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

               MADE IN THE USA: STORIES OF AMERICAN MANUFACTURERS

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

                                    HEARING

                                   before the

                          COMMITTEE ON SMALL BUSINESS
                                 UNITED STATES
                            HOUSE OF REPRESENTATIVES

                        ONE HUNDRED THIRTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                  HEARING HELD
                                 JUNE 19, 2013

                                   __________

                                   [GRAPHIC] [TIFF OMITTED]

                Small Business Committee Document Number 113-024

                  Available via the GPO Website: www.fdsys.gov

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                       HOUSE COMMITTEE ON SMALL BUSINESS

                         SAM GRAVES, Missouri, Chairman
                               STEVE CHABOT, Ohio
                                STEVE KING, Iowa
                             MIKE COFFMAN, Colorado
                           BLAINE LUETKEMER, Missouri
                         MICK MULVANEY, South Carolina
                             SCOTT TIPTON, Colorado
                       JAIME HERRERA BEUTLER, Washington
                            RICHARD HANNA, New York
                             TIM HUELSKAMP, Kansas
                           DAVID SCHWEIKERT, Arizona
                           KERRY BENTIVOLIO, Michigan
                            CHRIS COLLINS, New York
                            TOM RICE, South Carolina
                   NYDIA VELAZQUEZ, New York, Ranking Member
                             KURT SCHRADER, Oregon
                            YVETTE CLARKE, New York
                              JUDY CHU, California
                            JANICE HAHN, California
                         DONALD PAYNE, JR., New Jersey
                              GRACE MENG, New York
                            BRAD SCHNEIDER, Illinois
                              RON BARBER, Arizona
                        ANN McLANE KUSTER, New Hampshire
                            PATRICK MURPHY, Florida

                          Lori Salley, Staff Director
                        Paul Sass, Deputy Staff Director
                          Barry Pineles, Chief Counsel
                      Michael Day, Minority Staff Director

                                C O N T E N T S

                               OPENING STATEMENTS

                                                                       Page
    Hon. Sam Graves..................................................     1
    Hon. Nydia Velazquez.............................................    10

                                   WITNESSES

    Richard Schwind, Jr., V.P., General Manager, Continental Took,
      Smithville, MO.................................................     2
    Terry Iverson, President & CEO, Iverson and Co., Long Grove, IL..     4
    Bruce Broxterman, President, Richards Industries, Cincinnati, OH.     6
    Mike Mittler, President, Mittler Brothers Machine & Tool, Wright
      City, MO.......................................................    19
    Jim Allen, Director, Shapeways, Inc., Long Island City, NY.......    21
    Jill Johnson, Founder & CEO, Institute for Entrepreneurial
      Leadership, Newark, NJ.........................................    24
    Anthony Wanger, President, IO, Phoenix, AZ.......................    26
    Barbara Schindler, President and COO, Golden Artist Colors, Inc.,
      New Berlin, NY.................................................    36
    Shelly Gibbons, Vice President, Quik Mart, Tucson, AZ............    38
    Mike Bergmeier, President, Shield Agricultural Equipment,
      Hutchinson, KS.................................................    39
    Aaron Bagshaw, President, WH Bagshaw Co., Nashua, NH.............    42
    Brad Braddon, President, Commodore, Bloomfield, NY...............    50
    Shirley Brostmeyer, CEO, Florida Turbine Technologies, Jupiter,
      FL.............................................................    52
    Richard Najarian, President, Precision Global Systems, Troy, MI..    54

                                    APPENDIX

    Prepared Statements:
        Richard Schwind, Jr., V.P., General Manager, Continental
          Tool, Smithville, MO.......................................    69
        Terry Iverson, President & CEO, Iverson and Co., Long Grove,
          IL.........................................................    72
        Bruce Broxterman, President, Richards Industries, Cincinnati,
          OH.........................................................    77
        Mike Mittler, President, Mittle Brothers Machine & Tool,
          Wright City, MO............................................    81
        Jim Allen, Director, Shapeways, Inc., Long Island City, NY...    83
        Jill Johnson, Founder & CEO, Institute for Entrepreneurial
          Leadership, Newark, NJ.....................................    85
        Anthony Wanger, President, IO, Phoenix, AZ...................    90
        Barbara Schindler, President and COO, Golden Artist Colors,
          Inc., New Berlin, NY.......................................    99
        Shelly Gibbons, Vice President, Quik Mart, Tucson, AZ........   102
        Mike Bergmeier, President, Shield Agricultural Equipment,
          Hutchinson, KS.............................................   104
        Aaron Bagshaw, President, WH Bagshaw Co., Nashua, NH.........   110
        Brad Braddon, President, Commodore, Bloomfield, NY...........   112
        Shirley Brostmeyer, CEO, Florida Turbine Technologies,
          Jupiter, FL................................................   119
        Richard Najarian, President, Precision Global Systems, Troy,
          MI.........................................................   122
    Question and Answer for the Record:
        Congressman Hanna to Ms. Barbara J. Schindler, President and
          COO, Golden Artist Colors, Inc., New Berlin, NY............   128
    Additional Material for the Record:
        None.

               MADE IN THE USA: STORIES OF AMERICAN MANUFACTURERS

                                  ----------

                            WEDNESDAY, JUNE 19, 2013

                      House of Representatives,
                   Committee on Small Business,
                                                        Washington, DC.
        The Committee met, pursuant to call, at 1:00 p.m., in Room
    2360, Rayburn House Office Building. Hon. Sam Graves [chairman
    of the Committee] presiding.
        Present: Representatives Graves, Chabot, Luetkemeyer,
    Tipton, Hanna, Huelskamp, Schweikert, Bentivolio, Collins,
    Velazquez, Schrader, Payne, Meng, Schneider, Barber, Kuster,
    and Murphy.
        Chairman GRAVES. We will go ahead and call this hearing to
    order, and Ranking Member Velazquez is detained for a few
    moments. She is speaking across town but she is on her way and
    she said we can go ahead and get the hearing started.
        So with that I would like to say good afternoon, and we do
    call this hearing to order.
        In recognition of National Small Business Week, today we
    are going to hear from small manufacturers around the nation
    who have achieved success while producing goods right here in
    the United States. And I would like to welcome all the
    witnesses who are going to be here today and thank them for
    taking time out of their busy schedules and from running their
    businesses to offer us their insights. And we are going to have
    four panels all together today.
        We have all heard about the decades-long decline of the
    manufacturing industry in America. Since the late 1970s, a
    combination of high U.S. wages and cheaper overseas production
    costs have led to a loss of nearly 11 million manufacturing
    jobs in the U.S., with nearly 2 million of those occurring
    during the recent recession. In an attempt to cut costs, many
    companies that previously made goods domestically moved their
    production to China and other nations with much less expensive
    labor.
        Now, after years of industry decline, we are seeing a shift
    that is taking place. In April 2010, the U.S. began adding
    manufacturing jobs for the first time in many years. High
    consumer demand for Made in American products, rising foreign
    wages, and the increased realization by American entrepreneurs
    of hidden overseas production costs has led to more
    manufacturers producing goods and creating jobs here at home.
    In the past three years, the industry has added a half-million
    jobs to the U.S. economy.
        Today, we are fortunate enough to have with us a group of
    accomplished American manufacturing leaders that have been
    doing business in the U.S. for years. Some started their
    businesses at the kitchen table, and others took the helm of a
    local manufacturing mainstay. Whether it is a story of a paint
    producer in New York or an agricultural equipment maker in
    Kansas, common traits of success are very evident.
        I look forward to hearing from our witnesses today about
    the things that have led to their accomplishments, as well as
    the challenges that they see ahead. And again, I want to thank
    all of our witnesses today that are in the audience for making
    the trip all the way to Washington to participate in this
    hearing.
        With that I will make the first introduction. With our
    first panel and our first witness today is Rick Schwind, Jr.,
    of Smithville, Missouri. Rick is the vice president and general
    manager of Continental Tool and Manufacturing. It is a producer
    of specialty tools and other machine components. This 20-
    employee, American manufacturing business makes a wide array of
    products, including mechanical pullers, sockets, spanner
    wrenches that are used by the U.S. military. Continental Tool
    was purchased by the Schwind family in 2008. And Rick, thanks
    for coming all the way from Missouri's Sixth District to be
    with us here today, and welcome to the Small Business
    Committee.

      STATEMENTS OF RICHARD SCHWIND, JR., V.P., GENERAL MANAGER,
     CONTINENTAL TOOL; TERRY IVERSON, PRESIDENT AND CEO, IVERSON &
       COMPANY; BRUCE BROXTERMAN, PRESIDENT, RICHARDS INDUSTRIES.

                   STATEMENT OF RICHARD SCHWIND, JR.

        Mr. SCHWIND. Good afternoon. My name is Rick Schwind, the
    vice president and general manager of Continental Tool and
    Manufacturing, located in Lenexa, Kansas. I am also a resident
    of Smithville, Missouri, located in Chairman Graves's
    congressional district. Thank you for the opportunity to be
    here to speak about our company and today's small business
    climate.
        Continental Tool is a family-owned, private CNC
    manufacturer of specialty tools, gages, assemblies and
    components with roughly 20 employees. Approximately 80 percent
    of our business is manufacturing tools designed for military
    end use. Think of the Army mechanic that takes care of the
    Abrams tanks, Humvees, and Bradley fighting vehicles. We make
    many of those specialized tools. We make specialized wrenches
    for the landing gear on fighter jets, for the adjustment of
    sights on weapons, for the setting of fuses on mortar rounds,
    and hundreds of other tools. In addition, we provide a host of
    machine components to cooling towers, fire trucks, lighting
    fixtures, pumps, and valves.
        My parents purchased the business in 2008 from a family who
    had started it from scratch in 1980. My dad's dream was to
    purchase a small, manufacturing company and offer a career, not
    just a job, with paid training and benefits to anyone who
    simply had the right attitude and did not mind working for
    everything they earned.
        As for myself, I graduated from the University of Kansas
    and later received an MBA from the University of Missouri-
    Kansas City. I had worked as an operator in a machine shop
    while in college and after working in technology and
    telecommunications, I came back to manufacturing at Continental
    Tool. Like my dad, I, too, was realizing a dream. Not only
    being able to work side by side with my father, but also being
    in the business of ``making stuff'' for America.
        As you remember, 2007 and 2008 were banner years for
    manufacturing, but as the recession began to take shape, things
    changed. Raw material pricing, surcharges, and the overall cost
    of doing business increased. But like any small business at
    that time, we pulled back, assessed the situation, drew
    financial lines in the sand, and lived within them. There were
    opportunities to buy new equipment that we passed up. There
    were people we wanted to hire but did not due to our own
    commitment to live within our financial guidelines. The single
    best (and most difficult) advice my dad gave me was that we
    needed to manage our business with our minds but not
    necessarily our hearts.
        2011 and 2012 were much better. We rebounded to 2008 levels
    and operationally we were in a great place. The challenge of
    the recession led us to sharpen our pencils in just about every
    way and we got better. Most importantly, we retained every
    employee during that period.
        Challenges remain for our industry where we struggle to
    find skilled labor. It takes anywhere from five to eight years
    of on-the-job training to become truly skilled in machine setup
    and operation. The average age of a skilled worker in our
    company is 50, and that seems to be consistent across the
    industry. These men and women are approaching retirement age,
    and as a nation, we need to build our skilled labor bench
    strength, or else we will have many people with college degrees
    but no technical skills.
        But as a company, we face additional issues. Uncertainty
    over health care is a major concern. Today, our company fully
    pays for the health care premium of every employee. But not
    knowing the financial implications of the Health Care Law next
    year has us questioning whether we will be able to provide this
    going forward or whether we will be forced to turn this cost
    over to the employee.
        As I mentioned, roughly 80 percent of our business is
    supplying the defense industry. This is where sequestration has
    had a real impact on us. We agree Washington needs to reduce
    our nation's debt and reign in spending quickly. Our company
    made difficult decisions during the recession and significant
    cuts to survive, and the Federal government should do the same.
    However, in our company we took a sensible, precision approach
    to our finances just as we would when manufacturing a tool,
    while Congress did not.
        Unless Washington quickly addresses the situation they
    created with sequestration and the budget, the impact to small
    manufacturers like ours, whose primary customer is the Federal
    government, will be severe. Our sales to the government are
    down 30 percent this year, and we recently were forced to lay
    off three employees, temporarily we hope, and are working to
    refinance our long-term debt to reduce monthly expense.
        Even though our company survived the most recent recession,
    we are seriously concerned with the current environment facing
    small business. Does Washington really understand our
    challenge? Do they sense the concern we have with lack of
    skilled labor, with health care uncertainty, ineffective and
    costly regulation, the sequester and indecisiveness regarding
    the budget? We certainly hope so, but the environment remains
    scary.
        I am thankful that the Committee is asking for input from
    companies such as ours in order to stem the tide. Small
    business is the backbone of our economy.
        I am honored to be here today, and many thanks to Chairman
    Graves and the Committee.
        Chairman GRAVES. Thank you, Mr. Schwind.
        I will now yield time to Mr. Schneider to introduce our
    next witness.
        Mr. SCHNEIDER. Thank you, Chairman Graves, for allowing
    this opportunity to invite owners of manufacturing companies to
    testify during National Small Business Week to highlight the
    critical role these small businesses play in our economy.
    Manufacturing, in particular, has been a promising growth
    sector of late, re-emerging after years of decline. However,
    headwinds remain. Of particular note, I consistently hear, as
    Mr. Schwind just mentioned, from my district companies, about
    the growing skills gap threatening manufacturing and growth
    prospects. That is why I am so pleased to invite Terry Iverson
    from Long Grove, Illinois, for today's hearing.
        Terry has been involved in manufacturing for more than 30
    years. His family's involvement in the industry dates back to
    the 1920s. Terry is currently president and CEO of Iverson and
    Company. His company sells machine tools, automated and
    precision machines that power today's manufacturing.
    Additionally, he is a minority owner in his brother's company,
    the Chicago Dial Indicator Company, which manufacturers
    mechanical and electronic gauges. With years of experience in
    the industry, Terry is now giving back to the manufacturing
    community by forming CHAMPIONNow, a chain to advance
    manufacturing as perceived in our nation now, an organization
    working to address the skills gap in the United States.
        Terry, I want to personally thank you for coming today, and
    I look forward to hearing your testimony.

                       STATEMENT OF TERRY IVERSON

        Mr. IVERSON. Mr. Chairman and members of the Small Business
    Committee, thank you for the opportunity to join you today.
        My name is Terry Iverson. We do sell machine tools in the
    states of Illinois, Wisconsin, and Indiana. We have
    approximately 20 people, and my brother Erik does run our
    indicator business that has about 35 people. As you have said,
    both companies are over 80 years old.
        I come to the Committee today to speak about the skills gap
    issue in manufacturing. This country is facing a crisis at this
    moment. If we do not find the next generation of manufacturing
    engineers, programmers, and CNC machinists, then the
    manufacturing sector will diminish because we do not have the
    human resources.
        Recently, I have been pleased to hear that there is a buzz
    about manufacturing in the media, attention it deserves. I
    strongly believe that manufacturing has made this country
    great, and supplies good paying incomes for millions of
    families, and I believe that future generations as well, but we
    must be mindful of the skills gap issue.
        In my 33 years on the road, I have talked to thousands of
    manufacturers and subcontract machine shops. They have all
    increasingly shared one problem--they cannot find enough
    skilled personnel. I have been told time after time, ``Terry, I
    will buy a machine from you. Just give me an operator to go
    with it.''
        Baby boomers are getting closer to retirement. I am 54. The
    average age for the manufacturing employee is 56. Young people
    are being discouraged by their relatives, their counselors,
    their teachers, and the media to not pursue manufacturing
    careers. Because of the misperceptions, that must change. The
    industry is no longer a dark, dirty, dingy, low-paying
    profession. Advanced manufacturing in the U.S. is heavily
    computerized and automated. In Europe, not only do they still
    have apprenticeships in manufacturing, but they also have a
    culture that holds these professions in high esteem. Neither
    currently here in the U.S. is the case.
        The young people of our country are our future, and we need
    to educate the next generation of the realities of the industry
    compared to the general public's perception. Forty-two percent
    of young people going to college do not find their degree in
    four years. Approximately 53 percent of recent college
    graduates are either underemployed or unemployed. Seventeen
    million workers with college degrees are now working jobs that
    do not require one. With skyrocketing college tuitions and
    admission requirements, it is clear that manufacturing should
    be embraced by our students.
        There is clearly a demand in the U.S. for highly skilled
    manufacturing workers. Many are of the opinion that all
    manufacturing has gone overseas. While some of this notion is
    true, the advanced manufacturing will and must stay in this
    country. Some of the low skilled tasks have gone, in fact, to
    the Far East, but the highly skilled positions with STEM-
    related skills are still needed in this country.
        There are as many as 6,000 jobs for highly-skilled
    manufacturing positions currently unfilled, despite
    unemployment at 7.6 percent. Manufacturing needs the best and
    brightest and best math and science students that are great
    with their hands. They need to be seen as manufacturing
    champions.
        After being involved in technical education in several
    community colleges, high schools, and serving on some technical
    boards around the country, I came up with a vision and
    organization called CHAMPIONNow. As Brad noted, it is an
    acronym that stands for Change How Advanced Manufacturing's
    Perceived in our Nation. The Now is the call to action. You can
    see our film trailer on our website.
        Since founding CHAMPIONNow in 2009, I have been involved in
    various projects. Currently, I am involved in a project that
    will film inspirational stories of career paths into
    manufacturing with young people, and these can be used as role
    models for others unaware of these successful opportunities.
        I have been involved in Project Lead the Way in my
    community. This program gives high school students a way to
    apply theoretical knowledge with hands-on applications,
    strengthening their STEM skills. This was missing in my
    engineering education and I became disenchanted and went into
    the working world. My family and my father's devotion to the
    art and science of manufacturing has actually brought me into
    what has now turned into a lifelong passion of making things.
        CHAMPIONNow is poised and ready to champion manufacturing
    careers. We need to educate our country on how exciting,
    challenging, honorable, and financially rewarding these careers
    can be. Everyone in our industry has to quit complaining and
    join together and take action. I encourage everyone here to do
    what they can to lead the charge on the skills gap and support
    U.S. manufacturing. We have many needs in technical education,
    policies, and perception. We need everyone on both sides of the
    political spectrum to agree on this and play a part in the
    solution.
        Thank you again for all of your time and giving me the
    opportunity to speak today. I hope I have been able to bring to
    light some things and a passion that can make a difference in
    what I consider to be a vital topic in the U.S. manufacturing
    industry.
        Chairman GRAVES. Thank you, Mr. Iverson.
        I will now yield to Mr. Chabot to introduce our next
    witness.
        Mr. CHABOT. Thank you, Mr. Chairman.
        It is an honor to introduce our next witness here this
    afternoon, Bruce Broxterman, who is the president of Richards
    Industries, which has been producing industrial valves for a
    host of industries since 1948.
        Bruce Broxterman started at Richards Industries as an
    inside sales correspondent back in 1980 and now serves as its
    president. As Bruce Broxterman can surely tell you, his is a
    customer-driven company. Their growth and longevity directly
    reflects the value of the products and service it offers its
    customers. I am thankful that Bruce Broxterman was able to
    attend today's hearing to highlight what has made his company
    successful and speak to some of the challenges American
    manufacturers face today.
        Bruce, Jack is your brother or cousin?
        Mr. BROXTERMAN. My older brother.
        Mr. CHABOT. Older brother. That is what I thought.
        And on a side note, Bruce's brother, Jack Broxterman, was a
    football coach and social studies American History teacher at
    my high school, LaSalle High School back in Cincinnati, and I
    had him as a teacher and I had him as a coach, as well. And I
    ended up getting a college football scholarship partly as a
    result of his coaching and certainly the interests that he gave
    me in politics and government and American history and that
    sort of thing. So for better or worse, the Broxterman family is
    at least partly responsible----
        Mr. BROXTERMAN. It is not our fault.
        Mr. CHABOT. Not your fault.
        Some of my colleagues on the other side of the aisle would
    probably say for real, but we welcome you here, Bruce
    Broxterman, and look forward to hearing you now.

                     STATEMENT OF BRUCE BROXTERMAN

        Mr. BROXTERMAN. Thanks, Steve.
        Good afternoon, Chairman Graves. Thank you for holding this
    important hearing today to highlight the value of manufacturing
    in the United States, and thank you for the opportunity to talk
    briefly about the challenges and opportunities that lie ahead
    for U.S. manufacturers.
        As Steve said, my name is Bruce Broxterman, and I am the
    president and CEO of Richards Industries, a privately held
    manufacturer of industrial valves located in Cincinnati, Ohio.
    We have been in business since 1961, and our mission is to
    provide heavy-duty valves to control flow, pressure, and
    temperature for our customers in the process industries--places
    like refineries, chemical plants, petrochemical plants,
    pharmaceutical facilities, and food processing plants.
        Richards Industries has been fortunate to experience solid
    growth over the past six years. After a management buyout in
    2007, we have seen unprecedented growth of our revenues and
    profits. Over those six years, our sales grew nearly 45
    percent, with net earnings improving at nearly the same rate
    and employment growing by 12 percent to just under 150
    employees.
        The deep recession of 2008, followed by a slow and
    uncertain economy, has resulted in a challenging business
    environment, and even now is proving to be difficult.
        Richards has grown by staying focused on the niche markets
    and taking care of our key financial fundamentals.
        We have a single-minded philosophy of providing products to
    meet the ``special'' requirements of our customers around the
    world. These products are highly engineered solutions to
    different customer process problems. Manufacturing runs in our
    plant are low and precision is high.
        Being a small manufacturer can be challenging, but it
    provides the opportunity for us to be agile and flexible as we
    work to provide our customers with fast response and product
    delivery that they need to be effective and successful in their
    operations. We are often asked to build an engineered custom
    product and ship it in less than two days, and our lean process
    structure and flexible approach enables us to do that.
        Our products are used in every corner of the world. Despite
    our size, you will find Richards Industries products on
    drilling platforms off the coast of Brazil, in pharmaceutical
    plants in the heart of Europe, on gas pipelines in Central
    China, and in chemical plants in Kazakhstan.
        In 2007, international sales represented just 19 percent of
    our Richards Industries revenues. In 2012, international sales
    were 45 percent of the shipment total.
        Along with increased revenues, Richards Industries has been
    able to achieve healthy levels of net income and cash flow,
    thus enabling the company to repay the debt taken on at the
    time of the acquisition, while at the same time reinvesting
    significant amounts of capital in the company. The reinvested
    capital has been used to generate further company growth and
    jobs.
        At the heart of our success are the employees at Richards
    Industries. Our team is talented, experienced, and creative,
    but most importantly, they are committed to excellence and
    performance, bringing a ``consider it done'' attitude to work
    every day. Additionally, the family culture runs through our
    company, helps set up our team for success, and has resulted in
    Richards Industries being chosen as the `Best Place to Work''
    five out of the last six years by a local Cincinnati business
    publication.
        There are, however, immediate and future challenges that
    threaten our ability to maintain our pattern of success as a
    manufacturer in the United States. First among them is the
    structural cost of U.S. manufacturing imposed by government tax
    policy, regulatory policies, and legislative initiatives.
    Richards Industries is structured as an S-corporation and,
    therefore, the taxable income generated by the enterprise flows
    directly through to personal tax returns of the owners of the
    company. High individual federal tax rates imposed on the
    owners siphon off precious capital that, but for the higher
    taxes, would be reinvested back into the company to purchase
    capital assets, grow the company, and create new jobs.
        The Manufacturing Institute estimates that these structural
    costs add a full 20 percent to manufacturers' costs of doing
    business here in the United States relative to our major
    partners.
        U.S. health care costs have increased 80 percent in the
    last decade, and we believe that much of the cost increase is
    attributable to government involvement in the insurance
    marketplace via coverage mandates. We believe that the
    expansion of government involvement in health care brought on
    by the implementation of the Affordable Health Care Act will
    put forward further pressure on health care costs.
        Of equal concern is the shrinking supply of qualified
    workers. The manufacturing workforce is moving toward
    retirement at a faster rate than the rest of the economy, and
    we cannot find qualified workers to fill positions as
    machinists, operators, and skilled assemblers. The U.S.
    education system is not equipping American students with the
    right skills and the right disciplines to support the
    manufacturing economy. The lack of qualified workers will
    impact U.S. manufacturers' ability to compete in the global
    marketplace.
        I encourage the Committee to continue to explore these
    growing challenges and to act to alleviate the accelerating
    headwinds.
        I am very proud of the small part that Richards Industries
    plays in the nearly $2 trillion U.S. manufacturing sector, and
    I am excited about the opportunities ahead.
        Thank you for your support as we move forward through these
    challenging times, and thanks for the opportunity to testify.
        Chairman GRAVES. Thank you very much, Mr. Broxterman.
        Mr. Tipton, questions?
        Mr. TIPTON. Thank you, Mr. Chairman. I would like to thank
    our panel for taking the time to be here. I am a small business
    guy. That has been my real trade in life, and the ability to
    create jobs and to be able to address some of those headwinds I
    think is critically important. And I certainly want to applaud
    all of your efforts.
        If we could, you may not have a specific number. I know in
    my particular district in Colorado we still have double digit
    unemployment, real unemployment, in my two largest communities.
    Can you tell us out of your home areas in your state what is
    unemployment looking like right now? Mr. Schwind, do you want
    to start?
        Mr. SCHWIND. I do not have the exact figures, but I can
    tell you it is hard to find the people with the skill to work
    for us. There seem to be plenty of workers available to come to
    work, but almost zero with the skills that we need to have them
    safely work within a shop like ours with cutting tools, with
    machines, with chips. Safety is a huge issue, so we cannot take
    people fresh off the street and put to work; they need to be
    acclimated to the environment to be able to work effectively
    but really safely. So I do not have the specific number; I just
    know that there might be people that could fill the jobs but
    they are not skilled enough to do it.
        Mr. TIPTON. Right.
        Same experience?
        Mr. BROXTERMAN. It is amazing. I am sorry, I had a campaign
    on Saturday to hire--we are trying to hire three machinists.
    First of all, it took us a good four weeks to put together a
    list of potential candidates. We had 50 scheduled for
    interviews. On Saturday morning there were 12 no-shows. It is
    amazing to me the effort that you have to put forth just to
    find--and these are not experienced machinists. We have a
    training program, an apprenticeship program, so we are willing
    to invest in them and train them, but to find qualified folks
    who are trainable is getting to be impossible.
        Mr. IVERSON. We have gotten involved in some internship
    programs, I think five. We are only a 20-man company, so for us
    that is kind of a big deal and we found the same thing.
    Retaining people is very difficult. There is a lot of
    recruiting going on and people are paying people to go from one
    industry to another, so that is a struggle that we struggle
    with. But I think the actual unemployment may be around 9
    percent in our state. I am not really sure. Brad might know
    that better than I. But certainly, finding people is very
    difficult for all three of us.
        Mr. TIPTON. Great.
        Well, Mr. Schwind, I was captivated really by a comment you
    made that came from your father, ``To manage your business with
    your mind and not with your heart.'' But you then followed that
    with ``even in tough times you were able to hang on to the
    people that you worked with.'' Does that really demonstrate
    that particularly with the small businesses that we have in
    this country that it is more of a family operation and that
    includes those that you work with?
        Mr. SCHWIND. Absolutely. Absolutely. Being a 20-person
    company, we know the families of every individual. We know the
    kids, the kids' names. So we take on ourselves responsibility
    of the welfare of those individuals--not just the folks who
    work for us but the entire family unit.
        During the recession, we kept everyone because we got a
    little smarter. We did things that we did not do before. We
    brought some things in-house that we had paid for currently,
    and you are willing to do that. You try to do everything you
    can to retain your workforce because it is a personal
    relationship. If we had 800 or 900 employees, it might not be
    that way, but given that I know the names of every individual
    and every family member of the folks that work for us, you do
    what you can to keep--to hang on to those employees.
        Mr. TIPTON. Right. You know, it was interesting listen to
    all three of you because what you were specifically noting is
    what happens here in Washington is impacting your ability to be
    able to create jobs to be able to hang onto the people you have
    and to be able to build for the future. You cited the
    Affordable Care Act as being able to create uncertainty,
    potentially endangering jobs, sequestration. I think it is
    worthy of note out of the House of Representatives we passed
    two pieces of legislation, and I would encourage you to get a
    hold of your senators to take up those pieces of legislation.
    Also, the STEM act that we passed out of the House of
    Representatives when we were looking at Science, Technology,
    Engineering, and Math to be able to address them.
        But if you could give, and Mr. Broxterman brought it up at
    the very end, we just had the fiscal cliff legislation a few
    months back, which is impacting sub S-corporations, S-
    corporations like his. If you have a piece of advice for
    Washington, what would it be?
        Mr. BROXTERMAN. You know, from my perspective it is to be
    aware of the impact that that has on small businesses. The
    impression that comes to folks like myself is that we are the
    fat cats that are sitting on the back of our yacht with a
    martini in our hand. Well, that is actually an S-corporation.
    That is a small business.
        I tried to tell this to my folks at election time, is that
    what has an impact on us is the approach that all income, all
    personal income over $250,000 has got to be taxed at a higher
    rate. Those are small businesses. Those are S-corporations.
    Those are not just individuals who have been very highly
    compensated.
        Mr. IVERSON. I have seen a lot of people that have, because
    of the fiscal crisis, have not invested in their businesses in
    terms of capital equipment, things that can make them more
    productive. So that is something that I have seen in calling on
    different manufacturers in the three states.
        Mr. SCHWIND. The one thing I would mention in terms of
    Washington, and I know most of the folks on this panel have
    small business backgrounds so you know what I mean when I say
    this, but spend every dollar as if it were your own. Within our
    companies, whether we are ordering tooling, ordering services
    from an outside vendor, spend the money as if it were your own
    and it is amazing how much more conservative we spend when we
    think of things that way.
        Mr. TIPTON. Thank you. I yield back, Mr. Chairman.
        Chairman GRAVES. Ranking Member.
        Ms. VELAZQUEZ. Thank you, Mr. Chairman. And thank you for
    being here today sharing with us the successes.
        This Committee is well aware of the great role that you
    play in our economy. And so we are concerned about providing a
    climate that is conducive to help you do what you do best, and
    that is creating jobs for our economy.
        There has been some discussion here in the House regarding
    a comprehensive tax bill, and the chairman and I have
    participated in some roundtables with the Ways and Means
    members, leadership. And so my question to you is besides
    lowering tax rates, what specific tax changes could better help
    small businesses have greater access to cash?
        Mr. BROXTERMAN. I think from my perspective, the continued
    ability to buy capital equipment and have taxes not be a big
    factor in that decision-making process is a major plus. We are
    typically a company that buys a major machine tool every year.
        Ms. VELAZQUEZ. Have you used section 179?
        Mr. BROXTERMAN. We have. Yes. And we have----
        Ms. VELAZQUEZ. One of depreciation?
        Mr. BROXTERMAN. Yes, absolutely. And it does. It makes a
    difference whether you make that move or you wait a period of
    time.
        Ms. VELAZQUEZ. Sure.
        Mr. BROXTERMAN. Or perhaps put that move off all together.
    This is the first year in probably 15 years that we did not buy
    a piece of capital equipment, and it was because of the
    uncertainty in the tax situation that caused us to do that.
        Mr. IVERSON. I would agree also. The section 179 is huge in
    our business. We sell machine tools. A couple of years ago the
    179 was more aggressive than it is currently. I know a customer
    that had a family business that invested in a $1.2 million
    piece of equipment, which was a huge investment for them, and
    the reason that they were able to do that and invest back in
    their business is because of the 179 and implications on their
    tax burden.
        Mr. SCHWIND. I would suggest that in addition to the
    advantages on capital purchases, within companies that provide
    training for their employees. We have all said that we have a
    lack of skilled labor.
        Ms. VELAZQUEZ. Yes.
        Mr. SCHWIND. Our company belongs to the National Tooling
    and Machining Association (NTMA), and NTMA has created an
    online university to send students to achieve college level
    training at night while they work in our shops during the day.
    But the individual companies bear the costs of sending those
    students to programs such as this. And I think more incentives
    for companies to provide training in-house or at least to
    provide some incentive to do it not only makes their individual
    companies stronger but across the industry if we are doing
    this, I think there can be some leverage there.
        Ms. VELAZQUEZ. Well, there are some partnerships happening
    between community colleges across the country and the small
    business sector in New York I am quite aware because one of
    them is in my district. And precisely, I just held a roundtable
    with small manufacturers, and time and again the major issue is
    to find skilled workers.
        Thank you, Mr. Chairman.
        Chairman GRAVES. Mr. Chabot.
        Mr. CHABOT. Thank you very much, Mr. Chairman.
        Bruce, I think I would like to go to you since you came all
    the way from Cincinnati.
        You had started--what year did you start? Was it 1948--
    excuse me, 1961 or 1948?
        Mr. BROXTERMAN. The company was incorporated in 1961 but
    the original product line was developed in 1948. That is
    correct.
        Mr. CHABOT. All right. I was just wondering how my cracked
    staff could have got that wrong.
        Mr. BROXTERMAN. Okay. No, they were right.
        Mr. CHABOT. My question is this. You have been a very
    successful company and you have approximately 150 employees
    now. Times are different now than they were back then. If you
    would have started a company or wanted to start a company like
    you did back then now, would that have been possible? What
    additional challenges do startups have out there nowadays that
    were not in existence back when you guys started up?
        Mr. BROXTERMAN. Well, you know, I think there are a few
    things. It is interesting. I was involved in a management
    buyout of the company in 2007. We could not do that today
    because there is just no way in the banking environment that I
    could have gotten the funds to help me finance that.
        Mr. CHABOT. Is that because of Dodd-Frank in particular, do
    you think?
        Mr. BROXTERMAN. Yeah. I mean, from our standpoint I just
    had this conversation with U.S. Bank this week, and they said
    you should mention that if you get the chance because that kind
    of legislation change has a huge impact on their approach to
    lending dollars to people like me.
        I think, too, I think the issue of finding skilled labor
    now as a startup would be very difficult. It is hard enough for
    me as a company of 150 to get people to take the chance to go
    to work for a small company, much less someone who is just a
    startup and just getting out of the chute.
        Mr. CHABOT. Well, getting into that question about skilled
    labor, and all three of the witnesses here have mentioned that,
    they are having the same difficulty, and that is in an economy
    where we have ballpark somewhere between 7.5 and 8 percent
    unemployment, and that really, I would argue, does not
    adequately reflect the true unemployment when you look at
    people that used to work full-time and are working part-time
    who are still counted as working, and people that have given up
    working all together have gotten so discouraged they drop off
    and they are not counted at all anymore. So it is probably
    significantly higher than that. But whatever, the unemployment
    rate is higher than it ought to be, yet folks like yourselves
    are having a hard time hiring people. Are there any things that
    you would suggest that either we ought to be doing or maybe the
    local vocational schools ought to be doing or somebody ought to
    be doing to make folks employable in these high paying jobs
    which you all are screaming? And I will let all three of you
    touch on that if you would like to.
        Bruce, do you want to go first since you are the hometown
    guy to me?
        Mr. BROXTERMAN. You know, that is one that I thought of
    quite a bit on the way out here and as I prepared for the
    testimony, and it is difficult. I think there are some line
    items in the budget that support the nonprofits, such as the
    MEPs in Cincinnati. It is a group called TechSolve that offers
    low-cost training for companies like ourselves. They have a
    machining center where they share their expertise on machining
    and machining skills. But it is a challenge. It is a special
    challenge.
        I like hearing about what Steve has to talk about because
    he has taken kind of a unique approach there I think that would
    be helpful as well. But it is a challenging time and I am not
    sure what the answers are.
        Mr. CHABOT. Okay. Would either one of the other witnesses
    want to----
        Mr. IVERSON. Well, I got an e-mail from the president of
    the Illinois Manufacturing Association, and he said that
    basically, students coming out of high school, just their math
    skills are not up to par. And so a lot of us, the first thing
    they do at community colleges is that they find that they have
    to re-teach and do a better job at getting the math skills
    sharpened first. So I think schools in general are not--they
    are being measured maybe in an inappropriate or not necessarily
    an efficient way. And so a lot of people, a lot of schools are
    putting prominence on things that may be they should not have
    prominence on.
        Mr. CHABOT. Thank you.
        Mr. Schwind.
        Mr. SCHWIND. Yes. I think in our own experience we find new
    individuals coming into our company with no experience have
    found us as maybe a second or a third option. They were not
    charging into machining out of high school because while in
    high school there was no real promotion of it. I think we need
    to get with mom and dad while these youngsters are still 14-,
    15-, 16-years old in high school. I know within the high
    schools at least in our area we have had good success with
    robotics, and out of that students are learning how to design
    high level. They are learning how to build. But it seems to be
    gone the days where you would go to high school with kids that
    can rebuild cars when they get out of high school. It just
    seems like we have lost focus or funding. I am not sure why.
    But at the high school level there is very little real building
    or manufacturing going on. It seems to have moved more towards
    design and engineering, which is still good, but we just lost
    that hands-on approach I think at the high school levels.
        Mr. CHABOT. Thank you.
        Mr. Chairman, I see my time is about ready to lapse. Just
    let me make one final point.
        I happen to be the chair of the Subcommittee on Foreign
    Affairs on Asia and the Pacific, and Mr. Broxterman, you had
    mentioned that about 45 percent of your sales now are
    international, and we are looking at TPP and we are looking at
    trade with the Europeans and a whole bunch of other free trade
    agreements and things of that nature, so in 10 seconds could
    you tell us do you think those types of things would be
    helpful? Would you like to see the international trade to go
    up?
        Mr. BROXTERMAN. Absolutely. Obviously, our goal is to have
    it be half of our business or more. The more you can do to
    reduce barriers between us and our foreign markets and support
    us in our work and sending products overseas, the better.
    Places like Brazil where there is a challenge in terms of their
    import taxes, and then obviously, we have had some property
    rights issues in China as far as patented products being
    copied, those are the things that are toughest for us.
        Mr. CHABOT. Thank you very much.
        Thank you, Mr. Chairman. I yield back.
        Chairman GRAVES. Mr. Schneider.
        Mr. SCHNEIDER. Thank you, Mr. Chairman. I want to thank the
    witnesses. I know, having run a business, taking a day and
    coming to Washington is difficult, so thank you for taking time
    out of your busy schedule and sharing with us your stories.
        Particularly, stories of manufacturing. I know when I
    graduated in 1983 with an engineering degree, we had 12 percent
    of our graduates in engineering and 22 percent of our economy,
    our GDP was manufacturing. Both those numbers are today at
    half. All three of you have told us that you have a hard time
    finding employees. When I am home in my district I make a habit
    of visiting companies in the district. I am batting 100
    percent. Every single company we go to is saying the same
    thing. We cannot find people with the skills we need.
        And Mr. Schwind, you made a comment about kids coming out
    of school but not having the requisite skills. There is a
    distinction between knowledge and know-how, and what we need
    are people who have the know-how to put a car together, to
    operate these machines.
        I was proud the first bill I introduced is the America
    Works Act, which is working with community colleges and
    industry to help close the skills gap. And Terry, what you have
    been doing in Illinois with CHAMPIONNow, working with--high
    schools and some of the other things is nothing short of
    miraculous. So that was a long way of saying thank you to you
    all for what you do.
        And I would be remiss, also, Mr. Schwind, your father was a
    client of mine before you bought the business, and having
    worked with family businesses for almost 20 years and working
    with my own dad, I tip my hat to you because as you all said,
    family businesses treat their employees like family. That is
    how we are going to grow the economy.
        As we look forward, as we look to close the skills gap, you
    mentioned, Mr. Broxterman, that it takes a number of years to
    train people in your business. How long has it taken you at
    this point to fill an open position?
        Mr. BROXTERMAN. From our standpoint, the process is
    threefold. One is to actually find a pool of employees, and
    that typically runs two to three weeks. And then once you have
    them is to bring them in and vet that process. And then
    finally, to make that offer and try to bring them onboard. I
    would guess that the whole process for us is somewhere in the
    range of about three months.
        Mr. SCHNEIDER. Mr. Iverson?
        Mr. IVERSON. Well, we are in a situation where we do not
    have a production technician, which is hard enough in itself.
    Many times we have to find either a service engineer--we have
    been very lucky with our service people. But salespeople that
    have to have mechanical skills and other skills, time
    management skills, so we have had to actually bring young
    people in and develop them, and it is short of two years to get
    to the point where they can actually do the job effectively. So
    if we are trying to find someone seasoned, it may take us every
    bit of six months or more.
        Mr. SCHNEIDER. Mr. Schwind.
        Mr. SCHWIND. In our experience, to recruit someone and
    recruiting someone with skill, anywhere from three to six
    months. Lots of interviewing, but finding someone with the
    actual hands-on and the practical experience could take up to
    six months. Finding someone to come in with no skill is
    relatively easy, but then you shift a lot of the responsibility
    and cost of training, safety, all that, right back into your
    shop. So you would prefer to obviously hire the more
    experienced because you bring in some unknowns when you bring
    in someone fresh with no skill.
        Mr. SCHNEIDER. Sure. Do you see that timeframe--getting
    people, getting people the skills, having to retrain or train
    backwards, having a restrictive impact on your ability to grow
    your businesses?
        Mr. SCHWIND. From my standpoint, it definitely is. It
    reduces capacity. We run three shifts. In past years, that
    second and third shift was a big part of what we did. Our
    second and third shifts now are just skeleton shifts because we
    just do not have the manpower to fill them.
        Mr. IVERSON. At our indicator business we do not have a
    second shift and we compete with competitors all over the
    globe. And we have actually gone to what they call ``lights
    out'' manufacturing, where we can run the machines at night
    unattended. People can say that that is taking away jobs but it
    really is not. It is making us more competitive, and trying to
    put a second shift on--a first shift is hard enough. A second
    shift is almost impossible.
        Mr. SCHWIND. We do long manufacturing runs, so we do run a
    second shift, but we pick and choose. There are certain cases
    where we can take a relatively new employee and have them run
    certain jobs, but in many cases, if it is something
    specialized, we intentionally hold off. And we could run it but
    cannot because we do not have the human capital trained enough
    to do it.
        Mr. SCHNEIDER. Great. Thank you.
        I am running out of time. I could sit here and talk all day
    about manufacturing, about small business, about family
    business, so again, thank you. One of the things we need to
    push through is sequester, and Mr. Schwind, you touched a bit
    on about it, but real briefly in a couple of seconds, can you
    give us a sense percentage-wise the impact sequester is having
    on your business?
        Mr. SCHWIND. Year-to-date it has been about a 30 percent
    impact on our revenue to the federal government. And like I
    said before, we knew something had to happen. Sequestration
    did, but within the recession when demand dropped, we at least
    had insight into when things were going to turn around. Right
    now, with our government buyers, we do not have that insight.
    That is what is hard for us to plan. So what we have done in
    response is we are looking for commercial work and adding that
    to our pipeline, but it has been difficult for us. About a 30
    percent drop.
        Mr. SCHNEIDER. Mr. Iverson.
        Mr. IVERSON. I would concur. I mean, there is a lot of
    uncertainty, and because of the uncertainty, people are not
    going to buy machine tools. Our indicator business, we are
    investing in research and development quite heavily, but you
    know, we cannot necessarily make the investments that we would
    normally make.
        Mr. BROXTERMAN. The impact there is less for me. It does
    add to the uncertainty of the overall economy, and therefore,
    the investments that my customers make. But I do not directly
    sell to that marketplace that is so strongly impacted by
    sequestering.
        Mr. SCHNEIDER. Well, again, thank you. Your success is our
    success. The ability for you all to grow is how we will grow
    our future. So thank you all again for coming today.
        Mr. BROXTERMAN. Thanks. Thank you.
        Mr. SCHNEIDER. And I yield back.
        Chairman GRAVES. Mr. Luetkemeyer.
        Mr. LUETKEMEYER. Thank you, Mr. Chairman.
        I just wanted to thank the individuals for coming today. I
    appreciate your insights, the real life stories of how you
    operate your businesses, the impact of the rules, regulations,
    and trade policies of this country on what you do. I am going
    to save my questions until the next panel because it is a long,
    long day for us, so I will just yield back with that, Mr.
    Chairman. Thank you very much.
        Chairman GRAVES. Ms. Kuster.
        Ms. KUSTER. Thank you very much, Mr. Chair.
        I appreciate it. I was planning to yield back to wait for
    the next panel but I appreciate this conversation so much I
    just wanted to weigh in very briefly.
        I am, like my colleagues, very, very interested in small
    business and workforce development, and I have been on this
    Congress at your Company tour whenever I go back. I am now up
    to 17 companies, very, very similar to your own with this CNC
    high-level manufacturing. And the witness that I brought here
    from New Hampshire today actually is going to describe a five
    generation company that has industrial revolution machines that
    are over 100 years old in the same company, the same factory as
    CNC machines that are cutting edge. So we are proud of it in
    New Hampshire.
        But I just want to share with you a bill that I have
    introduced, Workforce Development Investment Act. It is H.R.
    1747, and I would love to get bipartisan support from the panel
    that will provide tax incentives to employers who partner with
    local colleges to prepare students for the workforce. And is
    this the type of legislation that might be helpful for you
    working with your local community colleges, technical colleges?
    And if so, I would love to get your comments.
        Mr. BROXTERMAN. I would just say that that is the kind of
    thinking that will help us move forward. It is exactly the kind
    of thing that we need. Some type of a break so that we can work
    with local experts to train folks. We have our own Richards
    Industries University that we created for ourself, which is a
    combination of on-the-floor work plus online work to help our
    folks learn the industry, but anything that can accelerate that
    process because it is three to six months to find somebody, but
    it may be as much as two years to train someone that moved from
    basic hand-drilling type operations to the true CNC
    environment.
        Ms. KUSTER. That would be terrific.
        Your comment about the math skills, that is precisely what
    I am running into. Like my colleague, Mr. Schneider, I am
    batting--every single company that I have been to has had this
    issue. One company, of every 10 that they bring in for an
    interview, only four have the math and English skills. Of
    those, two are disqualified for drugs and alcohol, and of the
    two that they hire, only one will last longer than four months
    in the company.
        Mr. BROXTERMAN. You know, I have not done the math but I
    bet ours is very similar to that.
        Ms. KUSTER. Is very similar.
        Mr. BROXTERMAN. And that is the sequence that we run into
    as well.
        Ms. KUSTER. So, my only other comment, and then time is
    short today, I will yield back, but just how can we all be
    working together to make sure that we invest in this basic
    infrastructure which is our public school system? One of you
    mentioned Project Lead the Way, and I am a huge fan of that. My
    son started in the seventh grade and our teeny little town of
    7,000 people, and he is now studying engineering in college and
    starting to work this summer at Lincoln Labs. So how can we all
    be working together to encourage those types of programs in our
    public schools?
        I love your CHAMPION NOW program; maybe Mr. Iverson, you
    have something you could add to that.
        Mr. IVERSON. Well, I think we need to keep, you know, STEM
    going, Project Lead the Way. We cannot let those not be
    supported. I think they need to be implemented more across the
    board throughout the whole country. Different states I travel
    in, I see one state doing a great job and another state not. I
    also think that the school system needs to be measured a little
    bit differently than it is so we can encourage and rate the
    school about how successful they are not of just sending young
    people to four-year universities, but then also success stories
    as well and incentivize the schools and track the schools for
    those successes as well. But I also think that Project Lead the
    Way has got to succeed and we have got to support it.
        Ms. KUSTER. And then the last question for Mr. Schwind, one
    of you talked about videos, and what I have learned from my
    visits to the community colleges is a comment that you made
    about it is often the parents that have the image of the old,
    grungy, dark shop, and so I think the videos would be brilliant
    in trying to bring the parents into this modern environment
    where it is so clean and some of these companies that I go
    into, everybody has got the caps and the clothing, so any
    comment about how we could engage the parents.
        Mr. SCHWIND. Absolutely. And I think the story is a good
    one in that the image needs to change for what manufacturing
    really is, but you think of all the students going through
    four-year universities, saddling up $60,000-70,000 of debt with
    no job. In our industry, many of our companies, especially
    within the NTMA, pay for that training, if there is some tax
    incentive to do that, and these students graduate, have a good-
    paying job with no debt. It is nothing but a good story, and I
    think that needs to be intertwined and told by guidance
    counselors and directly talking to mom and dad. I think it is a
    great opportunity. I think videos would help.
        Ms. KUSTER. Terrific.
        Mr. IVERSON. We are involved in a lot of videos, and I
    concur 100 percent that the parents and the influencers need to
    know what reality is more so. National Manufacturing Day, I
    think it was the FMA, has October 5th where we open our doors
    as companies and all the manufacturers need to do that and
    participate so that the parents can come in and see what the
    reality is on the manufacturing floor. I also think your point
    about getting businesses, partnering with community colleges is
    huge. And when you see that happening, there is a notable
    difference in impact on the community in the manufacturing
    sector.
        Ms. KUSTER. Excellent. Well, thank you so much. And I
    appreciate you all coming to Washington and all the witnesses
    today, and I will look forward to working on these ideas with
    you.
        Thanks, and I yield back.
        Chairman GRAVES. Mr. Hanna.
        Mr. HANNA. I will just thank the witnesses for being here
    today, and I yield back.
        Chairman GRAVES. Ms. Meng.
        Ms. MENG. I also thank the witnesses for being here. I
    yield back.
        Chairman GRAVES. That is everybody.
        There are no other questions with that. I appreciate our
    first panel for coming in. Thank you. Some of you traveled a
    long way, obviously, and I very much appreciate that. And with
    that we will seat the second panel. I will turn the gavel over
    to Mr. Luetkemeyer.
        Mr. LUETKEMEYER. Okay. Could the second panel please come
    forward? Mr. Mittler, Mr. Wanger, and Ms. Johnson, Mr. Allen.
        Okay, let us get started with the second panel. And thank
    all of you for coming.
        We will apologize to you before we get started here. We
    have votes scheduled in about 15 minutes, and so when you see
    the bells and whistles and everything start to go off around
    here, we will take probably a few more questions at that point
    and then go five or 10 minutes or so and then we will have to
    take off. We will ask for your indulgence while we go cast a
    few votes and we will come back and we will continue with the
    Committee at that time.
        If you have been watching the discussion, you know that in
    front of you you have got a little box that has red, green, and
    yellow buttons on it. You get five minutes to make your
    statement, and then all of the members up here have five
    minutes to ask you questions, and we will try and hold to that,
    in the general vicinity of, but it is my honor this afternoon
    to be able to introduce one of my constituents, Mr. Mike
    Mittler. He is president and co-founder of Mittler Brothers
    Machine and Tool in Wright City. Mittler Brothers has been
    making high-quality, metal working equipment since 1980. The
    business includes a product line of metalworking and
    fabrication tools used in auto racing and aviation market.
    Additionally, they play a role in engineering, designing, and
    building special machines to automate industry. Mr. Mittler and
    his brother have built a very successful family operation that
    has not only excelled in business, but it has also provided
    safe and stable jobs for the local community and supported
    local students in developing skills and technical experience
    for future careers.
        I must add for the enjoyment of any NASCAR fans in the
    room, Mr. Mittler is a racing enthusiast whose experience in
    auto racing is related to a number of ideas for special tools
    and machine concepts, and his support of a particular
    individual who is now one of the top race car drivers in the
    NASCAR family. So in my opinion he is the perfect example of
    how hardworking Americans can achieve anything when their
    innovation and ingenuity are allowed to flourish.
        I am happy to welcome this great Missourian to the
    Committee, and I remind Mr. Mittler he has five minutes to
    present his testimony. My special welcome. Thank you.

      STATEMENTS OF MICHAEL MITTLER, PRESIDENT, MITTLER BROTHERS
      MACHINE & TOOL; JIM ALLEN, DIRECTOR, SHAPEWAYS, INC.; JILL
        JOHNSON, FOUNDER AND CEO, INSTITUTE FOR ENTREPRENEURIAL
               LEADERSHIP; ANTHONY WANGER, PRESIDENT, IO.

                      STATEMENT OF MICHAEL MITTLER

        Mr. MITTLER. Thank you, Congressman. It is my privilege,
    and I feel my duty, to be here to give my testimony today, so
    thank you very much.
        As you said, my name is Mike Mittler, president and co-
    founder with my brother Paul of Mittler Brothers Machine and
    Tool, a manufacturing company located in Wright City, Missouri.
    And as you said, I feel we are the classic example of small
    business. We founded our company around the kitchen table at my
    mom and dad's house Super Bowl Sunday of 1980. On Monday,
    following the Super Bowl, we rented a 2,500 square foot
    building for $400 and a handshake with the owner. How little
    did we know?
        Paul and I worked many long days and nights as the only
    employees of the company to build our reputation of quality
    work and great customer service. We had honed our basic
    customer service skills with the first Mittler Brothers,
    cutting grass, raking leaves, painting houses, and many other
    odd jobs while in high school. With me, the oldest of eight
    children, and Paul the youngest, if we wanted to have any money
    at all, we had to earn it.
        Mom and dad were great role models while providing the
    initial startup money, which we paid back with interest by the
    way. They quickly said, ``You boys are on your own and you have
    to make it.'' Always glad to offer advice, they did not meddle
    in the business and knew we had to make our own mistakes so we
    would really learn the hard way.
        In 1984, we moved to our second location, a 7,500 square
    foot building that we helped build with a lot of sweat equity.
    We added both customers and employees slow but sure over the
    years and moved to our current location, a 50,000 square foot
    building in Wright City in 2004.
        Like Rick, I am a member of the National Tooling and
    Machining Association. I was proud to have served as the
    national chairman of that organization in 2006. There are
    thousands of companies like ours in manufacturing America, and
    together, it is these small businesses who provide jobs to the
    majority of Americans.
        Our most important asset is our people, and we are proud to
    have 10 people with over 20 years of service with us. Two of
    them started right out of high school and are now grandfathers.
    We currently have 60 employees, and last year we paid out over
    $2.5 million in payroll to our people. I am very proud to
    currently have five military veterans as part of our team, and
    I feel these are the real heroes of this country. We have
    always given young people a chance to work for us, and
    currently have several moving up through the ranks, including
    two still in high school working part time for us.
        Our people are all highly skilled, and we employ welders,
    machinists, toolmakers, engineers, painters, and assembly
    technicians. Our people are guided by just three basic rules--
    safety, quality, productivity. We provide a quality benefit
    package, including health care, that we pay the majority of, a
    401K plan, a gain sharing program that last year paid over
    $200,000 to our employees, and a flexible work schedule to
    allow our people to deal with their family and their job.
        We utilize the latest technology in our manufacturing
    processes, including 3D sold design modeling software and high
    tech CNC, our computer-controlled machines.
        Our company has two main areas of focus. One is our product
    line of special machines and components for the auto racing,
    hotrodding, restoration, aircraft, and bike building industry.
    And the other is design and building of special equipment for
    industrial automation.
        Our standard products serve both the professional racer,
    fabricator, and the do-it-yourselfer who has our products in
    their own home workshop. We are proud to be able to sell our
    products all around the world. Our products have been featured
    in a number of hit TV shows, including the American Chopper
    series and several other how-to shows. Numerous trade
    publications and many online videos have also featured our
    products. We maintain a dynamic website, publish a 90-page
    catalog, and exhibit in several trade shows to promote and sell
    our products.
        In the design and build area, we manufacture custom
    machines and systems for large industrial companies, helping
    them compete in the global economy. Our customers include
    companies in medical, building products, energy, heavy truck,
    and general industry.
        While we have been successful over the years, many things I
    currently see bother me and give me cause for great concern. I
    wonder often would I do it all again? In today's climate, could
    my brother and I succeed and create the jobs that we currently
    have? Unfortunately, I think the answer is no.
        There is too much uncertainty right now and the costs of
    manufacturing in America are rising, making us less globally
    competitive. Uncertainty over the health care law, instability
    in the tax code, ineffective and costly regulations are the
    biggest problems we face. It seems most of our obstacles come
    from right here in Washington. Small businesses do not need a
    helping hand. We need a sensible partner in government which
    allows entrepreneurs to build a business and most importantly
    create jobs.
        In closing, I am proud and thankful to live in the greatest
    country in the world and proud to have an opportunity to
    contribute in a very small way to that greatness. May God
    continue to bless America. Thank you.
        Mr. LUETKEMEYER. Thank you, Mr. Mittler, for your
    testimony.
        For the next witness we will have Mr. Payne introduce our
    next business, Ms. Johnson.
        Mr. PAYNE. Thank you.
        Mr. Chairman, if the Committee would be so kind to skip by
    Ms. Johnson. I have not received my information yet.
        I think that is a little shorter than the one I had.
        Mr. LUETKEMEYER. We will skip her?
        Mr. PAYNE. If the chairman would.
        Mr. LUETKEMEYER. Okay.
        Mr. PAYNE. Thank you.
        Mr. LUETKEMEYER. Ms. Meng, is she here? There we are. You
    can introduce Mr. Allen.
        Ms. MENG. Thank you, Mr. Chairman, and Ms. Ranking Member.
    It is my pleasure to introduce Mr. Jim Allen.
        Mr. Allen is the director of Economic Programs at
    Shapeways. Shapeways is the world's leading 3D printing
    marketplace where users can make, buy, and sell 3D printed
    products. The startup company produces and ships hundreds of 3D
    printed objects per day from its 25,000 square foot facility in
    Queens, New York. It also has the capability to print millions
    of objects per year. Shapeways uses cutting-edge technology
    that places it at the forefront of 3D technology. I am proud to
    have Shapeways as part of our Queens community and look forward
    to Mr. Allen's testimony.
        Welcome, Mr. Allen.

                         STATEMENT OF JIM ALLEN

        Mr. ALLEN. Thank you for inviting me to speak at this
    Committee.
        Again, my name is Jim Allen, and I am the director of
    Economic Programs for Shapeways. We are the world's leading 3D
    printing marketplace and community. We harness the power of 3D
    printing by granting consumers access to commercial and
    industrial-grade printers to basically print whatever they
    want. These are done in our ``factories of the future,'' which
    as Ms. Meng mentioned is in Long Island City. We also have one
    in the Netherlands.
        We want to make product design both personal, accessible,
    and inspiring, and that is something that we can do through 3D
    printing. I have worked closely for the last two years of the
    company by maintaining close relationships with local, state,
    and federal government agencies and the local economic
    development community. I have also been involved in creating
    what we call the ``factory of the future'' in Long Island City,
    leveraging my experience in manufacturing and economic
    development.
        The Shapeways story reads like a new-age American success
    story. The company was founded in 2007 by Peter Weijmarshausen
    and Marleen Vogelaar in the Lifestyle incubator of Phillips
    Electronics in the Netherlands. At the time, 3D printing was
    still very expensive and virtually unknown. It was really the
    domain of large corporations, prototyping service bureaus, and
    architects, but it really was not used for creating real
    products for real consumers. Consumers were using 3D software
    to design objects but they really had no outlet to actually
    have those objects in their hands. The founders of Shapeways
    said, ``Let us make this possible.''
        And so in 2008, the company launched their website and
    started 3D printing, basically achieving the impossible. In
    2010, the company was spun off from Phillips and the Dutch
    founders packed their bags and their families and moved to the
    U.S. They moved here to New York for the same reasons that a
    lot of companies do--direct access to the world's largest
    consumer market, as well as access to capital. The founders
    also realized that New York City is a hub for creativity and
    design, and so they looked at this as being an opportunity to
    tap into the American workforce.
        Since late 2010, Shapeways has created over 70 well-paying
    jobs in the U.S. in the fields of manufacturing, software and
    web design, marketing, product design, finance, and customer
    service. As we continue to grow, we are going to have probably
    over 50 people in the manufacturing plant and we are also going
    to need to have support at our corporate office in Manhattan,
    so there will be additional jobs created there.
        I want to highlight Shapeways growth from the perspective
    of community and marketplace. We have a diverse and global
    community comprised of designers, shoppers, as well as
    creators, who are turning out ideas on a daily basis. At least
    count they were uploading 60,000 new products every month to
    our website. We also have thousands of members of our community
    that do not have any 3D experience and who want to get involved
    in creating objects that populate their lives. At most recent
    count, we have over 300,000 community members.
        We also have shop owners. These are people who have design
    experience and are placing their designs on our website for
    others to purchase. We allow them to set their price and make
    their own profit in return for a small fee from us, but we
    manage the transaction from end to end. In 2012, we paid out
    over $500,000 in payments to these shop owners, and at that
    point there were 8,000 shop owners. Now we have over 10,000.
        We have also been fortunate in raising capital. In 2010, we
    raised our initial $6 million, and over the last few years we
    have raised an additional $41.3 million. Most recently, a $30
    million round through Andreesen-Horowitz and supported by Union
    Square Ventures, Index Ventures, and Lux Capital. This is a
    testament not only to the Shapeways concept and business model,
    but is indicative of the game-changing potential of 3D
    printing. As we go forward, we are going to continue to roll
    out new materials, invest in the latest 3D printing technology,
    and work our way towards 100 percent local production. Right
    now nearly 90 percent of the products sold in the U.S. are
    manufactured here in the U.S.
        I feel that this is the tip of the iceberg, not only for 3D
    printing but also for U.S. manufacturing in general. I gave a
    talk last January at the Leadership Summit of the International
    Economic Development Council and noted that there is a
    significant uptick in venture funding of manufacturing in
    hardware-based companies. So it is not just the latest social
    media fad or website that is being funded. This coupled with
    improvements proposed in the Jobs Act to ease restrictions on
    crowdfunding may help spark a renaissance in U.S.
    manufacturing.
        One of the challenges that we face, which has been
    mentioned by each one of the previous presenters, has to do
    with finding and attracting the best talent, and this we think
    stems from a lack of STEM education. We need to continue to
    support those programs. I worked for an economic development
    agency outside of Chicago before and was working closely with
    the workforce development organizations there and the
    manufacturing community to make sure that that happened.
        Before I finish, I would like to acknowledge the warm
    welcome and assistance Shapeways has received from Queens,
    Manhattan, and the State of New York, from Governor Cuomo,
    Mayor Bloomberg, Congresswomen Carolyn Maloney and Grace Meng.
    We have been welcomed with open arms. Queens may not be known
    for its manufacturing industry, but the past few years
    Shapeways has realized how great a community this can be for
    business with the right investments and strategy. We hope that
    Shapeways can be both a hub and a catalyst for the resurgence
    of manufacturing in this area.
        Thank you again for your time.
        Mr. LUETKEMEYER. Thank you, Mr. Allen.
        Mr. Payne, do you want to introduce your witness?
        Mr. PAYNE. Thank you, Mr. Chairman.
        It is my honor to introduce Ms. Jill Johnson, CEO of the
    Institute for Entrepreneurial Leadership, also known as IFEL,
    located within my district in Newark, New Jersey since 2002.
    She started the organization to serve the unique needs of
    minority- and women-owned businesses with her father, Dr. Henry
    Johnson, who was a minority business advocate in Newark for
    over 20 years. In 2011, she expanded the organization's reach
    through a partnership with the City of New York Base Workshop
    in Business Opportunities program, which has special outreach
    to low-income communities, including the re-entry and veteran
    populations.
        While today's hearing focuses on the resurgence of small
    business manufacturers, I wanted to ensure that the challenges
    and opportunities for entrepreneurs of various sectors,
    including manufacturing, from disadvantaged backgrounds, were
    highlighted as well. Given Ms. Johnson's 20 years plus
    experience with minority- and women-owned businesses and her
    work in urban and low income communities, she is equipped just
    to do that.
        In her current capacity as the CEO of the Institute for
    Entrepreneurial Leadership and Workshop in Business
    Opportunities, Ms. Johnson is responsible for strategic
    direction of the organization that will guide their vision to
    make the American dream through entrepreneurship available to
    anyone who has the drive and commitment to be successful. She
    has led the company in the creation of successful programs
    focusing on entrepreneurial training and mentoring services for
    New Jersey Department of Labor, the Newark Urban Enterprise
    Zone, and the Rutgers Center for Urban, Entrepreneurial, and
    Economic Development. In 2012, the Institute for
    Entrepreneurial Leadership and Workshop in Business
    Opportunities together served over 1,700 aspiring and existing
    entrepreneurs in New York and New Jersey, as well as through
    five affiliate partners in four states. Prior to launching the
    Institute, Ms. Johnson was a financial analyst at Goldman
    Sachs, an associate publisher of Yes Magazine, which was a
    family-owned business, and the president of On Point
    Consulting, a strategic business planning consulting firm
    started by her husband.
        Again, it is my honor to introduce Ms. Jill Johnson.
        Mr. LUETKEMEYER. Ms. Johnson, you have five minutes. And
    just to let everybody--the witnesses as well as the panel
    members know, we will take this testimony and then we will
    adjourn to go vote. As you can see on the board, we are in the
    process of voting, and then we will return probably in about 30
    to 45 minutes.
        So, Ms. Johnson, you have the floor for five minutes.
    Welcome.

                       STATEMENT OF JILL JOHNSON

        Ms. JOHNSON. Thank you very much to the Committee.
        My name is Jill Johnson, and on behalf of the Institute for
    Entrepreneurial Leadership, the Workshop in Business
    Opportunities, and the thousands of people who pursue small
    business ownership as their path to the American dream, I thank
    you for the opportunity to address this Committee today.
        I am here to share our view of the challenges that exist
    for the entrepreneurs that we serve which are particularly
    acute in segments that require high levels of capital
    investment, like manufacturing.
        The Institute for Entrepreneurial Leadership is focused not
    on the entrepreneurs who start businesses with loans from their
    parents or corporate buyout packages or by raising money on
    Wall Street; our clients are regular people who aspire to live
    a better life, people for whom the American dream is a concept
    worthy of pursuit.
        For over 10 years, as Congressman Payne said, from our base
    in Newark, New Jersey, we have provided one-on-one mentoring to
    businesses with revenues of less than $250,000. While these
    types of enterprises are often demeaned as ``mom and pop''
    businesses not worthy of investment, we celebrate these
    entrepreneurs as the agents of change in communities where
    change is most needed.
        In 2011, we joined forces with Workshop in Business
    Opportunities, an amazing organization that has trained over
    15,000 entrepreneurs since 1966, in the areas of New York City
    where the angel investment dollars do not flow. Since joining
    forces, we have created an end-to-end training, mentoring, and
    support continuum for the entrepreneurs that are often left out
    of the mainstream small business ecosystem. Last year we served
    close to 1,800 existing and aspiring entrepreneurs, and we
    launched a pilot program to replicate our model nationally
    through affiliate partners. Our clients are 73 percent women,
    70 percent with household incomes below $60,000, and 74 percent
    black and Hispanic. The challenges that our clients face in
    starting and growing businesses revolve around three primary
    issues: the Capital Gap, Talent Gap, and Opportunity Gap.
        In 2010, white Americans were about six times as wealthy as
    nonwhite Americans. In dollars and cents, this translates to
    the average white family having about $632,000 in wealth,
    versus $110,000 for Hispanic families, and $98,000 for black
    families. While access to capital is often viewed as best
    addressed through the private sector, private sector solutions
    are generally not interested in low return, nonscalable
    ventures.
        While the SBA does what it can, the SBA cannot replace the
    type of business startup and growth capital offered through
    personal wealth and friends and family investment. Black
    businesses are particularly affected due to the historical lack
    of intergenerational wealth transfer. While money alone cannot
    fix a flawed business model, it is a simple truth that money
    can buy expertise and can enable a small business to stay
    afloat long enough to figure things out and adjust. Access to
    capital makes the pivot to profitability possible.
    Undercapitalized businesses have no room for error. We need to
    find solutions to the access to capital gap.
        In addition to capital constraints, many entrepreneurs rank
    lack of business training as high among the challenges they
    face. Again, this is where we see a divergence in what exists
    for high tech, high growth businesses and the businesses that
    we serve. Across the nation there is a strong effort to support
    incubators and accelerators for companies that have the
    potential to attract significant private sector investment
    dollars, as well as research grants. Most of the value is in
    having access to the talent and expertise that entrepreneurs
    generally cannot afford during the early years in the
    development of the business. These incubators and accelerators
    stimulate innovation, provide support, and connect capital to
    projects that can change the world. What we are missing is the
    same level of resource for entrepreneurs who can change
    communities. We need to find solutions to the talent gap.
        Related to the previous two issues, a challenge for many of
    our clients is the inability to win meaningful contract
    opportunities. While this is due in large part to lack of
    capacity, we find that the absence of strong networks and
    relationships is also a limiting factor. Limited resources
    often prevent undercapitalized entrepreneurs from attending
    conferences, playing golf, joining clubs, and making the sales
    calls necessary to develop strong relationships with large
    potential customers. Government set-aside programs and
    corporate spend goals have been helpful in certain areas.
    However, for the businesses that we serve, these programs do
    not apply. We need to find solutions to the opportunity gap.
        After our years of working with thousands of aspiring and
    existing entrepreneurs, I have come to believe with all my
    heart that solutions are possible. I have presented several in
    my written testimony. It is not enough to just focus on those
    who have been blessed with the benefits and privilege of
    history; we must also empower those individuals who have not
    but aspire for more and whose spirits are still open to
    dreaming.
        On behalf of the thousands of entrepreneurs like the ones
    that we serve, I ask that as you consider ways to support the
    manufacturing sector, that you commit yourselves to inclusion
    of community entrepreneurs whose success creates a path to
    economic self sufficiency for more of us and a healthier
    economy for all of us.
        Thank you very much.
        Mr. LUETKEMEYER. Thank you, Ms. Johnson. That was right on
    five minutes. Very good.
        We apologize to the panel. This is our life around here. We
    are in the process of putting the rule on the floor for the
    Farm Bill, and so we are going to have a recess here for
    probably about 30 to 35 minutes, I would assume, around 3
    o'clock, give or take five or 10 minutes, we will be back. It
    probably will not be any sooner than 3 o'clock, but I would say
    as soon as we can get a number of members back here we will
    again go back to work. And I apologize, but again we ask for
    your indulgence.
        With that, we will recess until a little after 3:00.
        [Recess]
        Mr. SCHWEIKERT. Okay. Our Subcommittee is back in session.
        This is actually one of those moments where I got to be in
    the chair at just the right moment. I get to introduce Mr.
    Wanger.
        Anthony Wanger is president of IO, a global leader in the
    manufacturing of software-defined data centers with intelligent
    controls, the next generation of data center inner structure
    technology, and integrated hardware and software data center
    platforms. IO intelligent controls offer enterprises,
    governments, and service providers an innovative way to deploy
    provisions and optimize data center capacities anywhere in the
    world. As president, Mr. Wanger directs the company's expansion
    and acquisition activities overseas, key transactions, and the
    company's legal, HR, security, and risk management functions.
        Prior to his involvement with IO, Mr. Wanger co-founded and
    managed Sterling Network Services, a leading enterprise data
    service provider. Earlier in his career, Mr. Wanger was a
    private equity investor and served as a senior vice president
    at Sterling Partners, where he directed a variety of
    investments and transactions for the firm. Mr. Wanger graduated
    with a bachelor of arts degree in political science from Embry
    Riddle University--that is a strange place to go for a bachelor
    in poly science--and a juris doctorate degree from Boston
    University.
        I know him. He is my friend. I am allowed to screw with
    him.
        And from a personal standpoint, knowing of the company,
    knowing some of the technologies, one of the reasons I am
    actually very pleased to have my friend actually here from
    Arizona. It is often when we speak of manufacturing we think of
    the production of widgets and things and not understanding the
    platforms it requires to manage in an information world.
        Anthony.

                      STATEMENT OF ANTHONY WANGER

        Mr. WANGER. Thank you so much. Good afternoon, everyone.
    This is a terrific opportunity to appear before the Committee.
    In addition, I would like to thank each and every member of our
    team at IO. We now have employees all over the world
    prominently in Arizona but we have folks in several other
    states and also overseas. I owe a great thank you to my co-
    founders and partners, George and Bill Slessman, and our
    financial backers who have been steadfast. We built this
    business from the ground up, no employees. We started with a
    Costco folding table the first day of January 2007. So it has
    been an interesting several years.
        Lastly, I guess I would like to thank our customers who are
    the reason we are here, and people ask me all the time what is
    the secret to business and the secret to small business
    success? I think it is very simple. It is find great customers
    and keep great customers and make customers happy. If you do
    those things the rest of it is manageable.
        Just a little bit to add to the introduction, I come from a
    family of all small business owners. My mother, father,
    grandparents, father-in-law, sister-in-law are all small
    business owners. So these are discussions that we do not just
    have here, but also over the dinner table and at holidays.
        About IO, just to give you a little bit of background, we
    are a manufacturer of modular data centers and we are a leader
    in the software-defined data center industry. I brought an
    image over there. We build very large scale building blocks
    that can be used and combined to create the data center
    capacity that a given company needs, from the very small all
    the way through large global giants. Our technology can be used
    to deploy, provision, and optimize so-called clouds. We hear a
    lot about the cloud in the news. The cloud really, ultimately,
    is a series of servers and storage devices that are connected
    to the Internet, and the demand for these services is
    substantial and growing. Our customers are industry leaders in
    everything from financial services, education, entertainment,
    health care, retailing, and more.
        I am very proud to say that our products and technology are
    made in the USA. We manufacture our data center modules in
    Chandler, Arizona. We recently doubled the size of our factory
    from two lines to four lines, and in addition, we employ a
    great deal of technical specialists, including software
    developers, so all of our physical hardware is software-defined
    and software-controlled by the operating system that we
    developed in a proprietary fashion, which again we believe to
    be industry leading. I am very proud to say that we have a
    substantial number of U.S. patents both issued and pending and
    that every day we go to work we wake up to please our customers
    and to innovate; to find better solutions to the problems and
    help our customers solve those problems.
        A recent item of note, the company is very pleased that we
    are now an exporter. We just landed our first IO anywhere
    modules in Singapore. We sent around on Twitter a picture of
    the modules literally hitting the dock earlier this month, and
    that was a proud moment for us to see great high technology
    products going from the U.S. to Asia and the rest of the world.
        We employ a workforce of approximately 385 people. The joke
    was that I am very pleased to be able to appear before you
    today but in a year or so we might exceed 500 employees because
    we are scaling rapidly and we have added about 100 employees
    this year already. Most of that was attributable to the
    expansion of our manufacturing operation.
        We both sell our modules, our IO Anywhere modules to
    customers directly where they deploy them and we also operate
    them for our customers as a service, and we do so in data
    centers in Arizona, New Jersey, and Ohio. And as mentioned,
    soon in Singapore. Our corporate headquarters is located in
    Phoenix, Arizona, and I think it is an important point that not
    only do we directly employ these folks but we have an ecosystem
    of terrific partners--supply chain partners and installation
    partners and other folks. And so when a small business is able
    to succeed and grow, I think we are able to take a lot of folks
    along with us, not just our direct employees but also the folks
    that work with key partners.
        Having done this, I personally in expansion have traveled a
    great deal and been able to see how much of a hunger there is
    for American-made products and technology. We are leaders in
    the IT and Internet infrastructure industry and IO is proud to
    be a part of it.
        Mr. SCHWEIKERT. Thank you. Not as good as Ms. Johnson in
    hitting the mark, but it was very, very close.
        One of the joys of getting to sit in the chair is I get to
    throw out a couple of questions, and so think of this sort of
    as the lightning round.
        There are a couple things having listened to some of the
    opening statements. Ms. Johnson, just for the fun of it, are
    you familiar with the discussions on crowdfunding? And how do
    you think that future is going to help? Because I was listening
    to sort of you describe a lot of the sort of these tiny little
    organizations who are trying to set up businesses and get
    themselves going. Will it help?
        Ms. JOHNSON. Absolutely. And I think that crowdfunding is
    really, really an exciting opportunity for a lot of the
    businesses. We recently, actually, joined with Kiva Zip, which
    is doing crowdfunding, and they are doing it in a bit of a
    different way. So people can actually give contributions, loans
    essentially, in increments of $25 to give people a loan up to
    $5,000. We had someone, a client who was on the platform and
    was able to raise $5,000 in less than 30 days, and this was the
    money that provided the resources that she needed to really get
    her product up and going and to another level.
        Mr. SCHWEIKERT. I am elated to hear that. It is one of
    those, as you spoke in your opening statement, we do have some
    communities, some populations which do not have necessarily the
    family structures, the economic structures or banking
    relationships. It is a new world out there if we can ever get
    the SEC to finish its rule sets. I am excited because is think
    it is going to do sort a certain level of egalitarian level of
    access to capital.
        Ms. JOHNSON. The other thing that it does, just to add, is
    that it provides access to markets as well because it
    familiarizes more people with the product.
        Mr. SCHWEIKERT. Mr. Wanger, now the Jobs Act last year also
    had the emerging growth company part of it. So if you ever
    chose to go public in the next couple of years, do you believe
    you would fit into that portion of the Jobs Act?
        Mr. WANGER. Yes, I do. My understanding is that we would be
    right within the definition of the emerging growth company
    definition of the Jobs Act.
        Mr. SCHWEIKERT. And have you, as an organization, thought
    about what that might do to your ability to hire people and
    create jobs and create that platform for economic growth?
        Mr. WANGER. We have. Ultimately, we compete against very,
    very large companies, and one of the advantages they have
    besides their access to capital is also their ability to
    provide stock options and equity ownership and some of those
    items. So the ability to streamline a process to test the
    market and to do those things would be very beneficial.
        Mr. SCHWEIKERT. Okay. Forgive me for asking, but Mr.--is it
    Mittler?
        Mr. MITTLER. Mittler.
        Mr. SCHWEIKERT. Mittler, sorry.
        Mr. MITTLER. Yes, sir.
        Mr. SCHWEIKERT. Anything you see out there, both we have
    done in Congress that is helpful or you see as bottlenecks
    right now in your ability to grow and provide economic
    expansion?
        Mr. MITTLER. Well, I think that the health care law is
    certainly a big unknown for all of us. We are spending a lot of
    time trying to understand that. No one seems to really know
    what the direct impact of that is going to be for us. So that
    is something that we feel has hurt us directly. We provide a
    very rich package. We pay about 85 percent of the total
    premium, not only for our employee but all their families and
    all that. We then, to keep our premium down, we have a partial
    self-funding, so that we assume part of a large deductible, but
    we self-fund that back to the employee to keep our premium down
    or low and still provide a good benefit to our employees. So
    that, I think, is a huge thing.
        We, as some of the other members spoke about, we are a
    family-type business. I do not know every one of my employees'
    children's names but I know all their names, most of their
    spouses. We engage them at least twice a year in social events.
    So I think that is a real problem for us.
        And then burdensome regulation, I think a lot of these
    regulations are written for the big guys, and when OSHA comes
    into a small business it is really quite a worry for us. And so
    I have said here before, I think OSHA as a small business
    should be there to support us, pat us on the back, and yes, if
    there are flagrant, repeated violations, certainly, fines would
    be in order. But I think they should be there to serve and help
    us to be globally competitive, help us to provide a safe
    environment.
        As you noted my three rules, I am a very simple guy--
    safety, quality, productivity. And I am proud to have been over
    a five-year run without a lost time accident.
        Mr. SCHWEIKERT. Thank you, Mr. Mittler.
        Mr. Allen, same sort of question. As policymakers, what are
    the bottlenecks that you see coming either from regulatory or
    public policy for you?
        Mr. ALLEN. I guess I see a couple areas. One I mentioned
    during my talk was about I think with the Jobs Act with the
    relaxing of restrictions on crowdfunding, if that could get
    passed through the SEC, I think then as Jill was talking about,
    that there is a lot more access to markets. It is sort of a
    validation of what a product or a company can do. One of the
    most successful campaigns that was on Kick Starter, a
    crowdfunding site, was for a manufactured product. The founders
    were looking for only about $250,000. They raised close to $10
    million. So that tells you be careful what you wish for. But I
    think that is one thing.
        Within the 3D printing industry, we also have to look at
    intellectual property rights. We are very vigilant about making
    sure that people do not upload designs that have been
    copyrighted by others and they certify when they upload designs
    and sell them that they are their own designs. So that is
    something that we want to make sure happens or that we police
    ourselves, but we are also worried that larger companies may
    want to shut down companies like ours because they look at us
    as a repository for designs that could conceivably be--they may
    think that they are theirs.
        Mr. SCHWEIKERT. Interesting.
        Mr. Wanger, I saw your head nodding, so let me ask sort of
    you have had amazingly rapid growth, and I am elated to have
    you as part of my community. But with that, what are the
    bottlenecks that are hitting you, and what do you think we as
    policymakers should take on that would be helpful?
        Mr. WANGER. Thank you. I think from my perspective it would
    be an effort to create simplicity, perhaps safe harbors. Time
    and time again I will be on a conference call with a benefits
    lawyer and a finance lawyer and a securities lawyer and an
    auditor and I am paying them all to fight with each other to
    try to understand what the intention was. And I think that
    things like a safe harbor or like a clear rule or a path as was
    exposed in the Jobs Act is just so helpful to us because it
    just gives us a clear path. We can comply with the law and get
    on with the business of business and job creation.
        Mr. SCHWEIKERT. With that, I pass over to the ranking
    member, Ms. Kuster.
        Ms. KUSTER. Thank you very much. And thank you, Mr. Chair.
    And I want to thank all of you as witnesses for taking the time
    as small business owners to come down and be with us in
    Washington today.
        My questions are focused, and I am so impressed by the way
    with all of your companies. Mr. Wanger, you are setting records
    here on job creation, so Congress needs to take note. We all
    were elected to create jobs, and I thank Mr. Mittler for his
    comment that Congress should be a sensible partner with
    business, and I agree with that approach.
        My question is in the area of workforce development. And I
    guess I will start with you, Mr. Wanger. Have you had any
    difficulty with this level of growth in terms of the skills? We
    heard on the previous panel issues around STEM education or
    preparation for the workforce and I was referencing a bill that
    I have introduced on tax incentives to employers who partner
    with local colleges to prepare students for the workforce. Do
    you have any comment on workforce development?
        Mr. WANGER. Sure. Thank you.
        Yes, I do. I actually sit on, in Arizona, on the Arizona
    Workforce Development Task Force as part of our Technology
    Council. We have had very good success training individuals who
    were previously residential contractors or tradesmen or women,
    and they have come into the factory and been able to contribute
    meaningfully quickly after some training. That has been a very
    positive story for us. I think a bigger challenge has been
    around some of the very specialized areas--sofware development,
    electrical, and sort of multiple discipline engineering can be
    a challenge because we need folks who understand electrical
    engineering and computer science and mechanical engineering.
    And so literally today on our website I think we have 30 or 40
    open jobs openings, and most of the ones we have trouble
    filling are on these STEM technical areas.
        Ms. KUSTER. So I want to invite you to come to New
    Hampshire where we have on taxes, either income or sales. You
    have a long list. We would love to have you--and a great
    engineering school as well.
        So I wanted to turn to Ms. Johnson. In the same realm, do
    you have issues with the companies that you are working with in
    terms of the talent pool available and the education system?
    And do you have any recommendations of how we could be the
    sensible partner with business on the education side?
        Ms. JOHNSON. Absolutely. And I think that the challenges
    that a lot of our clients face are even more acute because they
    have fewer resources, and so they are hiring from probably the
    lowest end of the talent pool and in inner city communities
    where the educational systems tend to be not what they should
    be. And then I guess from a personal standpoint I have four
    sons who are all in public school--three of whom are in public
    school, and one of the things that I have seen is just a
    movement away from working with your hands. And when I was in
    school we had to take shop--metal shop or wood shop. I took
    wood shop. And so you develop a familiarity and comfort with
    working with your hands and being in that environment that may
    lead someone to decide that a career in manufacturing is the
    right path for them. And I think it would be very beneficial to
    move that back into schools at the earliest educational levels,
    even at the elementary level, so that way young people have
    options. They have a path. It is not just, you know, if you are
    smart you go to college and if you are not you do something
    else. It is that now you are training very smart people and
    talented people from the very earliest levels to look at
    manufacturing as an option. And in our inner city communities
    where people may not have the ability and wherewithal to go on
    to college, this is really a viable career path that needs to
    be encouraged.
        Ms. KUSTER. Excellent. Thank you so much.
        I note that the clocks are not working but I will yield
    back in case I have any time.
        Mr. SCHWEIKERT. I just thought you were special.
        Mr. Hanna.
        Mr. HANNA. I will just thank the witnesses for being here
    today. You all have very impressive resumes and I will yield
    back.
        Mr. SCHWEIKERT. And my friend from Arizona, Mr. Barber.
        Mr. BARBER. I have no questions.
        Mr. SCHWEIKERT. Mr. Bentivolio.
        Mr. BENTIVOLIO. Does it work? Can you hear me all right?
        Ms. Johnson, I could not have come at a more opportune time
    for me anyway.
        I was a vocational teacher and general ed teacher before I
    came. In my district we are really concerned about something
    just mentioned regarding apprenticeship programs. I noticed
    over my tenure as a teacher that the metal shop, the CAD, the
    woodshop disappeared, and it is a great loss because there are
    a lot of kids out there wondering what they are going to do and
    they have no clue. They are being forced or told to go to
    college.
        And also, we have a bunch of veterans coming home from
    overseas and having been a veteran, in 2007, I came home. I
    went to college and you know all that, and I found that the
    best, most therapeutic thing for me was to work with my hands.
    I took up gardening and it was very relaxing for me and within
    weeks I was well adjusted and back.
        They are going to have some fun with that later I am sure.
        What would you recommend? Because right now I am finding
    out there is a problem working with VA and the Department of
    Labor. Getting the Department of Labor, for instance, to agree
    to an apprenticeship program that the VA or a soldier once he
    is discharged can apply for VA benefits. But it does not apply
    to apprenticeship programs because the Department of Labor does
    not authorize it. I am just now getting into that. Do you have
    an information on that? Can you help me in understanding what
    the big problem is?
        Ms. JOHNSON. I am not familiar exactly with VA benefits,
    but one of the things that I do want to say based on our
    experience in working with the Department of Labor, in New
    Jersey there was a very innovative program to support
    entrepreneurial training. And the challenge often with
    entrepreneurial training programs is that it is not deemed as
    looking for work. And so even programs like Job Corps, they are
    responsible for helping young people get trained for jobs,
    starting a business does not count for that.
        And so one of the things I would love to see is that there
    is more of a relationship between the job training programs and
    entrepreneurship because for so many people there are just not
    the jobs out there. And when you especially look at the re-
    entry population, that will have a special emphasis as well.
    There are just not opportunities for them in the workforce
    oftentimes with the skills that they have. However, having a
    trade and learning to work with your hands, that is something
    that is then a transferrable skill to starting your own
    business.
        Mr. BENTIVOLIO. How would you recommend we get public
    schools and other schools more interested and focused on giving
    students the opportunity to go to an apprenticeship program
    like carpentry, masonry, or a manufacturing technician of some
    sort? Do you have any suggestions?
        Ms. JOHNSON. I do. I think that really, again, it starts
    with having exposure. I did not originally say I think I want
    to take something working with my hands; I want to take
    woodshop. It was either I took home economics, metal shop, or
    woodshop. And I was not so interested in cooking, and so I
    chose to do woodshop. And now actually doing sheet rocking and
    spackling and working on my home is a release from the work
    that I do every day, and it also supports home ownership. And
    so I think that in creating an opportunity for exposure is what
    young people need where it is not an option because young
    people do not always know best what they need.
        Mr. BENTIVOLIO. Well, I just spoke to a young--do I still
    have some time left, Mr. Chairman?
        I just spoke to a young congressional award winner for
    students, and the student came to my office today and asked if
    there was a program where she could--because she does not
    really know what she wants to do. A lot of students think they
    do but they will get involved in something and they find, well,
    that is not really what I wanted to do. And I suggested maybe
    they follow me because one of the opportunities I have as a
    congressman is I get invited to a lot of my constituents' place
    of business for a tour. I am just wondering if maybe that is an
    opportunity we should explore and get more young kids involved
    at the high school level, maybe during the summer, to tour some
    of these various employers' facilities. Do you think that is a
    good idea? Suggestion?
        Ms. JOHNSON. I absolutely think so. And I think that would
    also be an amazing opportunity for a lot of the entrepreneurs
    like the kids that we serve to close the talent gap. And having
    young people, whether they are in high school or especially
    even at the college age, where now you have programs like Teach
    for America, which allow very young, energetic people to go
    into the teaching profession for a period of time. We could do
    the same thing with entrepreneurs in disadvantaged communities
    and provide incentives for people to work and support these
    entrepreneurs while getting access to training and just
    experience so that they can then have the opportunity to decide
    what they want to do. This would be a great experience for a
    lot of veterans returning home as well.
        Mr. BENTIVOLIO. Thank you. I have some more questions I
    would like to explore if we have time.
        Mr. SCHWEIKERT. We may have to make a circle around.
        Mr. BENTIVOLIO. No problem.
        Mr. SCHWEIKERT. Thank you, Mr. Bentivolio.
        Mr. BENTIVOLIO. I yield back my time. Thank you.
        Ms. MENG. Thank you, Mr. Chairman.
        I was curious to any and all of the panelists what are some
    programs, if any, federal programs that have been helpful to
    your businesses?
        Mr. MITTLER. I would comment that the section 179 for the
    advanced depreciation of capital equipment is beneficial for
    us. Our business is very capital-intensive, buying expensive
    CNC machine tools, so that really helps us defray the cost of
    that. So I think that is a positive benefit.
        Mr. ALLEN. One program that I have taken advantage of with
    Shapeways is the Manufacturing Extension Partnership through
    the National Institute of Standards and Testing where they
    provide low cost manufacturing training, safety training, lead
    manufacturing and other topics, and train the supervisor.
        Ms. MENG. Similarly, the R&D tax credit is of great
    importance to the manufacturing industry because it provides
    the ability to invest in innovative research. Currently,
    America leads the world in groundbreaking R&D and small
    companies are prominent in that effort. How in your view could
    the R&D credit be made more business friendly? And should it be
    made permanent?
        Mr. MITTLER. I would like to comment on that again. That is
    exactly parallel with the other. Since we develop our own
    products, having that R&D tax credit is very important, and I
    think if that was made permanent then that would give us a
    longer range view of developing more increased products. So I
    would highly encourage that that R&D tax credit be made
    permanent. Every few years we see are we going to have it, are
    we not going to have it? I mean, we move forward the best way
    we can, and if we benefit, we benefit. But if we knew that that
    was there, and again, that is part of the uncertainty that I
    spoke of, you know, we are not in a certain climate, so if we
    had more certainty that would make it easier to have a long-
    term view of developing more and bigger products.
        Ms. MENG. Thank you. I yield back.
        Mr. SCHWEIKERT. Thank you.
        Mr. Payne.
        Mr. PAYNE. Thank you, Mr. Chairman.
        Ms. Johnson, as you know, New Jersey's Small Business
    Development Centers, in conjunction with the SBA and several
    other organizations, hosted a series of educational and
    networking events around entrepreneurial and small businesses
    this week. During Monday's event I heard from a young man with
    an interest in 21st century manufacturing opportunities
    particularly dealing with technology. Can you speak of the
    possibilities and opportunities and challenges facing your
    particular constituency in these efforts?
        Ms. JOHNSON. Sure. Thank you.
        I think that the challenges really exist around the three
    areas that I mentioned in my comments--the access to capital
    gap being a very large part of that. It is very difficult to
    get a business started and to scale up, if you will, without
    the capital necessary to, one, test and do prototypes. And I
    was discussing that with Jim a little bit earlier--to test and
    do prototypes--and to be in business long enough for the
    reality to actually happen. And so I think that one of the
    challenges with access to capital can be effectively addressed
    through crowdfunding. I think that will just open a lot of
    doors and enable people to test concepts in a short order using
    funding that they are able to raise, not relying just simply on
    their own means.
        I think that the other real challenge is just an access to
    opportunity around contracting, and I think that most of these
    small businesses with which we deal, which are the very
    smallest in size, are not able to take advantage of contracting
    opportunities as many of them exist because they are just too
    small and they do not have the opportunities to scale. And I
    think as Mr. Wanger mentioned in being able to create
    additional opportunities and utilizing resources that exist and
    creating an ecosystem so that businesses that may be growing
    very rapidly like his company are able to bring others along by
    providing contracts. And even if some of the contracts are in
    catering and janitorial services and other resources that exist
    or that are required by the ecosystem and that community, those
    are ways to create a spillover effect by the growth and success
    of other businesses. And I think that is especially true in the
    manufacturing sector.
        Mr. PAYNE. And also, we tend to find I know in the
    constituency that we serve, bonding in different areas--in
    construction and what have you. Not manufacturing, but the
    capacity for people to be able to afford the bonding that is
    required has been prohibitive in entrepreneurs moving forward.
        My experience in small business, I come from a
    manufacturing background in the 1970s. My uncle had created a
    company in 1969 that manufactured the old computer forms that
    we used to use, the big folded sheets with the holes down the
    side that are obsolete. But we were the only minority firm in
    the nation that was doing that at that time in the 1970s,
    hiring--we called it guys coming back home from doing their
    debt to society but now we call it re-entry. So I am very proud
    of that background which really continues to lead me down this
    path to try to help young people in startup businesses be
    successful.
        In your testimony, in speaking of the enormous level of
    support and resources for high tech and high growth business,
    you state that what is missing is the same level of resource of
    entrepreneurs who can change communities. Can you expand on
    that point?
        Ms. JOHNSON. Sure. I had the opportunity to visit the
    Entrepreneurship Center I think it is called in Nashville as
    part of a conference that was held by the Startup American
    Partnership, which has been highly touted, lots and lots of
    publicity, and lots of resources. It is a great partnership and
    provides a great benefit to high tech, high growth businesses.
    There are many incubators and accelerators that focus on high
    tech, high growth businesses, and they are doing that because
    we have made a conscious decision that as in particular areas
    and as a country, that we want to be the leaders in these
    areas. And I think that if we are going to have the same amount
    of success with businesses, with companies that are providing
    the jobs to people from the re-entry population that are
    serving the needs of local communities, that are creating
    economic opportunity in our most distressed communities, we
    also have to think about the level of resource with which we
    are supporting these types of entrepreneurs.
        We have resources provided through the SBDCs and SCORE and
    various resources provided through the SBA, but our feeling
    about that is if those resources alone were not good enough to
    have the type of high tech, high growth companies that we
    wanted to produce, why do we feel that that is enough for
    minority women and small businesses that are community-based
    businesses in the areas where they are in most need and that
    have the fewest resources? I think we have to be serious about
    or decide if we are serious about really growing those types of
    businesses and then provide and support those businesses with
    the requisite resources.
        Mr. PAYNE. Thank you, Mr. Chairman. I yield back.
        Mr. SCHWEIKERT. Thank you, Mr. Payne.
        I actually also remembered green bar computer paper. I
    think that is what we all called it, which is actually sort of
    tear--I also remember punch cards.
        Last quick comment. Thank you. Having Mr. Wanger here is
    special for me because Arizona is a long way away, but actually
    all of you had some really interesting things to share.
        There are no further questions for the panel. I want to
    thank the witnesses.
        The third panel will be getting ready to be seated. And Mr.
    Hanna, I believe you are chairing the next panel, and this
    panel is actually now closed. If you have any other testimony
    or comments you would like to submit for the record, I believe
    it is tradition in this Committee to keep it open for five
    legislative days. And with that, the next panel.
        Mr. HANNA. Thank you, everyone, for being here.
        I will begin by introducing Barb Schindler, our next
    witness, president and chief operating officer of Golden Artist
    Colors, a world-renowned company, that does business in over 60
    countries, I believe. Ms. Schindler joined the company in 1997
    as comptroller, and previously served as chief financial
    officer. Golden Artist Colors is an employee-owned company
    which began in 1980 in New Berlin, New York, proudly located in
    my congressional district. The company makes tools and products
    for artists, including acrylic paints, and provides good jobs
    in my community. For that we are all very grateful.
        Welcome, Ms. Schindler. You may begin.

      STATEMENTS OF BARBARA SCHINDLER, PRESIDENT AND COO, GOLDEN
    ARTIST COLORS, INC.; SHELLY GIBBONS, VICE PRESIDENT, QUIK MART;
    MIKE BERGMEIER, PRESIDENT, SHIELD AGRICULTURAL EQUIPMENT; AARON
                BAGSHAW, PRESIDENT, WH BAGSHAW CO., INC.

                     STATEMENT OF BARBARA SCHINDLER

        Ms. SCHINDLER. Good afternoon, members of the Committee.
    And thank you, Congressman Hanna, for inviting me to be here
    today to testify on manufacturing in America.
        My name is Barbara Schindler, president of Golden Artist
    Colors. Golden manufactures acrylic and oil paints for
    professional artists. As a global company, we export our
    products to 60 countries around the world.
        Our mission is to grow a sustainable company dedicated to
    creating and sharing the most imaginative and innovative tools
    of color, line, and texture, for inspiring those who turn their
    vision into a reality.
        To achieve that mission, we operate on three principles: 1.
    Make the best products; 2. Provide customers with the best
    service; and 3. Find people that can make the first two things
    happen. Our products are intended to preserve the artistic
    legacy of our times for hundreds of years. This is a unique
    responsibility and privilege that we take very seriously. In
    2002, Golden became an employee-owned company. We have 157
    owners coming to work each day, knowing that their contribution
    will have a direct impact on their investment and their
    retirement.
        The art materials industry is one which grows a meager 2
    percent per year. Despite that reality, Golden has grown its
    business 21 percent since 2009. Many of our competitors have
    moved a portion of their manufacturing to emerging markets,
    predominately China. We choose to remain here, as we recognize
    we can protect our product quality and intellectual property in
    the U.S. Our continuous efforts to drive manufacturing
    efficiencies improve our ability to remain competitive;
    however, our commitment to new product development and consumer
    relationships is essential for continued growth. Our five-
    member technical support team responds to 13,000 phone calls
    and e-mails annually. We also contract with over 40 teachers
    throughout North America who provide art education for over
    15,000 people each year.
        Most of the issues we face are local and industry-related,
    yet there are three significant issues where we feel the
    Federal government can provide leadership and assistance. They
    are health care, education, and harmonized labeling standards.
        We remain optimistic that the Affordable Care Act will meet
    its goal of creating affordable health insurance to all
    Americans. As we prepare for this future, however, it is our
    approach to ready our employees and our business for every
    aspect of health care, and not simply the ACA impact alone.
        At Golden, we have been managing affordability via staff
    education and wellness. Yet, a consumer mindset can only go so
    far in an opaque market such as health care. Medical inflation
    outpaces the cost of living. We need your continued efforts to
    address the entire health care system. Americans must embrace
    wellness and health care providers must place the patient in
    the center of all they do so that we may once again enjoy the
    highest quality health care in the world and not simply the
    highest cost.
        Secondly, an educated and creative workforce is critical to
    sustain success in any business. Unfortunately, due to federal
    mandates and budget shortfalls, art teachers are being lost in
    almost every district. We are troubled by the lack of arts
    education in our schools and believe this is a serious
    situation that will in the long run shrink one of the most
    significant drivers of American ingenuity and leadership.
        Finally, we need a harmonized regulatory framework for
    health and safety labeling of art materials. Applying state of
    California mandated health warnings to our products, warnings
    that are deemed appropriate by no other jurisdiction in the
    world, causes confusion and lost sales not only in the U.S. but
    in our foreign markets as well. Adoption of the United Nations'
    Globally Harmonized System of Classification and Labeling of
    Chemicals as the preemptive standard for consumer products,
    would eliminate these burdensome domestic and international
    inconsistencies.
        Golden's future is both positive and sustainable. We will
    be successful if we are able to maintain and hire an educated
    and enthusiastic staff. Employee ownership has been a point of
    difference between us and other employers. Federal support for
    ESOPs is invaluable for creating workplaces which honor and
    celebrate its staff. ESOPs are not a cure-all for business
    success, yet it provides another level of security for
    employees trying to navigate their future. When employees are
    treated like owners, they act like owners.
        Thank you again for the privilege to address this
    Committee.
        Mr. HANNA. Thank you. You have about a moment left if you
    would like to wait for the 157 people that are watching you I
    understand.
        Ms. SCHINDLER. No, that is good.
        Mr. HANNA. You are all right then. Good.
        Ms. SCHINDLER. Thank you.
        Mr. HANNA. Thank you.
        I would like to yield to Mr. Barber, who will introduce our
    next witness.
        Mr. Barber.
        Mr. BARBER. Thank you, Mr. Chairman, and thanks to all the
    witnesses for being with us today. It has been a very
    educational hearing so far, and I know it will continue that
    way with your testimony.
        It is my honor and pleasure to introduce Shelly Gibbons.
    Shelly and I come from the same town. We were both from Tucson
    where she is the vice president of Quik Mart, a family-owned
    and grown small business in Tucson, Arizona. Quik Mart was
    started in 1965 by Shelly's dad. Growing up, Shelly and her
    brother and sister worked almost every job there was in the
    business from counting change to pulling weeds to secret
    shopping, which she still does when she is not being
    recognized. She told me yesterday that actually her dad would
    have the children around the dinner table and he would throw a
    bunch of change and he would say you better know how to count
    that. So we need to do more of that it seems to me.
        Now almost 50 years later, the Quik Mart business has not
    only survived the test of time but has grown. From those first
    three stores, Quik Mart now has 27 stores, all in southern
    Arizona, and it is truly a local small business success. As a
    former small business owner myself, and my wife, we owned a
    business for 22 years, a retail business, I know just how hard
    it is to start a business, make ends, meet, meet a payroll,
    keep the customers coming back, and so my hat is off to any
    business that can survive the first five years of opening and
    operation because that is usually when businesses, if they are
    going to succeed, do; and those that do not, fail.
        As a member of Congress now, as a small business owner in
    the past, it is my job to make sure that the voices of small
    businesses in Arizona are heard here in Washington. And I
    invited Shelly here today to testify before the Committee, to
    tell us her family story because her family business is a
    shining example of the entrepreneurial spirit that is in so
    many southern Arizonans and working families across the
    country.
        I want to thank you for joining us today, Shelly. It has
    been great talking with you and getting to know you. We met
    many years ago when I was district director for Congresswoman
    Gifford. It is great to see you here today in my new capacity
    as a member. We welcome you and look forward to your testimony.

                      STATEMENT OF SHELLY GIBBONS

        Ms. GIBBONS. Thank you, Mr. Barber, and Mr. Chairman.
        My name is Shelly Little Gibbons. My family owns Quik Mart
    stores in Tucson, Arizona. My father, Wes Little, started Quik
    Mart in 1965, like Mr. Barber said, where he opened three
    stores. My mother and father are the ones that chose the
    colors, the logo, and the name Quik Mart. He liked the way that
    there were four and four letters, so that is why there is no C
    in Quick. After these three stores opened, mom and dad would
    scrape and save until they had enough money to buy another
    corner or build another store. They did not borrow any money
    from the bank to expand the business.
        Growing up, there were a few memories I remember clearly.
    One is dad working extremely hard to keep the business running,
    but he would also be home every night for family dinner.
    Another is how we would take Sunday drives. Mom and Dad would
    pack us three kids in the car and we would drive around the
    streets of Tucson. As I got older, I realized our family drives
    were to be looking at different street corners where Dad was
    contemplating building another store. Another family tradition
    was every time a new store opened, in the evening we would all
    drive out to the new location to visit and check how it looked
    at night. So you can see all of our stores are like another
    child in our family.
        Quik Mart slowly grew from the three stores in 1965 to the
    27 we currently have today in Pima County. The 27 stores we
    have are not all the original stores. We have opened and closed
    and renamed many a store. Since all stores are family owned and
    not franchised, if one is not doing well and hurting the
    company's bottom line we will close it. Sometimes the city and
    county help with that by changing traffic flows, so it is not
    as convenient to get to us anymore. Or sometimes it just turns
    out not to be a great corner. Housing developments that we
    thought were going to go in did not.
        Owning convenience stores is a hard business, especially
    after 2008. It became harder and tougher. Our vendors now
    charge us a fuel charge when they deliver products.
    Unemployment tax, workman's comp premiums, payroll tax health
    insurance, everything every year keeps going up while the
    business with so many people unemployed keeps going down or is
    staying the same. Also, we are experiencing more shoplifting,
    beer skips, and robberies with so many people out of work and
    desperate.
        Our next big expense is the new Affordable Health Care Act.
    We employ over 170 employees, so either way we go, providing
    health insurance for our employees through the company or
    paying the penalty and sending our employees to the Exchange
    will be a huge expense for us.
        But with all I have mentioned, we are very proud that we
    Quik Mart stores and little family have been open and around
    for almost 50 years. You do not see too many family businesses
    that have grown and have had this much impact on a community as
    ours has. We have kept many people employed throughout the
    years. We have even had many generations of family members work
    for Quik Mart. People like working for us because we are local.
    Our corporate office is right there in Tucson. Any of our
    customers or our employees can come by at any time to see us.
        We have had a lot of loyal employees that have been around
    for over 30 years, and the majority of our employees stay five
    years or longer. Quik Mart--We are Tucsonans.
        I would at this time like to thank Congressman Ron Barber
    again for inviting me to testify here. Thank you.
        Mr. HANNA. I will yield to Mr. Huelskamp to introduce our
    next witness.
        Mr. HUELSKAMP. Thank you, Mr. Chairman. It is my privilege
    to introduce my fellow Kansan, Mike Bergmeier. Mike is the
    owner of Shield Ag Equipment in Hutchinson, Kansas. Shield Ag
    has been in business for 75 years and is a small manufacturer
    that meets the needs of farmers with tools and assemblies
    required for a sustainable modern agriculture. And I will say I
    have known Mike's Equipment long before I knew Mike in our own
    operation. His customers are regional and international, with
    distributors in Canada, Europe, Asia, Mexico, New Zealand, and
    Australia. Mike currently employs 44 full-time and five to six
    seasonal part-time employees. Mike is a graduate of two
    outstanding universities, Kansas State and Wichita State. He
    also served his community for eight years on a local school
    board. Mike and his wife Angie are parents of six children and
    reside outside of Hutchinson.
        And I welcome him to Washington to share his testimony
    today. Thank you for being here and joining us today, Mike.

                      STATEMENT OF MIKE BERGMEIER

        Mr. BERGMEIER. Thank you, Representative Huelskamp.
        My name is Mike Bergmeier. My wife Angie and I own Shield
    Agricultural Equipment, South Hutchinson, Kansas.
        The economy of the United States was built around the three
    super sectors that create wealth--mining, agriculture, and
    manufacturing. I am proud to own a small business within
    manufacturing in direct service to agriculture.
        The only way to create wealth is to create it out of
    something tangible, hard, growable, or renewable. When a
    president or a politician from either party starts talking
    about creating jobs, I worry, because government spending does
    not create wealth for the human race. And the more jobs balance
    shifts away from the big three, the poorer we become as a
    nation.
        That is why I am here today, for my children, not for me,
    to tell you why my children might not have the same
    opportunities I did to own a business and employ people. With
    all respect, please allow me the time to discuss these
    government functions that inhibit the ability for me to grow my
    business. And you will see a danger down the road for my
    children.
        It is difficult for most politicians and business leaders
    to pin down overregulation. It just seems there are no
    specifics; just talk about there being too many. I liken these
    government regulations to the Eastern Red Cedar tree. Cedar
    trees supply windbreaks and shelter for farm and domestic and
    wild animals where I live. Having more of them seems to be a
    good thing. I have plenty of cedar trees. The problem is that
    one cedar tree left unattended becomes about a dozen within a
    year, and then 100 within a few years, and 1,000 within a
    decade. And you get to the point where you cannot grow or
    maintain your farm and ranch your livestock. The bluestem quits
    growing because the cedar trees suck up all the resources. You
    have to spray more invasive weeds because they will grow or the
    grass will not.
        And you look back on it and say where did all these cedar
    trees come from? And you cannot pick out any one cedar tree
    that is the culprit. The only real option is to get out the
    chainsaw and cut down as many as you can without much regard
    for the good trees or the bad trees, because my quarter of
    grass land became dysfunctional and I had to do something.
        Here is a sampling of the forest of laws and regulations
    that keep me from expanding my business. The Patient Protection
    and Affordable Care Action of 2010. My company will remain at
    44 full-time and 4 to 15 part-time employees. Any benefits to
    people PPACA aside, this was the real issue. It hurts the
    people you are trying to help the most, folks in the lower and
    middle income classes. Those 4 to 15 part-time men and women
    will not have access to my health care insurance, and I will
    not expand. As my company paid total health care insurance
    premiums, Arista, by $45,000 a year, that is one person I
    cannot hire. It is that simple. I have to make payroll every
    Friday and I have got to pay my suppliers on time.
        So let us go back to the cedar tree thing again. The
    following is a list of just a few of the new forest of
    regulations that are impediments to growth. The RIN numbers are
    listed in my written testimony, and all have potential onerous
    effects on any future expansion. From the EPA, stormwater
    runoff revision of section 402(p) of the Clean Water Act, and
    the national pollution discharge elimination system, revisions
    to hazardous chemical reporting, risk and technology reviews
    for foundries. From the Department of Labor and OSHA,
    electrical power and distribution protection; trip, slip, and
    fall safety improvements; and the new revisions to the national
    ambient air quality standards for particulate matter, dust,
    under Title I of the Clean Air Act. By the way, it is 522 pages
    long and impossible to interpret.
        There are at least 200 rules, laws, and regulations out
    there that my business falls under, and expansion is just not
    worth the trouble. My bankers spent more time on the banking
    regulations that regulate the regulations than they do in
    processing business loans. Full implementation of Basel III
    capital requirements will impair the ability of business
    lenders to provide funds for expansion. The federal tax code is
    incomprehensible and nearly impossible to comply with. The
    forest of cedar trees is just too thick. When you increase my
    taxes, I just react. I do not hire the next person. I do not
    purchase a new piece of equipment, and I do not improve my
    operations and expand into new opportunities.
        As I fear that my kids will not have an opportunity to own
    a new business, a small business, or work in one of the big
    three wealth creation industries due to burdensome government
    regulation and laws, I also worry that their education will not
    position them to be future leaders. The education system in the
    U.S. is broken. We spend more money per student on education
    than any of the other 11 most developed countries in the world
    with lesser outcomes than most of the other 11. I implore you
    to completely gut the No Child Left Behind and AYP standards.
    Allow the states and localities to determine what is best for
    the lifelong earners we are trying to raise.
        In closing, I have got to tell you the truth. You do not
    owe me nothing. I was born with nothing, raised in a great
    family environment, educated at a small rural school, and I
    graduated from the finest land grant university in the United
    States. In 1983, I moved to Hutch with nothing but a college
    degree from Kansas State and a used pickup truck. You can
    overtax and under serve me. I really do not care because I love
    my family and I love my employees and other stakeholders, and I
    will continue to work to make a living because that is what I
    do. And the USA continues to be a great country to operate a
    small business. I will leave this life someday and report to
    God with nothing and that is fine by me. What I am asking you
    to consider is making sure that my children, grandchildren, and
    future generations of Americans have the same opportunities
    that I have and that you do not overtax and regulate business
    to the extent that nobody wants to take the risk anymore of
    joining in the great triangle of wealth-producing industry. We
    all owe that to our children. Thank you very much.
        Mr. HANNA. Thank you, sir.
        I would like now to have Ms. Kuster introduce our next
    witness. Ms. Kuster.
        Ms. KUSTER. Thank you very much, Mr. Chairman.
        I am delighted to introduce our next witness. Aaron
    Bagshaw, my constituent from Nashua, New Hampshire, and I want
    to thank Aaron for being here with us today and for sharing
    your inspiring story of manufacturing innovation and ingenuity.
    It is my pleasure to introduce Aaron, who is the president of
    W. H. Bagshaw Company, a pin manufacturer, in my congressional
    district in Nashua, New Hampshire.
        In business since 1870, and in Nashua, New Hampshire, for
    the past 60 years, the W. H. Bagshaw Company is the oldest pin
    maker in America. A small, family-run business, Bagshaw has
    adapted to the times and now manufactures products for the
    medical, aerospace, defense, and high tech industries. I also
    want to note that Mr. Bagshaw works in a fifth generation
    company. Aaron and his wife, Andrea, were kind enough to host
    me and Congressman Hoyer in their factory earlier this year to
    discuss the importance of American manufacturing. I am thrilled
    to return the favor and give Aaron the opportunity to discuss
    his company's success story.
        And with that, I recognize Mr. Bagshaw so he may address
    the Committee.

                       STATEMENT OF AARON BAGSHAW

        Mr. BAGSHAW. Good afternoon. Thank you to the Committee. I
    appreciate the opportunity. Representative Kuster, thank you
    very much for the invitation to speak to you all today.
        As a small business owner, it is so encouraging to know
    that our voices are being heard and that small business, and
    manufacturing in particular, is such a priority to our
    delegation. Representative Kuster has been to our factory, like
    she said, on two visits now, once as a candidate, and more
    recently, like she said, with Steny Hoyer.
        My name, Aaron Bagshaw. I am president of the W. H. Bagshaw
    Company in Nashua, New Hampshire, a fifth generation pin
    manufacturing business. After combing through our records
    recently, I have discovered that we have manufactured and
    shipped, since our inception 143 years ago, almost 42 million
    pounds of pins to happy customers all over the world.
    Amazingly, this would be enough steel to build the Chrysler
    Building in New York City.
        My great, great grandfather started manufacturing pointed
    pins for the textile industry in 1870. In the 1920s, we were
    the only and original manufacturer of the Brilliant Tone
    phonograph needles. We still manufacture textile and phonograph
    pins today, as well as more modern products that are in higher
    demand. The life cycle of the pin to me, and probably to some
    engineers out there, is baffling. If any engineers are
    listening right now, I would like to share this information
    with you. We still manufacture and sell the same product we
    manufactured 143 years ago. However, over the years we
    obviously had to adapt, update, and change not only what we
    sell but how we manufacture it. We are now making complex
    machined components for high tech applications using advanced
    machinery.
        Our pin-making machines are modeled after Leonardo Da
    Vinci's grinding concepts. We are a living, breathing showcase
    of where the Industrial Revolution meets the Digital
    Revolution. We have machines that can make millions of pins per
    week, and we have state-of-the-art machines that can make
    incredibly complex components. Often in my tours of our
    facility, I will say that our ``older'' machines can make a lot
    of pins fast. I liken our story to what Henry Ford described as
    ``you can have any color you want as long as it is black.'' You
    can have any pin you want as long as it looks like a pin that
    we have manufactured before. Textbook Industrial Revolution.
    Next on our tour, I would show you our computer-controlled
    machines that are making parts unattended. We download a
    computer program into the machine wirelessly or directly from a
    laptop. With setup assistance of an operator, the machine
    manufactures complex components. Textbook Digital Revolution.
    All under one roof.
        When people learn about our business, after the obvious
    question, ``What do you mean, pins?'', we are asked, ``How have
    you managed to stay in business so many years?'' Our magic
    formula seems to be having this incredible legacy and
    foundation partnered with lots of mojo and a fresh approach to
    marketing and to management. As well, we like to say, we are a
    143-year-old startup. Our core values are: Family, a ``Make it
    Happen'' approach, Empowerment, Courage, and Perseverance.
        The story of our family business truly is one of courage
    and perseverance. Through the years we have weathered several
    years, obviously, a Depression, and the recent Recession. Ten
    years ago, we made a courageous decision to branch out into new
    markets, investing in CNC machines. CNC stands for computer
    numeric controls, which means that they are programmable
    machines. One operator can run several machines at one time.
    These machines have allowed us to produce pins that are much
    more complex for the aerospace and high tech industries.
    Several years ago, my wife and I made another courageous
    decision--we purchased a controlling interest in the business
    to secure the business for future generations.
        As with most businesses, we are concerned about the
    economy, health care, and energy costs, but our most important
    resource is our labor force, and a big challenge for us is
    access to skilled labor. There is a shortage in our area of
    machinists who are skilled at running these types of machines.
    In some cases, we have been able to bring in entry-level
    employees and train them. We are working with our local
    community college to bridge some of the gaps in their skill
    levels so we can accelerate their learning. We were excited to
    learn that a federal grant allowed for a major upgrade to the
    equipment in their machining labor. Having these partnerships
    with community college will be effective for the continual
    development of our workforce. While a large corporation can
    hire someone to focus on workforce development and educational
    outreach, a small business like ours does not have that
    resource. We have taken advantage of lean manufacturing courses
    in our state, NETAAC programs, export assistance through the
    U.S. Department of Commerce, and business advising from our New
    Hampshire Small Business Development Center. The Trade
    Adjustment Assistance for firms has also been very beneficial.
    Support like this is critical to small businesses like ours.
        We often say, ``If you think a pin is just a pin, you do
    not get the point.'' We have survived for 143 years on grit,
    determination, fortitude, and a bit of luck. From Da Vinci to
    Ford to the Digital Revolution, we, as a company, need and will
    continue to need the skills that stem directly from the fields
    of Science, Technology, Engineering and Math. Our story does
    not end here. Our continued growth and evolution will rely
    heavily on the ability of our employees to adapt and grow and
    use these technology skills. Thank you.
        Mr. HANNA. Thank you. There are a number of themes going on
    here today. Deep concern about the health care law. An idea
    that regulation is far-reaching and growing and cumbersome and
    difficult, and keeps you from growing your businesses. Another
    theme clearly is the lack of--there is opportunity, there are
    jobs, lack of employees to fill STEM-type jobs--Science,
    Technology, Engineering, and Math, which is directly related to
    how we educate ourselves in this country and how we compete
    globally.
        Something unique among our panel, I think, is Barbara
    Schindler's ESOPs program. And it is an Employee Stock Option
    Plan. Maybe you could enlighten us a little bit about how that
    works and how it has changed the dynamic in your company since
    the Goldens originally started. And what kind of incentives it
    may or may not provide.
        Ms. SCHINDLER. Sure. So our business was started by Barbara
    and Mark Golden and Mark's parents, and they put probably
    $5,000 into it and sold a lot of artwork and started the
    business. In 2002, when it was determined that they were
    interested in creating this ESOP, Mark Golden tells the story
    that he always asked employees to act like they were owners.
    Act like it is your dime that you are spending, and so whatever
    you are doing, keep that in mind.
        So 2002 actually allowed us to finally say, okay, not only
    are we asking you to act like owners, but you will be owners.
    We have always been an open company where we have shared our
    financial information, and when it is a year that is more
    challenging, or if we are venturing into a new market that we
    want everyone to be aware of, we provide that information to
    them. So we really have an open set of books. So it was an easy
    transition for us to move into an ESOP environment.
        We continue to educate them on what evaluation, how that
    happens, you know, what happens when you take on debt, what
    does that do to your valuation? So we continue to educate our
    staff on the meaning of it, and then besides having the ESOP,
    we continued with our 401K match, which many ESOP companies do
    not, but we really want our folks, when they retire, to be
    situated where they can celebrate their years of hard work.
        So the ESOP, just so people know. I had, in fact, our
    electric guy, our electrician, he was at the point in his
    career where he is over 55 and he has been in the plan for 10
    years, and he could diversify. That is one of the rules around
    ESOP, to protect your interests. So he could actually take 25
    percent of the monies of his shares in the ESOP and convert it
    and put it in his 401K or another investment. And he said to
    me, he said, ``Barb, I know what we are doing. I have no idea
    what any other company is doing.'' And I aid, ``Well, that is
    right.'' He said, ``I am comfortable leaving my money here.''
    And I said, ``It is your choice. Do what you need to do.'' But
    that is the feeling, the sentiment that it brings.
        So it is a great avenue. The owners, they wanted to really
    give back to the arts and so they created an artist in
    residency program. And that is what having the money out of the
    company and into their hands enable them to do. So it is a win
    all around.
        Mr. HANNA. Thank you. Ms. Kuster.
        Ms. KUSTER. Thank you very much, Mr. Chairman. And thank
    you, Ms. Schindler, for sharing that story with us. One of the
    most successful companies that I have visited on this Congress
    at our Company tour--I visited 17 small companies now and one
    of them has an ESOP. And I love visiting there because the
    associates, as they called them, all of the employees are so
    excited to show me what they are working on, and they always
    want me to know what the next product line is and where--and
    the other thing that I love is when I get to the end and they
    are showing me the shipping and delivering and there are these
    huge boxes that say ``Ship to Shanghai.'' And this is what this
    whole day is about and this week and this whole Committee is
    Make it in America. So I am very proud of what you are doing,
    and I think you do get better energy out of your employees when
    they are owners.
        I am interested--a previous panel member said that
    government should be as sensitive partner in business. And I
    certainly agree with the comments on we want to avoid
    overburdensome regulation but by the same token we have had a
    lot of conversation today about education, STEM education. I
    have a bill about cooperating with community colleges.
        I have not heard as much today, but I do hear on visits
    about infrastructure. And I am going to guess that your
    companies are not going to, building the roads and the bridges
    to get your employees to your plants and get your products to
    market. And so I would love to hear your comments on what the
    government can do to provide you with the infrastructure that
    you need, and it may be telecommunications, but getting your
    products to market. If you could comment on that I would be
    interested.
        Mr. Bergmeier, did you have any comments?
        Mr. BERGMEIER. Well, you know, we pay taxes for the roads.
    You know. And so I kind of expect that out of my government.
    That is part of the taxation I pay on diesel fuel and gasoline.
    So, of course, infrastructure is a way to improve the economy
    because you can flow goods quicker. But with regards to any
    special programs, I already feel like it is the government's
    job to do that because I am paying the taxes for that to
    happen.
        Ms. KUSTER. And have you had any issues that all the other
    panelists have discussed--STEM education, difficulty in hiring
    in this new technological environment that we are in. Have you
    had any issues about hiring?
        Mr. BERGMEIER. My shop is pretty simple. We are a modern
    shop with modern equipment and CNC equipment, but we are still
    a blacksmith shop. And we hire people who have skills. We are
    in a rural area, so in general we can get people with physical
    skills to come to work. I do work with the Kansas WorkforceONE
    development program. In working with their directors, you have
    to bring them aside but they will tell me the truth; that they
    cannot get people to apply because they make $11.45 an hour on
    a 40-hour week sitting at home because of SNAP programs and
    other welfare programs and social programs. Those people cannot
    recruit people to their programs to be trained to go into the
    Kansas workforce because they make more money sitting at home.
        Ms. KUSTER. Mr. Bagshaw, do you want to comment on your
    experience with the community colleges and training and maybe
    comment on the wages if that is the issue--what the wages are
    for manufacturing in New Hampshire. I know that we have a 5.3
    percent----
        Mr. BAGSHAW. Unemployment?
        Ms. KUSTER. Unemployment. So most people in New Hampshire
    are employed. We do not have the situation you re describing in
    Kansas where may be the benefits are far more generous than in
    New Hampshire.
        Mr. BAGSHAW. We are understanding right now that with our
    local community college that they are going to be receiving or
    they have already received a grant for a machine that is
    representative of the machine that we use in our facility which
    will be absolutely dynamite for us. We are ready to hire people
    and put them into positions now. The issue that we have is that
    when we do hire people, usually we are training them for six
    months, seven months, eight months. It takes them probably a
    year before they are really contributing to the team. So that
    is the battle that we have. So with the community college and
    partnering with them, hopefully, we can reduce that timeframe.
        Ms. KUSTER. And if I could just very briefly with my one
    second left, what is the average hourly wage of the incoming
    employees?
        Mr. BAGSHAW. I think they could be making $20 an hour when
    they are coming out of that community college.
        Ms. KUSTER. Thank you very much.
        Mr. HANNA. Mr. Huelskamp.
        Mr. HUELSKAMP. Thank you, Mr. Chairman. I appreciate the
    opportunity to ask a few questions. I certainly appreciate the
    testimony from Mr. Bergmeier.
        We were talking, in general, the hearing theme is Made in
    the U.S. And I know, Mike exports all around the world, in
    multiple cases. Tell me now, as an American manufacturer, where
    the other folks who were trying to shed jobs overseas. How are
    you able to complete in a multitude of countries and get that
    done?
        Mr. BERGMEIER. Well, what Shield Ag has done is, as you can
    see we, we are at 75 years old, but in the last 10 years we
    have reinvented ourselves to really focus on sustainable
    agriculture. That is a more sustainable footprint and the
    ability for underdeveloped countries to grow their own food.
    And by doing that we have positioned some of our products so
    that countries, other than the United States, that want access
    to U.S. agricultural technology, come and find us. And that is
    where we have been successful in our export markets.
        Mr. HUELSKAMP. Okay. Fantastic.
        Describe a little more. You had, I think, seven different
    regulations you had identified. Can you pick one of them out of
    the business and say, hey, this is what it is doing to me?
        Mr. BERGMEIER. I picked the ones that are impediments to me
    putting up more plant, property, and equipment. By looking at
    which ones I would have to file paperwork on it. Remember, big
    companies will complain about this stuff, too, but it is just
    me and some great managers making payroll every Friday. So if I
    want to put up 2,000, 3,000, 5,000 square feet, I have got a
    lot of stuff to do. And I also run heat treat facilities and
    things like that, which are subjected to all these EPA things
    and it is just not worth the hassle.
        I did not want to pick on any one particular organization,
    but when I see the flood of recent regulations and updates to
    regulations since about 2009, I say those are targeted right at
    me. So why should I want to do it? I will just continue to do
    what I can within the laws of my own building as I grow my
    revenues.
        Mr. HUELSKAMP. And Ms. Schindler, what has been your
    experience with implementation or the new regulations coming
    out of the president's health care plan and response from your
    employees? Mr. Bergmeier indicated he has capped the number of
    employees he is going to hire. He is not going to cross the 50-
    employee threshold. Your thoughts?
        Ms. SCHINDLER. For us, as I said, we remain optimistic. We
    took a serious approach to wellness and looked at our health
    plans, and we actually moved to a high deductible health plan
    with the heavy savings account probably five years ago. So
    there has been a lot of education, just about being consumers
    of your medical needs. You know, you would not buy a car, just
    that the salesman is saying, ``Hey, trust me. Buy it.'' So we
    have done a lot of education for our staff to just--I am just
    trying to be better prepared for going to the doctor and their
    medical needs.
        So for us there is a lot that you do not know. We had to
    try to understand it just with--we bring in a lot of college
    students which we love because for us our back to school time
    of year is now. We are preparing for all the colleges taking
    art materials, and so we bring in about 15 to 20 college
    students for the summer and we were not sure what that was
    going to mean with the Health Care Act. And I said, ``Look, on
    the end we cannot change our business practice; we just have to
    understand what it may mean and then keep talking about that.''
        I think for us as we understand it, I know that this year
    for our renewal, there is a 5 percent increase that we are
    going to have to bear just because of the act. But we strive to
    say, okay, there is a challenge with raw materials. I have the
    same challenges with all the different markets and trying to
    figure out who is the best partner to be able to sell to that
    consumer and understand the consumer in that market.
        And so our approach is really to say, well, with this
    opportunity, how can I increase more business? So we are always
    looking at growing the venue side because we have these
    challenges. So that is how we are approaching it. We do
    understand the theory behind it and we do believe that everyone
    needs to have health insurance. How it is going to pan out, we
    hope the dialogue continues so that you can ask us for that
    feedback. But there is a lot that is not, you know, there is a
    lot that you are still developing. And we realize we have to
    partner in that development.
        Mr. HUELSKAMP. Yeah. It was reported I think yesterday or
    maybe even today that the January 1st deadline, the regulations
    are behind schedule, and there are some things you do not know
    today and maybe we will not even know on the deadline, January
    1st, so I appreciate the testimony.
        I yield back, Mr. Chairman.
        Mr. HANNA. Mr. Barber.
        Mr. BARBER. Well, thank you, Mr. Chairman. And thank you
    again to all of the witnesses. I think your testimony has been
    excellent and you have made a number of points that I think we
    all need to take to heart.
        You need to know you have allies in this Committee, on both
    sides of the aisle. We would not be here if we were not
    interested in helping small businesses thrive. And not only
    survive but thrive because we know, all of us, that 70 percent
    of this economy is in your hands, and in the hands of many
    other people in this country who run small businesses or run
    into all the problems that you have talked about today. I want
    to make sure that we deal with those problems as specifically
    as we can, and I will come back to that in a moment.
        But I wanted to ask Ms. Gibbons a little bit more, if you
    could share a little bit more about your concern. I think other
    witnesses, too, have some concerns about the health care law,
    the Affordable Health Care Act. As you know, it is going to be
    implemented over the next six months or so, starting July 1st,
    in October enrollment, and then implementation in January if
    things go according to plans. And I am concerned about that as
    well.
        I want to make sure that this health care law, and we know
    that it is going to continue, works for small businesses. So I
    am really interested in what we can do to make it work because
    we are not going to have implemented it over the next several
    weeks, and months.
        So Ms. Gibbons, can you tell me and other witnesses
    perhaps, to, what kind of help do risk sources assistant do you
    need--you do not have that would make easier for you to work
    within this new law that we have got?
        Ms. GIBBONS. Well, I think part of it is information and I
    know that out there it is very sketchy, low to reach us. But in
    our situation with our employees, right now we do offer health
    insurance. The time limit, you know, they have to work for us
    for a year. The type of employees we have, of course, are
    under-educated, lower income employees, and so what we are
    struggling with is sending our employees to the Exchange, and
    from the research and having them take advantage of the
    subsidies seems like the best way for them to get affordable
    health insurance. But then the penalties that we would have to
    pay would cost us up to $250,000 a year that we cannot afford.
        So we probably will continue with the health insurance that
    we are offering for them but we struggled with what would be
    best for our employees versus the company, but sometimes
    keeping the company up and running so that they have a job is
    the difference between our employees having health insurance or
    not. But we are afraid that a lot of our employees are just
    going to just do the buyout because it is the cheapest way to
    go. And then we are back to them not having health insurance.
        Mr. BARBER. It is tough balancing act, and I think small
    business all across the country are going to try to figure out
    what to do.
        I am really interested in taking a hard look at specific
    parts to the bill. I was not here when it was approved, but I
    am interested in fixing what is wrong with it and there are
    many things that we need to fix, and that is co-sponsored some
    bills that I hope will help small businesses if we are able to
    get them through.
        Let me move to a different question in regard to
    regulations. You know, we hear a lot here in these--how
    businesses, small businesses struggle with bureaucracy and red
    tape. And we need to make government work better for small
    business. I think sometimes it is about getting out of the way,
    and sometimes it is about removing things that are burdensome.
    And certainly, even the tax code is problematic for business,
    the same individual if we need to fix that as well.
        So can you describe, Ms. Gibbons, some regulations that you
    faced that you deal with that you think do not make any sense,
    we could get rid of them; we would get them out of your way and
    you would be able to do a better job as a small business owner.
        Ms. GIBBONS. Well, I think some of the tax codes could go
    away. I do not know which ones specifically. The problem that
    we have is our small business is 170 plus employees, and so a
    lot of the tax codes and the tax breaks that we could get were
    too big of business to get those but then we are not a big
    business either. So we sort of get stuck, crunched in the
    middle, with not getting any tax breaks and still having to pay
    like a big business all the taxes and unemployment and workers'
    comp.
        Mr. BARBER. Well, I am out of time but I know there are
    many other questions all of us want to ask you all. And again,
    thank you for being here. Thank you for doing what America
    needs, and that is keeping small business not only alive but
    growing hopefully and continuing to serve our communities and
    the people who live in them.
        Thank you so much. I yield back.
        Mr. HANNA. Thank you.
        Mr. Bentivolio.
        Mr. BENTIVOLIO. I yield back. Thank you very much, ladies
    and gentlemen.
        Mr. HANNA. Thank you to all of our witnesses. Thank you for
    your insights, your long travel, and the distance, and
    certainly the expense. And we are deeply appreciative of all of
    that.
        If there are no further questions for this panel, I want to
    thank you and excuse the panel. The next panel may now be
    seated and I will turn the gavel over to Mr. Collins of New
    York. Thank you.
        Mr. COLLINS. In the interest of time we are going to go
    ahead and jump in. I think we have some other members on the
    way. This has been one of those days that we have all been
    jumping around not sure when votes are coming. But anyway,
    thank you all three for coming, and in particular I guess we
    will start with Mr. Braddon, who was invited down here by me.
    He is the president of Commodore Plastics in Bloomfield, New
    York. I had the pleasure of touring that factory here just a
    month or so ago. They are located in New York's 27th District,
    which as I said I am proud to represent. It is a family-owned
    business operated by Mr. Braddon's father, started in 1981, who
    is with us today and his lovely wife. Thank you for joining us.
        Commodore is a manufacturer of foam meat trays for
    supermarkets and food processors. It employs 150 people and it
    runs 24/7. He and his company service approximately 4 percent
    of the U.S. market for meat trays. He is also the president of
    the sister company, Commodore Technology, which makes all the
    equipment Commodore plastic uses and also sells this technology
    to vendors around the globe. And from what I remember the
    machines are about the size of this room, so it is not exactly
    small equipment. They employ approximately 30 people in
    Commodore Technology. It is a successful exporter. And as we
    all know, we cannot export too much.
        I want to thank Mr. Braddon for traveling to Washington
    with the family to share with us the success of his business
    and what this Committee and the Federal government can do to
    help him and his business grow, expand, and succeed. Thank you.

       STATEMENTS OF BRAD BRADDON, PRESIDENT, COMMODORE; SHIRLEY
        BROSTMEYER, CEO, FLORIDA TURBINE TECHNOLOGIES; RICHARD
             NAJARIAN, PRESIDENT, PRECISION GLOBAL SYSTEMS.

                       STATEMENT OF BRAD BRADDON

        Mr. BRADDON. Thank you very much for the introduction.
    Thank you for having me.
        I submitted a report here that is I think better to read--
    or better for you to read than for me to read, and so I am
    going to go a little unscripted here and just kind of touch on
    what our story is. I do not need to read that one. I know that
    one pretty well. And then a little bit about us and government
    and kind of how we see that and a little bit about something
    that is really bothering us and then something a little bit
    about taxes.
        My father started the business in 1981. He was working for
    Mobil Chemical as a process engineer and he was watching them
    put foam lines in. They would put a line in and it would be
    full. They would put another one in and it would be full. And
    he thought, jeez, I can do this. I know how to do it. I am
    doing it. So he managed to pull a line together and he gets
    some people and he gets a building and he starts--he has got
    this idea he is going to make four trays. And he goes and gets
    these four trays going and of course his money is gone. He did
    not have very much money to start with, so really the American
    dream story started with $30,000 and became a manufacturer.
        But pretty quickly they said, ``No, George. You have got to
    have all the sizes.'' And he was scratching his head like I do
    not know how I am going to come up with all the sizes. And he
    is an investor so he invented a way to get the sizes. He
    introduced some colors, and eventually, he did get some
    business. So far into that business, after about 10 years,
    pretty successful, and then the plant burns down. And so it is
    reset button and we are beginning all over again.
        But during this process he found a customer that was
    Pepperidge Farms, and they had an extrusion line. And they did
    not want to run it anymore. They decided that being vertically
    integrated, making your own foam trays, did not make a lot of
    sense so he got some new equipment, new used equipment and a
    customer at the same time. And what happened was he realized
    that the manufacturing footprint that they had for this little
    teeny operation was the manufacturing footprint that he needed.
    And so we are a teeny little player in a great big market and
    we survive because we have this other footprint. We build all
    of our own equipment. That is what Commodore Technology does,
    and so we are the only ones with it. And all the other
    competitors in the U.S. are big. They do not want that
    manufacturing footprint because they are big, and so that is
    kind of how we are able to survive.
        So one of the things I guess is we do not really consider
    ourselves a small business anymore because we are not finding
    ourselves having to do--I do not have to do everything myself
    anymore. George does not have to do everything himself anymore.
    And when he did, that is when we considered ourselves to be
    small. And when we did have to do everything ourselves, that is
    when the regulations are tough. Right now I look at OSHA as
    that is the guide on how to be safe. Just follow that guide and
    you will be safe. It is a law of cause and effect. It is
    perfect. We could not think of those rules ourselves. It works
    good.
        Some of these regulations that we have had some issues
    with, we had an issue with not knowing a law existed. There was
    a chemical bulk storage law that existed that we did not know
    existed. We figured out that it existed, but by the time we had
    our program in place we had a visit, had the wrong program, and
    had a pretty good size fine there. Most recently, we had some
    building code problems. We had a building that we have been
    occupying since 1994 and we find out from the fire chief that
    we do not meet these guidelines and we have to move. Well, we
    really did meet the code, and fortunately, we were able to find
    an architect and we swung around that curve ball.
        So when it comes to the Affordable Care Act, I think we
    should talk about that just for a minute. Mostly, what we are
    finding out and what we are learning is that we meet these
    requirements with what we offer today. The thing that we are
    most concerned about is the affordability provision. And this
    year it is okay. We have maybe a slight change that will be
    needed, but next year it changes pretty dramatically, and we
    just do not know kind of where that is going to come from and
    what that is going to mean to us.
        I already went over on time. Please do not mind.
        There is a couple of things that I outlined about some of
    the other regulations. You never think about audits on 401Ks, a
    workman's comp that we had where we were sued by New York State
    and we lost. We were part of a pool. I explain a little bit
    about that. The one thing I say about taxes here is I am told
    that there are loopholes in taxes but they do not apply to us.
    I do not know what they are. If they do exist, they certainly
    do not apply to us. We feel like we pay taxes. And they feel
    like they are pretty significant. And when you do pay a lot of
    taxes it is difficult to reinvest because you pay the taxes,
    you pay yourself, and the other thing that happens a little bit
    to me personally right now is where the S-corps or the
    company's profits are coming through our owner, so my income
    tax--I look like this on paper, right, but I get paid somewhere
    like this. So I am not eligible for financial aid for my kids
    to go to college so I better make sure that I save some money.
        I am going to jump to the thing that is really bothering
    us, and that is what is going on with some product bans. And
    right now there are some product bans on foam, hinge hood
    containers, and they are mostly going on in California and they
    are mostly being done by individual cities. But just recently,
    Mayor Bloomberg proposed a ban on Styrofoam. And Styrofoam is a
    trade name. It is really called polystyrene foam trays. That is
    what we make, and so we are super concerned about this
    attitude, and it is really not based on something that is--it
    is not real. There is a perception that this stuff is bad for
    the environment, but the reality is that it is not. And it is
    taking just a little bit of plastic and making a lot of
    products. We are foaming plastic like in the bathroom when you
    foam soap and use a little teeny bit of soap and you get a lot
    of soap. It is a little bit of the same thing.
        One of the things I want to add about that is polystyrene
    foam that is used in the United States is made in the United
    States and it is good manufacturing jobs and a lot of the
    people who work for us, this is the first job they have ever
    had and they come in here and we provide them with some
    structure and we provide them with some benefits. I am just
    kind of dumbfounded that this is a concern of ours really. That
    I guess would be the thing that is really bothering me.
        Mr. COLLINS. We can even talk about that some more, but at
    this point what I would like to do is yield to Mr. Murphy to
    introduce our second witness.
        Mr. BRADDON. Okay.
        Mr. COLLINS. And then we can do some questions after.
        Mr. BRADDON. I am sorry that I went over.
        Mr. MURPHY. Thank you, Mr. Chairman.
        I would like to also thank I guess Ranking Member
    Velazquez. I passed her in the tunnel, so I got a little wave
    to her.
        On behalf of the Small Business Committee I would like to
    welcome Shirley Brostmeyer, CEO of Florida Turbine
    Technologies. Ms. Brostmeyer is an engineer by training and
    trade. She started her career as a line engineer working on
    turbine blade and vein designs for GE and has worked across the
    international turbine industry as a manager and consultant. As
    CEO of FTT, an innovation in its field, Ms. Brostmeyer
    represents the best of American ingenuity. Her experience
    working in both extremely large and small companies from the
    lowest level to the highest is invaluable to the Committee as
    it seeks to level the playing field for small businesses
    seeking government contracts. I thank Ms. Brostmeyer for
    traveling to Washington from beautiful Jupiter, my hometown, to
    speak at this hearing, and I look forward to your testimony.
    Thank you.

                    STATEMENT OF SHIRLEY BROSTMEYER

        Ms. BROSTMEYER. Thank you, Congressman Murphy, and thank
    you to the Committee for this opportunity.
        Again, I am Shirley. I am the chief executive officer of
    Florida Turbine Technologies. We are a leading provider of
    engineering, development, and testing, and the manufacturer of
    test equipment for turbomachinery. This turbomachinery is used
    for military and commercial aircraft, space propulsion, and
    industrial power.
        Florida Turbine Technologies began in 1998 in Palm Beach
    County with a handful of engineers, and we have grown to supply
    research and development activity worldwide with over 200
    employees. FTT is a leader in innovative turbomachinery
    improvements. In fact, we lead the nation in patents per
    employee. Many of FTT's patents are recognized by the Air
    Force, who actively review these patents as extremely
    innovative ideas.
        Thanks for the privilege of speaking with you today, and I
    would like to encourage the creation of a new federal
    acquisition regulation for government research and development
    projects. Currently, whether or not a company has production
    products is being used as a selection criterion for R&D, and
    this should not be allowed.
        We at FTT feel that better utilization of small business
    for government contracts would provide more innovative and
    affordable solutions--saving money for the taxpayers, and
    creating exports that will boost our economy. I would like to
    quote a March 2010 House Armed Services Committee report
    regarding the current defense acquisition process, ``Small
    businesses are largely locked out of the process or accorded
    contracts only on the goodwill of one of the larger firms. We
    are concerned that the end result of this process is the
    gradual erosion of competition and innovation in the defense
    industrial base.''
        Only 2.5 percent of research and development funds are
    allocated to Small Business Innovative Research programs, or as
    you probably know it, the SBIRs. And yet, small businesses
    provide the most innovative and agile workforce available
    without the large overhead costs of large companies. For the
    other 98 percent of government R&D acquisitions, government
    decision makers actively use a selection criterion which puts
    small business at a significant disadvantage. This criterion is
    that a company must have at least one active production program
    to be a serious competitor for R&D funds. This is true because
    of historical close ties between the government and its large
    production suppliers. But this is also true because government
    employees prefer to work with a ``proven entity,'' albeit
    expensive and less innovative. They feel comfortable that the
    technology will be taken to market and not left on a shelf
    after their investment. But there are many contractual ways to
    deal with product transition into production, and once a
    development prototype from a small business has been proven,
    larger businesses will often compete to license the available
    technology.
        FTT has developed small engines that address future DoD
    needs for small UAV and missile platforms. We have developed
    our most recent engine on SBIR funds, and we have matched the
    funds dollar-for-dollar with profits from our commercial
    business. This small engine would reserve as an ideal platform
    to affordably demonstrate advanced aircraft engine
    technologies. However, we are discouraged from competing for
    R&D contracts because our small engine is not currently in
    production. This issue is certainly not limited to the turbine
    engine community. The findings in the 2010 House Armed Services
    Report confirm that this is a pervasive issue.
        Thus, I have a recommendation which would increase small
    business participation in R&D programs, and this is it: create
    a Federal Acquisition Regulation that R&D contract decision
    makers may not use the existence of production programs as a
    selection criteria.
        I thank you for your time, and I hope you consider this
    change to the existing acquisition philosophy.
        Mr. COLLINS. Thank you, Ms. Brostmeyer. I always say do not
    bring me a problem without a solution. That was well done. You
    have a solution.
        I would like to now yield to Mr. Bentivolio to introduce
    our next witness.
        Mr. BENTIVOLIO. Thank you, Mr. Chairman. Ranking Member,
    fellow Committee members, I am very appreciative we are holding
    this hearing today. According to the business research firm,
    Dunn and Bradstreet, Michigan's Eleventh Congressional District
    is the second leading manufacturing district in America. It is
    my privilege to introduce Mr. Richard Najarian, representing an
    exemplary manufacturing company in this industrial district.
    Mr. Najarian--did I pronounce that correctly?
        Mr. NAJARIAN. You did.
        Mr. BENTIVOLIO. Thank you. Mr. Najarian is president of
    Precision Global Systems, a manufacturer for some of the
    world's largest automotive and defense companies based in Troy,
    Michigan. Since being founded in 1983, PGS has become a leader
    in crisis manufacturing management, machine and assembly, and
    component recertification. With over 100 employees in three
    manufacturing sites, PGS ships over 3 million parts every month
    across North America and beyond. Mr. Najarian is also chief
    investment officer and a board member of Premier
    Biomechanical--excuse me, Biomedical, Incorporated, a company
    working with the U.S. Army to develop cures for cancer,
    traumatic brain injury, and suicide ideation. A veteran of the
    frontlines of American capitalism, I am honored to introduce an
    individual who has been successful in good times and bad and
    has insights to share on public policy moving forward. Mr.
    Najarian, I thank you for coming and look forward to your
    testimony. Thank you.

                     STATEMENT OF RICHARD NAJARIAN

        Mr. NAJARIAN. Thank you for the introduction.
        Am I on? I guess I am. Okay.
        Thank you for the introduction. First and foremost, this is
    a fantastic forum and I thank you for that.
        Congressman Bentivolio's invitation came through another
    organization called Automation Alley, which is a networking
    organization in southeastern Michigan, and we have been working
    with them for a little while here with regard to both
    automotive and defense contracting.
        I hope you have a chance to read my testimony, my written
    testimony. If you have not, please if you get a chance to take
    the time I would appreciate it. As a graduate of the University
    of Michigan, B.A. in English, 1989, Go Blue, I like to write,
    and sometimes I can get a little carried away on the written
    testimony side so I will be brief in the oral testimony here.
        Our capabilities are in component recertification, value
    add sub-assembly, as well as complete production assembly. The
    PGS team implements these processes at one of three
    manufacturing sites occupying nearly 200,000 square feet
    located in southeastern Michigan. We ship over 3 million parts
    each month to customer locations throughout North America and
    beyond.
        Several years ago I wrote a letter to the employees of PGS
    to note some of the trends I was witnessing. As you will know,
    we were already in the midst of the recessionary events that
    created such turmoil in our economy. I am going to read a
    couple of excerpts from that note.
        ``The tides change, the winds shift, the water ebbs and
    flows, and the sun sets only to rise again. PGS has had
    wonderful days and yet these recent days have been extremely
    slow. We will soon find growth and opportunity at our
    doorsteps, and with the systems recently implemented, we will
    have no hesitation to open the door and let it in.
        We arrived at our place within the automotive industry by
    design. We do great things for great companies. We work behind
    the scenes of our customers who continue to waste millions of
    dollars in scraps, rejects, and wasteful processes. We have
    tasked ourselves to help them stop this absurdity. Our ideas
    will reinvent their successes as well as ours.''
        Then in 2010, I issued yet another letter, but this time
    the ebb had receded and the flow had begun again for PGS. I
    will read an excerpt from that note.
        ``The year was 2008 and the economy was on the brink of
    disaster. In many ways it provided a test of our resolve. How
    hard could our group be tested? And we were tested unlike any
    other time in our 27 year history. The entire automotive
    manufacturing industry lay in ruin as Congress and the American
    people questioned our intelligence, our ingenuity, and our
    integrity.
        How will we all help? Cast no shadow on the questions each
    of us asks for they are the power of our future. Harnessing the
    power of success with innovation and determination will lead
    our company and our team into a very bright future and only we
    determine how our future shall unfold by the course of our
    actions and the strength of our spirit.''
        So I was asked to come here and talk to this Committee
    about the question of what will be obstacles in our growing
    manufacturing organization? And I will say it is a very deep
    and troubling question. There are a lot of regulations that are
    out there. There are a lot of taxes that are out there. Tax
    code, there is a section 179 expense election, and we think
    about all these things but there are a couple things that came
    to mind. One is, and I share some concerns with my neighbor to
    the left of me, is how do we get U.S. manufacturers to do
    business with U.S. manufacturers that are small business
    companies? And the second is how do we account for the waste
    that is a byproduct of every manufacturing site?
        Incentivizing one company to do business with another could
    be one of the most intriguing demonstrations of U.S. policy in
    years. Small business manufacturers based in the U.S. shall be
    granted certification as such.
        Giving a federal tax incentive for work produced to a small
    business manufacturer would stimulate the economy, continue to
    assist more small businesses in gaining a better foothold on
    their specific product or service and keep these factories
    still active and in the market. Market forces do not always
    favor the small business.
        Frontline buyers are typically unaware of how their
    purchasing power can affect their community, and upper
    management may consider how they save money through supplier
    consolidation or shared product/material purchases. They may
    consider how they better brand their product or push themselves
    into new markets. Why not extend the new opportunity to U.S.
    small business manufacturers similar to minority-owned, women-
    owned, 8(a), and so on.
        The second idea is with regards to waste. Plastic plugs and
    caps are utilized for either shipping from plant to plant or as
    assembly aids. The caps and plugs are used one time in a way to
    either protect a seal, maintain fluid in an assembly, secure a
    wire, assist in protecting a sensitive area during the assembly
    process. Quite literally, thousands of tons of material are
    annually sent to landfills as a result of this seemingly
    innocuous process. We estimate approximately 20 million pounds
    of plastic sent to landfills or dumps each year just from the
    auto industry. And just because a plant has plastic material
    removed from their site does not qualify them as a zero
    landfill facility.
        LEED, as some of you may know, has become the standard for
    buildings erected or modified throughout the country. It is now
    time to establish a new standard for the manufacturing process
    throughout the country that incorporates the same need to
    respond to environmental concerns. Why not certify via an
    outside independent auditor, whether a plant or facility really
    has done all that is possible to either reduce or eliminate the
    waste product entering our soil?
        Again, thank you for the opportunity to present this
    testimony. I hope the two primary ideas I offered will be
    respectfully considered by this Committee as reasonable and
    possible. Further, to the hearing, I pledge my continued
    support and vigilance to these ideas, and I look forward to
    your desire in kind. Thank you.
        Mr. COLLINS. Thank you, Mr. Najarian.
        I know Mr. Bentivolio has got another meeting he is going
    to have to go to, so I will yield to Mr. Bentivolio at this
    time.
        Mr. BENTIVOLIO. Thank you.
        Mr. COLLINS. Five minutes.
        Mr. BENTIVOLIO. Thank you very much, Mr. Chairman.
        Mr. Najarian, I understand you manufacture an increasingly
    diverse line of automotive parts. Can you describe some of the
    challenges involved in branching into a new product line?
        Mr. NAJARIAN. Well, some of the issues that we run into as
    a small business is because of resources. Typically, in some of
    the instances that I have had we have been fortunate that we
    have established some relationships with some larger OE
    customers--OE being original manufacturers or original
    equipment manufacturers. The difficulty in that is being able
    to--even though our ingenuity or engineering, our abilities or
    capabilities are available to do something, a specific product,
    it is hard to get a customer to actually give you the
    opportunity to do so. And the reason why is because maybe you
    are not doing it today.
        Well, what does that mean? What I am talking about is in my
    case we were doing a derivative of a project. We happened to be
    working on actual and a customer, in this case it was Chrysler,
    gave us the opportunity to work in engines and transmissions.
    It was a derivative of what we were doing but they saw through
    that and said, ``Well, we see the success that you have on the
    actual side so we would like to talk to you about engines and
    transmissions.''
        So I think the trouble is--and then when that happens, the
    ability for us to then go into engines and transmission work
    becomes greater. The problem is getting that frontline customer
    to come to you and say could you do something. The problem
    today is the buyers are typically going to a smaller set of
    large organizations, and that is who they typically go to. And
    the reason why is because they really do not understand how
    they affect their community at-large. So if you look at their
    city, their state, or their country, from that standpoint, how
    they affect it from their purchasing is not something that the
    typical buyer really understands. And I am talking the
    frontline buyer. I am not talking about management and so on
    and so forth.
        So I think that is part of the issue, is getting them to
    better understand what it is that small business can do for
    their community because sending the money overseas, which is
    what a lot of them do, it is usually out of convenience because
    those are the companies maybe that do that project already or
    that part already.
        Mr. BENTIVOLIO. And earlier you had a proposal where you
    indicated that a number of facilities declared themselves to be
    zero landfill facilities but that is not always the case. Would
    you care to elaborate on the scale of this issue and how it
    affects companies like your own which reuse and recycle their
    waste internally? I want you to expand on that, too, because I
    found that very interesting what you are doing with these caps.
    Can you talk about that?
        Mr. NAJARIAN. Sure.
        Mr. BENTIVOLIO. Thanks.
        Mr. NAJARIAN. So the caps and plugs that we are talking
    about are shipping aids. What happens is what we designed was a
    process to recover those and a process to clean them and
    recertify them, send them back to the manufacturer. When I am
    talking about a manufacturer, I am saying, okay, so for
    instance let us take a transmission. On the transmission you
    might have four or five plugs or caps that are used to protect
    either a seal or a port. When they are taken off at the
    assembly site when they are assembling the vehicle, they
    typically throw those parts away. And so we developed a way to
    bring those back, clean them, requalify them, and send them
    back to the transmission site, for instance. I actually
    patented and actually have a patent that came through in April
    of this year, so we just finally closed that out which was a
    huge success for the organization.
        But one of the things that I am concerned about is there
    are a lot of companies out there, large organizations that
    qualify themselves as zero landfill organizations, and they are
    really not. They might be selling their plastic or selling the
    stuff that they would otherwise put into the landfill; somebody
    else puts it in a landfill for them. They might burn it off.
    Somehow, some way, trust me, it is going into the land. It is
    going into the soil. And I think we need to start regulating
    that with regard to not--and I am not talking about regulations
    like we typically think of regulations, but what I am saying is
    that if you are going to call yourself a zero landfill
    facility, you should be certified as such.
        And similar to LEED, where LEED does, okay, well, you are
    platinum or gold or silver star, LEED building, we should have
    similar capabilities of judging whether or not a plant really
    takes the environment into consideration. They do not have to.
    There is no requirement, but if they are going to say it and
    they are going to qualify themselves as such, then we need to
    give them some sort of standard by which they should follow.
        Mr. BENTIVOLIO. I see my time is expired. Thank you very
    much, Mr. Najarian. I appreciate your testimony.
        Mr. NAJARIAN. Thank you, Congressman.
        Mr. BENTIVOLIO. To all of you, I want to hear more about
    your story. Real quick. I have about five seconds here. Is the
    original owner in the room?
        Mr. BRADDON. Yeah, right here.
        Mr. BENTIVOLIO. Okay. Good job. Thank you. We need more
    like you.
        Mr. COLLINS. Thanks, Mr. Bentivolio.
        At this point I will yield to Mr. Murphy.
        Mr. MURPHY. Thank you, Mr. Chairman.
        Ms. Brostmeyer, again, welcome. Thank you.
        Your Florida Turbine Technologies is one of the most
    innovative in America and you remarked on that already. And it
    is a prime example of the kind of high tech design in
    manufacturing where we are always going to hold an edge in
    America. As you pointed out, FTT has the greatest number of
    patents per employee in the nation. I mean, how cool is that?
    That is something to be proud of.
        In addition to outserving the competition patents, I
    understand that your company excels at finding new and
    innovative applications for existing technologies. A talent
    that large, that large of a talent pool you have, companies are
    often unable to replicate this. Can you give us a concrete
    example of how a FTT product or a prototype that has benefitted
    from being able to quickly and easily cross pollinate some of
    these technologies?
        Ms. BROSTMEYER. Definitely. That is an excellent question.
    We see that actually working with some large companies that
    work in multiple industries that one group does not talk to the
    other, and that is one of the really powerful things about a
    small technology company. Although we work in various
    industries, we are so small that we are able to take lessons
    learned from one industry and apply it into another. So one
    example where we are doing that, we have developed a sequential
    cooling scheme for an industrial turbine application. It is
    being tested this year and it is going to have all kinds of
    efficiency improvement implications in the machinery. But we
    just actually took the same concept and designed it into an
    aircraft engine application and we have actually just received
    an award, an SBIR award to test that as well or to develop it
    to the point of test. So it is really good to get the synergies
    from different industries, especially high tech like the space
    industry that we are in, aircraft engines, and industrial
    turbines.
        What I think is rather interesting is that our country is
    behind in rocket turbines and rocket space relative to the
    Russians and the Europeans, but we are not behind in aircraft
    engines and we are not behind in industrial turbines. So
    lessons from those industries can readily be transferred to our
    rocket industry, and we are actively doing that.
        Mr. MURPHY. You mentioned SBIR. Can you maybe talk about
    some things you have done to take advantage of that program,
    and perhaps some things we could learn and some improvements
    that you would recommend to us?
        Ms. BROSTMEYER. Sure. Yes. FTT is very active with the SBIR
    program. I mean, over the years we have been awarded over $10
    million worth of SBIRs. And actually, we have designed and
    developed an entire turbine with SBIR funds. In our case,
    actually, we matched those funds with profits from our
    commercial ventures. But that saved the government--I mean,
    normally you are looking at a 10 million plus program and so it
    saved a lot of money in terms of the development costs.
        I think SBIR is a great program. I guess if we had to make
    a couple suggestions, one would be that they shorten the time
    cycle because there is more than a year from the time that we--
    there is some kind of a technology need identified to the time
    that one is actually awarded the monies to start working. So
    that could be shortened. That would be helpful. And another
    thing that we feel would be helpful is, I mean, if you have a
    good idea such as our small engine and you are getting the
    momentum, there is a $1 million cap on phase two SBIRs. And we
    feel perhaps it could be a little higher than that in order to
    enable really larger products to continue being developed.
        Mr. MURPHY. Thank you for those recommendations.
        And you made the case that the defense acquisition process
    is inherently biased against small businesses and you had a
    pretty shocking quote there. You have recommended the federal
    acquisition process not just use prospective contractors'
    production status as selection criteria. If we were to make
    this change, how would you recommend the government ensure
    small businesses with unknown production capability were able
    to produce the products that the government needs?
        Ms. BROSTMEYER. Well, again, that is a really good question
    because I know that is the concern that is cited a lot of times
    when small businesses are locked out of the process. But there
    are a couple things. First of all, we are right now working on
    licensing agreements for technologies that we have developed
    under research SBIR programs, and if there is a good idea,
    larger companies will want to license the technology or a team
    or a joint venture, but in the worst case, if the government
    funds a small business for a R&D or development program and the
    small business is unable to commercialize it, the government
    owns rights to the technology and therefore, the government
    could take the project and go to somebody else, you know, even
    a larger manufacturer at that point to put it into production.
    So that would be the worst case if the small business cannot
    figure out a way to license or work together with other
    businesses. But I guess the other point is that the government
    should encourage large businesses to engage with small
    businesses who have good ideas, and that encouragement would
    also really go a long way.
        Mr. MURPHY. Thank you. Just one more question here.
        I caught the tail end of your testimony, Mr. Braddon, and
    Mr. Najarian, you spoke about this idea of LEED certification
    for manufacturers. I am certainly not an expert on Styrofoam
    but I guess I am in the general public category. You mentioned
    perhaps the naive thinking that Styrofoam is very bad for the
    environment. I fish, I dive, every time I go in the ocean, when
    I see things floating it is always Styrofoam. My understanding
    is that it does not break down. Maybe you could explain that.
    And Mr. Najarian, your thoughts on what he said.
        Mr. BRADDON. Okay. Well, when he talks about the zero
    landfill, I would say that our plant probably qualifies as a
    zero landfill. It is not something that we have purposefully
    tried to say that we are, but every bit of scrap that is
    generated in our process goes back in and we make more product
    with that. And that would be on the foam side of the business.
        On the equipment side of the business, our scrap is metal
    chips, and so of course, that is all recycled, and all of our
    cardboard is recycled and all of our plastic wrap is recycled.
    And the most garbage that comes out of our plant is from the
    cafeteria. That is where most of it comes from.
        As far as foam in the environment, foam is basically inert,
    and if you do not like it because it floats, well, it is very
    light. Only 5 percent of a foam tray is actually plastic. The
    rest starts out as a blowing agent. You know, you take plastic
    and you foam it. It is not too much different than this
    plastic. You do not hate this plastic, but if we were to foam
    this plastic you might hate it. And we cannot understand that.
    It is taking a little bit of plastic and making a lot of
    product. A typical meat tray might weigh 6 grams, so you get
    about 500 school lunch trays out of 10 pounds of plastic. I
    mean, that is a pretty efficient use of material, and it is
    inert. And if you do want to use it as waste to energy, it has
    got a high BTU content. You could say that you were going to
    take these natural resources and you were going to make
    electricity. Well, you could take these natural resources, you
    could make plastic, then you could make electricity. Why not
    use it once first.
        My father invented the term ``precycle.'' He says you are
    going to use it for this. Use it for something else first. And
    I think there is a lot of hope to that waste to energy. Right
    now you have these recycling programs where they throw
    everything in the bin. Everything in the bin. And then you
    cannot really sort everything out of that bin. Like if you look
    at the Europeans, they have a green dot program. They collect
    clear PET, green PET, blue PET, aluminum, and steel. They do
    not collect everything like we do. But we are collecting
    everything, and I think that could be a really nice way to
    waste energy because it is not absorbent, it will help the
    stuff that is soaking wet that is in with the plastic to burn.
    You get a real nice BTU content. I think it makes a lot of
    sense.
        Mr. MURPHY. Mr. Najarian?
        Mr. NAJARIAN. Do I have to push this button again? I do not
    know. Okay.
        So I do not have anything necessarily against polystyrene
    so I did not make any ovations to that, but as far as what I
    was talking about, my idea is specific to any facility, any
    manufacturing facility in the country.
        With regard to making sure that the waste that they have,
    this byproduct, and a lot of it is plastic, some of them are
    good with their cardboard, baseboard, you know, metal, of
    course, is always recycled because you get some good money for
    the scrap dealers that are out there in this country and
    everybody is looking for steel or aluminum or some form of
    metal, so that is not an issue. And they have recycling
    programs for light bulbs and things of that nature, but the
    question that I am asking, and the assistance that I think
    needs to be done is how can we actually certify a company as
    being environmentally sound.
        I have, for instance, TS69, 49, 9001, and ISO14001, those
    are all certifications, two are for quality and one is for
    environmental. 14001 tells me I measure my aspects and impacts
    to the environment very well and I follow exactly the rule that
    the international standard states. But what it does not say is
    am I really removing this product from my facility the right
    way? Or in this case what I am talking about is recycling those
    plastic parts. There is nothing that says that you cannot
    recycle on a normal basis. These parts that I am talking about
    are washed and brought back and we charge a nominal amount of
    money for it. It is a cost savings to the company, but the
    bigger issue is certifying those companies within. And not just
    allowing them to self-proclaim themselves. You know, self-
    proclamations of, hey, we are zero landfill. We do not affect
    the environment at all, and nobody can challenge it because
    there is no auditing committee that comes in and says are you
    really that? So it is kind of that truth in advertising. We do
    not allow that. We regulate that; we should regulate these
    things of things, too.
        Mr. MURPHY. Thank you all very much.
        Mr. COLLINS. Yeah, no, thank you. I have got a last but not
    least.
        A few questions. I am also a small business guy. I have
    done that for 40 years--high tech, low tech, and bio tech, and
    one of my companies also lives on patents. The funny one off
    the record here--but we are not off the record--is the patent
    on bed bugs. So we are going to see where that one goes.
        What I would ask is maybe a rhetorical question just to get
    some info. One benefit of these hearings is to get on the
    record your opinion. You are all successful, hardworking, small
    business owners, and it is helpful for all of us when we go to
    other committees even to give them feedback from here. So my
    rhetorical question or comment to start is in my businesses we
    have a mantra ``Grow or die.'' Every day we come in we want to
    take care of our customers, we need to worry about orders,
    collecting money, paying our bills, et cetera, et cetera, but
    we all plan to grow. I mean, how are we going to grow? Whatever
    that is. We may not always succeed.
        Now, to me, growth is an investment. It takes money, and so
    I guess the concern I have on this Committee and serving in
    Congress now and seeing some of the environment that we talk
    about here, I talk about financial things. For the first time
    in history, small business taxes are higher than big
    corporations. It has never happened before. 39.6 percent for
    subchapter S pass-through, and I am presuming all of you are
    subchapter S pass-throughs. So you are paying, and I pay, at
    39.6 percent. But the biggest corporations pay at 35. Now, to
    me, number one, that is just plain wrong. But my rhetorical
    comment is that is money you cannot invest in your business.
        Mr. NAJARIAN. Right.
        Mr. COLLINS. The money is coming to Washington for whatever
    programs--good, bad, or indifferent--but you do not get to keep
    the money to invest, and I think you probably could confirm you
    take most of the money you make and reinvest it. That is what
    entrepreneurs do. They do not, by and large, have yachts and
    airplanes and that kind--you are always looking to grow your
    business. So every dollar that comes to Washington is a dollar
    you cannot invest, and this tax code that we are talking about
    at a 25 percent marginal tax rate, I am presuming, and that
    will be one of the questions, what would your reaction be on
    the positive or neutral--but I think positive--to a 25 percent
    top marginal tax rate that says--putting aside the state you
    are in, I am from New York, you know, shame on me or unlucky
    me--you get to keep 75 percent instead of only 60. How would
    that impact you if we are able to get tax return this year?
    What would you think of a 25 percent top marginal rate which is
    what they have in Europe?
        Maybe we will start with Mr. Braddon and ask all three the
    same.
        Mr. BRADDON. Of course, that would have a positive effect.
    Right now, you have a certain amount of debt capacity and you
    have to be at a certain profitability level in order to have
    that debt capacity. So when you start bumping up close to that,
    then you are done. And you cannot borrow any more money. The
    bank looks at your ratios and they say, okay, you are done. We
    are not doing anymore. And then particularly if you have a bad
    year, which happens, you know, you lose customers, you gain
    customers, especially in a market that is not growing, and
    yeah, it would give more debt capacities. It would fix those
    ratios. You would be able to borrow more money and buy more
    equipment and grow.
        Mr. COLLINS. I will take that as a yes.
        Ms. Brostmeyer.
        Ms. BROSTMEYER. Yeah. I mean, certainly, everyone wants
    more money to reinvest in their business, and we would be no
    different than that. I do not know the big picture as far as
    how our government is going to get enough taxes to do what they
    need to do, but I would say that I think the off shoring of
    profits that is going on in large businesses is a big problem.
    And as a small business, I look at some of the large businesses
    and ask myself, well, gosh, you know, how can they shift their
    profit centers offshore such as they do? How do they get away
    with that? And to me that is also something that really needs
    to be addressed because that is where a small business is
    really at a loss. They will pay their taxes. They have no
    choice about it.
        Mr. COLLINS. Thank you.
        Mr. NAJARIAN. So 15 percent is quite a bit. I could not
    fathom that happening.
        Mr. COLLINS. Twenty-five.
        Mr. NAJARIAN. No, I mean, 15 percent reduction over what I
    have got now from almost 40 percent, right? I think it is 39.6
    or something like that. But anyway, one of the issues that we
    ran into I know last year, it was a very nice year for PGS, but
    it was funny because at the end of the year we needed up with
    no cash--paying down loans, our payables went down, so that was
    nice. We paid off our working capital loans. And at the end of
    the day we had no cash left because the rest of it went to
    taxes. And in fact, I ended up in the negative territory when
    you added the taxes into it. So that was kind of an interesting
    side note.
        I think extra money for us, we would be moving into new
    markets. We would be pushing a little bit harder into new
    opportunities that right now we hesitate on because of the
    resources that we have or do not have right now. We have a
    great relationship with our bank we established a couple years
    ago. We actually worked with the SBA on a big loan a couple
    years ago which has been absolutely the most fantastic thing
    that happened for my organization and allowed us to actually
    grow and prosper. So if any of you had anything to do with that
    I thank you for that. I think what we would look at is moving
    into new markets and pushing a little bit more on the limits of
    what we could do from a manufacturing standpoint. And in doing
    so you increase business. You just keep going.
        Mr. COLLINS. That is helpful because when we stand up and
    we make these proclamations that if we give small businesses
    more cash, they will spend it on job creation. And that if we
    need more jobs, and we do in this economy, the quickest way to
    get those jobs is let small business owner, who all are
    subchapter S. So these are not the fat cats. The three of you
    sitting there who would take that differential and put it right
    back in your business, whether it is R&D, another trade show,
    or in Ms. Brostmeyer's case, another 100 patents. Right?
        Ms. BROSTMEYER. Yes.
        Mr. COLLINS. Which is jobs. And so we have talked about it
    would be revenue neutral. We would get rid of all those
    loopholes that Mr. Braddon does not know about. But if it is
    revenue neutral, and I think that is our focus, and I do not
    think it is even--I think it is bipartisan. We need to unleash
    the ingenuity and the creativity of small business owners who
    speed to market, which is what Ms. Brostmeyer was talking
    about, would make the bigger corporations look slow and
    lethargic.
        Now, my other question really concerns Obamacare, you know,
    the Affordable Care Act. And I bring that up because, again,
    there is a cost issue. There are two issues here. One is impact
    on your employees. And you are not running a fast food
    restaurant where you can cut your workers down to 27 hours.
    That is not something you are going to do, and I was just in
    with some insurance companies who were begging to repeal the
    health insurance tax. And I go, ``Where does the $100 billion
    come from?'' That was a way of raising monies to pay for the
    expansion of Medicaid. And while it is going to get passed on
    to you, by the way, we had a hearing on that a few weeks back,
    and someone from the insurance industry said, yes, the $100
    billion health insurance tax paid by the health insurance
    carriers will absolutely be directed back to the consumers,
    which are businesses, impacting premiums. So now we do not yet
    know exactly what is coming, but I have heard a lot of folks,
    if they have got 39 or 42 or 45 employees say I want to grow
    but not beyond 49. And we have seen smaller companies like
    yours cutting hours.
        But my question on Obamacare is where is that in your
    thought process right now? How big of a concern? Have you
    gotten your premiums for next year yet? And maybe the last one,
    maybe the controversial one was if you could vote tomorrow to
    repeal Obamacare, or let it go just the way it is because there
    are no changes coming. It is what it is. So would you repeal it
    or not? That is kind of a direct question I am curious about.
        Mr. BRADDON. So we have a fair amount of people who are--I
    guess a starting wage of around $10 an hour. And so when you
    look at the affordability piece of that, right now I think it
    is 20 percent of a single--it is 10 percent of a single
    program, that is the affordable----
        Mr. COLLINS. Yeah. Affordability is like 9.5 percent of W-2
    wages. If you had a $20,000 employee, the affordability would
    be considered $2,000 for his portion.
        Mr. BRADDON. Okay. So that is not too far off from what a
    single policy goes for; right? I mean, that is not that
    different. It might be $4,000 for a single policy. Okay, so you
    check the mark. We are going to pass on affordability. Now,
    next year it goes to the employee and all their dependents.
        Mr. COLLINS. Except their spouse.
        Mr. BRADDON. Except their spouse. So if you have--now you
    are buying them a family policy. I mean, right now no policy
    exists like that. It is either single, two, or family. There is
    no--not being offered to me. So now, okay, the same person that
    makes $10 an hour, now we have to buy them a family policy.
    That is about a $9,000 a year policy. So now you are paying
    $7,500 if it is a----
        Mr. COLLINS. I want to meet your broker because in my
    companies the single policy is like $6,000 or $8,000 and the
    family is $15,000. So.
        Mr. BRADDON. Yeah, well, you know, yeah, okay.
        Mr. COLLINS. A lot of people--not to put words in your
    mouth--really do not know yet what they are going to do.
        Mr. BRADDON. Right. There is an uncertainty right now. I do
    not know how many people are going to sign up. Right now we
    have 90 out of 170 roughly. And so how many people are going to
    sign up this year more? I do not know that. So that is an
    uncertainty. And then next year, how many people fall into this
    particular bucket where now we have an extra 7,500? And I think
    what is going to happen is people are going to move in favor of
    eliminating low paid positions. And you are going to take that
    bottom rung on the ladder and you are going to raise that up
    and people are not going to be able to get on the bottom rung
    anymore.
        Mr. COLLINS. So would you repeal it?
        Mr. BRADDON. For the way it is? I think it is going to do
    more harm than good, and I would.
        Mr. COLLINS. Thanks.
        Ms. Brostmeyer.
        Ms. BROSTMEYER. Yes. Well, our company provides health
    care. We always have for our employees and their families.
    Really, it is not going to influence us in any way except that
    our premiums are going up at a little bit higher rate than they
    would have otherwise. We are extremely vigilant about comparing
    policies and trying to find something that works for us, so we
    did just change carriers in an effort to try to keep the
    premiums at an affordable rate.
        I mean, it is a challenge, and I would not say that I would
    repeal it because I will say, I mean, I have a handyman. I have
    a cleaning woman. I utilize lot of household help in order to
    work, and my husband works, and we have two teenage daughter.
    So we have a lot of household help, a lot of help. None of them
    have health insurance. I mean, you ask them, you know, what are
    you going to do if something happens? And I go to the emergency
    room. I have been there a few times, and it is filled with
    people who do not have health insurance. And there are people,
    like my sister for instance, I mean, people that have medical
    conditions that in the past have worried, oh, gosh, it is going
    to be really hard for me to change jobs because I have a
    specific medical condition and, you know, preexisting
    conditions are so difficult. Employers are going to look at
    that and say I know that it is going to be a challenge to hire
    you and put you on a medical plan. So I do not feel I have the
    oversight to say, okay, here is exactly what we should do about
    health care, but I know it is a complex issue and I would not
    claim to say let us get rid of it. I do not think that is the
    right solution.
        Mr. COLLINS. That is why I am asking.
        I will say this. Some of the lower paid folks qualify under
    Medicaid. One thing as a nation we have to remember when we
    talk about the uninsured, we normally think about the poor.
    Well, in fact, they have insurance; it is called Medicaid. And
    when we worry about the emergency rooms, the thing that I worry
    about is many doctors do not take Medicaid patients. If you
    show up at the door of a primary physician, a dermatologist,
    and you say I am on Medicaid, more than not, certainly up in
    our area, they do not accept you. So you go to the emergency
    room with your insurance card. The expansion is Medicaid, so
    now you have a lot more Medicaid carrying individuals who are
    going to the emergency room. Well, if you think it is crowded
    now----
        Ms. BROSTMEYER. It is going to get worse.
        Mr. COLLINS. Just wait. Yeah. Unintended consequences.
        Mr. Najarian.
        Mr. NAJARIAN. If it is a vote of three I am going to go
    with repeal.
        Anyway, so, you know, I am a republican by nature and by my
    beliefs.
        Mr. COLLINS. And a taxpayer.
        Mr. NAJARIAN. Yeah. And a taxpayer. Yes. And I hesitate to
    say that out loud because I am being audited right now by the
    city and the state which is one of those coincidental things.
    And it is okay. We go through those days.
        So we have in a similar sense, we have had insurance for
    our employees since day one. The company opened in 1983 and we
    have been providing insurance for everybody. There was a time
    we used to pay 100 percent. We cannot do that anymore so we pay
    a percentage. And I think the biggest issue that I found, if
    somebody was to say what is the matter with health care, I
    would say that the problem with health care is we do not
    understand it. I am talking about Obamacare, not health care in
    general. And what I mean by we do not understand it, small
    businesses are very savvy. Small business owners are typically
    pretty savvy people. And I say this because if we knew six
    months ago, a year ago when everything was voted on and passed,
    it is fine. It is passed. We are not changing it. You said it
    yourself, it is not going to go away right now. But for us to
    plan for it, you cannot--we are in the dark. I think it is
    absolutely absurd for us to be in the dark this long to know
    exactly how we should plan. When everything came through we had
    an insurance carrier who came to me and said this is what it is
    going to be like. Three months later I get the guy come back in
    my office who says, okay, there are changes to it. We did not
    understand these other things. Oh, now there is another system.
    We still do not really understand what it is that we are going
    to be doing. And so for us to plan for the inevitable is
    difficult.
        Mr. COLLINS. The uncertainty. I was just with an insurance
    company and they were sharing they have had to put forth their
    premiums for next year and they do not know who is signing up.
        Mr. NAJARIAN. Right.
        Mr. COLLINS. They do not know if the young and the healthy
    are going to stay in, and they are all brand new policies.
    Policies that are being offered have never existed before
    because they include the health clubs. They have to have
    prescription coverage. There are a lot of things that now have
    to be in policies that were not before, so they do not have a
    base to compare it to. They do not know who is signing up, but
    they had to lock in their premiums.
        Mr. NAJARIAN. Right.
        Mr. COLLINS. They have done that, and right now they do not
    know what their profits or losses may be. So it is an unknown.
        Mr. NAJARIAN. Right. And we have been trying to plan for it
    like everybody else, but it is just you are planning sort of in
    a bubble almost because every small business owner has a
    different interpretation of exactly what is going to come down.
        Mr. COLLINS. So as we wind down, one other quick one. I am
    being selfish because you are helping me here a little bit. I
    have held hearings on cybersecurity because I chair the
    Subcommittee on Technology, and I am also on the Science, Space
    and Technology Committee. The statistics are 87 percent of
    small businesses do not have formal cybersecurity polices, and
    I have to admit across my companies I am as guilty as the rest.
    I have one that is really good and the rest are not. But
    cybersecurity and small business, when we worry about customers
    paying our bills and collecting our money, cybersecurity is not
    real high on the list. We are trying on this Committee to shine
    a light on it, to make people more aware. I am just curious
    where you are on that and also specifically, are you in the
    cloud or not?
        Let me start with Ms. Brostmeyer.
        Ms. BROSTMEYER. Yeah. First of all, we are not in the
    cloud. And I am sort of curious how that works with very secure
    information. But I am told that there are ways to do it, that
    one can really stay secure. So I have been asking the question
    should we be looking at this, and I really do not know enough
    about it yet. But we do have cybersecurity. I mean, we see all
    the time threats in our industry especially from Asia, from all
    over the world, and we are very vigilant, sometimes too
    vigilant that it slows our computers down so much because there
    is just so much involved.
        Mr. COLLINS. Is somebody in charge and do you educate your
    employees on passwords--changing your password dos and do nots?
        Ms. BROSTMEYER. Absolutely. Yeah, very important in our
    business. And so, yeah, there are people in charge. We have a
    group that really monitors it very regularly.
        Mr. COLLINS. Good for you.
        Ms. BROSTMEYER. And we are trained.
        Mr. COLLINS. So you are part of the 13 percent.
        Ms. BROSTMEYER. I guess so. Yeah.
        Mr. COLLINS. Thank you. Mr. Najarian?
        Mr. NAJARIAN. I am going to hand you this capability
    statement in a little bit, and the differentiators talk about--
    the first thing says cybersecurity compliant. It is something
    that we take very serious. We are in the cloud. We have been in
    there quite a while. Everything that I do, I can operate the
    entire company over the Internet, but we work with a company
    that is very secure. If I lose anything tomorrow, if something
    happened and the system went completely down, we actually have
    cold storage and hot storage sites that are not even located
    nearby our facility.
        We are very dedicated to traceability to everything--lot
    traceability, lot controls, things like that, so parts coming
    into our plant, when they go out we know where they got to in
    the process in the assembly, so if a customer calls up and says
    I have got a problem, I not only contain what he has on his
    floor but I can contain any other customer that has shared
    those types of parts.
        But I think that one of the questions that you asked with
    regard to cybersecurity is understanding how it can negatively
    affect your company, and until you have really had to react to
    something, and that is typically why anybody starts up and
    says, okay, we need to be a little bit more vigilant, is
    because they have had an issue. And I think the shame of it is
    that, yeah, we have a lot of people that are hacking into our
    computers all the time--not ours personally but in the United
    States. And a lot from overseas. And I know the government is
    the primary objective for a lot of those overseas nationals.
        Mr. NAJARIAN. They are actually coming after small
    businesses.
        Mr. COLLINS. And the small businesses.
        Mr. NAJARIAN. Stealing your IP, stealing your customer
    list, getting your banking information, and your employees'
    data.
        Mr. COLLINS. Yeah. And that is the challenge, just keeping
    everything in a secure site. And that is why we do this in a
    cloud bubble because we have found that if somebody can get in
    to a computer itself, they still cannot get into that and that
    is one of the issues that we----
        Mr. COLLINS. Yeah. Good. Good.
        Mr. Braddon.
        Mr. BRADDON. We do not specifically have a cybersecurity
    policy. I think we follow some good practices. We have the
    standalone system for our banking. Our servers are hardware in
    a closet on our own site. We do have, you know, we are doing
    some offsite backups in a couple of different ways and knock on
    wood, we have not had any issues.
        Mr. COLLINS. Yeah, I think as we move forward there is
    going to be more and more emphasis on it, and I think as you do
    business--if your customers are big customers, they are going
    to want to know--there is something called Trust Mark, which is
    the cybersecurity, like you were talking about LEED
    certification, and maybe we can get something for the
    sustainability and all of that. And we are trying to shine a
    spotlight on it on this Committee because small business people
    do not generally go to work worried about cybersecurity. It is
    Federal government, big banks, insurance companies. But they
    are starting to come after us, and when they do, it can be
    devastating if you are not ready. And most are not ready.
        So I guess I know we are running out of time, but this has
    been very helpful.
        Mr. Braddon?
        Mr. BRADDON. I would like to maybe mention one thing. In my
    testimony I talk about one piece of self-regulation that we do,
    and I think it is similar to what you are talking about with
    the ISO certifications where we hire a company and they come in
    and they do their inspection and they give us a guideline on
    how to make products that are safe for serving food, and then
    they come in and then they give us a score. And believe it or
    not, they have competition. Right? So there is different--and a
    food producer can look at those guys and say I like the way
    that AIB is doing their audit or I like the way these guys are
    doing their audit. So you have competing companies that are
    regulators. Basically, it is a form of regulation, and we
    voluntarily sign up. And if some of these ideas come out, maybe
    so will more of that type of regulation.
        Mr. COLLINS. We are always looking for a competitive
    advantage. And hey, if you have got one and you can promote it
    and it gets you business, you want to do that, that is what we
    do as entrepreneurs.
        Well, I thank you for your time. I know we have run over a
    little bit but all of you should be proud of yourselves, and we
    thank you for the jobs you have. And I know you are all going
    to grow your companies this year. So thank you for the new jobs
    that you are going to be adding, caring about your employees
    and all that we do here.
        So what we have started is a dialogue. That is what the
    Small Business Committee does. Talk about small business--your
    issues, your concerns. You have given us some good ideas here,
    and I am sure we can follow up on some of that. So again, thank
    you for all of your time.
        I ask unanimous consent that the members have five
    legislative days to submit statements and supporting materials
    for the record. So without objection, so ordered.
        The hearing is now adjourned. Thank you.
        [Whereupon, at 5:30 p.m., the Committee was adjourned.]

                                A P P E N D I X

    [GRAPHIC] [TIFF OMITTED] 81699.001

                                  Testimony of

                                Mr. Rick Schwind

                        Vice President, General Manager

              Huntington Partners Inc. DBA Continental Tool & Mfg

                                   before the

                       House Committee on Small Business

                                 June 19, 2013

        Good afternoon. My name is Rick Schwind, Vice President and
    General Manager of Continental Tool & Mfg, located in Lenexa,
    KS. I am also a resident of Smithville, MO located in Chairman
    Graves' Congressional District. I am honored to be here today,
    and thankful to Chairman Graves and this committee for the
    opportunity to speak about our company and today's small
    business climate.

        Continental Tool is a family-owned, small private CNC
    manufacturer of specialty tools, gages, assemblies and
    components with roughly 20 employees. Approximately 80% of our
    business is manufacturing tools designed for military end use.
    Think of the Army mechanics that take care of and maintain the
    Abrams tanks, Humvees, and Bradley fighting vehicles. We make
    many of those specialized tools. We make specialized wrenches
    for the care of landing gear on fighter jets, for the
    adjustment of sights on weapons, setting of fuses on mortar
    rounds, and hundreds of other tools. In addition, we provide a
    host of machined components to cooling tower companies, fire
    trucks, lighting fixtures, pumps, and valves.

        My parents purchased this business in 2008 from a family
    who started it from scratch in 1980. My dad had retired as an
    executive with a background in manufacturing and industrial
    distribution. His dream was to purchase a small manufacturing
    company and provide long term employment for the company's
    employee base, but also to find and nurture a younger
    generation of worker. His dream was to be in a position to
    offer a career, not just a job, with paid training and benefits
    to anyone who simply had the right attitude and didn't mind
    working for what they earned.

        As for myself, I graduated from the University of Kansas
    and later received an MBA from the University of Missour-Kansas
    City. I had worked as an operator in a machine shop while in
    college and eventually ended up in management. For a few years
    I worked in a technology start-up and then the
    telecommunications industry before coming back to manufacturing
    at Continental Tool. Like my dad, I too was realizing my dream.
    Not only being able to work side by side with my father, but
    also being in the business of ``making stuff'' for America.

        As you remember, 2007 and 2008 were banner years for
    manufacturing. The economy was good, competition was fair,
    opportunities were everywhere. But as the recession began to
    take shape, things changed. Raw material prices, surcharges,
    and the cost of business increased. Competition became fierce.
    But like any small business at that time, we pulled back,
    assessed our situation, drew financial lines in the sand and
    stuck to those principles. In a world full of emotion and
    momentum, we became focused on running the business with the
    best financial acumen we could muster--by the numbers. There
    were opportunities to purchase new equipment we wanted to take
    advantage of, but we passed up. There were people we wanted to
    hire, but didn't due to our commitment to live within financial
    guidelines. The single best (and most difficult) advice my dad
    gave me was that we needed to manage the business with our
    minds but not necessarily our hearts. We needed to protect the
    jobs of our employees to the best of our ability. Use our mind,
    emotion, and faith as the backbone for every decision, but levy
    that against the financial justification on whether or not to
    proceed. We knew of several shops in our area at that time that
    failed to fully comprehend the financial aspects of some of the
    decisions they made, and sadly some of those shops failed and
    closed during that time period. 2009 and 2010 were indeed a
    challenge.

        2011 and 2012 were much better. I'm glad to say that our
    business rebounded to 2008 levels and operationally we were in
    a great place. The challenge of the recession led us to sharpen
    our pencils in just about every way and we got better. Our
    processes improved, our quality improved, our margins improved,
    and we retained every employee.

        But challenges remain. In terms of talent, we continue to
    struggle to find skilled labor. In our industry, it takes
    anywhere from 5-8 years of on the job training to become truly
    skilled in machine setup and operation. The combination of
    mathematics, mechanics, and technology are a challenge for
    anyone new to this industry and the learning curve is steep.
    I've heard there is renewed focus at the college levels on
    engineering, but we cannot stop there. There is an even more
    pressing need for skilled labor. The average age of a skilled
    worker in our company is 50 and that seems to be consistent
    across our industry. These men and women are approaching
    retirement age and as a nation we need to build our skilled
    labor bench strength, or else we will have many people with
    college degrees, but no technical skills.

        But as a company we face additional issues. Uncertainty
    over health care is a major concern. Today, our company fully
    pays for the health care premiums for all employees. But now
    knowing the financial implications of the Health Care law next
    year had us questioning whether we'll be able to continue
    providing this going forward, or whether we will be forced to
    turn this cost over to the employee.

        As I mentioned, roughly 80% of our business is supplying
    the defense industry. This is where sequestestration has had a
    real impact on us. We agree with the decision to pass a law
    holding Congress accountable to reduce our nation's debt and
    reign in spending. Our company made difficult decisions and
    significant cuts to survive, and the federal government should
    do the same. However, we took a sensible, precision approach to
    our finances as we would when manufacturing a precision tool
    while Congress did not.

        Unless Washington quickly addresses the situation they
    created with sequestration, the impact to small manufacturers
    like ours, whose primary customer is the Federal government,
    will be severe. Our sales to the government are down 30% this
    year, and we recently were forced to lay off three employees,
    temporarily we hope, and are working to refinance our long term
    debt to reduce monthly expense.

        Even though our company survived the most recent recession,
    we are seriously concerned with the current environment facing
    small businesses. Does Washington really understand our
    challenge? Do they sense the concern we have with health care
    uncertainty, ineffective and costly regulation, the sequester
    and the indecisiveness regarding the federal budget and tax? We
    certainly hope so, but the environment remains scary.

        I am thankful that this committee is asking for input from
    companies such as ours in order to stem the tide. Small
    business is the backbone of our economy. We employ the majority
    of workers, and due to our small size we build close, personal
    relationships with our employees and take on the responsibility
    of the welfare of their families. We ask that our government
    use sound financial justification in every decision, just as we
    do in our shops and plants across the country. As Americans, we
    are blessed with that special drive to do things beyond
    ordinary, and I see that drive in every small business owner I
    meet.

        I am honored to be here today, and many thanks to Chairman
    Graves and this committee.
    [GRAPHIC] [TIFF OMITTED] 81699.002

    [GRAPHIC] [TIFF OMITTED] 81699.003

    [GRAPHIC] [TIFF OMITTED] 81699.004

    [GRAPHIC] [TIFF OMITTED] 81699.005

    [GRAPHIC] [TIFF OMITTED] 81699.006

         ``Made In America: Highlighting the Success of Small American
                                Manufacturers''

                                 Testimony of:

                                Bruce Broxterman

                               President and CEO

                              Richards Industries

                                Cincinnati, Ohio

                     Before the Committee on Small Business

                     United States House of Representatives

                                 June 19, 2013

                       The Honorable Sam Graves, Chairman

        Good afternoon, Chairman Graves. Thank you for holding this
    important hearing today to highlight the value of manufacturing
    in the United States and thank you for the opportunity to talk
    briefly about the challenges and opportunities that lie ahead
    for US manufacturers.

        My name is Bruce Broxterman and I am the President and CEO
    of Richards Industries, a privately-held manufacturer of
    industrial valves, located in Cincinnati, Ohio.

        We have been in business since 1961 and our mission is to
    provide heavy duty valves to control flow, pressure and
    temperature for our customers in the process industries such as
    refining, chemical, petrochemical, pharmaceutical, food
    processing--just to name a few.

        We have six different product families that are made up of
    highly engineered products that are specifically designed to
    meet unique, individual requirements.

        Richards Industries has been fortunate to experience solid
    growth over the past six years. After a management buyout in
    2007 we have seen unprecedented growth of our revenues and
    profits. Over those six years our sales grew nearly 45% with
    net earnings improving at nearly the same rate and employment
    growing by 12% to just under 150 employees.

        The deep recession of 2008 followed by a slow and uncertain
    economic recovery has resulted in a challenging business
    environment that even now is proving to be difficult.

        Richards has grown by staying focused on the niche markets
    and taking care of our key financial fundamentals.

        Staying Focused: Richards Industries continues to thrive as
    a manufacturer here in the US because of our single-minded
    philosophy of providing products to meet the ``special''
    requirements of our customers around the world. These products
    are highly engineered solutions to difficult customer process
    problems. Manufacturing run quantities are low and precision is
    high.

        Agility & Flexibility: Being a small manufacturer can be
    challenging but it provides the opportunity for us to be agile
    and flexible as we work to provide our customers with the fast
    response and product delivery that they need to be effective
    and successful in their operations. We are often asked to build
    an engineered custom product and ship it in less than two days
    and our Lean process structure and flexible approach enables us
    to consistently do it.

        International Reach: Our products are used in every corner
    of the world. Despite our size, you will find Richards
    Industries products on drilling platforms off the coast of
    Brazil, in pharmaceutical plants in the heart of Europe, on gas
    pipelines in Central China, and in chemical plants in
    Kazakhstan.

        In 2007, International sales represented just 19% of
    Richards Industries revenues. In 2012, international sales were
    45% of the shipment total.

        Richards Industries were among the winners of the
    Governor's Export Award in 2010.

        Financially Sound: Along with increased revenues, Richards
    Industries has been able to achieve healthy levels of net
    income and cash flow, thus enabling the company to repay the
    debt taken on at the time of the acquisition while
    simultaneously reinvesting significant amounts of capital in
    the company. This reinvested capital has been used to generate
    further company growth and job creation.

        Talented Workforce/Special Culture: At the heart of our
    success are the employees at Richards Industries. Our team is
    talented, experienced and creative but, most importantly, they
    are committed to excellence and performance bringing a
    ``Consider It Done'' attitude to work every day. Additionally,
    the family culture that runs through our company helps set up
    our team for success and has resulted in Richards Industries
    being chosen as the ``Best Place to Work'' five out of the last
    six years by a local Cincinnati business publication.

        There are immediate and future challenges that threaten our
    ability to maintain our pattern of success as a manufacturer in
    the US. First among them is the structural cost of US
    manufacturing imposed by government tax policy, regulatory
    policies, and legislative initiatives. Richards Industries is
    structured as an S-Corporation and, therefore, the taxable
    income generated by the enterprise flows directly through to
    the personal tax returns of the owners of the company. High
    individual federal tax rates imposed on the owners siphon off
    precious capital that, but for the higher taxes, would be
    reinvested back into the company to purchase capital assets,
    grow the company, and create new jobs. High federal corporate
    tax rates have the same effect on entities structured as
    traditional C-Corporations.

        The Manufacturing Institute estimates that these structural
    costs add a full 20% to manufacturer's costs of doing business
    relative to our major trading partners.

        US health care costs have increased 80% in the last decade
    and we believe that much of this cost increase is attributable
    to government involvement in the insurance marketplace via
    coverage mandates. We believe that the expansion of government
    involvement in health care brought on by the implementation of
    the Affordable Care Act will put further upward pressure on
    health care costs. Indeed, just last week the Ohio Department
    of Insurance announced that preliminary indications point to
    individual health insurance premiums increasing 88% in 2014
    relative to 2013 rates. We anticipate similar premium increases
    for the plans we offer to our employees. Cost increases of this
    magnitude will in part be passed on to our employees and in
    part borne by Richards Industries, again diverting capital that
    would otherwise be deployed to grow the company and increase
    jobs.

        Of equal concern is the shrinking supply of qualified
    workers. The manufacturing workforce is moving toward
    retirement at a faster rate than the rest of the economy and we
    cannot find qualified workers to fill positions as machinists,
    operators, and skilled assemblers. The US education system is
    not equipping American students with the right skills and in
    the right disciplines to support the manufacturing economy.
    This lack of qualified workers will impact US manufacturer's
    ability to compete in the global market while manufacturing
    products in the US.

        I encourage this committee to continue to explore these
    growing challenges and to act to alleviate these accelerating
    headwinds.

        I am very proud of the small part that Richards Industries
    plays in the nearly $2 trillion US manufacturing sector and I
    am excited about the opportunities that lie ahead.

        Thank you for your support as we move forward through these
    challenging times and thank you for the opportunity to provide
    testimony today.

        I look forward to your questions.
                               Written Testimony

                                       of

                                  Mike Mittler

             President & Co-Founder, Mittler Brothers Machine Took

                                   Before the

           U.S. House of Representatives Committee on Small Business

                            Wednesday, June 19, 2013

        My name is Mike Mittler, President and Co-Founder with my
    brother Paul of Mittler Brothers Machine and Tools, a
    manufacturing company located in Wright City, Missouri. We are
    the classic example of a small business. We founded our company
    around the kitchen table at my mom and dad's house Super Bowl
    Sunday of 1980. The following Monday, we rented a 2,500 square
    foot building for $00 and a hand shake with the owner. How
    little did we know.

        Paul and I worked many long days and nights as the only
    employees of the company to build our reputation of quality
    work and great customer service. We honed our basic customer
    service skills with the first Mittler Brothers--cutting grass,
    raking lots of leaves, painting houses and many other odd jobs
    while in high school. With me the oldest of eight children and
    Paul the youngest, if we wanted to have any fun money, we had
    to earn it.

        Mom and dad were great role models and while providing the
    initial startup money, they quickly said you boys are on your
    own and you have to make it. Always glad to offer advice, they
    did not meddle in the business and knew we had to make our own
    mistakes so we would really learn the hard way.

        In 1984, we moved to our second location in a 7,500 square
    foot building we helped build with a lot of sweat equity. We
    added both customers and employees slow but sure over the years
    and moved to our current location the 50,000 square foot
    building in Wright City in 2004. I am a member of the National
    Tooling and Machining Association and there are thousands of
    companies like ours manufacturing in America, but together it
    is these small businesses who employee the majority of
    Americans.

        Our most important asset is our people and we are proud to
    have 10 with over twenty years of service with us. Two of whom
    started right out of high school and who are now grandfathers!
    We currently have 60 employees and last year we paid out over
    $2.5 million in payroll to our people. I am very proud to
    currently have five military veterans as part of our team and
    feel these are the real heroes of this country. We have always
    given young people a chance to work for us and currently have
    several moving up thru the ranks including one still in high
    school working part time for us.

        Our people are all highly skilled and we employ: welders,
    machinists, tool makers, engineers, painters and assembly
    technicians. Our people are guided by just three basic rules;
    SAFETY, QUALITY, PRODUCTIVITY. We provide a quality benefit
    package including health care, more on this later, a 401K gain
    sharing program that last year paid over $200,000 to our
    employees and a flex work schedule to allow our people to deal
    with their family and job.

        We utilize the latest technology in our manufacturing
    process including 3D solid model design software and computer
    controlled machines.

        Our company has two main areas of focus, one is our own
    product line of special machines and components for the racing,
    hot rodding, restoration, aircraft and bike building industry.
    And the other is design and building of special equipment for
    industrial automation.

        Our standard products serve both the professional racer,
    fabricator, and the do it yourself who has our products in is
    home workshop. We are proud to be able to sell our products
    globally with customers in much of Europe, Russia, Japan,
    Australia, New Zealand, Canada, and Mexico. Our products have
    been featured in the hit TV series American Chopper and several
    other ``how to'' shows. Numerous trade publications and many
    online videos have also featured our products. We maintain a
    dynamic web site, publish a 90-page catalog and exhibit in
    several trade shows to promote and sell our product.

        In our design build area, we manufacture custom machine and
    systems for large industrial companies helping compete in the
    global economy. Our customers include companies in the medical,
    building products, energy, heavy truck general industrial area.

        While we have been successful over the years, many things I
    currently see really bother me and give cause for great
    concern. I often wonder would I do it all again? In today's
    climate, could my brother and I succeed and create these jobs
    in Missouri? Unfortunately, I think the answer is no.

        There is too much uncertainty out there right now and the
    costs of manufacturing in America are rising, making us less
    globally competitive. Uncertainty over the health care law,
    instability in the tax code, ineffective and costly regulations
    are the biggest problems I face. It seems most of our obstacles
    come from Washington. Small businesses don't need a helping
    hand, they need a sensible partner in government which allows
    entrepreneurs to build a business and create jobs.

        In closing, I am proud and thankful to live in the greatest
    country in the world and proud to have the opportunity to
    contribute in a very small way to that greatness. May God
    continue to bless America!
    [GRAPHIC] [TIFF OMITTED] 81699.007

    [GRAPHIC] [TIFF OMITTED] 81699.008

     Statement for the House Committee on Small Business Committee Hearing

        Mr. Chairman, Rep. Sam Graves, and Rep. Nydia Velazquez,
    Ranking Member, and Members of the House Committee on Small
    Business.

        On behalf of the Institute for Entrepreneurial Leadership,
    the Workshop In Business Opportunities and the thousands of
    people who pursue entrepreneurship and small business ownership
    as their path to the American dream, I thank you for the
    opportunity to address this Committee today.

        I am here to share our view of the challenges that exist
    for the women, minority and low income entrepreneurs that we
    serve and to offer potential solutions to help them contribute
    to economic recovery and stability that never seems to make it
    to America's most distressed neighborhoods.

        Our entrepreneurs are mostly people who see starting a
    business as an avenue to a better life. They have an idea, a
    vision and a lot of passion. The resilience of small business
    owners and aspiring entrepreneurs never ceases to amaze me,
    particularly those whom we support. On a daily basis, they
    continue to push forward and succeed against considerable odds.

        IFEL is focused not on the entrepreneurs who start
    businesses with loans from their parents or SBA, corporate
    buyout packages or by raising money on Wall Street. Our focus
    is not on the high tech, high growth businesses that grab the
    attention of wealthy angel investors. Our clients are regular
    people who aspire to live a better life, people for whom the
    American Dream is a concept worthy of pursuit.

        For over ten years from our base in Newark, NJ, the
    Institute for Entrepreneurial Leadership has provided one-on-
    one mentoring to women, minority and inner city businesses with
    revenues less than $250,000. While these types of enterprises
    are often demeaned as ``mom and pop'' businesses not worthy of
    government or private sector investment, we celebrate these
    entrepreneurs as the agents of change in communities where
    change is most needed. If we can help these businesses grow, we
    can make a difference for the people they employ, the customers
    that they serve and the communities in which they exist.

        In 2011, we joined forces with Workshop In Business
    Opportunities (WIBO), an amazing organization that has trained
    over 15,000 entrepreneurs over 47 years in the areas of New
    York City where the angel investment dollars do not flow--
    communities like Harlem, South Bronx, Washington Heights, and
    Bedford Stuyvesant. Since joining forces, we have created an
    end-to-end training, mentoring and a support continuum for the
    entrepreneurs that are all too often left out of the mainstream
    small business ecosystem. Last year we served close to 1800
    existing and aspiring entrepreneurs through our trainings, one-
    on-one business mentoring, clinics, webinars and other
    resources. I come before you today to speak on their behalf.
    Our clients are 73% women, 70% with household income below $60K
    (36% below $20K), and 74% black and Hispanic. The challenges
    that our clients face in starting and growing businesses
    revolve around two primary issues: the Capital Gap and the
    Talent Gap. I would like to take a few minutes to discuss each
    and then propose some solutions for consideration.

        The Capital Gap

        A study released by The Urban Institute in April 2013,
    details the increasing gap in the wealth between white
    Americans and nonwhite Americans. The study discussed that with
    the 2-to-1 earnings differential has remained relatively
    constant for the last 30 years, the gap in wealth has increased
    substantially from pre- to post-recession. The study,
    summarizing Federal Reserve data, indicates that before the
    recession, non-Hispanic white families, on average, were about
    four times as wealthy as nonwhite families and by 2010, were
    about six times as wealthy. In dollars and cents, this
    translates to the average white family having about $632,000 in
    wealth, versus $110,000 for Hispanic families and $98,000 for
    black families.

        The Minority Business Challenge, a report published by the
    Milken Institute and the Minority Business Development Agency
    in 2000, revealed that capital gaps exist at very level for
    financing the capital structure of minority businesses: equity,
    mezzanine and senior debt. It went on to say that the fact that
    minority-owned businesses tend to be more prevalent in
    industries with lower entry costs may--at least in part--
    reflect more binding liquidity constraints and generally less
    access to startup capital among prospective minority business
    owners.\1\
    ---------------------------------------------------------------------------
        \1\ Minorities in Business, 2001, Published by the SBA Office of
    Advocacy, p. 22

        While capital access is often viewed as best addressed
    through the private sector, private sector solutions are
    generally not interested in low return, non-scalable ventures.
    Initiatives like the highly touted Startup America Partnership
    and the resources available in Silicon Valley and Silicon Alley
    and other high tech regions do a great job at supporting the
    development of the entrepreneurial ecosystem for high tech,
    high growth businesses--there is not, however, a place at the
    table for those businesses that do not fit this mold. And while
    the SBA does what it can through the limited resources that it
    has, the truth is that the SBA as its capital resources as
    currently structured cannot replace the type of business
    startup and growth capital offered through personal wealth and
    ``friends and family'' investment. Black businesses are
    particularly affected due to the lack of intergenerational
    wealth transfer that has occurred historically due to the fact
    that blacks in America were for so long denied the opportunity
    to own and build. In a community of ``have nots'', financial
    support from friends and family is not an option. To date,
    there have been few options to address lack of access to
    capital, which is inextricably linked to lack of collateral
    which can be linked to the lack of familial wealth and poor
    personal credit which often stems from trying to start or run a
    business without capital--a vicious cycle. We need to find
    solutions to the access to capital problem created by the
    ---------------------------------------------------------------------------
    wealth gap.

        The Talent Gap

        In addition to capital constraints, many entrepreneurs rank
    lack of business training as high among the challenges they
    face. Increasingly, financial institutions see training and
    mentoring as a risk mitigator, increasing a business's
    likelihood of success and repayment.\2\ While most small
    business and entrepreneurial experts agree that money can't fix
    a business without a fundamentally sound business model, it is
    a simple truth that money can buy expertise and can enable a
    small business to stay afloat long enough to figure things out
    and adjust. Access to capital makes the pivot to profitability
    possible. Access to capital enables entrepreneurs to bolster
    their own skill sets, hire experts and build a capable employee
    base. Undercapitalized businesses have no room for error and
    little capacity for weathering a storm.
    ---------------------------------------------------------------------------
        \2\ Creating Capital, Jobs and Wealth in Emerging Domestic Markets,
    p. 64

        Again, this is where we see a divergence in what exists for
    high tech, high growth businesses and for the community based
    businesses that we serve. In New Jersey and across the nation,
    there is a strong effort to support incubators and accelerators
    for tech companies that have the potential to attract
    significant private sector investment dollars as well as
    government and institutional research grants. The NJIT
    Enterprise Development Center, which has collaborated with us
    since our inception, supports high tech companies and the
    Entrepreneur Center in Nashville, which I visited through a
    Startup America conference, which accelerates the development
    of high growth companies, are two such examples that do a great
    job at their intended purpose. The NJITEDC has university
    support and the Entrepreneur Center has the support of the
    entire Nashville entrepreneurial and business communities.
    There are many, many examples of similar facilities and
    resources across the country and around the world for high
    tech, high growth businesses--and this is a good thing. Most of
    the value proposition of these incubators and accelerators is
    in having access to the talent and expertise that they could
    not otherwise afford during the early years in the development
    of the business. These incubators and accelerators stimulate
    innovation, provide support and connect capital to projects
    that can change the world. What we are missing is the same
    ---------------------------------------------------------------------------
    level of resource for entrepreneurs who can change communities.

        By helping community based entrepreneurs and small business
    owners gain access to talent, we can help them navigate their
    way to success. Their success can provide economic stimulus at
    a local level and sets the stage for healthy functioning
    communities with strong families, motivated youth, safe
    streets, arts and culture, and more. If we are able to help
    more community based entrepreneurs realize their potential, we
    can create jobs for those who are often difficult to employ and
    ultimately expensive to house, feed and clothe through other
    government channels. We need to find solutions to the talent
    gap that exists for community based entrepreneurs.

        Solutions

        So what are the solutions to these challenges that have
    plagued the micro-enterprise landscape for years? While there
    are no magic bullets, a renewed commitment to community based
    entrepreneurs and small business owners as the engine of
    revitalization in our most distressed regions can lead us to
    solutions that require relatively limited financial stimulus
    from the federal government. Here are a few solutions that we
    propose:

        Access to Capital:

        1. Provide incentives for private debt investment in micro-
    businesses. These businesses are not great candidates for
    equity investment for many reasons. A loan of $20-100K is often
    what they need and could be provided by friends and family,
    except this target population doesn't have friends and family
    with these resources. For loans with principal payments
    deferred 3+ years, interest paid could be tax free or at a
    reduced tax rate.

        2. Encourage the SBA to work with its micro-lending
    partners to relax the credit and collateral requirement for
    loans up to $10K.

        3. Include incentives for investors in businesses in
    distressed communities in the crowdfunding legislation being
    considered.

        Eco-system:

        1. Motivate banks to support entrepreneurial training and
    ongoing support (with evidence of results) through stronger CRA
    requirements; give additional credit for banks that demonstrate
    results in historically redlined communities

        2. Include small business development as a component of
    Community Block Grant funding

        3. Require that federally funded projects not just have
    minority subcontractor targets, but also include targets for
    ancillary services like catering, photography, and printing.
    This could provide a boost to local businesses in the area
    around federally funding projects.

        4. Require SBA funded programs like SBDC, SCORE, WBC to
    demonstrate evidence of partnership with community based
    organizations.

        ``Government must be a key partner in creating a favorable
    environment for business to flourish in integrating these
    communities into a regional, national, and global economy. The
    nonprofit sector also must continue to be a partner.

        Community-based organizations and other nonprofit entities
    have a critical role to play in linking investment with
    community resources so that partnerships can create a fertile
    environment for community capitalism. They are a critical
    component to the success of economic growth in distressed areas
    by identifying market opportunities, leveraging public and
    philanthropic dollars, creating healthy communities, and
    facilitating business investment.

        Community capitalism's goal must be to create healthy
    economies that produce jobs, income, and wealth for community
    residents at rates that are at or near national norms. This
    will provide the economic foundation on which business,
    government, nonprofit organizations, and individual residents
    can join together to build decent homes, good schools, cultural
    and recreational opportunities--all the ingredients of livable,
    sustainable communities.''\3\
    ---------------------------------------------------------------------------
        \3\ Excerpts from Community Capitalism: Rediscovering the Markets
    of America's Urban Neighborhoods, The Ninety-first American Assembly,
    April 1997, The American Assembly, Columbia University.

        After our years of work with thousands of aspiring and
    existing entrepreneurs, I have come to believe with all my
    heart that solutions are possible if we believe that
    entrepreneurship is truly the way to the American Dream. It is
    not enough to just focus on those who have been blessed with
    the benefits and privilege of history, we must also empower
    those individuals who have not, but aspire for more and whose
    spirits are still open to dreaming. On behalf of the thousands
    of people who pursue entrepreneurship and small business
    ownership as their path to the American dream, I ask that you
    commit yourself to inclusion of the community entrepreneurs
    ---------------------------------------------------------------------------
    whose success creates a better way of life for us all.

        Respectfully Submitted,

        Jill Johnson
        Chief Executive Officer
        Institute for Entrepreneurial Leadership/Workshop In
    Business Opportunities
        550 Broad Street, 15th floor, Newark NJ 07102
        www.ifelnj.org / www.wibo.org
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               Made in the USA: Stories of American Manufacturers

                                 Testimony of:

                              Barbara J. Schindler

                               President and COO

                           Golden Artist Colors, Inc.

                                 New Berlin, NY

                     Before the Committee on Small Business

                     United States House of Representatives

                                 June 19, 2013

        Good afternoon Chairman Graves, Ranking Member Velazquez
    and members of the Committee. Thank you to Congressman Hanna
    for inviting me to be here today.

        My name is Barbara Schindler, President and COO of Golden
    Artist Colors, Inc. Thank you for the opportunity to provide
    testimony on manufacturing in America. GOLDEN manufactures
    acrylic and oil paints for professional artists. As a global
    company, we export our products to 60 countries around the
    world. Currently, our international sales make up 25% of our
    business.

        Our mission is to grow a sustainable company dedicated to
    creating and sharing the most imaginative and innovative tools
    of color, line and texture for inspiring those who turn their
    vision into reality.

        To achieve that mission, we operate on three principles: 1)
    make the best products, 2) provide customers with the best
    service and 3) find people who can make the first two happen.
    Our products are intended to preserve the artistic legacy of
    our times for hundreds of years. This is a unique
    responsibility and privilege we take very seriously. In 2002,
    GOLDEN became an employee owned company. We have 157 owners
    coming to work each day, know that their contribution will have
    a direct impact on their investment and retirement!

        What makes GOLDEN a successful manufacturer in America?

        The Arts Materials Industry is one which grows a meager 2%
    per year. Despite that reality, GOLDEN has grown its business
    21% since 2009. Many of our competitors have moved a portion of
    their manufacturing to emerging markets, predominantly China.
    We choose to remain here, as we recognize we can protect our
    product quality and intellectual property in the United States.
    Our continuous efforts to drive manufacturing efficiencies
    improve our ability to remain competitive; however our
    commitment to new product development and consumer
    relationships is essential for continued growth. Many product
    concepts come from artists/consumers who use our brand. Our
    five-member technical support team responds to 13,000 phone
    calls and emails annually. We also contract with over 40
    teachers in North America who provide art education for over
    15,000 people per year.

        GOLDEN believes in giving back to our local community and
    the global arts community as well. Each year the company has
    contributed 10% of its net profit to the many non-profit
    organizations that make a difference in our world. Business is
    an ecology of interconnected resources, human and
    environmental. Each business needs to find its own way in
    nourishing these resources to remain sustainable.

        What obstacles do we face on a federal level?

        Most of the issues we face are local and industry related,
    yet there are three significant issues where the Federal
    Government can provide leadership and assistance. They are
    health care, education and specific to our industry, harmonized
    labeling standards.

        We remain optimistic that the Affordable Care Act will meet
    its goal of creating affordable health insurance to all
    Americans. As we prepare for this future, however, it is our
    approach to ready our employees and our business for every
    aspect of health care, and not simply the ACA impact alone.

        At GOLDEN we have been managing affordability via fierce
    staff education and wellness. Yet, a consumer mind set can only
    go so far in an opaque market such as health care. As health
    care services remain rationed, especially in rural areas of our
    State, and with medical inflation outpacing the cost of living
    in multiples, we need your continued efforts to address the
    entire health care system. Americans must embrace wellness and
    health care providers must place the patient in the center of
    all they do so we may once again enjoy the highest quality
    health care in the world and not simply the highest costs.

        Secondly, an educated and creative workforce is critical to
    sustain success in any business. Unfortunately, due to federal
    mandates and budget shortfalls, art teachers are being lost in
    almost every district. We are troubled by the lack of arts
    education in our schools and believe this is a serious
    situation that will in the long run, shrink one of the most
    significant drivers of American ingenuity and leadership.

        Finally, we need a truly harmonized regulatory framework
    for health and safety labeling of art materials. Applying State
    of California mandated health warnings to our products,
    warnings that are deemed appropriate by no other jurisdiction
    in the world, causes confusion and lost sales not only in other
    States of the U.S., but in our foreign markets as well.
    Adoption of the United Nations' Globally Harmonized System of
    Classification and Labeling of Chemicals, as the preemptive
    standard for consumer products, would eliminate these
    burdensome domestic and international inconsistencies.

        What does the future look like for GOLDEN?

        GOLDEN's future is positive and sustainable. With the help
    of NYS and Chenango County, GOLDEN just began a capital project
    to prepare us for future growth.

        We will be successful if we are able to maintain and hire
    an educated and enthusiastic staff. Employee ownership has been
    a point of difference between us and other employers. At the
    2011 Inc Magazine Awards for the 50 Top Small Companies to work
    for, at which GOLDEN was one of the recipients, 12 of the 50
    companies recognized were ESOP companies. Federal support for
    ESOPs is invaluable for creating workplaces which honor and
    celebrate its staff. ESOPs are not a cure-all for business
    success, yet it provides another level of security for
    employees trying to navigate their future. When employees are
    treated like owners, they tend to act like owners.

        Thank you again for the privilege to address this
    committee.
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       Testimony of Aaron Bagshaw, President of the W.H. Bagshaw Company

      Before the U.S. House of Representatives Committee on Small Business

             ``Made in the USA: Stories of American Manufacturers''

                                 June 19, 2013

        Good afternoon. I first want to thank Representative Kuster
    for the invitation to speak to you all today. As a small
    business owner, it is so encouraging to know that our voices
    are being heard and that small business, and manufacturing in
    particular, is such a priority to our delegation.
    Representative Kuster has been to our factory for two visits
    now, once as a candidate and more recently with Representative
    Steny Hoyer.

        I am Aaron Bagshaw, President of the W.H. Bagshaw Company
    in Nashua, NH, a fifth generation pin manufacturing business.
    After combing through records, I have discovered that we have
    manufactured and shipped, since our inception 143 years ago,
    almost 42 million lbs. of pins to happy customers all over the
    world. Amazingly, this would be enough steel to build the
    Chrysler Building in New York City.

        My Great Great Grandfather started manufacturing pointed
    pins for the textile industry in 1870. In the 1920's, we were
    the only and original manufacturer of the Brilliantone
    Phonograph needles. We still manufacture textile and phonograph
    pins today, as well as more modern products that are in higher
    demand. The lifecycle of the pin is baffling. If any engineers
    are listening I would like to share this information with you.
    We still manufacture and sell the same product we manufactured
    143 years ago. However, over the years we have had to adapt,
    update and change not only what we sell but how we manufacture
    it. We're now making complex machined components for high tech
    applications using advanced machinery.

        Our pin making machines are modeled after Leonardo Da
    Vinci's grinding concept. We are a living, breathing showcase
    of where the Industrial Revolution meets the Digital
    Revolution. We have machines that can make millions of pins per
    week and we have state of the art machines that can make
    incredibly complex parts. Often in my tours of our facility I
    will say that our ``older'' machines can make a lot of pins
    fast. I liken our story to what Henry Ford described as ``you
    can have any color you want as long as it's black''. You can
    have any pin you want, as long as it looks like one we have
    manufactured. Textbook Industrial Revolution. Next on our tour,
    I would show you our computer controlled machines that are
    making parts unattended. We download a computer program into
    the machine wirelessly or directly from a laptop. With the
    setup assistance of an operator, the machine manufactures
    complex components. Textbook Digital Revolution. All under one
    roof.

        When people learn about our business, after the obvious
    question ``What do you mean, PINS?'', we are asked ``How have
    you managed to stay in business so many years?'' Our magic
    formula seems to be having this incredible legacy and
    foundation partnered with lots of mojo and a fresh approach to
    marketing and management. As we like to say, we're a 143 year
    old startup. Our core values are: Family, a ``Make it Happen''
    approach, Empowerment, Courage and Perseverance.

        The story of our family business truly is one of courage
    and perseverance. Through the years, we have weathered several
    wars, a Depression, and the recent Recession. Ten years ago we
    made the courageous decision to branch out into a new market,
    investing in CNC machines. CNC stands for Computer Numeric
    Controls, which means that they're programmable machines. One
    operator can run several machines at one time. These machines
    have allowed us to produce pins that are much more complex for
    the aerospace and high tech industries. Several years ago, my
    wife and I made another courageous decision--we purchased a
    controlling interest in the business to secure the business for
    future generations.

        As with most businesses, we're concerned about the economy,
    healthcare and energy costs. But our most important resource is
    our labor force, and a big challenge for us is access to
    skilled labor. There is a shortage in our area of machinists
    who are skilled at running the types of CNC machines that we
    have in our factory. In some cases, we have been able to bring
    in entry level employees and train them. We're working with our
    local community college to bridge some of the gaps in their
    skills so we can accelerate their learning. We were excited to
    learn that a federal grant allowed for a major upgrade to the
    equipment in their machining lab. Having these partnerships
    with community colleges will be effective for the continual
    development of our workforce. While a large corporation can
    hire someone to focus on workforce development and educational
    outreach, a small business like ours cannot--tax incentives for
    these types of partnerships would be quite welcome. We have a
    huge slate of process improvements we would like to tackle and
    are always interested in tax incentives that support these
    measures. We have taken advantage of Lean Manufacturing courses
    in our state, NETAAC programs, export assistance through the US
    Dept of Commerce, and business advising from our NH Small
    Business Development Center. The Trade Adjustment Assistance
    for FIRMS has also been very beneficial. Support like this is
    critical to small businesses like ours.

        We often say, ``If you think a pin is just a pin, then you
    don't get the point.'' We have survived for 143 years on grit,
    determination, fortitude and a bit of luck. From Da Vinci to
    Ford to the Digital Revolution we, as a company, need and will
    continue to need the skills that stem directly from the fields
    of Science, Technology, Engineering and Math. Our story does
    not end here. Our continued growth and evolution will rely
    heavily on the ability of our employees to adapt and grow, and
    use these technology skills.
    [GRAPHIC] [TIFF OMITTED] 81699.026

        Commodore - A Small Manufacturing Business

        Our Story

        Commodore is a small manufacturing business located in
    Bloomfield NY. We make polystyrene foam meat trays and the
    equipment to make foam products. Commodore Technology LLC makes
    the machines and the molds for Commodore Plastics LLC and also
    sells equipment for export. Commodore Plastics makes and sells
    mostly meat trays for the domestic market. We started as a foam
    packaging business in 1981 and added machinery sales around
    1990 when we learned that there is a market for equipment
    designed like ours.

        My father, George, decided to start a foam business in 1981
    when the industry was in a high growth period. He was able to
    pull some people together and buy some used equipment. His plan
    was to offer a few items with some unique features added to the
    current offering. Right away this idea didn't work. The
    customers required that he be able to offer all of the sizes.
    He could not afford the molds for all of the sizes using the
    current processing technology so he developed and patented a
    new method of trimming the parts from the web. He was later
    able to offer more sizes, but still had trouble with sales. So
    George started offering colored trays (rose, blue, charcoal)
    instead of just the offering at the time of white and yellow.
    The developments came as a result of necessity and are part of
    our continuous improvement.

        It was much more difficult than my father imagined, but he
    had some lucky breaks too. At one point, he learned that
    Pepperidge Farms had decided that they would rather buy their
    trays instead of making their own. As a result, he was able to
    get some equipment and a new customer at the same time. This
    led to a discovery that the smaller equipment that Pepperidge
    Farms had been using was more efficient with material than what
    he had been doing. Because we are small relative to our
    competitors, we needed a different manufacturing footprint in
    order to be competitive. With the addition of this new
    equipment, he could see what previously had not been known to
    him.

        From this knowledge, we developed a system that
    incorporates many of the ideas behind Lean Manufacturing. We
    need to make shorter runs of different sheet types and colors
    and this change allows for us to do it efficiently. This turned
    out to be a big advantage when it came to selling equipment and
    molds. Many of the worlds markets are smaller and a producer
    might make trays, hinge lid containers, and plates all in the
    same plant. Our foot print works well for this so we have been
    able to design, manufacture, and sell equipment and molds to
    companies in Central and South American. Today the area where
    we are most active selling equipment is in Russia and the
    former Soviet Republics.

        Our company's biggest setback occurred on May 19, 1991. The
    entire business burned to the ground. There was almost nothing
    of value remaining. Insurance was expensive so we were
    underinsured leaving us few options. We focused exclusively on
    making machines and molds. We found this to be very difficult
    and we were determined to get back into the foam business. Then
    in 1995, we found a way and found it to be even harder the
    second time. Things started out very slowly and 10 years after
    the fire, we were still well below our pre-fire revenue levels.

        I have always been impressed with my father's optimism. For
    the first 20 years, we struggled. We reinvested every penny
    that we earned back into the business. He had everything that
    he owned on the line.

        Things have improved. The last 10 years have seen 8 that
    were profitable and a few good years where we earned more than
    a normal return. We have a strong balance sheet and currently
    meet all of our bank convenants. Commodore is now 175 employees
    strong and offer competitive compensation packages. We are able
    to attract some great people to come and work with us. We are
    the largest private employer in the Village of Bloomfield and
    an important part of our community. We contribute to many great
    causes from kid's baseball to the school yearbook. We are very
    happy where we are now with the business and very hopeful that
    we can continue to grow and prosper.

        Commodore and Government

        Our Company and the Government are sort of like partners
    with the Government having the final word in many areas. The
    Government has a set of rules that we live by called
    regulations and we pay taxes on our profits. The government
    does what they can to ensure the market place is fair for all
    competitors and also does what they can to help us to be
    successful through Government programs.

        Over time we have found our way through the maze of laws
    and regulations. We have great products so we are competitive
    in a mature market. We know that we need to get all of the
    details just about perfect or there will be no profits for a
    given period. We are most concerned about things that we can't
    control. One of things where we have the least control is with
    the most recent government intervention on the part of Mayor
    Michael Bloomberg in the form of product bans.

        Regulations

        Regulations can be a very real barrier to entry. There are
    so many different regulations that can be very complicated and
    also costly. Over time, the regulation become less onerous and
    if done right can be a guide to best practices. Listed below
    are some of the regulations that we follow. An unfortunate
    aspect of regulations is that they don't always change as fast
    as new technologies become available.

            OSHA

              We want a safe work place and feel this is one of our
            most important responsibilities to our employees. The
            last thing that we want to see is a person getting hurt
            on our watch; this is the same as what OSHA wants. We
            meet or exceed the regulations and as a result, have a
            safe work place.

            Chemical bulk storage

              We are regulated by the EPA for chemical bulk
            storage. The butane is use to foam the plastic and we
            buy it by the tanker load. The tank needs to be big
            enough to fully unload the truck. We had a case where
            we did not know a law existed regarding the storage. We
            found out about the law after we had been using the
            tank and were in the process of creating a safety
            program to meet the regulation when we had an EPA
            visit. We were given a chance to submit the program
            that we were working on and when we did so at the wrong
            program level, we were subject to a fine.

            Building codes

              The codes for buildings and fire systems can be
            confusing. We have an older building that was built
            around 1900. At one point we had a very difficult time
            with the fire inspection process. We were very
            fortunate to find an architectural firm with the
            necessary expertise to move us forward.

            AIB

              We are self regulated by The American Institute of
            Bakery. We hire AIB to do an annual inspection of our
            manufacturing facility. AIB publishes a guideline for
            facilities making packaging for food. We develop
            processes that follow the guideline and they assign us
            a number grade for our performance against the
            standard. Because of this, our customers do not need to
            inspect our facility to know that we are delivering
            safe and sanitary packaging. Our December 2012 score is
            940 out of a possible 1000 points.

            The Affordable Care Act

              We offer a group health care option to our employees.
            We pay for about half of the cost. We have about 90 of
            our 175 full time employees that participate. We
            purchase our coverage from a brokerage company and they
            spend time with management to help us decide what
            package is the best fit for our employees. They also
            explain the benefits to our employees and they are our
            primary source of information. We have been in constant
            contact with them since The Affordable Care Act passed,
            but we still do not understand how much our costs are
            going to change. We assume that some of the people who
            do not get insurance through the company get it from
            other places including their parents or spouse. We also
            assume that some do not have insurance. How many will
            join our plan is unknown and this is concerning. We
            think that our plan meets the affordability
            requirements this year, but the regulation changes and
            our current plan may not meet the requirements next
            year.

              I have concerns that the legislation will decrease
            the employment for the entry level worker. At Commodore
            Plastics, we have chosen to do a lot of work in our
            plant manually as opposed to automatic packing
            machines. We feel the added complexity of having more
            equipment and the setup associated will limit
            flexibility. With the upcoming changes, I can see
            companies choosing automation over hiring more people.

            401K

              We offer our employees a defined contribution
            retirement plan. Since we have more than 100
            participants, we are required to do an annual audit.
            The cost of the audit is about $10,000 not including
            the time spent by our employees.

            GAAP Accounting

              We are required to follow GAAP accounting. The banks
            that we work with insist that we follow the rules so
            they can understand the financial health of a business
            before loaning the business money. We understand the
            rules and do the accounting ourselves and then have
            them reviewed by an accounting firm that specializes in
            reviews and audits.

            Taxes laws

              The tax laws are very complicated so we hire an
            accounting firm to prepare our taxes. We have been
            through an IRS audit of our business and personally.

            Workman's Comp.

              We purchased workman's compensation insurance through
            a pool regulated by New York State. We were members of
            the pool for one year and then moved to a different
            carrier. Years later when the fund was empty and still
            had claims to pay; the attorney general of NYS sued the
            past and present members of the pool. We spent a
            significant amount of money on attorneys and eventually
            paid a settlement of about $250,000.

            Visas for Visitors

              Because we make equipment and also run a
            manufacturing plant, we can offer training to our
            Technology customers by having them spend time in our
            plant. We have been having trouble getting the
            necessary travel visas for them to come and visit.

        Taxes

        We are an S corporation so we pay our income taxes through
    the owner's tax return and do not file a separate corporate
    return. The negative impact is that individuals pay a higher
    tax rate than C corporations leaving us at a competitive
    disadvantage.

            Loop holes

              I have heard of these, but don't know of any. These
            must apply to some other type of company or product
            because we pay almost 50% of our income in taxes.

            Reinvesting in the company

              High income tax rates hinder growth. Our owners work
            for the business. We pay money to our owners for living
            expenses; we pay our taxes and reinvest the rest. With
            the tax amount being high, the reinvestment is low.
            Successful manufacturing businesses constantly reinvest
            just to stand still and more investment is required to
            grow. Alternatively, we borrow money to grow, but banks
            will not lend to a company that is not reinvesting as
            it will not have the proper debt to equity ratios.
            Lower rates would increase growth. Perhaps a reduced
            rte for money that remains inside the company would do
            the same thing for an S corp.

        Financial assistance

        We have taken part in a few different government loan
    programs. The loans were a very important part of our past. The
    loan guarantees that we were able to get from SBA and USDA
    allowed us to borrow money and grow our business.

            EXIM Bank

              We have an ExIm line of credit that we use to finance
            our work in progress for exporting machinery and
            tooling. The program also allows us to write a standby
            letter of credit. The program has worked well for us in
            the past. We have customers that use the ExIm bank to
            finance their projects. We are currently working on an
            order that will ship to Paraguay. This will be their
            second project using an ExIm loan guarantee.

        Product bans

        We are most concerned about PS foam packaging bans. We
    believe that the bans are based on people's negative reaction
    to litter and not based on scientific fact. There are many
    people who think that ps foam is bad for the environment. They
    base their opinion on emotion and avoid understanding the facts
    about foam packaging. Foam packaging is polystyrene that is
    foamed to stretch the natural resources to make more product
    using less material. People don't seem to have a problem with
    the unfoamed version of the exact same material. There are many
    positive attributes of foam packaging. The process to produce
    foam uses little energy and there is no water waste. Foam
    packaging is thought to be non recyclable but that is not the
    case. It is being recycled and turned into many household
    products. All of the internal scrap in our plant is recycled
    and put back into the products that we make.

        Mayor Michael Bloomberg has proposed a law that would ban
    polystyrene take out containers in New York City. This ban will
    have little to no impact on litter or the amount sent to
    landfill. This ban is bad for New York State and it is bad for
    Commodore. It is very difficult for us to understand how a
    government can pick the winners and losers without considering
    all of the other products in a category and without having the
    science on their side. I have invited Mayor Bloomberg to visit
    our plant and have had no response. It seems to me that he
    should see the material being made before taking such
    consequential actions.

            Made in USA

              Most of the foam used in the US is produced in the
            US. The substitutes that are being pushed by the bans
            are often made abroad. In many cases, these products
            are made in China and often are made from recycled
            paper. Paper is made from wood and contains many
            naturally occurring but potentially dangerous
            chemicals. The substitute products are less
            environmentally friendly when looking at the entire
            life cycle of the product.

            Waste to Energy

              We expect in the future that waste to energy will
            become more popular. Plastic packaging is generally non
            absorbent and also has high BTU content. Instead of
            using petroleum to make electricity, use is to make
            packaging and then use the packaging to make
            electricity.

            Conclusion

        Commodore is a small, privately help company operating in
    Bloomfield, New York which is located in the Finger Lakes
    Region. We have been in business for since 1981 and employ 175
    people. While our company has had its' share of challenges
    through the years, (fire disaster, market driven, regulations),
    we are healthy with a bright future. We believe in reasonable
    and fairly administered government oversight; one that allows
    privately held companies to compete effectively domestically
    and abroad.

        Our biggest concern is that Government will ban our
    products.

        I appreciate the opportunity to have Commodore's story
    heard in front of the Committee on Small Business.
        Florida Turbine Technologies, Inc. Testimony of Shirley
    Brostmeyer, Chief Executive Officer Before the Committee on
    Small Business U.S. House of Representatives June 19, 2013

                             Prepared Testimony and

                          Statement for the Record of

                  Shirley Brostmeyer, Chief Executive Officer

                                  On Behalf of

                       Florida Turbine Technologies, Inc.

                                     Before

                        The Committee on Small Business

                         U.S. House of Representatives

                                   Hearing on

               Made in the USA: Stories of American Manufacturers

    Wednesday, June 19, 2013 - 1:00 p.m. 2360 Rayburn House Office Building

        Good afternoon. Chairman Graves, Ranking Member Velazquez
    and Members of the Committee. I am Shirley Brostmeyer, Chief
    Executive Officer of Florida Turbine Technologies, Inc., a
    leading provider of engineering, development, and testing of
    turbomachinery for military and commercial aircraft, space
    propulsion, and industrial power. Florida Turbine Technologies,
    Inc. began in 1998 in Palm Beach County, Florida, and has grown
    to supply research and development activity worldwide with over
    200 employees. FTT is a leader in innovative turbomachinery
    improvements. In fact, we lead the nation in patents per
    employee. Many of FTT's patents are recognized by the Air
    Force, who actively reviews these patents, as extremely
    innovative ideas.

        Thank you for the privilege of speaking with you today. I
    would like to encourage the creation of a new Federal
    Acquisition Regulation for government research and development
    projects. Currently, whether or not a company has production
    products is being used as a selection criterion. This should
    not be allowed.

        We at FTT feel that better utilization of small business
    for government contracts would provide more innovative and
    affordable solutions--saving money to the taxpayer, and
    creating exports that will boost our economy. I would like to
    quote a March, 2010 House Armed Services Committee report
    regarding the current defense acquisition process, ``Small
    businesses are largely locked out of the process or accorded
    contracts only on the goodwill of one of the larger firms...(we
    are) concerned that the end result of this process is the
    gradual erosion of competition and innovation in the defense
    industrial base.''\1\
    ---------------------------------------------------------------------------
        \1\ House Armed Services Committee Panel on Defense Acquisition
    Reform Findings and Recommendations, March 23, 2010, pg 7.

        Only 2.5% of Research and Development funds are allocated
    to Small Business Innovative Research programs (SBIRs). And yet
    small businesses provide the most innovative and agile
    workforce available, without the large overhead costs of large
    companies. For the other 98% of government R&D acquisitions,
    government decision makers actively use a selection criterion
    which puts small business at a significant disadvantage. This
    criterion is that a company must have at least one active
    production program to be a serious competitor for R&D funds.
    This is true because of historical close ties between the
    government and its large production suppliers. But this is also
    true because government employees prefer to work with a
    ``proven entity'', albeit expensive and less innovative. They
    feel comfortable that the technology will be taken to market
    and not left on a shelf after their investment. But there are
    many contractual ways to deal with product transition into
    production. And once a development prototype from a small
    business has been proven, larger businesses will often compete
    ---------------------------------------------------------------------------
    to license the available technology.

        FTT has developed small engines that address future DOD
    needs for small UAV and missile platforms. We have developed
    our most recent engine on SBIR funds, and have matched the
    funds dollar-for-dollar with profits from our commercial
    business. This small engine would serve as an ideal platform to
    affordably demonstrate advanced aircraft engine technologies.
    However, we are discouraged from competing for R&D contracts
    because our small engine is not currently in production. This
    issue is certainly not limited to the turbine engine community.
    The findings in the 2010 House Armed Services Report confirm
    that this is a pervasive issue.

        Thus, I have a recommendation which would increase small
    business participation in R&D programs: create a Federal
    Acquisition Regulation that R&D contract decision makers may
    not use the existence of production programs as a selection
    criterion. I thank you for your time and I hope that you
    consider this change to the existing acquisition philosophy.
                        Testimony of Richard T. Najarian

                President of Precision Global Systems (PGS Inc)

                                   Before the

                          Committee on Small Business

                     United States House of Representatives

                                On June 19, 2013

        Good afternoon Chairman Graves, Ranking Member Velazquez
    and members of the Committee. Thank you for extending an
    invitation to provide testimony on behalf of President Global
    Systems and the many manufacturers throughout the country who
    would otherwise love to have this opportunity. I respectfully
    submit this testimony not only on behalf of Precision Global
    Systems, but also as a member of the Board of Directors, Chief
    Investment Officer, and Vice President of Premier Biomedical
    Inc., a company developing cures for Cancer, Traumatic Brain
    Injury, and Suicide Ideation. We are working with the
    University of Texas and El Paso and last week signed a
    Cooperative Research and Development Agreement (CRADA) with the
    U.S. Army. We hope to be manufacturing modules that will be
    used in the treatment and cure of many of the most debilitating
    and life-threatening diseases known to mankind.

        Beginning in 1983, PGS has been providing products and
    services for some of the world's largest corporations in the
    automotive and defense industries. Since surviving the dramatic
    downturn which began in 2007, we have diligently helped support
    our customers' increased production volumes through creative
    cost savings programs by implementing high quality and
    environmentally responsible innovative manufacturing processes.
    Our capabilities are in component recertification, value add
    sub-assembly, as well as complete production assembly. The PGS
    team implements these processes at one of its three
    manufacturing sites, occupying nearly 200,000 sq. ft. located
    in S.E. Michigan. We ship over 3 million parts each month to
    customer locations throughout North America and beyond.

        In order to survive during this difficult period, we like
    so many companies aggressively addressed every opportunity we
    faced with a sense of urgency and resolve that helped us
    survive and ultimately thrive in this newly defined
    manufacturing environment. I strongly believe there is no
    greater place to manufacturer a product than in the United
    States for several reasons. First is the challenge. We are
    challenged everyday for process improvements, process
    capability, and process repeatability. The test of our group is
    the laser like focus of those in the positions of
    responsibility and authority. While added-value is created on
    the plant floor, it is the resilience and dedication of the
    entire team from the front office to the shipping clerk that
    keeps us on track. Second is the satisfaction. All passionate
    manufacturers truly care about what they provide, whether a
    product or a service. There is an absolute satisfaction when
    the parts going out of your plant meet or exceed your
    customer's expectations. We all revel in the knowledge that
    there is a PGS part on a car or a military vehicle.

        Several years ago I wrote a letter to the employees of PGS
    to note some of the trends I was witnessing. As you well know,
    we were already in the midst of the recessionary events that
    created such turmoil in our economy. To be optimistic and
    energized with the economy falling fast is not an easy notion
    to grasp. I don't want to dwell on what was, but I do want to
    share a couple of paragraphs from that letter.

              Excerpt from Letter to the Employees of PGS - March
            5, 2007:

              Mexico, Asia, and the Eastern Bloc have reined in
            companies willing to expose themselves to cultures as a
            way to survive, not necessarily a way to prosper. We
            may relish the thought of potential growth outside of
            our borders, but the answers to our current issues are
            in our backyards. Over time the same concerns and
            difficult questions will be asked, even if we buy a new
            chalkboard today. The capability of an organization is
            only as strong as its weakest member. Whether it is a
            person, a factory, a division, or a technology. We are
            all subject to the same scrutiny by our customers, and
            therefore are subject to the criticism that may follow
            in our wake. The recipe for success lies in the ability
            to fix the ineffectiveness and inefficiencies wreaking
            havoc on your core business.

              The tides change. The wind shifts. The water ebbs and
            flows. And the sun sets only to rise again. PGS has had
            wonderful days, and yet these recent days have been
            exceptionally slow. We will soon find growth and
            opportunity at our doorsteps, and with the systems
            recently implemented, we will have no hesitation to
            open the door and let it in.

              We arrived at our place within the automotive
            industry be design. We do great things for great
            companies. We work behind the scenes of our customers
            who continue to waste millions of dollars in scrap,
            rejects, and wasteful processes. We have tasked
            ourselves to help them stop this absurdity. Our ideas
            will help reinvent their successes as well as ours.

        Then in 2010, I issued yet another letter, but this time
    the ebb had receded and flow had begun for PGS. To share how we
    accepted nearly every job, project, or opportunity that was
    presented to us would seem boring to those that read this
    testimony. However, I can tell you this, we worked hard,
    maintained our sense of direction, responded with
    responsibility and integrity and showed up every day to do it
    again, and again, and again, and again....

        There is an air of nostalgia when I think back on those
    days. Please take a second to read these three paragraphs from
    that letter.

              Excerpt from Letter to the Employees of PGS - April
            22, 2010:

              Six months ago I began writing this letter, only to
            see more revisions than the weeks that passed. I only
            say this because you should know that the future of PGS
            was uncertain and that caused a multiplicity of
            indistinguishable rants on this keyboard. And so I
            start with the past and then move us to the
            future....The year was 2008 and the economy was on the
            brink of disaster. In many ways it provided a test of
            our resolve. How hard could our group be tested--and we
            were tested unlike any time in our 27-year history. The
            entire automotive manufacturing industry lay in ruin as
            Congress and the American public questioned our
            intelligence, our ingenuity, and our integrity.
              Appropriate manufacturing techniques will need to be
            employed by every player in this industry. Strategy is
            not just doing it in-house or outsourcing specific
            processes. The industry needs to challenge not only
            what, but how they manufacturer. Designing for the
            manufacturing process and working with the Tier I
            companies to think similarly is not just a desire but a
            prerequisite. They cannot merely react to a print or
            spec, but actually suggest and participate in the
            process. A rebirth of what's appropriate will surely
            find its way to the engineering and product development
            tables throughout Detroit.
              So how will we all help? Cast no shadow on the
            questions each of us asks for they are the power of our
            future. Harnessing the power of success with innovation
            and determination will lead our company and our team
            into a very bright future and only we determine how our
            future shall unfold by the course of our actions and
            the strength of our spirit.

        So here I am, writing to you as a Small Business
    Corporation from the great State of Michigan through an
    invitation that was started by our dear friends and colleagues
    at Automation Alley in the city of Troy. They have certainly
    found the recipe for networking companies to do business
    together for all the right reasons.

        I was asked what I thought may be an obstacle in my growing
    manufacturing business in the coming months and years. What is
    it that I think would help if the SBA could somehow assist.
    Well, to be honest, it is a very deep and troubling question.
    Is it the tax code or a specific request to repeal a new tax on
    my company? Is it how we set-up our organization as an L.L.C.,
    an S-Corp, or a C-Corp? Is it universal health care or the
    bureaucracy in permitting and expansion projects? Should I ask
    you to lift a regulation, or increase the Section 179 Expense
    Election? There are a number of tedious and cumbersome personal
    and corporate objectives that are laid out every day to your
    group and other groups just like you. Indeed these are all
    great questions and issues that you have no doubt taken up the
    cause to either settle or fix.

        At dinner parties or with friends and family at the
    backyard BBQ, I find my thoughts and comments invariably
    gravitating to two fundamental ideas--how do we incentivize a
    US manufacturer to do business with other US manufacturers AND
    how do we monitor and account for the waste that is the by-
    product of every manufacturing site?

        Idea #1:

        Incentivizing one company to do business with another could
    be one of the most intriguing demonstrations of U.S. policy in
    years. Small Business Manufacturers based in the U.S. shall be
    granted Certification as such. Customers willing to use these
    companies as suppliers to their enterprise will be given a tax
    abatement against their building taxes, because it is the
    manufacturing building that houses the equipment and people
    that produce the product. Although there is a specific and
    unique formula that each city charges, their replacement funds
    would come from the U.S. Government.

        Giving federal tax incentive for work provided to a small
    business manufacturer would stimulate the economy, continue to
    assist more small businesses in gaining a better foothold on
    their specific product/service, and keep these factors still
    active and in the market. Market forces don't always favor the
    Small Businesses. While I believe in the free market as much as
    the next, there are times when assistance becomes not
    necessary, but imperative. Tax incentives can create a call to
    arms by even the largest of purchasing departments to focus
    more attention on U.S. based Small Business Manufacturers.

        Front line buyers are typically unaware how their
    purchasing power can affect their community. Upper management
    may consider how they save money through supplier consolidation
    or shared product/material purchases. They may consider how
    they better brand their product or push themselves into new
    markets. Similar efforts are made on behalf of companies
    certified as minority, women owned, veteran, disabled veteran,
    8a, etc. So why not extend the same opportunity to U.S. based
    Small Business Manufacturers (USSBM's)? Naturally, this would
    be a short-term program that would create a heightened
    awareness by purchasing departments of every large OE (original
    equipment) Manufacturer because it would put money back into
    their pockets through tax-based incentives and grow the very
    core of the companies this Congressional committee represents.

        Idea #2:

        I cannot tell you how many manufacturing plants are self-
    proclaimed zero-landfill facilities. My regular routine
    involves the touring of some of the largest manufacturing
    facilities in the world - some exceeding 2 million square feet.
    One of the services PGS provides is the recertification of
    components that would have otherwise been scrapped during the
    manufacturing process. While touring these manufacturing
    facilities I observe the thousands of plastic caps and plugs
    that are collected and regularly sent to solid waste sites.

        Plastic cups and plugs are utilized either for shipping
    from plant to plant or as assembly aids. These caps and plugs
    are used once as a way to either protect a seal, maintain fluid
    in an assembly, secure a wire, or assist in protecting a
    sensitive area during an assembly process. Quite literally
    thousands of tons of material are annually sent to landfills as
    a result of this seemingly innocuous process. We estimate
    approximately twenty (20) million pounds of plastic sent to
    landfills or dumps each year. Just because a plant has plastic
    material removed from their site does not qualify them as a
    zero landfill facility. Either they pay a waste company to
    dispose of the product or they put in it a ``dump'', which has
    a slightly different definition than a landfill. Regardless of
    how they ``dispose'' of this product, they should not be able
    to qualify themselves as zero landfill unless they have been
    certified as such.

        LEEDTM has become the standard for buildings
    erected or modified throughout the country. It is now time to
    establish a new standard for the manufacturing processes
    throughout the country that incorporates the same need to
    respond to environmental concerns. Plastic plugs and caps,
    cardboard, metal, fluids and chemicals, waste from grinding
    services, and by-product from non-traditional manufacturing all
    require consideration in assessing opportunity to enter a dump
    or landfill. Why not certify, via outside independent auditing
    and government oversight, whether a plant or facility really
    has done all that is possible to either reduce or eliminate the
    waste product entering our soil.

        Again, thank you for the opportunity to present this
    testimony. I hope the two primary ideas I offered will be
    respectfully considered by this Committee as reasonable and
    possible. Further to this hearing I pledge my continued support
    and vigilance to these ideas and look forward to your desire in
    kind.
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