[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]






            OUR NATION OF BUILDERS: MANUFACTURING IN AMERICA

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

                                HEARING

                               BEFORE THE

           SUBCOMMITTEE ON COMMERCE, MANUFACTURING, AND TRADE

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                           FEBRUARY 14, 2013

                               __________

                            Serial No. 113-5







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                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman
RALPH M. HALL, Texas                 HENRY A. WAXMAN, California
JOE BARTON, Texas                      Ranking Member
  Chairman Emeritus                  JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky                 Chairman Emeritus
JOHN SHIMKUS, Illinois               EDWARD J. MARKEY, Massachusetts
JOSEPH R. PITTS, Pennsylvania        FRANK PALLONE, Jr., New Jersey
GREG WALDEN, Oregon                  BOBBY L. RUSH, Illinois
LEE TERRY, Nebraska                  ANNA G. ESHOO, California
MIKE ROGERS, Michigan                ELIOT L. ENGEL, New York
TIM MURPHY, Pennsylvania             GENE GREEN, Texas
MICHAEL C. BURGESS, Texas            DIANA DeGETTE, Colorado
MARSHA BLACKBURN, Tennessee          LOIS CAPPS, California
  Vice Chairman                      MICHAEL F. DOYLE, Pennsylvania
PHIL GINGREY, Georgia                JANICE D. SCHAKOWSKY, Illinois
STEVE SCALISE, Louisiana             JIM MATHESON, Utah
ROBERT E. LATTA, Ohio                G.K. BUTTERFIELD, North Carolina
CATHY McMORRIS RODGERS, Washington   JOHN BARROW, Georgia
GREGG HARPER, Mississippi            DORIS O. MATSUI, California
LEONARD LANCE, New Jersey            DONNA M. CHRISTENSEN, Virgin 
BILL CASSIDY, Louisiana                  Islands
BRETT GUTHRIE, Kentucky              KATHY CASTOR, Florida
PETE OLSON, Texas                    JOHN P. SARBANES, Maryland
DAVID B. McKINLEY, West Virginia     JERRY McNERNEY, California
CORY GARDNER, Colorado               BRUCE L. BRALEY, Iowa
MIKE POMPEO, Kansas                  PETER WELCH, Vermont
ADAM KINZINGER, Illinois             BEN RAY LUJAN, New Mexico
H. MORGAN GRIFFITH, Virginia         PAUL TONKO, New York
GUS M. BILIRAKIS, Florida
BILL JOHNSON, Missouri
BILLY LONG, Missouri
RENEE L. ELLMERS, North Carolina
           Subcommittee on Commerce, Manufacturing, and Trade

                          LEE TERRY, Nebraska
                                 Chairman
                                     JANICE D. SCHAKOWSKY, Illinois
LEONARD LANCE, New Jersey              Ranking Member
  Vice Chairman                      G.K. BUTTERFIELD, North Carolina
MARSHA BLACKBURN, Tennessee          JOHN P. SARBANES, Maryland
GREGG HARPER, Mississippi            JERRY McNERNEY, California
BRETT GUTHRIE, Kentucky              PETER WELCH, Vermont
PETE OLSON, Texas                    JOHN D. DINGELL, Michigan
DAVE B. McKINLEY, West Virginia      BOBBY L. RUSH, Illinois
MIKE POMPEO, Kansas                  JIM MATHESON, Utah
ADAM KINZINGER, Illinois             JOHN BARROW, Georgia
GUS M. BILIRAKIS, Florida            DONNA M. CHRISTENSEN, Virgin 
BILL JOHNSON, Missouri                   Islands
BILLY LONG, Missouri                 HENRY A. WAXMAN, California, ex 
JOE BARTON, Texas                        officio
FRED UPTON, Michigan, ex officio



















                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Lee Terry, a Representative in Congress from the State of 
  Nebraska, opening statement....................................     1
    Prepared statement...........................................     3
Hon. Janice D. Schakowsky, a Representative in Congress from the 
  State of Illinois, opening statement...........................     4
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, opening statement....................................     6
    Prepared statement...........................................     6
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, opening statement...............................     8
    Prepared statement...........................................    10

                               Witnesses

Rick Yuse, President, Space and Airborne Systems, Raytheon 
  Company........................................................    12
    Prepared statement...........................................    14
James R. Steiner, Senior Vice President, Specialty Materials, 
  Corning Incorporated...........................................    19
    Prepared statement...........................................    21
Bob Holler, Director, Global Respiratory Protection Business, 3M.    30
    Prepared statement...........................................    32
Eric R. Meyers, President, Oil City Iron Works...................    46
    Prepared statement...........................................    48
Jeff Smatsky, Factory Manager, Zephyrhills.......................    66
    Prepared statement...........................................    68
Joseph K. Block, Vice President of Sales, Block Steel Corporation    75
    Prepared statement...........................................    77
Harold Arnold, President, Fram Renewable Fuels...................    91
    Prepared statement...........................................    93
Ron Saxton, Executive Vice President, JELD-WEN...................   102
    Prepared statement...........................................   104

 
            OUR NATION OF BUILDERS: MANUFACTURING IN AMERICA

                              ----------                              


                      THURSDAY, FEBRUARY 14, 2013

                  House of Representatives,
Subcommittee on Commerce, Manufacturing, and Trade,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:03 a.m., in 
room 2322 of the Rayburn House Office Building, Hon. Lee Terry 
(chairman of the subcommittee) presiding.
    Members present: Representatives Terry, Lance, Blackburn, 
Harper, Guthrie, McKinley, Bilirakis, Johnson, Barton, Upton 
(ex officio), Schakowsky, McNerney, Welch, Barrow, and Waxman 
(ex officio).
    Staff present: Charlotte Baker, Press Secretary; Sean 
Bonyun, Communications Director; Howard Kirby, Legislative 
Clerk; Nick Magallanes, Policy Coordinator, CMT; Brian 
McCullough, Senior Professional Staff Member, CMT; Gib Mullan, 
Chief Counsel, CMT; Shannon Weinberg Taylor, Counsel, CMT; 
Michelle Ash, Democratic Chief Counsel; Will Wallace, 
Democratic Policy Analyst.

   OPENING STATEMENT OF HON. LEE TERRY, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF NEBRASKA

    Mr. Terry. Good morning, and start our hearing.
    And Jan said it is OK that Henry is experienced enough to 
be able to take the lead right now.
    So good morning, and Happy Valentine's Day. It is 
appropriate that we have this hearing on Valentine's Day 
because we expect it to be a real positive love fest and not 
some of the usual hearings that we may have in Congress, or at 
least the ones that people see on the news. We are here to 
celebrate American manufacturing.
    But speaking of love fest, this is my 21st wedding 
anniversary as well. So as my wife is taking kids to school and 
getting ready for work, happy anniversary, honey. And by the 
way, I have got a 3D bust coming for you for Valentine's Day 
and our anniversary. And maybe she can put that on her 
nightstand and she can see me every night before bed. I am sure 
every woman out there is saying that is exactly what they want.
    So with a subcommittee title of Commerce, Manufacturing, 
and Trade, our first hearing could have dealt with any number 
of issues. The agencies and subject matter within our 
jurisdictions are numerous and diverse, and they all have 
complex issues worthy of our discussion.
    I would like to thank all of our witnesses here today 
traveling from all parts of our Nation to be here today to 
share their manufacturing experiences. And I have Mr. Holler 
from 3M. And now, while he is from Minnesota--one of their 
plants is in my district in Valley, Nebraska. They make 
respirators--masks--for all over the world and they employ over 
500 people in my district. And so hopefully, today, Bob and 
some of the other witnesses can shed some light on why those 
chose where to manufacture.
    So at this point, I am going to recognize myself for 5 
minutes.
    Today, we are going to start from square one by focusing on 
a sector which has undoubtedly served as a core building block 
in securing America's greatness, and that is our manufacturing.
    Our goal is simple: to hear directly from the individuals 
most immediately affected by U.S. manufacturing policies--the 
manufacturers themselves--and gain a clearer understanding 
about what is right with American manufacturing today and what 
can be done to make it even better tomorrow.
    We will hear from eight different business leaders 
representing a broad cross section of U.S. manufacturing, 
companies making everything from glass used for iPads and 
Smartphones, to respirator masks, to missile defense systems. 
My hope is that a wide range of ideas and perspectives will 
surface during the discussion that can, in a manner of 
speaking, ``set the table'' for more specific manufacturing 
topics that will be tackled down the road.
    While today's discussion will likely be wide-ranging, 
subsequent hearings could focus on specific manufacturing 
sectors like autos, auto parts, pharmaceuticals, chemicals, 
energy, and steel.
    Why have we chosen to kick off the 113th Congress with a 
series of hearings covering a topic as broad as the state of 
U.S. manufacturing? The bipartisan manufacturing showcase this 
morning, which highlighted 60 products from 20 different 
districts on this subcommittee, says it all.
    In the districts represented on our subcommittee alone, 
manufacturing accounts for over 800,000 jobs, which pay an 
average of 77,000 nationally, according to NAM. In Nebraska 
alone, the manufacturing sector consists of over 37,000 jobs 
just in 2011.
    One would think that given this morning's showcase and 
these impressive statistics that the United States was living 
up to the subtitle of our hearing, which is Our Nation's 
Builders. Unfortunately, with each passing year, this title 
becomes more representative of our past and less so of our 
future.
    The domestic manufacturing sector was hit the hardest in 
terms of job losses during this Great Recession. While 
manufacturing jobs account for just \1/10\ of the Nation's 
jobs, this sector suffered \1/3\ of the Nation's job losses. To 
be clear, during a time of record unemployment, roughly 33 
percent of the jobs lost were in the manufacturing sector. To 
paint an even starker picture of the state of U.S. 
manufacturing, the Information Technology and Innovation 
Foundation reported that the manufacturing sector suffered an 
average 3.1 percent-per-year decline from 2000 to 2011, 
resulting in an average job loss of nearly 1,300 jobs per day.
    One answer could be working to create an environment where 
companies already here see it worth their while to expand here. 
We often talk about job creation, and President Obama devoted a 
significant piece of his State of the Union to it, but what 
does job creation really mean? That is why you are here. We 
want companies manufacturing abroad to come to America, make 
investments in capital and take advantage of the most 
productive manufacturing labor workforce in the world because I 
truly believe that our labor is second to none.
    According to the National Association of Manufacturers, on 
average, manufactures of all sizes spend over 14,000 per 
employee to comply with regulations. Even when taking into 
account environmental regulations alone, manufactures spend 
7,200 per employee in regulatory compliance. No wonder it costs 
more to manufacture in the U.S.
    I agree with the President. We need to focus here in 
Congress on how we attract more jobs to our shores. We need to 
ask how we can equip people with the skills needed for the jobs 
that will power the engine of job creation. Manufacturing 
doesn't just create jobs, it creates great, high-paying jobs 
and it creates jobs in other sectors. Manufacturing has one of 
the strongest multiplier effects in the economy. Every $1 in 
direct spending produces an additional $1.35 in indirect 
outputs.
    But the benefits of manufacturing don't stop there. A 
strong manufacturing base is key to closing our trade deficit 
and to sustaining a U.S. economy that can be a leader in the 
global economy in the long term.
    I look forward to hearing all of your testimony. At this 
time I yield back my 12 seconds and yield to the ranking member 
for 5 minutes.
    [The prepared statement of Mr. Terry follows:]

                  Prepared statement of Hon. Lee Terry

    Good Morning, and Happy Valentines Day. We expect a love-
fest at our hearing and speaking of love-fest today is my 21st 
Wedding anniversary.
    With a subcommittee title as broad as ``Commerce,'' 
``Manufacturing,'' and ``Trade,'' our first hearing could have 
dealt with any number of issues. The agencies and subject 
matter within our jurisdiction are as numerous as they are 
diverse--and all have complex issues worthy of being discussed 
before a Congressional committee.
    I would like to thank all of our witnesses for traveling to 
Washington for this hearing. In particular, I would like to 
thank Bob Holler from 3M, for making the trip. 3M has a great 
manufacturing facility in Valley, Nebraska that employs over 
500 people. Hopefully today, Bob and some of the other 
witnesses can shed some light on why those chose to manufacture 
here in the U.S.
    Today, we are going to start from square one by focusing on 
a sector which has undoubtedly served as a core building block 
in securing America's greatness. Manufacturing.
    Our goal is simple: to hear directly from the individuals 
most intimately Affected by U.S. manufacturing policies--the 
manufacturers themselves--and gain a clearer understanding 
about what is right with American manufacturing today and what 
can be done to make it better tomorrow.
    We will hear from eight different business leaders 
representing a broad cross-section of U.S. manufacturing--
companies making everything from the glass used for iPads and 
smartphones, to respirator masks and missile defense systems.
    My hope is that a wide range of ideas and perspectives will 
surface during this discussion that can, in a matter of 
speaking, ``set the table'' for more specific manufacturing 
topics we will tackle down the road.
    While today's discussion will likely be wide-ranging, 
subsequent hearings could focus on specific manufacturing 
sectors like autos and auto parts, pharmaceuticals, chemicals, 
energy, and steel.
    Why have we chosen to kick-off the 113th Congress with a 
series of hearings covering a topic as broad as the state of 
U.S. manufacturing? The bipartisan manufacturing showcase this 
morning, which highlighted over 60 products from 20 different 
districts on this subcommittee, should say it all.
    In the districts represented on our subcommittee alone, 
manufacturing accounts for over 800,000 jobs, which pay an 
average wage of $77,000 nationally according to the National 
Association of Manufacturers. In Nebraska alone, the 
manufacturing sector consisted of over 37,000 jobs in 2011.
    One would think that given this morning's showcase and 
these impressive statistics that the United States was living 
up to the surtitle of our hearing series, ``Our Nation of 
Builders.'' Unfortunately with each passing year, this title 
becomes more representative of our past and less so of our 
future.
    The domestic manufacturing sector was hit the hardest in 
terms of job losses during the Great Recession. While 
manufacturing jobs account for just a tenth of the nation's 
jobs, this sector suffered a third of the nation's job losses. 
To be clear--during a time of record unemployment--roughly 33 
percent of the jobs lost were in the manufacturing sector.
    To paint an even starker picture of the state of U.S. 
manufacturing, the Information Technology & Innovation 
Foundation reported that the manufacturing sector suffered an 
average 3.1 percent per year decline for the 2000 to 2011 
period, resulting in an average job loss of nearly 1,300 jobs 
per day.
    We often talk about job creation--President Obama devoted a 
significant piece of his State of the Union to it--but what 
does job creation really mean?
    One answer could be working to create an environment where 
companies already here see it worth their while to expand--and 
companies manufacturing abroad want to come to America, make 
investments in capital, and take advantage of the most 
productive manufacturing labor force in the world-because I 
truly believe that our labor force is second to none.
    Another potential answer could be reigning in the costs of 
regulations. According to the National Association of 
Manufacturers, on average, manufacturers of all sizes spend 
over $14,000 per employee to comply with regulations. Even when 
taking into account environmental regulations alone, 
manufacturers spend over $7,200 per employee in regulatory 
compliance costs. No wonder it costs 20 percent more to 
manufacture in the U.S.
    I agree with the president. We need to focus here in 
Congress on how we attract more jobs to our shores. We need to 
ask how we can equip people with the skills needed for the jobs 
that will power the engine of job creation.
    Manufacturing doesn't just create jobs, it creates good, 
high-paying jobs, and it creates jobs in other sectors. 
Manufacturing has one of the strongest multipliers effects in 
the economy: every $1 in direct spending produces an additional 
$1.35 in indirect output. But the benefits of manufacturing 
don't stop there: a strong manufacturing base is key to closing 
our trade deficit and to sustaining a U.S. economy that can be 
a leader in the global economy for the long term.

                                #  #  #

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

    Ms. Schakowsky. Thank you so much, Mr. Terry, and I want to 
congratulate you on your new role as chairman of this wonderful 
subcommittee. I am pleased to serve as the ranking Democrat. I 
also want to thank you and all the staff that helped put 
together that wonderful display of manufacturing. And a special 
thank you to Michelle Ash and Will Wallace of the Democratic 
staff for helping make that happen.
    Our subcommittee has oversight over many areas that are of 
critical importance to the American people--consumer 
protection, product and auto safety, travel and tourism, 
interstate and foreign commerce, privacy and trade in 
manufacturing, which is our focus today.
    In this Congress I look forward to working with you, Mr. 
Chairman, to find areas where we can all advance the priorities 
of the American people. Manufacturing is a great place to 
start.
    I am pleased to welcome as a witness Joe Block, the vice 
president of Block Steel, located in my district in Skokie, 
Illinois. Block Steel is great American success story founded 
in 1948 and is run today 65 years later by the descendents of 
the founders. They have about 60 employees, are a union shop 
with good wages and health benefits. As the country's largest 
aluminized steel distributor, they are a critical supplier to 
the automotive appliance and HVAC industries, and I am sure all 
of our witnesses could attest the sector has changed 
dramatically from the images that many of us still have of the 
giant factories with long assembly lines.
    We are seeing major leaps in the area of advanced 
manufacturing where a skilled and educated workforce and 
groundbreaking technology play a key role. Like traditional 
manufacturing jobs, advanced manufacturing jobs are good jobs 
and can be filled by workers with a range of training. The 
growth of the industry is good news for building the middle 
class, a theme the President focused on earlier this week in 
the State of the Union Address.
    And the industry is growing. After years of job losses, 
manufacturing is a bright spot as we come out of the Great 
Recession. In my State of Illinois, 40,000 new manufacturing 
jobs have been created since December 2009--one of the top five 
states in the country for growth in manufacturing jobs. More 
than half a million manufacturing jobs have been created 
nationwide since the end of 2009.
    The manufacturing industry requires a few basic things 
including investment in innovation, good and reliable 
infrastructure, and an educated and skilled workforce that will 
fill the millions of good jobs that manufacturing can produce.
    I am extremely concerned about proposed cuts to federal 
investments in these areas, including what we would see under 
sequestration. This hearing will give us the opportunity to 
examine more closely the successes and challenges the industry 
is facing, and I look forward to the testimony of our 
witnesses. And I certainly hope you will also help us 
understand how we can be better partners to help grow our 
manufacturing sector.
    I would like to yield the balance of my time to my 
colleague, Mr. Welch.
    Mr. Welch. I think the ranking member.
    I want to brag a little bit. We have got Mr. Saxton from 
JELD-WEN here, and JELD-WEN is a company with a national 
presence, but it has two facilities in Vermont and has been a 
great contributor to our Vermont economy. It is combining 
skilled manufacturing, creating very good jobs in a State that 
has lost a lot of jobs. We used to have a big machine tool 
industry in Springfield, Vermont, and we more or less have lost 
it. JELD-WEN has come and it is a manufacturing facility that 
has created 800 very good-paying jobs in Windsor County, which 
is where I am from. And I used to be a State Senator before I 
got demoted to Congress.
    And so we are very proud of JELD-WEN, which combines very 
good manufacturing practices, high technology, good employee 
relationships, and energy efficiency. It uses certified wood. 
It makes windows and doors that are tremendous in insulating 
homes, saving energy.
    And we have had big debates about energy policy in this 
committee and they will continue, but there seems to be a good 
deal of bipartisan support for the notion that anything that 
creates good jobs and allows energy efficiency to save 
homeowners and building owners money is a really good thing.
    So I really want to welcome Mr. Saxton and thank you for 
all of the good work JELD-WEN is doing in Vermont. Thank you.
    Mr. Terry. At this time I recognize the full committee 
chairman, Mr. Upton, for 5 minutes.

   OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Upton. Well, again, congratulations, Mr. Chairman, for 
your first hearing. I was very impressed with the demonstration 
downstairs that many of us participate in.
    You know, when Henry Ford built his first horseless 
carriage in Michigan, Michigan began its journey as the face of 
the American automobile manufacturing. We later supplied our 
military with vehicles during times of war and felt the 
burgeoning consumer demand that followed it. And we have 
experience the pains of a changing automobile industry, 
certainly over the last several decades that I am very pleased 
with the resurgence of manufacturing.
    But much like the rest of the country, Michigan's economy 
is far more diversified now. Manufacturing, and not just auto-
related, is still extremely important to our economy producing 
$70 billion in output in 2011 and accounting for 16 percent of 
our State's GDP. In my own district, we have more than 660 
manufacturers who employ 10 or more folks, accounting for 
nearly 50,000 of the jobs in my district.
    Statewide, the manufacturing industry directly employs over 
a half a million Michiganders. And each of those jobs produces 
others upstream and downstream in Michigan and elsewhere. So we 
are pleased with this subcommittee and the hearing. And I would 
yield to the vice chair of the full committee, Ms. Blackburn, 
from Tennessee.
    [The prepared statement of Mr. Upton follows:]

                 Prepared statement of Hon. Fred Upton

    Thank you, Chairman Terry, for calling today's hearing, 
``Our Nation of Builders: Manufacturing in America.'' I am also 
encouraged by your plan to use the committee's jurisdiction to 
further examine manufacturing this Congress.
    When Henry Ford built his first ``horseless carriage'' 
plant in my home state, Michigan began its journey as the face 
of American automobile manufacturing. We later supplied our 
military with vehicles during times of war and filled the 
burgeoning consumer demand that followed.
    Michigan's economy is now far more diversified, but 
manufacturing--and not just auto-related manufacturing--is 
still extremely important to the state's economy, producing $70 
billion in output in 2011, and accounting for 16 percent of our 
state GDP. In my district alone, we have over 660 manufacturers 
who employ 10 or more workers, accounting for almost 50,000 
jobs. Statewide, the manufacturing industry directly employs 
over a half million Michiganders, and each of those jobs 
produces others upstream and downstream, in Michigan and 
elsewhere.
    According to University of Michigan, professor and American 
Enterprise Institute Scholar Dr. Mark Perry, the top 500 
publicly traded U.S. manufacturers had $6.01 trillion in 
revenue last year and would have been the world's third largest 
economy if they were their own country. Our manufacturing 
sector has been resilient and is one of the few bright spots in 
our economic recovery that has been adding jobs. The benefits 
of building products in the U.S. are clear: higher average 
wages, increased innovation, and greater economic multiplier 
effects for the entire economy. There are many challenges 
facing American manufacturers today, but I am still confident 
manufacturing can lead the way. Anyone who came by our 
Manufacturing Showcase this morning and saw a sample of some of 
the broad range of products made in our members' districts--
including the medical devices made by Stryker in my district--
know our manufacturers still define what is ``world-class.''
    I am pleased we have such an excellent panel of witnesses 
that represent the voices of our constituents. I am anxious to 
hear how they assess our current economic situation and what 
policies they believe need to be addressed to improve our 
shared goal of expanding manufacturing.

                                #  #  #

    Mrs. Blackburn. Thank you, Mr. Chairman. I think we all 
want to welcome you. We are delighted that you are here and 
delighted to have bipartisan support for growing the 
manufacturing footprint in this country.
    I do want to say that, today, we have welcomed Nissan North 
America, and they are located right there in my district and 
right outside of the district have a facility where they 
manufacture the Pathfinder, the Maxima, the Infiniti JX. Bodine 
Aluminum is also present with us today and they do an engine 
block that is in the Camry and the RAV4. So we are delighted 
with those.
     Mr. Steiner, I welcome you. Your Gorilla Glass, which is a 
product that I have referenced more than once in this 
committee, is produced there in conjunction with work from 
Doerfer in Nashville and we appreciate that. And at this time, 
I yield to Mr. Barton of Texas.
    Mr. Barton. Thank you, Ms. Blackburn. I want to take my 
brief time to introduce to the committee Eric Meyers. He and 
his father, who is sitting behind him, have owned Oil City Iron 
Works in Corsicana, Texas, a foundry founded over 125 years 
ago. The first major oilfield west of the Mississippi was 
discovered in Corsicana in 1895. The first oral refinery west 
of the Mississippi, Magnolia Petroleum, now a part of 
ExxonMobil, shortly followed. The Meyers family have been 
providing through their foundry the basic building blocks for 
industrial might for America, as I said, for over 125 years.
    Eric has got a master's degree and an undergraduate degree. 
He and his father have a company that has no debt. They provide 
over 250 good-paying jobs in Corsicana, Texas. In his spare 
time, Eric is the emergency manager for Navarro County which he 
self-funds. If there is a tornado within 100 miles, he is 
there. And 2 years ago we had a tornado in Rice, Texas. He was 
there before the Highway Patrol was there. So Eric, we welcome 
you and we look forward to your testimony.
    With that, I want to yield to my good friend from New 
Jersey, Mr. Lance.
    Mr. Lance. Thank you, Mr. Barton. And congratulations to 
you, Chairman Terry, and thank you for giving me the 
opportunity to serve as vice chair of the subcommittee. And I 
look forward to working in a bipartisan fashion to generate new 
ideas and increased regulatory efficiencies that will benefit 
our Nation's manufacturing sector.
    I welcome those who have participated in the showcase from 
the area of New Jersey I represent: Ortho Clinical Diagnostics, 
a J&J affiliate in Raritan, New Jersey; Bihler of America, 
based in Phillipsburg, New Jersey, which works with J&J to 
create extremely small needles for sutures; Voltaix: 
Electronics Chemicals company, manufacturing specialty gases in 
Branchburg, New Jersey; All-State Legal, an engraving and 
stationery manufacturer in Cranford, New Jersey; and Kuhl 
Corporation, a third-generation commercial egg-washing 
manufacturer that opened its doors in Flemington, New Jersey, 
in 1909. I look forward to working with manufacturing 
operations throughout the Nation to determine how Congress can 
be a partner in future growth.
    And I yield to Congressman Harper.
    Mr. Harper. Thank you, Mr. Lance.
    And I am pleased to introduce Mr. Rick Yuse of Raytheon 
Company, who serves as the president of Raytheon Space and 
Airborne Systems, a division that is a leading provider of 
products that give military forces the most accurate and timely 
information on today's network-centric battlefield.
    One product under his purview is Raytheon's active 
electronically scanned array, or AESA radar. These radars are 
an integral piece in the U.S. Military's tactical aircraft 
fleet, as well as a number of our foreign allies' aircraft. We 
have over 700 Mississippians who work at the Raytheon facility 
in Mississippi that are responsible for assembling these highly 
technological and life-saving radars. Raytheon takes advantage 
of Mississippi's track record of being business-friendly, its 
skilled and plentiful workforce, and its quality workforce 
training programs.
    We look forward to hearing from you today, and we welcome 
you, Mr. Yuse, and appreciate you being here today.
    And with that, I will yield to the gentleman from Kentucky, 
Mr. Guthrie.
    Mr. Terry. At this time, I have got to interrupt because 
you are out of time. So what we are going to do is go to 5 
minutes over here and we will do a unanimous consent so the 
others can introduce. Fair? So I recognize the gentleman from 
California, the full committee ranking member, Mr. Waxman.

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. Waxman. Thank you very much, Mr. Chairman. And I want 
to congratulate you on your new chairmanship of the important 
subcommittee which is holding its very first hearing today.
    I also want to welcome Ms. Schakowsky as the subcommittee's 
new Democratic ranking member. I look forward to working with 
both of you and our colleagues as we continue our oversight 
over interstate commerce and strive to ensure commonsense 
consumer protections for all Americans.
    A strong manufacturing sector is vital to our identity as a 
nation. It is a source of countless scientific breakthroughs 
and is essential to maintaining our national defense 
capabilities. Manufacturing is also a key building block for 
strong and stable middle class in this country.
    In my home State of California, the manufacturing sector 
adds more than $200 billion to the economy and employs more 
than 1.2 million people. In the Los Angeles area, particularly 
the South Bay region, this is one of the country's greatest 
centers of defense and aerospace manufacturing. And I have the 
great honor to have been elected to represent this area. It is 
also home to several promising manufacturers of energy 
efficiency technology.
    This morning, I am proud to showcase examples of 
manufacturing from El Segundo in Redondo Beach in my district. 
NanoH2O displayed an industry-leading energy efficient reverse 
osmosis membrane that it has developed for desalinization 
purposes. Northrop Grumman displayed two aerospace products it 
is manufacturing for the Federal Government: the Navy's F/A-18 
Super Hornet strike fighter and Nassau's James Webb Space 
Telescope.
    And I am also pleased to recognize Mr. Yuse from Raytheon, 
who was centered in El Segundo, and Raytheon has facilities in 
Mississippi but it is headquartered in the South Bay. And we 
are pleased to have you with us.
    Tuesday's State of the Union address reaffirmed the 
President's dedication to making the Nation a magnet for new 
jobs in manufacturing through the development of manufacturing 
innovation institutes. The President's proposals for targeted 
investments in education, infrastructure, and clean energy will 
also help grow the manufacturing sector.
    There is one big threat to manufacturing looming on the 
horizon. For the health of the manufacturing sector and the 
economy as a whole, Congress should work to avert the massive 
arbitrary spending cuts set to take effect on March 1. The 
sequester should be replaced with a balanced, responsible 
deficit reduction plan. It is time we returned certainty and 
predictability to our manufacturers, small businesses, American 
families, and our entire economy.
    Our manufacturing sector has accomplished great things. The 
U.S. can continue to be at the forefront of global 
manufacturing creating transformative technologies for years to 
come, but Congress must do its part. We can't expect our 
economy to rebound if we keep dragging the economy down with 
obstacles to growth, like the sequester.
    I am looking forward to the testimony from our witnesses. I 
must apologize that there is another subcommittee meeting at 
the exact same time and I have to go down there to that 
subcommittee hearing as well. I will come back as soon as I am 
able to, but I want to welcome all of the----
    Mr. Terry. Henry, you actually have a little bit of time 
left. Our clock is off.
    Mr. Waxman. Well----
    Mr. Terry. If you would like to yield----
    Mr. Waxman [continuing]. Yes----
    Mr. Terry [continuing]. To Mr. Barrow.
    Mr. Waxman. I do want to yield the balance of my time, 
which I assume is substantial, to Mr. Barrow from Georgia.
    [The prepared statement of Mr. Waxman follows:]

               Prepared statement of Hon. Henry A. Waxman

    I want to thank Mr. Terry for holding this hearing and to 
congratulate him on his new chairmanship of this important 
Subcommittee. I also welcome Ms. Schakowsky as the 
Subcommittee's new Democratic Ranking Member. I look forward to 
working with both of you--and all of our colleagues--as we 
continue our oversight of interstate commerce and strive to 
ensure commonsense consumer protections for all Americans.
    A strong manufacturing sector is vital to our identity as a 
nation. It is the source of countless scientific breakthroughs 
and is essential to maintaining our national defense 
capabilities. Manufacturing is also a key building block for a 
strong and stable middle class in this country.
    In my home state of California, the manufacturing sector 
adds more than $200 billion to the economy and employs more 
than 1.2 million people.
    In the Los Angeles area, the South Bay region is one of the 
country's greatest centers of defense and aerospace 
manufacturing, and I have the great honor of being elected to 
represent this area. It is also home to several promising 
manufacturers of energy efficiency technology. This morning, I 
was proud to showcase examples of manufacturing from El Segundo 
and Redondo Beach in my district. Nano H2O displayed an 
industry-leading, energy-efficient reverse osmosis membrane 
that it has developed for desalination purposes, and Northrop 
Grumman displayed two aerospace products it is manufacturing 
for the federal government: the Navy's F/A-18 Super Hornet 
strike fighter and NASA's James Webb Space Telescope.
    This is something that President Obama and his 
Administration clearly recognize. The Obama Administration has 
a number of initiatives underway to bolster American 
manufacturing.
    Tuesday's State of the Union address reaffirmed the 
President's dedication to making the nation a ``magnet for new 
jobs and manufacturing'' through the development of 
Manufacturing Innovation Institutes. The President's proposals 
for targeted, deficit-neutral investments in education, 
infrastructure, and clean energy will also help grow the 
manufacturing sector.
    There is one big threat to manufacturing looming on the 
horizon. For the health of the manufacturing sector--and the 
economy as a whole--Congress should work to avert the massive, 
arbitrary spending cuts set to take effect on March 1. The 
sequester should be replaced with a balanced, responsible 
deficit reduction plan. It is time we return certainty and 
predictability to our manufacturers, small businesses, American 
families, and our entire economy.
    Our manufacturing sector has accomplished great things. The 
U.S. can continue to be at the forefront of global 
manufacturing, creating transformative technologies for years 
to come--but Congress must do its part. We can't expect our 
economy to rebound if we keep dragging the economy down with 
obstacles to growth like the sequester.
    I'm looking forward to the testimony of our witnesses.
    Thank you.

    Mr. Barrow. I thank the gentleman for yielding.
    And I want to congratulate Mr. Terry on his being elected 
as chairman of the committee and thank him for holding this 
hearing on manufacturing in America.
    Most folks agree that American manufacturing is good for 
our country, but American manufacturing is good for other 
countries as well. In my district, goods that are made in 
America are literally running the rest of the world.
    Fram Renewable Fuels is doing just that. As one of the 
first wood-pellet producers and exporters in the southeast, 
they manufacture fuel that serves in place of coal to generate 
electricity to utility companies around the world. I had the 
honor of visiting Fram on a manufacturing tour of my district 
last fall, and I was impressed by the sophistication of their 
operation, which is responsible for exporting over 375,000 
metric tons of wood pellets each year. I have seen the 
difference that they are making through manufacturing, and I 
look forward to the testimony of Fram's president, Mr. Harold 
Arnold, as we examine how we can better support America's 
manufacturers and continue to be a ``Nation of Builders.''
    And with that, Mr. Chairman, I yield back.
    Mr. Terry. Thank you, Mr. Barrow. The time has run out. I 
would ask unanimous consent for 2 additional minutes on the 
majority's side so that two members can introduce their guests.
    Hearing none, we will have 2 minutes. And Mr. Guthrie, you 
are recognized for 1 minute.
    Mr. Guthrie. Thank you, Mr. Chairman. I appreciate that.
    It is my pleasure to introduce Mr. Jim Steiner. He is the 
vice president for Corning Special Materials and general 
manager of the Harrodsburg, Kentucky, plant that makes Gorilla 
Glass, which, if you don't know what it is, if you have an 
iPhone in your pocket or if you have an iPad in front of you, 
you are touching it every time you tap the glass to get to your 
areas you want to go to. And this product is emblematic of 
cooperation between a couple of great American innovators and 
where they always say good enough is never good enough. And we 
appreciate you being here. I have enjoyed touring your 
facility. It is a wonderful place.
    I also point out in the room below, there is another 
manufacturer. The gateway to the Bourbon Trail is Clermont, 
Kentucky, and there is Jim Beam and you saw Booker's and Knob 
Creek down there and Basil Hayden and also Toyota, which is not 
in my district, a manufacturing plant, but they have a lot of 
parts suppliers down there as well. They are in Georgetown, 
Kentucky.
    So with that, I yield to Mr. Bilirakis.
    Mr. Bilirakis. Thank you. I appreciate it very much. Thank 
you, Mr. Chairman.
    I would like to welcome and thank Mr. Jeff Smatsky at 
Zephyrhills Water for their appearance today. Mr. Smatsky 
serves as a factory manager at the Zephyrhills Water plant. It 
is in Zephyrhills, Florida, in my district, the 12th 
Congressional District of Florida. The 258 employees at the 
Zephyrhills plant produce both the Zephyrhills and the Nestle 
Pure Life brands of bottled water in a variety of single-serve 
and bulk containers ranging from 8 ounces to 5-gallon water 
cooler containers, which are distributed to homes in Florida, 
offices in Florida, all across Florida.
    Zephyrhills serves a valuable role in Pascoe County, a 
community that I represent in the Tampa Bay area in Florida as 
well, all of Florida. His testimony will shed light on the 
state of our economy and how we may be able to spur economic 
growth in this vital sector.
    And I yield back, Mr. Chairman. Thank you.
    Mr. Terry. Thank you, Mr. Bilirakis. And all of our 
witnesses have been introduced by their sponsoring member.
    So we will begin our testimony. Mr. Yuse, you have 5 
minutes.

STATEMENTS OF RICK YUSE, PRESIDENT, SPACE AND AIRBORNE SYSTEMS, 
  RAYTHEON COMPANY; JAMES R. STEINER, SENIOR VICE PRESIDENT, 
    SPECIALTY MATERIALS, CORNING INCORPORATED; BOB HOLLER, 
 DIRECTOR, GLOBAL RESPIRATORY PROTECTION BUSINESS, 3M; ERIC R. 
 MEYERS, PRESIDENT, OIL CITY IRON WORKS; JEFF SMATSKY, FACTORY 
MANAGER, ZEPHYRHILLS; JOSEPH K. BLOCK, VICE PRESIDENT OF SALES, 
    BLOCK STEEL CORPORATION; HAROLD ARNOLD, PRESIDENT, FRAM 
  RENEWABLE FUELS; AND RON SAXTON, EXECUTIVE VICE PRESIDENT, 
                            JELD-WEN

                     STATEMENT OF RICK YUSE

    Mr. Yuse. Good morning, and thank you, Chairman Terry, 
Ranking Member Schakowsky, and committee members. On behalf of 
his Raytheon constituents, I also want to thank Congressman 
Harper.
    As president of Raytheon Company's Space and Airborne 
Systems business, I am honored to be here representing our 
company and discussing our contributions to America's 
manufacturing infrastructure. Thank you for the opportunity to 
share the many ways that Raytheon, and in particular, Forest, 
Mississippi, Consolidated Manufacturing Center contribute to 
America's national security, global competitiveness, and 
economic prosperity.
    While my focus will be on Raytheon's Forest operations, I 
would be remiss if I failed to note Raytheon's manufacturing 
footprint covers many other States and our suppliers' 
operations expand that economic footprint even further.
    As a member of the defense and aerospace industry, Raytheon 
proudly competes in a market that contributed $218 billion in 
overall sales to the United States economy in 2012. Raytheon 
specializes in defense, homeland security, and related mission 
support services, providing state-of-the-art electronics, 
mission systems integration, and other capabilities in the 
areas of sensing; effects; command, control, communications, 
and intelligence; and cybersecurity. But more importantly, the 
work we do and the products we design and manufacture in places 
like Forest save lives and make the world a safer place.
    Raytheon's ability to succeed in the global marketplace 
requires skilled, well-trained, and dedicated workforce; a 
stable fiscal, tax, and regulatory environment; and the ability 
to export our products to United States allies. In fact, as our 
domestic budget faces increased pressure, defense exports can 
help decrease costs and risks associated with technological 
advances for the U.S. military, support America's industrial 
base, and strengthen our balance of trade.
    Our operation in Forest, Mississippi, contributes 
significantly to Raytheon's capability and reputation for 
manufacturing excellence. Our legacy in Mississippi stretches 
back to 1983 when we opened our doors in support of a single 
military radar program. Over the years, we have increased the 
scope and scale of our operations in Forest, expanded our 
facility, added jobs, and broadened the array of products 
built.
    Today, we have over 700 employees in Forest. They are some 
of the most skilled laborers in the country. They work in a 
340,000 square-foot state-of-the-art manufacturing space 
building sophisticated airborne, ground-based radars, 
electronic warfare technology, and advanced communication 
systems for use by U.S. and allied war fighters.
    Thanks to Forest, we have delivered more than 500 active 
electronically scanned arrays, or AESA radars, an industry 
first that we will soon celebrate with our Mississippi 
employees.
    The AESA radar is used on our military fighter planes to 
greatly increase their ability to detect and track airborne 
targets. Its capabilities also allow our pilots to identify 
multiple targets at once. This technology provides game-
changing performance and tactical advantages, enabling war 
fighters to accomplish their mission and return home safely to 
their families. This radar and the lives it protects are a 
source of tremendous pride for the Raytheon workers who build 
it. Our radars have logged more than 400,000 cumulative 
operational flight hours on Air Force, Navy, and Marine 
tactical aircraft.
    Between 2004 and 2011, Raytheon ramped up its AESA 
production rates tenfold with a 100 percent on-time delivery 
rate in 2012. This efficiency supports our customers' growing 
needs and demonstrates our ability to further increase 
production and jobs as we win additional contracts. In 
particular, foreign sales of U.S. military aircraft are an 
important growth area for Raytheon, the industry, and our 
country. As of last year, three key military aircraft 
production lines, the C-17, the F-15, and the F-16 were being 
extended largely by international export demand. These foreign 
sales drive increased demand for radars built in Mississippi.
    Whether driven by domestic or international sales, 
increased demand for Raytheon's products significantly enhances 
the economies of the United States and Mississippi. In 2012 
Raytheon operations contributed over $38 million in payroll to 
employees in the State. In most cases, our employees earned 
almost double the average annual Mississippi salary.
    Mr. Terry. Excuse me. Could you get to the conclusion?
    Mr. Yuse. Beyond our employees, we estimate that Raytheon's 
overall economic activities generated more than 400 additional 
jobs. Much of our success in Forest also is tied to the quality 
of our local and regional suppliers, who range in size from 
small business to Fortune 100 corporations. In 2012, for 
example, we spent nearly $6 million with 60 Mississippi 
suppliers.
    Finally, I want to point out the strong partnership that 
Raytheon has established with the federal, state, and local 
officials who count on our Forest employees and the facility as 
their constituents. This partnership is vital to our 
manufacturing process.
    Raytheon and the men and women of Forest, Mississippi, 
produce complex and cutting-edge technologies that protect our 
Nation, help our war fighters and their vital missions, and 
contribute to our Nation's economic prosperity. We are proud of 
these employees and their many accomplishments.
    [The prepared statement of Mr. Yuse follows:]


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    Mr. Terry. Thank you, Mr. Yuse. Appreciate your testimony. 
There are what we call the shot clocks, little monitors there 
on your desk. And it will turn to yellow at 1 minute left, so 
if you hit 1 minute and have a couple pages left, maybe skip a 
couple of them. We are really anxious to get to questions.
    So at this time, Mr. Steiner, appreciate you. You are from 
Corning, representing Corning.

                 STATEMENT OF JAMES R. STEINER

    Mr. Steiner. Chairman Terry and Ranking Member Schakowsky, 
thank you for the opportunity to be here today. My name is Jim 
Steiner. I am responsible for the Specialty Materials business 
at Corning. It includes our Corning Gorilla Glass business and 
our factory in Harrodsburg, Kentucky. But I would also like to 
thank you because we do have a small aerospace and defense 
business and you set me beside one of our customers today.
    But I would also like to thank Congressman Guthrie, who 
represents our facility in Harrodsburg. He has personally 
witnessed the success of Gorilla Glass manufacturing, and we 
appreciate his interest and support.
    Many of the members I notice are actively touching our 
product as we speak, so I thank you for also being a user of 
Gorilla Glass.
    We have been in business for over 160 years. Corning was 
founded by the great-great-grandfather of Amo Houghton, who 
many of you served with here in Congress, and Amo sends his 
best.
    Innovation and invention are keys to Corning's success over 
its long history. It includes the invention of many life-
changing things like the catalytic converter, optical fiber, 
and glass for liquid crystal displays.
    Today, I want to tell you the story of Gorilla Glass, an 
American success story. It is a good enough story that I 
shouldn't be able to screw it up. We invented in 1962 when Amo 
Houghton was our president a material we called Chemcor. It was 
a chemically strengthened glass we actually saw as a way to 
compete with the steel industry. It was a cool invention. The 
issue was we never really found any mass markets to 
commercialize it in, so it never became a success. In 2006 this 
small group in my division worked on taking the Chemcor base 
and inventing a new glass that could be used on mobile devices. 
In late 2006 we did a small development run, and once again, we 
thought we had a really cool invention but we needed a way to 
commercialize it.
    Then, along came Steve Jobs and Apple. In early 2007, as 
Apple was approaching the launch of the iPhone, they had 
originally designed the phone with a plastic cover. And as 
Steve Jobs did the first exhibition of the iPhone, as he walked 
off the stage, he looked down at it and the plastic was 
scratched. So he told his team that he wanted to use glass and 
he took an active role in finding a solution. He called our 
chairman Wendell Weeks and he challenged us to provide a glass 
that he could use for the launch of the iPhone. Luckily, we had 
done this small development run and we had the invention. The 
challenge was we had to take that invention and commercialize 
it. And the iPhone was due to launch in 3 months.
    So we went to our factory in Harrodsburg, Kentucky, and 
gave them 3 months to take a glass composition and develop the 
manufacturing process and make the initial shipments in May of 
2007. Now, typically, for us a glass development will take 
years, even decades to go from invention to commercialization 
but we had 3 months this time. We challenged the Harrodsburg 
plant and they pulled it off. Now, this only happened because 
of a close working relationship with Apple and the opportunity 
to meet that timeline and launch on their product.
    We got a very quick start in 2007. Our first year sales 
were 19 million, which sales for a new product in the first 
year of 19 million are quite significant. But we have grown 
significantly. We are now on over a billion devices out in the 
field. We have 33 different customers. And in 2012, I am happy 
to say, we broke $1 billion in revenue. See what I mean? It is 
a tough story to screw up.
    So our employment in Harrodsburg now is well over 400 jobs. 
We are running the factory full. Back in 2008 we got as low as 
about \1/5\ of our capacity, but the success of our work in 
Harrodsburg to bring up the manufacturing has allowed us to 
continue to invest in Harrodsburg. Last year, we started up two 
new melting tanks to make additional glass and we have invested 
over $240 million in the Harrodsburg facility for new 
production capacity.
    That success of Gorilla Glass has also allowed us to spend 
more in research and development in our Corning, New York, 
facilities. We have recently expanded our capabilities in 
Corning to do additional specialty flat glasses and have spent 
about $200 million in capital in that facility, too. And we 
believe over 1,000 people in Corning are now supported by the 
success of the Gorilla business.
    So our next product we are working on and we have invested 
in Harrodsburg is Willow Glass. This is Willow Glass. It is 100 
micron thick glass, about the thickness of your human hair. It 
is a cool invention and now we are looking for where to 
commercialize that.
    So I thank you for your support.
    [The prepared statement of Mr. Steiner follows:]


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    Mr. Terry. Thank you very much.
    Mr. Holler from 3M, you are recognized for 5 minutes.

                    STATEMENT OF BOB HOLLER

    Mr. Holler. Thank you. Good morning, Chairman Terry, 
Ranking Member Schakowsky, and members of the committee. My 
name is Bob Holler. I am the director of the Respiratory 
Protection Business of the Personal Safety Division for the 3M 
Company. The 3M Valley plant in Nebraska----
    Mr. Terry. Is your mic on or----
    Mr. Holler. The 3M Valley plant in Nebraska is the primary 
manufacturing site for a complete range of 3M respiratory 
protective equipment, including disposable and reusable 
respirator protection and surgical masks, along with medical 
electrodes, patient warming plates, sorbent materials, hearing 
and eye protection.
    As a manufacturer of personal protective equipment, one of 
our most pressing issues facing our Valley facility is making 
sure that America's workers are not only able to address the 
day-to-day safety needs, but also that our Nation is prepared 
to respond to threats and hazards that pose a risk to our 
country. This is an issue that the 3M Valley alone cannot 
address. It needs to be a shared responsibility with many 
stakeholders, both public and private, and today, I would like 
to focus on our roles.
    The role of government is to own the leadership position in 
prevention, protection, mitigation, response, and recovery of 
national threats and hazards. They need to ensure that the 
proper protective equipment is integrated into the capabilities 
of protection response and recovery. Although the Nation has 
made great strides in preparing against threats and hazards, we 
feel the role of personal protective equipment is not being 
fully leveraged in national preparedness.
    For example, the Pandemic and All-Hazards Preparedness Act 
is intended for us to improve our Nation's public health and 
medical preparedness and response capabilities for all 
emergencies. And the strategic intent is to advance 
countermeasures to diagnose, mitigate, prevent, or treat harm 
from any biological agent, toxin, chemical, radiological, or 
nuclear agent or agents whether naturally occurring, 
unintentional, or deliberate.
    However, the definition of countermeasures is so narrow 
that it only recognizes FDA-cleared respiratory protection 
devices. FDA-cleared respirators only represent a small segment 
of the devices and the capacity to produce these devices is 
very limited. Plus, they do not provide protection against 
chemical, radiological, or nuclear agents.
    3M feels the definition for countermeasures should be 
expanded to include the National Institute for Occupational 
Safety and Health-approved devices. And as such, the strategic 
direction would match its intent while also expanding the scope 
of products that would be available during an event. 
Additionally, if the definition is expanded, it could open up 
new opportunities and benefits to manufacturers to engage in 
developing technologies that may increase protection from many 
types of hazards.
    Another key area that needs addressing centers on preparing 
and responding to an event. The time to secure personal 
protective equipment for our responders and the general 
population is before, not after, an event. 3M has played a 
major role in providing PPE during many major events over the 
last 12 years from 9/11 to H1N1. And producing and delivering 
products during an event is extremely challenging from all 
aspects to the manufacturing process, to raw material 
availability, to capacity, and to who gets the products and 
when.
    We have two recommendations. First, the government should 
work more closely with manufacturers on plans on how to ramp up 
production and delivery when an event occurs. The second, 
nations should secure and maintain a stockpile of product with 
necessary types of PPE that will be available to both 
responders and the civilian population. For example, prior to 
H1N1, the national stockpile of N-95 respirators was over 103 
million, and the majority of these were shipped during that 
event. Today's N-95 stockpile by our reports sits only at 17 
million.
    As one of the world's largest designers and producers of 
PPE, 3M would like to work closely with all stakeholders in the 
mission to protect our Nation in preparing, responding to 
emergency events.
    We thank the chairman and ranking member and the committee 
for the opportunity today to share these thoughts, and we look 
forward to continuing to dialogue with all on this important 
topic. Thank you.
    [The prepared statement of Mr. Holler follows:]


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    Mr. Terry. Thank you, Mr. Holler.
    And now Mr. Meyers from Oil City Iron Works.

                  STATEMENT OF ERIC R. MEYERS

    Mr. Meyers. Good morning. Chairman Terry, Ranking Member 
Schakowsky, and members of the subcommittee, and from my 
district, Congressman Barton, I want to thank you for the 
opportunity to testify before you today to discuss the 
opportunities and challenges facing our company in the foundry 
industry, as well as ways to make American metal casters and 
manufacturing more competitive in the global marketplace.
    My name is Eric Meyers, President of Oil City Iron Works. I 
am a third generation Texas metal castor. We employ close to 
250 folks there at our foundry. Our foundry has been in 
existence for 125 years with our family operating it close to 
50 years. We manufacture thousands of different types of iron 
castings ranging in weight from 2 to 8,500 pounds for the 
energy, mining, agriculture, waterworks, and transportation 
sectors.
    Metal castings are the foundation for all other 
manufacturing, and metal casters are a vital building block for 
every nation's economic wealth. Every sector from agriculture, 
construction, healthcare, mining, to automotive, aerospace, and 
defense relies on castings. In fact, 90 percent of all 
manufactured goods and capital equipment incorporate engineered 
castings into their makeup.
    Oil City Iron Works supplies valves and pumps for power 
generation, gas turbine and compression parts, and general 
oilfield equipment parts to well-known companies such as 
Caterpillar, Halliburton, and FMC, as well as many other 
smaller ones.
    During the State of the Union address, President Obama 
called for a variety of energy initiatives, including expedited 
oil and gas permitting and increased funding for 
infrastructure. As part of his energy agenda, the President 
should move to approve the building of the Keystone pipeline to 
bring oil from Canada to the Gulf Coast.
    The growth in energy sector has provided significantly more 
work for Oil City and our industry, which has led to more jobs 
and lower domestic natural gas prices over the past few years. 
Establishing new stringent regulations on our energy sector 
will not only hinder foundries and domestic manufacturers but 
the long-term health of the economy and the prosperity of 
American workers.
    Today, the U.S. metal casting industry is comprised of 
2,000 facilities with 80 percent employing 100 workers or less. 
Our sector is truly one of small business. Unfortunately, over 
300 foundries have shut their doors over the past 5 years. This 
reduction can be directly attributed to the recession, foreign 
competition, and onslaught of regulations. Our government has 
created barriers to competitiveness and making it harder than 
ever for the manufacturer in the United States.
    There are a number of roadblocks that stand in the way of 
competitiveness and I am going to focus on just three key 
issues in my verbal comments today--number one, federal 
regulations. Unfortunately, over the past several years, we 
have not seen sensible and cost-beneficial regulation being 
proposed by EPA, OSHA, Department of Labor, and NLRB.
    I want to highlight a proposed rule under development by 
OSHA of serious concern to the foundry industry. The Agency has 
submitted its proposed rule for crystalline silica sand to OMB 
for review that is expected to mandate extensive and costly 
engineering controls. We believe the best way to protect our 
workers is stronger enforcement of the current regulations.
    A recent economic study reveals that the annual compliance 
cost of such a rule will likely reach $5.5 billion for all 
industry sectors, including manufacturing, construction, and 
shipbuilding. The foundry industry is estimated to face 
compliance cost of roughly $2 billion per year, and that is for 
engineering and ancillary costs alone. OSHA's potential new 
regulation would amount to about a 6 percent factor of U.S. 
foundry revenues for 2007, making our sector one of the most 
heavily impacted among all those affected. This regulatory cost 
burden would be very difficult for our industry to bear.
    Number two, the shortage of skilled workers. Adding to the 
challenges of regulatory overreach is the fact that 
approximately hundreds of thousands of manufacturing jobs 
remain unfilled due to the lack of qualified applicants. 
Despite an unemployment rate hovering near 8 percent, 
manufacturers are still struggling to fill jobs. Foundries rely 
on a variety of skilled workers to maintain and grow their 
companies, including machinists, electricians, welders, and 
pattern makers. Many of these positions have taken a long time, 
as long as 7 months to years to fill.
    For example, our Class A electrician position has been open 
for nearly 2 years with no qualified applicants. We have 
approached an area technical school to send graduating welders 
to us for possible employment. However, all of those graduates 
are already promised positions with other Texas-based 
companies. Currently, we are working with our local college to 
implement a certificate program for welding.
    Number three, tax policy. We need fair and competitive tax 
policies. Depreciation is an area of the tax law where 
uncertainty has significant impact on our capital expenditures 
and decisions. The difference is 50 percent bonus depreciation, 
100 percent depreciation, and no bonus depreciation is 
substantial. The change in the tax law determines whether we 
purchased an asset this year or perhaps not at all or whether 
we hire additional workers.
    In conclusion, Oil City understands and supports the need 
for reasonable regulations to protect the environment and 
workers' safety and health, but we also recognize that our 
industry and the entire manufacturing sector are facing 
unprecedented pressures in their efforts to remain competitive 
in the global economy. To continue manufacturing momentum and 
promote hiring, the United States needs not just improved 
economic conditions but also government policies that are more 
attuned to the realities of global competition. In this current 
economy it is clear that cost of ineffective regulations and 
increases in taxes dampen the economic growth and will continue 
to hold down job creation. For some foundries, it will be the 
final straw that destroys their whole business.
    Thank you again for the opportunity to appear before you 
today, and I would be happy to respond to any questions.
    [The prepared statement of Mr. Meyers follows:]


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    Mr. Terry. Thank you, Mr. Meyers.
    Mr. Smatsky from Zephyrhills, Florida.

                   STATEMENT OF JEFF SMATSKY

    Mr. Smatsky. Thank you, Chairman Terry, Ranking Member 
Schakowsky. It is a pleasure to be here today. I assure you, I 
will honor my time commitments.
    I would like to thank Congressman Bilirakis for his 
leadership in our district and to congratulate him on joining 
this prestigious committee.
    I would also like to point out that there is an additional 
Nestle Waters facility connected with spring sources located in 
Congresswoman Blackburn's district in Hohenwald, Tennessee. I 
would like to thank the Congresswoman for her support and 
friendship.
    Zephyrhills brand spring water was established in 1964, is 
one of five regional spring brands for Nestle Waters North 
America. It is the primary brand produced and manufactured at 
our factory in Zephyrhills, Florida.
    The Zephyrhills spring water comes from natural springs 
located in the Zephyrhills area, as well as other carefully 
selected spring sources across Florida. Today, 70 percent of 
what Americans drink either comes in a can, in a bottle, or 
another container. We take pride in producing healthful 
beverage bottles in Zephyrhills, Florida. We produce the 
Zephyrhills natural spring water, Nestle Pure Life purified 
water, along with Deer Park spring water, which is also bottled 
out of our sister factory in Madison County, Florida.
    At Zephyrhills, we are proud to not only produce great 
quality bottled water, but as well as have great quality jobs. 
A couple statistics about our factory: our plant was built in 
1990. We employ 258 full-time employees. We also additionally 
bring on 30 seasonal employees to cover peak season demands. 
The plant produces Zephyrhills and Nestle Pure Life in single-
serve containers, as well as the 5-gallon water cooler 
containers, which are distributed to homes and offices across 
Florida. Our spring water is piped to the factory and in some 
cases tankard, at which point it goes through a state-of-the-
art multifaceted, multistage quality process and ends with the 
hygienically sealed bottle that ensures food safety and quality 
in the marketplace.
    Preforms, which come from our sister factory in Madison 
County, are made into bottles in our blow molders. They are 
then filled, capped, labeled, packed, wrapped, palletized, 
wrapped again, prepared for shipment, all within the four walls 
of our facility. Across Florida, Nestle Waters employees 1,000 
people with an annual payroll of $42 million. We spend an 
additional $80 million with Florida-based business partners, 
compete in engagement activities as well as distribution 
networks. Incidentally, Madison County plant was the first 
lead-certified factory in the State of Florida.
    Our company is committed to both understanding water 
resources and share that understanding with the community. Our 
showcase partnership in Zephyrhills is with Crystal Springs 
Preserve. This 525-acre nonprofit sanctuary has been restored 
to its natural spring habitat and houses an educational 
facility, which is visited by more than 35,000 students 
annually. Last month, we just launched a traveling science 
center with the Crystal Springs Preserve. It is called Water 
Ventures. It is really cool. It is a 53-foot semi trailer that 
has been customized to provide a museum-quality-like platform 
for water education and encouraging positive stewardship to 
Florida's diverse watersheds.
    Bottled water has the lightest environmental footprint of 
any packaged beverage. We are intensely focused on lightening 
that footprint even further. We want and need our bottles back 
so that we can achieve cradle-to-cradle recycling and reuse. 
And we made a commitment to be the bottled water industry 
leader at 60 percent recycling rate for all plastic bottles 
nationwide.
    Mr. Chairman, you may not always hear from the industry 
representatives who are generally pleased with how they are 
regulated by the Federal Government, but bottled water is one 
such industry. Under the jurisdiction of the FDA, bottled water 
is one of the most regulated food products in the country. For 
example, every day, every line across 29 facilities throughout 
the United States, our product is tested, quality inspected at 
least 200 times to ensure that we meet and exceed FDA 
requirements and our own internal quality standards. The FDA 
regulations are even stronger since the enactment of the Food 
Safety Modernization Act, and we feel that we and the rest of 
the industry are regulated appropriately and in accordance with 
all laws and the high standards of our consumers.
    One area where we are not currently regulated at a federal 
level where we may be able to find some bipartisan compromise 
is with the issue of labeling and consumer's right to know. We 
believe that Americans have the right to know where their water 
is from and what is in it. In recent years, there has been an 
effort by some in Congress to introduce one federal standard 
for bottled water labeling and transparency and we have in our 
industry association looked forward to working with this 
committee on ideas for such a legislative approach.
    In closing, I would like to thank you again, Chairman 
Terry, Ranking Member Schakowsky, as well as Congressman 
Bilirakis and the committee members for your attention today. 
We applaud your leadership in assessing the current climate for 
manufacturing in America today and finding ways to improve it. 
Thank you.
    [The prepared statement of Mr. Smatsky follows:]


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    Mr. Terry. Thank you.
    And Mr. Block from Block Steel, who is Jan's witness today. 
Thank you for coming from Chicago.

                  STATEMENT OF JOSEPH K. BLOCK

    Mr. Block. Thank you, Chairman Terry, Ranking Member 
Schakowsky, distinguished members of the subcommittee. I really 
appreciate being here today because I think my company has a 
fantastic story to tell.
    We have been in business since 1948. That is 65 years. We 
are in our 65th year. And the story of our company, I believe, 
especially post-World War II, tracks a lot of the issues that 
are happening with American manufacturing. I would like to talk 
a little bit about my company, and while I do, I hope this 
illuminates some of the issues that are not only specific to 
Block Steel Corporation but in general to those small- to 
medium-sized U.S. manufacturers. I think with the knowledge of 
these issues and an understanding of their ramifications, 
public policy can be fashioned which more effectively supports 
the growth and sustainability of U.S. manufacturing, especially 
for the smaller and medium-sized businesses such as Block Steel 
Corporation.
    Block Steel Corp. represents a great American success 
story, and for the past 65 years, we have adapted to the 
changes which have occurred in the manufacturing base in the 
United States. Located in Congressman Schakowsky's district--we 
were actually previously on the west side of Chicago--we began 
by supplying a lot of the companies that today don't even 
exist, such as Zenith Electric, who made television sets, 
Sunbeam Appliance, and a company called the Hurley Electric 
Company, which was--their product was Thor washing machines, 
and they were actually the first company to produce an electric 
washer that we know today. Although there is a little bit of 
debate about who was the first.
    Those companies really don't exist anymore. In fact, at one 
time in the '70s, Zenith Electric was our largest customer. 
This is for those of us that don't remember of a certain age, 
television sets used to be big steel boxes and used a lot of 
material. And how we have adapted to those changes and that the 
change in our customer base I think represents some of the 
changes that have occurred to American manufacturing over the 
years. Certainly, televisions today are not produced with a 
quantity of steel, and to the best of my knowledge, they are 
not produced even in the United States anymore.
    We made a decision in the '60s and early '70s based upon 
the request of one of our customers to get into a product 
called aluminized steel. Aluminized steel is aluminum-coated 
sheet steel. I have a piece of it here and I can show it to 
you. And it is used primarily in HVAC, automotive applications. 
It is used in any application where heat and corrosion 
resistance is needed. We have become the premier supplier of 
aluminized steel in the United States and really in North 
America, and we are really known worldwide for that product.
    What I think is interesting is that we are in the middle of 
a supply chain, so we buy from the mills which produce steel 
and then we sell to manufacturers which use that steel to make 
a product, whether it is an automobile or a fireplace or an 
appliance. So we see both sides of some of the arguments which 
have to do with trade.
    I would like to really quickly quote--this is from Thomas 
J. Gibson, and he is the president of the American Iron and 
Steel Institute. Now, I don't agree entirely with what he says 
but I think it points out some of the issues that we all have 
to deal with because there is a real dichotomy in dealing with 
what side of the equation you are on with trade in 
manufacturing. He was responding to President Obama's speech 
the other night and he said, ``We need to recognize the massive 
trade imbalance we have with China and the fact that China 
operates with a built-in competitive advantage by undervaluing 
its currency. China has at least 200 million tons of excess 
production capacity in steel that is almost double the size of 
our entire domestic industry. The President needs to take 
action to address the import surge we are facing in steel, 
including declaring China a currency manipulator and working 
with Congress to pass a tougher trade enforcement legislation 
like the ENFORCE Act.'' Really quick, there is two sides to 
that story. Manufacturers want cheap steel wherever they can 
get it but the steel mills want protection so that they 
obviously can protect their market.
    Thank you.
    [The prepared statement of Mr. Block follows:]


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    Mr. Terry. Perfect timing.
    Mr. Block. All right.
    Mr. Terry. Thank you very much. And by the way, Mr. Block 
and others, we are actually contemplating a steel-only 
hearing----
    Mr. Block. Great.
    Mr. Terry [continuing]. So we could work through those 
issues.
    Mr. Arnold, appreciate you here from Fram Renewable Fuels.

                   STATEMENT OF HAROLD ARNOLD

    Mr. Arnold. Glad to be here. Thank you very much for 
inviting me.
    Fram is a small company in South Georgia. We make wood 
pellets. Wood pellets are wood fiber that has been dried and 
compressed into a pellet form, and the purpose of doing this is 
to enhance transportation and logistics of it and increasing 
the energy density when it is burned. The uses of wood pellets 
are for the residential stove and heating market. Mostly, that 
market is in the upper Midwest and the Northeast in the United 
States. Combined heat and power plants in Europe use wood 
pellets extensively where they generate heat for communities or 
large office complexes and a little bit of electricity and 
provide steam for industrial off-takers and then large-scale 
power generation in Europe, wood pellets can be used as a 
renewable fuel component to displace coal. And because of 
treaty obligations, they have to have an increasing amount of 
renewable fuel in their fuel mix every year.
    Because of the Kyoto Treaty and other obligations that they 
have such as the 20/20/20 target--20 percent reduction in 
greenhouse gases, they are looking for 20 percent of the mix 
from renewable fuels, and 20 percent from improved energy 
efficiency--wood pellets are a low-cost form in this. And what 
they have found there in markets such as the U.K. is that you 
can base load your power grid with wood pellets whereas 
intermittent sources--very good sources with cheap fuel like 
solar and wind, you can't base load.
    We manufacture in America. We have Appling County pellets 
in Baxley, Georgia. We employ 40 people there, original 
investment about $25 million. That mill originally had a design 
capacity of 130,000 tons. We have recently expanded that by 
another 100,000 tons up to 230. February of last year we 
constructed a joint venture operation in Lumber City, Georgia, 
where we can produce another 120 or 125,000 tons, a $10 million 
investment, and created 14 or 15 jobs there.
    We have just broken ground on a new plant to be constructed 
in Hazlehurst, Georgia, in two phases. The first phase will 
employee 62 people, produce 300,000 tons per year, and then it 
will be expanded later, another $30 million investment with two 
additional lines and increase employment by about another 20 
people in that. We do aggregate pellets from other very small 
producers in Georgia, and we expect to export over 450,000 tons 
this year and we expect to double that next year.
    The foreign market is the demand that Fram feeds. That 
demand--the U.S. exported about a million-and-a-half tons in 
2012. We expect that to grow to over 12 million tons in the 
next 10 years. So it is an area with tremendous growth in it.
    We have been helped by various government programs that are 
in place. The USDA rural loan guarantees were very helpful to 
us in establishing our plants. We have availed those. The 
Investment and Production Tax Credits, of course, are very 
helpful to us. Port infrastructure in the U.S. is somewhat 
lacking, and the work that the Corps of Engineers is doing to 
improve that with dredging is very important to us and, you 
know, in budget constraints, hopefully, they get enough to keep 
the channels open so we keep the ships going in and out.
    Thank you very much for inviting me up to tell our little 
story of our little company. We expect the global demand for 
the products that we are making to increase. The U.S. can be at 
the forefront in this and develop many things as we go along. 
And we are just on the edge of raw materials coming from bio 
sources that is going to really help in a lot of ways. 
Companies like Bridgestone are making tires now entirely from 
plant matter, and we will see a lot of things like this develop 
out of our industry as things move along. So this is a great 
country to be in and a great town to be end in the forest 
industry.
    [The prepared statement of Mr. Arnold follows:]


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    Mr. Terry. Well, thank you. I have asked for a wood pellet 
grill, so I am with you.
    Mr. Saxton, I appreciate you being here today, JELD-WEN.

                    STATEMENT OF RON SAXTON

    Mr. Saxton. Thank you, Mr. Chairman, Ranking Member 
Schakowsky, members of the subcommittee, and especially 
Congressman Welch for the opportunity to testify today.
    My name is Ron Saxton and I am an executive vice president 
of JELD-WEN. And I also serve on the board of the Window and 
Door Manufacturers Association and the Executive Committee of 
the National Association of Manufacturers.
    JELD-WEN began in 1960 in Klamath Falls, Oregon, and is now 
one of the world's leading manufacturers of windows and doors. 
JELD-WEN employees 20,000 people across more than 100 locations 
in the Americas, Europe, Asia, and Australia. In the United 
States, JELD-WEN manufacturers in 17 states and employs 
approximately 9,000 people. Vermont is an example of our 
commitment to U.S. market. As Congressman Welch knows, we 
employ over 800 people there in two of our facilities in Ludlow 
and North Springfield.
    Well before the term sustainability was popular, JELD-WEN 
adopted an ethos that the efficient use of our natural 
resources was a critical aspect of manufacturing. One example 
of our sustainability ethic at work is a facility where we 
utilize wood waste from our window framing manufacturing plant 
to create door skin products in a neighboring facility.
    While JELD-WEN sells products into both commercial and home 
remodeling markets, our strength as a company and job creator 
is intimately tied to the new housing construction market. With 
the steep decline in housing starts, the last 6 years have been 
very challenging for everyone in the housing industry. The 
slow, steady recovery in housing is having a positive impact on 
our bottom line, and we are hiring again, almost 1,000 people 
in the last year.
    However, as you are well aware, what you do in Washington 
can have a positive or disruptive impact on our industry. 
Consistency and predictability with regard to housing, finance, 
and regulatory policy are necessary, and I would like to 
highlight some energy efficiency policies that have significant 
impact on JELD-WEN and our industry.
    In remodeling, doors and windows are very important 
products. They are important to manufacturers like JELD-WEN, 
but they are also an important part of the U.S. energy debate. 
To illustrate this, consider that much of the existing housing 
stock in the United States uses single-pane windows 
manufactured prior to the late 1970s. If America focused on 
replacing the almost 1 billion single-pane windows in older 
homes with new energy efficient windows, we could avoid the 
need for literally dozens of new power plants. Clearly, JELD-
WEN would benefit, but a broad commitment to improving the 
energy efficiency of existing housing would be a boon to 
American employers and consumers well beyond window and door 
companies.
    The not-too-distant past shows how government action can 
move markets. In 2009 at the height of the housing collapse, 
Congress passed a significant 2-year tax incentive for energy-
efficient residential products, including windows. The enhanced 
25-C tax incentive attracted consumers to energy-efficient 
products and saved jobs across the sector from manufacturers to 
distributors to installers. In addition to providing a bridge 
to better times, it locked in energy savings for years to come.
    Recent bipartisan efforts to utilize incentives beyond the 
tax code have been led by members of this committee, most 
notably Representatives Welch and McKinley. We hope you will 
continue with those efforts in the 113th Congress. A good 
energy policy is also a good job strategy. However, misaligned 
energy policy, even if well-intentioned, can hamstring growth.
    JELD-WEN has been an ENERGY STAR partner since 1998 and 
past Partner of the Year in both the United States and the 
Canadian ENERGY STAR programs. As such, we are very concerned 
that recently proposed changes to that program relative to our 
products are a mistake for consumers and homeowners, as well as 
manufacturers. ENERGY STAR for windows has been a phenomenally 
successful program. For decades, it has pointed the consumer 
toward the best and most cost-effective energy-saving products. 
Through active collaboration with industry, the program has 
offered a voluntary and informative system that has promoted 
energy efficiency, consumer economic benefit, and encouraged 
manufacturing in the United States.
    Today, the EPA is considering changing the criteria for 
ENERGY STAR-rated windows to a point where there is no 
realistic cost-effectiveness for consumers, and we fear the 
long-respected program will become irrelevant. We are working 
diligently with EPA to fix the issue but a standard that does 
not recognize a balance of cost-effectiveness with energy 
efficiency threatens to dramatically and negatively impact an 
extraordinarily popular and effective program.
    In closing, I want to reiterate just two points. First, a 
stable, strong housing construction market is important to all 
of us, from my son and daughter-in-law looking to buy their 
first home to companies like JELD-WEN that supply materials for 
home construction. Second, there is an important and 
constructive role that the government can play in energy 
efficiency, but if programs like EPA's ENERGY STAR program are 
pushed beyond the standards that consumers recognize, those 
programs marginalize benefits to everyone.
    I thank the Committee for your time and attention.
    [The prepared statement of Mr. Saxton follows:]


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    Mr. Terry. Well, thank you very much. Appreciate all of 
your testimony. It has been very insightful.
    And I will recognize myself for the first question because 
I get to.
    But what I am curious--and several of you have put it into 
your testimony, but I want to highlight that, so what I want 
each to do--eight of us in 4 \1/2\ minutes--to be able to just 
say one, two, maybe three things that if someone came to you 
and said we need you to expand your production, give me one of 
the things that you would worry that would be a barrier or 
something that we can do that would really make it easier for 
that to happen.
    Mr. Yuse, we will start with you since you just sat there 
the longest.
    Mr. Yuse. Thank you. I appreciate that.
    The top of my list would be reforms and the tax codes and 
regulations. The best way for us to expand our manufacturing 
and product base is to become more affordable. Over the years, 
we have had numerous affordability programs. We have been able 
to drop the product prices. We have been able to drop or hold 
steady our labor rates. We need to go look at the other aspects 
of cost which affect our competitiveness in the marketplace.
    Mr. Steiner. So I would just quickly answer that to focus 
on U.S. tax rates. When we expanded Gorilla Glass, we had the 
choice to expand in the U.S., Korea, Taiwan, or Japan, and 
higher U.S. tax rates make it more difficult to justify an 
expansion.
    Mr. Terry. Mr. Holler?
    Mr. Holler. Illuminating my comments to the area of 
preparedness for an epidemic or a safety hazard, I think it 
would be close coordination with the government on what areas 
and what types of products we would need to expand our capacity 
so that way we are working in concert to make sure we are 
addressing the right products for the events that we need to 
prepare for in the future.
    Mr. Terry. Good point.
    Mr. Meyers?
    Mr. Meyers. Thank you. For us in our industry, obviously, 
uncertainty with regulations is a huge issue with us and it 
plays a major role in what we do as far as expansions and what 
we look at. I echo the gentleman to my right. And tax codes are 
very important to us, as well for all small manufacturers 
because that uncertainty as well will either ultimately decide 
on whether we expand or whether we do not.
    Mr. Smatsky. I don't think we have a barrier that exists 
with our company today. I think the challenge that we faced is 
getting our consumers and folks out in the communities to 
switch to that healthier lifestyle and consumer more water, 
quite honestly.
    Mr. Terry. OK.
    Mr. Block?
    Mr. Block. Probably the barriers that I would see to us 
would be certainly taxes are always an issue, not necessarily 
the particular level of taxes for myself, but to see a fair and 
simplified and more equitable tax code across the Nation so 
that there is more of a level playing field, I think that would 
be fairly important.
    I also would like to see harmonization of, you know, 
environmental or regulatory issues so that there isn't a 
competition necessarily between States to who can be the least 
regulatory or even if possible or to the amount feasible 
worldwide to a degree so that there is a harmonization of 
regulatory issues that gives pretty much a level playing field.
    Mr. Terry. Thank you.
    Mr. Arnold?
    Mr. Arnold. I would say number one is access to capital. At 
21 years old I could walk in a bank--I inherited that I guess 
from my father and grandfather--but it was much easier to 
borrow capital than it is today. It is very, very difficult and 
time-consuming and you need a raft of legal counsel, 
accounting, and all to make those things happen.
    The second thing would be in an export business access to a 
sufficient port infrastructure and keeping the channels and 
waterways open. Those are things we can't do. We can build a 
manufacturing plant, but we can't do those things.
    Mr. Terry. Interesting.
    Mr. Saxton?
    Mr. Saxton. If the market gives us the opportunity to 
expand, there are no barriers that are going to stop us. The 
one concern that we do have, which one of the previous 
witnesses mentioned, is the labor force. As I said, we hired 
1,000 new workers in the last year and we are continuing to 
expand, and the reality is that with high unemployment rates we 
have been very surprised how hard it is to hire qualified 
workers in many places.
    Mr. Terry. That is an interesting mention. I have actually 
heard that from other manufacturers in Omaha, one that had five 
welding positions open for months and they couldn't get them 
filled. So I appreciate that.
    The ranking member is now recognized for 5 minutes.
    Ms. Schakowsky. Let me just follow up on that. How many of 
you have found it hard to fill slots with qualified workers? 
Can you just raise your hand? We have an issue here that I 
think our committee ought to definitely explore----
    Mr. Terry. That is seven of the eight raised their hands.
    Ms. Schakowsky. Yes. And who didn't? Was it Mr. Holler?
    Mr. Terry. The----
    Ms. Schakowsky. So you are able to hire?
    Mr. Holler. Within my limited scope with 3M. I really can't 
speak for the whole company.
    Ms. Schakowsky. OK.
    Mr. Holler. But oftentimes, we have many candidates for 
different roles at 3M and we are known as an innovative company 
and oftentimes can attract many good employees.
    Ms. Schakowsky. Let me also continue along the line of 
workers and talk to my friend and neighbor and business in my 
district, Mr. Block.
    We know that global competition in manufacturing is far 
more intense today than it was 3 decades ago, the result in 
advances of transportation and communication and increasingly 
free flow of international trade. And consumers have benefited 
from that with lower prices on many everyday products and 
multinational firms have benefited from various savings related 
to cost of labor. But the impact of globalization on smaller 
manufacturers and American workers is far more uneven. You 
mentioned even playing field a couple of times. So in your 
testimony you mentioned the un-sustainability of the race by 
businesses to find the lowest cost wages or lowest taxes around 
the world and you called for a level playing field to help 
ensure that companies large and small compete on innovation, 
better products, better business practices instead of on 
cutting wages and benefits. And I wondered if you could 
elaborate on this recommendation and how you believe it might 
help American manufacturing workers.
    Mr. Block. Sure. I think that part of it stems----
    Ms. Schakowsky. Put your mike on. Yes.
    Mr. Block. You know, part of it stems from how our company 
was founded and how we deal with our employees. And ever since 
the inception of our company, we treat our employees like 
family. We have always paid very good wages and we have always 
created a situation where they have had pretty good health 
benefits. And when we see situations where new competition 
comes into areas whether it would be from overseas or whether 
it would be in other locations, and they start up businesses 
with a much lower cost structure--perhaps they do have those 
wages or they don't provide those health benefits--it really 
creates an unlevel playing field to a degree. And that is why, 
from our point of view, we don't want to be a race to the 
bottom. We don't want to have to survive by cutting benefits, 
by cutting wages to my employees. I know when I was--if I can 
expand on this----
    Ms. Schakowsky. Yes, go ahead. Sure.
    Mr. Block [continuing]. But I know a lot of us when I was 
growing up, I always thought that America, the land of 
opportunity, things would always get better, and there was 
always an opportunity for advancement. And it just kills me 
today personally when I see workers who have worked for 20, 30, 
40 years having to deal with having their wages cut, having to 
have to deal with their benefits cut. And I am not naive. I 
understand that we live in a world in which there is 
competition for labor and there is competition for resources. 
But is it fair that the United States should have to follow the 
lead of whether it would be Asian countries or whatever 
countries it is that we have to bring our wages down to match 
that? Would it not be better if we put in place leveling the 
playing field that they eventually would have to bring their 
wages up or their healthcare costs or whatever the case may be?
    And that troubles me because these consumers who are having 
their wages cut are the very people who buy the products that I 
certainly supply to the marketplace, the cars, the appliances, 
or whatever, or houses, as the case may be.
    Ms. Schakowsky. Thank you. That was kind of Henry Ford's 
idea that he wanted his workers to be able to buy his cars.
    I wanted to talk about the uncertainty from current fiscal 
policy because we are facing so many issues right now. And I 
just wondered, you know, with the idea, for example, Mr. Yuse, 
of sequestration, which would affect your business. It seems to 
me it would--actually, let me just ask you. Would it be correct 
to say that sequester would threaten economic harm to the 
aerospace industry?
    Mr. Yuse. Well, first off, let me say that, you know, we 
share the concerns expressed by the Secretary of Defense and 
the Joint Chiefs regarding the impact of sequestration should 
it be implemented. And yes, we are concerned about the impact 
on the business if indiscriminate budget cuts are made. It is 
difficult for us right now to anticipate the level or the exact 
mechanism by which those cuts will be implemented, so the exact 
impact to any program or any facility is difficult for us to 
predict. But if you take large quantities of funding out of the 
system, it will have an impact.
    Ms. Schakowsky. So the lack of predictability itself is a 
problem, though, is it not?
    Mr. Yuse. Yes. And the uncertainty is absolutely 
problematic.
    Ms. Schakowsky. Can I ask just one raise of hands? Raise 
your hand if you feel that your business would be better off in 
2013 if there were greater certainty on predictability right 
now in the outlook for fiscal policy. OK. Thank you.
    Mr. Terry. All right. Thank you.
    Mr. Barton, you are recognized.
    Mr. Barton. I love to be recognized, Mr. Chairman. Thank 
you.
    I want to ask--since Mr. Meyers is my friend and from my 
district and he is in the oil patch--what his view is on the 
competitiveness as related to natural gas prices in the United 
States. Does that help your industry or hurt your industry?
    Mr. Meyers. Well, thank you, Congressman Barton. Obviously, 
the competitiveness in the industry has been a benefit to most 
metal casters because we have seen quite an increase in 
products going out to the energy sector. One of the things that 
we do face with the natural gas industry and its increasing 
competitiveness is also a competitiveness for some of our raw 
products, one being sand. That is a big issue for us in Texas 
in foundries and metal casters. But I think overall, if you 
look at the increase in energy, specifically natural gas and 
oil, that increase has been beneficial to us in manufacturing 
not only just for foundry corporations or companies but also 
across the board to people producing machines for other various 
reasons.
    Mr. Barton. As a fuel source, though, do you use a lot of 
natural gas in your foundry? Is that a base load fuel for your 
foundry?
    Mr. Meyers. We use some natural gas, but primarily, it is 
all electric-run.
    Mr. Barton. Electric.
    Mr. Meyers. So in a tangible way, the natural gas prices do 
affect our operations because of the energy costs. We have seen 
energy costs maintain a pretty stable level for the past year-
and-a-half, but some forecasts are now starting to trend up. So 
that will be an issue as we move through this year and the next 
year and some of our contracts are 6- to 8-month contracts 
begin to expire and we move forward on new contract 
negotiations.
    Mr. Barton. Well, I will ask Mr. Steiner of Corning the 
same thing. What I am trying to get at is the fact that we have 
used hydraulic fracturing and horizontal drilling in our shale 
formations and drop natural gas prices so that they are the 
lowest in the world, I am told that that helps our 
competitiveness in our base manufacturing sector because of the 
lower natural gas prices. Have you found that to be the case, 
Mr. Steiner?
    Mr. Steiner. Yes, it takes a lot of energy to melt sand at 
1,200 degrees, so our melting units are both natural gas and 
electric-fired so that the competitiveness of natural gas 
certainly helps us.
    Mr. Barton. OK. I am going to switch gears a little bit 
with Mr. Arnold. My first question is just kind of 
serendipitous, but when I saw Fram, I thought oil filters. Is 
your company related at all to the Fram oil filter company?
    Mr. Arnold. No, sir, we are not. One of our investors is 
Norwegian roots, and Fram in the Norwegian language means 
onward and upward.
    Mr. Barton. Oh.
    Mr. Arnold. And it is also the name of a wooden polar 
exploration vessel that is in a museum in Oslo that was near 
and dear to his heart. He used the word Fram in many of his 
companies.
    Mr. Barton. OK. Now, my friends on the minority side, on 
the Democrat side, are always talking about green jobs and how 
great green jobs are. I am not anti-green job. I think I have 
finally seen an example of a green energy company that actually 
makes a little sense, and that is yours.
    Mr. Arnold. Thank you.
    Mr. Barton. You know, from what little bit I was able to 
gather from your testimony, your company takes wood and makes 
it into pellets and sells the pellets for fuel. Is that right?
    Mr. Arnold. That is correct.
    Mr. Barton. Now, what percent of your market is residential 
in the United States versus exported overseas for base load 
power plants in Europe?
    Mr. Arnold. One hundred percent of our market is export. 
Early on in the formation of our company, we were a participant 
in the domestic market, but logistically, we are too far 
removed from the Northeast where the concentration of 
residences with wood pellet stoves is. It is actually more 
economical for us to ship into Europe than it is to ship into 
Maine.
    Mr. Barton. I want the subcommittee to understand this. We 
don't have cap-and-trade in the United States so we are using 
natural gas and coal and nuclear for our base load power plants 
pretty much. But in Europe, they do. But it is more competitive 
to pelletize wood in the United States, ship it to Europe, use 
it as a base load fuel source in spite of the fact that your 
BTU content as compared to coal is not all that good, but 
because you are renewable, you get credit in Europe and we are 
burning wood pellets just like we used to burn wood here in the 
United States for transportation on the railroad. So it is kind 
of odd that we are doing it that way, but it is good for you 
and your company and the people in Georgia. Are there a lot of 
companies like yours that are springing up to do that?
    Mr. Arnold. There is a growing number of companies, but to 
make it clear on what is going on there is the European 
utilities are required to use a renewable fuel by government 
dictate. And it is not more economical to them than using coal.
    Mr. Barton. I understand.
    Mr. Arnold. But it is----
    Mr. Barton. And they are mandated to do it so it is helping 
us.
    Mr. Arnold. It is helping us.
    Mr. Barton. Their mandate in Europe is creating green jobs 
in the United States.
    Mr. Arnold. It is creating green jobs and also there is an 
evolution going on in the technology. We are building our third 
mill now, and each one of them is great improvements in 
technology and efficiency, which will lower the cost of it and 
eventually will help you guys.
    Mr. Barton. I am all for a renewable fuel mandate in 
Europe.
    Mr. Arnold. Yes.
    Mr. Terry. All right. Mr. McNerney from California, you are 
now recognized for 5 minutes.
    Mr. McNerney. Well, thank you, Mr. Chairman.
    You know, I spent about 10 years in manufacturing before 
coming to Congress, and so I found this to be a very 
interesting panel and I appreciate your coming out here and 
talking to us.
    I have a couple of observations. Mr. Smatsky, I really 
appreciated your comments on the cradle-to-cradle philosophy, 
and that is adopted. Could you explain what that means a little 
bit and maybe give us a hint of how you think that could be 
more widely adopted in the United States?
    Mr. Smatsky. Yes, thank you for the question.
    The cradle-to-cradle philosophy is really about recycling 
and reuse and getting the bottle back. About 27 percent across 
the United States currently today have recycle programs, so we 
need to develop the recycling aspect to get the bottles back. 
Currently, right now, we are working on recycled PET bottles 
that we are introducing into the California marketplace, as 
well as in our Deer Park spring water brand.
    Mr. McNerney. OK. Thank you.
    Mr. Meyers, I found your comments about the lack of 
appropriately trained workers to be concerning as did the 
ranking member and other members of this subcommittee. And it 
sounds like you have taken steps in your company to help ensure 
that you are going to have those workers that you need. Do you 
see that as the way education is going to be going in this 
country where the private sector has to take a more strong 
step, a more strong active role in providing for educated 
workers? Or do you think the public education system is going 
to be able to step up and provide that service?
    Mr. Meyers. OK. Well, thank you. First of all, that is 
correct. I do believe that the private sector is pushing 
technical trade training, and that is very obvious when you 
look at our sector and any manufacturing job in specific. It is 
just not something that is pushed at the local level or through 
public schools, so we were proactive in that in approaching our 
local college there to look at technical trade programs. And as 
we talked to other foundries throughout the country, they are 
basically doing the same thing if not just for the lack of 
skilled workers or tradesmen, simply because in our State we 
look at the competition with other sectors. For us it is very 
difficult because a lot of our skilled workers and tradesmen 
will either go to work in an oil field or in areas such as 
higher-level manufacturing in the aerospace or defense. So it 
is very hard. And either way you look at it, it is very 
competitive for the workforce, and we are not seeing the 
increases in the workforce that we need.
    Mr. McNerney. Well, thank you.
    Mr. Yuse, I know Raytheon has made significant 
contributions towards STEM education--science, technology, 
engineering, and mathematics. Could you elaborate a little bit 
on the direction that Raytheon is moving and how that could be 
replicated by smaller companies?
    Mr. Yuse. Absolutely. So as an engineering company, we are 
very concerned with the decline in interest in science, 
technology, engineering, and mathematics. Our industry is very 
dependent on a robust source of engineers and scientists for us 
to deliver the kind of innovation and technology the country 
needs. We have created a series of programs at a variety of 
levels--both the local, state, and at the university levels--
for encouraging younger folks to go into that field of work.
    Mr. McNerney. Have you found that program to be effective?
    Mr. Yuse. Yes, we have. We have found we had over the years 
now spent in excess of $72 million promoting STEM in a variety 
of different venues up to and including with the Smithsonian 
Institute. I would encourage companies across the board, but 
particularly those who are very dependent on high-skilled 
workers, to look into doing similar types of activities because 
we do find that the younger folks, when they get into it, 
really start to become interested in it. And I think that is 
very important for the future of our country and for our 
national security. And I would encourage the Congress to look 
into programs that could accomplish the same thing.
    Mr. McNerney. So somehow, Congress might be able to give 
incentives to smaller companies to getting engaged in the way 
that the larger companies like Raytheon----
    Mr. Yuse. Smaller companies, school districts, teachers. 
There are a variety of different ways. I think communications 
to younger folks is a major factor. The more they know about 
it, I think the more interest that can be generated. It is for 
the high-tech industry a decline in interest in STEM is a 
concern for the country.
    Mr. Terry. Thank you.
    Mr. McNerney. Thank you, Mr. Chairman.
    Mr. Terry. I recognize the vice chairman of the committee, 
Mr. Lance.
    Mr. Lance. Thank you, Mr. Chairman.
    To the panel in general, to what extent does the fact that 
the Chinese currency does not float freely have an impact on 
your manufacturing? Mr. Block?
    Mr. Block. I think it is certainly a big problem, and you 
know, in my industry, which is the steel industry----
    Mr. Lance. Yes.
    Mr. Block [continuing]. The whole China situation is 
certainly very complex. But just a few statistics, raw steel 
production in China, they have excess capacity of something 
around 200 million tons of excess capacity to produce steel. 
And we don't even really know for sure because the steel 
industry in China is very fragmented. But there is an estimate 
today that 50 to 70 percent of the world's productive capacity 
to produce steel is in China. And what that creates is, 
obviously, on a global scale huge market manipulation in theory 
because if the Chinese decide to go at a policy to just produce 
steel at a crazy rate and sell it on the world market, it will 
drive prices down, which may or may not be good, depending upon 
which side of the supply chain you are on, but it certainly 
would not be good for the American steel industry.
    Mr. Lance. Thank you. Is your company--is it called Block 
Steel or is it Inland Steel?
    Mr. Block. Block Steel.
    Mr. Lance. Block Steel.
    Mr. Block. You are thinking probably of Joseph Block?
    Mr. Lance. Yes.
    Mr. Block. It is not related.
    Mr. Lance. Not related.
    Mr. Block. But he was the chairman of Inland Steel.
    Mr. Lance. But that was in the Middle West, was it not?
    Mr. Block. Correct. Inland Steel was actually in--well, the 
remnant of Inland Steel is still there. It is owned by 
ArcelorMittal now.
    Mr. Lance. Yes.
    Mr. Block. Yes.
    Mr. Lance. Thank you.
    And to the panel in general on an issue that had been 
raised earlier, we are going to be engaged in a reform I hope 
this year on corporate tax policy, Ways and Means more so than 
E and C, but certainly an important issue to us all. What would 
you suggest as we try to have a better corporate tax system in 
this country? Yes, sir?
    Mr. Yuse. In general, American businesses pay among the 
highest corporate tax rates in the world.
    Mr. Lance. Yes, sir.
    Mr. Yuse. We compete internationally. International sales 
are of a benefit to our customers and to the economy in 
general. The higher tax rates cause us to be less competitive 
in the international marketplace. So anything that could be 
done to reduce overall tax rates and make U.S. products more 
competitive in the marketplace would be very helpful.
    Mr. Lance. Yes.
    Mr. Yuse. It would also be very helpful to have that 
coupled with a substantial research and development incentive--
--
    Mr. Lance. Yes.
    Mr. Yuse [continuing]. Which is also common 
internationally.
    Mr. Lance. And of course, certainty in that area, making 
sure the R&D portion is permanent----
    Mr. Yuse. Correct.
    Mr. Lance [continuing]. And does not have to be extended 
periodically by the Congress.
    Mr. Yuse. Absolutely.
    Mr. Lance. A final question to the panel. Manufacturing's 
future needs, besides your current concerns, what do you think 
might be the next big thing to confound growth in your 
industries and what challenges are you likely to face looking 
forward in the next 5 to 10 years or even 10 to 20 years?
    Mr. Yuse. So as we try to deal with the potential for 
budget cuts, we have been focused on international sales. 
International sales, as I mentioned a few minutes ago, benefit 
this country in a number of ways. A lot of development can go 
on in those programs that our U.S. customers can take advantage 
of. The bulk of the jobs are here in the U.S. They are not 
overseas, at least in my industry, which tends to offset some 
of the earlier discussions today. So I do believe that, you 
know, the ability to expedite international sales in my 
industry is a stabilizing influence going forward.
    One of the things we see competing internationally is that 
we compete not only with companies, but we compete with 
countries. So it would be very helpful to get congressional and 
administrative advocacy for the promotion of international 
sales. That would be a big help. Fully fund all of the 
international security assistance programs, which enable U.S. 
allies to make the purchases of the systems that they need. And 
then finally, streamline the armed sale process in general. I 
know that is something that has been talked about recently. It 
can be a lengthy process. Anything that can be done to expedite 
that would help this entire situation and boost manufacturing 
in the U.S.
    Mr. Lance. Thank you. My time is expired.
    Thank you, Mr. Chairman.
    Mr. Terry. Thank you.
    And now we would recognize the gentleman from Georgia, Mr. 
Barrow.
    Mr. Barrow. Thank you, Mr. Chairman.
    Mr. Arnold, I want to follow up on some of the leads that 
were opened up by my friend Mr. Barton from Texas because he 
talked about one of two trends we have discussed today that I 
think provide an object lesson. Each provides an object lesson 
in the tension for the debate between folks that say we ought 
to put mandates out in front of technology in the blind hope 
that technology will catch up to the mandates on the one hand, 
and folks who think no, we ought to invest in technology. Put 
the technology out in front of the mandates and the mandates 
will take care of themselves.
    He brought up one of these trends, the fact that Europe has 
imposed conditions on the marketplace that are not market-based 
at all. They have imposed mandates on the marketplace and say 
you have got to go do something you are not doing now. And the 
unintended consequence of that is at the cost of European 
utility consumers, we are investing in research and development 
here in this country where the raw materials to meet that 
artificial mandate can be found and where it is stimulating 
research and development in your area, not exactly I ought to 
think they contemplated but that is what is happening as a 
result of that approach to put the mandate out in front of the 
technology. The nearest available technology may be in America. 
We may be benefiting from it in the 12th District of Georgia as 
a result of what is going on there at their expense but not the 
expense of our utility consumers.
    Likewise, we talked about what is going on with fracking, 
the fact that there has been an explosion in a traditional 
source of energy but it has been inaccessible to us because of 
our inability to get to it because of our technology. But what 
is happening now? If you listen to Ted Nordhaus and folks at 
the Breakthrough Institute, they will tell you this is a direct 
pay off of 35 years of investment in very basic research that 
has only come into fruition now, stuff that was started during 
the Carter years.
    So what is happening in natural gas is the payoff of an 
investment in technology ahead of mandates. Without cap-and-
trade, we have achieved tremendous reductions in CO2 
and we have exploded the available natural gas to our consumers 
because we invested in technology, not mandates.
    Now, that is a lead-in to what I want to ask you. What do 
you think we ought to be doing in the area of research and 
development? How can government help encourage and incentivize 
manufacturers to invest in research that will provide a long-
term payout? What do you think ought to be our priorities in 
that area?
    Mr. Arnold. I think the priorities in that area should be a 
very broad base, putting as much research and development money 
in small amounts into as many different companies as you can to 
foster as many ideas out there, because out of there will come 
the one that will pay off in the beginning. As Thomas Edison 
said, he has found 1,000 different ways not to make a light 
bulb. That is what we have to have in this country to keep 
bringing new technology to the forefront. There will have to be 
some pull in some technologies in some markets to get people 
involved, but we also need a lot of research and development 
and it needs to be academic tied to industry sponsorship in 
some way. But it doesn't need to be giant block grants from 
Department of Energy or anybody else that goes to one segment 
of one industry to one company where success or failure has 
used up all of that money. It can be used in many, many 
different places in my opinion.
    Mr. Barrow. My friend Tom Fanning, the head of the Southern 
Company, is fond of describing sort of an S curve in which you 
can get from research. There is a small amount that is spent at 
the most basic level, the most basic pure research. We don't 
know where it is going to lead. Then, there is a tremendous 
amount of money in the high part of the S curve in which folks 
are researching how to develop a lead, something that has come 
out of basic research. And then there is the deployment phase 
where it levels off again where you are just trying to deploy 
something that you have got ready to go in the marketplace. His 
position is that the government ought to confine its 
investments or its incentives at the most basic level possible 
where the highest payoff will be from investing in that very 
basic research where there is very little support that you can 
get from the private sector to get the kind of breakthroughs 
that you will need. But the private sector is good at taking 
off with that. What do you think about that? Is that a model 
that we should build on?
    Mr. Arnold. I personally think that is a very good model to 
build on, and that is the kind of things that we look for is 
reading some research paper where somebody has stumbled across 
an idea and then I can take that idea and improve our processes 
or come up with a completely different business model out of 
that.
    Mr. Barrow. I think of the difference between investing in 
something like DHARMA where they are doing incredibly basic 
research on the one hand and the payoffs you get from that, as 
opposed to investing in a development or deployment strategy 
for a big old outfit like Solyndra. I can't help but think that 
the biggest payoff is investing at the front end of that S 
curve, where there is the least amount of outside money that is 
available through private sources to lead to the kind of 
development and breakthroughs that private sector knows what to 
do with once they have got it. But it is very hard for them to 
provide that kind of support. That sort of seems to me to be 
sort of a good object lesson.
    Mr. Arnold. I would agree with that approach.
    Mr. Barrow. Thank you, Mr. Arnold.
    No further questions.
    Mr. Terry. Thank you.
    Mr. Harper is recognized for 5 minutes.
    Mr. Harper. Thank you, Mr. Chairman. And thank each of you 
for taking the time out of I know what is a very busy schedule 
for each of you to be here and to shed a little light on your 
businesses and make us perhaps think outside of the box and to 
give us some ideas to go forward on how we can make it more 
conducive to do your business and how we can create and grow 
jobs in this country, and that is a great thing and we 
congratulate you on the successes that you have had.
    And Mr. Yuse, we are certainly glad to have you here, and I 
remember the very first time that I came into almost official 
contact with Raytheon in my district was when I was running, 
and you had a great advocate there in Forest, Mississippi, 
Mayor Chambers, who just went on and on about the impact that 
you had as a company there in east central Mississippi. And you 
know, I have been there for Veterans Day event and, you know, 
the workforce, the team there is exceptional and you should be 
very, very proud of what is there and what you see.
    But how is that support of your local and state government 
officials, what has that meant to you in Forest, Mississippi?
    Mr. Yuse. Well, thank you for the kind words. We are very, 
very proud of the facility and the workforce there. We have an 
excellent working relationship with all levels of the 
government in Mississippi from local, state, up through this 
level. And it has gone a long way in helping us work with 
various agencies. We are on a number of statewide initiatives 
to do everything from expand the use of broadband technology to 
energy initiatives. The workforce is very, very involved in 
community service. They put in a lot of time on a regular basis 
and I think that goes a long way to building community spirit, 
which helps us work with the community when we need to go do 
something with the facility or find people or expand the 
facility. So in general, the working environment has been 
extremely beneficial to the success of our operation there, and 
I thank you for it.
    Mr. Harper. Well, we are delighted to have you there and 
look forward to working together for many years on that. And 
you mentioned earlier in your testimony that with us as a 
country having one of the highest corporate tax rates, you 
mentioned that as something if you could see done--you talked 
about tax codes and regulations earlier. If our corporate tax 
rates were reduced to a level where we were one of the lowest 
and not highest, what would you see as the benefits that would 
come from that and how quickly would we realize the benefits 
after a change was made?
    Mr. Yuse. I think the change would be quite quick. The 
primary effect would be we would be much more competitive very 
quickly in the international marketplace where we are competing 
with companies that do have lower corporate tax rates. And I 
think that is the primary factor there. And there is a large 
potential for foreign sales but we have to be able to compete. 
We have to have, as I said, advocacy from the United States 
Government. We have to have affordable prices, and we have to 
have the ability to export the technology. In many cases, 
foreign companies, you know, can sell technology that we are 
not allowed to export out of the U.S. Those are kind of the 
three things that tend to limit our ability.
    Mr. Harper. You mentioned also the regulatory burdens that 
are there. What area of regulation are you referring to when 
you say that we need to look at improving, you said, the tax 
code and obviously regulations? Would that be in the area of 
the export regulations you just referred to?
    Mr. Yuse. That would be one area just, you know, general 
reporting on, you know, a variety of different business 
processes. We might want to take a look and see how those are 
being used. Anything that is being used and is meaningful, I am 
happy to do it.
    Mr. Harper. Great.
    Mr. Yuse. If it is not being used, maybe we ought to think 
about it.
    Mr. Harper. Again, thank you all for being here.
    With that, I yield back.
    Mr. Terry. Mr. Guthrie, you are recognized for 5 minutes.
    Mr. Guthrie. Hey, thank you, Mr. Chairman. Thanks.
    And to be a witness for Mr. Barton's question, actually my 
family has an aluminum foundry and we are gas. And so it has 
made us tremendously competitive compared to people that we are 
competing with in other countries. And you know, it is all 
about inputs and how much input costs. And any time we do 
mandates and things here that raise the price of energy, it 
will go counter to bringing manufacturing jobs back to the 
country. It is just a fact of--that is our competitive 
advantage in Kentucky, particularly with coal. We have cheap 
electricity and it has made us a competitive State.
    But a question with Mr. Steiner, I think we heard the other 
night in the State of the Union about the tax credits that 
incentivize people to send jobs overseas. One thing that does 
is our tax rate, so if we want to lower our tax rate, it will 
bring jobs back as well.
    Mr. Steiner, you are in Kentucky. Obviously, I know you are 
there because of the great working employees that are there. 
But I know the iPhone isn't necessarily completely assembled in 
the United States----
    Mr. Steiner. Correct.
    Mr. Guthrie [continuing]. And so why are you competitive in 
Kentucky and what decision-making did you--I know you got a 
great workforce, but I am interested to know why you chose to 
manufacture it here.
    Mr. Steiner. So at Corning we always start with an 
invention and then what allows us to compete is a very 
efficient process. So we spent a lot of our R&D dollars on 
process efficiency. And the process we use in Kentucky allows 
us to compete worldwide. But we are hampered by the effective 
tax rate. A dollar of income out of Harrodsburg is about 39 
percent and our effective tax rate as a company is 21 percent. 
So it is much lower in other areas of the world.
    Mr. Guthrie. So----
    Mr. Steiner. So we have to offset the tax rate difference 
with a much more efficient process.
    Mr. Guthrie. But if you had a lower tax rate, you would 
still strive to be more efficient just because of competition--
--
    Mr. Steiner. Absolutely.
    Mr. Guthrie. Yes, so that would----
    Mr. Steiner. You always compete with the process first.
    Mr. Guthrie. Always compete with the process. But your 
process is energy-intensive.
    Mr. Steiner. It is. And our process again in Harrodsburg, 
labor, batch materials, and energy are the three major cost 
components so----
    Mr. Guthrie. What do you think that drives your energy 
costs----
    Mr. Steiner. Reduction in energy costs certainly helps us.
    Mr. Guthrie. And anything that drives up energy costs makes 
you less competitive.
    Mr. Steiner. Makes us less competitive and that is an 
advantage we have over other areas of the world----
    Mr. Guthrie. Yes.
    Mr. Steiner [continuing]. In Kentucky.
    Mr. Guthrie. And not specifically in Kentucky, but yes, as 
a country as well, most parts of the country.
    Mr. Steiner. Correct.
    Mr. Guthrie. So with the trade agreements that we are 
talking about, there is the Transpacific and the European. What 
are your issues with that and what----
    Mr. Steiner. So again, about 78 percent of what we make we 
export. In the case of Gorilla Glass, virtually every square 
foot that is made in Kentucky gets exported outside of the U.S. 
because industry, as Mr. Block said, to make televisions don't 
exist in the U.S. yet. So to keep access to global markets is 
vital to us because we are basically an export company.
    Mr. Guthrie. Yes. That is what is interesting to note about 
what you do is you are not making for the--well, eventually, 
the products come back for the American----
    Mr. Steiner. Many of the products come back.
    Mr. Guthrie. Many of them come back but you are not just 
here making for the domestic market; you are actually exporting 
and find yourself competitive. But anything that we do here--
well, what kind of things could we do to make it better? I know 
the tax rate, we don't want to affect energy rates.
    Mr. Steiner. Access to foreign markets is quite important. 
The other issue that is very important for us is IP protection. 
Again, we compete because we invent first and then reinvent a 
process. It is important to have U.S.-style IP protection all 
over the world, not just in patent law but in trade secrets. It 
is a little easier to enforce patents because we can look at a 
product and tell whether or not it has used our glass 
composition. Trade secrets is a more difficult issue from us 
because somebody could copy our manufacturing process, but 
since you don't have access to it outside the U.S., you may not 
know that. So we need fair enforcement all around the world in 
both patent law and trade secret.
    Mr. Guthrie. Is some of your decision to manufacture here 
is to protect your intellectual property?
    Mr. Steiner. So we feel more comfortable certainly with our 
situation in the U.S. A lot of our industries are in China and 
that is a constant discussion in Corning of how do we protect 
ourselves outside the U.S. like we can within?
    Mr. Guthrie. Well, you are great employer and we really 
appreciate what you do for that community. It is several big 
industries. A lot of it is driven by energy costs and we really 
appreciate what you do. And I actually just picked you guys up 
in redistricting, so I have been very blessed to represent you 
and look forward to working with you.
    Mr. Steiner. Thanks. And we appreciate your support.
    Mr. Guthrie. Thanks.
    I yield back.
    Mr. Terry. Thank you.
    And Mr. McKinley, you are now recognized for 5 minutes.
    Mr. McKinley. Thank you, Mr. Chairman. And thank you for 
assembling the meeting prior to this with the displays and also 
for this panel that we have.
    I guess I am taking a little bit more of a cynical approach 
perhaps. I have been here 2 years in Congress. Years ago, 
before going to college, I worked on an assembly line. My 
brother was in the steel industry working in the mills, and I 
have seen the demise of the industry in our area. In northern 
West Virginia, we have lost 30,000 steel worker jobs. They have 
been lost in part primarily because of, I believe, government 
interaction, government intrusion, government regulations. And 
I have heard you talk a little bit about that. I have heard a 
lot of love coming from the side of the table from people that 
say they have your best interests at heart, and I would think 
that the manufacturing all should be very robust given all the 
love that you are getting from the side of the table.
    But we have heard comments made about the sequester. We 
have had 2 votes on the sequester. We are trying to avoid in 
the sequester but we can't get the other side of the aisle to 
support us on that. Oh, they will say they are concerned about 
it, but we have given them the votes and they don't take them.
    So I am concerned about it. I am concerned about where we 
are going to go with us. I listened to that initial polling and 
I thought it was a very good question that the chairman came up 
with, and it was just Joe Hanson. It certainly wasn't 
scientific. But when he mentioned tax code and regulations, 
that is more than all the other combined, the issues that were 
raised. Tax code and regulation. But yet, we can't get the 
people on certain areas of our Congress to accept that. They 
think it is more of what we have been doing for the last 4 
years in Congress, more regulation, more government intrusion, 
more taxes, higher energy costs. Is that the direction? Is that 
what you are telling us now? I would like to make sure we are--
should we be going in that--do you really think the last 4 
years is the best direction we could go if we are going to make 
manufacturing all that it can be where we have American 
exceptionalism again in our manufacturing? Is this the 
direction we should continue?
    Or what would you suggest to wake up Members of Congress to 
understand what it is like to see a demise and struggle within 
the manufacturing business? Can you give us some direction on 
where you might give it to us? I heard you say tax code and 
regulation but EPA and OSHA, regulatory, tax policy, ObamaCare, 
I have heard how that is affecting businesses all over. The 
sequestration, R&D, energy costs, what should we be doing, not 
just sweet talk but actual what can we do? What should we do if 
we are going to reverse manufacturing in the demise? Can a few 
of you give me some good examples?
    Mr. Meyers. Thank you for the question. You asked what 
Congress should do, and honestly, for our industry, the 
regulations and taxing, healthcare, everything that we see 
coming down the pipeline is becoming more burdensome. What you 
could do is stop.
    Mr. McKinley. Thank you.
    Mr. Meyers. You could stop. That would allow us to be the 
manufacturing engine that drives this country and let us get 
back to work.
    Mr. McKinley. But why don't you think that people are 
hearing that? It is so basic. Get government off our backs. 
Free up--I hear it time and time again. Manufacturing will get 
back if we just back off, but the Congress doesn't seem to want 
to back off. It thinks it is going in the right direction by 
becoming more intrusive in your workplace. How do you do it? 
What are we missing here? Why aren't people listening to you?
    Mr. Meyers. Well, basically, we have been vocal for years, 
and why that has not reached Congress is beyond us. But I think 
when you look at the jobs lost and how our entire manufacturing 
sector continues to struggle, you know, when is it going to be 
too late? When we are all out of business? So I appreciate the 
opportunity to be here and express our issues of not only my 
company but our industry and manufacturers in general.
    Mr. McKinley. Thank you. Any others in the time remaining? 
Yes, sir.
    Mr. Arnold. It is not so much the regulation as it is the 
unknown, as Congressman Waxman talked about. You know, gridlock 
and arguing from both sides is a necessary part of the 
government process. We need that. But when something is 
enacted, get to it, then, on specifically what we have got to 
do about that. We have had the ObamaCare for 2 years now. The 
only thing I have seen out of that--we provide hospitalization 
for our employees. Our insurance cost just went up 20 percent a 
year for the last 2 years. And yet, it is not even enacted yet, 
but the anticipation of that, the unknown, the insurance 
companies have had to respond that way. So what we need is 
swift action.
    I talked for a second about the dredging of the entrance to 
the channel in Brunswick. The Corps of Engineers has been 
working on that for 4 years. They don't get the allocation of 
the money to be able to do that completely at one time. So it 
is piecemeal and it fills right back in. We are in a world 
where we have to respond to market conditions immediately and 
government is not responding as quickly.
    Mr. McKinley. Thank you.
    Mr. Terry. Thank you very much.
    Mr. Johnson from Ohio, you are recognized for 5 minutes.
    Mr. Johnson. Well, thank you, Mr. Chairman. I too 
appreciate the opportunity for today's hearing and the 
demonstration of products that we saw earlier. I have several 
manufacturers from Ohio that displayed their wares, Thermo 
Fisher and their orbital mixer, Quanex and their window 
efficient linings, and of course, Magnum Magnetics, one of the 
few companies that provides flexible magnets to consumers and 
businesses.
    I had a line of questions here but I want to take just a 
second because we have asked you guys a lot of questions and 
you have been very gracious to give us your opinion. One of the 
issues that came out in the State of the Union that has been 
alluded to here several times is the President's insistence 
that cap-and-trade is still on the table. Climate control is 
still a big issue. It probably doesn't come as a surprise to 
you in eastern and southeastern Ohio where we have a wealth of 
oil and natural gas and the prosperity that that is bringing to 
our region and to America's ability to become more energy 
independent and secure, the vast amounts of coal that we have 
that provide reliable and affordable energy. That is a big 
issue. And because of where we are located, manufacturing is a 
big deal. We are in a manufacturing corridor.
    And I talked to businesses every single day that are 
saying, Bill, we are in jeopardy of having to lay off our 
people because we simply cannot keep pace with these rising 
energy costs as coal-fired power plants shut down, as energy 
costs go up. As the tax burden and regulations continue to 
drive up our cost of doing business, we are not going to be 
here.
    So let me just ask--you have been polled a couple times now 
so for the sake of time, let me just ask one final polling 
question in my time. How many of you believe that additional 
climate control regulations coming out of the Federal 
Government that are going to drive up your cost of operations, 
including driving up the cost of the energy that it takes to 
run your operations, how many of you think that is going to 
have a negative impact on your ability to grow and expand and 
hire and innovate within your companies? How many of you think 
that is going to have a negative impact?
    The rest of you don't think it is going to or are you just 
silent? I have got to ask.
    Mr. Holler. For me it is just beyond the scope of my 
responsibility.
    Mr. Johnson. Mr. Yuse, you don't think climate control 
regulations are going to have an effect on your business?
    Mr. Yuse. So I guess, in my opinion it depends on how they 
are implemented exactly.
    Mr. Johnson. I qualified that. They are going to raise 
operating costs; they are going to raise the cost of reliable, 
affordable energy. It was very specific, because that is what 
is happening with the shutdown of the coal industry, the 
elimination of coal-fired power plants, and the attack on 
hydraulic fracturing and our ability to go after fossil fuels. 
That is going to affect your operating costs. Is that going to 
affect your business?
    Mr. Yuse. Well, let me just say that anything that impacts 
operating costs will theoretically have a negative effect.
    Mr. Johnson. I realize this is a politically charged 
question because it is one that the President is very 
interested in pursuing. I can see the stares and the why are 
you putting me in this position to have to answer this. Well, 
folks, I am going to tell you. You folks are the ones that help 
us determine what the agenda is and how we fight these battles. 
If you don't want to see increased operating costs, if you 
don't want to see your electricity rates go up, then I would 
simply encourage you, speak out. Speak out in your industries. 
Speak out when you come here. Let the American people hear what 
it is doing to manufacturing.
    Do you know why we can't stand up a nuclear power plant in 
America anymore? It is not because of technology. It is not 
because of permitting. It is because of what David McKinley 
talked about earlier. It is because we don't manufacture the 
kind of steel here anymore to enclose nuclear reactors. We have 
to buy that overseas. And you have got other industries that 
are in jeopardy of being closed down because of onerous climate 
control regulations. So I would just encourage you, don't be 
bashful. You want us to help your industry and spur many 
fracturing? Give us a voice with the American people.
    Thank you, Mr. Chairman. I yield back.
    Mr. Terry. The gentleman from Florida, Mr. Bilirakis.
    Mr. Bilirakis. Thank you, Mr. Chairman. I appreciate it 
very much. Thank you for giving me the opportunity to serve on 
this committee as well. This is an outstanding hearing.
    Mr. Terry. As long as you continue to think that way.
    Mr. Bilirakis. Thank you. I will. I promise you. This has 
been outstanding.
    Now, I want to focus also on the regulation and the 
overlapping regulation or overregulation as well. And I want to 
ask Mr. Smatsky a question. Your testimony briefly touched on 
how your company and business is regulated by the FDA but has 
faced the possibility of also being regulated by the EPA. Can 
you further explain how your business operations would possibly 
be impacted by adjusting to a new regulatory scheme? Must you 
also comply with the sets of state and local regulations? Do 
your federal regulations again conflict or overlap with these 
state and local regulations? Because that is what I keep 
hearing in my district and all over the State of Florida. And 
then what is it going to cost you to comply with these over-
burdensome regulations in my opinion? That is my question. 
Thank you.
    Mr. Smatsky. Thank you for the question.
    In terms of the FDA regulations, they are of the highest 
standards to protect the consumers. So we feel as a food 
manufacturer, it is in our best interest to go with the 
highest-level standards, which is above and beyond the EPA. I 
can't recall the second question that you asked me as well.
    Mr. Bilirakis. Well, in other words, do the state and local 
regulations in general conflict with each other? Do federal 
regulations ever conflict--and I believe they do--and overlap 
with state and local regulations?
    Mr. Smatsky. They do, Congressman, although I just don't 
have enough data at this point in time. I would have to get 
back to you to further answer that question to give you more 
clarity. So I am happy to submit anything for the record.
    Mr. Bilirakis. Yes, what does it cost you? I would like to 
hear from other members of the panel as well, anyone that once 
to jump in. Thank you. Anyone else want to? Mr. Block?
    Mr. Block. Well, we don't really do any particular hot 
processes or have any issues with the regulatory environment 
ourselves. Certainly, our customers do. But I am not 
knowledgeable enough to directly answer that question for my 
customers and for what they do. Obviously, the mills themselves 
have certain issues with regulatory situations. I know, Mr. 
Johnson, I am not sure which district you cover. I think----
    Mr. Johnson. Ohio 6, all along the Ohio River.
    Mr. Block. Oh, OK. But like AK Steel, which is in southwest 
Ohio, has had environmental issues which has impacted them.
    They are difficult issues. I don't know if you want me to 
expand on this or not, but I might be going off on a tangent 
here and that might not be a good thing.
    Mr. Bilirakis. Well, give me a specific example of how you 
face overlapping regulation.
    Mr. Block. Well, we personally don't, to be honest with 
you. I mean my business is relatively--it is complex and it is 
details, but in the actual factory, it is relatively simple. So 
we really don't deal with regulations that impact us directly.
    Mr. Bilirakis. OK. I have one other question, Mr. Chairman.
    Can you please describe--and this is for the entire panel--
how your manufacturing enterprises fit within the domestic 
economy? And then how do you impact other businesses and 
sectors up and down the supply chains? Anyone want to jump in?
    Mr. Meyers. Well, obviously, with the casting industry, our 
products are used throughout the U.S. and primarily domestic. 
And what we see as the beginning user of the beginning process 
with castings is it is a cascading effect all the way across 
the entire supply chain.
    So I want to go back real quickly to what you are asking 
about regulations and the overlapping. Fortunately, in the 
great State of Texas, we have regulatory issues that are pro-
business not only from the fact of the areas that they come, 
but our agencies in the State of taxes work with businesses. 
They are not coming down against us but they work with us to 
help us maintain goals and achievements that we need to look at 
as far as environmental or safety. So I think that when you 
talk about overlapping regulations, you know, it it is more of 
a regulatory-friendly issue in helping our manufacturers and 
not constantly bombarding us with regulations and issues that 
we simply can't do.
    Mr. Bilirakis. Very good.
    Mr. Chairman, I would like to yield back the rest of time.
    Mr. Terry. Thank you.
    Mr. Bilirakis. Thank you very much.
    Mr. Terry. And so there is no more questions to be asked of 
you here at the panel, but that doesn't mean that we won't 
submit questions to you. You or your representatives probably 
already know that or have been briefed that we have the 
opportunity. And I have several questions that were kind of 
prompted from your testimony and answers to questions. So be 
looking forward to receiving your answers to those.
    And to all the members, I remind you that you have 10 
business days to submit questions for the record and ask the 
witnesses to respond promptly.
    And then, I want to mention that the manufacturers' 
showcase will open again for an hour after this hearing. And I 
want to thank all of their help for the showcase, our clerk, 
Kimberly Howard; our press secretary, Charlotte Baker; and 
Caroline Ferguson from the committee.
    Now, thank you. You guys were awesome, great testimony and 
feedback, exactly what we were looking for. So thank you for 
being here today. And we are adjourned.
    [Whereupon, at 12:17 p.m., the subcommittee was adjourned.]

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