[Senate Hearing 112-494]
[From the U.S. Government Publishing Office]
S. Hrg. 112-494
THE ROLE OF EXPORTS IN SMALL BUSINESS GROWTH AND JOB CREATION
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
UNITED STATES SENATE
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
AUGUST 11, 2011
__________
Printed for the Committee on Small Business and Entrepreneurship
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COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
ONE HUNDRED TWELFTH CONGRESS
----------
MARY L. LANDRIEU, Louisiana, Chair
OLYMPIA J. SNOWE, Maine, Ranking Member
CARL LEVIN, Michigan DAVID VITTER, Louisiana
TOM HARKIN, Iowa JAMES E. RISCH, Idaho
JOHN F. KERRY, Massachusetts MARCO RUBIO, Florida
JOSEPH I. LIEBERMAN, Connecticut RAND PAUL, Kentucky
MARIA CANTWELL, Washington KELLY AYOTTE, New Hampshire
MARK L. PRYOR, Arkansas MICHAEL B. ENZI, Wyoming
BENJAMIN L. CARDIN, Maryland SCOTT P. BROWN, Massachusetts
JEANNE SHAHEEN, New Hampshire JERRY MORAN, Kansas
KAY R. HAGAN, North Carolina
Donald R. Cravins, Jr., Democratic Staff Director and Chief Counsel
Wallace K. Hsueh, Republican Staff Director
C O N T E N T S
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Opening Statements
Page
Shaheen, Hon, Jeanne, a United States Senator from New Hampshire. 1
Ayotte, Hon. Kelly, a United States Senator from New Hampshire... 7
Witnesses
Johns, Hon. Marie, Deputy Administrator, Office of the
Administrator, U.S. Small Business Administration.............. 15
Felton, Wanda, First Vice President and Vice Chair, Board of
Directors, Export-Import Bank of the United States............. 21
Cox, James M., Regional Director, Northeast, Commercial Service,
United States Commerce Department.............................. 32
Friedman, Richard L., President and Chief Executive Officer,
Carpenter and Company, Inc..................................... 38
Wivell, Dawn, Former Director, Office of International Commerce/
International Trade Resource Center, State of New Hampshire.... 56
Moulton, Thomas, President and Chief Executive Officer, Sleepnet
Corporation.................................................... 64
Preston, Grace, International Sales Manager, Secure Care
Products, Inc.................................................. 69
Alphabetical Listing and Appendix Material Submitted
Ayotte, Hon. Kelly
Testimony.................................................... 7
Prepared statement........................................... 10
Cox, James M.
Testimony.................................................... 32
Prepared statement........................................... 34
Felton, Wanda
Testimony.................................................... 21
Prepared statement........................................... 24
Friedman, Richard L.
Testimony.................................................... 38
Prepared statement........................................... 42
Johns, Marie
Testimony.................................................... 15
Prepared statement........................................... 17
Moulton, Thomas
Testimony.................................................... 64
Prepared statement........................................... 66
President's Export Council
Letter regarding Transportation Infrastructure............... 84
Letter regarding Trade Facilitation Single Window............ 87
Letter regarding Ex-Im Financing............................. 90
Letter regarding Business VISAs.............................. 92
Letter regarding 21st Century Trade.......................... 94
Letter regarding SME Trade Capacity Export Assistance........ 99
Letter regarding Benchmarking................................ 107
Letter regarding IPR......................................... 109
Letter regarding Services Data............................... 113
Letter regarding Russia...................................... 115
Letter regarding Export Control.............................. 119
Letter regarding FTAs........................................ 121
Letter regarding Travel and Tourism.......................... 124
Letter regarding Veterans Retraining......................... 126
Preston, Grace
Testimony.................................................... 69
Prepared statement........................................... 71
Shaheen, Hon, Jeanne
Testimony.................................................... 1
Prepared statement.......................................... 4
Wivell, Dawn
Testimony.................................................... 56
Prepared statement........................................... 60
THE ROLE OF EXPORTS IN SMALL BUSINESS GROWTH AND JOB CREATION
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THURSDAY, AUGUST 11, 2011
United States Senate,
Committee on Small Business
and Entrepreneurship,
Washington, DC.
The Committee met, pursuant to notice, at 2:05 p.m., in the
Third Floor Auditorium, University of New Hampshire-Manchester,
400 Commercial Street, Manchester, New Hampshire, Hon. Jeanne
Shaheen, presiding.
Present: Senators Shaheen and Ayotte.
OPENING STATEMENT OF THE HON. JEANNE SHAHEEN, A UNITED STATES
SENATOR FROM NEW HAMPSHIRE
Senator Shaheen. Good afternoon, everyone. Senator Ayotte
and I are delighted to be here with all of you. Thank you for
coming out on such a beautiful afternoon to join with us in
talking about the importance of exporting to small business.
I thought I would begin by just telling you a little bit
about how today's hearing will work, and then I will do an
opening statement and Senator Ayotte will do an opening
statement. We will then turn it over to our panelists. We have
two panels today. As you can see, the first panel is seated
already, so we will spend about an hour with them and then
invite the second panel up to join us and we will then be able
to question each of our witnesses after they have finished with
their testimony and hopefully it will be an enlightening
discussion for all of us.
Let me also thank all of the witnesses who are here today,
particularly those of you who have come from far away to join
us on the panels. Of course, for those of you coming from
Washington, you really ought to be paying us for getting you
out of Washington and up to New Hampshire on such a beautiful
day.
[Laughter.]
We are delighted to have you all here, and I will introduce
the first panel and then Senator Ayotte and I will introduce
the second panel before they appear.
Let me also point out that this is an official hearing of
the Small Business and Entrepreneurship Committee and we have
members of the committee who are here with us who, again, work
for the committee. We have Katie Elder, who is with Senator
Landrieu, the Chair of the Small Business and Entrepreneurship
Committee, and Matt Walker, who is with Ranking Member Olympia
Snowe from Maine, and Monisha Smith, who is the Committee
Hearing Clerk. So we are delighted to have each of you here
today, and they will take very good notes and this will be part
of the record of the Small Business Committee.
While I am doing my thanks, I should thank the University
of New Hampshire for hosting us this afternoon. We are
delighted to be here in this very beautiful facility.
So with that, let me begin my opening statement and then I
will turn it over to Senator Ayotte.
I am really pleased to be chairing this hearing on small
business exporting with my colleague, Senator Ayotte. We both
sit on the Senate Small Business Committee. I think it is not
surprising that both of New Hampshire's Senators would be
interested in sitting on the Small Business Committee because
small businesses are so important to the economy of this state.
Over 95 percent of our employers in the Granite State are small
businesses and it is essential that we in the delegation focus
on ways that we can support your companies to provide good jobs
for the state's residents.
Of course, we all know that the last few years have been
particularly challenging for small businesses in New Hampshire
and across the country, and while many have weathered the
economic storm of the last few years, too many businesses
continue to feel the effects of the recession. Today we are
here to focus on one area that has really been a bright spot
for the national economy and especially for New Hampshire's
economy, and that is the opportunity to export.
Last year, exports from American businesses increased by 21
percent, contributing nearly half of the increase in our
country's gross domestic product. In New Hampshire, exporting
has become an increasingly important and promising part of our
state's economy. Last year, New Hampshire companies set a state
record for international sales and ranked first in the country
in export growth. New Hampshire firms increased their exports
by $1 billion last year alone. In a difficult economic climate,
this new revenue has provided an important boost to many of our
businesses. With 95 percent of the world's customers living
overseas, there is tremendous room for growth in exporting.
That is especially true for small businesses, because while
over 40 percent of large businesses export, only one percent of
small companies are engaged in exporting. So while New
Hampshire is doing well, we have the potential to do even
better.
Accessing foreign markets remains a challenge for small
businesses, but it is also a real opportunity. As I go around
the state, many small businesses, small business people that I
talk to tell me that trying to get into international markets
can really be daunting, because unlike big companies, small
firms simply do not have the resources that they need to
navigate those new markets that often have complex rules and
they are dealing with foreign cultures. Small businesses often
also do not have the time or resources to identify the right
global markets for their products, and many small businesses
interested in exporting have a hard time getting the financing
they need to make a deal happen.
The services available at the state and federal level can
play an important role in helping our small companies overcome
these challenges. That is what we are here today to talk about.
Federal and state programs that provide export assistance have
helped thousands of small businesses sell their products
overseas. I am looking forward to hearing more today about the
value of these programs and looking at ways that we can improve
the services that federal agencies provide to our small
businesses.
Of course, we also need to consider additional ways to
increase small business exporting. One common sense approach is
to make sure that the Federal Government is not unnecessarily
putting regulations in the way. For example, our export control
regime remains a complex set of regulations that were designed
decades ago for a Cold War environment. As a member of the
Armed Services and Foreign Relations Committees, I have pushed
to enact thoughtful reforms to our export control regime which
better allow our businesses to compete in a global trade
environment, and I know that the panelists we are going to hear
from today are also working toward that end.
At today's hearing, we will take a look at these and other
barriers to exporting that are faced by small businesses and
examine new opportunities for helping them reach foreign
markets. To help us do that today, as I said, we will hear from
two panels. The first panel will discuss the resources that are
available through the Federal Government and the ways that
those programs might be improved and be available to the small
businesses of New Hampshire. The second panel will provide a
New Hampshire perspective. We will hear about the importance of
exporting to the New Hampshire economy and about the
experiences that our businesses have had as they have tried to
work in international markets.
As policy makers, our job is to focus on the areas of the
economy that will help create jobs now and enhance our long-
term competitiveness. Helping small businesses export is a
bipartisan, common sense way to help create jobs now and put
the United States in a strong position in the global economy.
I look forward to a lively discussion and to hearing from
our panelists. I will ask Senator Ayotte if she would like to
make an opening statement and then we will introduce the first
panel. Senator Ayotte.
[The prepared statement of Senator Shaheen follows:]
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OPENING STATEMENT OF THE HON. KELLY AYOTTE, A UNITED STATES
SENATOR FROM NEW HAMPSHIRE
Senator Ayotte. Thank you so much, Senator Shaheen, for
chairing this very important hearing today.
I want to thank, of course, UNH for hosting us and I also
want to thank each of our witnesses who have come here to
testify today. We deeply appreciate your being here and taking
the time, and all of you who have come. I see in this audience
so many successful business people in our state, and we know
how hard you work and your feedback means a tremendous amount
to me and Senator Shaheen. We thank you all for being here
today.
With the Labor Department reporting last week that 9.1
percent of Americans were unemployed in July, Washington must
fully commit to helping create an environment that is conducive
to job creation. It is imperative that we put the right
policies in place to enable businesses to hire and grow, and
that includes eliminating onerous regulations and mandates and
opening markets around the world for American businesses,
especially our small businesses which comprise over 96 percent
of all New Hampshire businesses.
The economic struggles our country is facing have put the
issues of exporting and free trade on the front burner, and
that is why this hearing hopefully will be enlightening for
everyone here today. Our two panels, comprised of government
officials and small business exporters, will testify about how
trade policies and programs are impacting firms that are trying
to expand into foreign markets, home to 95 percent of the
world's customers.
Our first panel includes representatives from three of
roughly 20 Federal agencies that are involved directly or
indirectly in promoting United States exports. I look forward
to hearing about what the government is doing to increase small
business exports, which in 2008 accounted for 31 percent of all
U.S. export sales. I am especially eager to examine these
programs' effectiveness and how the Administration is
addressing barriers, like tariffs, regulatory challenges and
intellectual property violations by other countries that make
it difficult for small businesses to compete globally.
While I am pleased that we have the representatives here
from the Federal Government, I am also very eager to hear from
the second panel, which includes New Hampshire businesses with
real world experience in navigating the complexities of
exporting. I look forward to garnering their input on Federal
trade policies and programs and how we can be more effective in
not only helping them to succeed, but in getting more small
businesses to expand their operations into international
markets. With less than one percent of all U.S. small
businesses currently exporting, there is a tremendous
opportunity for us to increase our efforts in this area.
Last week when the Small Business Deputy Administrator
Marie Johns, who we are so fortunate to have here with us
today, stopped by my office in Washington, D.C., we discussed
the government's role in helping small businesses increase
exports. For instance, the Federal Government provides
technical assistance, training, data, and information,
financing in the way of export loans, matchmaking with sales
opportunities abroad, and is responsible for enforcing our
trade laws. I am interested to hear from both our panels,
especially the small business exporters who have used these
services, on the effectiveness of what we are doing right now
in the Federal Government's assistance and how we can improve
our efforts to increase our exports and job creation here in
New Hampshire and across the country.
I also want to say a few words about what Congress needs to
do to enable our businesses to grow exports. When we return to
Washington, D.C. after Labor Day, I am confident that we will
be debating the Colombia, Panama, and South Korean Free Trade
Agreements. By most accounts, the issue of temporary adjustment
assistance will be worked out and we will finally be able to
move forward and enact these crucial Free Trade Agreements,
which will be significant and have a positive impact on New
Hampshire's economy.
The U.S. International Trade Commission estimates that
passing the trade agreements will increase United States
exports by $13 billion and create 75,000 jobs, all without one
dime of new government spending. I am eager for the Senate to
finally bring these agreements forward for us to debate them
and to have votes on them.
New Hampshire is well positioned to benefit from Free Trade
Agreements. Our state exports to over 160 countries, and
exports from New Hampshire were up 43 percent in 2010 over
2009, as Senator Shaheen mentioned. This increase was number
one in the nation. We are all proud of that. Of course, we want
to do more. This should be a source of pride for all of us, and
our pro-business tax policies and mindset have set us apart
from other states in this region, and it is very important, of
course, that we preserve the New Hampshire advantage.
However, the economy is not even close, to those of you who
I know are here who are working hard in your own businesses, to
where we know it needs to be. I read an August 1 report that
the manufacturing sector had its weakest growth in two years.
It was also reported by the Department of Commerce that factory
orders in June declined 0.8 percent. I am concerned that these
are alarming signs that the economy could possibly weaken
further over the next year.
Jobs are not created in a vacuum, and we need private
sector economic growth to create jobs. Increased export sales
will aid both of those things, but it is not a cure to
everything that we need to accomplish. Uncertainty is killing
jobs as businesses are keeping their money on the sidelines,
and I have heard it from so many businesses, large and small,
both in Washington and here in New Hampshire. I came across a
Harris Interactive poll commissioned in July stating that 85
percent of small business owners believe that the economy is on
the wrong track versus only eight percent who believe that we
are on the right track. Furthermore, 49 percent of these small
businesses claim that uncertainty is their top challenge to
what they are trying to accomplish at the moment.
When asked how reasonable Federal Government regulations
are on small businesses, 9 percent said that government
regulations were unreasonable, and 85 percent worried about the
impact of Federal regulations and taxes on their ability to
grow.
However, I was encouraged to see statistics stating that,
by a two-to-one ratio, small business owners project that
America's best days lie ahead. I wholeheartedly share this
feeling. We need that feeling of confidence to move forward,
and now is the time for policy makers to provide small
businesses the tools that they need to succeed, such as passage
of the Free Trade Agreements and then to get out of the way and
watch them thrive.
Again, I want to thank Senator Shaheen, my colleague, for
chairing this hearing and thank all of you for being here
today.
[The prepared statement of Senator Ayotte follows:]
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Senator Shaheen. Thank you very much, Senator Ayotte.
Now, I would like to introduce our first panel of
witnesses. As I said, most of them have come from outside of
the state today, so we are really delighted that each of you
are here.
First, I am very glad to welcome the Honorable Marie Johns,
the Deputy Administrator of the Small Business Administration,
to New Hampshire. As I mentioned, New Hampshire is a small
business state, something I know you already know, and the
services that the SBA provides here are critical. Ms. Johns has
been serving as Deputy Administrator of this important agency
since June of 2010, when she was unanimously confirmed by the
Senate, and that says something about her and her background.
Previously, she served as President of Verizon Washington.
Recently, Ms. Johns has been focused on the implementation of
the Small Business Jobs Act, including the SBA's trade and
export program, so thank you very much for being here. I will
just introduce the rest of the panelists and then ask Ms. Johns
if she would give her testimony.
I would also like to welcome Wanda Felton, who is the First
Vice President and Vice Chair of the Export-Import Bank of the
United States, the Ex-Im Bank. The Ex-Im Bank is the lead
agency for providing financing and insurance for non-
agricultural exports. Nominated by President Obama and again
quickly confirmed by the Senate, Ms. Felton has served over 20
years--has 20 years of investment and banking experience--
sorry--and alternative investment advisory experience,
something very important these days.
Next, I would like to welcome Jim Cox, the Northeast
Regional Director for the Department of Commerce's Commercial
Service. Jim has over 20 years' experience helping businesses
sell their products overseas and has been the Northeast
Regional Director since 2005. You can tell by all of these
introductions that we have a wealth of experience here at the
table. The Commercial Service is the lead agency providing
assistance services for U.S. non-agricultural businesses, and
just to show you how widespread they are, they have trade
specialists in 107 United States cities and in more than 80
countries, and their specialists work with U.S. companies to
help them get started in exporting. Today, Jim will provide us
with more information about the services available through the
Commercial Service.
And finally, it is my distinct pleasure to introduce
Richard Friedman. Dick Friedman is a very successful
businessman and entrepreneur who is based in Boston. He has
developed many hotels, including the Charles Hotel and the
Liberty Hotel, for those of us who know Boston here. He is also
working on a project here in New Hampshire, helping redevelop
the Hanover Inn. And in his spare time, what little he has of
it, Mr. Friedman serves on the President's Export Council,
which advises President Obama on ways to increase American
exports, especially among our small and mid-size companies. He
is the Vice Chairman of the subcommittee of that group that
focuses on manufacturing services and agriculture and serves on
the subcommittee focused on small- and medium-sized
enterprises.
So I look forward to hearing your testimony, Dick, and it
is very nice to welcome you to New Hampshire. Dick and I have
been friends for a long time.
Now, I would like to ask Marie Johns if she would begin her
opening testimony. We have asked each of our panelists to try
and keep their testimony to about five minutes, so we hope that
everybody can stay relatively, reasonably within that time
frame. Thank you very much, and I am delighted to have you
begin.
STATEMENT OF HON. MARIE JOHNS, DEPUTY ADMINISTRATOR, OFFICE OF
THE ADMINISTRATOR, U.S. SMALL BUSINESS ADMINISTRATION
Ms. Johns. Thank you, Senator Shaheen, Senator Ayotte. I am
honored to be here to testify this afternoon at this very
important hearing.
I am especially pleased to be in New Hampshire to talk
about exporting because your state truly is leading the way
with regard to international trade. As has already been
mentioned, exports increased 40 percent in New Hampshire last
year, which is the largest Statewide increase in the country.
SBA plays an important role in supporting New Hampshire
small businesses. Already in fiscal year 2011, our resource
partners have assisted over 4,000 small businesses through
loans and counseling here in your State.
I want to acknowledge, Senator Shaheen, the fact that you
have been such a strong leader on international trade issues,
starting with your time as Governor, and certainly in your
leadership on the Small Business Committee, and we thank you
for your support of the Small Business Jobs Act.
Senator Ayotte, it has been a pleasure to meet you and to
learn of your important work and your leadership roles on the
Small Business Committee in the Senate as well as the Commerce
Committee, and we know that small businesses are well poised
for continued growth through exporting here in your state and
the SBA has an important role to play.
With growth in technology and global connectivity, new
markets are continually opening for small businesses. In fact,
since 2003, America's small business exports have grown about
80 percent. They now account for nearly $500 billion in annual
sales. However, small businesses still only represent about 30
percent of the country's exporting in our country, and of those
small businesses who are exporting, the vast majority only
export to one country. So that is why at the SBA our goal is to
increase both the number of companies exporting as well as the
number of countries to which they export.
SBA has a variety of tools to support small business
exporting. We have loan programs specifically designed for
exporters and we have staff co-located with the Department of
Commerce and the U.S. Trade Representative at 20 U.S. Export
Assistance Centers, or USEACs, around the country. Meanwhile,
as the agency that serves America's small businesses, we
support small business exporters through our traditional loan
and counseling programs.
The Small Business Jobs Act gave the agency new tools to
increase our support for exporting. It elevated our Office of
International Trade, increased the size of our international
trade loans, and provided funding for export counseling through
our resource partners. The Jobs Act also gave the SBA $30
million a year for two years to award State Trade Export
Promotion Grants, or STEP Grants, and we expect to have those
dollars in the hands of states in September.
In his first State of the Union Address, President Obama
announced the National Export Initiative and his goal of
doubling U.S. exports in five years. This is a very important
goal. Increasing exports will strengthen our economy, both
through our global competitiveness and create good jobs. In
support of the NEI, SBA is working with our partners in the
Trade Promotion Coordinating Committee, or the TPCC, to connect
Federal resources and make them more accessible to small
businesses. Our plan has four components: identify, prepare,
connect, and support.
The first step is identifying small businesses that are
ready to export. SBA and our partner agencies have done
extensive outreach to identify and motivate small business
exporters. For example, the Department of Commerce and SBA have
worked closely together to identify and refer new clients to
the most appropriate resources.
The second step in our plan is preparing these small
businesses with counseling and technical assistance. To that
end, Federal agencies have collaborated to, quote, ``train the
trainers,'' unquote, offering export training for SBA resource
partners.
The third step is connecting small businesses with export
opportunities. For example, in September of 2010, we launched a
series of export matchmaking events, which have been very well
received.
Finally, the fourth step is continued support for these
small business exporters with loans and counseling. This
includes an increased presence at international trade shows,
coordination of marketing materials, and ongoing outreach to
lenders to encourage their participation in export financing
programs.
These efforts are having a real effect on the ground in
states like New Hampshire. Peter Kermond, for example, owns
Burnham Boat Slings in Hanover. They make uniforms for crew
teams, boat covers, and other accessories. And last year, the
company used two SBA Export Express loans to support a number
of foreign orders. Thanks to the Small Business Jobs Act, those
loans carried a 90 percent guarantee, and the new orders are
helping employ four full-time employees, three part-time
workers, and Peter plans to bring on two more workers in the
near future. Stories like that make me confident of our
progress.
Total U.S. exports increased 17 percent from 2009 to 2010
and we are looking forward to building on that success, and I
would like to thank you both for your support, for hosting this
important hearing, and I am happy to answer your questions.
[The prepared statement of Ms. Johns follows:]
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Senator Shaheen. Thank you very much.
Ms. Felton.
STATEMENT OF WANDA FELTON, FIRST VICE PRESIDENT AND VICE CHAIR,
BOARD OF DIRECTORS, EXPORT-IMPORT BANK OF THE UNITED STATES
Ms. Felton. Thank you. Senator Shaheen and Senator Ayotte,
thank you for inviting me here to testify in Manchester about
how the Export-Import Bank is supporting small business
exporters. We are very grateful to have this opportunity to
come here and get the word out about how we can help more small
businesses grow their exports and create jobs.
I am honored to be here and would like to acknowledge each
of you for your support of small businesses. The fact that you
are hosting this event is evidence of your commitment to
helping small businesses and your awareness of the role exports
can and must play in job creation.
Both Senators and Ms. Johns commented on New Hampshire's
export growth in 2010, so I will confine my time to talk about
what Ex-Im Bank is doing to help small businesses across the
country and how we are directly impacting small businesses in
New Hampshire.
In 2010, Ex-Im Bank supported $126 million in exports from
New Hampshire. Of this amount, 89 percent directly supported
small businesses. The amount authorized for companies in New
Hampshire increased dramatically, from roughly $5.5 million in
2009 to over $65 million in 2010. While these numbers are
impressive, we are making every effort to do more. We are a
small agency, but we pack a big punch, and we do it at no cost
to taxpayers. We are financially self-sustaining. In fact, we
have returned more than $3.4 billion of surplus to the U.S.
Treasury in the last five years.
With two months left in the fiscal year, we are on track to
achieve a third straight year of record growth in our support
for U.S. exporters. So far in fiscal year 2011, Ex-Im Bank has
supported more than $31.5 billion of export sales and 213,000
American jobs in communities across the country. These numbers
include more than 2,500 transactions that went to finance small
business exports.
Ex-Im Bank support for small businesses has increased 58
percent, from $3.2 billion in 2008 to a record $5.1 billion in
2010, and I would like to point out that it is important to
recognize that these numbers do not capture indirect support
for small businesses. We estimate that Ex-Im Bank provided an
additional $1.7 billion in 2010 to small businesses that acted
as suppliers to larger companies which were exporting. Our
support for these hidden exporters is not captured because the
larger company is the exporter of record.
We have a Congressional mandate to allocate at least 20
percent of our authorizations to small businesses. We have met
this mandate in the past couple of years. While 20 percent of
our dollars go to small businesses, small businesses account
for more than 80 percent--85 percent, I am sorry--of our
transactions.
We work hard to reach out to small businesses. I said
earlier that we punch above our weight. We have been able to do
this with new initiatives designed to increase the awareness of
our programs through more proactive outreach, speed up our
response time, and make sure we are offering products that
really meet the needs of small companies.
Without getting into detail, because we have packages
available that will provide the specifics, Ex-Im Bank offers
three basic products to help small businesses finance their
exports. Direct loans, or buyer financing, will lend directly
to foreign buyers to help U.S. businesses compete more
effectively for sales. Working capital guarantees--we provide
guarantees to banks so small business exporters can fulfill
orders. And export credit insurance--this program allows small
companies to extend credit terms to their customers by
protecting them against the risk of nonpayment. Our insurance
covers default for both political and commercial reasons. The
ability to offer credit terms can help a small business become
much more competitive in winning sales.
These are our core products, but we have introduced many
new products, again, to speed up turnaround time and to be more
responsive to small companies' real needs. We have introduced,
for example, Export Express Insurance. Express Insurance
streamlines the application process for export credit insurance
and makes it easier for small businesses to finance their
short-term receivables. Supply chain financing is targeted at
those hidden exporters I spoke of earlier, small companies that
need working capital to finance receivables that are due from
larger companies that are exporting. Finally, Renewable Express
is a streamlined process to finance exports involving renewable
energy projects.
With that overview, I would like to share a few examples of
how Ex-Im Bank has helped small businesses in New Hampshire. In
2010, we launched Global Access for Small Business. These are
forums that we hold all over the U.S. to improve our outreach.
We have held 20 so far. Senator Shaheen, I believe you attended
our first one, which was held here in New Hampshire last
January. We do these in cooperation with other city and state
partners. Here in New Hampshire, we have worked closely with
the New Hampshire Office of International Commerce.
As I mentioned, we kicked off our first event in
Portsmouth, New Hampshire, and that forum, I think, really does
illustrate what we can accomplish. Bill Skelley of Skelley
Medical here in Hollis, New Hampshire, stood up at this event
and said his company could double his exports by offering open
account terms. We processed his application in two weeks and
approved $250,000 in Export Credit Insurance. Since then, we
have increased the policy to more than $1 million and he is
able to sell to India and Mexico.
Land and Sea, Inc., in Concord manufactures dynometers,
which is engine testing equipment that tests the horsepower of
cars, bikes, airplanes, and the like. Land and Sea has used our
working capital guarantee for two years. That company is
exporting to Taiwan and Malaysia and the U.K. Exports now
comprise almost 50 percent of its sales, and that is up from 17
percent two years ago.
Just this week, and you will excuse me, please, if I
butcher this, Monadnock Paper Mills----
Senator Shaheen. Very good.
[Laughter.]
Ms. Felton [continuing]. In Burlington was awarded a policy
through our Express Insurance Program. The company manufactures
specialty paper and paper products and has been in business
since 1819. It employs 325 people. It has three customers in
China and Hong Kong, but has never extended credit before to
its customers. Now it is able to meet the competition by
offering credit terms in order to increase its sales.
And finally, I will mention GT Solar of Merrimack. This
company manufactures materials and equipment to produce the raw
material for solar cells and other industrial uses. GT Solar
exports to Asia, mostly China, and is a real success story
because when the company first began using our products, it was
a small business. Now, thanks in part to its growth in exports,
GT Solar has graduated and no longer qualifies as a small
business. That is the kind of impact we are looking to have,
and I would like to just thank you again for having us here.
[The prepared statement of Ms. Felton follows:]
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Senator Shaheen. Thank you very much.
Mr. Cox.
STATEMENT OF JAMES M. COX, REGIONAL DIRECTOR, NORTHEAST,
COMMERCIAL SERVICE, UNITED STATES COMMERCE DEPARTMENT
Mr. Cox. Thank you, Senator. Thank you, Senator Shaheen and
Senator Ayotte, for the opportunity to testify today on the
role of the International Trade Administration's U.S. and
Foreign Commercial Service and supporting the efforts to
increase U.S. exports, assist in small business growth and
creating jobs.
The Obama Administration, in March 2010, announced the
National Export Initiative, which sets as a goal to double
exports by the end of 2014. We are on pace to reach that goal.
Overall, in the first five months of 2011, exports of goods and
services are up over 16 percent from last year. U.S. goods and
services in 2010 comprised nearly 13 percent of our national
Gross Domestic Product, GDP, an increase from 11.4 percent the
previous year.
New Hampshire in particular highlights this success. The
total value of goods and services exported from New Hampshire,
as you mentioned, increased 43 percent in 2010, over 2009, to a
record $4.4 billion. New Hampshire led the nation in export
growth in 2010. Through the first five months of 2011, New
Hampshire merchandise exports were 12 percent higher than the
same period in 2010.
As the key export promotion agency, the U.S. and Foreign
Commercial Service fosters economic prosperity, enhances jobs,
and strengthens national security through a global network of
our outstanding trade professionals. Our international network
of about 1,450 trade specialists provides comprehensive export-
focused business counseling and supports the small- and medium-
sized businesses, SMEs, throughout the United States. We are
located in over 100 U.S.-based USEACs, U.S. Export Assistance
Centers, and in 129 countries--excuse me, 129 embassies and
consulates in nearly 80 countries. Last year, we assisted 5,600
companies in exporting for the first time, of which 85 percent
were small- and medium-sized enterprises.
I am very proud that we have here locally in New Hampshire
Director Justin Oslowski and International Trade Specialist
Taylor Little of our New Hampshire USEAC, located at UNH-
Durham, to counsel local exporters on a range of issues
focusing on promoting their products internationally, sales,
and market development. This team works in close collaboration
with the state and state agencies, such as the New Hampshire
Office of International Commerce and other local organizations
to deliver seamless and complementary services to small- and
medium-sized businesses.
One example of a company that successfully used our
services is Sky-Skan, a Nashua, New Hampshire-based
manufacturer. Sky-Skan focuses heavily on export opportunities
for planetarium theater systems. The company learned of a large
public tender and installation of a new theater system at the
Copernicus Science Center in Warsaw, Poland. By participating
in the Commercial Service Trade Winds Trade Mission Program to
Poland in 2009, Sky-Skan benefitted from the customized
matchmaking appointments arranged by our New Hampshire and
Warsaw offices using the Gold Key Program. The meetings
included visits with officials from the Copernicus Science
Center and other contacts in the industry. With innovative
products and the Federal assistance provided, Sky-Skan won the
bid and signed a contract for the installation of a new theater
system in December of 2010. This single success resulted in a
sale worth more than $750,000.
In addition to companies like Sky-Skan, the USEAC in New
Hampshire has worked with more than 1,500 exporters. In the
last ten months, the office provided more than 300 individual
counseling sessions for New Hampshire exporters, 100 of which
have been in partnership with the state's Office of
International Commerce.
The New Hampshire USEAC and its partners host regular
events attracting both local and national audiences. Two
locally held programs include the standing room only U.S.
Export Controls training session. This event was so successful
that the office will again hold a session in April of 2012. The
second is a recently offered Value-Added Tax webinar focusing
on the European Union. More than 90 companies were trained on
international pricing and tax policies.
As we look for more opportunities to increase the
competitiveness of U.S. businesses, the Obama Administration
has made passage of the pending agreements with Korea,
Colombia, and Panama a priority, as Senator Ayotte mentioned.
USEACs work with companies and partners in the communities to
help them realize the benefits of existing trade missions and
trade agreements. The New Hampshire USEAC guides local
companies through the international documentation process. This
counseling provides especially important guidance on issues
such as the NAFTA Certificates of Origin. These are
requirements for New Hampshire exporters to our two largest
trading partners, Mexico and Canada.
To increase the economic competitiveness of our businesses,
the U.S. Foreign and Commercial Service is working diligently
each day to connect those SMEs with the 95 percent of consumers
living outside the United States. New Hampshire businesses have
the full support of the U.S. Government in conducting and
contacting potential exporters to global partners and markets.
Again, I thank you very much for the opportunity to appear
before you and I look forward to your questions. Thank you.
[The prepared statement of Mr. Cox follows:]
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Senator Shaheen. Thanks very much.
Mr. Friedman.
STATEMENT OF RICHARD L. FRIEDMAN, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, CARPENTER AND COMPANY, INC.
Mr. Friedman. Thank you, Senator Shaheen and Senator Ayotte
and members of the committee, for inviting me here today. My
name is Richard Friedman, and I am President of a Boston-based
hotel development firm working on a national level on a variety
of hotel types. We have many hotels in Boston and some across
the country, including the Charles Hotel and the Liberty Hotel,
and right here in New Hampshire, we are now redeveloping the
Hanover and the Dartmouth, my alma mater.
I was appointed by President Obama as a member of the
President's Export Council. On that council, I am Vice Chairman
of the Subcommittee on Manufacturing, Services, and
Agriculture, which includes tourism policy. The President's
Export Council has some 18 private sector unpaid members, many
from large businesses--the chairman of Boeing, the chairman of
Xerox, Ford Motor Company, UPS, Met Life--and a few small
people like me, and the PEC also has eight members of Congress,
five Senators and three House members, and some Cabinet
Secretaries, as well, and we meet periodically.
The PEC advises the President on increasing United States
exports and competitiveness on an advisory basis. In his
National Export Initiative, the President asked the council to
explore methods to double exports over the next five years, or
actually four to go. We have made great progress to this goal,
and in 2010, exports increased 17 percent. One-point-eight
trillion dollars of exports of goods and services represents
the second highest annual total on record, and in May of this
year, exports of services are up again 14.9 percent to $505
billion.
As a PEC member and hotelier, I have made it my personal
goal to try to help our country's tourism, hospitality, and air
transit industries. Most importantly, as a small business
owner, I have tried to help these businesses as a member of the
PEC Small- and Medium-Sized Business Engagement Subcommittee.
Increasing the export capacity of these enterprises is
essential if we are to double exports. Small- and medium-sized
exporters, SMEs, are typically credited with creating three out
of every four jobs in the United States, and some SME exporters
currently account for four million U.S. jobs, and they tend to
grow significantly faster and larger than non-exporting
businesses.
We are making great strides in helping our SMEs to export.
In 2010, almost 5,600 companies exported for the first time,
and their exports--and increased their exports abroad. Eighty-
five percent of those companies were SMEs. But we have a huge
room for improvement. Only one percent of exporters are small-
and medium-sized businesses.
In the last year, the PEC has adopted 15 letters and sent
to the President in the areas of export controls, FTAs, terms
of promotion, veterans' retraining, benchmarking export
promotion, lots of other things, as well. If these
recommendations were to be adopted, we estimate we could
increase U.S. exports by $630 billion.
In particular, I would like to talk for a moment about the
tourism sector of exports. Nationally, one in nine jobs is
related to tourism or travel. In New Hampshire, I estimate that
it is probably substantially more than that as a ratio. It may
sound odd, but when a foreign traveler comes to the United
States, it is an export because they are bringing money here,
spending it on all kinds of goods and services--hotels, travel,
meals, shopping, et cetera. Northern New England is a very
attractive international tourist destination. In the post-9/11
years, our national tourism performance has suffered very
dramatically and we have lost 68 million visitors and $500
million in lost spending plus 400,000 lost jobs and $32 billion
in lost tax revenues.
The President's Export Council is working closely with the
President and the Administration in an attempt to reverse these
trends. There are two primary methods by which this is
occurring. One is, for the first time ever, is to advertise
America as a destination, and the other is to shorten visa
waiting times at our embassies and train our Border Patrol
people and others in being more customer friendly.
In the early years of the Obama Administration, the
President signed the Travel Promotion Act--thank you, Senator
Shaheen, for your support of that--which is a public-private
partnership now just getting underway, yet to run their first
ad, to promote travel to the United States. It is a very
promising effort.
Secondly, efforts are underway with the Department of State
to reduce wait times to obtain visas at our embassies and in
some cases to expand the locations at which travelers can
obtain visas.
Increased tourism has the potential to have dramatic impact
on Northern New England in many regards. Hotel and travel
destinations in Northern New England are well equipped to
receive foreign visitors. For example, there is a great
potential for people to come--foreigners to come here and watch
the New Hampshire Presidential primary and see our democracy at
work.
Senator Shaheen. We like that.
Senator Ayotte. We love that, yes.
[Laughter.]
Mr. Friedman. Well, the hoteliers like it, too. On a
national basis, if we just doubled the arrivals from the 36
visa-waivered countries, over $200 billion in spending would be
generated. Tourism would be helped dramatically in New
Hampshire.
The United States is in a great position to increase our
exports and foreign travel business. Currently, each Euro is
worth $1.40, which makes our goods and services a true bargain
for foreigners. Worldwide, people want to buy American, and now
with our currency conversion levels, our trade policy makes us
well positioned for export growth.
Small- and medium-sized enterprises face unique barriers to
exporting that require targeted action. The PEC's SME Business
Engagement Subcommittee has held roundtables around the country
with small businesses to explore obstacles to exporting. The
recommendations we came up with, adopted by the full PEC in
March, fall into three categories: education, access to
capital, and regulatory and cost burden issues.
Hundreds of state and local organizations and agencies are
engaged in export outreach, but the findings by the SME
Subcommittee indicate prominent and persistent education gaps
and confusion among small businesses on a broad range of export
issues. We recommend that the Federal Government provide
catalyst grants to foster regional export development strategic
planning among identified chambers, economic development
centers, academia, state and local governments, et cetera.
The second challenge that we face is lack of access to
information. We recommend the development of new and maximizing
of existing public-private partnerships and acceleration of
expansion of on-demand educational resources on export trade
channels such as trade.gov, YouTube, YouTube videos,
export.gov, USTR, et cetera.
The third challenge we face is a continuing misperception
about the Free Trade Agreements, as the Senators have
discussed, and there is significant disconnect in which the
people do not understand what these Free Trade Agreements
actually mean. We recommend continuing to work with all the
International Association of Manufacturers and other people to
get these bills passed.
We also face a persistent lack of access to capital for
small businesses. The current loan initiation process lacks
transparency and takes too long. We recommend expediting the
increase in delegated lending authority to existing trade
finance lenders, as noted in the Small Business Act of 2010,
conducting finance trade training to community banks to include
receptivity to working with small exporters and working more
closely with small businesses in training them to prepare
documents for international transactions before going to their
financial institutions.
There is also a lack of support for young small businesses.
We recommend establishing formal incubator programs at the
Federal Government level that specialize in working with young
SMEs to fund their working capital and export finance needs
during the start-up process. It is equally important to develop
these young businesses, and we have encouraged additional
support of the Young Entrepreneurship Programs at community
colleges.
On the regulatory side, we have overcome cumbersome export
compliance regulations, procedures, and policies. The
President's Export Control and Regulatory Reform Initiatives
are a step in the right direction, but we need to create one-
stop shops where small businesses would be able to find
guidance on all matters related to exporting, including
international trade regulations.
We also need to address the prohibitive cost of
intellectual property rights protection, which are inordinately
high for small businesses. We recommend working within the
World Trade Organization to improve the simplicity, speed, and
cost of registering and maintaining international intellectual
property.
A final challenge deals with the rules of origin, which are
complex and inconsistent, and it is difficult for small
businesses to be export compliant or take advantage of the Free
Trade Agreements. SMEs just do not have the staff to manage or
the market power to leverage suppliers to gain proper origin
information from their supply chains. We recommend that the
Administration bring this to the attention of the World Trade
Organization and other bodies to standardize their rules of
origin.
As you can tell from these recommendations, small
businesses are unique in their needs and ability. They often
lack the resources available to large businesses, and,
therefore, it is critical that specific programs are rolled out
under the NEI with special consideration given to easing the
burden on small businesses so they can unlock their full
potential.
The long and short is that America must learn to think of
itself as an exporter, just like Germany, China, and Japan. We
are uniquely positioned in the world to make this happen. We
can be rightly optimistic about our trade and export potential,
and the President's goal of doubling exports in five years is
worthwhile and realistic.
Thank you very much.
[The prepared statement of Mr. Friedman follows:]
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Senator Shaheen. Thank you, Mr. Friedman, and thank you,
each of you, for your testimony.
Now, if we were in Washington, the way this would work is
we would have a little timer and each of us would get about
five or seven minutes of time to ask questions before we would
turn. I would get that, and then I would turn to Senator Ayotte
and she would also get that amount of time. But since we are
not there, we thought it might work better here if we would
just alternate questions, and so that is what we are going to
do, so I will ask the first question and then turn it over to
Senator Ayotte.
Mr. Friedman talked about the President's Export Council
and some of the recommendations and the challenges that it
identified, one of which is the bureaucracy as a hurdle to
small businesses taking advantage of resources at the Federal
level. Can I ask each of you if there are ways in which you all
cooperate as agencies and if there are other ways in which you
think you could better cooperate as you look at how we improve
exports and access for businesses to exports? I will just ask,
I do not know who wants to go first. Ms. Johns, would you like
to go first.
Ms. Johns. Certainly, Senator Shaheen. I was listening with
great interest to Mr. Friedman's testimony, which I think was
very well done. What was particularly of interest were some of
the issues that he outlined, and I was thinking about how the
resources in the Small Business Jobs Act has actually given us
more bandwidth to address some of those very issues, and I will
certainly be happy to talk in greater detail about those.
But the issue of coordination is a very important concern
that I know you both have, and what I want to assure you is
that the SBA works very closely with the Department of
Commerce, with Ex-Im Bank, and we look at ourselves as part of
a system that the Federal Government has in terms of resources
to support small businesses in exporting.
We--the business community is not monolithic. We are not
focused on the Raytheons or the Lockheeds, who exporting is
important to them, but we are focused on the Burnham Boat
Slings, those companies, and they need different resources than
do larger companies, and that is why the SBA's participation in
this important support for small businesses is so critical. And
again, we thank you for the support of the Small Business Jobs
Act because that allowed us not only to improve and give
greater heft to our loan programs, it also gave us
opportunities to expand our counseling and technical assistance
programs and to create a stronger, independent Office of
International Trade at the agency.
I will give you an example of how we are coordinating
through the Trade Promotion Coordinating Committee. There is a
Small Business Working Group which Karen Mills, the SBA
Administrator, chairs, and it is through that mechanism that we
are working closely with Ex-Im Bank, with the Department of
Commerce, with the U.S. Trade Representative. We coordinate our
efforts to make sure that we are providing that continuum of
service for businesses, whether they are small, and as was
mentioned, businesses who grow into larger businesses and then
may appropriately be more in the domain of the Department of
Commerce.
Mr. Friedman mentioned about the Rules of Origin and some
of the difficulties that small businesses have in terms of
getting the information they need. We have worked closely with
our Federal partners on developing tools to address just that.
The Free Trade--there is a Free Trade Agreement Tariff Tool
that was unveiled in May of this year. We worked with the
Department of Commerce and with the U.S. Trade Representative
to develop that tool, and what it is, it is an online tool for
small businesses to actually allow them to calculate what the
tariff would be for their particular good or service that they
would want to export, depending on which country they were
planning to export. It gives information about rules of origin
and addresses what is a big issue with getting more small
businesses involved in exporting, and that is to demystify the
process, to make sure that we have information at their
disposal.
We have a planning tool on our Web site, the SBA's Web
site, that is a workbook of sorts where small businesses can
get access to a variety of pieces of information. They can
store information and return to it, continue to update it.
Those are examples of--I think strong examples of how we
are coordinating with our Federal partners, not just to share
information but to create real tangible tools, put them in the
hands of small businesses to help them improve their
opportunities to export, to grow their businesses, and to
create more jobs.
Senator Shaheen. And can I just ask for the benefit of our
audience, how can people access the tariff tool and the other
tools? Can they get that through your Web site?
Ms. Johns. Yes. Well, export.gov really is that--Mr.
Friedman also mentioned the need for a one-stop shop. In our
experience, that is not so much a physical place, because,
again, the needs are so diverse in terms of what the business
is, what industry the business is in, et cetera. But we have
created, again, in partnership with our Federal partners,
export.gov, which is that virtual, that online front door, if
you will, that can give a small business access to the plethora
of tools that are out there to help them in the exporting
arena.
Senator Shaheen. Great. I do not know if either of you
would like to add anything to----
Mr. Cox. Senator, if I could give a more local perspective,
here in New Hampshire, we are very pleased with the community
effort, and by that I mean the U.S. Department of Commerce,
USEAC, the Small Business Development Centers, the SBA, the
states all work very much together, because we realize that for
a small business, it is daunting. It is the Federal Government.
How do I approach? It is the local government. It is the state
government.
So our colleagues are cross-trained. John Joyce with the
Small Business Administration, Bruce Drossman with the Export-
Import Bank, ourselves, will make joint calls. We will visit
the company directly. If a call comes in and it is not
appropriate for us, we are on speed dials with one another. So
we try to get that information to the company as quickly as
possible to resolve their questions.
Senator Shaheen. Thank you.
Ms. Felton. Senator, I would add that all three agencies
work very closely together and I think our various services and
programs complement each other. I have been on a couple of
different events, even though I am very new to Ex-Im Bank, with
both colleagues from the Commerce Department and the SBA. The
Commerce Department, in particular, offers trade missions that
will take companies abroad, help them with market research,
help them matchmake and to find opportunities to sell their
goods and services abroad.
Once the company is at a stage where they have got a
contract or a purchase order, if it is appropriate, they can
then, in terms of their business life and where they are with
respect to financial statements, et cetera, that would be
available to make them qualified to participate in Ex-Im Bank's
programs, then they would refer that lead over to Ex-Im Bank
and we would begin to talk about how we can help with our
various programs.
Senator Shaheen. Thank you.
Senator Ayotte.
Senator Ayotte. Thank you very much, Senator Shaheen.
I actually wanted to follow up on Senator Shaheen's
question, because as I understand it, in 2009, the GAO issued a
report that expressed concern over export promotion targeting
services. Just thinking about it from a small business
perspective, as I understand it, there are about 20 different
agencies that either have a direct or indirect role in trade,
and one of the announcements that the President has made
previously, I think around the State of the Union, was to look
at this, the fact that 20 agencies interacted in some way on
these issues, and to come up with a plan to streamline the
efforts of government, hopefully to make it easier for the end
user and to make sure that we were being efficient as possible
with the resources that we have.
I guess I would ask to all of you, I know that Mr. Friedman
mentioned one-stop shopping, if you could update us on whether
there is a plan that is going to be brought forward that would
streamline more or has looked at duplication. I think it can
often be really intimidating for small businesses when they are
trying to deal with multiple agencies, and I do appreciate what
you, Mr. Cox and Ms. Johns, have said about the attempts at
coordination, but I wanted to get your thoughts on what the
President had announced at the State of the Union and also the
GAO report.
Ms. Johns. If I may, Senator Ayotte, I will start.
Certainly, we are always looking for ways to operate the agency
more efficiently and more effectively. As good stewards of the
agency, that is our responsibility. And so we have had
conversations with our Federal partners as well as OMB about
how we can ensure that we have the most streamlined and most
easily navigable process for small businesses. And at the SBA,
we are particularly sensitive to that because we live and
breathe small businesses and trying to serve their needs and we
know that it has to be easy--the resources for the Federal
Government have to be easily accessed, easily understood in
order for them to be useful. Otherwise, they are not going to
be utilized.
And so the export.gov, for example, is a response to that
issue, to ensure that we are coordinating our resources and the
information that we have across the Federal Government and
putting that--packaging that in a way that is more easily
accessible for small businesses.
Senator Ayotte. I would love to hear from all of you. Also,
should we do the one-stop shop? Should we eliminate some of the
agencies' involvement to make it easier for small businesses to
navigate and make sure that we are not duplicating some of the
things that we are trying to accomplish?
Mr. Friedman. If I may, Senator, I would support the idea
of more one-stop shopping. In particular, in the travel and
tourism business, there is a lot of conflict between, on the
one hand, trying to advertise to get people to come here, then
people trying to get a visa to come here, whether it is for
business, they want to buy machinery or something in New
Hampshire, they cannot get a visa in China and they do not want
to come. Homeland Security may not welcome them when they get
here.
We are probably one of the only major countries in the
world, frankly, that does not have a Minister of Tourism as a
cabinet-level position, and tourism is actually the largest
single industry in the world. So I think that simplifying these
overlapping jurisdictions is very, very critical for actually
small and--for all kinds of businesses, but big businesses can
handle it because they have armies of people who can figure it
out.
Senator Ayotte. Right.
Mr. Friedman. But the little guy, he is just stunned. I got
an email from a Congressman in Vermont who had some Chinese
people who wanted to come and invest a substantial amount of
money in Vermont and hire 50 or 100 people. They could not get
a visa. Well, Commerce cannot help with that. Homeland Security
cannot. Sometimes people get to our borders and they get turned
away. So it is a bit of a morass, and post-9/11, we have had a
very defensive view of ourselves as a country.
Senator Ayotte. Well, I appreciate that. Mr. Cox, I do not
know if you wanted to comment?
Mr. Cox. I would just say, Senator, that the one-stop shop
was the genesis of the Export Assistance Centers and the idea
was that no one agency would really be the agency. All agencies
would share equally to help exporters, so that exporters, small
businesses could come in, and regardless of whose
jurisdiction--we would not worry about that. We would get the
answers as quickly as possible.
Here in New Hampshire, there is a great tradition of that
with the International Trade Resource Center, where six or
seven agencies participate under one roof to help get that word
out to the company. Again, we want to help one another because
the company's success is all of our successes.
Ms. Johns. May I add one quick point, Senator Ayotte, and
that is, particularly with the Department of Commerce, the way
we have organized our thinking around this--I have talked about
the identifying small businesses, preparing them, connecting
and supporting, et cetera. The SBA is very focused on new to
exporting, in other words, identifying those small businesses
that are poised to be successful as exporters but need some
preparation in order to really enter that arena and get going.
So that is where we provide a very important set of resources
because that is what we are built to do through our technical
assistance and counseling programs, the various resources that
we do every day for small businesses.
Then at a certain point it is appropriate to hand that
business off to the Department of Commerce so that they can
then pick up in their area of expertise, which is actually
helping that--guiding that small business into a market outside
of our country, et cetera.
So this is--we are not taking a haphazard approach to this
at all. We are being very thoughtful about how to play to our
agencies' strengths to make sure that we provide that seamless
level of support for small businesses.
Mr. Friedman. And, Senator, I would add that, to echo what
was just said, that to the extent that the SBA is more involved
in helping some of the small businesses that may be very young
companies--there was some discussion earlier of an incubator-
type approach to helping young companies that want to get
involved in exporting, and these companies have a life cycle
that they move through that make them get to a size and a stage
of development that makes them more appropriate to then become
eligible to use Ex-Im Bank programs, we can then pick them up
at that point.
The Commerce Department may have helped them identify
market opportunities, to demystify some of what is keeping
people from going out and starting to export. And then at some
point, it becomes a company that is--that has an order, that
has a market. We offer products that may be relevant to a
company that is only selling in a single country or that has
expanded and developed its exporting activity and now is
reaching out and able to sell to multiple countries.
But we at Ex-Im Bank also then help much larger companies,
and so I think that we have a continuum along the not just--
just along the life cycle and stage of development and size of
companies that we serve and that that is useful. We do have--we
do cooperate very effectively and we have, I think, on our Web
sites the ability to direct our customers to each agency, as
appropriate.
Senator Ayotte. Thank you very much.
Senator Shaheen. Thank you.
One of the things that we wanted to do a little differently
today is give an opportunity for those people invited today to
ask a question, so we have gotten questions from a number of
you in the audience and I am just going to read one of those.
Some of the questions were not questions that were really
appropriate for the members of this panel. They dealt with
other issues. And so I just wanted to let anybody who had
submitted a question that is not for this panel know that we
are going to forward those questions to the appropriate Federal
agency so you can get an answer to them.
This is from Peter Antoinette, who I think is still here. I
saw him earlier. He is the President and CEO of Nanocomp. There
he is. Peter asked what specifically can be done or should be
done to simplify or reduce ITAR export regulations. We
addressed this a little bit earlier. I think you addressed it,
Dick, as you were talking in your testimony. Would you like to
expound on what you had to say a little bit about what can be
done to make our export control regime more user friendly for
the businesses of this country?
Mr. Friedman. Well, I think it somewhat goes to Senator
Ayotte's question about single sourcing, single whatever,
single window. I can actually read to you out of our letter to
President Obama on this section. He said, a single window,
which is a system that allows traders to lodge information with
a single body to fulfill all import or export related
requirements, would reduce a major barrier to U.S. exports and
deliver immediate measurable results.
The World Bank estimates that, globally, it takes an
average of six days to move goods to or from the United States.
A one-day improvement in that time, export time for imports by
means of a single window, would increase U.S. trade by $29
billion----
Senator Shaheen. Wow.
Mr. Friedman [continuing]. And create thousands of new jobs
in the United States--one day. So, on average, some stuff is
held up in these--with this bureaucratic stuff for months, and
so if we can speed up the process and expedite this, these are
customers. They are not foreigners. They are customers. And if
you are McDonald's, you determine your success by how fast you
can make hamburgers. So the speed is very, very important.
Senator Shaheen. Thank you.
Senator Ayotte.
Senator Ayotte. Thank you very much. I think that goes to
the overall question of what can we do to speed this up? What
can we do, Mr. Cox, following up on what Mr. Friedman has said,
from the Department of Commerce perspective? I know I am
cosponsoring several pieces of legislation to make sure that
the regulations are passed in Washington that impact small
businesses, and all businesses, frankly, that there is more of
an analysis of the indirect costs on business in terms of what
the regulation does and making sure that we are trying to
streamline more. Can you help us with--I hear this so much,
whether it is ITAR or other areas, what Mr. Friedman has just
described--what is being done right now and what more can be
done to make it easier for businesses on the regulatory end.
And I know, Ms. Johns, you have experience in the private
sector on this, as well, so I would love to hear your thoughts
on it.
Mr. Cox. In terms of export regulations, my understanding
is that there are proposals for a single entry type of
processing, and I believe the hope, and I am sure the
expectation is to speed up processing of export applications
and licenses. Right now, there are a number of agencies--the
Commerce Department, the State Department, the Treasury
Department--that get involved in those export licenses. Then
they get involved in dual use issues and ITAR, as we have
heard. So there is a recognition. I think your comments, your
interest is helping to push this issue.
At the local level, I would say that our initiative is to
make companies aware of the regulations, bring our officials
from Washington to New Hampshire and elsewhere so they can have
conversations; we can have seminars and discussions on these
issues so that the people on the front lines in our offices in
Washington also go back and understand the issues that are
being faced by New Hampshire exporters.
Ms. Johns. Senator Ayotte, what I would add is that you are
absolutely right. As a retiree from the telecommunications
industry, I know a little bit about regulatory issues and how
they can sometimes impede business growth. And so what we want
to make sure is that there is an appropriate level of
regulation. It has its place. But we want to ensure that we are
looking constantly for ways to not burden--to ensure that small
businesses are not burdened by undue regulations.
So a few things we have done at the agency. First of all,
we started at home to make sure that our processes--we have
gotten feedback. We have roundtables with small businesses
around the country all the time, Administrator Mills, myself,
other senior officials at the agency, to hear directly from
small businesses, and we are taking that input and we are
making improvements at home by streamlining our loan
application processes, making sure that we have the touchpoints
and using the new technology to allow us to be more customer
friendly, if you will, for small businesses, and that work
continues.
Start-Up America is an initiative that the SBA has been
very involved with, and we not long ago finished a nationwide
tour in several key markets around the country to hear directly
from small business owners and other key stakeholders about
what were the regulatory burdens they were facing. That
information has been compiled. We are in the final stages of
preparing a report that will be shared across the government,
and we will be working closely with our Federal partners to
ensure that what we learned from the Start-Up America road
tour, that those issues are being factored into plans that
other agencies have for improving the regulatory process.
Senator Ayotte. Thank you very much, and I know that both
of us stand ready to work with you to make the regulations
easier for our businesses, and hopefully we can speed that time
up and really create more jobs here.
Senator Shaheen. And one of the things that I think would
be very helpful to everybody on the Small Business Committee,
not just Senator Ayotte and I, would be to get copies of the
council's letters, like the one you just read from, so that we
can see what your recommendations are and we can make sure that
that gets into the record for the Small Business Committee and
that everybody has a chance to see those. That would be very
helpful.
[The President's Export Council letters appear in the
Appendix on p. 84.]
Mr. Friedman. I would be happy to send them to you.
Senator Shaheen. Great. Thank you.
Mr. Friedman. Sure.
Senator Shaheen. I know that we have another panel to do,
so I think, as interested as we are in what everybody has to
say, we will do one more question each before we bring on the
second panel.
I would like to just ask each of you, just very briefly, if
you could talk about what kind of outreach efforts you have,
because one of the things that we are all struggling with is
how do we make sure that businesses in New Hampshire and
throughout the country know what is available to them. So if I
could just ask you, each in one minute to talk about what you
are doing at your agency to make outreach available.
Ms. Johns. Should I start, Senator?
Senator Shaheen. Yes, please.
Ms. Johns. Well, Senator Shaheen, that is an area that is
very close to my heart because it is striking to me how many
businesses, small businesses around the country, do not have a
full understanding of what the SBA does. And so outreach is
high on our agenda, to build awareness about the SBA's
resources, access to those resources, and we are particularly
focused on exporting.
As has been expressed in a number of very powerful ways
through the panelists, we have got to change the mindset of
small businesses in this country to let small businesses know
that the tools are there, the resources are there for them to
get involved in exporting. That is where the new markets are.
And if we do not, we are going to have a huge detriment for our
small businesses.
So we are doing a number of events, exporter matchmaking
events. We are involved with the Department of Commerce through
the District Export Councils, the 56 of those around the
country. We are using new technology through our newly revised
Web site. We have an exciting contest that is underway on
YouTube that is a cosponsorship with Visa, tell us your
exporting story. That contest was just launched in August. We
will be announcing the winner in November and that winner will
get not only cold, hard cash, they will also get the benefit of
Gold Key service from the Department of Commerce.
So we are trying to be as creative as possible to use every
opportunity through our headquarters efforts, but we have a
very powerful tool in that the SBA has 68 field offices. We
have a district International Trade Officer in each one of our
district offices. We have an increased presence in the USEACs,
20 of those around the country, and we are intending to bring
more online.
So we are operating on all fronts to make sure that we are
using the tools, connecting with partners, and using all
networks that we can access to tell the story that, small
businesses, now is the time to get involved with exporting.
Senator Shaheen. Great.
Ms. Felton. Yes, Senator. We have a number of initiatives
that we have launched in the last year or two in order to make
sure that we are reaching out more effectively to small
businesses, one of which I mentioned earlier the Global Access
Forums. We have webinars. We have a new small business portal
that will direct small businesses quickly to where to go on our
site in order to find what they need in order to access Ex-Im
Bank programs.
Importantly, we have five regional offices. We are, as I
mentioned, a small agency. We have a Northeast Regional Office.
Bruce Drossman is here today and he can--he will be sticking
around to make sure that he can talk to everybody who might
have a need. But he is based in New York. He is responsible for
handling our potential customers and developing leads in New
Hampshire. What he will do is help determine what the need is
that the business has and direct them to the right place. They
may be insurance brokers. We, I should also mention, use a
number of lenders who have delegated authority to process
things quickly and Bruce would be able to help determine who
would be the best fit for the customer's need.
Senator Shaheen. Great. Bruce, do you want to stand up so
everybody can see you. Thank you.
And we are going to ask all of the SBA people who are here
to stand up, too.
Ms. Johns. I have a great team with me today.
Senator Shaheen. Marie, would you like to introduce
everybody who is here.
Ms. Johns. We have got lots of people here today, so--our
Regional Administrator, Jeanne Hulit, is here. Our District
Director is here, Greta Johansson, and members of their team.
Marilyn is our International Trade Officer for the New
Hampshire District and doing a great job. Who have I missed?
John Joyce, yes, is here, and our Advocacy Regional
Administrator--when we talk about regulatory impediments, our
Office of Advocacy at the SBA is a critical partner in that
work and our Region I Administrator is here, as well.
Senator Shaheen. Great. Thank you. So if you need help from
any of these people, you know who to check at the end.
Jim.
Mr. Cox. Senator, with that, I cannot let my own people off
the hook. I want to introduce Justin Oslowski and Taylor
Little, who are great partners here in New Hampshire----
Senator Shaheen. Thank you.
Mr. Cox [continuing]. So they are our turn-to people.
What I would say in response to your question is that we
are, like SBA and Ex-Im Bank, always running events, always
doing programs. We are very pleased to have a partnership with
the Granite State District Export Council. John Sutton of
Dartware is our chair of it, and the next panel, you will be
hearing from the Vice Chair, Grace Preston. That is a public--
it is a private sector voice of what is going on in the
exporting community and it keeps us honest and gives us
guidance and it helps us out in a great way.
Events are being held all the time. I mentioned a couple of
seminars and webinars. I am very pleased that your interest as
Governor and your interest as Senator to lead a trade mission.
It is a fantastic event where people can learn of the
opportunities, whether they can attend or not. These markets
are out there. Some are very easy and approachable for small
companies that are just getting started. Some are very
difficult and it is not transparent what goes on in those. So
having an executive-led trade mission is very important and I
would certainly invite Senator Ayotte, if opportunity presents
itself, to lead a trade mission, as well. It does provide great
opportunities for companies to see first-hand and it is quite a
bit of work, as you are aware. Those are long, long days.
Those are some of the areas that we focus on. Again, the
partnerships, the working in the community, getting the
counseling done through all the partners, just the great
partnerships here in New Hampshire are key to us.
Senator Ayotte. Thank you.
Dick, I do not know if you want----
Mr. Friedman. I am not doing any coordination. I have no
people here.
[Laughter.]
Mr. Friedman. But I just would say one thing. I think that
the dollar is very favorable for trade. ``Made in USA'' is
prestigious worldwide, and ``Made in New Hampshire'' is
particularly prestigious because people think of New Hampshire,
whether it is maple syrup or Segways or whatever----
Senator Ayotte. We would fully agree with that.
[Laughter.]
Mr. Friedman [continuing]. About quality. And people who
export ought to blast on their boxes or whatever, ``Made in the
USA,'' ``Made in XYZ, New Hampshire, USA.'' There is a gigantic
potential. We have got to learn to think. Can you imagine a
Japanese company that does not think about exporting? I do not
care how big they are. That is their business. We have got to
get back to the basics, that 95 percent of the consumers are
non-American.
Senator Shaheen. Great. Well, thank you all very much.
Senator Ayotte. Thank you very much.
Senator Shaheen. We hope that you will stick around for the
second panel and hear what some of the New Hampshire folks who
are engaged in trade have to say. Thank you.
So we are going to be switching over panels, and while we
are doing that, let me just recognize two people on my staff
who have worked really hard to put together this event, Chris
Neary who is my assistant who works with the Small Business
Committee, and Scott Merrick, who works with business interests
here in New Hampshire, and Senator Ayotte, you may want to
introduce folks who you have here.
Senator Ayotte. Yes. I want to introduce John Lawrence from
my staff, actually from Washington, up here to help me. And
then I have other members of my staff who are here, Susan
Terzakis, who is here in the back, who also works in the New
Hampshire office, and my State Director, Bud Fitch, is
wandering around here somewhere, along with Steve Monier, who
works on veterans' issues for me, and Liz Johnson, who does
press for me.
Senator Shaheen. Thank you.
I think two of our panelists are here. I do not know if Tom
Moulton has--there he is. Thank you. We have you in the middle
here.
[Pause.]
Senator Shaheen. We are going to go right into the second
panel because we are running a little bit behind. We started a
little late, so hopefully we can run over a little bit, but we
do not want to run over too long since we promised folks that
we would get you out as close to four as possible.
But we are delighted to have a second panel of New
Hampshire witnesses here, and they will help us explore some of
the issues that were raised by the first panel, those
challenges faced by New Hampshire small businesses as they try
and export.
We will hear directly from small business exporters about
their experience, and I would like to begin by introducing Dawn
Wivell, who anybody who has worked in exporting in New
Hampshire knows that she is the former Director of New
Hampshire's International Trade Resource Center. She just
retired recently. We are really going to miss her. But the good
news is that she is now going to be in the private sector.
I worked with Dawn very closely during my six years as
Governor and I continue to rely on her expertise. So under
Dawn's leadership, I think everybody who has spoken today has
talked about how well New Hampshire has done with regards to
trade. Well, that speaks to all of the innovative businesses we
have here, but it also speaks to Dawn's leadership and the work
of the International Trade Resource Center. So thank you, Dawn,
very much, for being here.
Ms. Wivell. Thank you.
Senator Shaheen. I would also like to introduce Grace
Preston, who is the International Sales Manager at Secure Care,
which is based in Concord. Secure Care's employees design,
manufacture, and service systems that protect Alzheimer's and
dementia patients from wandering out of nursing homes. They
protect infants from being abducted from a hospital maternity
ward. Under Ms. Preston's leadership, Secure Care has generated
millions of additional dollars in revenue by exporting its
products. Utilizing both state and federal resources, Secure
Care has developed working relationships in Ireland and
Australia and plans to continue expanding to new international
markets. So, again, we are delighted to have you here, Grace.
I will turn it over to Senator Ayotte to introduce Mr.
Moulton.
Senator Ayotte. Thank you very much, Senator Shaheen. It is
my privilege to introduce Thomas Moulton, who is here today. In
1989, Tom founded Sleepnet in Hampton and now serves as the
President and CEO. Sleepnet has been making quality products
that help hundreds of thousands of people around the globe
sleep better, and we all could use that, right?
[Laughter.]
Senator Ayotte. It has become an industry leader in mask
innovation and development. Tom's passion for American
manufacturing and job creation has led to his success, and a
lot of hard work. In two-plus decades, he has grown his company
to a position where it exports to 30 countries in 14 languages.
Sleepnet has 25 employees, all in New Hampshire, and all his
products are designed and assembled in the United States, with
65 to 70 percent of his sales coming from exports.
It is a privilege to have Tom here with us today and we
look forward to hearing your perspective, and I thank you.
Senator Shaheen. So, again, thank you all for being here.
We hope you will try and stick with the five-minute time limit,
please, and if we can ask you to speak directly into the
microphone so we can make sure we can record your testimony.
And I will ask you to begin, Dawn.
STATEMENT OF DAWN WIVELL, FORMER DIRECTOR, OFFICE OF
INTERNATIONAL COMMERCE/INTERNATIONAL TRADE RESOURCE CENTER,
STATE OF NEW HAMPSHIRE
Ms. Wivell. Okay. Thank you, Senator Shaheen. Good
afternoon, Senator Shaheen and Senator Ayotte. I would like to
thank you for this opportunity to address this committee on the
importance of exports to our economy and how we might boost
U.S. exports to the level at which they should be.
My name is Dawn Wivell and for the past 21 years I have
proudly served as the International Trade Director for the
State of New Hampshire. I resigned my post less than two weeks
ago to launch an international business development company.
Previously, I worked in the private sector, both overseas and
in the U.S. in sectors ranging from oil drilling to import/
export to manufacturing. I also spent five-and-a-half years
with the Italian government, where my job was to assist Italian
companies to penetrate the U.S. market.
During my two decades with the state, I have witnessed
tremendous growth in exports, in export markets, in the
sophistication of our industry base and our capabilities. As
has already been mentioned, at $4.4 billion in sales, New
Hampshire's exports increased by 43 percent in 2010, reaching
an all-time record, in addition to being the highest percentage
increase amongst the States.
The bottom line in dollars and cents, which is the number,
I think, that is really exciting, is that New Hampshire
companies sold over $1.3 billion more in goods in 2010 than
they did in 2009. That number does not even account for the
export of services, which we do a lot, and we are unable to
quantify that due to available data. Moreover, our exports
continue to increase, and as of the end of May, we are already
up another 12 percent. I think in this current economy, that is
pretty tremendous.
One-quarter of all manufacturing workers in New Hampshire
depend on exports for their jobs. Over 2,200 New Hampshire
companies export, 88 percent of which are SMEs, which generate
42 percent of New Hampshire's total exports. This is the ninth
highest share among the States and well above the national
average, which is about 31 percent, I think.
According to the Tech America Foundation, New Hampshire has
the third highest tech export concentration in the nation,
accounting for 50 percent of total exports.
Over the years, I have had the opportunity of working with
a huge spectrum of companies in nearly every industry sector. I
have worked with many very small companies that have achieved
amazing results in the foreign marketplace, some of which would
no longer be in business were it not for their foreign sales.
As we all know, these entrepreneurs and innovators are the
drivers of the U.S. economy, the job creators. Companies like
them throughout the world are the drivers of the global
economy. I can attest to the fact that the majority of economic
development agencies around the world are equally focused on
the development of the sector of their economy and they are
hyper-focused on export-led growth.
The term SME or SMB is a term that one can freely use
across any language without translation. The difference is that
the United States spends just one-sixth of the international
average helping its small businesses to export. In actuality, a
World Bank study found that each dollar increase in export
promotion expenditures bought a 40-fold increase in exports.
The reality is that there is tremendous untapped
opportunity for our small businesses in the global marketplace.
However, these businesses need a little help and they are
competing with businesses around the world that get a lot of
help. What they need in terms of assistance is access to
buyers, market intelligence, capital, advocacy, reduced tariff
and non-tariff barriers, reasonable export regulations, and
technical assistance. These are all services that are offered
in whole or in part by the federal export promotion agencies
and by the state trade offices.
However, over the past couple of years, budget reductions
on the federal and state levels have severely hampered the
ability to effectively provide these services. For example, the
U.S. and Foreign Commercial Services provides programs that are
essential to U.S. exporters, the most important of which is
their customized matchmaking with buyers and partners, their
ability to provide direct market intelligence, customized
marketing events, and in-country advocacy. These are
fundamental needs that are essential to achieving America's
goals of doubling exports in five years. Yet over the past few
years, the U.S. and FCS has lost 239 staff positions, some
overseas offices, and has undergone many budgetary constraints,
including significant cuts to travel funds.
The capacity to keep up with the ever-growing demand is a
problem. Many of the states partner with the Commercial
Service, and none more so than the State of New Hampshire. A
recent trade mission to Canada led by Governor Lynch
demonstrated to me how counterintuitive these reductions are.
In many regards, Canada is the most important market to U.S.
exporters, yet there is only one Commercial Officer covering
the entire country and the local staff is and was so
overburdened that they had to hire an outside contractor to
support the needs of the mission participants. And this
mission, by the way, consisted of 17 companies, most of which
were new clients.
Many state trade offices have suffered severe cuts to their
trade promotion budgets, aggregated at about 20 percent. In the
case of New Hampshire, the International Trade Resource Center,
which not so long ago was a national award winning program
serving hundreds of New Hampshire companies, has been reduced
to one staff person with a zero travel budget.
The State Trade and Export Promotion Grant Program, which
came out of the 2010 Small Business Jobs Act, will provide
much-needed support to the state trade offices to meet the
demands of their clients. While the program has seen delays and
has been burdensome to some of the state trade offices,
particularly with the recent requests for adjustments and
resubmission, it is a boon for every state and is much
appreciated. As a bonus, I appreciate that the STEP program may
spawn some new and innovative programs.
Another issue which continues to be very important and
increasingly so is the fact that there is no mandate or
directive in place which provides a real incentive for federal-
state collaboration. The effectiveness of collaboration cannot
be overstated. The organizations at the local level working in
the field know their companies, their assets, and their
weaknesses better than anyone.
In New Hampshire, this collaboration, which has included
the state office, the U.S. Commercial Service, Ex-Im Bank, SBA,
SBDC, TDA, and MEP, has worked beautifully and is something
that we became known for. It is quite confusing as to why this
issue, which has been brought up so many times, has never been
seriously addressed.
Economists and analysts are predicting a significant global
economic transformation over the next decade where emerging
economies will account for more than half of all global growth,
where economic powers will shift and the world economy becomes
multi-polar. Barring any major calamitous event, demand should
continue to grow and may even be unprecedented. Accordingly,
both opportunities and competition will increase. It is of the
utmost importance that we consider the impact of investing and
the potential for growth. In addition to the fact that export
jobs pay more, it is a well documented fact that those
companies that exported during the last couple of years were
able to sustain their business, in great part due to their
broader customer base.
There are many reasons why exporting is actually becoming
more viable, such as the rapid diffusion of information
technology. In addition to being at the vanguard of innovation,
the most compelling reason why we know that American SMEs can
compete in the global marketplace is that they have already
been successful in the most competitive market in the world.
Again, thank you for this opportunity to speak, and thank
you, Senator Ayotte, and I want to thank Senator Shaheen, in
particular, as always, for all the many years of significant
contribution you have made to small business and exports in
particular.
[The prepared statement of Ms. Wivell follows:]
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Senator Shaheen. Thank you very much.
Mr. Moulton.
STATEMENT OF THOMAS MOULTON, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, SLEEPNET CORPORATION
Mr. Moulton. Good afternoon, Senators. Thank you for having
me. As my university professor taught me to KISS, ``keep it
simple, stupid,'' and I will try to do that for you, to be
short and brief but hopefully to the point.
My name is Tom Moulton. I am the Founder and President of
Sleepnet Corporation in Hampton, New Hampshire. Sleepnet is the
leading domestic manufacturer of masks that sleep apnea
sufferers wear nightly. For over 15 years, I have employed
eight to ten manufacturing employees, 25 to 30 at some times,
including engineers and business people as well. I do this in
part in the spirit of patriotism and partly because it makes
sound business sense.
For the first time, however, I have begun to source
components in Asia. While this does not affect the Sleepnet
workforce, I am not blind to its impact on my New England area
vendor base, whose staff will be less busy and pay fewer taxes
as a result.
I have been asked to comment on the role of exports in job
creation for America. But before I can make my comments and
observations, it is my opinion that we first must reflect on
our past for guidance and then be willing to make changes in
order to create a better future for all of us. I will talk
about the manufacturing in particular.
It is a vital and key economic component to any
industrialized nation. Typically, for every one manufacturing
job, seven other jobs are created. The key to America's
economic strength was created and embodied in manufacturing.
From manufacturing, many other industries were created--
finance, banking, insurance, real estate, trade, the service
industries, et cetera. Make no mistake, it is powerful and
impactful to an economy. If you doubt it and do not believe me,
look what manufacturing has done for China and other economies
over the past two decades. It is not rocket science.
Just to segue for a second, on the front page of the Wall
Street Journal today, there is quite a naval aircraft carrier
that China has built, and quite frankly, you cannot do this if
you do not have superior manufacturing. That is something to
take note of.
Unfortunately, over the recent decades, America has lost
its competitive edge and is on a continuing downward slide. We
have literally given away our technology and manufacturing jobs
to others, and I find it sinful.
We say, how did this happen? It is really not hard to
figure out, and I often refer the scenario to my business
colleagues as corporate treason. I say it was far from our
objectives to wake up one day and find ourselves in an
unfavorable business climate created by government, largely
caused by overregulation, onerous labor laws, and over-
taxation. They found themselves in an uncompetitive environment
for business, so they went elsewhere with manufacturing jobs to
improve their bottom line. The result is an ongoing catastrophe
and a slow death for our nation.
What can we do to reverse the slow death? Give
manufacturing companies a good reason to come back to and set
up shop in America again. Where and how can the government help
manufacturers? Get involved and get out of the way.
Predictability, I feel, with government incentives and
technology. America is known for its ingenuity. We can compete
with cheap labor because we have better technology. At least,
our country has been known to create cutting edge in technology
in all different industries.
For starters, I think the government needs to create
meaningful and long-term incentives for manufacturers to
reinvent in themselves, by giving opportunities for companies
to invest in new equipment, so they can be competitive in our
global economy. Look how some of the foreign car companies have
set up manufacturing plants in the South and have done well.
And if you look at Detroit now, it is abominable. Sixty years
ago, Detroit was a shining jewel, and today it is a rust bowl.
Very sad.
Commit to some long-term R&D tax credits. Temporary
incentives do not give companies ability to do long-term
planning. Competing in business is a marathon, not a spring.
Well-run businesses that pay taxes require predictability from
their government on how they are treated.
Education, and you can refer to the Wall Street Journal
article of yesterday on how to close the skills gap, a very
good article if you have not read it. It is excellent on
education. There are about three million jobs available right
now, but we do not have the skill sets to support them.
As I referred to again in the past, numerous industries can
point to their very existence as the result of creations,
including computers, microwaves, and communication technology.
To ensure the future viability of the future manufacturing
workforce, new engineers and scientists are needed to create
the next big thing, or 100 things. It is critical we train that
next generation of math and science majors in this country that
want to and can stay here.
Our immigration policy, our education policy and incentives
around each will have an outsized effect on whether we have
1,000, 10,000, or 100,000 new engineers, and the resulting
multiple of manufacturing jobs that they will create ten years
from now. There needs to be a comprehensive plan to ensure
future manufacturing jobs. It is vital.
And that is it. I appreciate the opportunity you have given
me to give some personal thoughts on the matter. I am both
honored and humbled to be asked to be here. I took my time away
from my business today because I care and I really want to make
a difference in my country. I love my country. I love the State
of New Hampshire where I reside. I raised my family here. Like
you, my motivation is to support the efforts to make life
better for my fellow citizens and my country. I am an American,
and I am proud to be one. Thank you.
[The prepared statement of Mr. Moulton follows:]
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Senator Shaheen. Thank you.
Ms. Preston.
STATEMENT OF GRACE PRESTON, INTERNATIONAL SALES MANAGER, SECURE
CARE PRODUCTS, INC.
Ms. Preston. Senator Shaheen, Senator Ayotte, thank you
very much for inviting me today, and I am really honored to be
able to give a perspective from a small New Hampshire
manufacturing company.
Secure Care Products was founded in 1979 to provide health
care facilities with radio frequency identification technology,
RFID. We basically, as the Senator said, protect Alzheimer's
dementia residents from wandering out of a nursing home and we
protect infants from being abducted from a hospital's maternity
ward. Secure Care Products is a wonderful example of a small
New Hampshire manufacturing company, only one of which that
makes the state so great.
It is safe to say that Secure Care Products initially
dabbled in the international marketplace, but it was not until
the mid-1990s in which the international expansion took off. We
would not have been able to do this without the assistance of
both state and federal service initiatives. The New Hampshire
International Trade Resource Center and the U.S. Commercial
Service helped us in many ways. Such things as Gold Key
matchmaking services, trade missions, sometimes coordinated
through a joint state and federal effort, market research, and
just plain general guidance have allowed Secure Care Products
to successfully expand the overall growth of our company.
I would like to share a few examples with you that help
validate how Secure Care has benefitted from both state and
federal export assistance initiatives. Secure Care established
one of our most important international relationships in 1997
during a Gold Key matchmaking trip coordinated through the U.S.
Commercial Service. Secure Care signed a distributor in
Ireland. A Gold Key is a program offered by the U.S. Commercial
Service that helps specific in-country partnerships at a
minimal cost.
Since then, this relationship has grown and flourished.
Today, more than a decade later, this partnership has generated
millions of dollars worth of revenue to Secure Care and helped
our company hire and sustain jobs. Looking forward, we are now
working together to further leverage the synergy between our
two companies into growth outside of Ireland and further into
other European markets.
Within more recent years, another Gold Key matchmaking
program established a new Australian partner in 2008. This
relationship is not only producing sales, but today we are
cooperating in new technology development together with the end
goal of bringing new products and offerings to all of our
current and future customers worldwide.
To further quantify the importance of just these two
relationships alone, Ireland and Australia, these two
partnerships have generated approximately six percent of our
2010 annual revenue, so just two partnerships.
Even such programs that do not equate to immediate returns
are critical to our future sustained growth of our company. In
2007, I personally participated in a trade mission with Dawn to
the Kingdom of Saudi Arabia that was coordinated on a state
level by the New Hampshire International Trade Resource Center.
As you can imagine, there is an inherent cultural challenge as
a businesswoman traveling into Saudi Arabia. The trade mission
allowed me to successfully represent Secure Care, investigate
market conditions, and develop critical relationships. The
trade mission provided me a hands-on understanding of both
market and cultural conditions that I otherwise would not have
been able to access.
At the beginning of this year, when the Saudi Ministry of
Health mandated that all maternity hospitals in the Kingdom of
Saudi Arabia implement an RFID solution like ours, I was well
positioned with knowledge, understanding, and most importantly,
the credibility in having traveled to the region to pursue the
opportunity. Last month, we secured our first sale in Saudi
Arabia, and the company has been chosen as one of two companies
that were short-listed from a field of 13 companies to bid
under a Ministry of Health tender for 150 Saudi hospitals. I
believe that our chances for such opportunities are
strengthened by the support we receive from state and federal
export initiatives.
My last example is literally playing out as I speak to you
today. We are in a highly competitive situation for a premier
hospital in Doha, Qatar. We are competing against a Canadian
company. With one phone call to the local U.S. Commercial
Service Office, I have access to U.S. Embassy staff in Doha to
provide advice and advocacy in hopes of securing the business.
One phone call, that is all it took. It is our hope that the
embassy can provide some lobbying efforts on our behalf, an
effort that otherwise we would not have been able to accomplish
on our own, and I would be happy to let you know how it turns
out. I am still in the process of working with everyone.
The challenges we face in our particular business are
many--budgets, competition, specifically in our market, a very
long sales cycle in hospital sales. As a small manufacturing
company of less than 100 people, our resources are extremely
limited. To have access to a wealth of information, in-country
experts on local business climate, and those willing and able
to lobby on our behalf is invaluable. While we are not the
biggest company in New Hampshire, I believe that we are a solid
example of what makes the New Hampshire business community
thrive.
In closing, state and federal programs such as the
International Trade Resource Center, Small Business
Association, U.S. Commercial Service, are valuable tools for
small companies like Secure Care, which increasingly have
limited resources available for developing knowledge and know-
how and opening up markets overseas. If your company is not
global, it is going to be tougher and tougher to survive the
ever-competitive marketplace. Thank you.
[The prepared statement of Ms. Preston follows:]
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Senator Shaheen. Thank you. Thank you all very much for
your testimony.
Ms. Preston, you had two great anecdotes about the help
that Secure Care has gotten with exporting, and you talked
about working with the Commercial Service and, of course, with
the International Trade Resource Center. Were you able to take
advantage of any other federal or state resources, and were
there any lessons from your experience that you can share about
collaboration within or among the agencies?
Ms. Preston. It is evolving now, and as our deals get
bigger and bigger, particularly working with the Ministry of
Health in Saudi Arabia--I have actually just spoken to Bruce
Drossman to see if he could come over and talk to us about
financing, credit, insurance, that type of thing, because we
are going to be looking at that as we move into bigger and
bigger deals and as we expand. So it is evolving every day.
Senator Shaheen. Great. Thank you.
Senator Ayotte. Thank you very much. I wanted to follow up.
I appreciate both these New Hampshire stories about businesses
built here and wanted to get both of your insights, both Mr.
Moulton and Ms. Preston, on what are the regulatory challenges
that you are facing and how can we help cut through some of the
red tape that you are facing? Both of us serving on the Small
Business Committee--I also serve on the Commerce Committee--and
I think hearing your perspective on the ground level would be
helpful to us as we move forward. I have heard so many stories
from small businesses in our state that are really concerned
about well-intentioned things passed in Washington that, when
put in application, do not always work, and I am sure, Ms.
Wivell, you have insight on that, as well.
Mr. Moulton. The unintended consequences.
Senator Ayotte. Right.
Mr. Moulton. Exactly. Well, our product is an FDA-approved
product and obviously you have to go through the regulatory
approval and things like that, 510(k) processes. It is kind of
good to get that expedited so it does not get worn down. That
would be our perspective from my lens.
That is what would help our business, so that we can
basically try--because we have a lot of new products in the
pipeline right now, and in order to get them through, some
require 510(k) approval. Obviously, we go through all kinds of
biocompatibility testing, materials, you know, do testing to
make sure the products are safe and secure, as is typical of a
low-risk product. But, to be able to get that process condensed
so we can get the products to market is helpful, because the
sooner you can get it to market, the sooner you can hire more
people, and we do a significant amount of business overseas, so
on the horizon, that is helpful.
Not to segue out of the regulatory thing, but also, and I
know it is probably a topic we certainly cannot discuss in
great detail, but free trade. One thing that concerns me is
that Brazil is a very big market. We want to get in there, but
the problem with Brazil is they tax the product, like, twice to
get it into the country. We have got a great product. They want
it. But if I sell it for $50, they are going to whack it
another $50 and now they make me not competitive. So there is a
lot of protectionism going on there.
So I know there are all kinds of debates on free trade and
open borders, but there has got to be some common sense there,
too. That would be very helpful, if you can do those things.
Senator Ayotte. Great. Thank you very much.
Ms. Preston.
Ms. Preston. We are FCC regulated here in the U.S., and
whenever we enter into a new country, we have to get approval
to operate our radio frequencies in-country. So a lot of it is
just working with the local regulatory authorities, but I have
also asked U.S. Commercial Service and the embassies overseas
to help us kind of push that process through.
The other issue that I have is, because I am working and
quite active in the Middle East is--I know it was mentioned in
the previous panel--but getting visas for some people to come
here. So we want to train people. We want to get them up and
going because it is critical for us to have local
representation in a market. If I cannot get people here to be
trained on our products, it is going to be very difficult for
us to have support in-country.
Senator Ayotte. Thank you. I do not know if you had
anything you wanted to add.
Ms. Wivell. Well, just very simple common sense would
dictate that the export promotion agencies should work together
with the export regulatory agencies. They completely work at
cross-purposes, and you see some of the most ridiculous things.
I am sure you have heard all of the stories where it just
absolutely--the regulations do not make sense and they
absolutely do not work together. They do not see the reason to
work together. They think very differently and there is really
absolutely no reason why they could not sort of see the
benefits and detriments. Obviously, you have, again, heard the
stories about all of the companies who lose sales to similar
companies, competitors in other countries, because they do not
have the same regulatory issues.
And the visa situation, since Gracie brought it up--sorry,
we call her Gracie--is a big issue. So you work with a company
that has gone and made a great deal, maybe signed with a great
distributor or is doing a joint venture, and they have not even
thought that they are not going to be able to bring these
partners over here to do training. So you might have worked on
it for months and months, a year, and it is time to get over
here, get people trained, and start really selling. You cannot
get a visa.
Senator Ayotte. Thank you very much. I appreciate your
insight.
Senator Shaheen. Dawn, in your testimony, you talked about
the challenge of federal and state collaboration and that there
is no requirement that agencies work together at the federal
and state level. Were you suggesting that you think there ought
to be legislation that requires that, or did you have other
thoughts about how to make that happen?
Ms. Wivell. Well, since we have been talking about it for
the entire 20 years that I have been in this job, my colleagues
and my former colleagues all over the country, it is something
that we talk about on and on and on, maybe it would take
legislation. It seems that it should not have to, because the
whole point is that the collaboration is so important. We have
talked about that several times today, the leveraging
resources, working together, but especially at the field level.
So if you want to talk in practical terms, in a lot of
states, there is no collaboration. We are so fortunate that we
have that in New Hampshire and it has been awesome. We are all
really good friends. We are all cross-trained, as Jim Cox said,
and we work really well at handing clients off. We work as a
group, seamless operation. That is very unusual. We have had--
when we started doing that, we had, I think, nine or ten states
actually fly out and some federal people fly out and watch us
because they could not understand how we did that. I do not
really get that.
But there is no--I have brought this up at other times when
I have testified. There is no incentive. There is no directive.
There is no mandate, you will work with your local partners.
You will--this is part of what your job is, and somehow, I
guess, you will be measured on that performance. But there is
no mandate that comes from Washington, D.C. So you will find
states--Pennsylvania is a very good example. The State of
Pennsylvania office and the Department of Commerce office, they
hate each other. They do not work together at all. It makes
absolutely no sense. That is a huge exporting state. It has got
a lot of great companies, a lot of opportunities. They do not
work together. The territoriality, it does not make sense.
So there has to be, I think, some kind of incentive,
mandate, directive. I do not know why it would take
legislation. I know you have got the Trade Promotion
Coordination Council, and for years and years and years, the
State Trade Directors have--we have a formal organization. We
have been advocating for that a state person has a place on
that council so that there is more coordination, and it has
been ignored.
Senator Shaheen. So do you think as the Small Business Jobs
Act is being implemented and the STEP program that is part of
that and some of the other focus on exporting that is part of
that legislation, are there any ways as that is being
implemented to encourage more of the kind of collaboration that
you are talking about, do you think?
Ms. Wivell. I think that is a good point and I think that
because the STEP grant program is specifically coming out of
the SBA that at the local level, there is going to be more
coordination. So I actually think that is a very good point.
Senator Shaheen. And perhaps guidelines for awarding those
grants could include some sort of points for states that are
working closely or with their federal agencies.
Ms. Wivell. Yes. That is actually a really good idea.
Senator Shaheen. I see Marie Johns shaking her head back
there, agreeing. Thank you.
Senator Ayotte.
Senator Ayotte. I very much thank you, Senator Shaheen.
Just to follow up on that, since we, based on the
discussion of the prior panel, when we have got 20 agencies,
federal agencies, we have done a great job of coordinating in
New Hampshire, and I know that you are a huge leader in that,
and that has been the New Hampshire way, that people actually
talk to each other, that foreign concept.
[Laughter.]
But with 20 agencies at the federal level with some hand in
export, import, trade policy, what can we--you have such a
breadth of experience. I appreciate your feedback on making
sure that we have a State representative on the council and
others. So should we be making it more one-stop shopping, or
from your experience over the years, what could we do better
just to make sure that we are maximizing our resources, number
one, and that we are making it easier for businesses, because I
think it must be really confusing for a business to know which
agency to start with.
Ms. Wivell. Yes. The one-stop shop, I am a huge advocate of
that and that is what has worked so well in New Hampshire. I do
not see any reason why you cannot have that in every state.
Basically, that puts everybody under one roof, and it is how
you manage it and how it functions that is important. So
everybody should be cross-trained like we are in New Hampshire.
I could get up and talk about Justin's programs as well as he
could talk about mine.
So you have to have a place where companies, small
businesses, could walk in and everything is there for them,
whether they need marketing, whether they need technical
expertise, they need education, they need financing. It was a
beautiful situation when we could take a company by the hand
and he would mention, ``I think I might need money,'' and say,
okay, we are going to take you to the money guy, and, okay, we
are going to take you to the Middle Eastern guy, all in one
location.
But everyone had to be physically working together and they
had to be told that you have--there is no territoriality. There
is no duplication of efforts. Everyone needs to work together.
I am really--it has to work on a local level. It has to be
in the field where you are actually working with companies. It
is great that the TPCC and all that, but that is way up in D.C.
and that is not down where the companies are. And each state is
different and the industry bases are different. The needs of
the companies are different. And so each state should be able
to sort of customize it to the way the state functions.
Senator Ayotte. I do not know if our small business owners
have any comments or experiences they have had with trying to
deal with multiple agencies.
Ms. Preston. I think, as an experienced professional, I
have worked with the Trade Center for ten years now and I
really feel sorry for the new companies that are going out
there to try and export because they are not going to know how
to negotiate those avenues. I have made the relationships. I
know everybody at the Department of Commerce locally and I work
with them quite frequently, Justin and Taylor, and I think it
is going to be very difficult, and I am really sad that the
budget was cut for the state because it was a great environment
to call up and to go and have all these resources under one
roof. I think it is a detriment to small businesses that are
just getting out there to export.
Ms. Wivell. I just want to add that the USEAC situation was
created to do the one-stop shopping, but it should include many
of the other agencies that you mentioned. There are 20
agencies--the MEP, SBDC, TDA is a really good one that is often
overlooked. They have some very--OPIC is another one. So
everybody, or at least the staff, should be trained or cross-
trained on what they do so all the resources are there.
Mr. Moulton. And we work with Dawn and Taylor, as well, and
they have done a great job helping us. Even though I would
encourage some small businesses that maybe cannot afford to go,
like MEDICA is one of the largest medical trade shows in the
world in Dusseldorf every fall and they get a group, if you
could not afford it, a booth, if you will, a trade show booth,
and they could take a series of, what, eight, ten different
small companies and they could share a space to make it more
economical to go there, and the Gold Key program opens up
opportunities to speak with, where they can make, like, a
matchmaker--harmony.com, if you will--to get companies lined up
with the right distributor and contacts in the countries and
they have been very helpful.
Senator Shaheen. Thank you.
Senator Ayotte. Export-harmony.com.
Mr. Moulton. Export-harmony.com, yes.
Senator Shaheen. We are trying to get us back on time, so I
think we have time for each of us to have one more question,
and I would like to again use a comment that we got from
someone who I think is in the audience, though I have not seen
him this afternoon. Ray Boissoneau [phonetic], is he--he was
here, I think. But he asked something that I think is very good
that has been touched on. Given the recent unemployment
numbers, what can be done to lower the cost of doing business
for exporters? Any thoughts that any of you have about that?
Mr. Moulton. Well, one thing, if we could be competitive, I
mean, it is about keeping your costs down. My main competitors
are three particular companies. One is Phillips Medical over in
the Netherlands. They bought a company called Respironics.
Resmed in Australia, and Fisher and Paykel in New Zealand. They
are all foreign companies. I have been forced to look to get
sourcing because I have to compete with them on the cost of my
product. They are the big 800-pound gorilla that I have to deal
with.
If I have to outsource outside the country, which I prefer
not to do, to be honest with you. I really am doing everything
I can to keep it internal. But if I have to be competitive,
obviously, it would be helpful not to get the products that I
am bringing in, or the components, getting taxed to death. If I
can keep that as minimal as possible to cover the expense of
doing that, that would be helpful, because then my end cost
makes me more competitive, because they all have plants in
China. I just refuse to go over there. I am not going to, as
long as I can hold out.
Senator Shaheen. Good.
Mr. Moulton. Yes.
Ms. Preston. I think from my perspective, and I have a
sales and marketing role, is to ensure that the initiatives and
the programs that U.S. Commerce offers do not go up in price,
because I have a budget that I have to stick to, and if I spend
too much money here, I cannot spend too much money elsewhere.
So I have got to make my budget, just like my household budget,
last. If the programs either go away or they get raised in
price, it is going to be difficult for me to take advantage of
that and grow our market.
Ms. Wivell. I was just going to say that, and it is really
important that you do keep the costs down. There was a movement
a couple years ago to raise the prices and it would have gone
up from something like $700, the Gold Key cost, to $3,000. So
then you are competing with the private sector. And it was
actually done quite sneakily. The OMB was trying to get this
cost--I am not going to go into all that.
But the Trade Offices advocated to keep the costs down and
we were successful in doing so. Maybe the ITAR registration
fees, you might want to take a look at that. And patents, the
cost of patents and the time that it takes to get patents
through. I do not see Mike Barratt in the audience from
Aricept, but he had a great idea the other day. I was talking
to him and he was saying that it takes, like, five years and
several hundred thousand dollars to get a patent and he was
thinking, you do it in Germany, it is like no time at all and
does not cost anything. He actually lost a lot of money to a
company that he had a patent situation here.
But he had a great idea of starting something like a small
claims court for patents worth under, like, $25 million, and
make it quick and easy and inexpensive. That would make them
more competitive, as well. A lot of good ideas.
Senator Shaheen. I think the good news on patents is that
patent reform legislation has passed both Houses. I think there
is an agreement to move that legislation forward. This has
actually had real strong bipartisan support, so it has been one
of the things that people have gotten behind, and hopefully
that will make a huge difference.
But thank you all very much. Thank you for taking time to
be here and for your testimony and for your good ideas, and we
will take back what we have heard today, share that with the
Small Business Committee, and hopefully all of us be able to
respond in ways that will make it easier for small businesses
to export.
Senator Ayotte. Thank you very much. I appreciate it. Thank
you, Senator Shaheen.
Senator Shaheen. Let me also point out that the record of
this hearing will be open for two weeks, so there may be other
questions that we will submit. We will submit some of the
questions that we got from the audience for answers from some
of the agencies who have been represented here.
Again, I want to thank--special thanks to all of the folks
who have come from out of town, all of our witnesses from
Washington. We hope you will stay overnight here in New
Hampshire, enjoy----
Senator Ayotte. Spend lots of money.
[Laughter.]
Senator Shaheen. Yes, enjoy what we have to offer.
To all of you in the audience, thank you very much. We hope
you will take note of everybody who represents one of the
services that is available through our Federal Government, and
if you need to talk to them, hopefully, they will stay around
for a few minutes so you can have a chance to connect with them
and get answers to any questions that you have had. Thank you
all, again, very much.
The hearing is adjourned.
[Whereupon, at 4:07 p.m., the committee was adjourned.]
APPENDIX MATERIAL SUBMITTED
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