[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]


                  SUPPLY CHAIN RESILIENCY AND THE ROLE OF 
                              SMALL MANUFACTURERS

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

                                HEARING

                               BEFORE THE

        SUBCOMMITTEE ON ECONOMIC GROWTH, TAX, AND CAPITAL ACCESS

                                 OF THE

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD
                             APRIL 29, 2021

                               __________

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
                               

            Small Business Committee Document Number 117-010
             Available via the GPO Website: www.govinfo.gov
             
                               __________

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
44-563                     WASHINGTON : 2020                     
          
-----------------------------------------------------------------------------------            
             
                   HOUSE COMMITTEE ON SMALL BUSINESS

                 NYDIA VELAZQUEZ, New York, Chairwoman
                          JARED GOLDEN, Maine
                          JASON CROW, Colorado
                         SHARICE DAVIDS, Kansas
                         KWEISI MFUME, Maryland
                        DEAN PHILLIPS, Minnesota
                         MARIE NEWMAN, Illinois
                       CAROLYN BOURDEAUX, Georgia
                          JUDY CHU, California
                       DWIGHT EVANS, Pennsylvania
                       ANTONIO DELGADO, New York
                     CHRISSY HOULAHAN, Pennsylvania
                          ANDY KIM, New Jersey
                         ANGIE CRAIG, Minnesota
              BLAINE LUETKEMEYER, Missouri, Ranking Member
                         ROGER WILLIAMS, Texas
                        JIM HAGEDORN, Minnesota
                        PETE STAUBER, Minnesota
                        DAN MEUSER, Pennsylvania
                        CLAUDIE TENNEY, New York
                       ANDREW GARBARINO, New York
                         YOUNG KIM, California
                         BETH VAN DUYNE, Texas
                         BYRON DONALDS, Florida
                         MARIA SALAZAR, Florida
                      SCOTT FITZGERALD, Wisconsin

                 Melissa Jung, Majority Staff Director
            Ellen Harrington, Majority Deputy Staff Director
                     David Planning, Staff Director
                            
                            
                            C O N T E N T S

                           OPENING STATEMENTS

                                                                   Page
Hon. Sharice Davids..............................................     1
Hon. Dan Meuser..................................................     3

                               WITNESSES

Mr. Claudio Dente, President, DenTec Safety Specialists, Lenexa, 
  KS.............................................................     6
Mr. Wes Hampp, Co-Founder & Managing Partner, Holleway Capital 
  Partners, LLC, Overland Park, KS...............................     7
Ms. Kimberly Glas, President & CEO, National Council of Textile 
  Organizations, Washington, DC..................................     9
Mr. David Taylor, President & CEO, Pennsylvania Manufacturers' 
  Association, Harrisburg, PA....................................    10

                                APPENDIX

Prepared Statements:
    Mr. Claudio Dente, President, DenTec Safety Specialists, 
      Lenexa, KS.................................................    21
    Mr. Wes Hampp, Co-Founder & Managing Partner, Holleway 
      Capital Partners, LLC, Overland Park, KS...................    26
    Ms. Kimberly Glas, President & CEO, National Council of 
      Textile Organizations, Washington, DC......................    34
    Mr. David Taylor, President & CEO, Pennsylvania 
      Manufacturers' Association, Harrisburg, PA.................    43
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Material for the Record:
    Alliance for American Manufacturing..........................    47
    American Fashion Network (AFN)...............................    50
    CATO.........................................................    53
    Job Creators Network (JCN) Statement of Carlos Ruiz..........   120
    Job Creators Network (JCN) Statement of Guy Berkebile........   121
    Manufactured Housing Institute (MHI).........................   123
    National Waste & Recycling Association.......................   125

 
      SUPPLY CHAIN RESILIENCY AND THE ROLE OF SMALL MANUFACTURERS

                              ----------                              


                        THURSDAY, APRIL 29, 2021

              House of Representatives,    
               Committee on Small Business,
                   Subcommittee on Economic Growth,
                                   Tax, and Capital Access,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 1:00 p.m., via 
Zoom platform. Hon. Sharice Davids [chairwoman of the 
Subcommittee] presiding.
    Present: Representatives Davids, Newman, Evans, Andy Kim, 
Meuser, Van Duyne, and Donalds.
    Chairwoman DAVIDS. Good afternoon, everybody. I call this 
hearing to order.
    Without objection, the Chair is authorized to declare a 
recess at any time.
    I want to thank everyone, especially our witnesses for 
joining us today for our Subcommittee's remote hearing. I want 
to make sure to note some important requirements.
    Let me begin by saying that the standing House and 
Committee rules and practice will continue to apply during 
remote proceedings. All members are reminded that they are 
expected to adhere to these standing rules including decorum 
when they are participating in any remote event.
    With that said, the technology we are utilizing today 
requires us to make some small modifications to ensure that the 
members can fully participate in these proceedings. House 
regulations require members to be visible through a video 
connection throughout the proceeding, so please keep your 
cameras on. Also, if you participate in another proceeding, 
please exit and log back in later.
    In the event a member encounters technical issues that 
prevent them from being recognized for their questioning, I 
will move to the next available member of the same party. I 
will recognize that member at the next appropriate time slot 
provided they have returned to the proceeding.
    Should a member's time be interrupted by technical issues, 
I will recognize that member for the next appropriate spot for 
the remainder of their time once their issues have been 
resolved. In the event a witness loses connectivity during 
testimony or questioning, I will preserve their time as the 
staff addresses the technical issue. I may need to recess the 
proceedings to provide time for the witness to reconnect.
    And finally, remember to remain muted until you are 
recognized to minimize background noise.
    In accordance with the rules established under H.R. 965, 
staff have been advised to mute participants only in the event 
that there is inadvertent background noise. Should a member 
wish to be recognized, they must unmute themselves and seek 
recognition at the appropriate time.
    All right. Well, the COVID-19 pandemic has exposed 
longstanding weaknesses in global supply chains. As countries 
around the world shut down to slow the spread of the virus, 
entire sections of the domestic and global economies were 
brought to a standstill. In the United States, businesses 
across every sector suffered supply shortages. Gaps in supply 
chain had a substantial impact on our fight against COVID. The 
scarcity of personal protective equipment forced medical 
professionals on the frontlines to fight the virus with garbage 
bags as gowns and coffee filters as masks.
    At the same time, we saw insufficient supply in critical 
industries like clothing manufacturing, electronic components, 
and agriculture. In total, nearly 80 percent of U.S. businesses 
experienced a disruption in their supply chain. These 
disruptions often hit small businesses the hardest. Small firms 
regularly have limited inventory, depend on lower costs from 
overseas suppliers, and do not have the margins to sustain 
extended product shortages.
    While small businesses are uniquely vulnerable to 
disruptions, they also play a pivotal role in building more 
resilient supply chains. Small firms are agile and adapt to 
changing market conditions more quickly than large 
corporations. Small manufacturers can also quickly adapt their 
business models to meet changing demands. As we saw last year 
when small distillers began producing hand sanitizer, 
independent manufacturers can shift operations to meet the 
needs of their communities. These small domestic manufacturers 
will play a critical role as we seek to strengthen our supply 
chains and prepare for future economic disruption.
    That is why we have to recognize the significant obstacles 
that these enterprises face in a post-COVID world and work to 
address those. The overall manufacturing sector could take 
longer than 5 years to recover to the pre-crisis GDP levels. To 
return to pre-pandemic output, factories are going to need to 
address various challenges related to meeting new health and 
sanitation requirements. This will require the implementation 
of new systems, the adoption of digital technologies to protect 
their workers, and modernization in the wake of the pandemic.
    To meet these challenges, small manufacturers will need 
reliable access to affordable capital. Unfortunately, these 
firms traditionally have a much harder time obtaining funding 
than their larger counterparts. This leads many to rely on 
antiquated equipment and facilities with lower productivity. 
Without increased access to affordable capital, small 
manufacturers will find it difficult to find the upgrades 
necessitated by the pandemic further weakening America's 
manufacturing base.
    Fortunately, the Small Business Administration has several 
programs in place that small manufacturers can take advantage 
of. Every year, the 7(a) loan guarantee program, the 504/CDC 
loan guarantee program, and the Small Business Investment 
Company Program supply small manufacturers with billions of 
dollars in capital on favorable terms. This money helps these 
businesses pay for fixed assets, purchase new equipment, access 
venture capital, and finance a variety of other expenditures. 
We must utilize these programs and others to strengthen our 
manufacturing base and avoid future supply chain disruptions.
    That is why I fought to secure $10 billion for the Defense 
Production Act in the American Rescue Plan, to ramp up domestic 
production of critical supplies. It is also why I recently 
introduced the Supplies Act, a bill that would create $100 
million grant program to increase domestic manufacturing of 
medical supplies by our small businesses. I hope that today's 
hearing gives us a chance to find more ways to empower small 
manufacturers and improve the SBA lending program to serve 
them.
    I now yield to the Ranking Member for his opening 
statement.
    Mr. MEUSER. Thank you, Madam Chairwoman. I appreciate it 
very much. I certainly appreciate our witnesses appearing with 
us today.
    Am I coming through okay, Madam Chair? Okay, great.
    Coming from a manufacturing background, I am very much 
looking forward to this hearing and hearing from all on some 
ideas, suggestions that the Federal Government and the U.S. 
Congress can engage in to improve our strength and ability for 
small manufacturers, and all manufacturers for that matter. And 
I thank you, Madam Chairwoman. I appreciate your convening 
today's hearing on this very important topic. Given the great 
influence these businesses have on our national economy, I 
think it is particularly appropriate that we dedicate the 
Subcommittee's first hearing for one of America's most vital 
industries. In fact, it is difficult to overstate the 
importance of manufacturing to our economy. At a microlevel, 
manufacturing is a significant job creator, reaching higher 
than average salaries, raising the standard of living for 
millions of Americans across the country. Pennsylvania 
manufacturers account for over 12 percent of the total output 
in the state, employing nearly 600,000 individuals directly and 
10 percent of our workforce. Pennsylvania manufacturers help 
sustain millions of additional jobs up and down the supply 
change. Prior to the pandemic, total manufacturing was almost 
$100 billion in 2019.
    Manufacturing is also a most significant of a multiplier 
effect. It generates more economic activity than any other 
economic sector. For every dollar spent in manufacturing from 
the private sector, another $1.89 is added to the overall 
economy. At a microlevel, manufacturing drives productivity 
growth which drives R&D growth.
    Productivity growth is the lifeblood of technological 
development. The bulk of innovation happens in manufacturing 
growth from other sectors and springs from innovation within 
the sector. Given its significance, this hearing should help us 
understand top concerns threatening the industry. The workforce 
crisis in manufacturing in Pennsylvania, and I am sure in most 
states, is exasperated by the gradual retirement of an aging 
workforce and negative perception of manufacturing by the 
younger generation. That is why we need more tours and more 
career technical investments because these manufacturing 
facilities are far cleaner and they are not the traditional 
manufacturing of our fathers' days. A skills gap resulting from 
declining science, technology engineering in the U.S. and the 
inability to recruit qualified candidates in skilled production 
line positions. These struggles are only one piece of the 
broader picture.
    Outsourcing of U.S. manufacturing to foreign nations, from 
China, most of Southeast Asia and down the list, we have driven 
supply chains vulnerable to failure and exploitation by foreign 
actors weakening our national position in defense, health, and 
all other sectors. The aggressive economic tactics by 
competitive Nations creating global market distortions which 
will depress competition.
    On top of all this, the maze of Federal acquisition 
processes, like the contract timelines and emergency clearances 
and accounting requirements creates significant hurdlers for 
U.S. manufacturers and all businesses for that matter seem to 
grow and thrive in the Federal marketplace, as well as a 
tendency for the U.S. not to create the most competitive 
atmosphere and truly appreciate that is what draws 
manufacturing to the U.S. from other countries who compete on a 
global scale. All manufacturers in particular hit hardest by 
such challenges.
    Even though the overall picture might seem quite 
challenging, the silver lining in this is the power of the 
small manufacturers will reshape our Nation. Many small 
manufacturers do not make finished products but are a source 
for many domestic manufacturers of finished products. From my 
business career in manufacturing, close to 25 years, I know 
firsthand the importance of reliable, quality, cost-effective, 
financially solvent supply chain.
    Given any impact to small manufacturers, positive or 
negative that can cause a significant ripple throughout the 
rest of our economy, we as members of Congress need to consider 
carefully our policies and their impact on these essential 
businesses, especially now as we are recovering from the 
pandemic. In short, manufacturing matters. I look forward to 
the testimony of the witnesses today and I yield back. Thank 
you.
    Chairwoman DAVIDS. Thank you, Mr. Meuser. The gentleman 
yields back.
    I would like to take a moment to explain how this remote 
hearing will proceed. Each witness will have 5 minutes to 
provide a statement, and each Committee member will have 5 
minutes for questions. Please ensure that your microphone is on 
when you begin speaking and that you return to mute when you 
have finished.
    I would now like to introduce our witnesses.
    Our first witness is Mr. Claudio Dente. Mr. Dente is the 
president of Dentec Safety Specialists, a manufacturer of 
personal protective equipment located in Lenexa, Kansas, which 
is in my home district. His business had to pivot at the height 
of the pandemic in order to meet the sharp increase in demand 
for PPE and face severe supply chain management challenges. I 
am looking forward to hearing about how Dentec adapted to the 
market conditions brought on by the pandemic. Welcome, Mr. 
Dente.
    Our second witness is Mr. Wes Hampp. Mr. Hampp is the 
cofounder and managing partner of Holleway Capital Partners, an 
SBA-licensed small business investment company (SBIC) located 
in my district that targets small manufacturers in the Greater 
Midwest and Southern U.S. His insights are critical for us to 
learn how SBA's capital programs, such as SBIC, can play a role 
in helping finance the future of our domestic manufacturing 
base. Welcome, Mr. Hampp.
    And then our third witness today is Ms. Kimberly Glas, 
president and CEO of the National Council of Textile 
Organizations. NCTO represents and advocates for domestic 
textile manufacturers, the vast majority of whom are small 
businesses. Prior to joining NCTO, Ms. Glass held positions at 
the Department of Commerce as the deputy assistant secretary 
for textiles, consumer goods and materials, and led the Blue 
Green Alliance. Your long history and expertise in this 
industry will certainly help us craft a path forward for small 
business manufacturers. Welcome, Ms. Glass.
    And I would like to now yield to our Ranking Member, Mr. 
Meuser, to introduce our final witness.
    Mr. MEUSER. I thank you, Madam Chairwoman, very much.
    I would like to welcome our final witness who is from the 
great Commonwealth of Pennsylvania, Mr. David Taylor. Mr. 
Taylor is the president and chief executive officer of the 
Pennsylvania Manufacturers' Association (PMA), the century-old 
statewide trade organization representing the hardworking 
manufacturers throughout the Commonwealth. PMA is the official 
Pennsylvania state partner of the National Association of 
Manufacturers (MAN), the Nation's foremost advocate for 
manufacturers representing 14,000 member companies across the 
country in every industrial sector. Mr. Taylor brings with him 
a wealth of knowledge and experience having spent over 2 
decades with PMA as its spokesman in the state capitol and as a 
leader. Mr. Taylor is a frequently sought-after guest and 
commentator by media outlets across the Commonwealth, and we 
are fortunate to have him here with us today.
    In addition to his role at PMA, Mr. Taylor serves as 
Chairman of the Pennsylvania Leadership Council. He is a member 
of the American Institute's Leadership Network. He currently 
serves as a member of the Executive Committee of the Conference 
of State Manufacturers' Association. He is on the Board of 
Directors of the Pennsylvania Steel Alliance, Foundation for 
Free Enterprise Education, Business Industry Political Action 
Committee, the Lincoln Institute for Public Opinion Research. 
He serves as the board president of REACH cyber charter school, 
an online public school providing a broad range of science, 
technology, engineering, and math enrichment of students. Prior 
to joining PMA, Mr. Taylor worked for the United States Senate 
and the Senate of Pennsylvania. He is a native of Huntington, 
Pennsylvania where I was just last weekend and a graduate of 
Dickinson College.
    Mr. Taylor, thank you for all that you do for Pennsylvania 
and for your participation today. We look forward to your 
testimony and I yield back.
    Chairwoman DAVIDS. Thank you for doing that introduction.
    Mr. Dente, we are going to go ahead and get started. You 
are recognized for 5 minutes.

     STATEMENTS OF CLAUDIO DENTE, PRESIDENT, DENTEC SAFETY 
SPECIALISTS; WES HAMPP, CO-FOUNDER & MANAGING PARTNER, HOLLEWAY 
CAPITAL PARTNERS, LLC; KIMBERLY GLAS, PRESIDENT & CEO, NATIONAL 
  COUNCIL OF TEXTILE ORGANIZATIONS; DAVID TAYLOR, PRESIDENT & 
          CEO, PENNSYLVANIA MANUFACTURERS' ASSOCIATION

                   STATEMENT OF CLAUDIO DENTE

    Mr. DENTE. Sorry about that. Wrong button.
    I appreciate it very much, Madam Chair. I appreciate the 
opportunity to participate in this conversation.
    I would like to let you know first that I am a 41-year 
veteran of personal protective equipment and manufacturing, 
distribution, and design. I know nothing but this industry. I 
am going to share with you my journey through this experience.
    I purchased a respirator manufacturing operation located in 
the Kansas City, Kansas area called U.S. Safety. That company 
had been manufacturing reusable respirators, filters, and 
cartridges for some 40-plus odd years. My interest in the 
business was because respiratory protection is a critical 
product in our industry and because I have been through all the 
viruses, and I wanted to be able to bring a product to market 
that was manufactured and assembled in the United States.
    The effect of COVID, what happened, I was in New York when 
it first hit. I was traveling on business. It was in February. 
The news started to spread. From New York I went to Kansas and 
then, of course, COVID blew up. It was like something I have 
never seen or experienced, all of us have. Quickly, the supply 
or disposable N95 respirators, surgical masks from overseas, 
and also from domestic supply completely collapsed. Nothing was 
available.
    Fortunately for us and our business, we manufacture 
reusable rubber half masks and an N95 filter in our facility. 
We quickly deployed a marketing campaign to the marketplace, 
and it became an incredible success because we were able to 
help not only healthcare workers but general industry for those 
that could keep working. However, folks, the orders were 
overwhelming for a company of our size. They were massive. They 
continued to hit us with orders every single day.
    My team worked 6-, 7-day weeks, 2 shifts, 10-12 hour days. 
I do not know how they did it and I do not know how they still 
do it. God bless them. We experienced everything that you could 
imagine--raw material shortages, equipment breakdowns, 
employees coming and going. Very, very difficult. So, in 
summary, surge demand orders, which I had been through in the 
past unlike what I have seen here during COVID, are absolutely 
enormous. Not only for a small business but also for a big 
business.
    And the challenges that when you have to set up and get 
going are equipment, which are molds. Everything I make is 
plastic or rubber, so we are dependent on molds and injection 
molding machines. We are dependent on cycle time. My product 
has a lot of hand assembly to it. So, you have to make 
arrangements to acquire those goods in a fashionable time. 
Fortunately, we received a grant and funding from the CARE/
SPARKS program, and we have modernized our facility in a manner 
that I did not dream was possible in the next 10 years. The 
next time you come, Ms. Davids, I think you will be quite 
impressed.
    We also had enormous space challenges, as you can 
appreciate. When you have to make product of this magnitude, it 
is absolutely incredible. So, all of these are expenses that we 
have to incur. And as an entrepreneur and an owner of a 
business, you are fearful of committing yourself beyond when 
the pandemic resides.
    So, a couple of recommendations that I would like to pose 
to the Committee are that instead of not only subsidizing 
people during a time, critical businesses like ours, help us 
hire people by subsidizing an additional wage to them, an 
hourly wage. Rather, this would create tax income as well and 
not just debt.
    Staffing, of course, was a challenge to hire people. What I 
ask, when you identify critical businesses such as ours, 
perhaps we could have access to some military personnel to help 
us ramp up. They are process oriented, great workers, wonderful 
personalities, and if we could have access to people like that 
for a short period of time while we ramp up it would make an 
enormous difference for us as a business.
    And then finally, financing. We want to be careful again as 
an entrepreneur and an owner, I do not want to extend myself 
beyond because it as quickly as COVID came upon us, all of a 
sudden it will stop and then you are stuck with the overhead, 
capital investment and so forth and loans. So, my suggestion 
would be to--of course, grants are fantastic for those that are 
worthy of it, but also loans in a manner that are not as 
challenging and maybe recognize the concerns of when the event 
subsides. Thank you very much.
    Chairwoman DAVIDS. Mr. Hampp, you are now recognized for 5 
minutes.

                     STATEMENT OF WES HAMPP

    Mr. HAMPP. Thank you, Chair Davids, Ranking Member Meuser, 
and members of the Subcommittee. Thank you for inviting me to 
testify at this important hearing.
    My name is Wes Hampp. As Chair Davids said, I am a 
cofounder and managing partner of Holloway Capital Partners. We 
are a small business investment company (SBIC). We are 
headquartered in St. Louis but we have an office in Overland 
Park, Kansas where I sit. We focus on investing in small 
manufacturers throughout the Midwest.
    I am going to highlight several challenges with the U.S. 
supply chain we are experiencing in our portfolio companies and 
suggest a few solutions.
    Challenge 1. COVID-19 exposed our country's massive 
reliance on China and our supply chain across nearly all 
industry sectors. While U.S. businesses compete successfully in 
a global economic environment, there are positive economic 
arguments for global supply chains but COVID-19 exposed an 
urgent need for more domestic manufacturing to reduce our 
reliance on imports.
    Manufacturing is an interconnected ecosystem where the 
impacts on any one business can affect other associated 
businesses. The Paycheck Protection Program (PPP) was a 
lifesaver and helped stabilize the financial uncertainty many 
small businesses faced in the early days of the pandemic. 
Today, however, domestic supply chains are in a state of chaos. 
Prices are rising, in some cases 25 percent week to week, and 
lead times have been extended in some cases four times longer 
than pre-pandemic levels. PPP allowed many small businesses to 
surge back but many of their larger company suppliers lost 
their workforces and were unable to quickly restart and return 
to pre-pandemic production levels which has led to domestic 
supply chain disruptions.
    After COVID-19 hit last year, some large companies that 
supply products to smaller manufacturers stopped making growth 
investments, shuttered capacity, and even laid off employees. 
As demand rebounded in late 2020 and so far this year, these 
larger suppliers are now struggling to hire and train employees 
to ramp output to meet demand. In some cases, it appears that 
supply chain disruptions may have been an unintended 
consequence of limiting PPP to small businesses.
    Challenge 3, our biggest challenge facing small 
manufacturers is labor supply. Small manufacturers are unable 
to find employees to fill open positions which is hindering our 
growth. In some cases, our companies have raised starting wages 
20 percent but positions remain unfulfilled. This issue is 
currently more acute for unskilled entry-level positions but is 
a challenge for skilled labor as well.
    These are the key challenges. Let me offer a few solutions.
    Solution 1. Access to patient capital is critical for 
domestic small businesses in order to keep the U.S. competitive 
and strengthen supply chains. Since SBICs invest exclusively in 
domestic companies, and heavily in manufacturing, they are an 
excellent vehicle to get capital to small manufacturers. 
Congress should support policies that reward and encourage SBIC 
investments and not do anything to hinder the program's 
success. Particularly, lawmakers should support more equity 
investing in U.S. small businesses that otherwise need to rely 
on debt financing where in some cases equity is more 
appropriate.
    Congress should write tax policies that encourage, not 
discourage, long-term investing in America's small businesses. 
Before Congress doubles the capital gains rate, I would implore 
you to consider what doing so would do to small business owners 
across the country, especially older entrepreneurs that are 
beginning to explore retirement. Small business owners build 
their businesses over years, even the majority of a lifetime. 
They typically get to sell that investment once. And when the 
entrepreneur sells their business it is commonly going to 
generate more than $1 million in income but that nest egg kind 
of becomes what they expect to live on for the rest of their 
lives. If capital gains taxes are raised, there should be 
serious consideration given to investments in American small 
businesses.
    Solution 3. Our leaders in government, business, and 
education should work together to promote and provide 
opportunities to learn skilled trades through apprenticeships 
and technical education. Finding workers is one of the biggest 
problems in the manufacturing sector and it is holding back 
small business growth and national economic growth. Four-year 
college degrees are not for everyone and people can make good 
livings working in the trades and support manufacturing. And 
these types of careers should be supported and encouraged.
    Thank you again for the opportunity to testify before the 
Subcommittee, and I welcome your questions.
    Chairwoman DAVIDS. Thank you, Mr. Hampp.
    Ms. Glas, you are now recognized for 5 minutes.

                   STATEMENT OF KIMBERLY GLAS

    Ms. GLAS. Thank you so much for the opportunity to testify 
before you today. I am the president and CEO of the National 
Council of Textile Organizations and I represent the domestic 
textile industry and the 539,000 workers it employs. We are 
predominantly comprised of small businesses.
    Today's focus on supply chains and bolstering our small 
businesses is an incredible opportunity. There are immense 
challenges faced by our industry as a result of this pandemic. 
Literally, overnight, billions of orders were canceled. And I 
was looking out at an industry that was really confronting 
bankruptcy.
    In the spring of last year when PPE shortages were hitting 
every front line, and workers were wearing garbage bags as 
gowns or reusing N95 masks, our industry really stepped up. But 
it is important for me to highlight that the reason that these 
supply chains broke down was that our predominant supply for 
these items was in China. And Chinese subsidies, coupled with 
significant global demand, exacerbated by export controls 
placed by the Chinese on certain products and raw materials, 
had a cascading impact that we were reading on the front pages.
    Simply put, it was like fighting a fire with a garden hose 
on every front. U.S. textile manufacturers quickly mobilized. 
Virtually overnight, our members were able to retool supply 
chains to make over a billion face masks, isolation gowns, and 
other textile components. In fact, I am in New York's garment 
district right now and this garment district played a 
significant role in retooling their supply chain.
    In order to help the Nation's PPE crisis, manufacturers 
retooled overnight, but they had to purchase expensive 
equipment at a time when capital was really uncertain and at a 
considerable expense. In addition, industry needed to expend 
significant resources to ensure safe workplaces to get workers 
back to work and purchase the raw materials necessary to making 
lifesaving PPE. Please note that while PPE was important for 
our frontline workers, it did not make up for the significant 
loss of orders of normal business in our industry. Industrial 
expenses were vast and wide-ranging, including everything from 
health and safety measures, to thermometers, to more pay for 
workers, to bringing them back on the job. We appreciate that 
there are many solutions necessary for small textile 
manufacturers to weather the challenges of the pandemic and the 
crisis that we are still confronting.
    For many of our small businesses, SBS programs serve an 
important role. Many of our companies take advantage of 
everything from the Paycheck Protection Program to Main Street 
lending, 7(a) loans and 504 loans. Our members really 
appreciate the aspect of the SBA loans, including the lower 
down payment and extended payment term. These advantages, 
however, are sometimes offset by other factors that 
disincentivize their use. And I have several key solutions to 
project for the Committee, and for you all to consider moving 
forward.
    First, we think that we need to reform our domestic 
procurement rules for federal purchases of PPE. Right now, we 
need to extend the Berry Amendment rules for our military for 
PPE items that are purchased by other agencies across the 
Federal Government. We appreciate the president's ``Build Back 
Better'' initiative to strengthen our supply chains, but we 
need legislation to move forward. We want to highlight that 
Congressman McHenry from North Carolina and Congressman Bill 
Pascrell from New Jersey have co-sponsored the American PPE 
Supply Chain Integrity Act which does just that.
    In addition, we believe that there needs to be more tools 
and investments in small businesses to manufacture these 
products moving forward. We appreciate the support for the 
Defense Production Act, but we also need Federal protection 
grants and tax credits to ensure manufacturing capacity.
    Chairwoman Davids, I want to highlight your bill as well. 
The $100 million fund set aside for small businesses is an 
important tool moving forward, but we need more tools moving 
ahead.
    Further, private sector investment is important to U.S. 
supply chains and can be bolstered by contracting reforms that 
promote long-term contracts for U.S. suppliers. We need a 
demand signal. In fact, our industry is starting to see orders 
dry up for PPE. We have had 60-day contracts and 90-day 
contracts. We need certain set-asides for small businesses, but 
we should ensure that when we are providing contracts to small 
businesses, those companies can deliver and have the capital 
necessary to help the U.S. Government.
    And the last recommendation I had is to ensure that the SBA 
loan process is streamlined and that communication is better 
with borrowers. During the height of the pandemic, it was 
difficult for some of our manufacturers to tap into the 
resources because they simply did not know where the paperwork 
trail would eventually begin.
    Our industry is ready to work with this Committee. I want 
to amplify the comments made about workforce. We really do need 
more funding to help bring workers back on the job, and our 
industry stands ready to help this Committee in any way 
possible.
    Chairwoman DAVIDS. Thank you, Ms. Glas.
    And Mr. Taylor, you are recognized for 5 minutes.

                   STATEMENT OF DAVID TAYLOR

    Mr. TAYLOR. Thank you, Chairwoman Davids and Ranking Member 
Meuser and members of the Subcommittee, thank you for the 
privilege of testifying today.
    As Congressman Meuser was so kind to introduce me, I am 
David Taylor. I am the president and CEO of the Pennsylvania 
Manufacturers' Association. We are the statewide not-for-profit 
group representing the people who make things and 
Pennsylvania's public policy sector. I also want to thank 
Congressman Evans from Philadelphia, my great friend. It is 
good to see you, sir.
    I want to express three important points. First, the 
workforce crisis is real and is a hard cap on America's 
economic growth. Second, the Federal Government becomes a 
competitor to employers when it pays people more to stay home 
than they would earn at work. And third, Congress can help 
address the workforce crisis by working with the states to 
reinvent the existing tangle of taxpayer-funded workforce 
development and job training programs. And I will expand on 
each of those points as I go on.
    Manufacturing is the sector of our economy that adds the 
most value, pays the highest wages and benefits, and has the 
strongest multiplier effect on job creation. No matter what 
product is being made, manufacturing takes raw materials or 
component parts and goes through a multi-stage process to yield 
a finished good, almost always consuming a large amount of 
energy and usually deploying some kind of chemical process. 
Because of that multi-stage process of adding value, 
manufacturing sustains not only the jobs on the plant floor but 
also jobs through supply chains, distribution networks, and 
vendors of industrial services. In that way, the major 
manufacturer is often the small business owner's best customer.
    I know the Subcommittee is looking to examine the supply 
chains for small business, however the most critical input that 
is lacking for manufacturers today is the supply of qualified 
workers. Nationally, manufacturers are facing an alarming 
problem: our workforce is aging and retiring and there is a 
shortage of skilled hands to succeed them. Pennsylvania is no 
exception to this problem. According to our sources at the 
Manufacturing Institute, at any given point in time there are 
about 6,000 open manufacturing positions in Pennsylvania. When 
you couple the current shortage with the fact that some 
companies have more than half of their current workforce within 
just a few years of retirement, then we could consider this 
workforce problem a workforce crisis. The manufacturing sector 
and the workforce at large face an increasingly pressing 
problem: the glut of unfilled jobs due to a skills gap. As a 
result of employers' inability to find enough qualified new 
hires, businesses are not able to grow to meet current levels 
of customer demand. Those employers are ``leaving money on the 
table'' because they cannot find the quality employees they 
need to increase production capacity to be able to bid on new 
work, which is available. This is what I am trying to express 
when I say that the workforce crisis is a hard cap on growth.
    Of course, to get people into the workforce, they first 
have to want to work. This is one of the problems of the 
current moment because of Congress's policy of subsidizing 
state unemployment compensation payments. The Federal 
Government was correct to respond to the needs of our citizens 
caused by the economic shutdown triggered by the pandemic. Many 
people are still dealing with both the health crisis and the 
economic consequences of the shutdown. The impulse to be 
generous is understandable, but regrettably, the Federal 
taxpayer subsidy to state unemployment benefits is keeping many 
employees out of the workforce.
    One final thought that I want to share with you concerns 
the efficacy of the Nation's job training and workforce 
development programs. In Pennsylvania, roughly $2 billion 
dollars in state and Federal taxpayer money is spent annually 
on more than four dozen programs that run through at least five 
different state cabinet agencies. Following a 2019 audit of the 
state's workforce development system, Pennsylvania's Auditor 
General at the time, Democrat Eugene DePasquale said, and I 
quote, ``I think it needs to be restructured entirely. You have 
to envision nothing exists right now and how you would create 
it. None of us would have it look the way it does today.''
    I am convinced that there are hundreds of millions of 
dollars in efficiencies that could be realized if Pennsylvania, 
working in partnership with Congress and the respective Federal 
departments, could realign, rework, and move dollars between 
programs. The existing waiver process has been used to great 
effect by the state of Indiana, and I would recommend using 
their experience as a model for future reforms.
    So thanks again for the great honor of speaking with you 
and I will do my best to answer your questions.
    Chairwoman DAVIDS. Thank you, Mr. Taylor. And thank you to 
all our witnesses. We appreciate your expertise and everything 
you have shared today.
    We will go ahead and get started with the questions. I will 
begin by recognizing myself for 5 minutes.
    Mr. Dente, in your testimony you gave both recommendations 
and a bit about the story of the difficulty that you faced in 
pivoting and transitioning. I am wondering if you could speak 
specifically to the challenges that Dentec faced while 
searching for capital to produce the N95s during the height of 
their shortage here domestically.
    Mr. DENTE. Thank you. Please understand, I do not 
manufacture disposable N95s. We manufacture reusable product. 
Right? So again, when the volume of orders which were massive 
came to us, right now I am self-funded but I was at a point 
where I was saying, what the heck am I going to do? We were 
fortunate when the CARES Act grant program came out, we 
qualified for that. We also qualified for a loan from the 
Department of Commerce for Kansas as well. Had I not qualified 
for those programs I would have had to go to the street, but 
the problem is the speed, trying to get things accomplished 
during a chaotic time like that, I do not know how we would 
have done it. Do not know how we would have done it. I hope 
that answers.
    Chairwoman DAVIDS. Thank you, Mr. Dente.
    I am going to switch over. Mr. Hampp, I know that a lot of 
manufacturers had to reassess their supply chains following the 
pandemic-related disruptions and realized that there was a lot 
of risk and vulnerability in the supply chains that they were 
making use of. I am wondering if you could tell us a little bit 
about the role that SBICs can play in establishing a more 
stable supply chain for our small and mid-size domestic 
manufacturers.
    Mr. HAMPP. Sure. I will talk about, you know, we focus on 
manufacturing. And you know, as the supply chain stretched out 
and it became very difficult, prices are increasing regularly. 
Sometimes products that we would get come just in time basis 
were not even available. What we did was we encouraged our 
portfolio companies to invest in inventory. To take down as 
much inventory as they could as quickly as they could to get 
through what was an uncertain time. Again, the PPP program 
helped. But what happens in those situations where we have a 
company that needs capital to address a short-term issue, the 
SBICs would typically stand behind those portfolio companies 
and inject capital if needed. But all of our companies were 
able to, through the PPP loan, keep employees employed and then 
they had capacity to buy the inventory more than they would 
normally hold to get through the situation. But knowing that 
you have got a financial partner in an SBIC makes making that 
investment easier unlike Claudio. You know, it is not all on 
the individual to source that capital when you have an 
institutional investor alongside as an investor.
    Chairwoman DAVIDS. I appreciate that.
    I guess in the remaining time, Ms. Glas, I would love to 
hear from you. You mentioned quite a bit in your testimony, and 
as you know, last year I introduced the Supplies Act which 
would provide grant funding to small manufacturers who are able 
to produce PPE and other emergency medical items during the 
crisis. I am curious if you see a role for the SBA and other 
Federal agencies to support domestic PPE manufacturing in the 
long term.
    Ms. GLAS. Absolutely. In fact, our industry collectively is 
really seeking a long-term Federal Government plan associated 
with onshoring PPE production. Our industry responded, provided 
materials for the Strategic National Stockpile, FEMA, and 
Defense Logistics Agency. And with the kind of investment that 
you are talking about in your bill--about people being able to 
invest in manufacturing equipment--we can be a globally 
competitive industry. There is no doubt our industry has become 
much more efficient since March of last year when they were 
making products for the first time. They want to invest in 
equipment in their manufacturing facilities to be more globally 
competitive, but they also want a strong demand signal. We 
think working with the Small Business Committee here; the SBA 
leveraging those loans or grant opportunities; and working with 
your agency partners across the Federal Government on 
procurement policies and long-term contracts will ensure that 
this small business community is supported in the long term, so 
that we are bringing these supply chains home and reshoring 
essential production like PPE.
    Chairwoman DAVIDS. Thank you, Ms. Glas.
    And thank you to everyone who answered my questions. My 
time is now expired.
    The Ranking Member, Mr. Meuser, is now recognized for 5 
minutes.
    Mr. MEUSER. Thank you again, Madam Chair.
    Pennsylvania, my home state, the great Commonwealth of 
Pennsylvania, is known as a manufacturing state. We have a long 
history of coal, steel, garments is mentioned. Concrete, 
masonry, fabricators, candy, beer, crayons, guitars, batteries, 
airplanes to name a few. We have, however, suffered over the 
last several years or over the last we will say 40 years and 
for the last several years we made somewhat of a comeback.
    Mr. Taylor, you and I both know well the statewide burdens 
that exist in Pennsylvania related to taxes and regulations. 
Can you speak about the importance of natural gas on how 
natural gas creates competitiveness for our small and large 
manufacturers?
    Mr. TAYLOR. Yes, sir. I will be glad to.
    Mr. MEUSER. As well as provides what is necessary for 
manufacturing?
    Mr. TAYLOR. Yes, sir. I will be glad to do my best with 
that.
    So in 2005, the Marcellus Shale Play was discovered and 
starting 2008, production began in earnest. And the discovery 
really is world historic. We are talking about trillions of 
recoverable feet of natural gas. And so this has helped very 
much to power our economy, but in thinking about what the other 
testifier said about the need to reshore supply chains, that 
Pennsylvania, along with having the methane, the natural gas 
that is used for fuel and for electricity generation and 
industrial furnaces, that we also have abundant natural gas 
that comes with natural gas byproducts--ethane, butane, 
pentane, propane, and natural gasoline and that there has been 
an $8 billion investment by Royal Dutch Shell in Western 
Pennsylvania for a facility to produce polyethylene, which 
again is at the top of a value chain that can derive every kind 
of plastic, Styrofoam and rubber and every kind of coating in 
the marketplace. So that domestic source of this industrial 
input I think is critical to making our supply chains resilient 
and price competitive domestically.
    Chairwoman DAVIDS. Thank you, Mr. Taylor. It appears as 
though our Ranking Member might have had a technical difficulty 
and dropped off. I think that we will probably come back with 
approximately 2 minutes 40 seconds remaining for the Ranking 
Member's questioning and then hopefully he will get to get back 
on this so he can finish his questions.
    So I think what we will do is go next to Rep. Marie Newman 
from Illinois. You are recognized for 5 minutes.
    Ms. NEWMAN. well, thank you, Chairwoman. And thank you, 
Ranking Member. I hope you come back soon.
    So thank you to all our guests this afternoon. It has been 
great hearing your testimony. And thank you for offering 
solutions. We love it when guests come with both problem and 
solution, so thank you for that.
    I am going to I think start with Ms. Glas because I think 
she is the logical person to ask this question. But I would 
open it to others if they have commentary.
    In Illinois 3, we have an unusually high concentration of 
manufacturers, and I work with a partner organization called 
IMEC here in Illinois. And I think it is well-known in the 
industrial Midwest, we have a lot of micromanufacturers. So in 
my district, about 70 percent of all manufacturers are under 20 
employees. And what that means is that that is a huge 
employment base but we are particularly productive. And so with 
that I have a couple of questions around that.
    Those are the types of manufacturers that have kind of 
suffered the most around things like reshoring. What I mean by 
that is that I am a fan of bringing everything back here and 
making sure our workforce and our production process, our 
supply chain and our partners stay here. Some of the things 
that I think are helpful in that mix are incentivizing business 
partners. And so I guess I wanted to hear what your thoughts 
are on incentivizing the customers of our micromanufacturers so 
that they buy here, stay here, workforce is here, all of those 
good things. So I will put myself on pause and I would love for 
you to give us your thoughts.
    Ms. GLAS. Congressman, thank you so much for that question. 
You know, it is clear to me that you are very proud of the work 
that is being done in your congressional district and the 
ingenuity that exists with a lot of those small manufacturers 
in a really dynamic period of time.
    When you look at the customers for PPE, the biggest buyer 
is not the U.S. Government. It is an important buyer, okay, and 
we need to make sure we get all those roles right and help 
reshore production. But I think a lot of our manufacturers, 
similar to yours, are looking to sell their products in the 
private marketplace--to hospitals, to other kinds of customers. 
And are there ways that Congress can incentivize the customers 
or even incentivize the actual manufacturers to produce these 
products or purchase these products. We, as an industry, have 
all collectively been talking about the fact that there may be 
unique arrangements that can be made with hospitals and nursing 
homes and others that would get an incentive for buying Made in 
the USA product or get a better Medicare-Medicaid reimbursement 
rate as a result. I think this is a time for creative thinking, 
similar to the micro-manufacturers in your district who all 
probably came together in unique partnerships during this 
period; to think about what it would take to actually bring 
some of these production teams on shore and how to incentivize 
the private marketplace.
    Ms. NEWMAN. And if any of our other guests have any 
suggestions, I am all ears.
    If you would like to go, Claudio, that would be great to 
hear from you.
    Mr. DENTE. I am sorry; I keep pressing the button up there, 
not down there. I apologize for that, Representative Newman, 
thank you. Great comments there, Kim.
    The issue is not the end user. And I hope there are no 
distributors on this call. Distribution is what I sell through, 
and they are the people, the carrier to move product to the 
end-user. The distributors are the challenge because they are 
the ones that do not want to disrupt their current supply chain 
which may be overseas. Right? So, your idea, Kim, about 
incentivizing the end-user is great.
    So, think about it like this: in our industries, in all 
industries, there are buying groups. And buying groups create 
and collect rebates. So why not create some type of rebate 
program, some type of funds that go back to the end-user that 
rewards them for working with American made manufacturers. That 
is my comment.
    Ms. NEWMAN. Great. Any of our other guests like to share 
any thoughts?
    Mr. TAYLOR. Yes, if I may.
    Ms. NEWMAN. David.
    Mr. TAYLOR. Thank you very much.
    The kind of smaller companies that you are describing, very 
important job creators, very important part of the overall 
ecosystem of manufacturing. The smaller companies are more 
vulnerable to disruptions and to pitfalls. One of the things 
about the pandemic that has been hard to see is that you had 
companies that really stuck their necks out by retooling to go 
from the product that they knew to do something different that 
was needed to cope with the pandemic, whether it was the 
distillers putting out hand sanitizer or there was a company in 
Pennsylvania that would make airplane parts and they converted 
over to make ventilator parts. These companies took a risk and 
one of the things that they really need from Congress is some 
kind of safe harbor for protection against predatory lawsuits. 
And that is something that in good faith I would like to see 
Congress take up.
    Ms. NEWMAN. When you say ``predatory lawsuits,'' give me an 
example, David.
    Mr. TAYLOR. Well, I mean, just being exploited----
    Chairwoman DAVIDS. The gentlelady's time has expired.
    Ms. NEWMAN. Oh, okay.
    Mr. TAYLOR. Okay. Well, I will do my best to respond just 
to say that opportunistic, inevitably when you are doing 
something new you do not get it 100 percent right the first 
time.
    Chairwoman DAVIDS. Mr. Taylor, thank you for the follow up. 
Thank you.
    Ms. NEWMAN. Thank you, Chairwoman. Thank you, Chairwoman.
    Chairwoman DAVIDS. Thank you. And we are actually going to 
go back to Ranking Member Meuser who has returned. I believe 
you had about 2 minutes and 45 seconds left.
    Mr. MEUSER. Thank you, Madam Chair. I apologize about that 
operational difficulty.
    So Mr. Taylor, thanks for your answer related to natural 
gas. Obviously, very important from a competitive standpoint as 
well as manufacturing via the packer plants.
    At the Federal level, what can we do? You brought up 
workforce development. On a Federal level, what are your 
suggestions providing for a stronger, more available workforce 
availability, as well as comment on do you believe that 
manufacturers who are not being able to bring their workforce 
into their operation today will invest in robotics and other 
machines so as those manufacturing jobs could be done forever 
if they do not get fulfilled within the next year?
    Mr. TAYLOR. Okay, Congressman, I will try to respond to 
that. Certainly, the trend towards automation continues at 
pace. And new technologies enable manufacturers to innovate and 
increase their operational tempo. And so as a result of those 
technology efficiencies that you see the manufacturing 
workforce tighten but that those jobs that remain become much 
more valuable. You know, certainly to have a pro-growth, pro-
production agenda for American manufacturing, valuing the way 
that manufacturing is a positive dynamic for the quality of 
life for our citizens, certainly in the communities where a 
manufacturing entity is located, they are also, along with 
being major employers they are also major taxpayers which makes 
them important to state and local government as well. So it is 
just the whole spectrum of competitiveness and having our 
Federal Government recognize the contribution of domestic 
manufacturing and to support it through all of those 
competitive fundamentals. As for the workforce issue, I have 
got to say it is the phoniest most multifaceted challenge that 
we face. I do think that the one opportunity that is before us 
as I mentioned, is working to reinvent our highly fragmented 
job training and workforce development system. If Congress 
would partner with the states to help to rationalize that, and 
I am not just asking for the feds to block grants although that 
would be awesome, but to work in partnership to allow the state 
authorities to realign the program, to move money between the 
silos, I think that there are huge savings that could be 
realized. And again, we could get more bang out of what is 
being spent without having to increase expenditures.
    Mr. MEUSER. Thank you.
    The plan to increase corporate net income tax, income 
taxes, capital gains tax, what effect will that have on U.S. 
manufacturing?
    Mr. TAYLOR. It is very negative. And I would say that there 
were two really positive things from the previous 
administration's tax changes. Number one, bringing the rate 
down to just slightly below the OECD average, that that greatly 
improved competitiveness. And also, that there was an existing 
penalty as it were for U.S. companies that earned profits 
overseas that prevented them from bringing that money back to 
the U.S. I actually know of one instance where a company in 
Minnesota, it was easier for them to invert and become a 
foreign company to be able to reinvest their overseas earnings 
back in the U.S. and that is just perverse. We do not want 
that. We want American global corporate leadership. And so I 
would argue very strongly against changing the improvements 
that were recently made.
    Mr. MEUSER. Thank you. I yield back, Madam Chair.
    Chairwoman DAVIDS. Thank you. The Ranking Member yields 
back.
    And next I would like to recognize Rep. Evans for 5 
minutes.
    Mr. EVANS. Thank you. Thank you, Madam Chair. Thank the 
Ranking Member. It is good to see Mr. Taylor. It is a pleasure.
    Ms. Glas, you stated that the U.S. needed stronger 
workforce training programs. What percentage of textile 
manufacturing businesses provide on-the-job training? Would on-
the-job training be more flexible with government assistance? 
And what tools do textile manufacturers need to do more 
recruiting?
    Ms. GLAS. This is a quintessential and timely question, 
Congressman Evans. You know, actually, business is starting to 
come back but we simply do not have the workforce to fulfill 
the orders, which is a missed opportunity for our industry. Our 
industry does provide onsite worker training. We do heavy 
recruitment at technical colleges. A lot of our manufacturers 
do not have 4-year degrees. There is a pathway forward for good 
paying jobs in our field, but we are having a hard time 
retaining a workforce in this environment. And so if there are 
incentives or ways to help bolster the domestic supply chain in 
clusters for textile manufacturers to recruit additional 
workers, or ways to incentivize small manufacturers to actually 
help pay some of their workforce an additional bonus to work 
during this time, those are all important tools in the toolbox. 
But right now it is a real challenge across our industry to 
retain a workforce in this environment. And part of it is 
because COVID has impacted manufacturers' ability. People are 
staying at home with their children. I mean, lives have been 
disrupted incredibly and it has been really hard to recruit 
people back into the workforce because they have other things 
that are pulling at them at this time.
    Mr. EVANS. Thank you.
    I yield back the balance of my time, Madam Chair.
    Chairwoman DAVIDS. Thank you. The gentleman yields back.
    Next, I would like to recognize Rep. Van Duyne for 5 
minutes.
    Ms. VAN DUYNE. Great. Thank you.
    I think all the panelists today have hit on issues with the 
workforce. Mr. Taylor, you made a point in your testimony that 
small employers are having to compete with the Federal 
Government for workers thanks to the luxurious unemployment 
benefits that are being offered currently. So not only is the 
Federal Government hurting employers with extended benefits, 
but they are also stagnating the workforce on learning skills 
that they will eventually need to return to work. Can you 
elaborate on how the extended unemployment benefits have 
affected hiring and the workforce? And can you also explain a 
little bit about your concern with workers not having the 
skills needed when they do return to work?
    Mr. TAYLOR. Yes. I will do my best to respond to that. And 
again, it is an unintended consequence I am sure, but that 
impulse to be generous of raising unemployment benefits beyond 
what people would earn if they returned to work, it is keeping 
people on the sidelines. It is essentially making the 
government a competitive employer, like you are outbidding the 
market. Surely there is a precedent in history with the New 
Deal three letter agencies to give unemployed people work. But 
at least in those instances they were actually engaging the 
program participants. That they were doing work. They were 
hopefully upgrading their skills. They were at least keeping 
current and would have something that they could list on a 
resume that employers know the longer somebody is on the 
sidelines the more their skills degrade, the longer that gap 
comes on their resume and the more difficult it is for somebody 
to reenter the workforce.
    Ms. VAN DUYNE. I appreciate that.
    It is also evident by the testimony we have heard today 
that small manufacturers, while agile and highly resilient, has 
faced a tough time during COVID-19. President Biden has 
proposed increasing corporate taxes among other tax hikes.
    So Mr. Taylor, how would increased taxes affect small 
manufacturers?
    Mr. TAYLOR. Well, I mean, in Pennsylvania, about 80 percent 
of our manufacturing employers, they are not C corporations. 
They are S corps or LLCs or partnerships. So the higher 
corporate tax rate again would hurt the big fish in the ocean 
but because of supply chains and distribution networks, those 
smaller companies that are suppliers or vendors or part of the 
distribution for the major manufacturers, they would see less 
business.
    In my lifetime, the example, it would be when Bethlehem 
Steel left Johnstown. And that not only do you lose that major 
employer, but because so many of the smaller businesses were 
part of that ecosystem as suppliers, they were part of 
logistics, you know, forklift and warehouse jobs, you know, 
people who do payroll or HR or legal services or any of those 
things, if you lose what happens on the plant floor, all the 
rest of it goes away. And so with our eye to competitiveness, 
especially with reshoring in a very demanding global 
marketplace, I would recommend strongly against raising the 
U.S. tax rates.
    Ms. VAN DUYNE. I appreciate that also.
    Also in your testimony you mentioned the potential to cast 
a wider hiring net, including those that had been incarcerated 
before. Are there any regulatory burdens that make it difficult 
to hire these types of workers and can they be changed to allow 
employers to cast that wider net?
    Mr. TAYLOR. Well, that is a great question and I really 
believe it is the question of our time. I want to stay in my 
lane here. I am an advocate in Pennsylvania on state public 
policy but I would ask our Nation's leaders to look to 
Pennsylvania because we have made a lot of progress. And that 
in particular, our secretary of corrections, John Wetzel, has 
been a real leader with corrections reform. Secretary Wetzel 
is, himself, a former corrections officer so he has walked the 
block. He was the only African American in Governor Corbett's 
cabinet. He is now the only Republican in Governor Tom Wolf's 
cabinet. And so there really is a bipartisan consensus on this. 
And that is the upswing.
    I remember being at a company out in Allegheny County and 
most of their workforce is ex-military. They have very tough 
standards and that they were one of those companies leaving 
work on the table because they could not find enough new 
people. And it was the owners there who said we are going to 
have to cast the net wider. We are going to have to do better. 
And so this is a moment where everybody needs to level up. But 
if we do it, we can have real social progress because the jobs 
in manufacturing that go wanting are really good paying, family 
sustaining jobs with great wages and benefits and pensions. And 
so I do not have all of the answers to know how we can make 
that happen. Maybe Representative Evans and I need to work on 
this together because we need to find a way to get those 
citizens who have been outside the workforce, who have not 
succeeded in our society. This gravitational pull of 
demography, because there are more jobs available than people 
looking for work, this should be the time when we help to bring 
those marginalized folks back into the workforce, into 
productive living, and into the dignity of work and the real 
sense of identity that can come from having a profession and 
still trade.
    Ms. VAN DUYNE. Thank you very much.
    Chairwoman, I appreciate that you extended time.
    Chairwoman DAVIDS. Thank you, Rep. Van Duyne. The 
gentlelady yields back.
    First of all, I would like to say thank you to all our 
witnesses for taking the time, for joining us today and sharing 
your expertise. Your testimony has certainly given the 
Subcommittee members valuable insight into the problems that 
have been created because of the pandemic. And particularly for 
our small manufacturers and the challenges that they are facing 
moving forward. The pandemic has taught us a hard lesson in the 
value of domestic manufacturing and a robust supply chain. 
Today, we continue to feel the effects of supply chain 
disruptions and shortages on our economy. And we obviously want 
to avoid a repeat of this situation which means we have to find 
ways to empower small manufacturers. One of the most common 
sense ways to do that is by ensuring that they have ample 
access to affordable capital, and I hope today's hearing has 
shed light on critical SBA lending programs. And I am looking 
forward to working with all of you to find ways to improve 
them.
    I would ask unanimous consent that members have 5 
legislative days to submit statements and supporting materials 
for the record.
    Without objection, so ordered. And if there is no further 
business to come before the Committee, we are adjourned. Thank 
you very much.
    [Whereupon, at 2:03 p.m., the subcommittee was adjourned.]
                            
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