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




 
                 OUR NATION OF BUILDERS: HOME ECONOMICS

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

                                HEARING

                               BEFORE THE

           SUBCOMMITTEE ON COMMERCE, MANUFACTURING, AND TRADE

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              JUNE 4, 2013

                               __________

                           Serial No. 113-49
                           
                           
                           
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]




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                    COMMITTEE ON ENERGY AND COMMERCE

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

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

                              ----------                              
                                                                   Page
Hon. Lee Terry, a Representative in Congress from the State of 
  Nebraska, opening statement....................................     1
    Prepared statement...........................................     2
Hon. Janice D. Schakowsky, a Representative in Congress from the 
  State of Illinois, opening statement...........................     3
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, prepared statement..............................   142

                               Witnesses

Rick Judson, Owner, Evergreen Development Group, and Chairman, 
  National Association of Home Builders..........................     5
    Prepared statement...........................................     8
    Answers to submitted questions \1\...........................   144
Curt Stevens, CEO, Louisiana-Pacific Corporation.................    16
    Prepared statement...........................................    18
    Answers to submitted questions...............................   148
George Kubat, President and CEO, Phillips Manufacturing Company..    26
    Prepared statement...........................................    28
Edward Martin, President and CEO, Tilson Home Corporation........    32
    Prepared statement...........................................    34
Thomas S. Bozzuto, Chairman and CEO, Bozzuto Group, and Chairman, 
  National Multi Housing Council, on behalf of National Apartment 
  Association....................................................    39
    Prepared statement...........................................    41
    Answers to submitted questions...............................   150
Steven Nadel, Executive Director, American Council for Energy-
  Efficient Economy..............................................    51
    Prepared statement...........................................    53
    Answers to submitted questions...............................   154
James M. ``Buddy'' Robinson, IV, Senior Vice President, General 
  Counsel and Corporate Secretary, Kohler Company................    78
    Prepared statement...........................................    81
    Answers to submitted questions...............................   158
William Shaw, Founder, William Shaw and Associates...............    98
    Prepared statement...........................................   100
    Answers to submitted questions \2\...........................   161
Mark Wilhelms, Vice President of Architectural Sales, Midwest 
  Brick and Block................................................   105
    Prepared statement...........................................   107
    Answers to submitted questions...............................   163
Ludy Biddle, Executive Director, Neighborworks of Western Vermont   115
    Prepared statement...........................................   117
    Answers to submitted questions \3\...........................   166
Brian Bovio, Operations Manager, Bovio Advanced Comfort and 
  Energy Solutions...............................................   122
    Prepared statement...........................................   124
    Answers to submitted questions...............................   168

----------
\1\ Mr. Judson did not respond to submitted questions for the 
  record.
\2\ Mr. Shaw did not respond to submitted questions for the 
  record.
\3\ Ms. Biddle did not respond to submitted questions for the 
  record.

                 OUR NATION OF BUILDERS: HOME ECONOMICS

                              ----------                              


                         TUESDAY, JUNE 4, 2013

                  House of Representatives,
Subcommittee on Commerce, Manufacturing, and Trade,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:05 a.m., in 
room 2123 of the Rayburn House Office Building, Hon. Lee Terry 
(chairman of the subcommittee) presiding.
    Members present: Representatives Terry, Lance, Blackburn, 
Guthrie, Olson, McKinley, Bilirakis, Johnson, Long, Schakowsky, 
McNerney, Welch and Matheson.
    Staff present: Kirby Howard, Legislative Clerk; Nick 
Magallanes, Policy Coordinator, Commerce, Manufacturing, and 
Trade; Brian McCullough, Senior Professional Staff Member, 
Commerce, Manufacturing, and Trade; Gib Mullan, Chief Counsel, 
Commerce, Manufacturing, and Trade; Andrew Powaleny, Deputy 
Press Secretary; Shannon Weinberg Taylor, Counsel, Commerce, 
Manufacturing, and Trade; Michelle Ash, Democratic Chief 
Counsel; and Will Wallace, Democratic Professional Staff 
Member.

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

    Mr. Terry. Good morning, and welcome to our hearing. I am 
pleased to say that this is our fourth hearing in our ``Nation 
of Builders'' series and one that I have been looking forward 
to, particularly because I get to welcome somebody from my 
hometown, and frankly, a one-time neighbor, and that is George 
Kubat, who is the CEO of Phillips Manufacturing, a company that 
I am proud to have headquartered in my district, and particular 
in south Omaha, a notorious--I shouldn't say notorious, but a 
well-known blue-collar area of my great city.
    Thus far in Congress, we have heard from the CEOs of the 
largest steel companies in the United States, representatives 
of the world's largest auto manufacturing companies, and even 
had a showcase displaying the wide range of products being 
manufactured in each of our districts on this committee panel. 
And today we are welcoming our home builders and manufacturers 
of products that are included in home building.
    Of course, these industries are pretty different. A company 
like Ford, who testified at our hearing on auto manufacturing, 
is markedly different in many ways from my constituent on 
today's panel, Phillips Manufacturing. One makes cars, and one 
makes corner beads used for drywall finishing. Clearly, their 
products are different. Their companies are different sizes and 
serve different market sectors. Yet their message to our 
subcommittee is quite similar. Both the President of the 
Americas at Ford and Mr. Kubat from Phillips put three of the 
same issues in their top four areas for Congress to focus on. 
Now, I don't think these two business leaders know each other, 
so I doubt they worked in concert, but they were remarkably 
consistent when it came to identifying places where Congress 
should focus and policy areas in need of improvement. They say 
we should pay attention to regulatory efficiency and certainty, 
tax reform, and worker education and training.
    Not surprisingly, the similarity between testimonies does 
not stop here. We have had over 35 witnesses testify at our 
manufacturing hearings and many of the themes and issues have 
been recurrent. It is time we start listening to these folks 
and what they are telling us, and start looking at ways we can 
take their advice, address their concerns and help them help 
Americans get back to work.
    I believe that the best way to grow our economy is by 
nurturing an environment where organic job growth is possible, 
and there is nothing more organic than in home multi-housing 
and single-family construction. According to the National 
Association of Manufacturers, U.S. manufacturing jobs pay 
around $77,000 a year, and we must find ways to facilitate 
growth in these domestic industries, and I hope today as we 
hear from the home building industry we can help create the 
organic environment they need to stay competitive and create 
good-paying jobs, all while building affordable housing for 
Americans. This is a nonpartisan issue. Not only will we create 
this environment, foster job creation, but it will also help 
our manufacturers build the next generation of energy 
efficient, more affordable and safer homes.
    I want to thank again our witnesses for being here today.
    [The prepared statement of Mr. Terry follows:]

                  Prepared statement of Hon. Lee Terry

    Good morning, and welcome to our hearing today on the 
national impact of the homebuilding industry. I am pleased to 
say that this is our fourth hearing in our ``Nation of 
Builders'' series and one that I have been looking forward to-
particularly because I get to welcome George Kubat, the CEO of 
Phillips Manufacturing, a company I am proud to have 
headquartered in my district.
    Thus far this Congress, we have heard from the CEOs of the 
largest steel companies in the U.S. and representatives of the 
world's largest auto manufacturing companies, and even had a 
showcase displaying the wide range of products being 
manufactured in each district represented on this subcommittee 
panel. And today we are welcoming homebuilders and 
manufacturers of products that are included in homebuilding.
    Of course, these industries are pretty different. A company 
like Ford, who testified at our hearing on auto manufacturing, 
is markedly different in many ways from my constituent on 
today's panel, Phillips manufacturing. One makes cars, and one 
makes corner bead used for drywall finishing. Clearly, their 
products are different. Their companies are different sizes and 
serve different market sectors.
    Yet their message to our subcommittee is quite similar. 
Both the President for the Americas at Ford and Mr. Kubat from 
Phillips put three of the same issues within their ``top four'' 
areas for Congress to focus on. Now, I don't think these two 
business leaders know each other, so I doubt they worked in 
concert, but they were remarkably consistent when it came to 
identifying places where Congress should focus and policy areas 
in need of improvement. They say we should pay attention to 
regulatory efficiency and certainty; tax reform; and worker 
education and training.
    Not surprisingly, the similarity between testimonies does 
not stop here. We have had over 35 witnesses testify at our 
manufacturing hearings and many of the themes and issues have 
been recurrent.
    It's time we start listening to what these folks are 
telling us, and start looking at ways we can take their advice, 
address their concerns and help them help Americans get back to 
work.
    I believe that the best way to grow our economy is by 
nurturing an environment where organic job growth is possible. 
We have repeatedly heard about the good jobs manufacturing 
provides. According to the National Association of 
Manufacturers, U.S. manufacturing jobs pay around $77,000 jobs 
a year. Let's find ways to facilitate growth in these domestic 
industries.
    I hope we will hear today from the homebuilding industry 
how we can help create the organic environment they need to 
keep building and creating good paying jobs while building 
affordable housing for Americans. This is a nonpartisan issue. 
Not only will creating this environment foster job creation, 
but it will also help manufacturers to build the next 
generation of more energy efficient, more affordable and safer 
homes.
    I would like to thank all the witnesses for appearing today 
and everyone for attending.

                                #  #  #

    Mr. Terry. Marsha, do you want a minute and a half? I will 
yield to the gentlelady from Tennessee.
    Mrs. Blackburn. Thank you, Mr. Chairman, for calling the 
hearing today, and I want to take my time and welcome Curt 
Stevens, who is the CEO of Louisiana-Pacific Corporation. It is 
headquartered in Nashville, Tennessee, and we are proud to have 
it there. LP is not only one of the backbones of the housing 
industry but they are a leader in quality-engineered wood 
building products including OSB, structural framing products 
and exterior siding for use in residential, industrial and 
light commercial construction. As we talk about jobs in this 
committee, it is important to note that they employ 3,900 
people and operate 25 mills located in the United States, 
Canada, Chile and Brazil. LP is striving not only to be seen as 
a respected manufacturer of building products but is creating 
jobs in local communities across the country. These are forest 
owners, truckers, loggers, suppliers, and we want to make 
certain that we keep that jobs growth environment in place.
    So Mr. Stevens, we welcome you and I look forward to your 
testimony, and Mr. Chairman, I yield back.
    Mr. Terry. Thank you, and I will yield back the 8 seconds 
and recognize the gentlelady from Illinois, our ranking member, 
Jan Schakowsky.

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

    Ms. Schakowsky. Thank you, Mr. Chairman, for yielding and 
for holding today's very important hearing on the home building 
industry.
    In Chicago, where I am from, home sale prices dropped 
dramatically following the Great Recession 36 percent below 
pre-recession level. Housing in Chicago is rebounding from that 
low point. The median sale price for homes is 18 percent higher 
than last year, according to Trulia. However, the New York 
Times Magazine this past weekend highlighted for many areas of 
Chicago the foreclosure crisis is still causing pain and we 
need to develop policies to support the rehabilitation of those 
neighborhoods.
    The home building industry has historically been a good 
indicator of strength of our economy, and I am pleased that the 
industry continues to recover from the recession. The industry 
supports almost 600,000 jobs nationwide, and with housing 
starts up 13 percent over the same period last year, I am 
hopeful that those job numbers are going to continue to grow.
    As we seek ways to foster growth in the home building 
industry, it is important that we do so in a thoughtful and 
forward-looking way. The topic of energy efficiency will be a 
major subject of today's hearing, and for good reason. Energy 
is one of the three largest costs of home ownership. 
Incentivizing upfront investments in energy-efficient building 
materials, electronics and other products can save families 
thousands of dollars in the long run while also reducing 
pollution and improving public health. I look forward to 
hearing from our witnesses about how to motivate those 
investments in the development phase for new homes.
    And while we are on the subject of smart home design, I 
want to mention another important priority for me as it comes 
to housing. As we continue our housing recovery and our 
population ages and our military veterans return from the 
battlefield with severe physical disabilities, there is an 
increased need for accessible housing. The cost to renovate 
existing housing to make it accessible for those with physical 
disabilities can be tens of thousands of dollars, often forcing 
residents to move or become increasingly isolated or go to a 
nursing home, but if accessibility features are incorporated 
into housing at the time of construction, the additional cost 
can be less than $600. So next week I plan to reintroduce the 
Inclusive Home Design Act, legislation I have sponsored for 
more than a decade, really at the behest of the disability 
community. My bill would require homes built with federal 
dollars to meet inclusive design standards including at least 
one accessible or zero-step entrance into the home, doorways 
wide enough for a wheelchair on the main level, and let us face 
it, there is no magic to the size of a door width if you do it 
initially as opposed to having to rehab it, one wheelchair-
accessible bathroom, light switches and thermostats at 
reachable heights from a wheelchair. This legislation is a 
commonsense approach to addressing the rising demand for 
inclusive housing. It is another case in which a low-cost 
investment early can prevent incredibly burdensome renovations 
later on. I have to tell you, I have made attempts in the past 
to deal with the home building industry, I hope that we can 
some of us have a conversation about this and that you would 
consider support for this commonsense legislation.
    I look forward to hearing from our witnesses about the 
state of home building, its impact on the overall economy, the 
increase in energy-efficient home design, and how we can 
incentivize further job growth in the industry. I yield back.
    Mr. Terry. The gentlelady yields back. The gentleman from 
Texas, Mr. Olson, is recognized for 2 minutes.
    Mr. Olson. I thank the chair, and I am thrilled to 
introduce the President of the Texas Association of Builders, 
the President and CEO of Tilson Homes, and my friend, Eddie 
Martin. Eddie has a distinction that I will never have: he is a 
native Texan. Born in Pecos, Texas, he is a West Texas man. He 
got his bachelor's degree from Abilene Christian University, 
his law degree from the University of Houston, and Eddie and 
his wife, Brenda, have been married for 33 years. Last 
September, Eddie and Brenda took another full-time job spoiling 
their first grandchild, Kate. So welcome, Eddie. Thank you for 
coming. I look forward to your testimony. I yield back.
    Mr. Terry. Is there anybody else that wishes to be 
recognized for a statement? Seeing none, this should be written 
down in congressional history as the shortest opening 
statements.
    With that, we will start our testimony. As I mentioned, we 
are going to go from Mr. Judson to our right. At 5 minutes, if 
you are still talking, you will hear some progressively 
strengthening in sound tapping by the gavel. There are some 
lights there. Green, yellow is the last minute, so you should 
start when you see it turn yellow, start wrapping up.
    So Mr. Judson, you are now recognized for 5 minutes.

STATEMENTS OF RICK JUDSON, OWNER, EVERGREEN DEVELOPMENT GROUP, 
   AND CHAIRMAN, NATIONAL ASSOCIATION OF HOME BUILDERS; CURT 
  STEVENS, CEO, LOUISIANA-PACIFIC CORPORATION; GEORGE KUBAT, 
   PRESIDENT AND CEO, PHILLIPS MANUFACTURING COMPANY; EDWARD 
 MARTIN, PRESIDENT AND CEO, TILSON HOME CORPORATION; THOMAS S. 
    BOZZUTO, CHAIRMAN AND CEO, BOZZUTO GROUP, AND CHAIRMAN, 
NATIONAL MULTI HOUSING COUNCIL, ON BEHALF OF NATIONAL APARTMENT 
  ASSOCIATION; AND STEVEN NADEL, EXECUTIVE DIRECTOR, AMERICAN 
              COUNCIL FOR ENERGY-EFFICIENT ECONOMY

                    STATEMENT OF RICK JUDSON

    Mr. Judson. Thank you. On behalf of the more than 140,000 
members of the National Association of Home Builders, I 
appreciate the opportunity to testify before you today. My name 
is Rick Judson. I am a home builder and developer from 
Charlotte, North Carolina, and Chairman of the Board of the 
National Association of Home Builders.
    Home building is dominated by small firms, and our 
membership reflects just that. Approximately 70 percent of the 
NAHB members build 10 or fewer homes per year, and their median 
revenue is under a million dollars. Collectively, however, we 
represent a massive industry employing literally millions of 
people and producing about 17 percent of the Nation's gross 
domestic product. The recession, of course, has taken a heavy 
toll. Total employment in home building is down almost 40 
percent from our peak of 2006 and it is down to under 2.1 
million employees. Last year, the industry only constructed 
534,000 homes. For a comparison, to keep up with population 
growth and replacement needs, we should be building about 1.4 
million homes per year.
    There is, however, reason for optimism. Over the last 2 
years, the housing market has started to heal and home building 
is beginning to pick up. Our growth creates jobs, something you 
have all acknowledged. More than three full-time jobs are 
generated by the construction of each single-family home. 
Similarly, 100 new multi-family units will result in 116 new 
jobs. With just a normal production cycle, 2 million more job 
opportunities will be available to this country. Housing also 
provides a key tax base for State and local governments. 
Homeowners paid approximately $3 billion in property taxes last 
year.
    However, economic and policy headwinds are beginning to 
slow some recovery. For example, in response to the prolonged 
downturn, many building material companies cut back on 
production and capacity. Now that housing is coming back, the 
lack of product availability is resulting in rising costs. 
Pricing for lumber, wood products accounts for about 15 percent 
of the cost in new construction. OSB products jumped over 80 
percent in the past year. Framing lumber is up 32 percent. 
Gypsum products--drywall, etc.--are up about 40 percent. This 
drives up the price for new homes, which particularly is tough 
on builders of affordable housing. It doesn't take much of an 
effect to put people out of the ability to purchase a home. 
About 240,000 households will be priced out with every $1,000 
increment in the cost of housing. Policies that streamline 
permitting, that attract investment into domestic mining, and 
that encourage multi-use forest management would all help in 
the pricing pressures that seem to ride this cyclical ride.
    We are also concerned with the trends in energy code 
development, to mandate certain or almost proprietary products 
or techniques. This significantly limits the choice for 
consumers and does not allow for the performance-driven value 
engineering that we would prefer. Further efforts to push 
energy efficiency without real consideration of cost is a huge 
problem. I am a certified green professional builder, and I 
understand the value of energy efficiency and its importance to 
the consumer, but even with those savings, there are 
significant upfront costs being incurred in the home. We are 
particularly concerned about the costs imposed in one of the 
most recent energy codes. It will take the typical homeowner 
about 13 years to break even on that investment. In some States 
like Nebraska, it would be almost 17 years. Traditionally, the 
consumer is expecting and willing to pay for that capital 
investment that would be recovered in 7 or 8 years, so keep 
that in mind. These long payback periods will ultimately hurt 
housing affordability, and ironically, push lower-income owners 
into cheaper, older, less efficient homes.
    Possibly the most significant problem facing our industry 
is the lack of construction lending. NAHB strongly supports two 
bills, House Resolution 1255 and Senate Resolution 1002, that 
would require banking regulators to issue new guidance 
specifically addressing the key regulatory areas that have 
significantly hampered the flow of credit to our Nation's home 
builders.
    There still is work to be done before we see a healthy 
housing market, but again, as I mentioned, there is reason to 
be optimistic. We have 2.1 million households that have not 
formed due to the economy. These are college students moving 
back in with their parents, like mine. There are people taking 
on extra roommates. These individuals represent significant 
demand in the near term for both rental and purchasing of 
homes. Forecasts predict that housing starts over the next year 
will nearly double that of 2009. Future growth, if not impeded 
by the issues I discussed, will create jobs, will enhance small 
business, will create tax incentives for local and federal 
government.
    We are industry that is ready to get back to work, and we 
would appreciate your assistance in assuring the recovery and 
our ability to contribute to society. Thank you.
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Mr. Terry. Thank you, Mr. Judson.
    Now, Mr. Stevens, you are recognized for 5 minutes.

                   STATEMENT OF CURT STEVENS

    Mr. Stevens. Thank you. My name is Curt Stevens. I am the 
CEO of Louisiana-Pacific Corporation. This year, Louisiana-
Pacific celebrates our 40th anniversary. Over the years, we 
have managed millions of acres of forestland, operated hundreds 
of wood-products mills, and sold almost every building product 
that can be made from wood.
    A little more than a decade ago, we sold our forestlands 
and narrowed our focus to concentrate on what we do best: 
manufacturing and selling building products. Today we produce 
the wood products that build the roofs, walls and floors of 
single- and multi-family homes across the country.
    More than half of LP's sales come from products made in 15 
manufacturing sites spread across 13 States, from northern 
California to Maine to Alabama. We are headquartered in 
Nashville, Tennessee, and also operate administrative sites in 
Oregon, Washington and Idaho. We operate another 10 plants in 
Canada, Chile and Brazil.
    LP employs 2,630 people in the United States. Twenty-two 
hundred of these folks are in our production facilities located 
in rural areas close to our wood supply. These are communities 
where jobs can be scarce, and LP is often the major employer. 
Besides these LP jobs, for every person LP directly employs, 
about three additional jobs are created in these communities 
for loggers, truckers, suppliers and others. In addition, LP 
provides income to thousands of local family forest owners by 
purchasing the timber that they grow.
    Even during the market recession, the wood products 
industry operated almost 1,000 manufacturing facilities across 
America, providing close to 400,000 jobs and a payroll of $16.5 
billion, and this was in 2011. Over the years, LP has been 
through many up-and-down cycles in the housing market but we 
have never seen a dip as severe as the recent housing downturn 
from 2007 to 2012. LP along with others in our industry was 
forced to shut our mills, reduce hours and shifts, and lay off 
workers.
    The good news is that in the last year, housing starts are 
slowly but consistently improving. We are cautiously optimistic 
about the new few years. The signs of continued growth are 
there, but we still face economic headwinds and regulatory 
burdens that could slow growth and income and jobs. It is in 
this context that I would like to offer perspectives on several 
priorities to ensure that this fundamental American industry 
continues to strength and remain competitive.
    Environmental stewardship and compliance is one of LP's 
core values, and the wood products industry has met many costly 
regulatory challenges over the years. The industry needs a 
reasonable and sustainable regulatory path based in quality 
science. For example, the Wood Maximal Achievable Control 
Technology, or MACT, or will cost LP upwards of $13 million.
    The wood products industry is a leading user of wood fiber 
and producer and user of carbon-neutral renewable biomass 
energy to run our plants. Mandates and incentives including the 
Federal Renewable Electricity Standard, climate policies and 
the Renewable Fuel Standard promote the use of biomass for 
energy. Policymakers should be mindful of the growing demand 
that this created in the United States and internationally for 
biomass and the impact it could have on the mature wood 
products industry that rely on this fiber both as our raw 
material and a means for energy creation at our facilities.
    Additionally, wood products face a threat from the U.S. 
Department of Energy-supported 2012 International Energy 
Conservation Code, the IECC. Despite the ability of either 
product to contribute to equivalent thermal performance, the 
2012 version of the IECC unjustifiably gives preferential 
treatment to one product--foam sheathing--over structural wood 
panels such as OSB. That preference could result in a loss of 
20 percent of the structural wood market and thousands of jobs.
    As an international company, comprehensive tax reform, 
though not easy, is long overdue. At LP, these are real issues 
that affect daily decisions about where we make our products 
and hire our people. For example, Canada is one of many OECD 
member countries that have lowered corporate rates during the 
past two decades while U.S. corporate rates have remained 
nearly stagnant.
    Finally, LP supports immigration reform that helps ensure 
that we can find qualified labor to operate our mills, plant 
trees for sustainable forests that supply raw materials, and to 
contract the homes our products help to make.
    In summary, Louisiana-Pacific and the wood products 
industry play an important role in the economy of our Nation 
and the building of America. We are on the upswing, but we need 
your help in enacting and supporting policies to ensure that we 
have reasonable, science-based environmental regulation, energy 
regulations and codes that maintain a level playing field and 
fair competition, corporate tax return, and policies to address 
labor needs and skills gaps. We are proud to manufacture the 
materials that literally build America.
    Thank you for the opportunity to speak to you at this 
hearing.
    [The prepared statement of Mr. Stevens follows:]
    [GRAPHICS NOT AVAILABLE TIFF FORMAT] 
    
    Mr. Terry. Thank you. Well done.
    And now Mr. Kubat, who is the President and CEO of Phillips 
Manufacturing, headquartered in Omaha, Nebraska, you are 
recognized for 5 minutes.

                   STATEMENT OF GEORGE KUBAT

    Mr. Kubat. Chairman Terry, Ranking Member Schakowsky, 
distinguished members of the subcommittee, good morning and 
thank you for the opportunity to testify today. My name is 
George Kubat, and I am the President and CEO of Phillips 
Manufacturing Company.
    Phillips is a drywall bead and trim manufacturer--the metal 
corners used in drywall applications and related products. We 
are a nationwide manufacturer and distribution company, 
employee owned and in business for over 50 years.
    Given my limited time in front of the subcommittee this 
morning, I will be focused on the following areas and request 
your help, which will benefit many manufacturers in the United 
States: one, over-regulation; two, vocational education; three, 
taxation; and four, unfair foreign competition.
    Over-regulation: My initial comment is a general concern 
that any time a representative of a government agency contracts 
a business and says I am from the government and I am here to 
help you, the immediate reaction of the business is to assume a 
defensive position. The growth and complexity of regulation and 
corresponding enforcement increases in all areas every year. 
Although the agencies may know the regulations and rules under 
their umbrella, it is impossible for small manufacturers to 
stay current with what they must comply. Of course, lack of 
knowledge or understanding is not a defense for noncompliance. 
To our 13 federal agencies whose regulatory umbrella Phillips 
Manufacturer must comply with, they are listed in my prepared 
comments. Certainly, there is a need for regulation and 
governance over manufacturing practices for many reasons 
including employee safety, quality of treatment, environment, 
immigration, health care, taxes and many more but it can't 
possibly make sense for a relatively simple metal manufacturing 
business like Phillips Manufacturing to work through 13 federal 
agencies and dozens of State and local agencies. As difficult 
and expensive as compliance is for Phillips, it has to be 
impossible for the smallest of manufacturers, those with 50 or 
less employees. Over the past several decades in the United 
States we have created a labyrinth bureaucracy of government 
policy and complexity of regulation that makes it difficult for 
Phillips Manufacturing and especially smaller manufacturing 
companies to comply with today's requirements.
    Vocational education: Another request for this subcommittee 
is to reverse the decline in vocational education. Phillips 
Manufacturing is not alone in its struggle to find enough 
workers to fill our open positions in skilled trades. I believe 
many manufacturers, and our customers in the building 
construction trades, share this same challenge. It is little 
wonder that we struggle to find enough people in the skilled 
trades when I reflect on the fact that, to my knowledge, high 
schools and community colleges have none or minimal shop-type 
classes. The local community colleges have switched their 
marketing focus from skilled trades education to university 
preparation. Compare this situation to when I was in school, 
where almost every high school had shop classes and the local 
community college focused on the skilled trades education.
    Taxation: The U.S. tax code is archaic, complex, and beyond 
the ability of even the IRS to understand it. Tax rates only 
continue to increase including the tax increases mandated by 
the Health Care and Education Reconciliation Act of 2010, 
which, by the way, it seems no one really understands how this 
Act will fully impact our cost of doing business in the United 
States. One thing is clear, income tax rates for smaller 
businesses which are fortunate enough to make money will go up 
by 3.8 percent in 2013. In addition, payroll taxes will 
increase, as well as the cost of providing insurance benefits 
to our employees. These costs reduce our ability to reinvest in 
our business and be competitive with non-United States 
businesses.
    Unfair foreign competition: Earlier I referred to the 
global economy. What do we view as unfair foreign competition? 
Our regulatory and tax structure in the United States creates a 
higher cost of production for many products that Phillips 
manufactures. The unfair foreign competition is from products 
manufactured in countries where governments provide financial 
support. These products are of inferior material and quality. 
China is a major concern but there are also many other 
countries. It makes it difficult not only to compete with these 
products for sales in the United States, it makes it impossible 
to even think of exporting any of our products to foreign 
countries. Phillips Manufacturing only manufactures in the 
United States.
    In conclusion, please take action to lower taxes, stop the 
bureaucratic growth of regulation--less is better. Skilled 
trades are good jobs and people need to be trained and educated 
to fill the positions. Create and address unfair foreign 
competition. Phillips is proud to label all our products made 
in the U.S.A.
    Thank you for giving me the opportunity to present to you 
today.
    [The prepared statement of Mr. Kubat follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Mr. Terry. Thank you, Mr. Kubat.
    And Mr. Martin is the President and CEO of Tilson Home 
Corporation that we heard somebody up on this dais brag about. 
You are recognized for 5 minutes.

                   STATEMENT OF EDWARD MARTIN

    Mr. Martin. Thank you, Chairman Lee Terry and Ranking 
Member Schakowsky and the members of the Subcommittee on 
Commerce, Manufacturing, and Trade. Thank you for the 
opportunity to testify today. My name is Eddie Martin and I am 
a home builder from Texas, and President and CEO of Tilson Home 
Corporation. I have 30 years of experience in the building 
industry myself, both as a practitioner and an industry 
representative. I am honored to participate in this hearing on 
housing's role in sustaining and growing the national economy.
    Established in 1932, Tilson signs and builds custom homes 
on customers' property throughout Texas. We are a family owned 
and operated now for four generations. Family members have 
managed our business. We are ranked by Builder magazine as one 
of one the 100 largest builders in the United States.
    We have seen firsthand the housing market has improved over 
the last year, which is a welcome change to our industry and 
the economy. The building industry includes a vast network that 
includes general contractors and some contracted businesses, 
some of whom will testify here today.
    At the same time, this turnaround presents new challenges 
for the industry. At Tilson Homes, we are already experiencing 
labor shortage in both the high-skill and low-skill end of the 
construction labor categories. The most acute shortages are 
framing, flooring, roofing, HVAC, plumbing, and electrical 
contractors. My company has experienced delays due to the lack 
of qualified framing crews who are familiar with various 
structural building codes including windstorm codes on the 
coast. Plumbers and HVAC technicians are in short supply. We 
are struggling to find master plumbers and roughing crews who 
run the pipes and foundations before the concrete is placed 
because the workforce is aging, it is getting harder to find 
young plumbers to enter the trade.
    As a 100 percent committed EPA Energy Star builder, Tilson 
is required to use Energy Star-certified HVAC contractors. 
Finding new certified HVAC contractors is difficult because of 
the shortage of skilled workers trained in Energy Star. As a 
result of the shortage of skilled labor, on average it is 
taking my company a month longer to build our homes, which adds 
to our costs and makes it more difficult to satisfy our 
customers.
    As a state and national industry rep, I can attest the lack 
of skilled labor has become a nationwide problem. In the most 
recent NAHB/Wells Fargo Housing Market Index survey, 46 percent 
of builders experience delays in completing projects on time. 
Fifteen percent of the respondents had to turn down some 
projects, and another 9 percent lost or canceled sales as a 
result of the recent labor shortages. According to the 2011 
American Community survey, foreign-born workers account for 22 
percent of the construction labor force nationally. This number 
varies by state, and in some states such as Texas, we have 
nearly 40 percent foreign-born workers in the industry. These 
are the states that will experience the most acute labor 
shortages once home building increases. I would also note that 
the immigrants are concentrated in some trades needed to build 
homes such as carpenters, painters, drywall, brick mason, and 
general construction laborers. These are the trades that 
require less training and education but consistently register 
the highest labor shortages in NAHB surveys.
    As Congress begins to consider immigration reform, I 
strongly believe that this is an important opportunity for the 
country to implement a new market-based visa system that would 
allow more immigrants to legally enter the construction 
workforce each year. Despite our efforts to recruit and train 
American workers, there is still a worker shortage, which is a 
very real obstacle to our industry's full recovery as work is 
delayed or canceled due to this shortage.
    The housing industry is turning the corner and contributing 
to an improving labor market. However, I believe a long-term 
holistic approach to comprehensive immigration reform can 
maximize the recovery in housing and allow the industry to 
reach its full economic potential.
    Thank you for having me. I look forward to questions.
    [The prepared statement of Mr. Martin follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Mr. Terry. Thank you very much.
    I now recognize Mr. Bozzuto from the National Apartments 
Association. He is the Chairman and CEO of Bozzuto Group, and I 
thank you for taking the time to come to us, and you are now 
recognized for 5 minutes.

                 STATEMENT OF THOMAS S. BOZZUTO

    Mr. Bozzuto. Chairman Terry and Ranking Member Schakowsky, 
representing the National Multi-Housing Council and the 
National Apartment Association, I would like to thank you for 
this opportunity to testify on the multi-family sector's 
contribution to the national economy. I am Tom Bozzuto, 
Chairman and CEO of the Bozzuto Group, and also Chairman of the 
National Multi-Housing Council. I have been in the multi-family 
business for more than four decades. My firm focuses on the 
mid-Atlantic region developing, building and managing apartment 
properties.
    In our country, the strongest communities contain a mix of 
housing options, and that includes apartments. Apartment homes 
and our 35 million residents nationally contribute $1.1 
trillion annually to the economy and help support more than 25 
million jobs. I am proud to say that since the recession in 
2009, my company, the Bozzuto Group, has developed, is building 
more than three-quarters of a billion dollars worth of projects 
that have collectively supported more than 10,000 jobs.
    Nationally, research by George Mason University economist 
Steve Fuller shows that in 2011 alone, apartment construction 
reflecting approximately one-third of all new housing starts 
had a total economic contribution of $42.5 billion and 
supported nearly 324,000 jobs including 121,000 onsite 
positions. Furthermore, half of all new households formed this 
decade are expected to rent, so demand will continue to grow. 
Supply is already falling short as an estimated 300,000 to 
400,000 units must be built each year to meet demand yet just 
half that number was delivered in 2012.
    It is important to realize that the multi-family industry 
relies heavily on our manufacturing partners to both develop 
new apartments and maintain the country's 19 million apartment 
homes. Allow me to illustrate this with one of my own projects: 
Union Wharf. We are building this $72 million apartment 
community in Baltimore's historic Fells Point neighborhood, and 
when completed later this year, it will provide 281 apartment 
homes and 4,500 square feet of retail. More than 600 jobs will 
have been created by this project. On track to achieve LEED 
gold certification and build on an infill former industrial 
lot, the project showcases our commitment to sustainability and 
demonstrates how apartments spur economic growth.
    The manufacturing impact of this project is profound. The 
building required enough concrete to fill 240 swimming pools. 
End to end, the lumber used would span about 331 miles, and the 
drywall could cover more than 42 football fields. The sprinkler 
system alone required 56,000 linear feet of piping and almost 
5,000 heads. In addition, we will use 204,000 pounds of 
granite, 290,000 bricks, more than 7,000 gallons of paint, and 
1,700 appliances and 3,500 cabinets, and this is one building. 
A significant percentage of these materials were manufactured 
in America with more than 25 percent coming within 500 miles of 
the site. The apartment industry, as demonstrated by this one 
project, is a robust economic engine that provides lasting job 
growth and spending nationwide.
    And now for our recommendations. As significant consumers 
of energy, policies that ensure continued access to affordable 
fuel sources are critical. Efficiency improvements made in 
apartment properties can generate significant energy reductions 
and can impact a large number of households. The committee 
should advance incentive-based strategies for promoting 
building efficiency that recognize the unique characteristics 
of apartments. We also caution against creating a rating system 
that grades buildings on their energy efficiency, and instead 
we support the expansion of well-known energy management tools 
to apartments such as the Energy Star program. We also support 
voluntary green building programs such as the National Green 
Building Standard, the only standard written to be seamlessly 
incorporated into existing building codes.
    My written testimony also outlines several other key issues 
critical to the apartment industry such as a tax system that 
promotes economic growth without disrupting the real estate 
industry, a housing finance system that provides access to 
capital in all markets at all times, and a regulatory 
environment that does not inhibit our ability to provide 
housing to millions of American people.
    On behalf of the apartment industry, thank you for the 
opportunity to testify.
    [The prepared statement of Mr. Bozzuto follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Mr. Terry. And thank you. And now, speaking of home energy 
efficiencies, we have Mr. Nadel, who is the Executive Director 
of the American Council for an Energy-Efficient Economy. Thank 
you for being here, and you are now recognized for 5 minutes.

                   STATEMENT OF STEVEN NADEL

    Mr. Nadel. Thank you, Chairman Terry and other members of 
the committee. I am very happy to speak before you today. As 
you noted, I am the Executive Director of the American Council 
for an Energy-Efficient Economy. We are a nonprofit 
organization that acts as a catalyst to advance energy-
efficiencies policies, programs, technologies and investments. 
We were formed by energy researchers, and just celebrated are 
33rd anniversary. Personally, I have been involved in energy-
efficiency issues since the 1970s. ACEEE is a nonprofit 
organization. In our view, energy efficiency is a 
quintessentially nonpartisan issue since no one is in favor of 
energy waste.
    Today's hearing is on home building and home economics. A 
critical part of home economics is making homes energy 
efficient so they have low operating costs. The major costs of 
home ownership are mortgage payments, property taxes, home 
insurance and energy. The mortgage industry commonly refers to 
PITI for principal, interest, taxes and insurance, but energy 
costs should also be included as they are usually higher than 
insurance costs and sometimes higher than taxes.
    In my written testimony, I provide some average numbers. 
Specifically, mortgages average more than $12,000 per year for 
the average home, real estate taxes and energy each average 
just over $2,000 per year, and insurance is about $800 per 
year.
    While energy costs average just over $2,000 per year, some 
homes use more than twice that amount and others use than half 
of this amount. In most homes, energy use and energy bills can 
be reduced by 20 to 40 percent through cost-effective energy-
efficiency investments. In my written testimony, I show how 
energy-efficiency investments in our homes cost less than new 
electricity supplies and often less than current natural gas 
prices. In addition to saving energy, another virtue of energy-
efficiency investments are they tend to be very labor-
intensive, helping to create jobs.
    Unfortunately, a variety of market barriers keep builders, 
homeowners, landlords and renters from realizing these savings. 
The barriers are many-fold and include such factors as split 
incentives, panic purchases and bundling of energy-saving 
features with extra-high-cost bells and whistles. The term 
``split incentives'' refers to the fact that landlords and 
builders often do not make efficiency investments because the 
benefits of lower energy bills are received by tenants and home 
buyers.
    In the United States, policies to improve the energy 
efficiency of homes, both new and existing, are primarily at 
the State and local levels. However, federal policy has had an 
impact, and at a minimum, the federal government can provide 
information and assistance in order to make it easier for 
States and local jurisdictions to undertake appropriate local 
actions.
    I discuss several current policies in my written testimony, 
but in the interest of time, I just wanted to note that only 
about 11 percent of new homes qualify for the current federal 
new homes tax incentive. The other 89 percent could do better. 
And the home performance Energy Star program, the leading home 
retrofit program, has retrofitted less than 1 percent of the 
single-family housing stock and even less of the multi-family 
stock. Reaching more homes with these and similar programs will 
help reduce energy costs and improve affordability for many 
homeowners. Overall, the National Academy of Sciences in 2010 
found that energy efficiency could reduce U.S. energy use by 25 
to 30 percent below forecasted levels.
    Recently, Representatives McKinley and Welch, both members 
of this subcommittee, introduced the Energy Savings and 
Industrial Competitiveness Act, H.R. 1616, which is a 
bipartisan bill that includes multiple provisions to encourage 
energy efficiency. It is a companion to similar legislation 
introduced by Senators Shaheen and Portman. The Senate bill was 
recently reported out of committee on a bipartisan 19-3 vote 
and is expected to reach the Senate Floor in July. We hope that 
H.R. 1616 can follow in its wake.
    In this bill as well as a number of other bills that have 
been introduced or that amendments are expected on the Senate 
Floor, there are four specific policy recommendations I wanted 
to briefly mention here. First, support for model and State 
building codes. These codes are developed by groups like the 
International Code Council. DOE provides technical assistance 
to these bodies and also as the States are considering adopting 
them. H.R. 1616 makes the code revision process more 
transparent and encourages and assists States to consider the 
most recent model codes, and it will improve compliance with 
the codes. We recommend that this be included. I would note 
that decision-making remains at the State level.
    Second, I would note improving home mortgage underwriting. 
Most mortgage underwriting decisions are made based on mortgage 
payments, taxes and insurance but not energy costs. Investments 
in energy efficiency can reduce the carrying cost of a home, 
improving loan repayment rates and potentially qualifying more 
purchasers for mortgages. A recent study by researchers at the 
University of North Carolina found that efficient homes, 
meaning those certified to meet Energy Star criteria, had a 32 
percent lower default rate than otherwise similar homes. In the 
112th Congress, Senators Bennet and Isakson introduced a bill 
called the SAVE Act. It is now going through revisions, and I 
understand it may be reintroduced soon. Our understanding is 
that the revised bill is likely to direct HUD to develop 
guidelines for considering expected energy cost savings of a 
property when determining home loan eligibility and home value 
determinations, and in addition, it would encourage efforts to 
inform loan applicants of the costs and benefits of improving 
the energy efficiency of their homes. These changes will make 
efficient homes more valuable and affordable, while reducing 
homeowner energy bills.
    I also discuss ways to improve home energy benchmarking and 
how to enact temporary incentives for comprehensive home energy 
retrofits.
    I thank you for your time and look forward to your 
questions.
    [The prepared statement of Mr. Nadel follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Mr. Terry. Thank you. And now we go into the Q&A phase of 
our hearing. We get to ask the questions and you get to answer. 
This is the fun part.
    So Mr. Kubat, I will start with you. Will you describe for 
us the difference from number of employees that you have 
employed to make the one part, the drywall beads, from, let us 
say 2008 to current?
    Mr. Kubat. Maybe just as a quick overview, I am old enough 
that I have had several lives, and it was in 2008 was the first 
time that I ever had to lay off people from positions where I 
wanted to keep them. We cannot control construction starts, and 
we have heard from several of the speakers today the pain that 
the construction industry went through that related to housing 
of any type, whether it is single, multi, apartments, 
condominiums. The cliff was very steep, and what we thought was 
a correction or a valley was a canyon. So back in 2007, before 
the collapse, our total employment would have been in the high 
200s. We have heard statistics where up to 40 percent of 
people, I believe Mr. Stevens indicated Louisiana-Pacific had 
closing of plants and downturns. Fortunately, we did not have 
to close any plants. We have three plants. But we did have 
significant reduction in employment, and I can't give you the 
exact number but certainly it was down significantly under 200, 
maybe 160, 170 people. We are now back with what I refer to as 
the rising tide, and certainly we have an improving 
construction market and hopefully we can continue to support it 
in the United States.
    We are continuing to hire, but one of the challenges that 
we have is this area of what are called skilled workers, and I 
am going to say that is primarily tool-and-die shop, and the 
training for that has to be onsite. There is not educational 
and vocational training bringing these people into the 
manufacturing market. We hope that you will be able to give us 
support in that area as we look to hire more people.
    Mr. Terry. I appreciate that. So let me feed off of the 
aspect, because it is amazing of all the different hearings we 
have had, everyone has testified that they have job openings in 
the manufacturing and building area but lack the semiskilled 
and skilled workers necessary. So Mr. Judson, and I will just 
down the line, if you could be fairly quick, do you have any 
thoughts on where we should focus our efforts to try to develop 
the semiskilled and skilled workers necessary?
    Mr. Judson. From two fronts, the technical training is 
important and it has been something that has been deemphasized 
over the past few years. People have left our industry to go 
into other trades. There just was not the demand for their 
services so they have gone into other trades. The 
deglamorization of the construction trade has caused people in 
high school, for example, not to go into the trade arena so 
they are not learning a trade. The immigration laws at this 
point are prohibitive in allowing us to hire trainees as it 
might be to fill some of those beginning entry slots. So I 
would say to answer your question, a focus on technical 
training with trade schools and a focus on directing 
immigration labor opportunities into the industry.
    Mr. Terry. All right. Mr. Stevens?
    Mr. Steven. I would second what was said there. The only 
thing that I might add to that is that the immigration reform 
will help both the direct labor workers as well as the skilled 
laborers. Canada is an interesting example. Canada just 
basically waived their immigration requirements for skilled 
trades, and they are bringing in a lot of individuals from the 
Philippines and from Ireland to fill these skill needs, and 
that may be a model you might want to consider looking at.
    Mr. Terry. Mr. Martin?
    Mr. Martin. Yes, I would echo Mr. Judson's comments but I 
would also--you know, one of the problems is that high schools 
have no vocational training. In Texas, when they went to the 
four-by-four program, which required 4 years of science, 
English, social studies and math, they took out vocational 
training, and so there is no vocational training in Texas 
anymore, and there is actually a bill on the governor's desk to 
reinstitute vocational training in the high schools, and I 
think that would start getting people, young high school men 
and women who are not willing to go to college or wanting to go 
to college to get into a trade.
    Mr. Terry. Very interesting. Mr. Bozzuto?
    Mr. Bozzuto. The apartment industry began to recover from 
this recession before the home building did, and we began to 
see the shortage of manpower sooner, and it is very severe and 
it is causing meaningful cost increases. I defer to my 
associates here and their comment about vocational education 
and agree with them. With respect to immigration reform, our 
industry, our associations clearly support comprehensive 
immigration reform at the federal level with a reliable system 
for the employers to verify credentials.
    Mr. Terry. Thank you very much. Mr. Nadel, you don't get to 
answer that question, but I have a feeling you'll be asked a 
lot of questions. And that brings me to Mr. Matheson. Sorry. I 
am yanking it back.
    Mr. Matheson. All right. No problem.
    Mr. Terry. The ranking member is now recognized for her 5 
minutes.
    Ms. Schakowsky. I apologize. When family calls, you worry 
and take the call, so I apologize.
    I wanted to talk a bit about foreclosures. It has been a 
real problem and continues to be, as I mentioned in my 
testimony, in Chicago. An average family who simply lives in 
proximity to foreclosures and who may not have any trouble with 
their loans have already lost or will lose more than $20,000 in 
household wealth. It has also become clear that many of those 
companies that carried out foreclosures over the last few years 
kept poor documentation, sometimes employed abusive tactics, 
and in some cases committed outright fraud.
    On May 16, Representative Cummings introduced H.R. 1706, 
the Mortgage Settlement Monitoring Act of 2013, and I along 
with the chairman of our full committee, Mr. Waxman, are 
original cosponsors to try and ensure transparency in a federal 
settlement on mortgage servicers' unsafe and unsound practices, 
and a few members of this committee are cosponsors. So Mr. 
Judson, the National Association of Home Builders states on its 
Web site that it ``urges banks to engage in transparent and 
effective forms of communication with borrowers to avoid 
unnecessary financial distress.'' It seems like it would be in 
the best interest of home builders and homeowners alike to 
reduce residential mortgage servicing and processing abuses as 
well as to promote transparency in any federal reviews. So I 
wanted to ask you, you may need to get more information, but on 
the surface, does this sound like a bill that could be 
supported?
    Mr. Judson. I think the concept of what you are proposing 
is certainly supportable. Our industry doesn't deal in the 
writing or underwriting of mortgages. We build the homes that 
unfortunately have been foreclosed upon. We support that 
settlement. We support a fair settlement. The guilt associated 
with the foreclosure process is multifaceted, whether it be 
improperly underwriting, whether it be greed, whether it be 
people being truly misled on what their payments and obligation 
would be, it is across the board. We want that settlement done. 
We want it completed. These people need housing. If you can 
look at the housing stock in this country, the people that are 
being displaced or having to rent, and in some cases for more 
money than they could refinance their current home if they are 
paying a normal, regular rate. So we support that settlement.
    Ms. Schakowsky. Thank you. We would like you to take a look 
at that, and we will get that to you, the legislation itself, 
and hopefully if we had the support of the home builders, that 
would be a boost for us.
    Mr. Judson. Seventeen oh six?
    Ms. Schakowsky. That is correct.
    Mr. Judson. Thank you.
    Mr. Schakowsky. Yes, 1706. I also wanted to talk about 
energy-efficient appliances, Mr. Nadel. I think you mentioned 
that various State and local but also federal-level energy-
efficiency standards have come into effect. Residential and 
commercial appliances have evolved into high-performance 
machines, etc., but meanwhile, the price of energy-efficient 
appliances is falling. A new report by the ACEEE found that 
between 1987 and 2010, real prices of refrigerators, washers 
and dishwashers decreased by 35 percent, 45 percent and 30 
percent, respectively, so I would like to ask you about this 
report and your other work on appliances, and can we conclude 
that State and federal energy efficiency standards for 
appliances are a highly effective, highly beneficial force for 
consumers and the environment, and if I get a new air 
conditioner that we are looking at, am I going to get the help 
I need in terms of some sort of a credit?
    Mr. Nadel. Thank you for that question. Yes, our recent 
report did find that for many, most of the home appliances as 
well as commercial products that are regulated under federal 
standards, prices have been actually declining. Manufacturers 
have sharpened their pencils and figured out ways to reduce the 
costs, even as they have dramatically improved energy 
efficiency. Energy savings are quite large as well, and the 
very interesting thing from that report is we found that 
consumer choice had actually either stayed the same or 
increased. The products work better today, have more features, 
better performance than before. So I do I think that program 
has been very successful in saving energy, saving money. The 
program has been very careful to set those standards at levels 
that are cost-effective and technologically feasible, so yes, 
that is very good.
    In terms of your question about air conditioners, assuming 
you are in Chicago, I know Com Ed has a number of incentive 
programs that might be very useful to help you go beyond the 
minimum standard. For air conditioners, the minimum standard is 
called the CR rating of 13, but in many climates, 15, 16 might 
make sense.
    Mr. Terry. Thank you. The gentlelady yields back. At this 
time the chair recognizes the vice chair of the full committee, 
Ms. Blackburn, for her 5 minutes.
    Mrs. Blackburn. Thank you, Mr. Chairman. And Mr. Nadel, I 
want to stay with you on the energy-efficiency issue. I have to 
tell you, I have never met anybody that wants to pay more for 
their energy costs. Everyone is looking for a way to cut those 
costs, and I keep watching these DOE and EPA mandates and the 
way they apply the rules, you know, how they will take the laws 
and then they go about different things through rulemaking, and 
of course, where I am from down in Tennessee. I am sure Mr. 
Stevens will tell you, a lot of us down there like to have a 
ceiling fan in the kitchen or the bedroom or out on the back 
porch if it is a covered porch. So has your organization taken 
a position on the DOE regulatory framework on ceiling fans?
    Mr. Nadel. In general, as I replied to Ms. Schakowsky, we 
do support the efficiency standards program and particularly 
making sure that any new standards are technologically feasible 
and economically justified. On ceiling fans, that provision, as 
I recall, was enacted by Congress in 2005.
    Mrs. Blackburn. That is correct.
    Mr. Nadel. And yes, we supported that standard, and I 
believe that they are now reviewing that standard and trying to 
decide what, if any changes, may make sense. We plan to 
participate in that process.
    Mrs. Blackburn. OK. Let me ask you this. Do you think DOE 
should be in the business of mandating the efficient products 
or should they allow consumers the choice of choosing energy-
saving products that are going to fit their needs?
    Mr. Nadel. Right. The minimum standards remove the least-
efficient products from the market. They help address some of 
the market barriers but then give consumers many, many choices. 
As I mentioned before, they tend to actually improve consumer 
choice rather than decrease consumer choice.
    Mrs. Blackburn. Well, and see, I think that we should be 
encouraging consumers in doing things to open up that 
environment and not making it more expensive and more 
difficult. Ceiling fans are one of those things that are in the 
market that can help people reduce their energy use. Sometimes 
I look at this and I think that burdening the ceiling-fan 
manufacturers with increased regulations prices a lot of people 
out of that market, and then increases their reliance on 
cooling systems. Am I wrong about that?
    Mr. Nadel. We did not specifically look at ceiling fans, 
but for many of the products, the prices have actually declined 
with standards, not increased. So if we can have a win-win, I 
think it is worthwhile. But again, we have not specifically 
looked at ceiling fans.
    Mrs. Blackburn. Well, see, and we need more win-wins. We 
need less regulation and more options and the ability of 
individuals to get into that marketplace.
    Mr. Stevens, I want to come to you. Mr. Judson sitting over 
there next to you mentioned that there had been a number of 
news articles about rising building material prices, and he 
also mentioned that there have been recent declines in wood 
prices and that his has been a positive development. So is this 
a trend we can expect to continue going forward, and can you 
confirm that this is a result of expanded production based on 
confidence that the recovery is real and justifies a return to 
higher levels of capacity and output?
    Mr. Stevens. Our building products that we produce are 
generally commodities, and a commodity product is, by its 
nature, a decision between a supplier and a buyer on what that 
price will be. So let me just use oriented stand board as an 
example, or OSB. At the end of December, that price was $360 
per thousand square feet, roughly. In the first quarter, it 
rose to $430 because there was more demand than there was 
immediate suppliers and so buyers and sellers arrived at a 
higher price. In the last 6 weeks, that price has fallen below 
$300. So you see that there is a wide range of pricing in these 
commodity products, and that will continue. It will be local 
supply-and-demand considerations. It will be production coming 
online or production coming offline. It will also be very 
contingent upon weather and other conditions for building. So 
it is both the demand and the supply side of that.
    I can speak directly to what LP has done. We made a 
decision in October to bring on a new plant in Alabama that we 
built for a cost of $240 million and ran it for 6 weeks. Then 
the housing market declined and we shut that plant down for 5 
years. That took us about 9 months and over $10 million in 
capital to bring that plant online. We also announced last 
month that we are bringing on a plant in British Columbia to 
support the western United States in building products. So we 
are bringing on capacity at our plants to meet what we expect 
to be continued demand for building products.
    Mrs. Blackburn. Thank you. Mr. Chairman, I will submit in 
writing a question for Mr. Martin that I had, and I yield back.
    Mr. Terry. Thank you. The chair recognizes now the 
gentleman from Utah. You are recognized for 5 minutes.
    Mr. Matheson. Well, thank you, Chairman Terry. I appreciate 
that, and I appreciated the witnesses being here today.
    Mr. Judson, I had a question for you about the issue of the 
home building industry's challenges it faces in the credit 
area, specifically for your AD&C loans, your acquisition, 
development and construction loans. Could you please talk to me 
about how those loans are used and the challenges that your 
industry is facing with those loans?
    Mr. Judson. A builder will usually apply to a lending 
institution to borrow funds to build a home for you, and under 
the current climate and what has existed for the past several 
years, the builder cannot get that loan to build a home. Even 
more difficult is the ability to get what is called a 
speculative loan where a builder would build a model home or a 
home for sale waiting for the buyer to come along and buy the 
home. That is driven by the regulatory in-fighting that is 
taking place between the regulating agencies and the lending 
institutions themselves. Each blames the other person for it. 
The lenders say that the regulators are over-regulating and the 
regulators say that the banks are not properly underwriting 
their loans. So it is a catch-22 and caught in the middle is 
first the building and secondly the homeowner, who then can't 
get a home built. Now, if by some miracle the builder can build 
the home, then the difficulty lies in being able to get that 
home financed, which includes the lender willing to make the 
loan underwritten, which was not in the case in the past. They 
were not properly underwritten. Loans today are properly 
underwritten. You can look at the GSEs, you can look at every 
single bank. They are making money because they are properly 
underwriting their loans. So it is important for us as builders 
to be able to have access to financing to be able to build the 
homes, the houses for people who want to buy the homes.
    Mr. Matheson. And would suggest there may be some role that 
Congress could play in trying to clarify this regulatory 
uncertainty that you were describing earlier?
    Mr. Judson. Yes. Thank you. There were two bills that have 
been presented, one on the House side and one on the Senate 
side, that address the specificity of what a regulatory 
responsibility should be. It clarifies some of the capital 
requirements that should have and could have to make qualified 
loans to the consumer or the builder, but the congressional 
responsibility, I think, lies in their ability to more directly 
engage the regulatory arena in what their real responsibilities 
and authorities are.
    Mr. Matheson. OK. I appreciate that.
    Mr. Judson. Thank you.
    Mr. Matheson. Mr. Stevens, you mentioned in your testimony 
the challenge of the government policies that are picking 
winners and losers, and you specifically mentioned the 
renewable fuel standards mandate for biomass fuels as a policy 
that could hurt the long-term sustainability of forests. Can 
you expand on that and explain how the RFS could hurt not only 
forest sustainability but also users of forest resources and 
products?
    Mr. Stevens. It all comes back to the proposed subsidies 
for renewable fuels. As an industry, for over 200 years the 
forest products industry has used trees for their primary raw 
material and to produce the energy to run their plants. For LP, 
an average OSB plant will produce 95 percent of the energy from 
the wood waste from our products. What we want is just a level 
playing field. We don't want any subsidies. We want to play 
based on the economics of the use of that wood and to be fair 
across the board.
    Mr. Matheson. OK. I appreciate that. Mr. Chairman, I will 
yield back.
    Mr. Terry. Thank you. I am out of order but I have the 
gavel.
    It was interesting, a person that came to talk to me about 
the wood product industry and how they are producing solely to 
send woody biomass to Europe to meet their renewable standards, 
so it is not lumber that is being used in the United States but 
being milled and sent overseas. I thought that was interesting.
    I now recognize the vice chairman of the subcommittee, Mr. 
Lance, for your 5 minutes.
    Mr. Lance. Thank you, Mr. Chairman. Good morning to you 
all.
    In my home State of New Jersey, builders are reporting a 
surge in unit construction over last year's figures, I believe 
22,000 new units this year. This is good news. Data released by 
the National Association of Realtors shows growth in the 
State's median residential real estate prices with multi-family 
construction growing the fastest. This is a first since the 
peak of the housing boom roughly a decade ago.
    Of course, the market in New Jersey remains heavily 
affected by Hurricane Sandy, and the lasting impact will be 
felt for quite some time as the shore region of our State 
continues to rebuild. The storm did, however, spur much-needed 
new construction and renovations, boosting the lumber, plumbing 
and electric industries in these areas.
    To Mr. Judson following up on what you had stated 
previously, what do you think we can do best to untangle the 
tangle that exists between those who wish to build and the fact 
that there seems to be a reluctance on the part of those who 
lend money to lend the appropriate amount of money? Before my 
service on this committee, I did serve on the Financial 
Services Committee, and this is a continuing issue both on that 
committee and on this committee. We have had repeated testimony 
that banks are not lending appropriately.
    Mr. Judson. I testified before that committee, as you 
probably know.
    Mr. Lance. Yes, sir.
    Mr. Judson. If I had the answers, I would have told you 
then.
    Mr. Lance. Yes, sir.
    Mr. Judson. But I am learning as this goes along----
    Mr. Lance. As are we.
    Mr. Judson [continuing]. It is an unfolding issue. I would 
go back to the specificity and the clear underwriting 
requirements for lenders. The banks had a knee-jerk reaction. I 
think this whole scenario was much of a knee jerk because of 
the dilemma that started several years ago with foreclosures 
and poorly underwritten loans. So it would start, I think, with 
a direction from Congress, Financial Services to the regulatory 
environment, working with lenders to support the home building 
industry, allowing them more latitude on the capitalization 
rates that they have. These have been suggestions that are 
current written into law have been taken as mandates that you 
cannot go over certain limits, whereas the community banks are 
now being literally put out of business from the construction 
lending standpoint.
    Mr. Lance. The community banks had absolutely nothing to do 
with the financial meltdown, as you know better than I. They 
were good actors in this whole process, and from my 
perspective, they are scared to death by over-regulation here 
in Washington, especially after the passage of Dodd-Frank, for 
which I certainly did not vote. But be that as it may, we all 
want a better environment so that the American people can 
purchase the new residential real estate, and there is a pent-
up demand in my judgment, and we are discouraged because we 
feel that is important for the progress of the economics of the 
Nation that this occur. Do you believe that we should revisit 
statutory law or simply require the agencies that administer 
current statutory law to do a better job?
    Mr. Judson. That is a good question. It is probably some of 
both. The statutory guidelines could be specifically identified 
to address some of the concerns. I keep going back to the 
capitalization. But the willingness, almost encouragement, we 
spoke with Mr. Bernanke a couple of times and his term of the 
pendulum having swung too far I think is an accurate term.
    Mr. Lance. Yes, sir. Thank you. Are there others on the 
panel who wish to address the issue I have raised? Hearing 
none, I yield back the 40 seconds I have, Mr. Chairman.
    Mr. Terry. Very good. The chair recognizes the gentleman 
from California, Mr. McNerney, for 5 minutes.
    Mr. McNerney. Well, thank you, Mr. Chairman. My daddy was a 
home builder, so I appreciate the work that you all do, and I 
appreciate also how important home building is to our national 
economy not only in terms of employment but in terms of just 
giving people confidence in the economy and their spending and 
so on, so thank you for coming this morning. Thank you for 
passion.
    I understand about 40 percent of our Nation's energy is 
used by buildings. Of course, part of that is by commercial 
buildings and part of that is by home buildings, but I am very 
interested in energy-efficiency housing. So I would like to 
address my first question to Mr. Nadel. How much specialized 
training is required by the workers to produce high-efficiency, 
even net-zero housing as opposed to what would be required in 
terms of the building materials to accomplish those goals?
    Mr. Nadel. It will vary depending on the technique employed 
but generally it will require some extra training in terms of a 
very careful installation to prevent air leakage and whatnot, 
how to install some of the new materials, but it is not 
dramatic. There are usually short training courses available to 
help people get certified in doing these types of techniques.
    Mr. McNerney. Well, how much does it cost, say, to build a 
net-zero home compared to a standard home?
    Mr. Nadel. I don't recall for a net-zero home. For a home--
--
    Mr. McNerney. For a high-efficiency home.
    Mr. Nadel. For a high-efficiency home that uses half the 
energy of a typical new home, the estimates range anywhere from 
$1,000 to $4,000 or $5,000, depending on the type of home and 
who does the estimate, but these are for homes that cost 
hundreds of thousands of dollars.
    Mr. McNerney. That sounds like a pretty good bargain. Does 
anyone else care to address the question that I posed about 
training requirements?
    Mr. Kubat. This could be just a little different spin on 
it, Congressman, but a comment that maybe goes back a little 
bit to Ms. Blackburn too, but I had talked about over-
regulation and the difference in regulation. In our 
manufacturing plant, which is a little bit different than 
residential, there is an OSHA standard for air quality. In the 
State of Ohio, the Ohio EPA also has a standard for air 
quality, and I don't know if the Ohio EPA standard is based off 
of a federal EPA standard but it is significantly less than the 
OSHA EPA standard. So our plant more than meets the OSHA EPA 
standard but did not meet the Ohio EPA standard, and as a 
result of that, the Ohio EPA, I am going to use the word 
``mandated'', which could be a little strong because there 
wasn't another solution that was--and a waiver was not 
available--that we are expelling in the winter time about 20 
percent of the heated air in that plant out of the plant just 
out stacks into the atmosphere to meet the air standard of the 
Ohio EPA, and I think this question of, you know, where is the 
regulatory balance, how do we get to an OSHA standard that says 
we have also met versus an EPA standard, and I am going to call 
it Ohio EPA standard that we are not meeting, and the solution 
is take 20 percent of your heat out of your plant and----
    Mr. McNerney. Mr. Kubat, I appreciate your concern. Do you 
have legislative suggestions to alleviate this burden that 
would also ensure safety and quality of the product? Do you 
have any specific suggestions or are you just saying the 
regulations are bad?
    Mr. Kubat. I am not an engineer. I can't understand why 
there is an OSHA standard that we can meet and an Ohio standard 
that says it has to be significantly more, I am going to say 
more restrictive, and why is one so different than the other? I 
am not an engineer that can answer it other than they told me 
the answer is take 20 percent of the hot air out of your plant 
and blow it out into the sky.
    Mr. McNerney. Well, I appreciate your concern. Perhaps some 
legislative suggestions would be more helpful than just saying 
that you don't like the current regime. Is Phillips 
Manufacturing producing energy-efficient components for new 
housing?
    Mr. Kubat. The materials that we produce are used as part 
of building construction. They are not necessarily a direct 
energy-efficient component. It is raw form metal steel, and 
steel itself is not an item which would create an insulation or 
an energy barrier.
    Mr. McNerney. Thank you. Mr. Martin, you mentioned the 
difficulty finding labor. You know, given the high unemployment 
in the last few years, do you have any way to explain why we 
are still having labor shortages in specific areas?
    Mr. Martin. Well, in Texas specifically, the unemployment 
is down mainly because of the energy sector and the two big oil 
plays, Eagle Ford shale and the Mill and Odessa play. So in 
Texas, we have a real problem because the oil industry is 
paying so much for their workers that they are leaving 
construction and going into energy. So that is our problem.
    Mr. McNerney. At least locally?
    Mr. Martin. Yes.
    Mr. McNerney. Thank you, Mr. Chairman. I will yield back.
    Mr. Terry. Thank you, Jerry. And now I will recognize the 
gentleman from Texas, Mr. Olson, for 5 minutes.
    Mr. Olson. I thank the chair, and welcome to our panelists. 
As you know, this is the Subcommittee on Commerce, 
Manufacturing, and Trade, CMT. I assume I am speaking for Mr. 
Martin, we should change that to mean Come Move to Texas.
    Mr. Terry. I object.
    Mr. Olson. I have a question for all of you if I have time, 
but first of all, I would like answers from Mr. Martin and Mr. 
Judson. Clearly, I know I am blessed living in Texas 22. Right 
now, at least 100 new homes are being built within 2 miles of 
my home in Sugar Land, Texas. The sounds of cement trucks, of 
hammers hitting nails at 7:00 in the morning are commonplace. 
But that growth we are experiencing in Texas is threatened by a 
shortage of labor. I know it is hard to find qualified workers. 
Mr. Martin mentioned unskilled workers such as framers, 
flooring personnel, HVAC, plumbers, painters, bricklayers, and 
the lure of the high-paying, low-skilled construction jobs is 
long gone. When I was growing up in the 1980s an 18-year-old, I 
could not get a construction job, and I craved a construction 
job. Those jobs paid six-plus dollars an hour compared to 
working minimum wage in some restaurant for just a little over 
two bucks and change. I mean, I wanted to get in that hot, 
boiling Texas sun with that asphalt, spread that wherever that 
needed to go because I am getting paid six bucks an hour. I 
love my 13-year-old son but his generation won't make that 
choice. The work is too tough. I know that immigration reform 
is part of the solution but we have proven we can't tailor our 
economic needs with our immigration policies. Somehow we have 
to get American kids interested in these jobs again.
    So my question is, what can we do to encourage our youth to 
get involved in these jobs again started in the high school and 
community colleges? What can we do? Mr. Martin, you are first 
up, sir.
    Mr. Martin. As I said earlier, right now on Governor 
Perry's desk is H.B. 5, which is reforming our school system to 
allow for vocational training, and I think that will go a long 
way to start helping. The problem is, as I said earlier, right 
now the average age for a plumber, electrician, HVAC technician 
is in the upper 50s, so they are getting closer to retirement 
age and there is this huge gap of the skilled workforce that we 
are going to have contending with as we try to bring these 
young high school kids and right-out-of-high-school kids up 
into the trades and get them trained so they can make a good 
living despite the lure of the oil and gas industry, but I 
think you have got to start this vocational training that we 
have in Texas had for 10 years.
    Mr. Olson. Yes, and growing up, I took shop, wood shop, in 
8th grade. Now seniors in high school is the first chance you 
have to take wood shop. Look, I have got all 10 fingers. It was 
safe. I learned a lot.
    Mr. Judson, a national perspective. What can we do to get 
kids excited about these jobs again, get Americans working in 
the construction industry?
    Mr. Judson. The educational training is the key, whether it 
be through the Home Builder Institute--I mentioned earlier 
about the deglamorization that has taken place for this 
industry. Kids coming out of high school do not want to go into 
the construction industry. It is a respected trade. It has been 
for years when we were coming up and working in the 
construction trade industry. It is now perceived that way now. 
I think there is a perception in the industry and some things 
that we as an industry need to do to indicate that it is a 
respected trade and it can be an industry that will foster from 
a beginning as a bricklayer to running a bricklaying crew. If 
our average member has 10 or so employees, that is a painting 
crew, that is a drywall crew, but until the high school student 
recognizes that is an opportunity for him to advance himself in 
his own career, it won't happen.
    Mr. Olson. And Mr. Kubat from Phillips Manufacturing 
perspective, running out of time but what can we do to 
encourage our kids to get that education?
    Mr. Kubat. Well, I am going to go back to my prepared 
comments. I think it is a question that somewhere over time, 
however it was generated, the educational system has encouraged 
everyone to prepare for a college education, and not all people 
should be going to college. Some people have natural skills. 
Some people are born musicians, some people maybe have math 
skills. Maybe some people are born to be a doctor. But there 
are a lot of people that are born to be plumbers, electricians, 
I am going to call it tool-and-die craftsmen, but there is no 
opportunity for them to get trained, least in the experiences 
that we are seeing in the States that we operate in, either in 
the high school or the community colleges, and somehow we have 
to get that back into the system so that they see that these 
opportunities are there, and the level of unemployment we have 
now compared to the jobs that are available are simply people 
who do not have the skills or a place to go for training other 
than on-the-job training or employer-provided training to learn 
these trades. We have got to get it back to where it comes in 
at a much younger level. I am going to go back, and as you 
referred to, Congressman, as the shop classes that started in 
the high schools and then were continued in the community 
colleges and network those with manufacturers and contractors 
so that they can get credit while they work out on the job. 
Most of us learned a lot of what we learned not necessarily in 
school but on-the-job training when we got out of school, 
whether that was part of what we are doing in white-collar work 
or what people were doing in blue-collar work. Somehow we have 
got to get businesses, contractors to interact with the schools 
and get people back into training that will provide them a 
long-term skill and a long-term opportunity for compensation 
and retirement.
    Mr. Olson. I am way over my time so I yield back, Mr. 
Chairman. Mr. Stevens, Mr. Bozzuto and Mr. Nadel, I will get 
you those questions for the record. Thank you, Mr. Chairman.
    Mr. Terry. All right. Mr. McKinley, you are recognized for 
5 minutes.
    Mr. McKinley. Thank you, Mr. Chairman. And Mr. Nadel, thank 
you very much for talking about our Energy Savings Act. I hope 
that we will get adequate consideration and we will get that 
bill worked.
    But perhaps my remarks should have been in an opening 
statement but I come from the construction industry. I started 
in construction in 1965, and I had a home building company over 
40 years ago I started that, so I come with some degree of 
awareness of what we are talking about here. But the concern I 
have not heard voiced strongly enough, maybe it is not your 
fault but I want to hear some direction. How are we going to 
get affordable housing for middle-class Americans and low-paid 
people across this country? I am looking for something in the 
$125,000 to $175,000 range. How are we going to achieve that in 
new homes or are we going to tell our American citizens they 
are not entitled to a new home, they have to buy an older home 
and renovate it? I am really curious about where we are going 
as a country when we are dividing our major urban centers 
against rural America, and rural America cannot afford $300,000 
and $400,000 homes when they are on an income that may be only 
$40,000 a year. So I am really curious. I hear the issues that 
you are talking about and I have experienced as a contractor, 
an engineer, an architect. I understand all those aspects. But 
I want to see from the other perspective, what are we doing for 
the people to give them homes that they can afford. Yes, sir.
    Mr. Bozzuto. Mr. McKinley, I think perhaps we haven't been 
as clear. When we object to regulation or express concerns 
about regulation, there is an unstated bias behind that, which 
is that our goal is to provide in the apartment industry is 
clearly the most affordable form of housing that can be built, 
but every time a regulation is mandated, no matter how 
meritorious, there is a cost implication that we end up having 
to put on, and this tradeoff that you have so appropriately 
pointed out is the one that is a struggle for us all of us in 
our industry. None of us want to see energy consumed unwisely. 
None of us want to design buildings that are not accessible to 
everyone. And yet every time a new law or regulation is 
enacted, whether at the federal level, the local level or the 
State level, or all together, it adds to the costs, making it 
more difficult for our industry to make housing affordable.
    Mr. McKinley. Are there responses from some of the others 
as to how we might be able to achieve more affordable housing? 
I really don't want to get a point that we tell middle-class 
America they are not entitled to a new home, they can't afford 
one, they have to buy an older home and fix it up. I think 
everyone in America, I would love to see them be able to reach 
out so that they can have a new home. I can remember the first 
home I built was affordable housing, $30,125. People could 
afford that. Yes, sir?
    Mr. Judson. I would echo Mr. Bozzuto's comments about 
regulation. It accounts for somewhere between 18 and 20 percent 
of the cost of a home, and that is not to say that all 
regulation is bad or that all codes are bad because they 
certainly are not. We support things from quality and safety to 
the energy efficiency but there is a point of diminishing 
return on all those components. We think a commonsense approach 
needs to be taken. We think that the bureaucrat regulators, and 
I say that with all due affection, need to use some common 
sense when you are adding, 10, 15, 20 percent to a house and it 
is not a function of soundness or safety and maybe it is not as 
necessary as what you might think. You have got 20 percent to 
the cost of the land. If there were some leniencies allowed for 
affordable housing when you are developing a piece of property 
and you could do it for half of that cost, you have cut 10 
percent out of the cost of the production of that house. So 
there are a lot of small components that could go into reducing 
that $130,000 house to $100,000 if that is what you had the 
cooperation in generating.
    Mr. Terry. All right. The gentleman's time is expired. The 
chair recognizes Mr. Johnson from Ohio.
    Mr. Johnson. Thank you, Mr. Chairman. I associate myself 
with the comments that some of my other colleagues have made. 
The American dream for millions of Americans is embodied in the 
idea of owning their own home, of finally putting a stake in 
the ground and saying this is my domain, this is my family, 
this is where we are going to plant our roots. And so this 
hearing that showcases the importance of the housing and rental 
market I think is extremely important to the American people. 
There is no doubt that the housing market is one of the main 
drivers of our economy, one of the main indicators as to the 
health of our economy as a whole, and we should do everything 
in our power to help not only these gentlemen and their 
companies sitting at this table but those all over the country 
have the resources and the ability, the tools that they need to 
help the millions of Americans find housing, build that home, 
enjoy the American dream and at the same time create the 
millions of jobs that are in the waiting.
    My first question is for Mr. Judson. There have been a 
number of articulates lately talking about rising building-
material costs. What obstacles are builders facing in terms of 
obtaining necessary building materials to complete their 
projects?
    Mr. Judson. It is unfortunately a supply-demand scenario 
that is not uncommon. As was pointed out by Mr. Stevens, they 
had shuttered plants. The productive capacity has been 
diminished, and now that the industry is picking up again, it 
is a catch-up between building materials and the price but the 
prices escalate so dramatically as would be expected. It is not 
a price-gouging issue, it is just a supply-demand agreement 
between buyer and seller. But as was pointed out, if plants are 
operating more efficiently, if they can be brought on a little 
quicker, we can minimize the peaks and valleys in those cycles.
    Mr. Johnson. Are there any actions that you think Congress 
should take to try to help resolve that problem?
    Mr. Judson. From what I have heard today and what I have 
heard around the industry as I travel in the country is, the 
regulation for starting back up some of these plants is 
different than it might have been when those plants were built 
5 years ago. So to have to operate to a new standard creates 
some hardship for them financially and creates some time delays 
in bringing that product back online.
    Mr. Johnson. Now you are talking about regulatory reform 
again.
    Mr. Judson. Yes, sir, I am.
    Mr. Johnson. And I agree with you. I am not saying that in 
a negative way. I agree with you. Every time a new regulation 
comes out that stymies the industry, that puts a plant out of 
business, even a new owner that might come in and try to start 
that back up, it takes more money, more time. You lose a lot of 
the intellectual property of the workforce, and it is a 
problem.
    What about on the soft side, the money side? I hear another 
common concern from home builders, realtors and potential home 
buyers the inability of obtaining loans and financing. Now, we 
all know that there was a serious problem in the last decade of 
predatory loan making and people taking out loans for which 
they simply could not meet their obligations. However, it now 
seems that perhaps Congress and federal regulators have 
overcorrected these mistakes and are stopping qualified home 
buyers from obtaining the funds they need. You addressed this 
in your testimony as well as your opinion that the issue is 
ripe for Congressional action. Can you talk a little bit more 
about that? What do you think we ought to do?
    Mr. Judson. Well, the two bills that have been introduced 
already are solid bills. They have bipartisan support, and I 
don't recall off the top, but I think it is Senate Bill 1002 
and maybe the House 1255, but they both are pragmatic, they are 
both logical in their approach and again, as I mentioned, they 
are bipartisan. I think if there is lending available to the 
builders, then the houses can be built at a more affordable 
cost because builders now are paying almost a usurious rate for 
funding, to get funding. They are not getting it through the 
lending institutions that we traditionally were afforded.
    Mr. Johnson. One more quick question in my remaining time. 
What would the Wood MACT rule, the EPA's proposed Wood MACT 
rule, how that would affect you folks? Mr. Stevens?
    Mr. Stevens. In my testimony, what I said is, the current 
version of the Wood MACT would cost LP about $13 million with 
really no improvement in technology or in productivity.
    Mr. Johnson. And basically that is going to cost jobs, that 
is going to cost passing on costs to your customers. I mean, 
that money doesn't come out of thin air, right?
    Mr. Stevens. It is going to increase--not only do we have a 
$13 million capital expenditure but also increase our use of 
natural gas.
    Mr. Johnson. Mr. Chairman, thank you. I yield back.
    Mr. Terry. Thank you. The gentleman's time is expired. Now 
the gentleman from Florida is recognized for 5 minutes.
    Mr. Bilirakis. Thank you, Mr. Chairman. I appreciate it 
very much, and I thank the panel for their testimony, and this 
question actually goes to the entire panel, whoever would like 
to respond.
    In recent months, sales of single-family homes in the Tampa 
Bay area, St. Petersburg, Clearwater and Tampa, that area, have 
risen by more than 17 percent. Throughout the entire State of 
Florida, sales have been up by almost 10 percent. While this is 
good news, many analysts have suggested that most of these 
sales are being made to cash investors, and I see that as well. 
To what extent does new home construction follow the trends in 
the larger real estate market? Who would like to go first?
    Mr. Judson. I will be glad to start. We go back to that 
supply-demand scenario. Florida was the epicenter of 
foreclosure, so the people are going in now to gobble up these 
houses and pay cash for them, many times from an investor 
standpoint. But as that supply diminishes, you are going to see 
new construction follow suit because you still have that pent-
up demand. More families are being created. About 40 percent of 
the homes sold in this country are first-time buyers. So as 
those people are beginning to go into the market to look for 
homes and there is nothing available, new homes will be built, 
and if financing is available, not only for the construction 
process but for their permanent financing, then the economy 
will start again.
    Mr. Bilirakis. Very good. Anyone else? Thank you very much.
    Next question. This is for Mr. Bozzuto. You urged Congress 
to insist that any new rules from HUD or EPA or DOE have 
demonstrable benefits that justify the costs of compliance. Can 
you identify any current or proposed rules that do not meet 
that standard in your eyes?
    Mr. Bozzuto. Well, I guess I will cite a recent HUD rule 
where HUD has changed the lending limits and requiring that on 
larger loans, the amount of equity that is required from the 
developer has to be significantly different, greater than it 
had been previously, yet this change was done absent any 
experience with loans of that nature having gotten in trouble. 
So it is the kind of thing that has major impacts on the 
industry, particularly if one was in the middle of the process. 
I suspect if I had 24 hours I probably could come up with 100 
examples of rules and regulations that are in the nature of 
having been imposed because they were good ideas but not having 
any real benefit economically that justifies the costs 
associated with them.
    Mr. Bilirakis. Thank you. Anyone else want to jump in? 
Well, thank you very much, Mr. Chairman. I appreciate it. I 
yield back my time.
    Mr. Terry. Thank you, Mr. Bilirakis. Now, Mr. Bozzuto, you 
don't have a question because we are done, but one of the 
things that we get to do as Members of Congress is to submit 
questions to you to answer. Mr. Nadel, you didn't have an 
opportunity to provide additional comments when we were talking 
about energy efficiency. You can guarantee I will submit a 
question, so you can provide that answer. Mr. Bozzuto, we will 
probably ask you a question giving you that opportunity to 
those list hundred examples. You may not have to be 100 but 
some good examples. Thank you.
    And for those folks that we submit a written question to 
you, we would appreciate a timely answer. Timely would be 
within a few days for me, for some folks it could be 6 months 
but I prefer a week or two, OK? I would appreciate the timely 
answer. You guys were excellent. All of you provided us good 
insight on a variety of different topics, and you are now 
excused. We are going to take a couple of minutes while we 
switch panels here, and you will see some work on our 
microphones. We have learned in our backroom, they couldn't 
hear the witnesses. So we are going to see why that is 
occurring. So thank you all. You are dismissed.
    Again, I will ask unanimous consent to let Mr. Welch speak 
for 1 minute. Hearing none, you are recognized. The gentleman 
from Vermont is recognized.
    Mr. Welch. First of all, I thank the chairman, but I want 
to reassure the panel that you will be treated much better than 
I was when I arrived.
    I want to thank everybody for coming but I especially want 
to thank Ludy Biddle from NeighborWorks, who has been doing 
this incredible job in Vermont getting energy efficiency out 
into the remotest parts of a rural county and an old urban 
city, a city we are very proud of, Rutland, and the thing that 
has been so exciting, Ludy, to watch your work was, it is 
regular people getting out and making direct contact with 
homeowners and wading through all the challenges, financial and 
practical, that they face to make that decision to retrofit 
their homes.
    Mr. Chairman, I was down one time visiting some homes that 
they have worked on but then I went into this class where there 
were all these folks who were laid out because of the housing 
collapse. This was a few years ago. And they were learning 
about how they could use their skills to do something in their 
neighborhood to save their neighbors money and get them back 
earning cash. So it has been so tremendous to see the 
implementation of an idea. You know, we talk a lot around here 
but you all do get things done, and we really appreciate it. So 
thank you so much for being very proud and I am very proud of 
all the work that you and your team have accomplished.
    Mr. Terry. Thank you, Mr. Welch. Now the rest of you 
probably won't have as glaring an introduction as glowing as 
that one was, but Ms. Biddle, you deserve that, especially as 
being our only woman panelist today, so I appreciate you being 
here.
    So by introductions, I am going to go down as I did before, 
and when you start to speak and are recognized, I will give you 
your introduction, so Mr. Robinson, Buddy, is Senior Vice 
President, General Counsel and Corporate Secretary for Kohler 
Company, who I think we have a few of your products in our 
house.
    Mr. Robinson. I am glad to hear it.
    Mr. Terry. And so you are now recognized for 5 minutes.

  STATEMENTS OF JAMES M. ``BUDDY'' ROBINSON, IV, SENIOR VICE 
  PRESIDENT, GENERAL COUNSEL AND CORPORATE SECRETARY, KOHLER 
 COMPANY; WILLIAM SHAW, FOUNDER, WILLIAM SHAW AND ASSOCIATES; 
 MARK WILHELMS, VICE PRESIDENT OF ARCHITECTURAL SALES, MIDWEST 
BRICK AND BLOCK; LUDY BIDDLE, EXECUTIVE DIRECTOR, NEIGHBORWORKS 
OF WESTERN VERMONT; AND BRIAN BOVIO, OPERATIONS MANAGER, BOVIO 
             ADVANCED COMFORT AND ENERGY SOLUTIONS

               STATEMENT OF JAMES M. ROBINSON, IV

    Mr. Robinson. Thank you, Mr. Chairman and members of the 
subcommittee. I am Buddy Robinson, I am with Kohler Company, 
and I thank you for the opportunity to present Kohler Company's 
perspective on the current housing situation in the United 
States and prospects for its future.
    Although housing starts may exceed a million for 2013, no 
one in the industry would claim this is a robust market by 
historic standards. It is well below the 2 million starts we 
experienced in 2005 but, thankfully, it is appreciably above 
the 500,000 starts at the bottom in 2009.
    Kohler Company has played an important role in housing for 
more than a century. We will celebrate actually our 140th 
anniversary later this year. John Michael Kohler, an Austrian 
immigrant, came to Wisconsin, bought a farm implements company 
making cast-iron and steel implements in 1873. He took a 
product out his line, heated it up to 1,700 degrees Fahrenheit. 
He put a bunch of enamel frit on it and he took a picture, he 
put in his catalog and he said of the product, it would work as 
a horse trough or hog scalder, that when furnished with four 
legs will serve as a bathtub, and thus Kohler got into the bath 
business.
    So Kohler ideas, craftsmanship and technology are at work 
all around the world. We currently have four corporate groups: 
kitchen and bath, power, interiors and hospitality. We employ 
more than 30,000 associates. We have operations including more 
than 50 manufacturing facilities and we sell our products 
literally on every continent.
    Generally speaking, Kohler Company is bullish on the 
prospects for continued recovery and growth in the housing 
market. However, there are a number of economic obstacles and 
federal policies confronting America that could detail our rosy 
outlook. I will turn to a few of those now.
    First, home buyers and remodelers need access to affordable 
financing. Simply put, we need policies that encourage private 
institutions to participate in the home finance market. We need 
clarity in rules and regulations surrounding lending standards. 
We need consistent regulation and certification of appraisers 
and a greater general sensitivity in Washington toward 
burdensome processes that add time and cost without meaningful 
benefit to the mortgage finance market.
    Secondly, we need national water-use standards based on 
science. Patchwork regulations applied selectively create 
unreasonable burdens on enterprises and they virtually 
guarantee a race to the lowest water usage levels regardless of 
good science or maximum efficiency. Kohler wholeheartedly 
supports the EPA Water Sense program. This is a public-private 
partnership promoting water efficiency, and it is working well. 
It deserves congressional funding. EPA reports that Water 
Sense-labeled products have helped Americans save $287 billion 
gallons of water. That is $4.7 billion in water and energy 
bills, you know, avoided. And we are proud to have been named 
EPA Water Sense Manufacturing Partner of the Year three times 
since the program was launched in 2008 including this past year 
in 2012.
    Thirdly, we need policies that build the skilled and 
unskilled workforce. Kohler Company supports the intent of the 
comprehensive immigration reform pending in the Senate. It is 
overdue. As we face growing shortages in plumbers and other 
skilled trades, government should be doing what it can to 
support vocational and trade schools as well as supporting 
qualified apprenticeship programs. Furthermore, we need to 
offer work visas to all who graduate from U.S. colleges and 
universities, particularly those with science and engineering 
degrees.
    And finally, there needs to be greater sensitivity in 
government to rules and regulations that drive up manufacturing 
costs. Often we do not have sufficient lead time to prepare for 
oncoming regulations. In other cases, good science is missing 
and decisions are based on faulty or incomplete studies. In 
still other instances, contradictions occur between and among 
federal agencies that share regulatory responsibilities.
    So in conclusion, housing has pulled the U.S. economy out 
of every recession since the Great Depression. It remains 
critically important that governments at all levels help create 
and support an environment conducive to home building. Kohler 
Company's success illustrates what industrious immigrants can 
accomplish through the free enterprise system and a healthy 
housing sector.
    I thank you for this opportunity and look forward to your 
questions.
    [The prepared statement of Mr. Robinson follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Mr. Terry. Thank you for your testimony.
    Now, Mr. Shaw, you are the founder of William Shaw and 
Associates, and we look forward to your testimony.

                   STATEMENT OF WILLIAM SHAW

    Mr. Shaw. Thank you. I appreciate the opportunity to 
testify this morning, Chairman Terry and members of the panel. 
My name is Bill Shaw. I am the founder of William Shaw and 
Associates. We are a design-build-remodeling company located in 
the great State of Houston, Texas.
    Few industries have struggled more during the Great 
Recession than the home building industry. While remodelers 
have not experienced the extreme highs and lows like single-
family home building, the remodeling industry has struggled 
over the last few years. However, predictions indicate a very 
gradual yet steady recovery. Fortunately, predictions--
remodeling is an industry right now that is heavily regulated, 
and given the regulatory environment we face as an industry and 
as small businesses, I would like to share with you my thoughts 
on some key regulations that could hamper our recovery.
    Recent amendments and changes to EPA's Lead Renovation, 
Repair, and Painting rule are already constraining our 
businesses. The final rule, which took effect over 3 years ago, 
requires renovation work that disturbs more than 6 square feet 
in a home built prior to 1978 to follow the new Lead Safe Work 
Practices. Poor implementation of the rule by the EPA has 
resulted in considerable compliance costs and his hindered both 
growth and energy efficiency upgrades in older homes. The first 
important change to the RRP was the elimination of a consumer's 
ability to waive compliance if no children under 6 or a 
pregnant woman resides in the home, also known as the opt-out 
provision. This change dismantled everything EPA originally 
included in the rule to ensure that it was not overly costly to 
small businesses. For small contractors, these additional costs 
have to be passed on to the consumer, which increases the 
chances that the consumer will hire another likely uncertified 
contractor do the work or, what we are finding a lot in 
Houston, they are going to do the work themselves, which may 
increase the likelihood of disturbing lead-based paint.
    The 2008 RRP also relied on a new lead test kit. The EPA 
expected the more accurate test kit to be commercially 
available by the time the rule went into effect. Three years 
later, we still don't have a new test kit, and the old test 
kids can produce up to a 60 percent false positives, meaning 
that in many cases, consumers are needlessly paying additional 
compliance costs. We believe the EPA should reopen the rule and 
redo their cost-benefit analysis.
    Another challenge we face is with green remodeling. The 
green remodeling trend is growing quickly, and I myself am a 
certified green professional. But one of the major barriers to 
investing in green construction is that appraisals often do not 
reflect the increase in construction costs or the value of 
future energy savings. If my customers cannot realize this 
value, they won't seek green upgrades. Voluntary green building 
rating systems, though, have helped demystify the value of 
green. While there are many in the market, the ANCI-approved 
ICC 7000 national green building standard is widely used in 
residential construction. This standard focuses on energy 
efficiency, water and resource conservation, and more. There 
are minimal requirements in each of these categories. It also 
features an entire section dedicated to remodeling, a key to 
addressing the inefficiencies found in older buildings which 
are the real gas guzzlers of the build environment. Federal 
buildings must now meet green standards, but unfortunately, 
only one system is allowed: LEED. LEED is not a consensus 
standard. Agencies are required to use these standards because 
they allow for all relevant stakeholders to participate while 
also protecting against special-interest groups hoping to 
prioritize one particular product or technique. Second, giving 
one priority organization a monopoly does not promote 
innovation or cost-effective decision-making. Different rating 
systems may also be better suited for certain project types. 
Lastly, no standalone residential green standard was reviewed, 
even though 16 percent of the federal portfolio is residential 
space. GSA is currently reviewing this policy, and I hope their 
recommendation allows choice.
    Thank you for the opportunity to testify today and I look 
forward to your questions.
    [The prepared statement of Mr. Shaw follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Mr. Terry. Thank you.
    Mr. Wilhelms, the Vice President of Architectural Sales, 
Midwest Brick and Block, I appreciate you being here, and you 
are recognized for 5 minutes.

                   STATEMENT OF MARK WILHELMS

    Mr. Wilhelms. Thank you. On behalf of our company and the 
concrete masonry industry, I would like to thank you for 
providing us this opportunity to share our perspective on the 
importance of a healthy home building industry. My name is Mark 
Wilhelms and I am Vice President of Architectural Sales for 
Midwest Block and Brick. Our family business employs over 275 
full-time employees at our 21 locations in Missouri, Kansas, 
Oklahoma, Arkansas, Tennessee, Kentucky and Illinois. We 
manufacture and sell concrete block, concrete landscape 
products and distribute a wide range of masonry and landscape 
materials to the residential market segment. However, only 
about 90 percent of our companies typically operate a single 
plant and in a local market and remain family owned. 
Nationwide, there are approximately 350 block manufacturing 
companies operating about 600 plants. In other words, we 
typically make and ship our products in about a 60-mile radius 
due to the heavy weight of our materials. This local market 
focus means that our employees, our suppliers and our customers 
are local. We are truly the ultimate American business model.
    I am pleased that your subcommittee is holding this hearing 
today on the value of the home building industry. The 
construction industry has suffered a lot these past 6 years. At 
our company, this recession forced us to cut over 30 percent of 
our workforce. When this poor construction market is combined 
with the ripple effect of the banking industry, a major 
increase in medical insurance costs, it becomes very difficult 
for producers to stay in business. In fact, over the past 15 
years, we have seen close to 300 producers close their doors.
    Like most producers, our company began with the production 
of concrete block for the construction of basements in new 
homes during the 1940s. Back then, as the demand for homes 
grew, so did our company. The demand for homes created jobs in 
the local communities where our companies started. It is the 
same residential construction market that has led to every 
growth cycle experienced in our company.
    In fact, other construction sectors are driven by the 
residential market. We will begin to see longer delays in the 
construction of retail centers, schools, hospitals and 
municipal buildings as we wait for the housing market to 
recovery. We know a strong housing market is the stimulus for 
most all other building sectors.
    Looking beyond the effects of a poor housing market, we 
must also recognize the changing construction industry and our 
ability to adapt. The method and materials used to build 
buildings is changing quickly. The market is demanding more 
energy-efficient building materials, green building products, 
more education of architects and engineers, and a larger number 
of workers to move into the skilled trades. Each of these 
demands requires a consistent and substantial level of 
investment to remain competitive.
    Within our industry, we recognize the need to invest in our 
products. However, with block being a relatively low-margin 
commodity-type product with many small producers, maintaining 
that consistent level of funding in our own research, education 
and promotion becomes difficult.
    For this reason, our producers overwhelmingly support an 
industry-led funding program. We have solicited the leadership 
and assistance of Representative Brett Guthrie and 
Representative Kathy Castor to introduce bipartisan legislation 
in the form of H.R. 1563 to create a commodity check-off 
program for the concrete masonry industry. This legislation, 
which has been referred to this subcommittee, would not create 
the check-off program but simply authorize our producers to 
conduct a referendum, and if a majority support, then enact the 
program. We believe that this private industry approach, which 
requires no federal resources, is the only way to enable our 
industry to effectively promote itself and to continue to 
provide valuable building solutions for the public and generate 
the jobs that will naturally follow.
    In closing, our company and our industry sit with 
production capacity in reserve, and we are ready and anxious to 
support badly needed growth and development to compensate for 
pent-up demand. We encourage this subcommittee to play its role 
in supporting policies and legislation that will ultimately 
stimulate construction growth, stabilize property asset values, 
free up investment capital, and reduce the cost to operate 
domestic construction and manufacturing businesses.
    Thank you again for this opportunity.
    [The prepared statement of Mr. Wilhelms follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Mr. Terry. Thank you. Well timed.
    Now, Ludy Biddle is Executive Director, NeighborWorks of 
Western Vermont, and somebody that Peter Welch is very fond of. 
You are recognized for 5 minutes.

                    STATEMENT OF LUDY BIDDLE

    Ms. Biddle. And it is mutual. Thank you, Chairman Terry and 
Ranking Member Schakowsky and all of the members of this 
subcommittee. This is a great honor, and thank you, 
Representative Welch, for making this possible.
    I am here to share with you the benefits that the residents 
of a small county in Vermont are enjoying from an investment 
made in energy efficiency and to encourage you to consider how 
the whole country could benefit from a similar investment.
    In 2010, NeighborWorks of Western Vermont, a small, 
nonprofit housing organization, joined an august group of 
cities and States to receive a Better Buildings grant from the 
Department of Energy. The purpose of the DOE program was to 
wrap up demand for energy-efficiency measures in the 
residential sector. We were the only housing group to apply. We 
said we would encourage 1,000 households in Rutland City to go 
through the retrofit process in 3 years, and no one thought we 
could do it because to put that into perspective, only 26 
Rutland households had gone through the process in 2009. 
Rutland County is the second poorest country in Vermont subject 
to all the social ills and economic challenges that our 
stressed communities are, so we were not the typical 
demographic for efficiency programs, but we heat our homes 6 
months of the year. Our housing stock is some of the oldest in 
the country. Our low- and moderate-income residents, the least 
likely to participate, were the most likely to benefit from 
this program, and our mission, our experience is about helping 
make home ownership affordable.
    What better way to achieve savings and stability and 
comfort and health and safety for homeowners than to add air 
sealing and insulation and the occasional boiler and new roof 
to their homes? I will share some of the results and then tell 
how we accomplished this and what our hopes for continuing.
    As of the close of this year's heating season, 570 
households just in Rutland County had completed retrofits on 
their homes. The average homeowner is saving 386 gallons of 
fuel per year, which times about $3.85 a gallon equals about 
$1,500 a year, every year from now on. This means that this 
past winter because these 570 homes were using less fuel, about 
$850,000 did not leave Rutland County to buy oil. Eight hundred 
fifty thousand stayed in this little county to fuel our own 
economy, and it will stay with us every year from now on. 
Actually, it will be even more significant because we hope 
another 400 households will finish their retrofits by the end 
of this summer.
    Another way we have contributed to the economy of Rutland 
County is in creating jobs. Most of the contractors, who are 
specially trained and Building Performance Institute certified 
through Efficiency Vermont, were, when we started, a one-man 
operation, often an independent builder who had been trying to 
augment his income during the recession. Since we began, every 
one of the 13 or 14 independents have added people to their 
companies. We actually have the names and addresses of 62 
people who have jobs created around our program, so we are not 
just relying on statistics to indicate this. One of our One of 
our contractors, for example, went from three retrofit 
customers in 2009 to 40 retrofit customers in 2011 and 2012, 
producing a gross income just for his company of $300,000. At 
one point all the contractors were so busy, a 3-month backlog, 
that we created a small company of our own called LaborWorks 
for NeighborWorks. We now maintain a pool of workers we can 
loan out to the contractors when they need help keeping up with 
demand.
    How did we do this? We are and always have been a housing 
organization. We know that you don't advertise or announce 
programs and they will come. For example, in Shrewsbury, we 
enlisted the five volunteer conservation commission members to 
call all 400 residents. While incentive payments and rebates 
for efficiency measures are essential, we used our grant money 
to provide people to help other people understand this process, 
and we simply provided old-fashioned customer service, 
something we call the Melanie factor after the head of our 
coordinating team. We provided help with understanding the 
technical and financial choices. We like to tell people we will 
let the dog out, we will let the contractor in and we will help 
you understand all of the information you need in between. 
Because we were concerned and there was concern, of course, 
that providing these services was expensive and adding to the 
already existing efficiency programs, we engaged the Cadmus 
Group, a research firm that is highly regarded in the energy 
industry, to conduct an industry standard cost-benefit 
analysis. They found lower income households earning below 80 
percent of area median income were 164 percent more likely to 
install measures. Our Heat Squad program, which is what we call 
it, is cost-effective for the societal cost test of 1.72, and 
the Heat Squad with Efficiency Vermont programs is even more 
cost-effective. In other words, not only is the added cost of 
the Heat Squad producing more benefit than it is costing, but 
also the NeighborWorks Heat Squad is providing non-monetized 
value to society in that significantly more people in the low- 
to moderate-income homes are benefiting.
    I will stop now and hope that you will have questions that 
would address the rest of my testimony.
    [The prepared statement of Ms. Biddle follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Mr. Terry. I think you can bank on that.
    Mr. Bovio, did I say that right?
    Mr. Bovio. Yes, you did.
    Mr. Terry. Fantastic. Operations Manager, Bovio Advanced 
Comfort and Energy Solutions. You are recognized for 5 minutes.

                    STATEMENT OF BRIAN BOVIO

    Mr. Bovio. Thank you. Thank you, Mr. Chairman, and 
distinguished members of this subcommittee for this opportunity 
to offer my perspective on the role of home performance 
contracting in home economics and energy policy. My name is 
Brian Bovio and I am Vice President of my family's business--I 
gave myself a promotion--Bovio Heating, Plumbing, Cooling, 
Insulation located in New Jersey. We are a third-generation 
HVAC contracting company that has also transitioned in a whole-
house energy efficiency retrofit company. We offer heating, air 
conditioning, plumber, insulation, weatherization and energy 
auditing services. Essentially, we work with homeowner to 
increase their home's energy performance, comfort, health and 
safety.
    I come to this subcommittee both as a licensed contractor 
and as Chairman of the Board of Efficiency First. Efficiency 
First is a national nonprofit trade association of nearly 800 
member companies, most of which are small businesses employing 
five to 50 people. We have membership in all 50 States and aim 
to support the policies that will support a sustainable and 
scalable home retrofit market.
    Efficiency First contractors work every day sitting at 
kitchen tables across America helping homeowners to understand 
why their energy bills are so high, why their daughters' 
bedrooms are so cold or why their son's asthma acts up when the 
furnace is on. Americans understand that energy efficiency is 
about their home economics and comfort and their ability to 
raise their families there.
    The average American family spends over $1,800 per year on 
energy, which equates to over $200 billion across the Nation. 
This represents 22 percent of all U.S. energy consumption, 35 
percent more than is used for passenger cars and trucks 
combined.
    Energy efficiency is unique in that it creates its own cash 
flow. Less money spent on energy means more money to purchase 
groceries and save for college. So why don't all American 
homeowners undertake the energy efficiency upgrades they need? 
One key reason is the upfront costs. Efficiency First and I 
would like to thank Congress and Congressmen David McKinley and 
Peter Welch for their leadership on homes, home performance and 
for introducing H.R. 2128, the Home Owner Managing Energy 
Savings Act, or HOMES Act. This bill would help address the 
hurdle of those upfront costs by providing incentives for 
homeowners with rebates to help cover the cost of home energy 
efficiency upgrades. The rebates are earned. The size of the 
rebate is based on the energy savings the upgrade will provide, 
not the type of product they purchase, and homeowners will 
always pay at least half of the upgrade cost.
    Why should tax dollars be used to offset efficiency costs? 
Believe me, I understand the need to use public dollars wisely. 
As a small business, we understand the need to budget our own 
funds wisely so I am not asking for a handout. This country 
needs the energy savings that the HOMES Act provides. Saving 
energy is a public good. Homeowners are being asked to provide 
that public good to save energy and make expensive efficiency 
investments because we want them to save money on their utility 
bills and because the country needs them to reduce cost across 
the energy system as a whole and help achieve the broader goals 
of energy independence, pollution reduction and job creation.
    We are not properly valuing the very real public and 
resource benefits energy efficiency provides. Instead, we are 
asking homeowners to pay for the full burden and cost of these 
improvements often upfront and out of pocket. The HOMES Act 
fixes that.
    Mr. Chairman, retrofitting inefficient homes will also 
create hundreds of thousands of U.S. jobs in some of the 
hardest-hit industries including construction and 
manufacturing. These new jobs are primarily jobs that cannot be 
outsourced. You cannot hire a contractor from China, and the 
materials used in improving homes average 90 percent made in 
the United States. Shipping insulation is as smart as shipping 
air.
    My business and employees know personally how home 
performance can create jobs. Bovio's has been able to grow its 
business thanks to making the transition to a home performance 
company. Despite horrendous economic conditions, we have more 
than doubled our workforce in the past few years. All of these 
employees are working 40-plus hours a week, no short weeks and 
have full benefits. Revenues are also up dramatically from 
before we started in home performance. This change in my 
business and the businesses of many others across the country 
was made possible with the help of public dollars and incentive 
programs, incentive programs like the HOMES Act put forward by 
bipartisan policymakers at the State level, who saw the need 
and acted.
    Mr. Chairman, the major players we need to make the home 
performance industry economically sustainable over the long 
haul are already here. We are just not yet to scale. Those that 
claim the industry should stand up without incentives are not 
acknowledging that every other resource receives incentives 
despite already being at scale. Energy efficiency is an 
undervalued resource, and home performance deserves investment. 
We believe that a smart national incentive coordinated with 
local infrastructure will enable a transformation in the 
residential energy efficiency market. This subcommittee can 
help by supporting the passage of the HOMES Act.
    I want to thank the subcommittee on behalf of the thousands 
of contractors who are working every day to help homeowners 
invest and improve their homes. I thank you again for the 
opportunity to testify and look forward to your questions.
    [The prepared statement of Mr. Bovio follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Mr. Terry. Thank you very much.
    I will start with you, Mr. Shaw. It is interesting as a 
remodeler that I guess many of us, I didn't think about the 
lead rule and how it would impact, and I would assume most of 
the remodeling is in older homes. So when the EPA eliminated 
the opt-out, what notice was there? Why did they do that and 
how specifically did it impact a typical remodeling job for a 
home built before 1978?
    Mr. Shaw. Wow, I don't even know where to start on that.
    Mr. Terry. Yes, and you have to do it in about a minute.
    Mr. Shaw. Yes. Thank you. You know, as an industry, and 
remodelers in particular, we were at the table with putting 
this whole thing together, and we are very serious about lead 
poisoning so I don't want to imply that what happened after 
this thing went into effect in 2010, I think it was in July 
2010--what happened was is that we didn't get to the table to a 
change that occurred, I think it was in September, when because 
of a lawsuit and a settlement with the environmentalists, the 
EPA all of a sudden threw this opt-out and took it off the 
table.
    Mr. Terry. So to interrupt. Was that part of the settlement 
agreement is to eliminate the opt-out?
    Mr. Shaw. Yes, it was. So what happened to us is, is that 
we went from 36 million homes to almost 80 million that were 
now included, and we also added about $336 million in 
compliance costs. So for us, it was a huge impact, probably one 
of the biggest things that took the ability of the consumer to 
make a choice.
    Mr. Terry. Just real quickly, by eliminating that opt-out 
for a home that could opt out, what was the additional cost for 
a typical project, generally speaking?
    Mr. Shaw. What happened is, is that, you know, when you 
took the opt-out, then every single household that was in a 
home prior to 1978 became eligible, and now you take a test kit 
that doesn't work, and what happens with most of the remodelers 
that I take that even want to get involved with this is that 
you have to assume every house has lead, so there is no 
alternative.
    Mr. Terry. All right. Mr. Bovio, your company seems to be 
maybe not to the level of remodeling but certainly you will 
make some changes to a home under your program.
    Mr. Bovio. Absolutely.
    Mr. Terry. What is the typical assessment, assessment 
meaning conclusion, of what has to be done to a house that you 
will work on? What is the average cost? You mentioned 
incentives, and does that cover the cost and where do the 
incentives come from?
    Mr. Bovio. Currently, I work in a program in New Jersey 
that covers up to half the costs. I am a third-generation HVAC 
contractor so most of our leads come in as someone that needs 
heating and/or air conditioning. So most of our jobs are 
starting them and then we convert them into a home performance 
project and we talk to them about upgrading their building 
shell, which would be air sealing, making the home tighter, 
performing insulation upgrades to reduce the BTU load of the 
heating and air conditioning equipment we need to put in, 
reduce the equipment sizing. Those projects can range around 
$15,000, generally speaking.
    Mr. Terry. And the incentives program for New Jersey will 
cover $7,500 of a----
    Mr. Bovio. Up to $5,000.
    Mr. Terry. Up to $5,000?
    Mr. Bovio. Yes.
    Mr. Terry. Is there a financing mechanism for the rest?
    Mr. Bovio. New Jersey does have a financing mechanism for 
the rest, a $10,000 zero percent loan, which is why I told you 
that average job comes in about $15,000.
    Mr. Terry. Interesting. But Mr. Robinson, real quickly, you 
make a lot of products but I don't figure or see where the 
energy efficiency occurs in the use of your products. Is there 
an energy-efficiency component to your products?
    Mr. Robinson. Well, you have to remember we do more than 
make toilets so on----
    Mr. Terry. Well, yes, that is where I usually get reminded 
of your products, though.
    Mr. Robinson. You know, our name appears in all the best 
places, as they say. We also, on the power side of our 
business, make home gen sets, and, you know, this is becoming a 
less and less luxury and more and more something that as our 
population ages in place and they are expected to receive their 
health care needs in their home, we have--part of the spec of 
these homes often includes a backup power source because the 
power goes down and your dialysis or whatever machinery in your 
home doesn't work, that is a real issue when you only have so 
much batter life.
    So I think, you know, when you look at energy and just 
broadly speaking energy issues in this country, we need to be 
looking more and more about the security, the infrastructure 
for energy delivery to homes as we look at homes more and more 
to accomplish more things. They will, as I say, become mini-
hospitals for most of us as we age and they will also raise 
children and send people to college, et cetera. So I think the 
breadth of what we are asking this, you know, capital to do, 
this home on the ground to do is expanding and expanding and at 
the same time we are being asked to comply with far more, you 
know, detailed and I would say in certain circumstances say 
onerous regulations at all levels.
    Mr. Terry. All right. Thank you very much, and m time is 
expired and I will recognize the gentlelady from Illinois, Ms. 
Schakowsky, for her 5 minutes.
    Ms. Schakowsky. Thank you. First, let me say, Mr. Robinson, 
I have been to the American Club. You spoke about immigration 
reform. Don't you call it The Immigrants?
    Mr. Robinson. Yes, it is The Immigrant.
    Ms. Schakowsky. Great restaurant.
    Mr. Robinson. Thank you.
    Ms. Schakowsky. I wanted to just comment on the lead 
renovation and repair. I have been addressing the lead issue 
for a very long time in toys and homes, etc., and I have to say 
I am a big supporter of that rule because let us face it: these 
homes after renovation often are sold, flipped, people are 
moving in and out, and lead is one of the most dangerous toxins 
that affect more than 1 million children. I have met some of 
those children, and it is really devastating. Even exposures to 
very low levels of lead harms the development of children's 
brains, causing learning disabilities, behavioral problems, 
etc., but it is also a concern for the workers who can suffer 
cardiovascular damage, kidney damage, damage to central nervous 
system, and the National Institute for Occupational Safety and 
Health has found that construction workers bring lead dust 
home, leading to higher blood levels in the children of 
construction workers and in their neighbors. So I think the 
LRRP is an important tool in reducing these exposures and 
ensuring that renovations and repairs that disturb lead paint 
are done with basic safeguards by trained and certified 
professionals. It is very important. It has been supported by 
public health groups, by the International Union of Painters 
and Allied Trades, and it is being implemented. Renovation 
firms have been certified. Workers have been trained. In 
Illinois, there are over 5,000 firms certified for lead-safe 
renovations, and I just think that changing it to an opt-out 
would undermine important protections for workers, for future 
homeowners and their children and visitors to homes.
    But I want to turn to another subject for some questions. 
Mr. Bovio, in your testimony you wrote, ``Efficiency First 
contractors work every day with homeowners sitting at kitchen 
tables across America helping them understand why their energy 
bills are so high and that ``retrofitting homes will put energy 
savings back in the wallets of American families and 
communities and create hundreds of thousands of jobs,'' et 
cetera. So I understand that your company has seen success 
lately. So yes or no, has it been your experience that if more 
consumers knew how much energy they could save and how much 
money they could save through retrofitting that we would see a 
lot more people improving the energy efficiency of their homes?
    Mr. Bovio. Absolutely.
    Ms. Schakowsky. And Ms. Biddle, your testimony stressed the 
importance of informing homeowners of the money that they could 
save. Can you talk about the methods in your experience that 
have been the most effective and successful in helping people 
understand how they can save money and convincing them that 
these are really important things to do in their home?
    Ms. Biddle. Yes. As I said, as a housing agency for 26 
years, we have known how to talk to people about their specific 
challenges or questions or needs. So we have addressed the 
efficiency measures in the same way. It is very much a one-on-
one conversation or, where possible, two-on-one. But it is 
explaining the specifics. In most cases, you know, we can 
indicate that the cost of the loan--if a loan is necessary, the 
cost of a loan is less than the savings that would be 
accomplished on a monthly basis, and once a person understands 
that, you know, using their own numbers wherever possible, it 
is a very easy project to understand for anyone, and everyone 
benefits from it. It is a matter of making it very clear. It is 
still an esoteric kind of proposition to households. It is not, 
you know, like buying a granite kitchen counter. They don't 
know yet what it involves and how to get it accomplished.
    Ms. Schakowsky. So you don't wait for people to come to 
you, you go out to them?
    Ms. Biddle. No, we very definitely go out. We have outreach 
coordinators. One example I gave in Shrewsbury, five members of 
our town called 400 fellow residents and just explained, you 
know, I did this in my house and if you did this in yours, this 
is where you would be this time next year. We are very 
definitely talking to people specifically about their homes 
similar to mine, that kind of thing.
    Ms. Schakowsky. So Mr. Bovio, you were talking about the 
legislation, the HOMES Act.
    Mr. Bovio. Yes.
    Ms. Schakowsky. Are you saying that some States already 
have something similar to that and that this has proven to be a 
good model nationally? Could you explain?
    Mr. Bovio. Yes. I mean, some States do have programs and 
some have very successful programs, New Jersey being one of 
them, that has had a lot of success for me and we have had a 
lot of energy savings in New Jersey with that program. If there 
was a national model that rolled out and could take home 
performance nationwide, that would definitely benefit the 
Nation's energy independence.
    Ms. Schakowsky. Thank you very much. I yield back.
    Mr. Lance. [Presiding] Thank you very much. Before 
recognizing Mr. Long, Mr. Bovio, where are you from in New 
Jersey?
    Mr. Bovio. Southern New Jersey. I live in Williamstown.
    Mr. Lance. Gloucester County or----
    Mr. Bovio. Yes, sir.
    Mr. Lance. I live in Hunterdon County, which has even fewer 
people than Gloucester County, in the northwest, however.
    Mr. Bovio. OK.
    Mr. Lance. And to all of the panel, welcome, and of course 
to you, Mr. Bovio from New Jersey.
    Mr. Bovio. Thank you, Mr. Lance.
    Mr. Lance. Mr. Long from Missouri, you are recognized.
    Mr. Long. Thank you, Mr. Chairman, and thank you all for 
being here today and for your testimony. My friend, Ms. 
Schakowsky, as she always does, made some very good points 
about the dangers of lead and lead-based paint, and it is a 
very serious concern, as we all know. I come from a 30-year 
background as a real estate broker and I hail from the town of 
Springfield, Missouri, that is the third largest city in the 
State, founded in 1838, so we are not as old as towns out on 
the East Coast but we do have a lot of older homes, and a lot 
of those homes are rental homes. They are starter homes for 
people that buy the older homes and things, and it is a very, 
very serious concern, and these rules that they come up with, 
the repair and painting rule I think what they referred to it 
as, we stand a chance of people--they don't have to paint their 
house and they can let them rot down, they can let the 25 years 
or whatever since 1978 or however many years it has been since 
1978, they can just let that paint come off and then you get 
back to the thick lead-based paint that we all know chips. That 
is what children will eat and peel off the windowsill. So that 
is why we are so very concerned about it. I would like all of 
us to work together on both sides of the aisle and you all to 
come up with some kind of a rational program that will work and 
prevent that from happening because the danger of this paint 
coming off. The non-lead-based paint that people have used over 
the years that covered up, kind of acted as a pretty good 
protective coating, but now these houses are in need of 
painting. I know in Springfield they can't even find anybody. 
In Illinois, Ms. Schakowsky said that there are lots of people, 
but trying to get a house repainted in a town that has been 
there since 1838 is a serious problem.
    So Mr. Shaw, let me direct my first question to you. It is 
my understanding, and correct me if I am wrong, that the EPA is 
not even complying with their own rule by not providing a 
commercially available, accurate test kit. Do you know of any 
steps that they have taken--I am talking about the EPA--to 
satisfy the need for these test kits in the near term?
    Mr. Shaw. Well, first of all, the EPA wrote the lead test 
standards into their rule, number one. So NHB has asked them 
repeatedly to get a response from the EPA on what they are 
going to do with this lead test kit problem, and we have never 
received a response. We need to have a lead test kit that 
works. I mean, for us in Houston, 90 percent of our work are 
homes that are pre-1978. This rule really has a direct effect 
on us. And what we have been told by our attorneys time and 
time again is, we cannot take the risk of a false positive or a 
false negative. So if we think the house does not test for lead 
and it does and we don't do the lead safe work practices, we 
are liable.
    Mr. Long. Well, what does EPA tell you when you tell them, 
``Hey, you know, you have got this written into the law and we 
need these test kits?''
    Mr. Shaw. Well, you are not going to believe this, but what 
they tell us----
    Mr. Long. Yes, I would.
    Mr. Shaw. They tell us that there is another way of doing 
this--that you can send the paint chips to their approved 
laboratories. Well, there are not enough of them. And then if I 
came into your house and tore your kitchen and your bathroom up 
and then did this testing and said, ``You know what, you are 
going to have to wait 6 to 8 weeks for us to get the results 
back,'' and people just--my customers are not going to wait. It 
is unreasonable.
    Mr. Long. It is not just remodeling problem because you are 
in the remodeling business. It is, like I say, landlords that 
own these older homes that paint them every 3 or 4 years--but 
now with this new rule, they can't go in there and paint over 
what they have been painting over since 1978 for these pre-1978 
homes, so it is a very serious concern and I hope that we can 
get some help from everybody on this issue.
    Mr. Wilhelms, thank you for giving me a tour of Midwest 
Block on May 1st of this year in Springfield, Missouri--and 
very impressive operation there--I think that we both agreed 
things are kind of upturning in the economy and things are 
getting a little better around there, so again, I appreciate 
that. I know that you mentioned when I was down there about a 
check-off program that you all are interested in, and I know in 
Washington we are wanting to try to do less instead of more. So 
what would be the government's involvement in a check-off 
program? I understand it is like the Got Beef or the cattle 
check-off program, things like that. Can you in 1 second 
explain yourself?
    Mr. Wilhelms. Government involvement is minimal. Just give 
our industry the chance to see if it is a right fit for us--but 
with commodity product, we just need that authorization to 
allow our industry to take a vote.
    Mr. Long. OK. And I have to ask Mr. Bovio one question even 
though I am out of time. You have already admitted here before 
this committee that you gave yourself a promotion. Did you also 
give yourself a raise at the same time or was it just a title?
    Mr. Bovio. I did not.
    Mr. Long. OK. I yield back.
    Mr. Lance. You have a right to remain silent, Mr. Bovio. 
Thank you, Mr. Long, especially for that last question for the 
gentleman from New Jersey. The chair recognizes Mr. Welch.
    Mr. Welch. Thank you very much. I am going to ask a few 
questions and get to Ms. Biddle in a few minutes, but I want to 
ask Mr. Shaw a question first. How does the National Green 
Building Standard compare to some of the other rating systems 
with regards to energy efficiency?
    Mr. Shaw. One thing that is unique about the national Green 
Building Standard is that unlike the other main program, the 
LEED program, there is a minimum number of points that you have 
to score in every category including energy efficiency. Every 
category, you have to meet a minimum score. And if you look at 
the different levels of the National Green Building Standard, 
just to get a bronze is 15 percent above the 2009 energy code. 
So if you go into the emerald, that is 50 percent, and that is 
every single category, where if you compare it to the LEED 
program, and which I did a LEED project about a year and a half 
ago, a LEED gold, it was--the two architects that I did this 
particular work for, it was a game of picking and choosing out 
of different pots to try to get the points, so it became all 
about the points and really not about the energy efficiency 
across the board of a home.
    Mr. Welch. Thank you. And then for Mr. Bovio. I appreciated 
your kind words about the HOMES Act, and we are pleased that we 
have the support of Efficiency First for that legislation. What 
would that legislation mean for the home performance 
contracting industry?
    Mr. Bovio. It would mean a universal standard across the 
country, which we have never had, a program to put a firm 
footprint in the home performance place across the Nation, not 
a small program in this utility and, you know, that State that 
we have to deal with and it is hard to scale up, nationwide 
when you are dealing with 50 different programs across the 
country. If we had one program to shoot for, it could really 
build the industry up rapidly.
    Mr. Welch. Thank you.
    Mr. Bovio. Thank you.
    Mr. Welch. Thank you. And Ms. Biddle, tell us a little bit 
about the contracting jobs. I mentioned in my opening remarks, 
it was just amazing to me to be there seeing all these folks 
getting training to be able to go out and work, and it was nice 
to see the kind of bounce in their step because times were 
pretty rough in Rutland then and these folks had been laid off, 
and they really had prospects. So I think it would be worth it 
for all of us to hear more about the contracting jobs that you 
have been able to create.
    Ms. Biddle. Well, as I said, we really started at the 
beginning of our grant period, which was 2010, with about 12 or 
13 independent contractors, one-man companies, and as the 
demand increased, they were overwhelmed so we offered some 
assistance and some encouragement for them to hire new people, 
and we provided the training because it is intensive, 
technical, advanced training that is required to be a BPI-
certified contractor, and I think that is probably what you 
were part of. And as I said, 62 people now have new jobs that 
were created in the process of this 3-year period, some of them 
with even advanced specialties as well. It is a pretty amazing 
thing, and as I also said, we created a labor pool to augment 
those companies because they didn't want to necessarily grow 
any faster or further than demand was building. But yes, you 
are right, it has been important.
    Mr. Welch. What has been the practical impediment for 
homeowners to make the plunge?
    Ms. Biddle. Well, I think there are three things that we 
have addressed. One is the upfront cost of an audit. 
Traditionally, it had been $350, $450. One of the first things 
we did was to defer the cost so the cost remained the same but 
we took it out of the end check they got as an incentive, so 
the entry level was $100 rather than $450, and then there was 
concern that they wouldn't--they get a cheap audit or a free 
audit and not convert to a retrofit, but with assistance from 
just sort of understanding the process, our conversion rate is 
44 percent, and that is pretty high nationally. But it is about 
talking to them and explaining it.
    Mr. Welch. Direct one-on-one interaction?
    Ms. Biddle. Absolutely. And then we offer construction 
management where that is important. Some people are working and 
don't have time to be at home for the work to be done so we 
will actually provide that service, and then we have a very 
affordable loan product that is also in the minds of a lot of 
people. Financing is an obstacle. We find it is less of an 
obstacle once the process is understood by the individuals.
    Mr. Welch. Great. Thank you very much. I yield back.
    Mr. Terry. Thank you, and now to the gentleman from 
Kentucky, Mr. Guthrie, you are recognized for 5 minutes.
    Mr. Guthrie. Thank you, gentleman from Nebraska. I 
appreciate that.
    Mr. Chairman, H.R. 1563 that Mr. Long talked about just as 
he was concluding, he left you about, I think, 3 seconds, Mr. 
Wilhelms, to discuss it. I want to use my time discussing it, 
if that is OK with you. You know, it is questionable, which is 
interesting. You said it this way, what does the government 
have to do, and the one thing is, and for good reason actually, 
the government actually prevents some people from coming 
together to promote because they want to ensure competition in 
the marketplace and the system. My understanding is, as I have 
spent a lot of time with this issue, is that most concrete 
masonry businesses, or almost all are small, a lot of mom-and-
pop shops that are local. Most masonry is distributed within 50 
miles of where it is produced. So you don't have the big 
players. You have a lot of small players in order to come 
together to promote their product. You just couldn't run a 
national campaign from Springfield nor could you do national 
research from Springfield. And so the idea is to allow you all 
to choose if you so choose, and not being anti-competitive, but 
let you come together for the idea of not promoting your 
business but promoting your product, which is a commodity. So 
it is not like you are promoting one or the other. The other 
thing I think is even more important, quite honestly, is that 
you get to do research and development on products that may be 
more appropriate for New England. We have a wonderful State of 
Vermont, talking about Mr. Welch, that I enjoyed when I was in 
New England in college going up there, and--but are hurricane 
resistant or hopefully someday tornado resistant as is very 
much on our minds today.
    So why is the concrete masonry business so small and so 
fractured and just disparate like it is?
    Mr. Wilhelms. I think you addressed a lot of it. It was for 
small family businesses operating in local areas.
    Mr. Guthrie. The ones the market kind of forced that 
structure.
    Mr. Wilhelms. Yes, the market has forced it, and you bring 
up some good points, and our ability to adapt and really get 
our word out. You know, my pet peeves are on the research and 
education side of it, you know, with the green building and 
energy code compliance we have heard so much about today, there 
is really a huge opportunity out there for our materials 
whether it be utilizing fly ash in our materials, a higher 
percentage of fly ash, whether it be using crumb rubber waste 
in our materials. There is opportunity to improve our energy 
efficiency but lacking that opportunity to get in and really do 
the testing and how does it affect performance in terms of 
energy or fire protection, you know, those are all things that 
require money and a consistent level of funding that we need 
over time. So a check-off program for our industry would 
provide the consistent level of funding we need to advance, you 
know, our industry really and education, research and 
promotion.
    Mr. Guthrie. My understanding is, it is hard for one player 
to come in. A lot of industries--I have a family business and 
we sell automotives for U.S.-based companies. There are a lot 
of other companies, the Big Three as we call them, have massive 
research and development. But it is difficult for you to do 
because you are so small, and I understand the reason you are 
small is because it is so expensive. You couldn't just have one 
plant in Springfield, Missouri, and ship to New York or to 
Vermont and try to produce because it is so expensive to do so, 
so they perform in the local--that is kind of why you are 
disparate and small, right?
    Mr. Wilhelms. Yes. Shipping product that far would not be 
energy efficient. That is true, and the check-off program for 
us, you know, we see good support throughout our industry, over 
70 percent through a third-party survey have indicated that 
yes, we need this and it would be right for us. So the fault we 
have is, we are not a product that grows so we don't fall under 
the Department of Agriculture. We are doing this right, belong 
under Energy and Commerce, and unfortunately, being the first 
program that would get set up, we need to go through the proper 
steps.
    Mr. Guthrie. Well, thanks for doing that. So the proper 
steps--this bill does not create a check-off program, does it?
    Mr. Wilhelms. No.
    Mr. Guthrie. What does the bill actually do?
    Mr. Wilhelms. It gives us the authority to take a vote 
within our industry, and if it is approved by the majority of 
locations around the United States, then it would be enacted 
and overseen--there would be government oversight but no costs 
would go into monitoring that program.
    Mr. Guthrie. And if you looked at other check-off programs, 
is this different or is it similar?
    Mr. Wilhelms. Very similar, yes. There's over 35, I 
believe, check-off programs through the Department of 
Agriculture. The bill that is entered into the House is 
identical in the Senate, and they are based on that logic that 
has been argued before the Supreme Court and follows that same 
legislative process.
    Mr. Guthrie. You can't do it if you are only promotional in 
nature, you have to also move your industry forward.
    Mr. Wilhelms. And the good part about this, just real 
quick, is that 50 percent of the funds go back to the local 
market so the person in Springfield or Bowling Green or 
whatever would have that opportunity to get back what they put 
in.
    Mr. Guthrie. Yes, Springfieldian, Mr. Hammonds, had a hotel 
in Bowling Green. I know you lost him this week, and that is a 
big loss to your community, and our prayers are with you all 
and his family.
    Mr. Wilhelms. Yes, a very philanthropic individual.
    Mr. Terry. Thank you. Sorry, but there is no one else to 
ask questions, so that means our hearing is concluded. I remind 
you that there may be written questions submitted to you, and a 
timely response would be greatly appreciated. So you are 
dismissed and we are adjourned.
    [Whereupon, at 12:48 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

               Prepared statement of Hon. Henry A. Waxman

    Today, the Subcommittee examines homebuilding, remodeling, 
and relevant supplier industries.
    In recent years, these industries have faced massive 
turmoil and hard times. The financial crisis--triggered by a 
massive housing bubble--caused millions of people to lose their 
jobs or take mandatory pay cuts. Some Americans held mortgages 
they could no longer afford. Others had to put on hold their 
dream of owning a home. Demand collapsed, leaving contractors, 
builders, and suppliers in the worst shape they had been in 
decades.
    It's important to remember how Congress responded. In 2010, 
this Committee crafted and passed the Home Star Energy Retrofit 
Act of 2010, introduced by Representative Peter Welch. The bill 
had the support of a remarkably broad coalition that ranged 
from local contractors to environmentalists to organizations 
like the National Association of Manufacturers and the Chamber 
of Commerce.
    Many groups supported Home Star because it would have 
created 168,000 jobs that wouldn't be outsourced overseas. They 
would have been construction jobs in our neighborhoods and our 
communities. And they would have been manufacturing jobs for 
workers at factories in America. The bill also would have 
allowed 3 million families to retrofit their homes, increasing 
the homes' energy efficiency significantly.
    But the Republicans on this Committee and in the House 
overwhelmingly opposed the bill. The Senate Republicans blocked 
its consideration there. They had a simple message. No amount 
of pain in the housing sector would cause them to lend a hand 
if it might be a victory for the President.
    Now, the homebuilding industry is improving. Building 
permits for new homes is up 35% in the last year. In my home 
state of California, the residential construction industry now 
contributes 120,000 jobs and over $20 billion per year to the 
state's economy.
    Recent increases in home prices--around 20% year-on-year in 
some metropolitan areas--are welcome for many homeowners. But 
millions of Americans are still facing foreclosure or are 
struggling to make their monthly payments, particularly in 
California, where almost one-third of borrowers owe more than 
their home is worth. More can and should be done to help. For 
instance, the Federal Housing Finance Agency (FHFA) should 
allow Fannie Mae and Freddie Mac to establish principal 
reduction programs to help underwater homeowners reduce their 
debt burdens.
    While the most important factor is the broad economic 
wellbeing of consumers, there are policies that can help spur 
growth in residential construction.
    With 2012 now behind us and a new residential energy 
efficiency bill by Mr. Welch and Mr. McKinley pending, I hope 
that the Committee can do the hard work to pass legislation. We 
need to craft legislation supported by a broad coalition of 
stakeholders. We know it's possible because we did it in 2010. 
Such legislation would support jobs, support consumers, and 
support the environment.
    There are clear benefits of improved residential energy 
efficiency and I urge my colleagues to support these 
legislative efforts, as well as similar efforts by independent 
standards-setting organizations, the Department of Energy, and 
the states.
    Thank you.
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