[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 Available via the World Wide Web: http://www.fdsys.gov U.S. GOVERNMENT PRINTING OFFICE 71-268 WASHINGTON : 2012 ----------------------------------------------------------------------- For sale by the Superintendent of Documents, U.S. Government Printing Office, http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, U.S. Government Printing Office. Phone 202�09512�091800, or 866�09512�091800 (toll-free). E-mail, [email protected]. 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 ---------- 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 ---------- 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:] [GRAPHIC] [TIFF OMITTED] T1268.077 [GRAPHIC] [TIFF OMITTED] T1268.078 [GRAPHIC] [TIFF OMITTED] T1268.079 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:] [GRAPHIC] [TIFF OMITTED] T1268.080 [GRAPHIC] [TIFF OMITTED] T1268.081 [GRAPHIC] [TIFF OMITTED] T1268.082 [GRAPHIC] [TIFF OMITTED] T1268.083 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:] [GRAPHIC] [TIFF OMITTED] T1268.001 [GRAPHIC] [TIFF OMITTED] T1268.002 [GRAPHIC] [TIFF OMITTED] T1268.003 [GRAPHIC] [TIFF OMITTED] T1268.004 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:] [GRAPHIC] [TIFF OMITTED] T1268.005 [GRAPHIC] [TIFF OMITTED] T1268.006 [GRAPHIC] [TIFF OMITTED] T1268.007 [GRAPHIC] [TIFF OMITTED] T1268.008 [GRAPHIC] [TIFF OMITTED] T1268.009 [GRAPHIC] [TIFF OMITTED] T1268.010 [GRAPHIC] [TIFF OMITTED] T1268.011 [GRAPHIC] [TIFF OMITTED] T1268.012 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:] [GRAPHIC] [TIFF OMITTED] T1268.013 [GRAPHIC] [TIFF OMITTED] T1268.014 [GRAPHIC] [TIFF OMITTED] T1268.015 [GRAPHIC] [TIFF OMITTED] T1268.016 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:] [GRAPHIC] [TIFF OMITTED] T1268.017 [GRAPHIC] [TIFF OMITTED] T1268.018 [GRAPHIC] [TIFF OMITTED] T1268.019 [GRAPHIC] [TIFF OMITTED] T1268.020 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:] [GRAPHIC] [TIFF OMITTED] T1268.021 [GRAPHIC] [TIFF OMITTED] T1268.022 [GRAPHIC] [TIFF OMITTED] T1268.023 [GRAPHIC] [TIFF OMITTED] T1268.024 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:] [GRAPHIC] [TIFF OMITTED] T1268.025 [GRAPHIC] [TIFF OMITTED] T1268.026 [GRAPHIC] [TIFF OMITTED] T1268.027 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:] [GRAPHIC] [TIFF OMITTED] T1268.028 [GRAPHIC] [TIFF OMITTED] T1268.029 [GRAPHIC] [TIFF OMITTED] T1268.030 [GRAPHIC] [TIFF OMITTED] T1268.031 [GRAPHIC] [TIFF OMITTED] T1268.032 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. 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