of my family since 1918 to own and operate my
    business, Atlas Tool & Die Works. I work there as the Director
    of Development. I am also Vice President and co-owner of Abet
    Industries as well as Accushim, Inc. The businesses are located
    in Lyons and LaGrange, Illinois, which are Chicago suburbs in
    Representative Dan Lipinski's district. All three companies are
    my family's related businesses in precision manufacturing. Our
    companies make various parts and assemblies for the defense,
    aerospace, telecom, electronics, medical, industrial and heavy
    machinery industries. Together we employ around 80 people.
        I also serve as the chairman of the TMA Government
    Relations Committee and vice chair of the association. TMA
    represents nearly 1,000 small- and medium-sized manufacturers
    in the Midwest. We employ over 27,000 skilled workers.
        As an advocate of the critical importance of a healthy and
    growing manufacturing sector in any economy, I support passage
    of the American Manufacturing Competitiveness Act of 2012. One
    thing that strikes me about this bill is that it makes no
    assumptions of the best path forward to ensure America is the
    global manufacturing leader.
        That is important because there are so many diverse
    opinions of what the manufacturing sector needs. Some people
    feel unfettered free trade is a problem, others say it is tax
    policy and others say energy policy or training and workforce
    development, and still some people say the industry is strong
    and nothing is needed. With these varying opinions, all from
    purported experts, it is very difficult to develop a path
    forward. Instead, this bill creates a system that thoughtfully
    and methodically evaluates the issues surrounding the industry
    and it outlines a framework to develop a plan for success.
        As a business owner, I know that planning is critical.
    Plan, execute and review, that is the basic core of any good
    business model. Unfortunately, when an organization doesn't
    operate with the plan, what happens is a plan to fail. Right
    now the United States is operating with a plan to fail in the
    world economy when it comes to manufacturing, and that is
    unacceptable for a global superpower.
        We simply must be the world leader in manufacturing. And
    why is that so important? Manufacturing is a keystone stone
    industry in any economy. Most economists agree that for every
    sales dollar in manufacturing, there are two to three dollars
    of supporting activities required. This is the highest
    multiplier effect of any industry.
        In addition, manufacturing creates good jobs that value
    skills, jobs with healthy benefits and jobs where you can find
    a lifelong career. Manufacturing is critical to national
    defense as well as product innovation.
        Finally, manufacturing is one of the fastest growing
    sectors in the world economy. It requires capital investments
    in land and equipment, it requires many factors of production,
    and, in short, it is simply one of the fastest ways to jump-
    start employment, investment and innovation.
        Many other countries realize these facts. They are
    constantly and actively working to court manufacturers to
    locate within their borders. We live in a world with many
    competitors and they look at our position with envy. They are
    working to surpass the United States in many areas, and if we
    ignore what they ever doing and neglect to make our own plans,
    I assure you those competitors will succeed.
        Countries like China, Russia, Brazil, Canada, the U.K., and
    many others have a clear and detailed national manufacturing
    strategy. They have decided what critical industries they want
    within their borders and are actively working to foster
    success. They are asking the questions, what can we help you do
    to be more competitive? How can we help you sell more products
    and create more jobs? Whether it is consideration of a VAT
    versus an income tax, adding or removing tariffs and import
    barriers, providing regulatory relief, requiring domestic
    production or even low cost loan and financing programs, these
    countries are working in a concentrated and organized effort
    towards success.
        Furthermore, many of these countries already have developed
    best practices when it comes to supporting their manufacturing
    sectors. The American Manufacturing Competitiveness Act will
    not only bring the U.S. into line with our competitors, but
    compel us to study and learn from them. And this type of
    benchmarking is a standard best practice management technique.
        Ultimately the success of any industry depends on many
    factors. However, our collective will to ensure and achieve
    success is probably the most important factor. The American
    Manufacturing Competitiveness Act and ultimately the National
    Manufacturing Competitiveness Strategy developed in Section D
    of that act are important first steps to the long-term health
    and success of our overall economy.
        I applaud Congressman Lipinski and Congressman Kinzinger
    for their leadership to develop and sponsor this bill, and I
    urge you all to pass this bill in committee and ultimately the
    full House.
        Thank you for your time and consideration, and I look
    forward to your questions.
        [The prepared statement of Mr. Mottl follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mrs. Bono Mack. Thank you, Mr. Mottl.
        Mr. Gordon, with that, you are recognized for 5 minutes.

                      STATEMENT OF MARK A. GORDON

        Mr. Gordon. Madam Chairman Bono Mack, Ranking Member
    Butterfield, members of the subcommittee, thank you for the
    invitation to speak today.
        My name is Mark Gordon, Director of Defense Programs at the
    National Center of Advanced Technologies and a member of the
    Manufacturing Division at the National Defense Industrial
    Association. On behalf of the 1,700 corporate members and
    almost 100,000 individual members, I am pleased to appear
    before the subcommittee today to discuss the need for a
    competitiveness strategy to successfully develop a national
    ecosystem supporting American manufacturing.
        There should be no doubt as to the importance of the
    manufacturing sector to the economic and national security of
    the U.S. You have already heard an impressive number of
    statistics from multiple speakers. Most importantly,
    manufacturing means stable, high paying jobs for millions of
    U.S. taxpayers, and these jobs depend directly on the current
    and future competitiveness of the U.S. manufacturing sector in
    comparison to our trading partners, trading partners which
    possess national manufacturing strategies which aim to boost
    their competitiveness.
        While the U.S. is competitive in manufacturing today, our
    essential goal should be to increase our competitiveness to
    ensure future growth in an increasingly aggressive global
    environment.
        There are many recently published strategic plans, studies,
    reports and road maps on U.S. manufacturing, all of which focus
    recommendations on structural barriers, emerging technologies,
    infrastructure partnering or economic preservation models as
    vital components that lead to the revitalizing, reshoring or
    expanding of the U.S. manufacturing capability.
        My position is that developing a competitive manufacturing
    sector requires establishing and maintaining a national
    manufacturing ecosystem that simultaneously addresses
    structural limitations such as export control regulations,
    public and private R&D investments, such as advanced materials
    or processing and fabrication needs, and bridging the gap to
    successful scale-up and commercialization.
        Given the multitude of existing recommendations and
    strategies, what is required is a balanced approach that sets
    priorities among these mechanisms with the single goal of a
    competitive American manufacturing ecosystem, an ecosystem that
    proofs fertile enough to grow and maintain domestic
    manufacturing capacity.
        Turning to the specific issue of national security, Under
    Secretary of Defense Frank Kendall stated earlier this year
    that essentially the industrial base is part of our force
    structure and we have to treat it like it is, acknowledging the
    vital role of defense manufacturing and the requirement to
    actively manage its capabilities.
        The 2012 defense guidance clearly defines strategies built
    upon exploiting our technological advantage, such as advanced
    electronics, lightweight materials and reduced size, weight and
    power for a broad range of defense systems. The DOD recognizes
    that these technological advances are realized through
    manufacturing technologies, which is why the 2013 defense
    budget highlights advanced manufacturing as a top priority,
    along with cyber and autonomous systems.
        However, this strategy or this priority is set within a
    reduced budget environment with pressures on acquisition costs
    that will defer modernization and increase sustainment
    requirements. Acquisition and sustainment are both supported by
    the same industrial base which is threatened by these
    reductions.
        This defense industrial base, which is at the lower tiers,
    is predominantly small and medium size with commercial and
    defense companies. It possesses a variety of specialized
    manufacturing capabilities required to produce and sustain
    defense systems and must be managed to ensure readiness and
    avoid obsolescence. A defense industrial base that is
    technologically vibrant, highly capable and financially fit is
    in the national interest, and as such the Defense Department is
    a unique beneficiary of a highly competitive manufacturing base
    because of the reinforcing nature of an economic healthy
    manufacturing ecosystem on this shared industrial base.
        Our endorsement of this bill is based upon a stated
    objective, board membership and duties and a lengthy list of
    topics to be considered during the comprehensive analysis and
    strategy development. However, we note that the comprehensive
    analysis under section 4, paragraph C, would seem to require
    considerable effort and no staff budget or board support is
    currently specified. Obviously, resources will be required
    commensurate with the expected level of effort and will not be
    left to the private or public service board members.
        I am honored to have had this opportunity to provide you
    with the defense industry perspective on the importance of
    developing the needed ecosystem, and speaking on behalf of NDI
    membership, I thank you all for actively supporting U.S.
    manufacturing policies.
        [The prepared statement of Mr. Gordon follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mrs. Bono Mack. Thank you, Mr. Gordon.
        Ms. Wince-Smith, welcome back to our committee. It is a
    pleasure to have you here again, and we are recognizing you for
    5 minutes.

                  STATEMENT OF DEBORAH L. WINCE-SMITH

        Ms. Wince-Smith. Thank you, Chairman Bono Mack, Ranking
    Member Butterfield, and members of the subcommittee, for
    inviting me to discuss Representative Lipinski's bill to
    promote the competitiveness of American manufacturing in the
    global economy.
        The Council on Competitiveness is a 25-year-old nonprofit,
    nonpartisan organization uniquely comprised of CEOs, labor
    leaders and university presidents all working together to
    ensure U.S. prosperity.
        Under the leadership of our chairman, Sam Allen, the
    chairman and CEO of Deere and Company, the Council is
    undertaking a multi-year U.S. manufacturing competitiveness
    initiative. Last December we released a National Manufacturing
    Strategy called MAKE: An American Manufacturing Movement. We
    addressed the key issues around talent, technology, investment
    and infrastructure to develop this action agenda. We are
    certain that the committee will find this comprehensive
    strategy useful in its efforts to support America's
    manufacturing future.
        We know manufacturing is a cornerstone of American
    independence, economic prosperity and national security. The
    image of manufacturing as dumb, dirty, dangerous and
    disappearing is obsolete. Today manufacturing is smart, safe,
    sustainable and surging. It is inextricably linked to America's
    innovation capacity and a driving force leading our
    technological transformation from high performance computing,
    modeling and simulation tools in an exascale economy, to
    materials by design, advanced robotics, sensors, smart
    automation, and the new additive manufacturing revolution well
    underway.
        And manufacturing is broader. It is more deeply integrated
    with services and has a higher multiplier effect on the economy
    than at any time in history. The manufacturing enterprise
    includes research, development, production, sales,
    distribution, logistics, customer service, marketing and
    support.
        In short, manufacturing is a full lifecycle system
    extending from the making of physical products to the delivery
    of premium services. Understanding the full life cycle of
    production from startup to scale-up is essential if we are
    going to enact policies that will ensure the United States'
    long-term success.
        Ms. Wince-Smith. OK. The council applauds continued
    increased public and political attention given to
    manufacturing. America's economic portfolio requires a healthy
    and growing manufacturing sector to tackle the grand
    macroeconomic problems facing our country, from job creation,
    sustaining our middle class, debt reduction, entitlement
    reform, to infrastructure investment for the future.
        We urge Congress and the President to develop and implement
    a national manufacturing strategy that unleashes America's
    manufacturing potential in a time of great transformation. And
    we are pleased that the American Manufacturing Competitiveness
    Act of 2012 is progressing through the House.
        Supporting America's manufacturing future does not mean an
    industrial policy of selecting favorite sectors or firms,
    subsidizing decaying industries, or adopting protectionist
    policies that inhibit fair global competition and trade. These
    tactics rarely prove effective. Instead, the government should
    focus on creating the right conditions for manufacturing to
    thrive. This is an imperative given the changing dynamic of
    global competition and the steady rise of state-supported
    capitalism coupled to predatory mercantilist trade policies,
    and targeted intellectual property theft, and pervasive cyber
    threats against our digital networks.
        In this global, knowledge-intensive economy, the
    competitiveness of U.S. manufacturing has never been more
    uncertain or more important, and so the policy prescriptions
    must be right. America's economy needs accelerated
    productivity, faster economic growth. Our security requires a
    deeper, more resilient industrial base. And our private sector
    is deployed and prepared to produce solutions to meet national
    and global challenges in energy security, health, environment,
    food security, and, as I mentioned, pervasive threats to cyber
    networks.
        Our global economic competitors are aggressively developing
    and implementing robust national manufacturing strategies. They
    are targeting high-value investment, they're targeting advanced
    production, and building skilled workforces.
        Today's hearing is one of many critical steps Congress can
    take to keep America competitive in global manufacturing. This
    bill lays the groundwork and process for creating a national
    manufacturing strategy, and for developing and expanding the
    essential nonpartisan, public-private partnerships. The council
    hopes this committee and the full committee will continue to
    work in a bipartisan fashion to move this bill forward through
    the legislative process.
        Americans have always been pioneers; we are risk takers,
    and we are makers. Our task is to create the enabling
    conditions for 21st century innovation and production in scale
    in America. We must establish a business environment, and
    nurture and grow the ecosystem that fosters breakthrough
    innovations, rapid commercialization and allows firms, both
    small and large, to succeed in the global economy. The council
    stands ready to work with you to set in place the policies
    needed to ignite a new era of competitive and sustainable
    manufacturing.
        Thank you for this opportunity to be before you, and I look
    forward to your questions.
        Mrs. Bono Mack. Thank you, Ms. Wince-Smith.
        [The prepared statement of Ms. Wince-Smith follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mrs. Bono Mack. The chair now recognizes herself for 5
    minutes for questions, and I will direct my first question to
    Mr. Mottl.
        As we all know that there was a jobs report released today,
    and unemployment rose to 8.2 percent as the sluggish economy
    added only 69,000 new jobs, which was the fewest number in a
    year. These are dismal reporting numbers.
        But can you speak to--you are a fourth-generation, family-
    owned and -operated business. What do you see as the biggest
    threats to your ability to compete?
        Mr. Mottl. Well, related to the employment number, I can
    say I personally had a 10 percent employment growth last month,
    so we hired eight new people. But in terms of that issue, we
    have a very hard time finding skilled and trained workers right
    now. We are busy, and we have growing demand, and I am just
    having a very hard time hiring people who have the skills to
    work. Now, I think if we had this act in place, maybe some of
    those issues would have come out, and we would have some policy
    addressing that issue.
        The other problem that I see as a manufacturer, you know,
    having many, many years in business is that we talked about the
    defense base. About 30 to 40 percent of our business is
    defense. The other large portion of that is commercial. And any
    small business will tell you that they probably have two or
    three key customers, and without those customers they really
    couldn't operate.
        I have seen a lot of my larger key customers leave--largely
    leave the country probably due to predatory trade policies
    where they, you know, can assemble products a lot cheaper
    elsewhere. That is my personal opinion. But in terms of how
    does that affect defense base, well, as I lose my large key
    customers, I am more dependent on the defense work or the
    remaining work that is here. I am less competitive serving that
    because my capacity is not just shared over, you know,
    commercial work as well as defense work, it is now more defense
    related. So it makes me less competitive, and all of these
    issues together, I think, are things that would come out if you
    had a national strategy act to look at this and develop policy
    around that.
        Mrs. Bono Mack. Well, can you speak to specific changes in
    U.S. Policies that you would like to see implemented to help to
    improve the environment?
        Mr. Mottl. Yes. Specifically, there are some trade issues.
    I am a free market advocate myself, but I think as we integrate
    into a global economy where there is a lot more planning going
    on and--in other economies, and we are trading with people like
    that, we need to figure out how to address that and how to keep
    our sectors competitive with that.
        Specifically tax policy. We don't have the most competitive
    tax policy here in the U.S. for manufacturers who want to
    export. From my perspective, we trade with a lot of countries
    who have adopted a VAT tax in favor of a lower corporate or
    eliminated corporate income tax.
        If you look at that in another light, not in manufacturing,
    you might not like that policy, but if you look at that in
    terms of manufacturing, and exporting and creating jobs,
    companies that export get that VAT tax refunded to them,
    whereas U.S. companies have their income tax and all of their
    taxes built right into the cost of the product, so it makes it
    less competitive when you export it.
        So some of these policies, if you look at it in the light
    of manufacturing, look a lot different.
        Mrs. Bono Mack. Thank you.
        Ms. Wince-Smith, the legislation before us tries to avoid
    creating a new government bureaucracy by relying heavily on
    input from the private sector, which is intended to include the
    full range of nongovernmental organizations and nonprofits. It
    also tasks the Board with looking at ways to streamline
    government processes or cut back on unnecessary regulation.
        Can you agree with that approach? Do you want to speak to
    that a little bit?
        Ms. Wince-Smith. Yes, I think that is one of the very
    positive elements in the proposed legislation, because the bill
    recognizes the full panoply of private-sector leadership that
    is required to really develop and enact a national strategy
    that is a systems integration effort. So I think the types of
    expertise identified in the legislation are right on.
        In terms of not duplicating and ensuring a smooth-function
    bureaucracy, we are making a lot of progress in integrating
    manufacturing in the administration, and I certainly want to
    applaud the efforts of the administration to do that. However,
    we can do a better job on that, and I think that this national
    strategy will be one more step with congressional involvement
    to encourage that.
        The defense sector is a huge leader in what we are talking
    about, and yet defense, because of its imperative for national
    security, really, I think, is not fully utilized in the
    transformation. At the end of the day, this manufacturing need
    is a huge national security initiative.
        Mrs. Bono Mack. Thank you.
        I am going to yield back my last 20 seconds and recognize
    Mr. Butterfield for 5 minutes.
        Mr. Butterfield. Thank you.
        Dr. Singerman, thank you very much for your testimony. I
    understand that there are a number of initiatives underway as a
    result of President Obama's intense focus on manufacturing.
    This includes initiatives that are underway at the White House,
    and some through the Department of Commerce, and some in other
    places of the executive branch.
        As you might be aware, this isn't the first time that we
    have considered Mr. Lipinski's bill. In the last Congress on a
    bipartisan basis, we reported a different version of his bill
    out of this committee and passed it through the House, but it
    never made it through the other body.
        At that time we really weren't aware of all of the things
    that you guys are doing in the executive branch related to
    manufacturing, and now we know. And since that time we also
    have seen Congress push through its own ideas to put more
    emphasis on planning and policymaking related to manufacturing.
        I believe that--let me just skip to the question. Given
    what you know about current efforts to bolster manufacturing,
    can you please share with us your thoughts about how we can
    make H.R. 5865 an effective and useful addition to what the
    Commerce Department and administration already have underway.
        Mr. Singerman. Thank you, Mr. Butterfield, for that
    question. Let me say that I generally concur with the
    sentiments that have been expressed by the committee, and my
    colleagues on the panel, and Mr. Lipinski about his
    legislation, the importance of manufacturing to the Nation's
    innovation ecosystem and to our global competitiveness, and the
    importance of a national strategy--not a Federal strategy, but
    a national strategy--in support of advanced manufacturing to
    identify public and private investments and policies to support
    that.
        But we have been working with Representative Lipinski's
    staff, have had conversations with them about this legislation,
    and we are delighted to work with the committee as you consider
    this bill.
        I think a number of the members of the subcommittee raised
    questions about coordination, and the chairwoman raised a
    question about duplication and bureaucracy. These are issues
    that I think the committee will consider as it addresses this
    legislation moving forward.
        Mr. Butterfield. What are examples of times when the
    Commerce Department or, more specifically, the National
    Institute of Standards and Technology work closely with the
    private sector?
        Mr. Singerman. It is a very good question. We have a
    Visiting Committee on Advanced Technology, which is composed of
    leaders from the academic and industrial sectors. It is a
    Federal advisory committee, so it is a public body. It is a
    very high-level body, and it provides advice to the Under
    Secretary of Commerce for Standards, Patrick Gallagher, and his
    management of the organization.
        This Congress in the America COMPETES Act created--directs
    two studies, one by the Department of Commerce on innovation
    and competitiveness capacity. NIST was closely involved in
    supporting that, and that study was overseen by an external
    advisory board.
        We are also supporting, as I indicated in my testimony, the
    Advanced Manufacturing Partnership, which is a private-sector-
    led industry and academic group of leading research
    universities and global companies to provide guidance to the
    administration on the development of policy.
        There are several other examples, but those are just a few
    that----
        Mr. Butterfield. So you clearly recognize the private
    sector as a stakeholder in this process?
        Mr. Singerman. Absolutely.
        Mr. Butterfield. And you do that enthusiastically?
        Mr. Singerman. Yes. I would also add the Manufacturing
    Extension Partnership's Advisory Committee, also a Federal
    advisory committee, which focuses on the needs of small and
    midsize manufacturing firms, again, populated by private-sector
    individuals from community colleges, industry, and professional
    societies.
        So this is really a theme of the administration reaching
    out to the private sector to provide guidance to our
    activities.
        Mr. Butterfield. Thank you. I yield back.
        Mrs. Bono Mack. Thank you.
        Mrs. Blackburn is recognized for 5 minutes.
        Mrs. Blackburn. Thank you, Madam Chairman.
        Dr. Singerman, I want to stay with you for just a minute on
    that, because you testified that government should avoid
    industrial policy and making bets on particular companies and
    industries, and should invest in innovation policy to create
    the best overall business environment.
        Now, I agree with you. I think that picking winners and
    losers is a very bad idea, and frankly, this administration
    just really hasn't been very good at it. When you look at what
    has happened with Solyndra and Beacon Power and InterOne, all
    casualties, if you will, of the DOE loan program, and that
    trying to get in here and manipulate and pick those winners and
    losers. So the track record there isn't very good.
        And the purpose of the Advanced Manufacturing Partnership
    that you were just mentioning is to bring together industry,
    universities, and the Federal Government to invest in emerging
    technologies. Am I saying this right?
        Mr. Singerman. Yes, that was my testimony.
        Mrs. Blackburn. OK. And so the purpose, they will invest in
    these that will create high-quality manufacturing jobs. So my
    question to you is this: Is that not picking winners and losers
    in terms of which technologies that you are going to back?
        Mr. Singerman. So that is a very important question, and
    obviously a question that has----
        Mrs. Blackburn. I think the differentiation is very
    important.
        Mr. Singerman. A very important question and a very
    important differentiation. And the focus of the Advanced
    Manufacturing Partnership, and I would also say the efforts
    that we are involved in at the National Institute of Standards
    and Technology, are not focused on funding individual
    companies. We recognize that one needs, as I think other
    members of this panel have mentioned, a balanced and
    comprehensive approach that looks at trade.
        Mrs. Blackburn. OK. Then let me come at it like this with
    you. OK. What are the emerging technologies that you are
    wanting to go for? And then who gets to decide what those
    technologies are going to be? Whose decision is it to pick out
    and say, all right, we are going to go invest in this
    technology and not this, because in this committee we look at
    the issue of energy, the picking winners and losers and trying
    to go after wind and solar and not an all-of-the-above hasn't
    fared very well.
        So what are the criteria that they are going to base this
    on, and who are going to be the elites that make the decision
    of what wins and what loses?
        See, I like competitiveness, and I like the marketplace
    making these decisions rather than a group of people that have
    been self-identified as being pros in this and thinking that
    they are going to self-vet their opinions and arrive at a
    decision. So I have got a little bit of a problem with that
    one.
        Let me move on. I have got just a minute and a half left. I
    want to talk a little bit about information technology and
    piracy. In my area in Tennessee, we have a lot of auto
    manufacturing, we have financial service applications, health
    care, entertainment that are all dealing with this. So when you
    look at the issue of competitiveness as far as it relates to
    intellectual information technology inputs and IP protections,
    I want to know what any of you are doing that we can quickly
    state, and then if the Department and Commerce and the FTC has
    been helpful or has not been helpful.
        Anyone want to respond?
        Ms. Wince-Smith, go ahead.
        Ms. Wince-Smith. Thank you, Congresswoman Blackburn.
        I think this issue of protecting and dealing with the cyber
    infrastructure is at the top of the list, because virtually
    every private sector and government network is being
    consistently targeted by adversaries, and some even, I think,
    of our trading partners. We have to have an integrated strategy
    for this and actually the enabling technologies that enable us
    to both protect and ensure that these cyber networks are
    operational, because everything depends on their resiliency and
    performance. So it is a huge priority for our country.
        Mrs. Blackburn. OK. Thank you.
        Any addition to that?
        No, OK. Thank you.
        Mr. Mottl, I will just say manufacturing added only 12,000
    jobs this past month, so I am glad to know where 800 of those
    jobs were added. So it looks like you were the winner in the
    month.
        Quickly, do you think this administration's economic
    policies are helping or failing you? Anyone want to answer?
        OK. Go ahead.
        Mr. Mottl. It was eight jobs, but I wish it was 800.
        Mrs. Blackburn. Eight. OK. I thought you said--I misheard
    you, so we will correct that record.
        Mr. Mottl. You know, related to the administration's
    efforts and what you talked about picking winners and losers,
    you know, I think we have to have a good overall policy like we
    talked about, a good competitive policy. But in addition to
    picking winners and losers, I think our competitors are doing
    that, and maybe I would argue that what happened with Solyndra
    and with those industries was that we did not do a good enough
    job supporting them. I would say that some of our trading
    partners----
        Mrs. Blackburn. I would probably take issue with that, and
    my time has expired. So I thank you for the answer.
        Mrs. Bono Mack. I thank the gentlelady.
        And the chair now recognizes Mr. Gonzalez for 5 minutes.
        Mr. Gonzalez. Thank you, Madam Chair.
        This is my biggest fear. I would be supportive of this bill
    because obviously I was supportive of its last version and
    such. The issue I take is simply I actually see that we are
    ignoring things that are systemic that took over a number of
    years to develop in this country, and we are facing the
    consequences now. My problem is we can have another commission,
    we can have another board, but we are all--both Congress and
    the private sector are whistling past the graveyard.
        Let me give you my take on things, and I am going to be
    quoting from different articles over a period of time. This is
    from the Hamilton Project. It was cited in an article in the
    Post on January 19, 2012: From 2001 to 2007, investment in
    equipment and software, the kinds of investment that boost
    productivity and create good jobs, declined 15 percent as a
    share of our GDP.
        Something has been happening out there. Where is our GDP?
    Where do we invest our money?
        The combined assets of conventional banks and so-called
    shadow banking systems grew from a mere $500 billion in 1970 to
    $30 trillion in 2008. In the 1970s to the 1980s, financial
    firms comprised 15 percent of all corporate profits. By 2006,
    it was up to 33 percent. Financial services gradually comprised
    nearly 62 percent of GDP. You better figure out where that
    money is being invested.
        What we want in the greatest return--to be honest with you,
    I don't even know where my 401 is being invested. If I was a
    teacher, I don't know where my pension--but I guarantee you, it
    is going to be usually in the highest-yielding products out
    there, which generally do not create jobs in the United States
    of America. We are not doing anything about it. And maybe this
    is one way that we can bring people together and address it.
        This is Harold Meyerson way back on January 5, 2011, in the
    Post: There is a way to look at the recession, that it is
    institutional, that it is a consequence of the decisions by
    leading banks and corporations to stop investing in job-
    creating enterprises that were key to a broadly shared
    prosperity. The share of profits of United States-based
    multinationals that came from their foreign affiliates had
    increased from 17 percent in 1977 and 27 percent in 1994 to
    nearly 50 percent in 2006.
        This is Nouriel Rubini in a Post article of September 17,
    2010. 2010. Most policy approaches, including the Obama
    proposals, have tended to subsidize the demand for capital
    rather than the demand for labor. That has the problem
    backwards.
        In the second quarter of 2010, capital spending reached an
    annual growth rate of 25 percent. The argument that increased
    demand for capital leads to greater demand for labor--that is,
    if you buy more machines, you need workers to run them--has not
    held up. Firms are investing in capital goods, equipment, and
    offshore offices that allow them to produce the same amount of
    goods with less and lower labor costs.
        We exceed all other countries in productivity. We do more
    with less, and with the recession, obviously that may have been
    needed, but we have reached the breaking point. To avoid a
    chronic increase in the unemployment rate, we need to subsidize
    the demand for labor, achieving job creation rather than making
    it cheaper to buy capital, as investment and other tax credits
    would do.
        And that is the focused approach that goes back to what Mr.
    Butterfield was saying about preparing a workforce to be
    globally confident in products and services that are produced
    in this country, that can be consumed in this country, as well
    as exported. We are not doing much of that.
        And I thank you for your testimony today, and obviously, I
    am using my 5 minutes to basically set out there what we are
    all ignoring, both in the private and public sector, and until
    we come to grips what got us to where we are today, we are not
    going to undo it.
        I have 30 seconds, but I do want to ask Mr.--is it Mottl,
    is that how you pronounce that? How were you able to hire eight
    additional folks? What were the contracts, the nature of the
    contracts? I am real curious about that.
        Mr. Mottl. Well, primarily we are hiring in the machining
    and turning departments for programming, and these are highly
    skilled, highly technical positions. I have had to increase
    wages. You know, we were initially advertising around $20 an
    hour. We were hiring people at $25 and $26 an hour. We were
    stealing people from other companies because there is just,
    quite frankly, not a trained labor pool out there. So that is
    how I was able to find those people.
        Mr. Gonzalez. And where is this demand emanating? I mean,
    in other words, the contracts are coming; is it private, or is
    it government, local, State?
        Mr. Mottl. Defense work has driven a lot of my growth right
    now. My telecom business has been shrinking, and we have looked
    for other markets. It has been defense. Also some of our
    industrial products and our heavy equipment. We do a lot of
    work for Caterpillar, and that has been growing, but it has
    been defense, some heavy equipment, and then some general
    industrial products for export.
        Mr. Gonzalez. Thank you very much. I yield back, Madam
    Chair.
        Mrs. Blackburn [presiding]. I thank the gentleman.
        At this time Mr. Harper is recognized for 5 minutes for
    questions.
        Mr. Harper. Thank you, Madam Chair.
        And thank each of you for being here today and giving us
    some insight into what is going on in the manufacturing world.
        Mr. Mottl, I have a couple of questions I would like to ask
    you, if I may. If we benchmark our manufacturing environment
    and capabilities against our closest competitors, let us say,
    in other countries, whether that is Germany or China or Japan
    or others, if you were to align those, where would you expect
    to see the biggest differences between us and those
    competitors?
        Mr. Mottl. I would say it is definitely going to be in tax
    policy. It is going to be in education and training. In
    Germany, they do a lot more vocational training, which is given
    legitimacy along the lines of a college degree. I would love to
    see that here. Also in terms of trade and whether it is
    supporting exports or protecting industries that you want to
    see, I think other countries take a closer look at that.
        Mr. Harper. What are some of the issues that you see or
    think of as a manufacturer that--of those issues, how would you
    implement those or make them part of the core of our national
    strategy, particularly on the education issue? I am certainly
    intrigued by that and how we can implement that here. We are
    seeing it some, particularly in my home State of Mississippi,
    that a lot of the community colleges are taking that approach
    for job training, and we are seeing that. Anything along those
    lines that you might see?
        Mr. Mottl. Yes. In Illinois, there are a lot of community
    colleges doing this as well. My association, TMA, also has
    taken a lead role. We have had a historical leg up in this
    training. They have been training since the 1920s. We work with
    some of the MEPs. I have seen some great things out of those
    programs.
        But again, there is a fractured--there are a lot of
    different groups doing this, and there is no one really
    comprehensively bringing those programs and policies together
    and saying, ``This is the best practice; we are going to go
    with this program because it has really worked.''
        Mr. Harper. Madam Chair, in light of the time restraints, I
    will yield back.
        Mrs. Blackburn. The gentleman yields back.
        At this time Mr. Sarbanes is recognized for 5 minutes for
    questions.
        Mr. Sarbanes. Thank you, Madam Chair.
        I wanted to ask Dr. Singerman a question about the
    scouting--Supplier Scouting Program inside NIST. Before I ask
    you the question, I just want to read a little bit about it to
    the committee and to anyone who is not aware of it, because it
    is a great success, and I want to ask some follow-up questions
    about how we may be able to expand this.
        So within this, you have the Manufacturing Extension
    Partnership, which is an attempt to work with manufacturers all
    across the country, support their efforts to network and make
    connections, and get real concrete opportunities.
        The Supplier Scouting, which is part of the MEP's Make It
    in America Initiative, has worked to streamline Federal agency
    contracting with small and medium U.S. manufacturers. The
    program does this by connecting manufacturers with the
    procurement offices of various Federal agencies and assisting
    in the expansion and development of the manufacturers' product
    offerings to respond to the government's evolving contracting
    needs. The program has been a great success helping to ensure
    Federal agencies such as DOE, DOD, and DOT comply with the
    various Buy American statutes, while simultaneously bolstering
    the U.S. Manufacturing base.
        For example, in the case of the Department of Energy, of
    the 83 Buy American waivers filed by the agency suggesting that
    there were no U.S. Manufacturers to supply their contracting
    needs, the Supplier Scouting Program was able to identify 39
    matches between U.S. manufacturers and the Department of
    Energy, representing a 47 percent success rate. Subsequently,
    65 different U.S. manufacturers received business from the
    Federal Government. This is business that would otherwise have
    been shipped overseas. And there are other examples of the
    success.
        Let me ask you a couple of questions. Has there been
    interest from other agencies in entering into the Supplier
    Scouting partnership similar to that of the Department of
    Transportation, Department of Energy, or Department of Defense?
    Are you aware of that?
        Mr. Singerman. Let me answer that by just adding some
    context to your question for the committee.
        The Manufacturing Extension Partnership program has been in
    existence for nearly two decades. It is a public-private,
    Federal-local program in which the Federal Government provides
    a third of the funding, the private sector provides a third of
    the funding, and State and local governments provide another
    third of the funding. Every State has a center. Some States
    have more than one center. These are typically--these are
    nonprofit, often university-affiliated organizations. These are
    not Federal employees or Federal organizations. The Federal
    Government is a partner with local organizations. And in the 60
    centers with over 400 locations in every State, there are
    approximately 1,400 experts, generally from manufacturing
    backgrounds, who have expertise in various areas of specialty
    and know their industries in their communities.
        And it is through this national network that suppliers are
    identified for opportunities that the Federal Government and
    increasingly the private sector have, where they need
    suppliers, small and midsize firms, but are unable to find
    them.
        We have started to work closely with the Small Business
    Administration, which has a complementary program working with
    the private sector.
        Representative Sarbanes, you mentioned the Department of
    Transportation. That has been a highly successful program,
    particularly in the area of high-speed rail, a sector that this
    country has not been a leader in in the past, and there was a
    perception that there were no small firms that could supply
    material for the large construction programs. The MEP program
    organized well-attended hundreds of small firms at meetings on
    the west coast, in Chicago and most recently in Florida, and
    has made numerous connections, actual deals, product sales for
    small firms working with the Federal agencies, and, through
    those, the Federal agencies, contracting through large
    companies to build high-speed rail. So it has been an
    extraordinarily successful program.
        Mr. Sarbanes. I am running out of time, but first of all, I
    wanted to say that I think that Congressman Lipinski's bill is
    a terrific opportunity to focus us generally on these
    manufacturing issues, but programs like the Supplier Scouting
    Program can really help to bolster that focus. Are there plans
    to make sure that there is continued support financially within
    the MEP budget for the Supplier Scouting Programs?
        Mr. Singerman. So, the MEP program has ceded these efforts,
    but we have relied upon contracts, if you will, or interagency
    agreements with the Department of Transportation, Defense
    Logistics Agency, Department of Energy to fund the additional
    effort that is required on a really one-to-one, boots-on-the-
    ground basis to identify those firms that have the capability
    or could develop a capability to provide the products and
    services to these Federal agencies and increasingly to private
    companies.
        Mr. Sarbanes. Thank you. I yield back.
        Mrs. Bono Mack [presiding]. The gentleman's time has
    expired.
        The chair recognizes Mr. Kinzinger for 5 minutes.
        Mr. Kinzinger. Well, thank you, Madam Chair. And again,
    thank you for--to all of the witnesses coming in. I really
    appreciate.
        The manufacturing sector has received obviously a lot of
    attention recently, but it hasn't always been a focus. I think
    specifically, you know, 10, 20 years ago, I remember hearing
    members of government saying that, in essence, manufacturing
    was out of vogue, and we have moved beyond a manufacturing
    economy.
        One portion of this bill that I think is important is it
    puts in place a Presidentially confirmed group of private-
    sector and government experts that will focus our attention on
    manufacturing for two distinct Presidential terms.
        Do each of you believe raising the stakes in the creation
    of a Board that delivers recommendations to Congress, do you
    believe it will lead to a greater consensus on policies or
    actions that will improve the environment for American
    manufacturing?
        And we will start with you, ma'am.
        Ms. Wince-Smith. I think it will if it is comprehensive.
    And you just mentioned, Congressman, that manufacturing itself
    meets the new definition. It is far broader than the making of
    something. It is this whole complex supply system, the
    marketing, all of that. If we can address all of those issues
    and ensure that Treasury and Justice and other agencies in our
    government that have such an impact on policy are part of this,
    it will be very successful.
        Mr. Kinzinger. And I think that is a good point. I mean,
    the reality is manufacturing is not a thing. It is an idea. And
    to really get a grip on the idea and all of the ancillary parts
    of it and everything that is involved, I think to have people
    committed to sitting around and having a discussion or a talk
    about the big picture and how are we going to put our arms
    around the big picture and every facet of it is better than
    really kind of muddling through in a, you know, piecemeal kind
    of basis.
        Mr. Gordon.
        Mr. Gordon. I would absolutely agree with that.
        In fact, in the Defense Department one of the things that
    Congress has already done in the NDAA from 2011 is to establish
    a manufacturing and industrial-based policy instead of just an
    industrial policy, is manufacturing and industrial-based
    policy, essentially moving the organization responsible for
    manufacturing within DOD up four levels, much higher, to the
    Secretary of Defense.
        In addition to this, you have already heard what I talked
    about in terms of advanced manufacturing now being one of the
    top three priorities for R&D, and the Department's S2D2, which
    is a sector-by-sector and technology-by-technology study of
    what needs to happen in the industrial base.
        Mr. Kinzinger. I would hate to see us in a position where
    we are someday having to buy dumbed-down equipment from other
    places just to defend ourselves against potentially anybody.
        So, Mr. Mottl, welcome, from Illinois, Land of Lincoln.
        Mr. Mottl. Thank you. Yes, great, great State.
        I would agree with what was said before, and I think the
    key is sustaining things. You know, success doesn't happen when
    you kind of pop in with an idea and then disappear. You need to
    sustain it.
        And then the other end of it is action. You know, a lot of
    these recommendations come out of a lot of groups. I am hoping
    that this, like we said, a comprehensive, formal approach, will
    actually lead to legislative action to solve some of the
    problems, Because there are plenty of reports out there right
    now, but having to all come together, and action has not
    occurred.
        Mr. Kinzinger. I agree with you.
        Dr. Singerman.
        Mr. Singerman. I would only add that I think it is
    important, as has been mentioned by the members of the
    subcommittee, for the private sector to be closely engaged and
    leading this effort, working with the public officials at the
    Federal and State level.
        Mr. Kinzinger. Now, I saw that the Chicago-area factory
    output fell to a 2 \1/2\-year low in May, showing signs of a
    slowing economy in Illinois. I would argue it is because many
    of Illinois' government policies are very unfriendly to
    surrounding States, and just like the United States needs to
    compete with other countries in the world, Illinois needs to
    compete, and unfortunately some of our leadership has not
    gotten that message.
        The State of Illinois is burdened by insurmountable debt
    that I believe is inhibiting manufacturing growth. In our
    legislation we include two governors selected by both parties
    as members of the board.
        Can each of you speak a little bit and actually very
    briefly, I have got about 50 seconds, about the importance of
    the role of State governments in fostering environment for
    manufacturing and growth?
        And we will start with you, Dr. Singerman.
        Mr. Singerman. I would like to speak to that, because we,
    at the Department of Commerce, in this view the role of States
    as crucial in developing a national strategy for manufacturing
    resurgence. And although we agree that the Federal Government
    should not have an industrial policy, I agree with
    Representative Blackburn, States all have industrial policies.
    Every State picks winners and losers. The States that I have
    been affiliated with, Pennsylvania and Maryland, and
    knowledgeable about other States as well, they all have very
    concrete programs to invest in particular companies or loan
    dollars to particular companies.
        What the Federal Government can do uniquely that States
    cannot do is provide the context and the R&D funding at a high
    level through the National Science Foundation, through NIST and
    other agencies to provide the basis for the States.
        Mr. Kinzinger. Thank you.
        Just if I may, just very briefly, Mr. Mottl, if you want to
    address.
        Mr. Mottl. For example, workers' comp in Illinois is a huge
    problem compared to our neighbors. It is $1,000 per employee
    for me in Illinois; in Indiana it would be $400 per employee
    for my same coverage. So----
        Mr. Kinzinger. You are not the only one I hear that from.
        Thank you, Madam Chair. And I yield back.
        Mrs. Bono Mack. I thank the gentleman.
        The chair now recognizes Mr. Rush for 5 minutes.
        Mr. Rush. Madam Chairman, I want to thank the ranking
    member, Mr. Butterfield, for holding hearings on these
    important matters.
        My question is about H.R. 5865. The world today looks like
    a wide-open field in the midst of a high-stakes economic
    marathon as frontrunners, other countries are trying to surpass
    the U.S. It was predicted that this year, this past year, 2011,
    the U.S. manufacturing industry--it is interesting that our
    Nation is dominated, is on a path to finish this economic
    marathon in second place after China. I certainly hope that
    this is not the case. But I also feel as though unless we
    change course now, it is probably going to be true.
        In the same token, the political unrest and turmoil that we
    are witnessing overseas and even in our own country is clear
    evidence that job creation is a top priority for all of us.
        I understand that the bill that we are considering is a
    bipartisan bill, and I hope, Madam Chair, that in the rewrite
    of the bill, that you have engaged with both sides of the aisle
    for all the changes that I have seen on this bill, as we did
    when we adopted H.R. 4952, during the last Congress.
        America's manufacturing sector is an important and
    exceptional foundation for the future of our country,
    considering the fact that in 2009 the manufacturing sector
    employed more than 11.5 million people. But the surprising
    thing about this is although it is significant, when you
    consider the Nation actually lost 5.8 million jobs between 1999
    and 2000, then that certainly kind of balances our enthusiasm.
        And I agree that our--with my colleagues on the other side
    that we live in a very competitive economic environment that
    requires an aggressive, multifaceted policy agenda to bring our
    industry back to where it was before the recession.
        What I disagree on is the methodology that would lead us to
    our global competitive advantages again. And it is clear that
    the objective is not just to have a competitive manufacturing
    industry, but, more important, to have an industry that creates
    jobs here in America.
        So that said, Dr. Singerman and Ms. Wince-Smith, what
    safeguards can we put in place to make sure that the Board
    created by this bill will indeed develop a strategy that is
    centered on jobs, job creation, and competitiveness?
        Ms. Wince-Smith. Well, I think in terms of the job-creation
    opportunity, it is huge, but it has to be addressed in the
    context of the jobs of the future, not protecting the jobs of
    the past. And if we just look at the energy sector alone, where
    this country is poised to really have game-changing
    capabilities and resources for energy security, think of the
    manufacturing supply chains and the added value that will come
    if we could move out aggressively in that particular component
    of the manufacturing enterprise, energy alone.
        I would also add on the job front that if we don't change,
    and this has been said, our training systems and training in a
    way that recognizes the full component of jobs in 21st-century
    manufacturing, we will continue to see other nations beat us in
    the global war for talent, which is part of this. So, I think
    we need to look at these issues in the national strategy in a
    very broad way, but recognize the opportunities, not focus on
    protecting the jobs of the past.
        Mr. Rush. Do you care to respond?
        Mr. Singerman. Yes, sir.
        Just to build off of Ms. Wince-Smith's comments, in order
    to create the jobs of the future, we have to invest in research
    and development now, which creates the infrastructure, the
    technological infrastructure, that enables companies like Mr.
    Mottl's and others', to build products and provide specific
    services.
        The program that the President announced in March for a
    national network for manufacturing innovation is designed
    precisely to do that and to solve a very particular problem
    that has arisen over the last three decades, the growing gap
    between basic research, which the Federal Government properly
    supports, and applied research, which is the province of the
    private sector.
        What we find is that there is a growing gap in the middle.
    Sometimes people call it the ``valley of death.'' And the
    purpose of these manufacturing institutes is to bridge that
    valley of death in a public-private partnership. That is the
    vehicle that this committee has been talking about, the
    mechanism, and that is the institutional arrangement that is
    conceived of and the development of the manufacturing
    institutes.
        So, research and development, but in a collaborative,
    industry-led, academic, Federal Government-supported mechanism.
        Mr. Rush. Madam Chair, I yield back.
        Mrs. Bono Mack. The chair recognizes Mr. Pompeo for 5
    minutes.
        Mr. Pompeo. Great. Thank you, Madam Chairwoman.
        And I want to say thank you to Mr. Lipinski for working.
    You came with this legislation to me several months ago and
    asked for my input, and I really appreciate that, and have had
    the chance to try and help shape what we are working on.
        I am often skeptical that another board, another agency
    will help us very far down the road, but I think this is a good
    step to get the private sector engaged and come up with some
    core principles that everyone can rally around.
        Mr. Mottl, I won't take my whole 5 minutes, but I want to
    ask you a question.
        First, I want to thank you, Ms. Wince-Smith, for mentioning
    energy. I agree. We have the opportunity with natural gas to
    change America's manufacturing sector for decades to come here.
    I wish we didn't have 10 agencies from this President
    investigating hydraulic fracturing today, which puts at risk
    this very renaissance that you spoke to. So I hope you all will
    take back when you talk to the administration that says this is
    important, and we don't need 10 Federal agencies regulating the
    industry that has regulated at the State level for years
    successfully and done no damage to groundwater anywhere, even
    according to Ms. Jackson from EPA.
        But that is a bit of an aside, but it is very important
    from a manufacturing policy standpoint.
        Mr. Mottl, you talked a little bit about the fact that you
    compete with international companies. Sometimes those are
    planned economies. I came from the same place. I actually was
    in sort of the same business. I ran a company that did CNC
    milling and lathes. I actually--you probably wouldn't want me
    to make your part, but I won't hurt anybody around a CNC lathe.
        But then you wandered off into a space that I am a little
    bit concerned about. I wanted to get your thoughts. You said,
    well, they are planned, so we should do something about that.
    What is it you would suggest? I give you--you talked about in
    the context of solar, and so now this administration has a
    subsidized solar technology, and then now is making it even
    more expensive at creating a tariff barrier for entry of solar
    products that we now have a belt and suspenders trying to prop
    up this particular sector. Is that the kind of thing that you
    think helps your business or another manufacturing company, or
    the kinds of policies that would help?
        Mr. Mottl. Well, it is a tricky issue, and I can't say if I
    would agree that that is the right route. I think we need to
    look at what the right route is, bring in experts and figure
    that out.
        My point being that certain countries will do whatever it
    takes to make that industry compete, and how do we address
    that? I don't know the exact answer. But they will do whatever
    it takes.
        From my perspective, why are my largest customers deciding
    that it is no longer competitive to assemble and build their
    electronics and telecom housings here? It is primarily
    government policy in other countries who are making it that
    much more competitive. I have been told that my subcomponents
    are competitive even with China's labor. I am very efficient--
    --
        Mr. Pompeo. Sure.
        Mr. Mottl [continuing]. But when my largest customers
    simply choose to move their entire assembly operations out of
    this country because they say it is no longer competitive to do
    business here, there is nothing I can do about that.
        Mr. Pompeo. I appreciate that. I would just suggest that
    oftentimes those policies that those countries engage in do
    impact manufacturing here, but they are really good for
    American consumers; that is, that we end up with affordable
    projects that people want and buy, and products that are very
    affordable. When we put tariff barriers, we are simply driving
    up the very cost of the thing that we want.
        So I can it is tricky, and maybe that is why we can get
    this group together, and they can help us figure a way through
    this.
        With that, Madam Chairwoman, I yield back the balance of my
    time.
        Mrs. Bono Mack. Thank you, Mr. Pompeo, and thank you for
    your work on this issue.
        And recognize Mr. Guthrie for 5 minutes.
        Mr. Guthrie. Thank you very much. Appreciate being here.
        My background is manufacturing. I grew up, my dad worked
    for Ford. When I was in high school, they shut the plant down.
    So my dad decided--he started on the factory floor during the
    union, worked his way through college kind of thing, and after
    they shut the plant down, he said, well, Ford is going to
    outsource, and I know how to make them. Maybe I will start a
    business and make them for myself.
        So he started a business. After I got out of the Army, I
    worked with him until I came here for about 20 years building a
    business. So, I know aluminum die cast factories that do a lot
    of tool and die--tool and die companies.
        And the one thing--and the shock that is always kind of
    around my public policy, things I have been interested in, was
    I remember I showed up for high school football practice the
    first day of my senior year in high school, and people were
    saying, ``What are you going to do this year?'' And I said,
    ``Well, I want to go to West Point, I want to go to college.''
    I remember a friend of mine saying, ``Well, I got a friend that
    can get me on at Ford.'' And that was a legitimate economic
    decision for an 18-year-old to make in 1981 in our hometown. If
    somebody could get you on at Ford, you would make more money
    probably than I would going to college.
        By the time we graduated, the plant was shutting down.
        And so I think you hit the point about trying to find
    skilled labor particularly is that you can make a really good
    living in the--middle-class living in manufacturing, and I
    think what we are all longing to bring it back so we can have
    the high school graduates go make a middle-class living, but it
    is difficult to do that if you don't bring a certain skill. So
    I think that has got to be an important part of the mix, and I
    think a lot of that happens in State governments and community
    colleges and technical colleges.
        But people need to know there are $27-an-hour jobs out
    there. You don't have to go to college to get them, but you do
    have to bring something to the table in order to get that kind
    of wage.
        So that is just something that has always been on my mind.
    And that is why I love manufacturing, love seeing products
    made. Not just manufacturing. We were doing a hydro down in my
    district, and I was climbing over it the other day. And it is
    just you see people working and building something that is
    going to make a difference, and that is important. And I think
    we need to do what we can, if this bill is the right direction
    to go, to come up with not picking winners and losers, but what
    is the government doing to prevent people from winning.
        And that is the question, Mr. Mottle, you said that your
    assemblers--and that was the problem we had. We made end caps
    for a little electric motor. Well, the electric motor company
    moved to Mexico, and guess where the die castings went about a
    year or two later? To Mexico. So we were able to do--we figured
    out we have to be highly engineered products, and we have to
    have skilled people build them; if not, the unskilled people
    will build unskilled small products. So that is what we did and
    have been successful with it.
        But when your assembler says, I can't manufacture here
    because I am not competitive. So some of that is wages, and we
    don't want to have Chinese wage rates. I have been over there
    and seen. We don't want to pay those. And that is not building
    in a country for us. I mean, it is better for them. It is
    lifting some of their people up, but that would not lift our
    people up.
        But what else are they saying? I know wage rates is an
    issue that we need to make sure that--you are paying good
    wages; you just need people that have the skills, that have the
    productivity to demand that.
        So, what are your assemblers--I know assemblers typically
    have a lot of labor.
        Mr. Mottl. Yes. Actually, particularly in the telecom
    industry, a lot of that integration is fairly automated. It is
    pick and place on circuit boards and assembly. The circuit
    boards and----
        Mr. Pompeo. So labor is not driving their decision?
        Mr. Mottl. I would say it is a portion of that, yes, but I
    also think that there has got to be--again, I am not running
    their business, I am guessing here, but I think it has to be a
    lot to do with the taxes, tax implications, the cost of
    capital. I suspect that they get some very low-cost
    opportunities to buy that expensive assembly equipment that
    automates it and to build those factories to do that. And I
    think they just get a lot more support from sometimes other
    countries that are willing to court them.
        Mr. Guthrie. So they are not just moving to China for low-
    cost wages. There are a lot of things.
        Mr. Mottl. There is a total package.
        Mr. Guthrie. Anybody want to talk about that, because if we
    compare ourselves to China, Germany, Japan and our kind of
    first-world competitors, and any of you, why does--would we see
    different that they are doing different that we could do
    better? Obviously, we have the highest corporate tax rate. You
    just mentioned that. That is obviously something that has got
    to be fixed if we are going to be competitive. But anybody want
    to talk on any of the--let us start from left and go right, I
    guess.
        Mr. Singerman. I would just like to add that if you look at
    Germany, which is a high-wage, high-benefit, highly unionized
    country, they are one of the world's most dynamic manufacturing
    in export-based countries. One of the signature activities that
    they engage in is a very active apprenticeship program. So they
    have a very highly skilled level of workforce. And these are
    people who don't have to go to college, but are ensured of
    good-quality manufacturing jobs that are stable over time.
        One last thing. With the German economy, what the
    government has done has created a situation in which during
    times of economic distress, workers are not laid off, but their
    work hours are reduced. So the dislocation to both the
    individuals and the firms is reduced, and when the economies
    pick up again, they can rapidly ramp up their activities
    without having to go back into the marketplace and compete for
    additional workers.
        Mr. Guthrie. And thanks for that.
        Ms. Wince-Smith, I think you had a comment on that.
        Ms. Wince-Smith. Well, I would just add another dimension,
    building on the comments about capital cost structure and
    regulatory environments as being very critical, and we are
    competing on that, that the United States and Brazil are the
    only two major nations that do not have a territorial tax
    system. So when U.S. enterprises are producing three times the
    value of all exports in growing markets in the emerging world--
    and this is good because these are customers, and we want to
    have exports--and not being able to repatriate $1.4 trillion in
    offshore profits because of double taxation, that is certainly
    something that we need to change.
        And I was very interested that a whole group of Brazilian
    manufacturers said to their President Dilma Rousseff, we have
    to get a territorial tax system, because Brazil actually owns a
    lot of manufacturing enterprise in the United States, and they
    are, interestingly enough, not bringing that money back to
    Brazil. I hope more of it stays here. So that is one thing we
    need to do is a territorial tax system.
        Mr. Guthrie. In the time I have, I want to close. And you
    are right.
        Mrs. Bono Mack. The gentleman's time has expired. Thank
    you--and then some. But thank you very much.
        At this point we do conclude the panel. We are trying to
    get the next panel in before votes start on the floor, so we
    all appreciate very much your testimony today. And with that,
    thank you for being here. We look forward to working with you.
        And we will take a very brief recess while we seat the
    third panel and then begin immediately.
        So, thank you again.
        [Recess.]
        Mrs. Bono Mack. Again, each of our witnesses has prepared
    an opening statement that will be placed into the record. Each
    of you will have 5 minutes to summarize that statement in your
    remarks.
        And joining us on our second panel are Jack Fitzgerald,
    owner of Fitzgerald's Auto Mall. Welcome. And the Honorable
    Joan Claybrook, president emeritus of Public Citizen, and
    former NHTSA Administrator. Welcome to you both. Good morning,
    yes, still. Thank you very much for coming.
        With that, Mr. Fitzgerald, you are recognized for 5 minutes
    for your opening statement.
        Mr. Fitzgerald, would please begin your statement?

    STATEMENTS OF JACK FITZGERALD, OWNER, FITZGERALD AUTO MALL; AND
    JOAN CLAYBROOK, PRESIDENT EMERITUS, PUBLIC CITIZEN, AND FORMER
     ADMINISTRATOR, NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION

                      STATEMENT OF JACK FITZGERALD

        Mr. Fitzgerald. Thank you, Madam Chairman, Mr. Butterfield,
    members of the committee. I am very grateful for the
    opportunity to be here on behalf of NATA.
        I was a car salesmen starting in 1956. That is a long time
    ago, isn't it? I have been a car dealer since 1966. And I have
    lived these changes, and on behalf of NAD, I want to say I
    support 5859 for all of the reasons that Congressman Kelly
    gave. On behalf of Jack, I want to say that I was probably
    cheerleading for this regulation in 1972, because I thought,
    and still think, that even though she doesn't like me, I think
    she is doing an awful lot for this country, she and Ralph
    Nader, who is a friend of mine. I get along better with him;
    and Jack Gillis, whom I like to think is a good friend of mine,
    too. These people have done good things for this country.
        But remember, if you think back--and I am so old, I
    remember all of these things--but we were rethinking our souls
    in the 1970s, you know, the Vietnam thing. We were relooking at
    everything. Nobody ever came to this room to do something bad.
    The people that passed these regulations and passed laws, they
    come here to do what you do: the best for the country they can.
        And in those days, we had a lot of work to do in terms of
    automotive safety, gasoline mileage, overall efficiency of our
    business. So the people that went after us, the industry, they
    had a war to fight. Some of them still fighting it, but they
    won. Our cars are vastly improved, they are safer, they are
    more efficient. They do cost a lot more money, but they are
    wonderful products.
        So I am not here to say anything bad about Ms. Claybrook or
    the people that got this law. But I would point this out to
    you. There are lots of ways to get information on cars. My
    favorite is Consumer Reports, by the way, Consumers Union. This
    is The Car Book, written by Jack Gillis, who is a disciple of
    Ms. Claybrook. This one, by the way, was dedicated to you, did
    you know that?
        Well, if you look at how to shop for insurance in this
    book, this guy gives you--it is a real compilation of useful
    information for consumers.
        I have always been on the consumer side because they buy
    cars from me. That is rocket science, isn't it? But I believe
    very strongly in supporting all the consumer endeavors, because
    they buy cars from me. And there are a couple of pages here,
    and there is nothing about using that chart that we are talking
    about. And the reason for that, I used to get it from the
    insurance companies before the government got involved, and I
    thought it was kind of neat. You know, it would tell you,
    purported to tell you if the car you are buying is going to
    have more damage than the next car that you might choose. The
    problem is it is all historical and it is arcane, and if you
    are not an engineer--Ms. Claybrook has made herself into an
    engineer. She has studied stuff that I would never get to and
    my customers would never get to.
        It just didn't do anything for me. And I used to get the
    booklets from them. The Highway Loss Data Institute would send
    that stuff to you for free, or they did years ago. I imagine
    now you just get it online. I used to get it in the mail and I
    would make copies of it and give it to my salesmen and say,
    tell your customers about things like this. They will
    appreciate it. Well, I don't think my salesmen understood it, I
    think I probably misunderstood it, and I know the customers
    just didn't care. They didn't respond a bit.
        So, I did not purposely conceal it from them. If you look
    on my Web site, you will see I don't conceal anything. I would
    put Consumers Report on there, except they won't let me. But we
    tell them everything. That is how we do business. That is how I
    have always done business. And there was no concealing of this
    information from my customers.
        I want to say I think that this country owes a debt of
    gratitude to Ralph Nader and his army, of which she was one of
    the leaders, for moving the ball down the field to make us take
    safety seriously. There is no reason for people to be dying in
    cars. I am alive today because the government demanded that we
    have seatbelts in cars, shoulder harnesses. And the car that I
    total lost was a former car driven by Senator Byrd from
    Virginia. I used to be a Ford guy and I got the cars from Ford.
    This was a big Lincoln Continental. I hit an Oldsmobile 98. And
    I survived just fine because it had an interlock on it and I
    couldn't not use the seatbelt.
        So I will ever say a word in opposition to people who take
    on the effort to try and improve safety and improve efficiency
    in our automobiles. It is a tough job. But this regulation is a
    waste of money. And what is really historic is that you all are
    going to do something about it.
        Mrs. Bono Mack. Mr. Fitzgerald, we need you need to wrap
    up. I am sorry. We have a vote on the floor. We need to have
    you conclude, please.
        Mr. Fitzgerald. I am very grateful to you for considering
    this. I have been in this town since 1935 and this is the first
    time I ever heard of anybody repealing a regulation. I think it
    is wonderful. I think it is historic. I celebrate it, and I
    congratulate you for being willing to do it. I thank you.
        [The prepared statement of Mr. Fitzgerald follows:]

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        Mrs. Bono Mack. Thank you very much.
        Mrs. Claybrook, you are recognized for 5 minutes, please.

                      STATEMENT OF JOAN CLAYBROOK

        Ms. Claybrook. All right. Thank you very much for the
    opportunity to testify this morning. I am here to oppose this
    legislation to repeal the important consumer information law,
    subsection C of title 29, section 32302. What this does is
    provide consumers with comparative information about motor
    vehicle makes and models on the costs of repair damage, crash
    damage.
        Auto dealers are attacking this as wasteful and obsolete.
    And while I appreciate Mr. Fitzgerald's kind comments, I do
    disagree with him on this legislation. Dealers claim that the
    consumer never asks for the booklet that it is printed by the
    agency, the National Highway Traffic Safety Administration, and
    sent to dealers each year.
        First, let's lay to rest the issue of the absence of
    consumer requests for this booklet. I have no doubt that
    consumers don't ask for the booklet. They don't ask for the
    booklet because they don't know it exists. How could they ask
    for something they don't know anything about?
        The consumer information requirement has suffered from a
    veritable conspiracy of silence. Neither the dealers nor NHTSA
    make any effort to inform consumers about its existence or
    usefulness. It is a self-fulfilling problem. The real question
    is whether consumers want information about differences in
    insurance costs for different makes and models of vehicles
    based on differences in damage susceptibility and crash-
    worthiness.
        Has the NADA ever surveyed consumers to ask this question?
    Apparently not. Would anyone in this room want to speculate
    about how consumers would respond to that question? There is no
    doubt that consumers want accurate information about the cost
    to repair a vehicle they are considering buying because repair
    costs are a huge part of the expense of owning a car.
        Consumers are concerned about car insurance and repair
    costs, just like they are concerned about gasoline prices.
    Every Member of Congress knows how sensitive consumers are
    about that. Why hasn't the gas tax been increased in recent
    years despite the funding of the needs for the funding of the
    Highway Trust Fund? It hasn't because Members don't want to
    touch a sensitive consumer issue. But they are willing to
    eliminate this particular requirement of consumer information.
        It is interesting to note that in today's economic cost
    information, such as vehicle damageability, it is all the more
    important, because consumers are struggling to stay afloat
    financially. Indeed, NADA just last month attacked NHTSA's fuel
    economy standards saying that they cost too much and make cars
    unaffordable. But while the dealers are willing to attack fuel
    economy standards on cars, they ignore cost savings to
    consumers as they try to eliminate this requirement.
        And there is no doubt that the best place for consumers to
    get and evaluate collision damage information is at the point
    of sale, at the dealership. That is why the Congress passed the
    law in 1992 requiring dealers to distribute it. That is why the
    gas mileage requirement booklet is to be at the dealership.
    That is why in 2005 Congress added a requirement that
    information about NHTSA's new car assessment crash test be
    listed on the Monroney price sticker so that consumers would
    have this information available when they went to buy the car.
    What new information does Congress or NADA possess that is
    persuasive and documents that consumers don't want such
    information at the point of sale?
        It is important to remember that a satisfied consumer is a
    repeat consumer and dealers, as Mr. Fitzgerald mentioned,
    should be putting their consumers first. Dealers claim that the
    current law is a waste of money, but their bill would have
    NHTSA continue to collect and publish the comparative collision
    cost information and probably just publish it on the Internet,
    but not have it at the point of sale.
        Much of the cost of this program rests with NHTSA's
    collection and analysis of the information, and not with
    sending a copy to each dealership. I would say that in 1991 in
    the proposed rule NHTSA said that the economic effects of the
    requirements are minimal and no consumer auto dealer or anyone
    else objected to the cost of the distribution.
        Having NHTSA put the information on the Internet, as the
    Alliance of Manufacturers suggested yesterday, will do little
    to inform consumers in the throes of deciding which car to buy
    when they are in the showroom. Technical and price information
    must be available to the consumers at the point of sale, and I
    know that Mr. Fitzgerald is aware of the importance of that.
        The dealers claim that the current law is obsolete, but
    what is obsolete about getting collision insurance cost
    information by make and model when you buy a new car? As NHTSA
    pointed out in its proposed rulemaking, insurance data
    applicable to the collision portion of the insurance premium
    provided by the HLDI information on average represents 40 to 50
    percent of the total premium cost to a car buyer.
        The dealers' primary claim for eliminating the statutory
    requirement is that consumers aren't asking for the
    information, and that is an issue that is totally within the
    control of the dealers themselves. This attack by the auto
    dealers on consumer information about collision damageability
    is not the first time that NADA has tried to stop this program.
    As noted in the March 5, 1993 rule, NHTSA asked NADA to allow
    the agency to use this list of dealerships to expedite the
    mailing of the insurance cost booklet to the dealers but NADA
    declined to cooperate and NHTSA was forced to get the
    information from the Department of Energy consumer gas mileage
    guide.
        Also with regard to the obligation of dealers to make
    consumers aware of the insurance booklet, in 1993 NHTSA stated
    to ensure consumer awareness of the availability----
        Mr. Harper [presiding]. We are over time, if you can
    finish.
        Ms. Claybrook. OK, I will. Thank you very much.
        I would just say it is very important that consumers get
    the information from NHTSA, and that NHTSA could improve this
    information substantially and has not done so, nor have the
    dealers recommended that it be improved, and I would suggest
    that that is another important piece of this.
        Thank you very much for letting me testify.
        [The prepared statement of Ms. Claybrook follows:]

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        Mr. Harper. Thank you both for your testimony. I will now
    recognize myself for 5 minutes for questioning.
        If I could, Ms. Claybrook, certainly thank you both for
    being here, but in your opening statement, your remarks, you
    stated that there was a veritable conspiracy of silence on
    this. And I guess my question would be, this law goes back to
    1972. They were supposed to have this by 1975. You were the
    Administrator from 1977 to 1981. It is not implemented. NHTSA
    doesn't issue a final rule to implement this mandate until
    March 5, 1993. So how do we call it a veritable conspiracy of
    silence when NHTSA didn't even implement it for more than 20
    years?
        Ms. Claybrook. Well, that is the conspiracy of silence,
    because they didn't actually implement the law. And I will say
    that in the absence of having the insurance information
    available, which finally got produced by the Insurance
    Institute for Highway Safety with its HLDI program, it is
    called, then finally there was information available to use.
    But the Department of Transportation did not have such
    information available and did work during my administration to
    try and figure out how to do that.
        Mr. Harper. But you would agree that delay did include 4
    years with you as the Administrator of NHTSA?
        Ms. Claybrook. It did. It did. I would have liked to have
    been there longer and I would have taken more care of it.
        Mr. Harper. When you look at the information, and this
    information that we are talking about, which is a very small
    part of our regulatory structure here, when we are looking at
    it, it is just measuring and showing the actual property
    damage, the cost of the repair for that vehicle. It doesn't
    factor in the other things such as bodily injury or things of
    that in the insurance picture, is that correct?
        Ms. Claybrook. That is correct. It could, but the law does
    not require it to do that. But the crash worthiness data is
    available with the new car assessment program that NHTSA
    implemented that I started, and it is in fact in the 2005 law
    now at the dealership itself also on the Monroney price
    sticker.
        Mr. Harper. But the information that we have in the booklet
    that NHTSA prepares is not verified information. They just use
    the information that is provided by the Highway Loss Data
    Institute, is that correct?
        Ms. Claybrook. The Institute for Highway Safety, which is
    the insurance industry.
        Mr. Harper. Right. Which in that they include all the
    factors of costs that might impact, not just the crash, the
    repair cost of the cars, but the other things that are on there
    also.
        Ms. Claybrook. Right. They do.
        Mr. Harper. And so this is why we are looking at this one
    regulation that is just a minor point that really doesn't tell
    us. And even in the information that NHTSA prepares and you are
    certainly familiar with on here, it clearly states that
    therefore to obtain complete information about insurance
    premiums, you should contact insurance companies or their
    agents directly.
        Ms. Claybrook. Right, that is correct. And I think that
    that alone is a great piece of information for the consumer to
    have. And I know that Mr. Kelly, who testified earlier, said
    that he tells people to call their insurance agent. But in fact
    most dealers don't do that.
        Mr. Harper. I yield back my time, and right now I will
    recognize Mrs. Schakowsky for questioning.
        Ms. Schakowsky. Thank you so much. I appreciate your
    actually charming testimony, Mr. Fitzgerald, and I wanted to
    say that I think I have been a consumer advocate for about as
    long as Ms. Claybrook has been and we have worked together on
    many things, and I have to tell you, I was not aware of this
    document, and now having become aware of this document, I am
    even more interested. And let me give you an example.
        I am looking at a copy of it now, nicely color coded, which
    actually the NHTSA one is not, and perhaps the presentation of
    that document could be made more consumer friendly so people
    would understand.
        But if I am buying a car, let's say I had a teenage driver
    so insurance costs are really very expensive. And I look at the
    Chevy Malibu, and for all coverages it is at a 94, which is
    below the mean in terms of the various safety features and the
    collision costs, et cetera. And in the same category of four
    door models is the Kia Optima, which is 134, so above the mean
    in the cost, and that is 38 points difference. And when I look
    at bodily injury liability, the difference is 56 points between
    the Chevy Malibu and the Kia Optima. I would be interested to
    know that so that I could be forewarned.
        So my question really to you, Ms. Claybrook, is can you
    tell us exactly what are the benefits to the consumer of
    having, and I think in a much more consumer friendly way, at
    the point of sale this kind of information? To me it seems very
    important.
        Ms. Claybrook. Well, I think that the information that
    NHTSA publishes could be drastically improved, and particularly
    in the collision area. When you buy a new car, you buy
    collision insurance.
        Ms. Schakowsky. Right.
        Ms. Claybrook. And so 40 to 50 percent of the premium is
    collision insurance of your new car. So that is why this is
    important, because it is going to tell you that there is going
    to be vast differences between collision insurance for one
    model versus another model.
        Ms. Schakowsky. Right.
        Ms. Claybrook. That is the real importance of this in this
    particular format.
        I issued a standard for a 5-mile-an-hour no-damage bumper.
    It was eliminated by the Reagan administration. It is now 2 \1/
    2\ miles, which doesn't mean much of anything. It allows
    damage. So if there were a really strong regulation, which
    there should be, to protect vehicles in damageability, this
    would be less important. But there isn't. This is the only
    thing that is available to the consumer on damageability of the
    vehicle. That is why it is so important. And I am disappointed
    that the----
        Mr. Harper. If the chair may interrupt just to inform, we
    only have a minute left for votes on the floor. If you would
    like, we can come back.
        Ms. Schakowsky. No, we don't need to come back. I think
    that the point has been made, and certainly in the written and
    the oral testimony, that this is useful consumer information if
    it is made more accessible I think to consumers.
        Ms. Claybrook. I think that rather than eliminating it, I
    think it would be much more important for NHTSA to bite the
    bullet and make it more useful.
        Ms. Schakowsky. I agree. Thank you.
        Mr. Harper. The gentlelady yields back. I want to thank
    each of you for being here today, and remind members they have
    10 business days to submit questions for the record and ask the
    witnesses to please respond promptly to any questions that you
    may receive.
        The hearing is now adjourned.
        [Whereupon, at 11:55 a.m., the subcommittee was adjourned.]
        [Material submitted for inclusion in the record follows:]

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