[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]




 
 FIELD HEARING IN NEW YORK: THE EMPIRE (STATE) STRIKES BACK: CREATING 
                                 21ST 
          CENTURY MANUFACTURING OPPORTUNITIES IN NEW YORK CITY

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

                                HEARING

                               before the

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD
                           FEBRUARY 22, 2016


                               __________


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            Small Business Committee Document Number 114-044
              Available via the GPO Website: www.fdsys.gov
              
              
              
              
              
              
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                   HOUSE COMMITTEE ON SMALL BUSINESS

                      STEVE CHABOT, Ohio, Chairman
                            STEVE KING, Iowa
                      BLAINE LUETKEMEYER, Missouri
                        RICHARD HANNA, New York
                         TIM HUELSKAMP, Kansas
                         CHRIS GIBSON, New York
                          DAVE BRAT, Virginia
             AUMUA AMATA COLEMAN RADEWAGEN, American Samoa
                        STEVE KNIGHT, California
                        CARLOS CURBELO, Florida
                          MIKE BOST, Illinois
                         CRESENT HARDY, Nevada
               NYDIA VELAZQUEZ, New York, Ranking Member
                         YVETTE CLARK, New York
                          JUDY CHU, California
                        JANICE HAHN, California
                     DONALD PAYNE, JR., New Jersey
                          GRACE MENG, New York
                       BRENDA LAWRENCE, Michigan
                       ALMA ADAMS, North Carolina
                      SETH MOULTON, Massachusetts
                           MARK TAKAI, Hawaii

                   Kevin Fitzpatrick, Staff Director
             Emily Murphy, Deputy Staff Director for Policy
            Jan Oliver, Deputy Staff Director for Operation
                      Barry Pineles, Chief Counsel
                  Michael Day, Minority Staff Director
                  
                  
                  
                            C O N T E N T S

                           OPENING STATEMENTS

                                                                   Page
Hon. Steve Chabot................................................     1
Hon. Nydia Velazquez.............................................     2

                               WITNESSES

Mr. Adam Friedman, Director, Pratt Center for Community 
  Development, Brooklyn, NY......................................     7
Ms. Bob Bland, CEO & Founder, MANUFACTURE NY, Brooklyn, NY.......    10
Mr. Michael DiMarino, Owner, Linda Tool, Brooklyn, NY............    11
Ms. Nekisia Davis, Founder and Owner, Early Bird Foods & Co., 
  LLC, Brooklyn, NY..............................................    13
Mr. Edward Jacobs, FXE Industries, Brooklyn Navy Yard, Brooklyn, 
  NY.............................................................    15

                                APPENDIX

Prepared Statements:
    Mr. Adam Friedman, Director, Pratt Center for Community 
      Development, Brooklyn, NY..................................    30
    Ms. Bob Bland, CEO & Founder, MANUFACTURE NY, Brooklyn, NY...    41
    Mr. Michael DiMarino, Owner, Linda Tool, Brooklyn, NY........    45
    Ms. Nekisia Davis, Founder and Owner, Early Bird Foods & Co., 
      LLC, Brooklyn, NY..........................................    47
    Mr. Edward Jacobs, FXE Industries, Brooklyn Navy Yard, 
      Brooklyn, NY...............................................    51
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Material for the Record:
    `Made in NY' Expansion to Fashion Industry Testimony.........    53
    


                   THE EMPIRE (STATE) STRIKES BACK: 
  CREATING 21ST CENTURY MANUFACTURING OPPORTUNITIES IN NEW YORK CITY.

                              ----------                              


                       MONDAY, FEBRUARY 22, 2016

                  House of Representatives,
               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 10:00 a.m., at City 
Hall, New York City Council Chambers, New York, New York, Hon. 
Steve Chabot [chairman of the Committee] presiding.
    Present: Representatives Chabot, Velazquez, and Clarke.
    Also present: Representative Meeks
    Chairman CHABOT. The Committee will come to order. Good 
morning. I am Congressman Steve Chabot. I am the chairman of 
the House Small Business Committee. We want to thank you all 
for being with us here today as we discuss manufacturing here 
in New York City.
    Before we get started, I sincerely want to thank our 
ranking member, Nydia Velazquez, for inviting me to her 
district to do this field hearing. The two of us have a very 
unusual relationship that is not seen very often in Washington, 
D.C. We actually get along and conduct our Committee business 
in a bipartisan fashion. Time and time again I have been 
impressed with the tenacity, she has for defending and 
supporting small businesses, and the commitment she has to 
fighting for the people of her congressional district. As she 
has said many times, helping our small businesses grow is not a 
partisan issue, and we strive to work together in that regard.
    I also want to thank our colleague, Greg Meeks, for being 
here. We have been on the Foreign Affairs Committee a number of 
years together, and have worked very well. And he has that same 
attitude also that rather than worrying about the politics of 
things, he wants to get the job done. And he works extremely 
hard. We are not the same party, so I am telling you as 
somebody who has seen these people operate in action, and they 
do really a great job for their districts. So I want to commend 
them for that.
    We will be joined shortly by Congresswoman Yvette Clarke, 
and she has that same sort of relationship also in working very 
hard for her constituents. So I want to thank all of them for 
their work and the work that we don the Small Business 
Committee together.
    My visit is actually a bit overdue. Back in 2007, Nydia was 
kind of enough to come and conduct a hearing in my district, 
which is in Cincinnati, the City of Cincinnati, Ohio. That is 
right. She was the chairman of this Committee at that time, and 
I was the ranking member. If your party is in the majority, 
which Republicans are right now in the House of 
Representatives, the chairman of the committees or chairwoman 
of the committees are Republicans, and the ranking member is 
the lead Democrat on the committee. And if the Democrats are in 
the majority, which they have been, I was the ranking member, 
and she was the chair. I like it better the way it is now 
obviously.
    [Laughter.]
    But it all----
    Ms. VELAZQUEZ. Do not get too confident.
    Chairman CHABOT. Do not get confident, that is very true. 
Well, I am very glad to be able to come to Nydia's district to 
talk about manufacturing here in New York City. While people 
often envision manufacturers as giant corporations with huge 
production facilities, the truth is that the vast majority of 
manufacturing is done by small businesses, by small 
manufacturers. In fact, 99 percent of all manufacturers are 
considered by definition small. Generally, below 500 employees 
is considered in this country as small business, which can be a 
fairly large entity.
    While they might be small businesses, their effect on our 
economy is enormous. Manufacturers employ over 12 million 
people all across the country and directly contribute over $2 
trillion to our economy each year. We cannot underestimate its 
indirect influence either. Every dollar spent on manufacturing 
in America adds $1.37 to the economy. A single manufacturing 
job can lead to the creation of three to five more jobs in 
other industries. Without a doubt, manufacturing plays a 
critical role in America's economic wellbeing.
    Manufacturers are increasingly participating in 
international trade as well. Over the past 25 years, U.S. 
manufactured goods exports more than quadrupled. In 1990, for 
example, manufacturers in the United States exported $330 
billion in goods. By 2000, that number had more than doubled to 
over $700 billion in goods, and in 2014 it reached an all-time 
for the 5th consecutive year of $1.4 trillion in goods, despite 
slowing global growth.
    But we can do better. A topic our Committee has examined 
extensively is the cost of Federal regulation and how that cost 
is borne by various segments of the economy. Research has found 
that manufacturers pay over $19,000 per employee per year on 
average to comply with Federal regulations, or nearly double 
the $10,000 per employee per year borne by firms as a whole. 
Small businesses pay a much higher percentage of their revenues 
in the cost of regulations than do larger companies. In 
addition, small manufacturers, those with fewer than 50 
employees, spend two and a half times the amount of large 
manufacturers. We must work together to eliminate unnecessary 
and burdensome regulations to help unleash the full capacity of 
the manufacturing engine.
    Another challenge going forward is maintaining a skilled 
workforce. The products we build, the way we build them, and 
the skills required to do so are different than in generations 
past. According to the National Association of Manufacturers, 
over the next decade nearly three and a half million 
manufacturing jobs will likely be needed, and two million are 
expected to go unfilled due to a skills gap. We need to enact 
education policies that prioritize these new trades and make 
skills training more widespread, more accessible, and more 
affordable.
    Given the importance of manufacturing to our economy, I am 
delighted to be here with all of you today with my colleagues 
here in Congress, and I am looking forward to hearing all the 
witnesses' testimony here this morning. And I would now like to 
yield to Ms. Velazquez for her opening remarks.
    Ms. VELAZQUEZ. Good morning. Thank you, Mr. Chairman, and 
really I welcome you to New York City. I want to take this 
opportunity to thank you for holding this hearing here in New 
York, and also recognize Joe Hartz, who has been very 
accommodating. I really appreciate it. My colleague, Gregory 
Meeks, thank you for being here, too. Mr. Chairman you have 
always been a very strong voice for manufacturers, not just in 
the Midwest or your state of Ohio, but around the country. I am 
glad we are getting an opportunity to showcase before you some 
of the leaders in the New York business community.
    What the chairman related to you before is completely true. 
My mantra is that when it comes to small business, there is no 
Republican or Democratic approach. What we need is to make sure 
that we develop the kind of public policy that will enable 
small businesses to do what you do best, and that is creating 
good jobs.
    Across the nation we have seen a manufacturing resurgence. 
Following years of decline, in the last 7 years, U.S. 
manufacturers added 856,000 workers to their payrolls. Just 
last month, 29,000 manufacturing jobs were created, the largest 
month-to-month gain since November of 2014. These are positive 
developments. With almost one-eighth of our economy rooted in 
manufacturing, strengthening this sector is vital to our 
country's overall economic health, and to job growth for 
working families and the middle class.
    While New York City is often thought of as the financial 
and media capital, there is also a rich manufacturing history, 
and we are seeing growth in this area. In New York's 7th 
District, and neighborhoods next to it, we have seen some of 
the greatest manufacturing innovation. The Brooklyn Navy Yard 
has become a vibrant manufacturing and commercial hub. Today 
more than 7,000 people employed in 330 companies, work out of 
the Navy Yard. Creative reuse of this space has become a model 
for similar projects around the country.
    A support city with deep ties to shipping, our 
manufacturers are well positioned to export products abroad. 
New York manufacturers sell almost $70 billion worth of goods 
overseas, and 94 percent of these exporting firms are small 
businesses. With exports driving much of manufacturing growth, 
New York firms stand to benefit given their proximity to such 
an active port system.
    Although this renaissance is promising for our city and the 
nation as a whole, there remain challenges that are preventing 
this sector from reaching its full potential. Here in New York, 
some of these hurdles are unique to an urban area. Other issues 
are sector-wide regardless of geography.
    Connecting workers with employers and addressing small 
manufacturers' employment needs is a longstanding challenging. 
Many of Brooklyn's neighborhoods are walk to work communities. 
To the extent small manufacturers hire locally, we can 
strengthen local economies while generating opportunity for 
low-income workers.
    On a broader scale, we must ensure we are adequately 
investing in human resources. Greater federal investment in 
science, technology, engineering, math education will enhance 
domestic manufacturing. Local and private sector apprenticeship 
programs can prepare young people for careers in rapid growth 
areas. I would like to hear your thoughts and insights on these 
aspects, on these issues.
    Transportation and rental costs remain an ongoing challenge 
for all manufacturers, but especially New York based. In the 
outer boroughs, industrial rents have climbed 10 percent in a 
single year. Similarly, transporting goods produced in a 
congested, urban market is always more expensive than in rural 
areas, one reason I have pushed legislation aimed at 
modernizing our freight system.
    For manufacturers everywhere, access to capital is a 
persistent problem. This is especially true for smaller startup 
firms that are on the cusp of fast growth. For this reason, I 
introduced the Scale-Up Manufacturing Investment Company Act. 
This legislation will expand investment opportunities for small 
and emerging manufacturers, and I hope to hear our witnesses' 
perspective on it today.
    All of these and other challenges point to a need for a 
concerted effort at the federal, state, and city level. In 
recent years, House Democrats have united behind the Make it in 
America agenda, a series of proposals to strengthen and expand 
our manufacturing base. Locally, New York City has a 10-point 
plan aimed at bolstering our industrial infrastructure and 
better train workers.
    I would like to see a more holistic, cohesive approach in 
terms of the federal, state, and city governments. Each one of 
them has programs, and have come up with public policy, but how 
can we work together to strengthen what each level of 
government is doing in a way that makes sense to the businesses 
that are on the ground?
    These efforts are important, but they can only succeed if 
they are guided by insight from the actual businesses here on 
the ground that are fueling our city's manufacturing 
renaissance. That is what makes today's hearing so valuable. As 
such, I would like to thank all of the witnesses for 
participating today. And, again, I thank the chairman for 
holding this field hearing.
    I yield back.
    Chairman CHABOT. Thank you very much for your opening 
statement. We appreciate that very much.
    I would now like to recognize the gentleman, Mr. Meeks, for 
the purpose of making an opening statement if he would like to 
do so.
    Mr. MEEKS. Thank you, Mr. Chairman, and I want to thank 
you, Chairman Chabot and Ranking Member Velazquez, for your 
thoughtfulness and for your leadership in bringing this hearing 
to New York City. It is indeed tremendously important that we 
look and listen to our small business folks because that is the 
essence of job creation in America, and it is what makes 
communities strong. If you go by a community and you do not see 
thriving small businesses moving forward, you see a community 
that is suffering, that is looking and yearning for jobs.
    So I want to thank the witnesses and recognize the 
panelists, and the distinguished entrepreneurs, and the leaders 
of our community who we will hear from today. And as a member 
of the Financial Services Committee, which I serve on with 
Ranking Member Velazquez, and, as the chairman indicated, on 
the Foreign Affairs Committee, you know, small business is 
ripe, and the appropriate Committee to determine how we enhance 
manufacturing.
    When you look at New York City and our communities, many of 
our small business are still recovering from the economic 
crises of 2008 and 2009, combined with the destruction of 
Hurricane Irene and Hurricane Sandy. In the 5th Congressional 
District, businesses like Madelaine Chocolates and Atlantic 
Steel faced a 1-2-3 combination that could have been a 
deathblow to manufacturing in Queens and in our great city.
    But our incredible businesswomen and men, community 
development financial institutions like the Disability 
Opportunity Fund, and economic zones, including the industrial 
business zones in Jamaica and around our Nation's most traveled 
international airport, John F. Kennedy Airport, have provided 
our region's most skilled entrepreneurs an opportunity to 
compete on the world stage. To me, that is vital.
    If we have a level playing field, our small businesses can 
compete with anybody, any place on this planet. We have the 
best minds and the best workers, and all we need is to make 
sure that the playing field is level. Let us be reminded that 
New York has the 3rd large economy in the United States 
trailing only Texas and California. New York's economy is the 
15th largest in the world ahead of countries like the 
Netherlands and home of Europe's largest cargo port, and just 
behind one of our largest trading partners, South Korea.
    So to get ahead, we need to address the cost of drag on our 
local businesses preventing them from expanding in scale and 
diversifying the scope of their products and services. Many of 
the most significant impediments that manufacturers in Queens 
and across the city face are the growing costs of overseas 
transportation, and a shortage of high-skilled workers, and the 
shift of budget priorities in Washington that reduced 
investment in research and development and other incentives 
that are critical to growing a manufacturing base.
    Now more than ever, manufacturers face stiffening 
competition from global competitors. Without policies to 
buttress the tremendous growth that manufacturing is 
experiencing in New York City and other places, our city may 
find itself slipping in its ability to provide well-paying 
competitive jobs. I would remiss if I failed to mention the 
substantial and important role, when I look at small 
businesses, I think it is tremendously important to make sure 
that women and minority-owned businesses are there because they 
can contribute positively to the competitiveness in this global 
economy.
    Throw something out real quick, for instance, the number of 
businesses owned by African-American women grew 322 percent 
since 1997, making African-American females the fastest-growing 
group of entrepreneurs in the United States of America. We have 
to make sure that we continue to focus on that.
    As the ranking member has said, I am a firm believer of 
making it in America and selling it every place else. When we 
look at our policies, and whether it is our trade policy, et 
cetera, we have got to make sure that we are opening up markets 
abroad because some of the markets abroad have been closed to 
United States' products. Our trade agreements, et cetera, 
should be opening up these markets so that we can get our small 
businesses into these markets so that you can grow your 
businesses here at home and make sure that there are 
opportunities there to create jobs for people right here.
    We need to get the message out clearly that outsourcing is 
not what you do when you are shipping your goods and your 
services, your manufactured goods overseas. That is not 
outsourcing. That is creating jobs here in America. That is 
what I think that you do and you are looking forwarding to 
doing. I want to know what we can do to make sure that you are 
successful.
    I thank you again for being here, and I thank the chairman 
and the ranking member for their wisdom to hold this hearing in 
the city that is so great, they had to name it twice--New York, 
New York. And I yield back.
    Chairman CHABOT. Thank you. The gentleman yields back. I 
appreciate your opening statement. And very briefly, I will 
explain the timing system here. We operate under what is called 
the 5-minute rule. It is pretty straightforward. It means that 
each member of the panel, and there are five of them, get to 
testify for 5 minutes. We actually have a light up on the clock 
to let them know what is going on, and we would ask you to stay 
within that as much as possible. We will give you a little 
leeway, but not much. We hope you stay within that rule. We 
limit ourselves to 5 minutes in asking questions when you are 
all finished.
    I would now like to yield to the ranking member, Ms. 
Velazquez, for the purpose of introducing our very 
distinguished panel of experts here this morning.
    Ms. VELAZQUEZ. Thank you, Mr. Chairman. I would like to 
first open the witness panel by introducing Mr. Adam Friedman. 
He is the third executive director of the Pratt Center for 
Community Development, and the founding director of the New 
York Industrial Retention Network where he led efforts to 
strengthen the city's manufacturing sector and promote 
sustainable development. He is one of New York City's leading 
advocates in support of manufacturing and employment 
opportunities it brings.
    Then I would like to also introduce Ms. Bob Bland, a 
Brooklyn-based fashion designer, entrepreneur, and community 
organizer. She is the CEO and founder of MANUFACTURE New York, 
a fashion incubator and factory dedicated to providing 
independent designers with the resources they need to 
streamline production and transform local manufacturing.
    She will be followed by Mr. Michael DiMarino, president of 
Linda Tool, a second generation family business that 
manufacturers precision machine components and assemblies. 
Linda Tool's state-of-the-art manufacturing facility is located 
in the historic Red Hook neighborhood, part of my district in 
Brooklyn, New York. Mr. DiMarino has participated in the launch 
of Goldman Sachs 10,000 Small Business Program, as well as the 
UBS Mentorship Program. Socially committed to the restoration 
of the community, Linda Tool is also participating in a number 
of green initiatives designed to promote a healthy, 
sustainable, and safe working environment for its employees.
    He will be followed by Ms. Nekisia Davis, founder and owner 
of Early Bird Foods, which makes small batch granola and other 
foods by hand. Prior to starting this business, Ms. Davis 
managed a famous local pizzeria and sold her granola at local 
markets, including the Brooklyn Flea Market. Now, they are 
located in Brooklyn's own Red Hook neighborhood.
    She will be followed by Mr. Edward Jacobs, co-founder and 
CTO of FXE Industries. His startup company is based in the 
historic Brooklyn Navy Yard and focuses on advanced motorcycle 
design, engineering, and manufacturing. With over 10 years of 
experience, Mr. Jacobs uses an innovative approach to 
manufacturing that offers greater accessibly to customers.
    And with that, Mr. Friedman, welcome.

    STATEMENTS OF ADAM FRIEDMAN, DIRECTOR, PRATT CENTER FOR 
 COMMUNITY DEVELOPMENT, BROOKLYN, NEW YORK; BOB BLAND, CEO AND 
FOUNDER, MANUFACTURE NY, BROOKLYN, NEW YORK; MICHAEL DIMARINO, 
 OWNER, LINDA TOOL, BROOKLYN, NEW YORK; NEKISIA DAVIS, FOUNDER 
AND OWNER, EARLY BIRD FOODS & CO., LLC, BROOKLYN, NEW YORK; AND 
 EDWARDS JACOBS, FXE INDUSTRIES, BROOKLYN NAVY YARD, BROOKLYN, 
                            NEW YORK

                   STATEMENT OF ADAM FRIEDMAN

    Chairman CHABOT. You are recognized for 5 minutes. Thank 
you very much.
    Mr. FRIEDMAN. I appreciate your efforts to reach out to the 
manufacturing community in New York. I thank you on behalf of 
every member, every participant on this panel.
    I am the director of the Pratt Center for Community 
Development, which provides research, and urban planning, and 
economic development services in low-income communities and to 
small businesses through the city. I am also the chair of the 
Urban Manufacturing Alliance, which is a network of about 350 
economic development practitioners in 100 cities across the 
country, all committed to sharing research, to collaborating 
and program development, and to try and articulate the urban 
perspective in the debate around economic development policy, 
particularly industrial development.
    I hope you all have the Power Point presentation, so let's 
s just go to the first pie chart, which is on page 2, and this 
kind of says why we do it. It's because of the jobs that 
manufacturing brings. I'm sorry, it's at page 1 for you all, 
and it's that pie chart. What it shows is manufacturing is 
still the best way to get a decent, well-paying job, 
particularly for people who have limited levels of educational 
attainment.
    Chairman CHABOT. Excuse me, Mr. Friedman. You may want to 
pull the microphone a little closer to your mouth just to make 
that folks all over the room can hear you, too. Thank you.
    Mr. FRIEDMAN. Okay, thank you. So the top of the second 
page you have this chart, and this really picks up on something 
that the chair said earlier. Urban manufacturing is small 
business, but large job numbers. In New York City, for example, 
the average manufacturer employs only 15 people.
    Let's go to the bottom of that page, the urban 
manufacturing challenges. Sometimes I'll be meeting with a 
manufacturer, and I feel like saying to him something like, 
run, save yourself, you know? This is a crazy place to do 
business. Your neighborhood can be rezoned at any point. You 
have crumbling infrastructure and tremendous conflict for land. 
Third, even if your neighborhood is not rezoned, it could be 
converted to a vintage clothing store. There's tremendous 
pressure on manufacturers in New York City.
    At the beginning Congresswoman Velazquez said there are 
normal anxieties that manufacturers face, and there are these 
problems that are kind of unique to urban areas, and they 
should have an influence on the program design that we'll talk 
about later.
    If we go to the next slide about the rebirth of urban 
manufacturing, this is how it's done. You know, we have lost 
the large companies like Farberware that made pots and pans and 
Swingline that made staplers because they were large commodity 
products. They didn't have a real reason for being in a city, 
let alone New York City. But what's left here are the high 
value added producers that have a reason for being here because 
of proximity to market, proximity to the design talent, to a 
highly skilled workforce. On today's panel I think we have some 
great examples of how the competitive advantages of a city can 
really work for a manufacturer.
    Let's look at some of the advantages that we have, the next 
one on high-tech manufacturing. I want to say at the outset 
technology is not the only way to create high value in a 
product. But high-tech advanced manufacturing is overwhelmingly 
concentrated in urban areas around the country. This is data 
gathered by Brookings Institute, and 95 percent of all the 
advanced manufacturing in the United States is in urban areas.
    The second reason for the rebirth of urban manufacturing is 
cities are the centers of innovation. This is the graphic with 
the map of the United States. It's number 7 I think. So in 
addition to technology, design is often critical, and cities 
are where the universities are. For example, in New York City, 
New York Schools each year award 4,000 degrees in design and 
architecture. That is a tremendous economic engine. In 
addition, universities are increasingly the launch pad for 
entrepreneurs. At University of Cincinnati, first batch 
graduates of a design department apply to be in this incubator, 
and not only are they launched, but they are hooked up with 
local manufacturers so that the jobs that are created are 
created locally.
    The last slide on the rebirth of urban manufacturing, 8, 
which is changes in technology benefit cities. It's not only 
that we have new micro technology, like 3D printers and CNC 
equipment which is shrinking factories, it's also how that 
technology is organized. We have co-location, co-working spaces 
which Bob Bland can talk about because that's what MANUFACTURE 
New York is.
    In addition, we're seeing a growing amount of space sharing 
and operations like Tech Shop, which is kind of a gym model, 
which for about hundred dollars a month, you go in and you can 
have access to equipment in a factory. The barriers to starting 
up are far less than ever used to be.
    Thank you. Slide 9, the emergence of micro manufacturing, 
this is the result. We have manufacturers that employ one 
people, two people, and that's what growing in the United 
States. The congresswoman mentioned the Brooklyn Navy as a 
great launch pad for companies, and we'll hear more about that 
today. The secret to their success is that they're a nonprofit, 
and because they're mission driven and because they're not 
going to convert their space to a different type of use, 
companies have the security to invest, to train their workers, 
to build a network, to build relationships with the surrounding 
community.
    This is not unique to New York. This a national movement. 
It's true in San Francisco. It's true in Indianapolis. It's 
rising up across the country.
    Let me go to the last slide on Federal policy. There's a 
need to sort of retool the traditional Federal policies and 
programming that's been used to support manufacturing. So start 
with, for example, new market tax credits, it's increasingly 
difficult to use in urban because of the restrictions on 
eligibility for certain census tracts. You get one market rate 
housing project in a census tract, bam, you know. The entire 
census tract is ineligible. Arguably, these are exactly the 
locations where manufacturing should be taking root to prevent 
gentrification.
    Second, industrial development bonds. The caps haven't been 
raised in years, and that money just does not go very far in 
urban areas. Really what's needed is a scan across Federal 
programming to weed out sort of the provisions that are kind of 
obsolete and that work against urban manufacturing.
    Two final points. I have met with easily a thousand 
manufacturers over the past 20, 30-odd years, and I've been on 
a thousand shop floors. I can count on one hand the time a 
manufacturer has said to me cut taxes and I'll create jobs. Not 
the issue. At least not the issue for high value added 
manufacturing. They're concerned about infrastructure. They're 
concerned about education as the chair said at the beginning. 
They're concerned about getting their product to market. It's 
return on investment that's important, not just simply cutting 
costs.
    The last point I wanted to make, because it's kind of 
counterintuitive, has to do with if you want an entrepreneurial 
society, you have to provide healthcare. I'm on an advisory 
board for Etsy, and I was at a meeting a couple of months ago, 
and the subject came up. So here's an entire massive 
organization devoted to launching new businesses. How can you 
launch a new business? How can you put your family at risk by 
walking away from a company that provides healthcare and start 
your own enterprise? So we've got to figure out some way to 
make healthcare more accessible, even beyond what it is today. 
Make it universal if you really want to have an entrepreneurial 
society.
    Thank you.
    Chairman CHABOT. Thank you very much. The one thing I did 
not note, there is a little doorbell like sound that goes off 
at the end of the 5 minutes, so just so you know.
    Ms. Bland, you are recognized for 5 minutes.

                     STATEMENT OF BOB BLAND

    Ms. BLAND. Thank you, Chairman Chabot, Ranking Member Ms. 
Velazquez, and members of this Committee for the opportunity to 
testify. Thanks also to our local representatives for your 
tireless commitment to retaining equitable opportunities for 
working and middle class New Yorkers and their families.
    My name is Bob Bland, and I'm the CEO and founder of 
MANUFACTURE New York. I created MANUFACTURE New York in 2012 to 
rethink the fashion ecosystem and create a new vertically 
integrated 21st century business model that serves the 
industry's domestic urban manufacturing needs of today and the 
future. Our mission is to reawaken and rebuild America's 
fashion industry, foster the next wave of businesses, and 
create a transparent, sustainable global supply chain.
    In the past 3 and a half years, we have grown our community 
to over 10,000 American designers, manufacturers, 
technologists, and proponents of domestic production, helped 
150 small businesses here in New York City to successfully 
launch or reshore their apparel lines, and piloted incubator 
programs for startups in fashion and contracting manufacturing, 
and accelerated programs for wearable tech startups, thanks in 
part to the generous support of the SBA Growth Accelerator 
Fund, which is a great example of a program to help not just 
small business, but incubator and accelerator programs 
themselves because they're usually small businesses, and they 
need help starting up, too.
    Since the recession, virtually all small creative and 
manufacturing businesses in New York City have had the exact 
same challenges. It was stunning for me at the beginning as a 
designer finding out that my contract manufacturers had the 
exact same problems that I did, access to affordable industrial 
space. Long-term leases, major problem. Relocation grants and 
construction loans are very hard to come by when you are 
displaced.
    Access to affordable housing is increasingly becoming 
impossible here in New York City, especially within a 
reasonable commutable distance. For instance, we have 40 
percent of our apparel manufacturing workforce here in New York 
City in the Flushing area of Queens, and getting them down to 
South Brooklyn, how in the world do you do that? We have major 
transportation problems.
    There's very low access to working capital that's 
affordable, and also lines of credit to grow our small 
businesses, and that's still a huge, major problem. Access to 
competitive equipment procurement and training programs that 
are sector specific so that we can adapt to our rapidly-
changing industry, are very necessary. They need to also be 
nationalized in a way that can result in certifications so that 
people can understand across States and across cities.
    Fashion design and manufacturing jobs are more than just 
jobs. They're inclusive pathways to careers and potential 
business ownership themselves regardless of educational 
background or socioeconomic statutes. Typically they pay on 
average apparel manufacturing $59,750 a year, which is a good 
job, and they're likely to include benefits and a clear path 
for growth. Also, skills training is typically included, and 
opportunities to advance in management positions and beyond.
    The New York City fashion ecosystem is unique in that 
historically New York's iconic garment district in 1931 was the 
largest garment district in the world. I'd like to say it's the 
original fashion incubator, and the original incubator program. 
It was because of the co-location and the proximity of all of 
the different parts of the supply chain together. It employed 1 
million people at its height here in New York City. While it is 
contracted now to 15,000 apparel manufacturers total for the 
entire city as of this year, that still accounts for 30 percent 
of manufacturers in New York City. It's still a very huge 
sector when it comes to manufacturing. Every single one of 
those jobs are important.
    We have several opportunities coming up at the intersection 
of fashion sustainability and technology if we seize the moment 
for urban manufacturing here in New York. There's already 900 
fashion companies headquartered here in New York City that 
employ 180,000 people and generate over $11 billion in wages 
and $2 billion taxes per year, so it's a big business. The 
industry at large is a $4 trillion global business, but we're 
also the number two polluter in the world right behind oil, 
which is shocking to most people.
    From the smallest emerging design startups that are 
MANUFACTURE New York to the largest department stores and 
conglomerates, everyone is looking for a solution that includes 
conceptualization, research and development, commercialization, 
and a shared set of resources and best practices to capture 
value and provide accountability at all stages of the supply 
chain. That's an area that New York City could really take 
hold, and then connect with other urban manufacturing centers 
all throughout the United States.
    I'd like to say that the best example I've seen of that so 
far, Representative Ms. Velazquez, you were saying, is that 
we're now part of one of the Manufacturing Innovation 
Institutes. That is an Obama Administration initiative to 
create these advanced manufacturing institutes. The one that 
we're in is the Revolutionary Textile and Fibers Manufacturing 
Institute.
    And I would like to say that that program--I'd love to give 
you more information about it--really needs to be expanded to 
other urban centers because it's a way for us to bring all the 
stakeholders to the table, all the national educational 
institutions, all of the state organizations, workforce 
training, and then to create this network nationally for a 
specific sector, in this case, the next generation of textiles 
and fibers.
    So thank you very much.
    Chairman CHABOT. Thank you very much. I appreciate it.
    Mr. DiMarino, you are recognized for 5 minutes.

                 STATEMENT OF MICHAEL DiMARINO

    Mr. DiMARINO. Good morning, and thank you all for inviting 
me to testify before this Committee. I'm Mike DiMarino, 
president of Linda Tool. We're a second-generation family-owned 
manufacturer of precision machine components and assemblies 
located in Brooklyn, New York. Linda Tool has been located in 
Brooklyn since its inception in 1952.
    Manufacturing in New York has always been so much of a 
challenge as it has been a blessing. New York has always 
enjoyed a rich history of manufacturing and cutting-edge 
technology. I'll give you a few examples.
    Most people don't realize that New York is the proud home 
of the Coleman gas lamp mantle which was invented on Canal 
Street in New York City. The company today, Navis Global, is 
still a major customer of Linda Tool and has been since 1964.
    It now produces high-tech cloth processing equipment, and 
Linda Tool makes components that no other company has ever made
    New York is also home to the largest manufacturer of window 
envelope machinery in the world, F.L. Smithe, located on West 
44th through West 48th Street and West Street in Manhattan. 
This was a cutting technology in its day. The Bahama Hinge 
Company, which probably most of the doors in this room have on 
them, was also located in Brooklyn, and AMF, the maker of 
bowling alley equipment, was located in Brooklyn, and now 
houses Lutheran Medical Center. Mergenthaler Linotype, 
Correcto-Type, even Ex-Lax belongs in New York City. These are 
all companies with cutting-edge technology in their heyday.
    As it was in 1950, 2016 New York City is still a great 
place to manufacturer and has so much to offer. New York now 
boasts a robust 3D printer industry, a rapidly-growing drone 
manufacturing sector, and cutting-edge technology in recycling 
and biofuel. Honeybee Robotics of Manhattan was instrumental in 
development of the Mars Land Rover. This is all made possible 
by the opportunities that New York has to offer.
    Most recently, New York City Schools have placed an 
emphasis on the development of manufacturing skills. Linda Tool 
recently hired two graduates from City Tech who went through 
their manufacturing engineering curriculum. These two new 
employees have the skills necessary to help Linda Tool move 
forward in the next phase of manufacturing. Their skills 
acquired in school, coupled with Linda Tool's old world 
training, is already paying off with some great advanced 
technology capabilities.
    The schools are on the right track, but need more hands-on 
training in this curriculum as this would make graduates much 
more job ready. I personally would love to see an 
apprenticeship program for the manufacturing sector in place in 
the future.
    The challenges are many. They are difficult, but you can 
understand some of it. Trying to marry urban life with 
industrial production is a challenge for anybody or any city 
that tries to do it. The New York City industrial business 
zones are one aspect that helps those of us trying to maintain 
a viable manufacturing business in New York.
    One of the main challenges going forward is the loss of 
commercial industrial property. Gentrification is probably the 
biggest obstacle. As commercial and industrial areas are 
rezoned, it drives the price of real estate to such levels that 
economics just fail in trying to maintain a business. The 
preservation of the IBZs will greatly help with this, but they 
must be maintained.
    The ability to move in this sector of technology can only 
have good benefits for all. Linda Tool itself was once an old 
world smoky, poorly lit, hazardous place to be employed. Today 
it is a modern, air-conditioned, well-lit, well-equipped 
manufacturing facility that boasts an employment stay of 15 
years. We're also one of the few, if not the only, manufacturer 
in New York City that boasts a green roof on the entire roof of 
its facility.
    We also have a wage scale that meets or exceeds our 
industry, and personally it is very satisfying to see employees 
of the company thrive. The higher wage scale is because of our 
ability to introduce more advanced technology into our 
business. This may not result in the head counts of yesteryear, 
but it most certainly lends itself to a higher-paying job for 
those that acquire the skills to do so.
    Looking back, New York has always been a technology leader 
in many aspects. Obviously the technology has changed 
drastically, and many today have no idea of some of the things 
that were previously mentioned in this testimony. Regardless, 
New York was always a leader in advanced technology whatever 
the era. Looking to the future, I believe there is a bright 
spot for us in the manufacturing sector as long as preserve our 
industrial zones and concentrate on educating and training our 
youth, providing them with hands-on learning and what to expect 
in the working world. A good part of that is the work that our 
local development organizations are doing, coupled with the 
work that the Federal and local government is contributing.
    Chairman CHABOT. Thank you very much.
    Ms. Davis, you are recognized for 5 minutes.

                   STATEMENT OF NEKISIA DAVIS

    Ms. DAVIS. Good morning, Chairman Chabot, Ranking Member 
Velazquez, and also Congressman Meeks. I am honored to be here 
today to testify.
    My name is Nekisia Davis. I'm the owner of Early Bird Foods 
in Red Hook, Brooklyn. We're a very small manufacturer of 
granola and granola bars. As Ranking Member Velazquez says, I 
started the company when I was managing a restaurant in 
Brooklyn called Franny's. I brought granola in to co-workers, 
and there was kind of like a small cult that was formed, and it 
was within a year that I was a full-time granola maker.
    To say that I had no idea what I was doing is a giant 
understatement. I had been fumbling into being a small business 
owner every step of the way. I feel like I'm at a table of 
people who are so articulate and know exactly what they're 
doing, and I am learning every day. Every single day I learn 
how to be a better businessperson, and I think I'm definitely 
not one of few. There are a lot of people that are in the same 
industry as me that are kind of doing the same thing.
    We now have six full-time employees, two part-time 
employees. We have many selling channels. We distribute our 
goods throughout the United States, very soon to China, Japan, 
the United Kingdom. I sell direct to a lot of stores in the 
U.S., and then also we have pretty good Web site sales.
    I think we tapped into something that was very familiar 
that we approached in a unique way. I developed a palate 
through working at some of the best restaurants in New York 
that allowed me to kind of approach in a new way in how to make 
it. It's been very successful. Within the first 3 months of my 
business, I was on the Martha Stewart Show making granola with 
Martha. I had a write-up in the New York Times, New York 
Magazine. I was on the shelf at Whole Foods--that was my second 
account--all because of the community that I've created through 
working in restaurants and food with chefs and wonderful people 
here in this city.
    At that time, it felt like small food manufacturing in this 
city was in its infancy. It was difficult to find a place to 
legally produce food, and no one really knew what to do or how 
to do it. You certainly couldn't make it in your kitchen, and 
you didn't really know what the other option was. I kind of 
fumbled around to a couple of different office cooperatives. I 
landed in an incubator kitchen in Coney Island where I would 
have to lug 50-pound bags of oats and sunflower seeds into my 
car, load them into the kitchen, and, 1, 2, 3, go, bake as hard 
and fast as I could, package, label, clean, load back into my 
car, bring it back home, and come back and do the same thing 
the next day. It was a very, very challenging time.
    I took out a very small loan from a friend, built out a 
space in 2001. It was 900 square feet. I quickly realized 
within a week it had improper electric to run all the equipment 
I needed, and I was there for 4 years doing kind of a gamble, a 
jump around and forth.
    Two years ago, I was able to take out a business loan. I 
had been in business for 5 years, and I had a bank that 
believed in me, which I was very proud of. We built a warehouse 
and commercial kitchen in Red Hook, and I fear that we'll 
outgrow it probably in another 2 years, although I have a lease 
secured for another 8.
    We have had very, very good luck in business. We've always 
been a business people love. I was raised in the way of the 
Danny Meyer hospitality. You have to run your business with 
compassion and empathy, and take care of your people first, 
take care of your customers second. It's worked very well, and 
I think that it resonates well with people. We have very, very 
loyal customers because of it.
    Now, in all this sweet hippy granola fest, we have a lot of 
challenges. The number one challenge for me is workers' comp 
insurance. We are in a classification of manufacturing, and I 
don't know if I share the same issue with people at the table 
here, but we pay 3 times the rate of a cook in a restaurant 
kitchen, and that is a very high-risk job. The highest risk 
that I have in my kitchen is someone getting a burn on their 
arm. It's just very, very low risk. We're baking oats in an 
oven, and letting them cool, and putting them into a bag. The 
numbers I pay for workers' comp are astronomical. There's no 
one that I can talk to or convince that these rates are not 
appropriate to the amount of risk that we have.
    Another issue has been with landlord-tenant relations. I 
feel like a landlord to provide a safe place for us to do 
business, to help facilitate business is just a given. I've had 
a lot of problems with landlords not having equipment that's 
working properly, and it really, really hinders our business. I 
had a freight elevator in my last kitchen go down for 3 weeks 
with no attempt to get it fixed. I had a P.O. that was supposed 
to go out to Whole Foods. I mean, my business was pretty 
paralyzed for 3 weeks. Thousands and thousands of dollars of 
business was lost.
    When I attempted to negotiate a rent break from the 
landlord because of the loss in business, not only were we not 
helped out, but we were turned against. We were discriminated 
against as women, being told that we didn't know what we were 
doing because we're women in business. He turned against us, he 
sued us, doubled our rent, and evicted us, and we had no power 
at all.
    I think the final thing beyond those struggles, obviously 
getting capital to buy bigger, save money, it's very, very 
difficult. I acquired capital to build out the kitchen where I 
am now, and I just can't have access to anymore because I have 
such a large amount that's borrowed. We have excellent credit. 
We have excellent annual revenue. We just don't have access to 
anything. We are trying to keep up and grow at the same time. 
It's very a paralyzing feeling. Cash flow is growing smaller by 
the day.
    I want to thank you again, and say in these moments we have 
to zoom out and remember this is one moment in a long journey. 
To have the collaboration and the care from the three of you is 
very comforting. Again, I'm honored to be here today.
    Chairman CHABOT. Thank you very much.
    Mr. Jacobs, you are recognized for 5 minutes.

                   STATEMENT OF EDWARD JACOBS

    Mr. JACOBS. Good morning, Ranking Member Ms. Velazquez, 
Chairman Chabot, and other members of this Committee.
    My name is Edward Jacobs, a Pratt graduate with a focus on 
industrial design, architecture, and engineering. Most of my 
adult life has been spent living and working within New York 
City being a designer and working initially with smaller-scale 
products. One quickly recognizes the challenges of sourcing 
manufacturers locally while attempting to secure reasonable 
pricing affordability and access to product.
    I'm honored to be here with you today to talk about 
attempting to navigate the manufacturing community locally in 
New York City, nationally living in other States, and 
internationally sourcing to eventually manufacturers ourselves 
with FXE Industries.
    FXE is a startup focusing on transportation and, more 
specifically, advanced motorcycle design and engineering. Our 
approach is a holistic one that bridges the gap typically found 
between fields within the realm of manufacturing. This is a 
modular approach to large-scale manufacturing that allows us to 
circumvent some of the pitfalls of highly-specialized niche 
employment, and, in turn, allows us to train and foster greater 
technical manufacturing abilities in house. This approach will 
allow us to offer accessibility of product so we may open up 
the market to a significantly greater number of customers.
    We're in the process of securing 50,000 square feet of 
design, engineering, and manufacturing space. This opportunity 
to grow to a 100-plus team has ultimately been afforded to by 
the Brooklyn Navy Yard. I initially became a tenant of Brooklyn 
Navy Yard through New Lab. It's where I grew my first design 
and engineering company, DNI. New Lab is a great example of an 
entity that is helping enable a very substantial evolution in 
specialized manufacturing.
    A good example of this is DNI's design, engineering, and 
sourcing for the Lowline underground park to be located at the 
base of the Williamsburg Bridge that has many challenges in its 
initial stages to be completed. This is an example of a 
potential large-scale architectural project with global 
implications. The entire project has been designed, engineered, 
sourced, and manufactured all in New York City.
    The basis of this project being support of plant life and 
public space below the surface of the earth is a great example 
of the full spectrum of manufacturing and tremendous social 
impact New York can foster. This correlates directly with what 
FXE is attempting. Choosing to operate here in NYC with the 
sheer density and diversity will allow us a fantastic base of 
talent, younger, older, from all fields and walks of life to 
pull from. Being a new manufacturer and being supported and 
supporting establishments like the Brooklyn Navy Yard makes us 
very hopeful for the new positive city building manufacturing 
efforts growing within the 21st century in NYC.
    I think a lot of the challenges that we've had have been 
finding funding outside of private funding. It seems as though 
a lot of the funding or the establishments are treated more the 
same kind of treatment we get from a bank. I think there needs 
to be development of a different spirit in lending where maybe 
people can actually view a business plan, make competent 
decisions so that startups, smaller entities can actually get 
capital to grow. And there's one other educational kind of gap 
that I see personally because of my background in industrial 
design and engineering. There isn't an educational element that 
bridges this foundation gap that you've seen throughout the 
years. There's definitely a rift.
    And so, I think there's an opportunity there in New York to 
bridge this gap. I think what we have educational kind of 
institutional wise, bridging the gap between a few of them can 
really open up a whole new industry.
    Thank you very much. I'm totally honored to be here. I 
really appreciate the time.
    Chairman CHABOT. Thank you very much. I want to thank all 
the members of the panel for their testimony, really excellent 
testimony from each one. I would now like to turn to the 
ranking member. I am going to allow her to ask her questions 
first.
    Ms. VELAZQUEZ. Thank you, Mr. Chairman. Ms. Bland, why did 
you choose to locate your facility here in New York City? What 
advantage does your business have over others because of its 
location?
    Ms. BLAND. Well, we are located in Sunset Park at Liberty 
View Industrial Plaza, which is a development by Sumar 
Properties. The reason we are located there is because Sunset 
Park is a walk to work neighborhood that has many, many people 
who are already familiar with manufacturing. It is primarily a 
Latino and East Asian base, so a lot of these folks already 
have apparel manufacturing skills. It makes it much easier for 
us to hire people.
    The reason for New York is because the fashion industry is 
iconic to New York City, and there are already so many skilled 
people also closing the loop in having all the designers, all 
of the development, and then also the sampling, how they are 
making all of it right in New York makes so much sense for 
these brands. It is starting to make more and sense. For 
instance, we just picked up Calvin Klein as a client. That was 
not something that we were expecting to happen this soon, 
because they are starting to pay attention to, oh, we need to 
do our development closer to home. New York City has a really 
incredible opportunity there.
    For all of our startups, having the access to the major 
media outlets and having all of the really good press, it very 
much helps startups to get the word out about their new 
products and their new businesses, as well as Silicon Alley, 
the new fashion tech scene, the wearable tech scene. We are not 
seeing a lot of venture capital go into anything besides tech 
anymore. We have to take advantage of the fact that we are a 
fashion capital, and make sure that there is not a bunch of 
money being sunk into ugly products that do not make sense and 
do not work for the customer, and that no one in fashion has 
been consulted on them.
    Instead we work with companies and work with VCs to ensure 
that they are employing the local workforce, and that everyone 
can take advantage of this opportunity, and that is going to 
require a lot of STEM training. That is going to require a lot 
of engineering, science, and other training to be combined with 
commercial manufacturing. We see a next generation of jobs 
there.
    Ms. VELAZQUEZ. Thank you. Thank you. I am so proud that we 
worked to prevent that building from being sold----
    Ms. BLAND. We are so grateful----
    Ms. VELAZQUEZ.--and putting it up for auction.
    Ms. BLAND. Thank you for your support.
    Ms. VELAZQUEZ. Sure. Mr. Jacobs.
    Mr. JACOBS. Yes?
    Ms. VELAZQUEZ. There is a large and growing gap between 
idea conception and sustainable sales that every manufacturer 
must go through, the valley of death. Bridging that financial 
gap is critical for success, but often funding for companies at 
this stage is difficult to secure because of the inherent risk. 
Can you describe your difficulties in obtaining financing at 
this stage?
    Mr. JACOBS. Yeah, absolutely. A lot of the challenges have 
been since we do not have a lot of assets to leverage, that, 
you know, borrowing can be very difficult. We have actually 
tried multiple ways to secure financing. Most of it has been 
from independent private financing, but we also have gone the 
EB-5 route. But there seems to be a large challenge because EB-
5 funding seems to focus more so on real estate endeavors 
because of their inherent lower risk. And also one of the other 
panel members mentioned tech investment. It seems that everyone 
through all of our meetings is always looking for a strictly 
tech angle, almost looking for a very quick return, like a 
Google or, you know, some type of explosion because of some 
tech industry thing.
    I do not know if it is because of a lack of understanding 
about some of the basic things in hard product design and 
manufacturing, but there seems to be, I guess, kind of just a 
rose-colored glasses effect on the tech industry that people 
are very much looking for a quick return.
    What we are doing is something that we believe, it is more 
of a long-term thing. Any large-scale manufacturing endeavor is 
not a 1- or 2-year, you know, quick return things. It is a 10-, 
15-year thing endeavor. I think sustained growth absolutely, 
but to find the people that are doing it, very difficult.
    Ms. VELAZQUEZ. Thank you. Ms. Davis, pretty soon we are 
going to be voting on a trade agreement, and we know that small 
exporters, small businesses are the majority of exporters. Yet 
if they do business with just one country, they will have only 
one customer in that country. I would like to hear from you, 
can you discuss your efforts to export your goods, and what 
challenges you have faced in doing business internationally?
    Ms. DAVIS. Well, I think the biggest challenge is to try to 
get it to a place where they can sell it. There are so many 
costs that are involved in shipping. Me saying that we 
distribute to China, this is the first round of going to China. 
The taxes on goods that come in I think is something like 30 
percent, and I don't know where that can be minimized, but that 
is a huge, huge challenge is to get the goods, which are 
already very expensive. My profit margins are right where they 
need to be in order to keep going just to try to get pricing.
    When we do work with a distributor, it is really for kind 
of one place, and there does not seem to be a whole lot of 
expansion possible. I work with one distributor that sells to 
markets and dispensers in London, but that is the only person 
they sell to.
    Ms. VELAZQUEZ. And just tell me with a yes or no answer, 
have you contacted or used any of the programs through the 
federal Department of Commerce or the Small Business 
Administration----
    Ms. DAVIS. No.
    Ms. VELAZQUEZ.--to help you in that regard?
    Ms. DAVIS. No.
    Ms. VELAZQUEZ. Thank you.
    Chairman CHABOT. Okay. The gentlelady's time has expired. I 
will now recognize myself for 5 minutes.
    With the four of you from here to here, let me ask you, 
when you started out your business, was it just yourself? Did 
you have anybody else? How many employees do you have now? We 
will just go down the line so we can get a good idea of what 
size businesses we are talking. Mr. Jacobs?
    Mr. JACOBS. Yes, thank you. We started with two employees, 
myself and a co-founder, Francois Terney, and we have expanded 
now a very small amount. We only have four employees. We are 
looking to expand within 2017 up to 50,000 square feet, and 
probably----
    Chairman CHABOT. So you have doubled two to four and maybe 
even further.
    Mr. JACOBS. Yeah.
    Chairman CHABOT. Over what period of time is that?
    Mr. JACOBS. Probably about a year and a half.
    Chairman CHABOT. Okay, thank you.
    Mr. JACOBS. Yeah.
    Chairman CHABOT. Okay. Ms. Davis?
    Ms. DAVIS. I started alone and was alone for several years. 
I now have a team of eight including me, and we have been in 
business for 7 years.
    Chairman CHABOT. Thank you very much. Mr. DiMarino?
    Mr. DiMARINO. Now we have 28. When I started working in the 
company in 1975 we were three.
    Chairman CHABOT. 1975 did you say?
    Mr. DiMARINO. That is when I started working there, we were 
three.
    Chairman CHABOT. Yeah.
    Mr. DiMARINO. Now we are 28, but we also survived the 
recession and did not lay anybody off through all that, which 
was pretty difficult. But we are able to maintain our force and 
expand it a little bit.
    Chairman CHABOT. Absolutely, thank you. Ms. Bland?
    Ms. BLAND. We started with just me, and 3 and a half years 
we now have nine full-time W-2 employees, and then two part-
time W-2 employees. We have 20 businesses on site, and they all 
have one or more employees.
    Chairman CHABOT. Excellent. You literally are the backbone 
of this economy, small businesses. Congratulations to each of 
you for what you have accomplished. It is very impressive, it 
really is.
    Mr. Friedman, let me ask you, you had mentioned the New 
Market Tax Credit Program. We use that pretty extensively in 
Cincinnati, especially in revitalizing the downtown area, and 
we have been pretty successful. In fact, the chairwoman at the 
time came there and saw a few years back what they are doing 
down there.
    Ms. VELAZQUEZ. Our committee, Small Business, while I was 
the chair was one that worked on the legislation.
    Chairman CHABOT. Yeah. We had a bunch of our colleagues 
came from other communities around the country to kind of learn 
about the New Market Tax Credit Program. Now, you mentioned 
there are some things that could be better. Could you tell the 
folks how that works in about a minute's time, and what 
improvements you might make?
    Mr. FRIEDMAN. In determining whether or not a project is 
eligible for new market tax credits, they look at the Census 
tracts and the income population in the Census tracts, and I 
think it is increasingly targeted to highly distressed 
communities.
    Ms. VELAZQUEZ. Yes.
    Mr. FRIEDMAN. What has happened, in part because it is a 
reflection of the density in cities, if you have a small 
housing development that is market rate, it will skew the 
income for that neighborhood so that it knocks out the entire 
Census tract and everything sort of in proximity to it because 
there is a boundary. It is not only your Census tract. It is 
the adjacent tract.
    Chairman CHABOT. So would it be your recommendation that 
that is something that Congress ought to look at and maybe 
adjust accordingly?
    Mr. FRIEDMAN. Yes, for industrial projects. Our resources 
are scarce, and we recognize that, and we have to figure out 
how to use it more effectively. Certainly beyond the industrial 
development side, yes.
    Chairman CHABOT. I would yield.
    Ms. VELAZQUEZ. Thank you for yielding. The main mission of 
the market is to create jobs that will benefit low-income 
communities. Because of gentrification and displacement, we 
have an issue, but it is worth revisiting when we have to 
reauthorize.
    Chairman CHABOT. That is the kind of stuff that we have 
worked on in a bipartisan manner over the years. We will look 
at that as a result of this hearing.
    Let me ask the four of you again. I think you said no, but 
has anybody had occasion to use the services of the SBA in the 
past, the Small Business Administration, either alone or 
anything? Mr. Jacobs, what was your experience or what did you 
use them for?
    Mr. JACOBS. My experience was when the storm hit, initially 
before we started or before I started FXE, my business partner 
had another company, DNI. It was out on a pier in Red Hook, and 
the whole place got flooded, 65 inches. Everything was 
literally destroyed. I was able to get an SBA disaster loan to 
continue----
    Chairman CHABOT. Speaking of that storm, by the way, Ms. 
Velazquez was able to get some legislation passed through 
Congress that had a dramatic impact on that, you know. Did you 
want to talk about, Nydia?
    Mr. JACOBS. Thank you for that.
    Ms. VELAZQUEZ. What we found was the fact that the decline 
rate of disaster loans was extremely high, and I asked for the 
GAO to conduct an investigation that basically validated my 
worst fears, that too many loans were declined. Many small 
businesses on the Lower East Side, and in Red Hook were 
impacted, and did not have an opportunity to get the assistance 
that they needed.
    For the first time in the history of the program through my 
legislation, it was reopened. Any business that did not get a 
loan could reapply, and anyone who lost their business could 
also reapply.
    Mr. JACOBS. One thing. Thank you very much for the efforts 
you put forward in that. One thing I would just like to say 
maybe so you would know, they actually made me leverage my 
actual home, though, which if I did not own a property I would 
not have been able to get that loan.
    Ms. VELAZQUEZ. Well, now we changed it.
    Mr. JACOBS. Okay, fantastic. Thank you.
    Ms. VELAZQUEZ. Okay.
    Chairman CHABOT. Thank you very much. My time has expired. 
The gentleman, Mr. Meeks, is recognized for 5 minutes.
    Mr. MEEKS. Thank you, Mr. Chairman. Good morning. I just 
want to thank each and every one of these panelists. 
Extraordinary is what makes America America. You are stick-to-
it, and I know it is difficult. Let me ask, I know Ms. Davis 
was asked, but let me ask Mr. Jacobs first. Have you utilized 
any, whether it is SBA, whether it is the U.S. Department of 
Commerce? You indicated that you were looking to do things 
internationally also. Is that correct?
    Mr. JACOBS. Yes.
    Mr. MEEKS. Whether it is the Ex-Im Bank or OPIC, have you 
utilized any of the government programs to try to help enhance 
your business?
    Mr. JACOBS. In FXE, there are a few things that have been 
done. I am basically behind the computer doing all the 
engineering and the components and everything. We have a 
different entity in our company that could probably speak a 
little bit more.
    I mainly do all the engineering and all the design work 
actually, so I am not the one to focus on the international 
kind of financing. The only internationally that we have 
attempted to do is the EB-5 Program, which it does not seem to 
be a program that is very stable, and there seems to be like a 
loopholes and a lot of strangeness to it. Again, it focuses 
more so on real estate and very low-risk investment where we 
need that to be kind of be able to take a higher risk, you 
know, and invest in companies like ours.
    Mr. MEEKS. Ms. Davis, you indicated you are starting to go 
into China, et cetera. Have you looked toward, and I listened 
to your three problems. One, workers' compensation insurance, 
two, landlord relations, three, access to capital, and breaking 
down barriers internationally. I think that is indicated by 
Ranking Member Velazquez, trade agreements that we are looking 
at, whether or not they break down some of those barriers.
    My question, have you looked at Ex-Im Bank, for example, or 
OPIC, or any other government, you know, using the U.S. 
Commerce. They have a program or the Chamber of Commerce. I do 
not know if any of you are involved in the Chamber of Commerce, 
whether it is the Brooklyn Chamber or the U.S. Chamber. Have 
you utilized any of those entities to help you to grow and to 
move forward with reference to the company?
    Ms. DAVIS. I have not really, and honestly I am not too 
aware of what is available to me. I think that is simply 
because I spend most of my time chasing people for money to pay 
my Amex bill. To be completely honest, to even imagine spending 
enough time to devote to get into one of those systems or in 
one of the programs, it is seems overwhelming, and maybe it is 
not. But I have not ever because of that.
    Mr. MEEKS. I am sure it is overwhelming. You are trying to 
run a business, and you are trying to do a number of things.
    Ms. DAVIS. Yeah.
    Mr. MEEKS. Chasing and finding out what program is there or 
not there is not something that is your focus.
    Ms. DAVIS. No.
    Mr. MEEKS. Your focus is move your product on a day-to-day 
basis. But I do want to let you know that there are, especially 
internationally, some opportunities for financing and access to 
capital. We have been putting a very tough fight as far as the 
reauthorization of Ex-Im Bank to make sure that they are 
catering to small businesses to help them do exports. I wanted 
to bring that to your attention.
    Mr. DiMarino, let me ask you. You have been in business a 
long time. Have you utilized any of the government services or 
government programs that may be available to help you enhance 
and grow your business?
    Mr. DiMARINO. No loans through the SBA, but we were able to 
put our green roof through the good graces of Congressman 
Velazquez on our facility with a Federal grant, which was quite 
a project.
    Mr. MEEKS. Ms. Bland, same question.
    Ms. BLAND. Yeah. We have won a couple of grants from the 
SBA to run our incubator program, and then to expand our 
incubator program to include contract manufacturers, so we are 
very grateful for that. Also we were asked to come down and 
talk with SBA about the importance of having a classification 
for microbusinesses. I was astonished when I found out 
originally what the definition of a ``small business'' was for 
the United States, and that is still something that completely 
vexes me. I consider 500 employees to be a huge business, you 
know. There are a lot of smaller businesses that are 25 people 
and under, and they deserve a specific type of support. I 
appreciate them having us talk about that.
    Mr. MEEKS. I think that we need to make sure that those 
agencies are getting back out to small business so that they 
know what is going on more.
    Ms. BLAND. Well, I think they need sector specific Web 
sites, that it is just like, hey, food businesses, here is what 
you can do. Hey, fashion, here is what you can do. And have it 
be completely separate and regimented and clear.
    Mr. MEEKS. Let me ask. I know I am out of time, but, Ms. 
Bland, you shook your head that you had worked with Chambers of 
Commerce, whether it was the Brooklyn Chamber.
    Ms. BLAND. Oh, yeah, I love the Brooklyn Chamber of 
Commerce. I cannot believe how well they have outreached to 
small business to hiring. Like I started, and it literally was 
like me and two other people, and already they were reaching 
out to us and seeing what they could do to help. I do not think 
we would be where we are at without the Brooklyn Chamber of 
Commerce.
    Mr. MEEKS. Thank you. I am out of time.
    Chairman CHABOT. Thank you. The gentleman's time has 
expired. Before recognizing the gentlelady for her questions, I 
would like to recognize one of your members of Council here. 
Councilman Robert Cornegy is here, and he is the chairman of 
City Council's Small Business Committee.
    You all here also in City Council have a small business 
committee as well, and Councilman Cornegy is the chairman of 
that committee. We appreciate him being here and showing his 
interest. Thank you very much. Thank you. Thank you.
    Mr. MEEKS. He is short, though.
    [Laughter.]
    Chairman CHABOT. I would now like to recognize the 
gentlelady from New York, although all my colleagues are 
gentlefolks from New York, Ms. Clarke, for 5 minutes.
    Ms. CLARKE. Thank you very much, Chairman Chabot, and to 
Ranking Member Velazquez. To our witnesses, thank you for 
coming today to share your and lend your expertise to the 
subject matter. I, first of all, want to express my regret in 
being delayed this morning. I had a small business event in my 
district just prior to getting here, and so please excuse me.
    I wanted to ask a couple of questions of you, Ms. Davis in 
particular. We are intrigued, of course, by small businesses 
that take on sort of the entrepreneurial spirit that leads them 
to marketing overseas and to capturing those markets. As we 
know, more than 95 percent of the world's consumers live 
abroad, but more than half of small exporters post sales to 
only one foreign market. It is our goal to make exporting more 
attainable for small businesses, and your business is available 
throughout Europe and Japan.
    In your experience, which countries are generally easiest 
to export to, and what makes breaking into more than one 
foreign market so challenging?
    Ms. DAVIS. I think it is difficult to answer that question 
because I work with distributors that handle a lot of the 
exportation, and the people that I export to have come to me as 
most of our accounts have. I am like a business unicorn in that 
way. We are really, really lucky. I do not have a good answer 
for you.
    Ms. CLARKE. So we would probably have to take a look at the 
whole distribution network and the relationships.
    Ms. DAVIS. I would hit up the international distributors 
for that information because they are really the ones that are 
going back and forth and dealing with taxes, and laws, and 
tariffs, and transportation. I just have to get my pallets down 
to them in a container, and then they take it from there.
    Ms. CLARKE. Very well. Ms. Bland, MANUFACTURE New York 
facilitates relationships between designers and a production 
team, and you act as a type of mentor to budding fashion 
designers, and encourage them to not only produce their brand, 
but grow their business. Can you discuss some of the challenges 
that you face in making these connections between production 
teams and the designers?
    Ms. BLAND. That is actually one of our strengths because 
everyone on my team comes from the fashion industry, and we 
have all been marketing locally for decades. So I would say 
that it is a more general challenge for designers in New York 
City before they find MANUFACTURE New York because most 
manufacturers do not want to be contacted by unvetted designers 
or new businesses that do not understand how to manufacture and 
how to speak with manufacturers.
    One thing that we have worked very hard on is to create 
fashion design boot camps where designers get to learn the 
entire manufacturing process in a weekend. At that point they 
are not coming to all of these contract manufacturers who are 
all individually all over the city and all five boroughs, and 
asking for things that are impossible, things that cannot be 
done in timelines that are not feasible at prices that sound 
ridiculous because they are thinking that they are going to get 
the same price as China.
    We try to provide some background around that, and I would 
say that those sort of programs, we want to work with local 
schools, including high schools, to help get people more 
educated earlier in the process because nationally fashion 
designers as a career has doubled in terms of the Census over 
the last decade. It is astonishing how many people want to be 
fashion entrepreneurs, and we want to help them to have access 
to it, but in a way that makes sense for manufacturers.
    I would add that the garment district is a place where 
everyone was co-located together in a very high concentration, 
that idea still needs to remain. Having contract manufacturers 
spread out throughout the city in a way that they are not able 
to access the same support structures and the same 
infrastructure as each other and networks is unfortunate. That 
goes for everything from hiring, to equipment, to systems, to 
grants, to you name it.
    The idea of co-locating them all on site in one place, 
which is what we are working towards at Liberty View Industrial 
Plaza, that is a 21st century model for garment manufacturing.
    Ms. CLARKE. And, Mr. Friedman, many small manufacturers 
with growth potential may not seek assistance with operations, 
marketing, and finance because they are simply unware that 
resources are available. However, the SBA has many 
entrepreneurial development programs, including SBDCs and 
women's business center. What can we do to increase the 
awareness among small manufacturers of the SBA's business 
counseling services?
    Mr. FRIEDMAN. I think there is a tremendous network of 
economic development organizations and professionals out there. 
I think Mike is on the board of----
    Mr. DiMARINO. Yes.
    Mr. FRIEDMAN.--of South Brooklyn Development Corporation, 
so that is one example of an intermediary that generally does 
not get Federal funding, but their job is to make those 
connections. So Bob may be doing it in one particular sector, 
but just building the basic economic development infrastructure 
so that those connections can be made. Maybe there is a Federal 
funding opportunity or just some acknowledgement about the need 
for that strata of intermediary.
    Ms. CLARKE. Very well. Thank you, Mr. Friedman. I wanted to 
acknowledge very quickly Mr. Meeks and, of course, our 
councilman, Robert Cornegy and thank them for being a part of 
today's proceedings. I yield back, Mr. Chairman.
    Chairman CHABOT. Thank you very much. The gentlelady yields 
back. We are going to into one more round of questions here, 
and I would like to recognize Ranking Member, Ms. Velazquez, 
for 5 minutes first.
    Ms. VELAZQUEZ. Thank you, Mr. Chairman. Mr. DiMarino, as 
more manufacturing work moves toward automation, workers need 
advance education to operate the machinery that produces highly 
technical goods, like computers and aerospace parts. And these 
jobs also command higher pay. What are the challenges you are 
facing today in that regard?
    Mr. DiMARINO. The challenges are really the training. I do 
not think it is so much of a higher education. It is one's 
ambition or willingness to learn and apply themselves to it. 
Like I said in my testimony, we hired two young people from 
City Tech, and the first young lady came in and she wanted to 
program my CNC machines. She never did it in her life. I 
interviewed her, and I could just see the fire burning in her 
belly. It was staring at me right in my face.
    So I called my foreman. I said, Dave, you know, take Anna 
around and show her. He said, what do you want to hire somebody 
else in the office for? It is too much overhead. Just take her 
around and talk to her. He came back in a half an hour, he 
says, hire her. You could see she had a hunger for it, and we 
sent her for training, and now she is programming five-axis 
machines. It is unbelievable. It was tremendous.
    Someone does not need years of education. I mean, we put 
her in education, but not advanced education. But it is the 
willingness to learn, and you have to have an interest in it.
    Ms. VELAZQUEZ. Mr. Friedman, so many times we meet with 
businesses, and when we ask them the biggest challenge they are 
facing, it is the lack of trained workers. What kind of role do 
you see for the federal government and at the state level that 
we could be doing more in terms of learning opportunities for 
our workforce?
    Mr. FRIEDMAN. One is an expansion of something you are 
already doing now having to do with support community colleges.
    Mr. FRIEDMAN. Not just growing support for community 
colleges, but also shifting to an apprenticeship model or 
providing additional funding for apprenticeships. One of the 
things that companies often say to me is that they would prefer 
to do the training themselves. Because manufacturing is 
essentially small business, the diversity of skills is 
tremendous. If we move towards kind of a lifelong learning 
model using apprenticeships, I think that would, you know, 
allow for the diversity in the sector, and yet create, you 
know, a stream of skilled workers.
    Ms. VELAZQUEZ. Let us talk for a second about how our 
country needs to encourage more students to pursue degrees in 
science, technology, engineering, and math, you know, the STEM 
subjects. What do you think? In terms of your organization and 
your relationship with the public school system in New York 
City, do you have any type of interaction? Do you have any type 
of conversation? Are there any type of meetings that take place 
to assess how can we encourage more, especially in places like 
New York City where the face is changing? You have more 
Latinos, more women, more African-Americans, more Asians.
    What can we do to narrow the gap that exists between what 
is going on in terms of the marketplace and the curriculum that 
we have in place these days?
    Mr. FRIEDMAN. Sure. I am not sure I can offer the big 
answer there.
    Ms. VELAZQUEZ. Sure.
    Mr. FRIEDMAN. But to bring something together that I think 
a bunch of us have talked about is how to co-locate different 
types of services. Workforce development and education is 
always the odd man out, and maybe that is a function of funding 
streams that is distinct from economic development. There is a 
tremendous silo between our economic development organizations 
and our workforce and labor organizations.
    One of the things that Pratt is working on with the 
Brooklyn Navy Yard, with City Tech, with the Board of Ed, 
Department of Education, is to co-locate a whole bunch of those 
facilities in the Brooklyn Navy Yard. We are in proximity to a 
number of NYCHA developments. So the idea is to make it as 
absolutely seamless as possible.
    Businesses, residents, they do not know who they are 
getting services from half the time, nor should they, you know. 
They should not have to have that skill. We want them to be 
good at their business. We want them to be good in high school. 
Pratt Institute already brings about 200 students to campus 
every Saturday to do STEAM education, and we are trying to link 
that moving forward with a CTE school that would be located at 
the Brooklyn Navy Yard so that you can get a real seamless 
integration of training, and resident employment, and business 
development.
    Chairman CHABOT. Okay. Thank you very much. The 
gentlelady's time has expired. I recognize myself for 5 
minutes.
    One of the things, and I think, Mr. Friedman, you had 
mentioned that tax policy is not the primary concern that 
business folks have, you know, but it certainly is one of the 
things that they have to consider. I was wondering if any of 
the members on the panel were aware that towards the end of 
last year, Congress passed some legislation relative to the Tax 
Code that was supposed to help especially small businesses that 
did a couple of things.
    One thing, there is Section 179 expensing that you could 
buy a piece of equipment and take it off all in that year. 
There are limitations to it, but overall rather than 
depreciating this over 15 years or a long time, you could take 
it all off that year right off your taxes. So the incentives, 
the argument was people would buy that piece of equipment, and 
put it into service, and become more productive, and be able to 
take it right off their taxes that year. That would help both 
that company that bought it, plus the company that made that 
thing, hopefully made here in the United States. We cannot 
control that, but hopefully made here, and the people that 
worked in that factory. That would help the economy. That was 
the idea.
    Also the research and development tax credit, and we made 
these things, we made them permanent. Let us see. Is that the 
one was permanent? There is one that was not. Bonus 
appreciation was the other one. That one is until 2019, I 
believe, and that is a credit.
    But we did those things. A lot of times we had done these 
in the past, but we just kind of extended it from one year to 
other, and we did it towards the end of the year, and so you 
could not plan for it, and so it did not do a lot of good. 
Well, finally Congress got its act together sort of in a 
bipartisan manner and got this thing passed, and it should help 
you to take advantage of the Tax Code out into the future.
    First of all, were you aware that this happened, and did 
anybody get a chance to take advantage of it yet or whatever? 
Mr. DiMarino?
    Mr. DiMARINO. I have been fortunate. I have a lifelong 
friend and my tax attorney. I have been doing the R&D credit 
since it first came out, so that it is in the 1980s. I think it 
was 1986 when it first was implemented. But it is a wonderful 
tool, and everybody here at this table should take great 
advantage of it. It is tremendous. Really a tremendous tool.
    Chairman CHABOT. I will yield to the gentlelady.
    Ms. VELAZQUEZ. You need to have good accountants so that 
they could provide information to you in a timely----
    Mr. DiMARINO. He is one of the Nation's leading experts in 
tax and R&D credit.
    Chairman CHABOT. Yeah. But, to me that would be one 
criticism of Congress that a lot of times we did this stuff, 
but we did it towards the end of the year in some gigantic 
omnibus bill that you throw everything but the kitchen sink in. 
By the time your accountant has got to go through it and figure 
out what the heck was in there, it was too late to take 
advantage of it, and you could not depend on it. But now the 
stuff that we made, those in particular were permanent.
    I would urge all of you to take a look at it because you 
could buy stuff and take it right off your taxes that year. It 
is a real advantage, and I would advise all small businesses 
who may not know about that to look into it.
    Another question, and I was going to follow up on something 
that the ranking member talked about, job training and the 
skills that you need when you are trying to hire something. I 
talk to a lot of small businesses in my district, and one 
complaint that I get is that, you know, we obviously want to 
have a safety net. If people have been laid off or they have 
not had employment for a while, something to make sure they can 
take care of themselves and survive. But sometimes what I hear 
is unemployment or other things make it such that people will 
not take the job, you know, at something that the small 
business could actually afford to pay somebody.
    Do you hear this? Is this an experience that you had or 
want to comment on? Ms. Bland?
    Ms. BLAND. I have definitely never had that experience.
    Chairman CHABOT. You have not had that experience.
    Ms. BLAND. No.
    Chairman CHABOT. Okay.
    Ms. BLAND. I have had some employees who have been coming, 
but they ran out of unemployment, and now it is just like, oh, 
my god, what am I going to do, and then they come to us. Most 
of the people that I have talked to, I have never personally 
been on unemployment before, but most of the folks in my 
community, it is very typical in the freelancer and creative 
community for people to spend some time on unemployment at some 
point during their career. And it has nothing to do with 
laziness.
    Chairman CHABOT. Okay.
    Ms. BLAND. I would say that until we have a social safety 
net for freelancers that is a little bit more coherent than 
now, we are not going to have that truly flexible talent pool 
that all businesses can take advantage of. Right now it is a 
little wooden where I have to keep people as full time, part 
time, or I am probably going to risk losing them as opposed to 
if we had a little bit more play with it, we could have people 
on a more hourly basis as opposed to either full time or part 
time.
    Chairman CHABOT. Okay. Thank you. My time is just about 
ready to expire, so I will not ask another question. I will now 
yield to the gentlelady for 5 minutes, Ms. Clarke.
    Ms. CLARKE. Thanks again. Thanks once again, Mr. Chairman. 
I wanted to just out of curiosity ask Mr. Friedman if your 
experience in working with emerging manufacturers, is there a 
role that you see sort of the social media landscape playing in 
helping those entrepreneurs to access information and maybe to 
network and connect with others that are in similar 
predicaments, or that can be helpful in terms of resource and 
support? I want to also extend that to the rest of the panel to 
discuss.
    Mr. FRIEDMAN. Let everyone know that we did not conspire 
before this meeting in any way to answer that question. There 
is a tremendous role, and we are at the very, very beginning. 
It is sort of like the shared economy comes to manufacturing. 
There is under capacity in a lot of factories, and so the issue 
is how can we begin to have different companies use the same 
factory. That is an app, you know. That is what Uber does. That 
is RB&B does. So there are those opportunities.
    Beyond that, we also run the Made in NYC initiative, which 
is a local branding campaign to drive consumer traffic to local 
manufacturers. To be honest, it is has been a shoestring 
operation. We got funding for the first time from the New York 
City Council, which is really allowing us to ramp that up. What 
we will be having is a social media campaign to attract 
consumers, to educate them about what is made locally, and then 
to get them to go to everyone's websites and buy directly from 
local manufacturers.
    Ms. CLARKE. I heard in particular Ms. Bland speak of the 
need to sort of distill information by industry. And it would 
seem to me that that maybe one of the vehicles that can be 
helpful in doing so that, you know, at one click if you 
manufacture motorcycles, you know who is in that space, what 
types of government assistance or programs are tailored towards 
that industry. I was just wondering whether you thought that 
would be helpful given that it is such a utility, but whether 
we have reached that space yet.
    Ms. BLAND. Are you talking in reference to Made in NYC, or 
just in general?
    Mr. FRIEDMAN. Or fashion in general.
    Ms. CLARKE. It could be----
    Mr. FRIEDMAN. We are not there yet.
    Ms. CLARKE. Okay, we are not there yet.
    Mr. FRIEDMAN. The honest answer is over the next year and a 
half, we hope to be doing a lot of that in New York City. We 
are one city, you know. San Francisco is very advanced in that, 
and if you go to sfa.org, they have a real inventory of what is 
available. There is still much more opportunity for networking.
    Ms. BLAND. Yeah, and I think it also starts with public 
awareness campaigns here in New York City that are in the 
languages of the people that are being targeted, you know, 
because we see that it is more effective for us to go out in 
Sunset Park with a printed out sign in either Mandarin or 
Spanish and put it directly in the neighborhood than it is for 
us to try to post something on Craigslist or anything like 
that. We also have to contextualize it for the sector, and the 
neighborhood, and the language.
    Ms. CLARKE. Very well. Anyone else want to add anything?
    Ms. DAVIS. Just a small thing. When you said bring it into 
the language of the people who it needs to apply to, I actually 
thought you meant the difference in governmental language and 
the language of most people.
    Ms. BLAND. That is a good point.
    Ms. CLARKE. Right.
    Ms. DAVIS. I am not in government. I am not anyone that is 
involved in government. Any time things are simplified, bullet 
points, to bring us into programs is so easy. A good example of 
this I think Oscar Health Insurance. It is a health insurance 
company that basically makes things click, click, click easy. 
There is a picture. There is a big button. There is an app. It 
is so easily accessible. I feel like you would just attract a 
lot more people to these programs if it were simple.
    Ms. CLARKE. What they call plain English.
    Ms. DAVIS. Yeah. I mean, make it like a kid, whatever you 
need to do.
    [Laughter.]
    Ms. CLARKE. Very well. Very well. If there are no other 
answers, Mr. Chairman, I yield back.
    Chairman CHABOT. Thank you. Before coming to Congress, I 
was a lawyer, and if we made it too plain and simple, we would 
put them all out of work, though. I am sure you would not want 
to see that, right? No. I am sure we probably would.
    But I can just say this has been extremely helpful, I 
think, to all members that we were able to be here today. I 
would like to yield to my colleague, Ms. Velazquez, if she 
would like to make a closing statement or a closing point or 
two.
    Ms. VELAZQUEZ. Sure. Thank you, Mr. Chairman. I really 
appreciate your taking time to come and listen to the people, 
the businesses that are creating jobs, and to see what the 
challenges are, what is working and what is not working. Mr. 
Friedman, you have raised the issue of the tax credits, which 
we will revisit.
    Mr. FRIEDMAN. Thank you.
    Ms. VELAZQUEZ. Mr. Jacobs, I am working on legislation that 
would allow for private capital equity to invest in startups 
like yours, but to structure that type of investment in a way 
where you do not have to start paying back right away until, 
you know, you have reached or you have put your product into 
commercialization.
    That will be a federal program geared towards manufacturers 
in the United States that lack the kind of liquidity and 
capital that will enable you to continue to work on your 
business, especially emerging businesses. So how can we, the 
federal government, incentivize with matching funds to create 
those type of companies like SBIC, but where you do not have to 
pay back immediately as is the case if you have a traditional 
loan.
    This has been very helpful. I really appreciate you all 
taking time out of your busy companies and businesses to be 
here with us. Mr. Chairman, I yield back.
    Chairman CHABOT. Thank you very much. The gentlelady yields 
back. I want to, as chair of the Committee, thank the Council 
of New York City for opening up their chambers to us today to 
let the United States Congress come here and use these fine 
historic facilities. We do appreciate it. We appreciate the 
folks here in the audience, and especially the panel members 
here for their testimony. This has been very helpful to us. We 
will take what we learn here back to our colleagues in the 
Congress, and hopefully we will do whatever we can to help to 
improve the climate for especially small business manufacturers 
in the United States, so thank you very much.
    And if there is no further business to come before the 
Committee, we are adjourned. Thank you.
    Ms. DAVIS. Thank you.
    Mr. JACOBS. Thank you.
    [Whereupon, at 11:17 a.m., the Committee was adjourned.]
                            A P P E N D I X

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    Thank you, Chairman Chabot, Ranking Member Velazquez, and 
members of this committee for the opportunity to testify at 
this hearing. And thanks to all of our local Representatives 
for your tireless commitment to retaining equitable 
opportunities for working and middle-class New Yorkers and 
their families.

    My name is Bob Bland, and I am the CEO and Founder of 
Manufacture New York. Founded in 2012, we are rethinking the 
fashion ecosystem and creating a new, vertically integrated 
21st century business model that serves the industry's domestic 
urban manufacturing needs of today and the future. Our mission 
is to reawaken and rebuild America's fashion industry, foster 
the next wave of businesses, and create a transparent, 
sustainable global supply chain.

    Fashion design & manufacturing jobs are more than just 
jobs--they are an inclusive pathway to meaningful careers and 
the potential for business ownership, regardless of previous 
educational background or socioeconomic status. Typically 
paying 20-30% more than equivalent service or retail positions 
with an average salary of $59,750 nationally, they are more 
likely to include benefits and have a clear path for growth, 
both in terms of skills training and opportunities to advance. 
The New York City fashion ecosystem is a unique creative and 
dynamic cultural powerhouse that touches lives internationally 
on a daily basis, whether we consider ourselves to be 
``fashionable' or not.

    Massive outsourcing of American jobs in the 1980's & 1990's 
resulted in an 86% decline in US apparel manufacturing 
employment, from almost 940,000 in 1990 to about 136,000 
nationally in 2015. While in 1931, New York City's iconic 
Garment District was home to the highest concentration of 
apparel manufacturers' in the world, employing 1 million locals 
at its height, it has since contracted to 15,000 total apparel 
manufacturing jobs in the city, which contextually, still 
accounts for 30% of all New York City manufacturers. This can 
look like a bleak picture, but we are sitting on several global 
opportunities for significant job growth in NYC at the 
intersection of fashions, sustainability and technology if we 
seize the moment.

    New York City is home to 900 fashion company headquarters, 
employs 180,000 people and pays $11B in wages and $2B in tax 
revenue annually. According to a report by the U.S. Congress 
Joint Economic Committee, spearheaded by U.S. Representative 
Carolyn Maloney in 2015, our New York Fashion Week alone 
generates $887M in economic impact locally per year. And yet, 
we are a $4T global industry at an inflection point--we cannot 
go forward as the #2 world polluter (behind oil) with systemic 
human rights violations throughout the supply chain, generating 
more than 200,000 tons of textile waste in NYC alone and 12.4M 
tons on a national scale annually. From the smallest emerging 
design startup to the largest department stores and luxury 
conglomerates, over the past 3.5 years we have experienced 
significant national & international interest in the 
conceptualization, research, development and commercialization 
of a shared set of resources and best practices to capture 
value and provide accountability at all stages of our supply 
chain. And we are not alone.

    New York City's unique proximity to a talented, experienced 
and passionate workforce; the headquarters of major brands and 
media outlets in web, print, television and radio; and the 
emergence of Silicon Alley as a hotbed for VC funding of 
related technology companies from biomaterials (Modern Meadow) 
to wearable technology (Ringly) to the coming connected devices 
revolution known as the Internet of Things (IoT) means that 
major 21st century manufacturing opportunities for New York 
City will be where fashion (apparel, textiles, footwear, 
jewelry, home goods) collides with previously distant sectors 
like consumer electronics, health care, transportation and 
defense.

    Anticipating this great need and in partnership with Salmar 
Properties, and thanks to the support of the New York City 
Economic Development Corporation (NYCEDC), Deputy Mayor Alicia 
Glen, City Hall and our local representatives, Manufacture New 
York has been awarded a $3.5M Construction Grant to build our 
1st Manufacturing Innovation Hub for Apparel, Textiles & 
Wearable Technology at Liberty View Industrial Plaza in Sunset 
Park, Brooklyn.

    Sunset Park is a rarity in 21st century New York City: a 
blue-collar walk-to-work neighborhood. Downhill from the 
residential area is a 30 plus block industrial zone anchored by 
the Brooklyn Army Terminal, Industry City, Liberty View and the 
future South Brooklyn Marine Terminal, where companies employ 
many neighborhood residents. Many more small factories and 
warehouses intermingle with housing on the area's many mixed-
used blocks. More than one-third of Sunset Park residents work 
in some form of manufacturing. Relatively affordable housing 
stock and well-established Latino and East Asian communities 
reinforce Sunset Park's status as a haven for small businesses, 
manufacturers and their families. The neighboring industrial 
neighborhood of Red Hook, where I live with my family and young 
daughter, shares a similar character, and a great need for 
similar support, particularly as economic recovery of local 
small businesses and residents has stretched out for years 
since Superstorm Sandy decimated our working waterfront.

    Unemployment, under-employment and lack or sector-specific 
training resources remain a major barrier for economic 
prosperity in South Brooklyn, particularly among 18-24 year 
olds who are just entering into their professional lives. We 
are committed to working with community stakeholders including 
local schools, community organizations, non-profits and trade 
or business associations to develop entirely new types of 
internships, apprenticeships and workforce training programs 
that blend STEM training in wearable technology and material 
science with traditional, artisanal apparel and textile 
manufacturing so that New York City and US domestic 
manufacturing can regain its foothold as leaders in 
entrepreneurship & innovation. We want to be sure that these 
opportunities are designed to attract the marginalized and 
underserved communities that can most benefit from them, 
particularly given fashion design and manufacturing's 
historical inclusivity, where stars can emerge and prosper from 
the most unlikely places.

    We applaud The Obama Administration's efforts to establish 
a national network of Manufacturing Innovation Institutes 
(``MII''), and are proud to be teamed locally with the Fashion 
Institute of Technology (``FIT'') in our bid for the 
Revolutionary Textile and Fiber Manufacturing Innovation 
Institute (``RTF-MII''). We look forward to participating in 
future institutes, as these sort of public-private partnerships 
are essential to long term innovation and job opportunities in 
advanced manufacturing. The United States lost 40% of our 
middle class jobs nationally during the 30-year exodus of 
domestic manufacturing, and after a catastrophic National 
Recession that gutted my generation's chance at The American 
Dream, the jobs that came in their place are not comparable, or 
even enough to provide us with security that we will be able to 
afford to establish careers and raise our families in New York 
City for the long term. It is going to take significant, 
sustained public and private investments across 
administrations, with all key stakeholders working together, to 
restore our middle class.

    Manufacture New York also advocates for a healthy domestic 
manufacturing sector at large. Not only do manufacturing jobs 
pay better than comparable service jobs, but they currently 
provide skilled work for roughly 12 million Americans.

    Domestic manufacturers object to NAFTA-style trade 
agreements that not only outsource American manufacturing jobs 
to low-wage, unregulated countries, but they offer little in 
way of oversight for overseas labor conditions. Because of this 
Manufacture New York opposes the Trans-Pacific Partnership 
(TPP).

    Our objections to this trade deal include the fact that TPP 
countries like Vietnam are known for ongoing labor and human 
rights abuses. It's questionable whether TPP labor standards 
can actually be verified or enforced in such countries.

    Additionally, TPP does not include enforceable provisions 
to prohibit currency manipulation. Deliberate currency 
undervaluation by America's trading partners has cost the U.S. 
millions of jobs over the last two decades. TPP also guts Buy 
America provisions in U.S. law by allowing firms in any TPP 
country to bid on U.S. procurement, including Chinese state-
owned firms located in Vietnam. Thus, U.S. tax dollars for 
apparel and textiles could go to China instead of to U.S. 
producers.

    Thank you for the opportunity to discuss the issues & 
opportunities around 21st century manufacturing in New York 
City.
                      ``The Empire Strikes Back''


    Good morning and thank you to all for inviting me to 
testify before this committee. I am Mike DiMarino, President of 
Linda Tool. We are a second generation family owned 
manufacturer of precision machined components and assemblies 
located in Brooklyn, NY. Linda Tool has been located in 
Brooklyn NY since its inception in 1952. Manufacturing in New 
York has always been as much of a challenge as it has been a 
blessing. New York has always enjoyed a rich history of 
manufacturing and cutting edge technology. Most people don't 
realize that New York is the proud owner of the Coleman gas 
lamp mantle. It was invented on Canal Street NYC. The company 
today, Navis-Global, is still a major customer of Linda Tool 
and has been since 1964. It produces high tech cloth processing 
equipment and Linda Tool makes components that no other company 
has made. NY was also home to the largest manufacturer of 
window envelope machinery in the world, FL Smithe located on 
West 44th through 48th Street in Manhattan a cutting edge 
technology in its day. The Bommer Hinge Co., AMF, maker of 
bowling alley equipment, Mergenthaler Linotype, CorrectoType. 
Even EX-Lax belongs to NYC. These were all companies with 
cutting edge technology at the time.

    Whether it is 1950 or 2016 NYC still is a great place to 
manufacture and has so much to offer. NY now boasts a robust 3D 
Printer Industry, a rapidly growing Drone manufacturing sector, 
cutting edge technology in recycling and Bio-Fuel. Honeybee 
Robotics of Manhattan was instrumental in the Mars Rover. This 
is all made possible by the opportunities that NY has to offer. 
Most recently NYC schools have placed an emphasis on the 
development of manufacturing skills. Linda Tool recently hired 
2 graduates from City Tech who went through their Mfg. 
Engineering Curriculum. These 2 new employees have the skills 
necessary to help Linda Tool move forward in the next phase of 
manufacturing. Their skills acquired in school coupled with 
Linda Tools ``old world'' manufacturing skills is already 
paying off with some great advanced technology capabilities. 
The schools are on the right track but need more ``hands on'' 
training in their curriculum as this would make graduates much 
more job ready. I personally would love to see an 
apprenticeship program for the manufacturing sector in place in 
the future.

    The challenges are many. They are difficult but you can 
understand some of it. Trying to marry the urban life with 
industrial production is a challenge to anybody or any city 
that tries to do it. The NYC Industrial Business Zones are one 
aspect that helps those of us trying to maintain a viable 
business in NY. One of the main challenges going forward is the 
loss of commercial and industrial property. Gentrification is 
probably the biggest obstacle. As commercial and industrial 
areas are rezoned it drives the price of the real estate to 
such high levels that economics just fail when trying to 
maintain a business. The preservation of the IBZ's will greatly 
help with this but they must be maintained.

    The ability to move forward in this sector of technology 
can only have good benefits for all. Linda Tool itself was once 
an old world, smoky, under lit hazardous place to be employed. 
Today it is a modern, air conditioned, well lit, well equipped 
manufacturing facility that boasts and average employment stay 
of 15 years. We also are one of the few, if not the only, 
manufacturer in NYC that boasts a Green Roof on the entire roof 
of its facility. We also have a wage scale that meets or 
exceeds our industry. And personally it is very satisfying to 
see employees of the company thrive. The higher wage scale is 
because of our ability to introduce higher technology into our 
business. This may not result in the head counts of yesteryear 
but it most certainly lends itself to a higher paying job for 
those that acquire the skills to do so.

    So looking back New York has always been a technology 
leader in many aspects. Obviously the technology has changed 
drastically and many today have no idea of some of the things 
that were previously mentioned in this testimony. But 
regardless NY was always a leader in advanced technology in its 
day. Looking to the future I believe there is a bright spot for 
us in the manufacturing sector as long as we preserve our 
industrial zones and concentrate on educating and training our 
schooled in ``hands on'' and what to expect in the working 
world. A good part of that is the work that our local 
development organization are doing coupled with the work that 
NYC SBS is doing.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Introduction

    Good Morning Chairman Chabot and Ranking Member Velazquez 
and also Congressman Meeks and Congresswoman Clark and thank 
you for inviting me here today to testify. My name is Nekisia 
Davis and I am the owner of Early Bird Foods & Co., LLC., 
located in Red Hook, Brooklyn. I am honored to present this 
testimony to you today on our experience and successes as a 
small manufacturing business in New York.

    Early Bird Foods is a small manufacturer of granola and 
granola bars. I started the company in my kitchen while 
managing a restaurant in Brooklyn called franny's. If you're 
not familiar with this wonderful place, you are missing 
something very special. I would bring granola to my coworkers 
and regulars, and very quickly a cult-like following was born. 
The demand was so intense that within a year ``granola maker'' 
was my full time job. We now have six full time employees and 
two part time employees and are currently adding to the team. 
We have many selling channels; several distributors who sell 
our products in the Northeast region of the US, Texas, Japan, 
the United Kingdom, and China, we sell direct to hundreds of 
stores throughout the US, and sell quite a bit direct through 
our website.

    Successes

    We have had success first and foremost because we tapped 
into something familiar in a unique way. Granola, at least to 
my knowledge at the time, was made with oils that I wouldn't 
want in my kitchen, was undercooked and underseasoned. Through 
my 7 years working in some of the best restaurants in New York, 
I developed a pallet with which to approach granola in a new 
way. I also developed an incredible community of people during 
that time that would be integral to my launch and success, from 
food shop owners, to members of the media, and owners of small 
batch flea markets. Within the first 3 months of business, I 
was on the Martha Stewart show making granola with Martha 
herself, featured in the New York Times by friend and food 
writer Melissa Clark, featured in New York Magazine by food 
writers Rob and Robin, and on the shelves of Whole Foods 
Markets in Manhattan.

    At that time, small batch food manufacturing felt like it 
was in its infancy in New York, and making food in the city was 
quite difficult. I went from my kitchen at home to a small 
office cooperative in Brooklyn with a tiny oven where I could 
make about 12 bags at a time. I then moved to a kitchen 
incubator in Coney Island where I had to haul 50 pound bags of 
oats and sunflower seeds from my car, and then (1-2-3-GO!) bake 
as fast and hard as I could, package everything I baked, clean, 
pack it all back up and into my car in an 8 hours period. 
Several days later, I would do the same thing again. In 2011, 
my friend and colleague Betsy Devine of Salvatore Bklyn Ricotta 
and I got investments from friends and built a commercial 
kitchen in a 900 sq ft space in the Brooklyn Navy Yards. Within 
a week, we realized the space didn't have enough power to run 
my oven and her cheese vat at the same time, so the cheese and 
granola dance began. Fast forward through 4 years of that, and 
we were able to take out business loans to build out our 
current commercial kitchen and warehouse where we have been for 
a little over two years. We have a lease secured for another 8 
years, but I fear we will outgrow the space in another 2.

    Our next expansion will be continued growth, and hopefully 
increased cash flow to allow for purchase of materials in 
larger quantities at lower costs, therefore raising our profit 
margin. In the plans are health care for employees, funding 
transportation for employees, and a regular partnership with 
charities. I look toward 2016 and hope for reduction of waste, 
increased efficiency, and continuing to spread the Early Bird 
love as many places as we can.

    We have always been a business that people love. In our 7 
years, we have had to do very very little reaching out for 
accounts, they come to us because of the product, because of 
our network, because of the customers who are loyal and have 
been since day one. We have never had to put money into 
marketing, and have just this year started investing a bit into 
PR. We are a business that has always been highly magnetized, 
and for that I feel grateful and blessed every day. I was 
raised in the Danny Meyer philosophy in my New York restaurant 
upbringing, and that is to lead with care, empathy, and 
compassion. It's all about how you make people feel, most 
importantly the people that work for you, and then your 
customers. We operate from such an empowered place, we're 
highly compassionate, stand true to our values, our mission, 
are dedicated to the brand, and want to make as many people 
happy as possible. This world is a tough one. If we can do 
anything to bring a moment of positivity into someone's life, I 
feel like we're doing a good thing.

    Challenges

    Now in all this sweet hippie granola love fest of ours, we 
have had a unbelievable amount of challenges. The first one 
that comes to mind is workers compensation insurance. The 
classification system in place for this seems extremely 
outdated when it comes to small batch food manufacturers. We 
have to pay a rate that is over three times the rate of a cook 
in a restaurant kitchen, which is a high risk job, because our 
classification is considered ``manufacturing''. I can only 
assume this was created to cover the risk level of industrial 
manufacturing where you could potentially lose a finger at 
work. Our biggest risk in the kitchen is a burn from the oven 
door. This over and over makes my head feel like it's going to 
pop off because there's nothing I can do and no one I can 
convince that our risk level in this kitchen is very low. And 
even if I could convince someone, the rules are the rules. The 
numbers we pay for workers comp are astronomical.

    Another challenge in the past has been with landlord/tenant 
relations. I assume that when renting an industrial property 
from someone, the basic benefits of operating in a space that 
is free of danger, maintained at least minimally, and from 
someone who cares that we survive in business, are just a 
given. Our space in the Brooklyn Navy Yards, on the seventh 
floor, had one freight elevator that was broken at least once a 
week. This put a huge damper in our business seeing as we 
constantly have goods moving in and out. There was one period 
of three weeks that the freight elevator was broken completely, 
with no communication from our landlord, no explanation as to 
what was going on, and zero concern about the fact that it was 
massively hindering our business. I had a purchase order from 
Whole Foods held up that entire time, so essentially I lost 
thousands and thousands of dollars in business, and my direct 
shipping was impacted as well. FedEx, as lovely as they are, 
will not walk up and down 6 enormous flights of stairs a dozen 
times so you can get all your online shipping out for the day. 
We also had to hire several people from Task Rabbit to help us 
bring dry goods up those 6 flights to the kitchen so we could 
continue baking, every day loads of over 4000 lbs were lugged 
up all those stairs. When we attempted to negotiate a temporary 
break in rent from our landlord to balance the huge losses we 
faced, not only did he refuse, but he turned against us. We 
were called out by him as incapable business people because of 
our gender, and called ``silly little girls that didn't know 
what the hell we were doing''. He eventually threatened to sue 
us, ruin our credit, he then doubled our rent, took us to 
court, and evicted us. I have never felt more discriminated as 
a woman and less respected as a business owner. We had no 
protection and nowhere near enough funds to properly fight him 
in court. This man, this landlord, who was to simply provide 
shelter and safety to help facilitate our business, was 
actually attempting to drive us and our businesses into the 
ground.

    Beyond those struggles, we always have a hard time gaining 
capital to make changes that would save us enormous amounts of 
money. If I could, I would invest in small equipment that would 
cause a drastic reduction in labor costs and increase my 
overall output immensely. There are much more efficient ways of 
doing everything we're doing, but we just can't afford to make 
that leap. I have taken out a loan to build our current kitchen 
in order to keep up with business, and am unable to acquire any 
more capital to continue growth, despite our stellar business 
credit rating and impressive annual revenue. Cash flow is 
growing tighter by the day, we are trying to keep up and grow 
at the same time. It's a paralyzing feeling. I think of moving 
production to a co-packer all the time, but look into the 
window of my kitchen and can't imagine losing my team.

    Conclusion

    The future of Early Bird looks so incredibly bright, 
despite the challenges we have faced and, no doubt, will 
continue to face. We are right on the cusp of what I believe is 
our next big growth spurt and to tell you that there are 
growing pains would be an understatement. At these times, I 
have to zoom out and remember this is one moment on a long 
journey for us. We are here, not in spite of those moments of 
struggle, but because of them. I look forward to continuing to 
grow our little granola company to something that can employ 
more and more, feed more and more, and carry on making the food 
world and my life a little richer.

    Thank you to everyone again for inviting me here today, and 
I genuinely say that I am honored.
    TESTIMONY

    Mr. Edward Jacobs

    CTO AND CO-COFOUNDER, FXE INDUSTRIES

    U.S. Congressional Panel to Examine NYC Manufacturing

    Good Morning Ranking Member Velazquez, Chairman Chabot and 
other members of this committee. My name is Edward Jacobs a 
Pratt Graduate with a focus on Industrial Design, Architecture 
and Engineering. Most of my adult life has been spent living 
and working within New York City. Being a designer and working 
initially with smaller scale products one quickly recognizes 
the challenges of sourcing manufactures locally while 
attempting to secure reasonable pricing to allow affordability 
and access to product. I am honored to be with you today to 
talk about attempting to navigate the manufacturing community 
locally in NYC, nationally living in other states and 
internationally sourcing to eventually to become manufactures 
ourselves with Fxe-Industries.

    FXE is a start up focusing on transportation, and more 
specifically advanced motorcycle design and engineering. Our 
approach is a holistic one that bridges the gap typically found 
between fields within the realm of manufacturing. This is a 
modular approach to large scale manufacturing that will allow 
us to circumvent some of the pitfalls of highly specialized 
niche employment and in turn allow us to train and foster 
greater technical manufacturing abilities in house. This 
approach will allow us to offer accessibility of product so 
that we may open up the market to a significantly greater 
number of customers.

    We are in the process of securing 50,000 sqft of design 
engineering and manufacturing space. This opportunity to grow 
to a 100+ team has ultimately been afforded to us by the 
Brooklyn Navy Yard. I initially became a tenant of the Brooklyn 
Navy Yard through New Lab and it's where I grew my first Design 
and Engineering company D.N.I. New Lab is a great example of an 
entity that is helping enable a very substantial evolution in 
specialized manufacturing.

    A good example of this is D.N.I's design, engineering and 
sourcing for the Lowline. An underground park to be located at 
the base of the Williamsburg bridge that had many challenges 
for its initial stages to be completed. This is an example of a 
potential large scale architectural project with global 
implications. The entire project has been designed, engineered, 
sourced and manufactured all within New York City. The basis of 
this project being the support of plant life and public space 
below the surface of the earth is a great example of the full 
spectrum of manufacturing and tremendous social impact New York 
City can foster.

    This correlates directly with what FXE is attempting. 
Choosing to operate here in NYC with the sheer density of 
diversity will allow us a fantastic base of talent young and 
older from all fields and walks of life to pull from.

    Being a new manufacturer and being supported by and 
supporting the establishments like the Brooklyn Navy Yard makes 
us very hopeful for the new positive city building 
manufacturing efforts growing within the 21st century in NYC.

    Sincere thanks,

    Edward Jacobs
               `Made in NY' Expansion to Fashion Industry


    New `Made in NY' programs catalyze growth of independent 
designers, production facilities, aim to build future pipeline 
of industry talent

    We are Made in NY is an economic development initiative 
that supports the City's digital, film, theatre and 
broadcasting sectors, and last year expanded to support fashion 
companies as well. Made in NY highlights job opportunities in 
the various sectors, celebrates the growing number of New York 
City-based companies, provides access to resources and programs 
to help companies grow, and helps novices learn how to become 
part of the innovation system.

    NYCEDC announced significant achievements for the `Made in 
NY' suite of initiatives. Over the past twelve months, the new 
and expanded programs supported by `Made in NY,' including 
retail partnerships, competitions, fellowships, marketing, and 
financing initiatives, have directly strengthened the fashion 
community in the following ways:

           Connected emerging businesses with more than 
        75 industry-leading mentors

           Showcased over 150 local fashion brands to 
        650 million people

           Generated over 450K in sales for NYC-based 
        established and emerging designers

           Awarded more than 4.5M in financing and 
        prizes to emerging and small businesses

    In addition, NYCEDC and the Council of Fashion Designers of 
America (CFDA) announced the third round of winners of the 
Fashion Manufacturing Initiative grant program, a $6 million 
public-private partnership designed to support the City's 
fashion manufacturing businesses and promote growth and 
innovation in the fashion sector. Seven fashion production 
companies will receive grants ranging from $8,000 to $250,000 
to upgrade equipment and technology, and provide workforce 
training to increase business capacity, and create and preserve 
jobs with the City's fashion industry.

    For 2016, NYCEDC announced the inception of new 
initiatives, aimed at further bolstering the city's pipeline of 
creative talent:

           The Made in NY Showcase, which will directly 
        support the presence of local designers at trade shows. 
        The program will offer a selected group of fashion 
        designers a series of Made in New York-branded and 
        fully subsidized booths and display spaces at the 
        Designers & Agents industry trade show in early fall 
        2016, providing them with the opportunity to exhibit a 
        collection of locally designed and produced apparel and 
        accessories. The Showcase Program will also implement a 
        series of exclusive workshops and seminars on various 
        topics critical for successful trade show participation 
        to Program participants in the weeks leading up to the 
        industry trade show.

    Throughout 2015, NYCEDC kicked off an array of new `Made in 
NY' programs, designed to celebrate the city's fashion legacy 
and endow the next generation of creative entrepreneurs with 
the resources necessary to succeed:

    Citywide Marketing Campaign

    From August through September of 2015, NYCEDC highlighted 
the `Made in NY' initiative's expansion to the fashion 
community via a citywide consumer-focused & awareness-building 
campaign showcasing nine local fashion brands, including Prabal 
Gurung, Rosie Assoulin, Alexis Bittar, Chromat, and Public 
School. The campaign spanned print and digital media outlets, 
including Women's Wear Daily, Vogue, and New York Magazine, as 
well as out-of-home media throughout the five boroughs, such as 
billboards, buses, taxi stops and street pole banners 
throughout the five boroughs.

    Barneys New York x CFDA: Made in New York Collection

    In September 2015 and in partnership with Barneys New York 
and the Council of Fashion Designers of America (CFDA), NYCEDC 
unveiled the Made in New York Collection, a curated compilation 
of limited-edition pieces produced entirely within NYC's five 
boroughs and designed by seven prominent New York-based brands, 
including Thom Browne, Narcisco Rodriguez, and The Row. The 
Collection is retailed in 18 Barneys New York stores nationwide 
through May 2016.

    Designer Certification Program

    In September 2015, NYCEDC launched the Made in NY designer 
certification, which endows qualifying NYC fashion brands with 
use of the `Made in NY' logo in order to help generate 
visibility, cache, and demand for their businesses.

    Made in NY Fashion Award Presentation

    In October 2015, NYCEDC honored Andrew Rosen, CEO of 
Theory, with the City's inaugural Made in NY Fashion Award. 
Commemorating an individual's extraordinary impact on NYC 
fashion industry, the Award was presented during the Women's 
Wear Daily's Apparel & Retail CEO Summit, a two-day conference 
attracting the industry's most prominent executives from around 
the world.

    Not Just A Label x Made in NY

    In December 2015, NYCEDC partnered with Not Just A Label 
(NJAL), a global e-commerce platform, and the Waldorf Astoria 
New York to crate a temporary retail space featuring a rotating 
collection of over 1,000 locally designed and produced apparel, 
jewelry, and accessory items. More than 100 emerging designers 
participated in the retail pop-up, which attracted an estimated 
1,500 visitors over the 10-day period.

    In addition to its newly implemented `Made in NY' programs, 
NYCEDC has significantly expanded its investment in the 
following fashion programs:

    Fashion Manufacturing Initiative

    In 2015, the Fashion Manufacturing Initiative (FMI), which 
provides grants to local production facilities to upgrade 
equipment and technology, offer employees skills training, and 
cover costs of relocating within NYC, doubled funding 
commitments to $6M, with support from the program's two Premier 
Underwriters Ralph Lauren and The Coach Foundation. FMI also 
launched new business development opportunities for grant 
recipients, such as free industry trade show participation, 
CFDA designer open houses, and consumer-focused retail 
partnerships. To date, FMI has awarded $2M in grants to 19 of 
the City's fashion production companies.

    Made in NY Retail Activation

    Retail activation offered a curated, rotating collection of 
locally manufactured fashion items designed by 125 emerging 
designers. This program was open to the public at the Waldorf 
Astoria's ground floor retail space for 10 days from December 
3rd to December 13th, 2015. The program aims to increase sales 
of NYC-produced goods, raise the profile of NYC-based 
designers, and create sales opportunities otherwise 
inaccessible to emerging NYC brands.

    NYC Fashion Production Fund

    In 2015, the Fashion Production Fund awarded 24 loans, 
totaling over $1.5M in financing. To date, the Fund has 
provided 30 loans, a total of $2.5M in financing at below-
interest rates to emerging NYC-based designers in order to 
locally manufacture their collections. The Fund was launched in 
partnership with Capital Business Credit in June 2014 and 
provides emerging designers with production financing at below-
market rates and flexible terms to cover the costs of purchase 
orders. Loans are awarded between $50,000 and $300,000 in size, 
with terms of 30-120 days.

    NYC Fashion Fellows

    In 2015, the New York City Fashion Fellows program 
announced its fourth class of 25 fellows, comprised of the 
industry's most promising emerging leaders. Building on the 
program's foundation of mentorship, networking, and educational 
opportunities, NYCEDC further incorporated professional 
development and skill-based workshops in 2015. To date, the 
program has directly supported the growth of 67 Fellows, in 
collaboration with 50 industry-leading mentors. With strong 
industry support, the program is entering into its 4th year, 
with a new cohort of 25 Fellows for 2016.

    Design Entrepreneurs NYC

    In 2015, in collaboration with industry sponsor G-III 
Apparel Group, Design Entrepreneurs NYC (DENYC) entered its 5th 
year, with the military-inspired menswear Cadet earning the top 
prize. DENYC also increased its prize monies awarded to the 
competition's winners nearly fivefold, from $35K to $150K. To 
date, the program has supported 130 emerging designers in 
building their businesses. In partnership with the Fashion 
Institute of Technology, DENYC is an intensive, ``mini-MBA'' 
program for fashion designers who have launched their own 
labels. Participants take business and management modules over 
3 workshop weekends and create and refine individualized 
business plans, with the aid of an assigned mentor. On the 
basis of their business plan, participants compete to win prize 
money at the program's conclusion.