[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.
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     ``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!
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 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.
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    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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