[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
OUR NATION OF BUILDERS: POWERING U.S. AUTOMOBILE MANUFACTURING FORWARD
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HEARING
BEFORE THE
SUBCOMMITTEE ON COMMERCE, MANUFACTURING, AND TRADE
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
APRIL 10, 2013
__________
Serial No. 113-27
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
__________
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COMMITTEE ON ENERGY AND COMMERCE
FRED UPTON, Michigan
Chairman
RALPH M. HALL, Texas HENRY A. WAXMAN, California
JOE BARTON, Texas Ranking Member
Chairman Emeritus JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky Chairman Emeritus
JOHN SHIMKUS, Illinois EDWARD J. MARKEY, Massachusetts
JOSEPH R. PITTS, Pennsylvania FRANK PALLONE, Jr., New Jersey
GREG WALDEN, Oregon BOBBY L. RUSH, Illinois
LEE TERRY, Nebraska ANNA G. ESHOO, California
MIKE ROGERS, Michigan ELIOT L. ENGEL, New York
TIM MURPHY, Pennsylvania GENE GREEN, Texas
MICHAEL C. BURGESS, Texas DIANA DeGETTE, Colorado
MARSHA BLACKBURN, Tennessee LOIS CAPPS, California
Vice Chairman MICHAEL F. DOYLE, Pennsylvania
PHIL GINGREY, Georgia JANICE D. SCHAKOWSKY, Illinois
STEVE SCALISE, Louisiana JIM MATHESON, Utah
ROBERT E. LATTA, Ohio G.K. BUTTERFIELD, North Carolina
CATHY McMORRIS RODGERS, Washington JOHN BARROW, Georgia
GREGG HARPER, Mississippi DORIS O. MATSUI, California
LEONARD LANCE, New Jersey DONNA M. CHRISTENSEN, Virgin
BILL CASSIDY, Louisiana Islands
BRETT GUTHRIE, Kentucky KATHY CASTOR, Florida
PETE OLSON, Texas JOHN P. SARBANES, Maryland
DAVID B. McKINLEY, West Virginia JERRY McNERNEY, California
CORY GARDNER, Colorado BRUCE L. BRALEY, Iowa
MIKE POMPEO, Kansas PETER WELCH, Vermont
ADAM KINZINGER, Illinois BEN RAY LUJAN, New Mexico
H. MORGAN GRIFFITH, Virginia PAUL TONKO, New York
GUS M. BILIRAKIS, Florida
BILL JOHNSON, Missouri
BILLY LONG, Missouri
RENEE L. ELLMERS, North Carolina
Subcommittee on Commerce, Manufacturing, and Trade
LEE TERRY, Nebraska
Chairman
LEONARD LANCE, New Jersey JANICE D. SCHAKOWSKY, Illinois
Vice Chairman Ranking Member
MARSHA BLACKBURN, Tennessee G.K. BUTTERFIELD, North Carolina
GREGG HARPER, Mississippi JOHN P. SARBANES, Maryland
BRETT GUTHRIE, Kentucky JERRY McNERNEY, California
PETE OLSON, Texas PETER WELCH, Vermont
DAVE B. McKINLEY, West Virginia JOHN D. DINGELL, Michigan
MIKE POMPEO, Kansas BOBBY L. RUSH, Illinois
ADAM KINZINGER, Illinois JIM MATHESON, Utah
GUS M. BILIRAKIS, Florida JOHN BARROW, Georgia
BILL JOHNSON, Missouri DONNA M. CHRISTENSEN, Virgin
BILLY LONG, Missouri Islands
JOE BARTON, Texas HENRY A. WAXMAN, California, ex
FRED UPTON, Michigan, ex officio officio
C O N T E N T S
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Page
Hon. Lee Terry, a Representative in Congress from the State of
Nebraska, opening statement.................................... 1
Prepared statement........................................... 3
Hon. Janice D. Schakowsky, a Representative in Congress from the
State of Illinois, opening statement........................... 4
Hon. Leonard Lance, a Representative in Congress from the State
of New Jersey, opening statement............................... 5
Hon. Henry A. Waxman, a Representative in Congress from the State
of California, opening statement............................... 6
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, prepared statement...................................
Witnesses
Joseph R. Hinrichs, President of the Americas, Ford Motor Company 8
Prepared statement........................................... 10
Answers to submitted questions............................... 134
Scott Dahl, Regional President, Starters and Generators--North
America, Robert Bosch, LLC..................................... 16
Prepared statement........................................... 19
James C. Wehrman, Senior Vice President, Honda of America
Manufacturing, Inc............................................. 44
Prepared statement........................................... 47
Answers to submitted questions............................... 140
Chris Nielsen, President, Toyota Motor Manufacturing Texas, Inc.. 64
Prepared statement........................................... 66
Answers to submitted questions............................... 148
Scott E. Paradise, Vice President, Marketing and Business
Development, Magna, International.............................. 76
Prepared statement........................................... 79
William A. Smith, Executive Director, Government Affairs and
Community Relations, American Axle & Manufacturing............. 88
Prepared statement........................................... 90
Annette Parker, Ed.D., Executive Director, Automotive
Manufacturing Technical Education Collaborative (AMTEC)........ 97
Prepared statement........................................... 99
Kathy M. Kinsey, Deputy Secretary, Maryland Department of the
Environment, Member of the Electric Vehicle Infrastructure
Council........................................................ 103
Prepared statement........................................... 105
Submitted material
Statement of Motor & Equipment Manufacturers Association......... 126
Statement of American Federation of Labor and Congress of
Industrial Organizations....................................... 132
OUR NATION OF BUILDERS: POWERING U.S. AUTOMOBILE MANUFACTURING FORWARD
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WEDNESDAY, APRIL 10, 2013
House of Representatives,
Subcommittee on Commerce, Manufacturing, and Trade,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:19 a.m., in
room 2123, Rayburn House Office Building, Hon. Lee Terry
(chairman of the subcommittee) presiding.
Present: Representatives Terry, Lance, Blackburn, Harper,
Guthrie, Olson, McKinley, Kinzinger, Bilirakis, Johnson, Long,
Schakowsky, Dingell, Barrow, and Waxman (ex officio).
Staff Present: Charlotte Baker, Press Secretary; Kirby
Howard, Legislative Clerk; Nick Magallanes, Policy Coordinator,
CMT; Brian McCollough, Senior Professional Staff, CMT; Shannon
Weinberg Taylor, Counsel, CMT; Tom Wilbur, Digital Media
Advisor; Michelle Ash, Minority Chief Counsel; and Will
Wallace, Minority Policy Analyst.
OPENING STATEMENT OF HON. LEE TERRY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF NEBRASKA
Mr. Terry. Well, I just want to welcome all of our
witnesses here today. And isn't it nice that we can come here
under no crisis, no angst or anxiety? Things are actually
improving in the automobile industry. And we just want to say
to the industry and its suppliers, what can we do to help? And
that should be a question we actually ask more often. But it is
almost--I said a lovefest in one of our hearings, but, in
reality, that is about what this is. We just want to help. We
want you to do better.
So, go to my official? Oh, yes, those type of details.
So, good morning. And welcome to our third installment of
our subcommittee series of hearings entitled ``Our Nation of
Builders.'' Today we are focusing on the U.S. automotive
manufacturing sector--a sector that supports more manufacturing
jobs than any other manufacturing industry, employing almost 8
million Americans across all 50 States, according to the
Alliance of Automobile Manufacturers.
Our subcommittee will be hearing from a distinguished panel
of witnesses consisting of experts from several sectors within
the automotive manufacturing industry. And it is my hope that
our witnesses can shed some light on the criteria taken into
consideration when making a determination on where to initiate
manufacturing and where to expand manufacturing in the United
States.
I also hope to surface important details on the effect that
expanding or initiating manufacturing can have on a community,
whether it is through job creation, increased tax revenue, or
charitable involvement.
Auto manufacturers, suppliers, and dealers have certainly
faced tough times in the last few years. Our great recession
saw vehicle production fall from 10.7 million in 2007 to 5.7
million in 2009. However, since 2009, we have seen this figure
rebound to 8.7 million vehicles produced and 100,000 jobs
recouped or added.
This is progress, but we have more work to do to create
jobs and grow our Nation of builders. Attracting foreign
investment to build manufacturing facilities in the U.S.,
lowering barriers to expansion, and incentivizing companies to
increase domestic production capacity should be top priorities
in Congress.
By all accounts, increased domestic manufacturing is a net
positive. When we increase manufacturing, we not only increase
direct employment but also take advantage of the auto
industry's tremendous employment multiplier. Eight hundred
thousand direct jobs represents a total economic effect of
almost 8 million domestic jobs.
We all know that more jobs means less unemployment, more
tax revenues for cities and States, and a better quality of
life for thousands of Americans. What increased domestic
manufacturing also means is that the U.S. can expand its export
base and shift from being a net importer to a net exporter.
Policies aimed at promoting increased domestic manufacturing, a
higher level of foreign direct investment, and increased
exports are critical right now, given the current negotiations
on the Trans-Pacific Partnership and the potential for a U.S.-
EU trade agreement.
When discussing trade agreements, many automatically think
about tariffs. However, there is much more to these pacts than
tariffs on imports. This subcommittee has jurisdiction over and
is very interested in non-tariff-related barriers. To that end,
we would be very interested to hear the opinions of our
witnesses when it comes to the positive effects that pursuing a
regulatory mutual-recognition standard should have on the
domestic automobile industry. I am sure that as free trade
talks continue this will be an important issue for this
subcommittee.
With us today we have eight witnesses on two different
panels. The first panel will consist of Joe Hinrichs, president
of the Americas for the Ford Motor Company.
I have a Ford. A little suck-up moment.
Scott Dahl----
Ms. Schakowsky. So do I.
Mr. Terry. There you go, ranking and--teamwork here.
Scott Dahl, regional president for starters and generators
in North America for Robert Bosch. Thank you.
Our second panel: James Wehrman, senior vice president of
Honda North America Manufacturing; Chris Nielsen, president of
Toyota Manufacturing in Texas; Scott Paradise with Magna
International, where he is vice president of marketing and
business development; Annette Parker, executive director of the
Automotive Manufacturing Technical Education Collaborative;
William A. Smith, with American Axle & Manufacturing, where he
serves as executive director of government affairs and
community relations; and, finally, Kathy Kinsey, deputy
secretary with the Maryland Department of the Environment and
member of the Electric Vehicle Infrastructure Council.
I hope that all fits on your business card.
Again, I would like to thank our witnesses for appearing
here at our subcommittee today.
[The prepared statement of Mr. Terry follows:]
Prepared statement of Hon. Lee Terry
Good Morning and welcome to the third installment in our
subcommittee's series of hearings titled ``Our Nation of
Builders.'' Today we are focusing on the U.S. Automotive
manufacturing sector-a sector that supports more jobs than any
other manufacturing industry-employing almost 8 million
Americans across all 50 states, according to the Alliance of
Automobile Manufactures.
Our subcommittee will be hearing from a distinguished panel
of witnesses, consisting of experts from several sectors within
the automotive manufacturing industry. It is my hope that our
witnesses can shed some light on the criteria taken into
consideration when making a determination on where to initiate
manufacturing and where to expand manufacturing. I also hope to
surface important details on the effect that expanding or
initiating manufacturing can have on a community--whether it be
through job creation, increased tax revenue or charitable
involvement.
Auto manufacturers, suppliers and dealers have certainly
faced tough times in the last decade. The Great Recession saw
vehicle production fall from 10.7 million in 2007 to 5.7
million in 2009. However, since 2009, we have seen this figure
rebound to 8.7 million vehicles produced and 100,000 jobs
recouped or added. This is progress but we have more work to do
to create jobs and grow our nation of builders.
Attracting foreign investment to build manufacturing
facilities in the U.S., lowering barriers to expansion and
incentivizing companies to increase domestic production
capacity should be top priorities for this Congress. By all
accounts, increased domestic manufacturing is a net positive.
When we increase manufacturing we not only increase direct
employment but also take advantage of the auto industry's
tremendous employment multiplier--800,000 direct jobs
represents a total economic effect of almost 8 million domestic
jobs.
We all know that more jobs means less unemployment, more
tax revenues for cities and states and a better quality of life
for thousands of Americans. What increased domestic
manufacturing also means is that the U.S. can expand its export
base, and shift from being a net importer to a net exporter.
Policies aimed at promoting increased domestic manufacturing, a
higher level of foreign direct investment and increased exports
are critical right now given the current negotiations on the
Trans-Pacific Partnership and the potential for a US-EU free
trade agreement.
When discussing trade agreements, many automatically think
about tariffs. However, there is much more to these pacts than
tariffs on imports. This subcommittee has jurisdiction over,
and is very interested in, non-tariff related trade
regulations. To that end, we would be very interested to hear
the opinions of our witnesses when it comes to the positive
effects that pursuing a regulatory mutual recognition standard
could have on the domestic automotive industry. I am sure that
as the free trade talk continues, this will be an important
issue for this subcommittee.
Again, I would like to thank our witnesses for appearing
before the subcommittee today and look forward to their
testimony.
# # #
Mr. Terry. And I now recognize the ranking member, Jan
Schakowsky, for her opening statement.
OPENING STATEMENT OF HON. JANICE D. SCHAKOWSKY, A
REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS
Ms. Schakowsky. Thank you, Mr. Chairman.
I really welcome all of our witnesses and look very much
forward to your testimony.
This is the subcommittee's third hearing of the year and
the third in our series on manufacturing--a critical sector of
our economy that creates good jobs for American workers. Nearly
800,000 employees in the motor vehicle industry and parts
manufacturing, and they support millions of additional jobs
nationwide in other industries. And without a doubt, it is
valuable to look at the factors that have contributed to the
current strength of the industry and the potential for future
growth.
Clearly, we are doing something right and you are doing
something right. The big three U.S. auto companies have
rebounded significantly from the 2008 financial crisis, and 10
other major auto manufacturers now have facilities located here
in the United States. The industry is investing in creating new
technologies, including those for improved safety, emissions
control, and fuel economy, and rolling out new features and
achievements seemingly every single day.
Manufacturing of cars, trucks, and other products has
shifted substantially from the image many of us still have.
Like the rest of our society, manufacturing has gone high-tech.
There are more computers in the design room, on the testing
floor in factories, and more computers in the cars themselves.
The changes in the manufacturing process and the rapid pace
of innovation means that the auto industry depends on a
workforce that has the education levels, skills, experience,
and credentials to step into those jobs that are available. I
know that even in my little auto shop in my neighborhood, you
really have to have a pretty good knowledge of computers to
even touch a car these days.
At our previous hearing, we heard that steel executives are
having difficulty finding qualified workers. In almost all of
your prepared testimony, everyone that is testifying, you
mention the need to expand educational opportunities and job
training for workers and applicants so that your companies can
continue to grow.
I am hopeful to hear more about how STEM and technical
education, skills training, and workforce development can be
leveraged to further strengthen the auto industry. And I must
say, we have been talking about this for a while, but I think
it is really time to see fairly dramatic changes in our
preparation of our students as they move toward the outside
world in jobs.
I hope to hear also how you are working to get all
consumers, from purchasers of the most high-end models to the
most basic, the newest critical features and the latest fuel-
economy elements that will help buyers truly get the most value
and peace of mind for their money.
Let me just say that I was a big supporter of the help that
our government offered to the auto industry. And I think that
the industry itself took full advantage of that, not taking
advantage of the taxpayers, but actually bringing back the
industry. And we are very, very happy about that.
I will want to talk in my questioning about a particular
safety feature, mainly the prevention of backover accidents,
and ask you about those. And I thank all of our witnesses for
coming here today to testify.
I yield back.
Mr. Terry. Thank you.
At this time, I recognize the vice chairman, Leonard Lance,
for 5 minutes.
OPENING STATEMENT OF HON. LEONARD LANCE, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF NEW JERSEY
Mr. Lance. Thank you, Mr. Chairman.
I am pleased that we are able to reschedule the hearing
from the cancellation in March, and I welcome the new witnesses
who have been added since then.
New Jersey, the State I represent, has 1.8 percent of
automotive jobs in the United States, and these are primarily
corporate rather than manufacturing positions. From the panel
today, Ford and Toyota have both regional offices in the Garden
State and contribute vital business to New Jersey, so I thank
you for your contribution. The North American headquarters for
several other companies are in New Jersey, as well--BMW,
Mercedes, Jaguar Land Rover, Volvo, and Mitsubishi, none of
which I can afford, personally. New Jersey accounts for
approximately $22 billion in new car sales, and the Garden
State has 123 supplier companies and nearly 3,000 dealerships.
This yields a great deal of revenue at both the Federal and
State levels.
New Jersey also has a vital role in the supply chain. Along
the eastern seaboard, our ports are used primarily for incoming
shipment of automobiles and parts.
I am encouraged that more foreign direct investment is
coming to the United States and that our domestic automotive
industry, including manufacturers and suppliers, is innovating
and expanding.
We have challenges regarding STEM-educated employees in the
U.S. workforce, the ways our complicated Tax Code affect
businesses, and the lack of certainty regarding governmental
projects related to business.
I welcome your testimony and your suggestions about the
ways in which government can be a better partner to the
manufacturing community and to the automotive industry in
particular. And I thank you for your participation today.
And I am pleased to have others have the remaining portion
of the 3 minutes, and I would be happy to yield to my
colleagues.
I yield to the vice chair of the full committee, Mrs.
Blackburn of Tennessee.
Mrs. Blackburn. Good morning, and welcome. We are delighted
that you are here. And on behalf of our constituents in
Tennessee who are involved in the auto manufacturing industry
with Toyota and Nissan and GM and Ford Motor Credit, which is
located in my district, Bosch has a presence there, we are
delighted that you are here.
We like building things and making things in Tennessee, and
we think we do a pretty good job of it. And one of the
frustrations that we are hearing from so many of our
manufacturers is the debilitating effect that overreaching
government agencies, regulatory agencies, are having on their
ability to do business here and manufacture here.
So we are delighted to hear from our panel and welcome that
panel today. And we do seek your input. We like ``made in
America,'' and we want it to be a good, healthy environment.
With that, I yield back my time.
Mr. Lance. Thank you.
Others who wish to speak?
Mr. Terry. Please, we need to delay for another minute,
so--oh, Henry is here.
All right. No further time, and the gentleman yields back
his time.
And now the gentleman from California is recognized for 5
minutes.
OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Waxman. Thank you, Mr. Chairman, from Nebraska. I
appreciate your stalling for time for me to get here from our
other committee. We have two committees meeting simultaneously,
which makes it difficult.
I am glad you are holding this hearing on auto
manufacturing. Motor vehicle and parts manufacturers play a
major role in the U.S. economy. In my home State of California
alone, the broader auto industry employs more than 412,000
people. We need a vibrant U.S. auto industry that leads the
world in innovation.
However, it was just 4 years ago that the financial crisis
left our domestic auto industry on the brink of liquidation. If
President Obama had not acted forcefully to rescue the
industry, the livelihoods of millions of Americans would have
been lost.
Since that time, the auto industry has emerged more
productive and profitable, thanks largely to the rescue
engineered by the President. The industry is also more
innovative, which has led to job growth.
There are two areas, in particular, in which rapid
innovation has become especially apparent.
First, there has been a significant advance in emission
control and fuel economy. Emission-control technologies help
the environment, but they also create jobs. In 2010, these new
technologies were associated with $12 billion in total economic
activity.
Consumers are increasingly considering fuel economy at the
point of purchase when they are deciding on what car to buy.
Reflecting an agreement with automakers, the Obama
administration set rules to restrict greenhouse gas emissions
and required an average fuel economy of 35.5 miles per gallon
by 2016 and 54.5 miles per gallon by 2025. Fuel-economy
innovations include alternative energy vehicles, full and
hybrid electric vehicles, and various energy-efficiency
technologies.
This is tremendously important, and it is ironic that the
other subcommittee of our full committee that is meeting at
this moment is trying to pass a bill to approve the tar sands
pipeline from Canada. They don't want to hear the discussions
whether it is a good idea or a bad idea, the pipeline is good
or the pipeline is not good. They don't care that the tar
sands, in order to be sent through a pipeline, is going to
require so much use of energy that it is going to add to our
global warming problem. Rather than discuss things that we can
do to become less dependent on oil, they say, well, what we
need is to produce more oil, even if it pollutes our
environment.
The second particular innovative area for autos is safety
technology. It has been driven by consumer preferences for
safer cars. Electronic stability control, airbags, seatbelts,
child restraints are now mandatory and have saved thousands of
lives. Newer advances in safety technology include advances in
collision avoidance, adaptive cruise control, and rearview
cameras.
Innovations like these make cars less polluting, less
dangerous. They are good for the environment. They are good for
public health. They are good for the safety of American
families. But they are also good for motor vehicle and parts
manufacturers.
I understand that some of our witnesses today will advocate
for regulatory harmonization, both with other countries and
with States. As the United States continues to negotiate the
Trans-Pacific Partnership and begins its work on the U.S.-EU
agreement, we must ensure that the push for regulatory
consistency does not create a race to the bottom. You can be
consistent, but you can be consistent with the lowest
protection. We don't want that. I consistently believe in the
principle that trade agreements negotiated by the U.S. should
not compromise our environmental or safety standards here in
this country or abroad. We should strengthen the
competitiveness of our auto industry by raising our own
standards, not by weakening those of others.
In addition, we need to remain mindful that the progress we
have made on cleaning up cars hasn't just happened. Time and
again, the States have taken the first step and demanded
cleaner cars. That certainly happened in California. Those
State successes have then been expanded at the national level.
We should be supporting innovative State efforts, not trying to
undermine them.
We have done well and we must continue to do well to
produce good cars, safe cars, less polluting cars. And I am
proud of the auto industry, and we ought to continue to do what
we can to help them.
Thank you. I yield back.
Mr. Terry. Thank you, Mr. Ranking Member, Mr. Waxman.
And at this time, we turn it over to our witnesses.
And so, Mr. Hinrichs, you will have 5 minutes. And being
the experienced person you are, you know the lights in front of
you. Yellow means start wrapping it up. Red means you can stop.
So, with that, Mr. Hinrichs, you are recognized for your 5
minutes.
STATEMENTS OF JOSEPH R. HINRICHS, PRESIDENT OF THE AMERICAS,
FORD MOTOR COMPANY; AND SCOTT DAHL, REGIONAL PRESIDENT,
STARTERS AND GENERATORS--NORTH AMERICA, ROBERT BOSCH, LLC
STATEMENT OF JOSEPH R. HINRICHS
Mr. Hinrichs. All right. Good morning. And thank you,
Chairman Terry, Ranking Member Schakowsky, and all committee
members, for providing us this opportunity.
My name is Joe Hinrichs, and I am president of the Americas
for the Ford Motor Company. Ford is a global automotive
industry leader, but our success is especially tied to our
competitiveness here in the United States, where we conduct the
vast majority of our research and development, produce more
than 2 million vehicles annually, and support manufacturing in
48 States through our supplier network.
I have been with Ford since December of 2000. Before that,
I spent 10 years at General Motors and 2 years in private
equity. I started at Ford as a plant manager, and I have worked
in seven different manufacturing plants in five different
States in the United States throughout my career.
More recently, I was president of Ford's Asia-Pacific and
Africa region, based in Shanghai, China. Before that, I served
as group vice president of global manufacturing and labor
affairs, responsible for the operations of 105 assembly,
stamping, and powertrain manufacturing plants. So manufacturing
is and has been my world.
Manufacturing matters. It remains the backbone of every
successful economy in the world. As an example, one job at an
auto plant supports nine additional jobs. This year, Ford is
creating more than 2,200 new salaried positions right here in
the U.S. This builds upon the 8,100 salaried and hourly jobs we
created just last year.
Ford demonstrated we can compete with automakers around the
world. We are now lean, more efficient, and we are producing
cars, utilities, and trucks with quality, fuel efficiency,
safety, smart design, and great value.
Government is also a key stakeholder in helping shape the
competitive climate our industry depends on. I would like to
highlight four key issue areas that are critical to Ford.
First, corporate tax reform. The U.S. has the highest
corporate tax rate among developed countries. A lower rate
frees up capital that can be reinvested in new products,
technologies, and manufacturing innovation. We are encouraged
that Congress and the President have both identified the need
to drive down the corporate rate to ensure American companies
remain competitive. Tax reform can further expand economic
growth and jobs.
Second, regulatory efficiency and certainty. We need a
performance-based, data-driven approach to regulation,
especially as we develop emerging technologies like vehicle-to-
vehicle communications and driver-assist features. We need
efficiency in the regulatory process that provides certainty
and avoids a patchwork of State regulations that can undermine
efficiency, often with no societal or environmental benefit.
When multiple regulators do exist, we need to work together
to ensure that we ultimately develop standards that are
achievable and consistent with one another so that compliance
costs are minimized.
New regulations also must be monitored to ensure that they
are consistent with underlying assumptions, market conditions,
and technological advancements. As an industry, we worked
together to shape one national program for fuel-economy
regulations, projecting standards over an unprecedented 10-year
period. Our support of this effort was dependent upon a robust
and equitable midterm review, which is absolutely critical.
Data collection must begin today to support a final assessment
in 2018.
Third, trade. Ford has supported every free-trade agreement
approved by the United States, and Ford is a leading vehicle
exporter in the United States. We need to continue to open new
markets to American-made products and ensure that new trade
agreements are not just to reinforce one-way trade.
Trade issues are not just about tariffs. Trade flows can be
significantly skewed by using non-tariff barriers, including
currency manipulation to protect home markets and subsidize
exports. We firmly believe exchange rate values should be
determined the marketplace, not by governments. We encourage
the U.S. to include strong and enforceable discipline to
prevent currency manipulation in the future of trade
agreements.
In addition, trade agreements can also help harmonize
regulations across borders. A U.S.-EU free-trade agreement that
pursues regulatory harmonization and mutual recognition of
standards will enhance competitiveness in both regions.
Fourth, training and education. We need to continue
training our current workforce and encourage education in math,
science, and engineering if America is to remain competitive
and innovative in the future. For our current workforce,
continued up-skilling is critical to maintaining our
competitive performance. Existing Federal training programs
should be flexible, work closely with States, and prioritize
incumbent worker training.
In summary, other countries are leveraging their workforce
and markets to encourage and attract manufacturing. I
experienced this firsthand in China and throughout Asia. For
the U.S. to continue to lead, we have to be more innovative,
efficient, and collaborative. We will need your help to ensure
that government policy supports manufacturing. What is at stake
is not just the future of Ford or American manufacturing but
the very future of jobs and growth across our great country.
Thank you.
Mr. Terry. Thank you. And well-timed.
[The prepared statement of Mr. Hinrichs follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Terry. Mr. Dahl, you are now recognized for 5 minutes.
STATEMENT OF SCOTT DAHL
Mr. Dahl. OK. Chairman Terry, Ranking Member Schakowsky,
members of the committee, thank you for the opportunity to
testify before you today. My name is Scott Dahl, and I am the
North American regional president for the Starter Motors and
Generator Division of Robert Bosch.
I am particularly honored to be here today because North
American manufacturing, U.S. manufacturing has supported me.
They have put me through college, and it made me the person I
am today. My father became a journeyman tool and die maker back
in 1966 and worked there in GM and Chrysler until the late
1980s, when he transitioned to a die engineer without a 4-year
degree.
Robert Bosch founded our company in 1886 when he opened the
Workshop for Precision Mechanics and Electrical Engineering in
Stuttgart, Germany. Today, Bosch employs more than 300,000
associates across the globe, including 15,000 here in the
United States. We have deep roots in the U.S. Our founder first
opened his New York office in 1906, where he had learned about
American ingenuity as an apprentice under Thomas Edison. Now we
operate more than 100 manufacturing, engineering, and service
sites across the country.
We have four business sectors: automotive technology,
energy and building technology, consumer goods, and industrial
technology. Automotive is our largest sector, comprising nearly
60 percent of our business. And our automotive technology has
touched almost every part of the vehicle, with specialized
business units devoted to vehicle safety, advanced diesel
systems, electronics, gasoline systems, hybrid technologies,
and car multimedia, just to name a few. Together with our
customers, we make vehicles safer, cleaner, and more
economical.
In January, we unveiled our prototype automated driving
test vehicle outfitted with Bosch advanced radar systems and
computer algorithms. Many of our high-tech components and
systems that support automated driving will in the near term
help drivers avoid collisions, save fuel, and reduce emissions.
Predictive emergency breaking will reduce the severity and
number of crashes in the near future. Engine start-stop systems
and high-efficiency alternators help improve fuel economy and
reduce emissions up to 8 percent and 2 percent, respectively.
And both systems provide an excellent cost-benefit ratio, as
they can easily be integrated into existing systems.
None of these incredible advancements would be possible
without strong and sustained investment into innovative
products. Research and development are at the heart of Bosch
success. Approximately 42,000 Bosch engineers work at 86
locations across the globe and file an average of 19 patents
per day.
One innovation project under way, in collaboration with the
University of Michigan, AVL, and other partners, is something
we call ACCESS. This project is 50 percent funded by the
Department of Energy vehicle technology program. ACCESS aims to
increase the efficiency of a gasoline engine up to 30 percent.
And because the U.S. Government is supporting this high-risk,
high-reward project, we chose to establish the global center of
competence for this technology here in the U.S. This project is
an excellent example of public-private relationships that can
keep the U.S. at the forefront of innovation.
While the U.S. continues as a world leader in innovation,
there is a growing need for workplace development and worker
training. To illustrate the challenge facing Bosch and many
other manufacturers, I want to highlight South Carolina, where
many of our automotive products are made.
First, the good news: Bosch will have added approximately
450 jobs over 5 years in South Carolina to support the
manufacture of products ranging from precision machine fuel
injectors to electronic stability control and engine management
systems.
However, there has been a significant struggle to identify
and hire skilled workers for these positions. Bosch recently
joined the Department of Commerce in hosting an economic
roundtable at our Charleston plant, and the significant lack of
skilled workers was echoed by other employers from the region
as well as several economic development specialists. Our plant
managers across the country expressed the same frustration.
They have worked diligently to attract employees, participating
in job fairs and military veteran recruiting events all across
the country.
Along with their fellow manufacturers in South Carolina,
Bosch embraced several different avenues to address this
challenge, including direct engagement with and support for
local technical colleges and in-house apprenticeship programs.
At just one of our South Carolina plants, we have graduated 308
apprentices in three different curriculums: electrician,
mechanic, and toolmaker. And in March we also provided a
$400,000 Greenville Technical College to support their training
program.
The intent of these programs is to produce individuals like
my father who have hands-on, real-world experience to help
companies like Bosch innovate, develop, and manufacture the
next generation of technology here in the United States.
While Bosch recognizes that occupational training is part
of our social responsibility, the reality is that significant
resources are required to hire and train workers who are not
prepared to enter the modern manufacturing workplace. We are
willing to do our part, but we need greater flexibility and
focus from our Nation's education system so K through 12
schools can instill the base knowledge, interest, and skill set
required for jobs in science, technology, engineering, and
math, referred to as STEM. This is vital to keep the U.S.
attractive for investment. In fact, this is one of the issues
that Bosch considers to be very important when we look at where
we put our investments.
Looking to the future, Bosch sees many exciting
opportunities on the horizon. At the top of the list is the
Transatlantic Trade Investment Partnership. We support this
endeavor and believe that it would result in notable benefits
for the automotive industry and consumers, particularly in the
form of enhanced regulatory harmonization and standardization.
Both the U.S. and the EU maintain stringent requirements
and performance standards for motor vehicles and motor vehicle
components. And this is particularly true relative to passive
and active safety technologies and carbon emissions.
Significant benefits could be accrued from additional
regulatory harmonization between the U.S. and EU. And we look
forward to engaging with the committee as negotiations
progress.
Thank you for the opportunity to speak before the
committee, and I welcome any questions you may have.
Mr. Terry. Thank you very much.
[The prepared statement of Mr. Dahl follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Terry. Both well done and much appreciated.
My first question is to Mr. Hinrichs. And you testified
about the job creation and improvement over the last couple
years. But what do you attribute, what does Ford attribute to
the job growth in the auto industry and the recovery?
Mr. Hinrichs. Well, certainly, coming out of a global
financial crisis and the recession that occurred not just here
but in most parts of the world, we are seeing increased demand
for autos today as the U.S. economy starts to improve.
But at Ford specifically, the restructuring actions that we
undertook back in 2006, 2007, 2008, and 2009 led us to have a
much stronger business, which is now growing. And over the last
4 or 5 years, we have increased our market share and are now
reinvesting in our business.
We received lots of supports along the way from all of our
stakeholders to make that happen. But, clearly, as the U.S.
economy improves, we are able to reinvest here in the United
States. We converted many of our manufacturing facilities from
truck plants to car plants to adjust to the new reality of
where the auto market has gone and where it is going. And we
are investing in high-technology and new technologies to meet
the new CAFE and other requirements that are out there for the
industry.
We are very proud to be investing in the United States. And
with the 8,100 jobs we created last year, 2,200 salaried jobs
this year, plus 1,200 at our Flat Rock facility we will be
adding this summer, you can see that we are investing in
America and growing.
Mr. Terry. I appreciate that.
You also mentioned, if you can answer fairly quickly, that
the effective tax rate impacts Ford's global competitiveness.
Could you be more specific?
Mr. Hinrichs. Yes. As you know, the U.S. has one of the
highest corporate tax rates in the world and certainly the
highest amongst the large economies. When you want to compete
as a manufacturer to export, you have to have a competitive
environment to operate in. We just started shipping Ford
Explorers from Chicago here in the United States to China.
We are competing with manufacturers who have different tax
rates, so our cost structure is different. If you want to have
a manufacturing base that is capable of exporting here from the
United States, we need to have a competitive tax rate vis-
AE2a-vis the other countries of the world we are competing
against.
Mr. Terry. Now, do you know if Ford has said whether a 25
percent or a 28, have they gone into those type of details?
Mr. Hinrichs. We have said, listen, this is so important to
industry that everything should be on the table as part of the
conversation here, that what we want is a lower tax rate so we
can reinvest.
Mr. Terry. Very good. I appreciate that.
Mr. Dahl--by the way, putting you two together, a U.S.-
based automotive company and then the European-based company of
Bosch's size and impact in the industry, was purposeful on our
part.
So I want to know, first of all, as a European company, you
mentioned in your testimony opening up the innovation research
center in the United States, that you chose the United States.
What were the factors that led to that decision?
Mr. Dahl. I think there are several factors when we take a
look at the investments of R&D in the United States.
One is, of course, the innovative and can-do attitude that
all of the associates in the United States tend to have. It is
different here. Everyone is willing to work together as a team
to try to find a solution for these topics and kind of think
outside the box.
So we also like to look at developments that are for
regional specific. So Bosch does have our research and
development centers and RTC in Palo Alto and in Pittsburgh. So
we support full R&D, corporate R&D here. But then also our
divisions have regional development activities in the United
States, as well, which also support the global R&D.
So, really, the attitude of the people, the education, the
innovative spirit, these are really the focus points for us
having it here, along, of course, with our customer base, which
is also very interested in our activity.
Mr. Terry. Several of our universities are engaging in
research and development of advanced manufacturing
technologies. Does that factor into the decision for Bosch?
Mr. Dahl. Absolutely. Absolutely. We partner with several
universities, ourselves, in Michigan and other areas to have
these advanced technologies and utilize those resources in our
activities.
Mr. Terry. Mr. Hinrichs, same question.
Mr. Hinrichs. Most definitely. When you think about
manufacturing leadership, partnership with universities is
critical to get the new technology that is out there. And we do
a lot of that partnering, as well.
Mr. Terry. Can either one of you say specifically one
breakthrough that has been helpful that has come through a
partnership with the university? And you can quit saying
University of Michigan.
Mr. Dahl. I mean, I was going to bring the example of the
ACCESS issue, where we are achieving this 30 percent through a
various array of technologies, working with the University of
Michigan.
Mr. Terry. We just wish Fred was here to hear all of this,
but he is upstairs.
All right. I appreciate that.
And now the ranking member, Ms. Schakowsky, you are
recognized.
Ms. Schakowsky. Thank you.
Mr. Hinrichs, as promised, I wanted to ask you about the
issue of rearview visibility. Every year, NHTSA estimates that
there are 228 fatalities and 17,000 injuries, 100 children,
who, in my view, needlessly die as a result of being backed
over by drivers who can't see them.
I was the lead sponsor, along with my Republican colleague
Peter King, of the Cameron Gulbransen Kids Transportation
Safety Act of 2007, which required a rulemaking to improve
visibility and prevent those tragic backovers. I mean, we would
have press conferences every 6 months or so, and parents and
grandparents would come holding pictures of their children that
they had literally killed.
So, in the proposed rule, NHTSA estimated that rearview
video systems would reduce fatal backovers by 95 percent. So we
are awaiting finalization of the rule. And NHTSA concluded that
the cost to include rearview cameras in cars that already have
some sort of in-vehicle display is less than $90 per vehicle.
So my question for you--and I will want to get an answer
also from Mr. Wehrman of Honda and Mr. Nielsen of Toyota. So
each year more and more vehicles are sold with these in-car
displays. What percentage of cars sold by your company
currently come with those display screens? And what are your
projections for the next year? And when will you reach 100
percent?
Mr. Hinrichs. Thank you.
I don't have with me the specific percentages of vehicles
that have displays in them, but we can certainly follow up on
that.
I can tell you that at Ford, all of our light-duty cars and
trucks sold here in the United States have the option of having
a rearview camera. And we have been moving forward with a lot
of new technology with the displays. As a matter of fact, the
take rate on MyFord Touch, which includes a display, has been
growing every year, and it is substantially up this year.
I will have to follow up with you on the numbers regarding
the displays.
Ms. Schakowsky. OK.
Let me just ask you this, because obviously it is my view
that everyone should have access to rear visibility and other
safety features. I mean, there are so many ways in which our
children, we can't protect them from the world, but this is one
where we know this will prevent these kinds of horrific
fatalities.
And so, recognizing this potential, do you, does Ford
support the finalization of the rear visibility rule?
Mr. Hinrichs. Well, we at Ford want to continue to work
with the government to find the right solution that makes sense
for customers and for safety. We have always been advocates for
safety.
There are many technologies that help with identifying any
obstacle or person in the rear of the vehicle--for example,
sensors as well as rearview cameras. And so we are open to
certainly continuing to work together, find the right solution
that works for customers, and, clearly, keeps everyone safe.
Ms. Schakowsky. Right, except that the kind of research
that we have done is that even the sensors, and regardless of
how you place the mirrors, that we still have these blind
spots, and that the most surefire way is to have these rearview
cameras.
Now, the auto industry did support originally the
legislation, not the particular technology. But now we are down
to the question of whether or not we are going to have this
particular technology. I mean, that is the issue. And I
certainly would love to have the support of the industry and
hope that we can work together on that particular technology.
Mr. Hinrichs. Thank you. I am sure we can work together
because, clearly, we all have the same interest in mind.
Ms. Schakowsky. Thank you.
I yield--no, I don't yield back.
I wanted to ask Mr. Dahl about the investments in fuel
injectors, for example, for clean diesel passenger cars.
I understand that your company announced over the next 5
years it will invest $125 million and create approximately 450
new jobs in a new manufacturing facility in Dorchester County
to this effect. I wonder how much progress has been made thus
far.
Mr. Dahl. We actually are getting ready to launch our new
high-pressure fuel pump, and that will basically lead the
market, if you will, with regards to performance and fuel-
efficiency improvements.
And, additionally, we are utilizing the manufacturing base
there in Charleston, and we will export. So we will actually
supply 15 percent of the world's exports of that technology out
of Charleston for that high-pressure pump.
Ms. Schakowsky. Thank you very much.
I yield back.
Mr. Terry. Thank you.
The vice chairman of the subcommittee is now recognized for
your 5 minutes, Mr. Lance.
Mr. Lance. Thank you very much, Mr. Chairman.
Mr. Hinrichs, you have testified that Ford created an
impressive 8,100 jobs in the United States last year, including
1,000 jobs that were repatriated from other countries.
Would you please explain to the committee what factored
into the decisions to repatriate those jobs? And, more broadly,
to what do you attribute the job growth in general?
Mr. Hinrichs. Well, the work we have done inside our
company and certainly with the UAW to make our business from a
manufacturing standpoint much more competitive has allowed us
to bring more work back in. So some work that was done
overseas, transmission work in Japan or some supplier work in
Mexico, has been returned to work here because we have a much
more competitive manufacturing environment today.
We are also seeing strong growth in the industry here with
Ford and our volumes are growing, which is also helping with
that. We also made some announcements that we are bringing more
production back into the U.S., including a recent announcement
that we will bring a transmission currently built in Spain back
to Cleveland, Ohio.
So the work that we have done with UAW to make our contract
and our operating patterns much more efficient is allowing for
that.
Mr. Lance. Thank you. This is good news, and I think we are
all pleased to hear that. And I hope that trend might continue.
I know that our recovery has been slower than all of us
would like. We are hearing some concerns at the moment about
the European market. And would you comment on the European
market as it affects Ford?
Mr. Hinrichs. Sure.
Ford announced a pretty aggressive restructuring plan for
our business in Europe in October, which includes the closure
of three manufacturing facilities. Europe, as an industry, is
going through somewhat similar situations that we went through
here in North America several years ago, which means
overcapacity and the need to rationalize that capacity.
And Ford is taking a leadership role in Europe in making
that happen. It is not easy to do, but it is necessary, just as
we did here in closing 16 manufacturing facilities to now allow
us to have the ability to grow with a much more competitive
cost structure.
Mr. Lance. Thank you.
You have stated in your testimony that there has been a
significant struggle to identify and hire skilled workers. And,
of course, many Americans who are out of work or who are
underemployed wish to work or wish to work fully.
And you have also stated that you are pleased to see that
some States are starting to pilot programs like Germany's dual
education approach. And could you describe to the committee
your view on dual education and how we might improve so that as
many Americans as who want to work are able to work?
Mr. Hinrichs. Well, yes. We have been very fortunate in the
growth we are seeing in our employment. It has attracted a lot
of interest. And, in fact, at Ford, probably because of our
history and the strength of our brand, we have been able to
attract a lot of good talent and are getting the talent we
need. But our supply base continues to tell us that one of the
biggest challenges they face is getting skilled labor in the
manufacturing environment to help support our business.
We have been focused on upscaling our workforce, both
salaried and the manufacturing workers in the plants, for the
new technology that has been discussed about what is happening
in the future. Because we are a high-tech business.
Mr. Lance. Of course. Thank you.
Mr. Dahl, might you comment on that, regarding making sure
that we have the necessary skills so that young people can go
into manufacturing?
Mr. Dahl. Absolutely. I think Bosch values manufacturing
very, very much. Some of our top executives have a
manufacturing background--for instance, Mike Mansuetti, the
president of Bosch North America.
These apprenticeship programs, we feel, are absolutely
vital. If you take a look at how Germany is set up with their
dual education system, where you get to go through the
standardized schooling and then you have to apply with the
company, you get accepted with that company, and then you get
the specialized training for not only the manufacturing but
also other areas, we see that to be very beneficial in Germany,
where the unemployment rate for young people has dropped
significantly due to these.
So bringing these types of programs into South Carolina,
North Carolina, all the other States, we think is a very big
advantage for us.
Mr. Lance. Thank you.
I am not aware of these figures. Does Germany have a lower
unemployment rate among young people, lower than our rate here
in the United States?
Mr. Dahl. Yes, they do, sir.
Mr. Lance. And, at least in part, in your opinion, is that
due to this dual education approach?
Mr. Dahl. Yes. Yes, I believe it is.
Mr. Lance. That is certainly something we should analyze in
this country moving forward.
I have 10 seconds left, so I will yield back my time.
Mr. Terry. Thank you, Mr. Vice Chairman.
And, at this time, it is my distinct honor to recognize not
only the dean of Congress but what we consider as the dean of
the automotive industry.
Mr. Dingell, you are now recognized.
Mr. Dingell. Mr. Chairman, thank you for your friendship,
for your very fine introduction, and for the having of this
hearing today.
First, welcome to our witnesses, especially Joe Hinrichs,
who comes from the great company Ford, which is headquartered
in my district. I would also like to welcome Chris Nielsen from
Toyota. The trucks his plant makes were substantially designed
in my district.
Now I would like to use my time to gain a better
understanding of the potential benefits of a free-trade
agreement between the United States and the European Union.
Trade is a tricky subject, and I think here there may be an
opportunity to do some good, as long as it results in job
creation and advances the public interest.
Mr. Hinrichs, does Ford currently export vehicles or parts
from the United States to the EU, yes or no?
Mr. Hinrichs. Yes.
Mr. Dingell. Mr. Hinrichs, has Ford announced plans to
expand its vehicles or parts exports to the EU, yes or no?
Mr. Hinrichs. Yes, we have.
Mr. Dingell. Mr. Hinrichs, are there differences between
U.S. and EU vehicle standards, yes or no?
Mr. Hinrichs. Yes, there are.
Mr. Dingell. Does Ford believe these differences inhibit
its ability to export vehicles from the United States to the
EU?
Mr. Hinrichs. Yes.
Mr. Dingell. Do?
Mr. Hinrichs. Yes.
Mr. Dingell. OK. Mr. Hinrichs, would harmonization of these
standards reduce Ford's design, engineering, and manufacturing
costs, yes or no?
Mr. Hinrichs. Yes, they would.
Mr. Dingell. Mr. Hinrichs, would harmonization of these
standards benefit all automakers with a manufacturing presence
in the United States, yes or no?
Mr. Hinrichs. Yes, they would.
Mr. Dingell. Mr. Hinrichs, does Ford believe that
harmonization of these standards with the EU would not lead to
a diminution of U.S. vehicle occupant safety, yes or no?
Mr. Hinrichs. Yes.
Mr. Dingell. Now, Mr. Hinrichs, just so my colleagues and I
understand the term ``harmonization'' a little better, would
you please submit for the record what Ford believes the term
would mean within the context of the trade deal which we are
now discussing?
Mr. Hinrichs. With the European Union?
Mr. Dingell. Yes, and just submit that for the record.
Mr. Hinrichs. OK, we will, yes.
Mr. Dingell. Now, Mr. Hinrichs, does Ford believe
harmonization of standards would aid in the development of
common global vehicle platforms, yes or no?
Mr. Hinrichs. Yes.
Mr. Dingell. Now, Mr. Hinrichs, would the development of
such platforms enhance Ford's ability to export from the United
States?
Mr. Hinrichs. Definitely, yes.
Mr. Dingell. And that would generally benefit American
manufacturers, too, would it not?
Mr. Hinrichs. Yes.
Mr. Dingell. Now, Mr. Hinrichs, does Ford believe U.S.
automakers could be competitive in price and quality by
exporting from the United States, yes or no?
Mr. Hinrichs. Yes.
Mr. Dingell. Now, I would like to ask a question or two
about how a potential U.S.-EU free-trade agreement might
influence trade relations with Asian countries.
Mr. Hinrichs, again, are standards in Asian countries where
vehicles are produced different than the U.S. and EU standards,
yes or no?
Mr. Hinrichs. Yes, they are.
Mr. Dingell. Now, Mr. Hinrichs, am I correct that China
alone is expected to expand its production to well over 20
million vehicles in the near future, yes or no?
Mr. Hinrichs. Yes.
Mr. Dingell. Now, Mr. Hinrichs, although China does not
export many automobiles today, do you expect China to
eventually become a major auto exporter, yes or no?
Mr. Hinrichs. Yes.
Mr. Dingell. And the U.S. and EU respectively have 15
million vehicle markets; is that correct?
Mr. Hinrichs. Generally, yes.
Mr. Dingell. Now, Mr. Hinrichs, with this in mind, would
common standards help U.S. and EU vehicle manufacturers to
compete better with their Asian counterparts, yes or no?
Mr. Hinrichs. Yes.
Mr. Dingell. And, also, specifically with regard to the
Chinese?
Mr. Hinrichs. All the Asian manufacturers.
Mr. Dingell. Now, in conclusion, does Ford believe a U.S.-
EU free-trade agreement would create opportunities to enhance
U.S. global competitiveness, yes or no?
Mr. Hinrichs. Yes.
Mr. Dingell. Now, Mr. Hinrichs, I would like to contrast
the potential benefits of a U.S.-EU free-trade agreement with
what would happen if Japan is allowed to join the Trans-Pacific
Partnership, TPP.
Is it true that foreign automakers have only approximately
a 5 percent market share in Japan?
Mr. Hinrichs. Yes.
Mr. Dingell. I would note that I have been complaining
about this having existed because of the way the Japanese
behave with regard to closing down on imports.
Now, Mr. Hinrichs, based on Ford's experience, is it
reasonable to assume that permitting Japan to become a party to
TPP would result in Japan's making meaningful policy changes,
yes or no?
Mr. Hinrichs. No, it wouldn't.
Mr. Dingell. So if we are going to let them in, we ought to
see to it that they first agree that they are going to open
their markets. Am I correct?
Mr. Hinrichs. Yes.
Mr. Dingell. Now, Mr. Hinrichs, in other words, the
potential benefits to U.S. automakers would be greater in a
U.S.-EU free-trade agreement than in a TPP with Japan as a
member, yes or no?
Mr. Hinrichs. Yes.
Mr. Dingell. So thank you, Mr. Hinrichs. It seems that
there are significant opportunities for U.S. automakers in a
free-trade agreement with the EU but questionable benefits if
the Japanese get into a TPP without opening their markets,
which have been closed tighter than a drum since World War II;
is that right?
Mr. Hinrichs. Yes.
Mr. Dingell. Thank you for your courtesy, Mr. Chairman. And
I am delighted to see that the committee is going into these
matters. And since the committee has jurisdiction over these
things, I would expect that we would actively and very
interestedly see to it that the TPP is in the benefit of the
United States, our workers, and our industry, and not in the
benefit of a market-closing country like Japan.
Thank you.
Mr. Terry. So noted. And brilliantly done, as usual.
At this point, we recognize the vice chairman of the full
committee, Ms. Blackburn, for 5 minutes.
Mrs. Blackburn. Thank you, Mr. Chairman.
And I appreciate that you all would both be here.
Mr. Hinrichs, let's talk about that Ford Motor Credit unit
there in Tennessee, 800 employees. I have had the opportunity
to be there a couple of times, as I had said.
And I am just curious how these credit units are going to
fit into your plans for the future and what we can do within
the financial system to make those captive finance arms
continue to work on behalf of the commercial end-user. If you
could talk about that?
Mr. Hinrichs. Yes, thanks. Ford Credit is an incredible
part of our company and our success over the last several
years, and we are so glad that we could keep Ford Credit as a
captive part of our business. I am actually on the board of
Ford Credit, so I get a close look at the business. And we are
very proud to be in the Nashville area and a part of Tennessee.
It is critical that all the regulation that is going into
place, which has good intentions, does not allow for unintended
consequences of the inability for captive finance companies to
compete when it comes to serving dealers for wholesale and
retail and serving customers for retail financing. I think that
is one thing we should keep in mind, to make sure that as we
move forward the regulatory environment here in the United
States, that we can allow for consumers to get access to credit
and for dealers to have access to credit for their wholesale
financing.
Mrs. Blackburn. Well, thank you for that.
And I think it is so important just to remind each of us
that you can manufacture all the things that there could
possibly be or anyone could possibly want. If they cannot get
credit and cannot afford it, you are not going to have the end-
user out there that is going to be able to benefit from those
items.
And, indeed, trade is an important component, but that
domestic marketplace is also very important also. And I would
appreciate that as you see things that are a hindrance to this,
that you would bring those forward and be open in articulating
those to us.
Mr. Dahl, let me ask you, you talked about Bosch's patents
that you hold. And just very quickly, piracy and illicit
products in the marketplace, how is that affecting you all?
What kind of impact are you seeing there?
Mr. Dahl. A lot of the piracy, obviously coming out of the
Asia-Pacific area, hasn't affected our automotive industry in a
large fashion.
Mrs. Blackburn. OK.
Mr. Dahl. In some of the aftermarket areas, perhaps, but
nothing from an OE perspective.
Mrs. Blackburn. OK. If you have further information on
that, I would appreciate knowing that. And I would think you
all could probably give us some stats on that. We continue to
fight the impact of piracy on U.S. products, whether it is
entertainment or a manufactured product.
Let me ask you, you talked about your dad. I liked hearing
you talk about your dad and his engineering abilities. And I am
sure, because of that, you are particularly close to what
engineers are doing to innovate and solve problems.
One of the things that comes forward to us many times is
the impact of these blended fuels, the E10s, E15s, the
corrosive nature that that plays on the engines. Is this
something that you all are looking at?
It seems as if we are approaching an issue--on one hand,
let's use the renewable fuels. On the other hand, we are
getting less gas mileage, less miles per gallon, and it is
having an adverse impact on the systems.
So what are you all doing to help address this?
Mr. Dahl. Certainly, a lot of our research and development
activities are in that direction of how can we withstand these
corrosive fuel combinations. We have made a lot of progress up
to this point in time, but we need much more.
Mrs. Blackburn. Mr. Hinrichs, how about you? What is Ford
doing?
Mr. Hinrichs. Well, Ford has been a leader in advanced
technologies, and we support moving forward with all of them.
We want to make sure that, for example, on E15 and products
like that that we don't do a disadvantage to the vehicles in a
retroactive nature. Vehicles need to be designed and capable to
use these new technologies, and we can't just artificially go
back and say, let the older----
Mrs. Blackburn. Yes. Let me ask you this: How much added
cost does this put on the vehicle as you are having to go in
and design so that it can take the corrosive nature of these
blended fuels? How much more does it make a vehicle cost?
Mr. Hinrichs. Yes, I am sorry I don't have the specifics
with me, but there certainly is an increased cost in the
powertrain system to be able to handle the advanced fuels. We
are very supportive of moving forward with that, but we want to
make sure that we understand what those costs are as we get the
benefits.
Because there are all kinds of new advanced technologies
out there, including electrification of vehicles and all these
alternative fuels. All of them need to be part of the solution,
but we need to make sure that we are looking forward and not
necessarily just arbitrarily letting older vehicles use the
technology.
Mrs. Blackburn. Right. Plus, we want to make certain people
can afford those cars. If you could submit that information to
me, I would appreciate it.
I yield back.
Mr. Terry. Thank you.
At this time, we will recognize the gentleman from
Kentucky, Mr. Guthrie, for 5 minutes.
Mr. Guthrie. Thank you, Mr. Chairman.
Thank you guys for being here, and the rest of the panel
that will be here next.
My dad is a Ford retiree, so I grew up in the automotive
industry. As a matter of fact, I left the automotive industry
when the good citizens of Kentucky allowed me to come here. And
it is massive. I remember I left the Army to go work in a
factory, and I am watching a power-steering pump/rack that was
on the Ford Explorer, going down about 60, 70 an hour, going
down the line. And you pick one up, and it is this big, but
every one of them had a power-steering clip attached to it,
four wheels, four tires, windshields. And that was only one car
and one model of one car for one company.
And so having a robust automotive industry is just so
important to all of us. And when Toyota came to Kentucky, my
district doesn't have the big plant, and I wish it did, but we
have a lot of suppliers that came with it. So those type of
brackets and things are made in my district. And Magna is in my
district to serve Ford. They are there to sell bodies, to truck
them up to Louisville to your plant. And, also, General Motors
makes the iconic Corvettes right near where I live.
So it is great to have you guys here to talk about this.
The thing that I want to focus on--and I have already talked
about a minute and a half, but I think the automotive industry
is so important. But everywhere I go in my district, whether it
is a manufacturing plant--and, from my experience in
manufacturing plant today, with the unemployment rate that we
have, nobody can find qualified workers. And what are you guys
trying to do?
At the State level, we are trying to do more. I know we
have a bill that got out of the House to go to the Senate to
try to help with the SKILLS Act that Virginia Foxx has put
forward. But it just seems like we have this disconnect of
people just dropping out of looking for work right now. And
everybody is looking for workers, if they can get the worker
with the right skills. And some of them can't get just hourly
work. Just people come in to do basic skill work, as well.
And what are you guys trying to do. Just address it. And
then in the next panel, we will talk about it a little more, I
guess.
You pay well. It is not like there is something to a earn
minimum wage job either.
Mr. Hinrichs. Yes. We are proud of the jobs we create, and
you mentioned Louisville. We hired 2,000 people last year, and
we had to cut off the application of like 18,000. The interest
is exciting to work at Ford. We are proud to be a longstanding
member of the Commonwealth. I think we are actually the second
largest employer in the State of Kentucky now.
When you look at the skill requirements in this country for
manufacturing, specifically, it comes back to what Scott said
also, technology, engineering, science, math, these skills and
these subjects matter, and if you look at the Asian country,
they are emphasizing this in their schools and in their
disciplines when it comes to education. The one thing we need
to do is get back to emphasizing the innovation comes from
science, engineering, and math and make that a priority with
our students.
I have three teenagers who are in high school right now
emphasizing the importance of those subjects. And also,
continual training. One thing we work very closely with the
Commonwealth on and continue to upscale our workforce because
technology advances. You hire somebody today, and 10 years from
now the technology has changed dramatically in manufacturing or
other places, so working together with governments locally,
regionally to continue to help train and have policies to help
develop training programs are very important.
Mr. Guthrie. Mr. Dahl, what are you guys focusing on in
trying to bring that, the skill levels, or finding people that
are employable?
Mr. Dahl. I think the issue is on both the skilled labor
and on the engineering side, too. So the skilled labor, of
course, we were implementing our own apprenticeship programs.
We are working with the technical colleges, we are supporting
these colleges with training material, textbooks, grants even
to bring the students in.
And on the more the engineering side, we are supporting the
Society of Automotive Engineering, a World in Motion programs,
the first robotics programs where we are in actually working
with these people. In fact, this Saturday we are hosting a VIP
reception for that first robotics in Michigan. It is so
critical for us to actually have our engineers go work with the
young students and get them excited about this technology so
that they can move forward in their own, should we say,
education paths.
Mr. Guthrie. What we did, we started a factory--my father
left Ford and started a factory in the 1980s, and we found we
couldn't find tool and die makers, industrial, the guys you are
probably looking for and we had to really create them. That
sort of actually got me involved in politics, started working
with the tech school, and we found there was a whole floor full
of smart people, very smart people. They didn't figure out they
were smart in high school or somebody didn't tell them they
were smart in the aptitudes that they had, and we had one guy
that was essentially a high school dropout almost. Well, just
barely got out that's now got his engineering degree because he
flourished, and so that is my passion.
We are out of time, and we will hit that on the next panel,
I am sure. Well, thank you for your coming here today.
Mrs. Blackburn [presiding]. The gentleman yields back. At
this time I recognize Mr. McKinley for 5 minutes.
Mr. McKinley. Thank you, Ms. Chairman.
I would like to hear Ford's perspective on this issue. We
have the condition of our roads and bridges. I am a fellow of
the ASCE, and we know that bridges are rated at a C and our
roads are rated at a D in their condition, and with the CAFE
standards that are being promoted to get up to approximately 55
miles per gallon, the CBO is claiming that we are going to have
a reduction in revenue by about 21 percent for a loss of
reportedly at $57 billion that we would otherwise use for
infrastructure. What would you suggest that we should be doing
to replace that revenue so that we can maintain our bridges and
roads if we are going to maintain 55 miles per gallon?
Mr. Hinrichs. Well, I think infrastructure in the United
States is a very critical discussion item for manufacturing
even, because getting parts moved around, having solid and
predictable routes for transportation is critical to a
manufacturing base, so it is a very applicable topic for us
today.
At Ford, we believe that it is Congress' responsibility to
work through the funding mechanisms, but clearly, when you look
at the countries, the advanced economies that are out there
driving manufacturing today, the road systems, the rail
systems, bridges, et cetera, are part of the infrastructure
investment priorities that go on in government.
China is a great example. I just lived there the last 3
years, and that infrastructure drives the ability to be able to
manufacture competitively.
As far as funding goes, there are many alternatives, and
obviously Congress will consider those, but I do think that the
status, the current status of our infrastructure here in the
United States needs to be a priority as they move forward to be
competitive in manufacturing.
Mr. McKinley. Don't you see we are exacerbating the problem
by pushing 55 miles per gallon in a short timeframe? That
obviously $57 billion, that is just to replace what we
currently have, and our bridges are at C and our roads are D.
We have needed more money, not less money for our
infrastructure.
Let me, in the time remaining, if I could, continue to hear
what Ford's perspective is. Also with the CAFE standards
implemented, you have seen cars be getting smaller and lighter;
and from a safety standpoint, I have here reports that were
produced here in 2009 by the Insurance Institute. Also USA
Today has put out articles about this that suggests that there
had been a 23 percent increase in deaths per cars as a result
of the reduction in weight and size, and there were 1,300, and
that equates to 1,300 to 2,600 additional crash deaths occurred
in 1993 because of vehicular weight reduction.
We are just talking about deaths, let alone how many people
were injured in the hospital and health care costs as a result
of this. So I am just, you can see my conflict here, trying to
achieve energy efficiency, but at what risk? If we are taking
money away from infrastructure and we are putting our families,
our children, and our spouses at risk in driving smaller,
lighter cars when they could be injured, what should we be
doing about that if we want to achieve 55?
Mr. Hinrichs. Well, I think all of us----
Mr. McKinley. Are the reports correct? Or do you deny that
these--or would you say these reports are inaccurate?
Mr. Hinrichs. Well, I don't have the reports in front of
me, so I can't speak to them specifically, but I will be happy
to follow up on that. In regards to the safety of all vehicles,
all manufacturers continue to improve the safety of our smaller
vehicles, different technologies, of course, as a part of that.
There has been a downsizing of the fleet, partially because of
fuel economy requirements but also partially because of
affordability and what has happened since the global financial
crisis.
Our focus is on making every vehicle that we sell as safe
as possible and giving those options for safety features to our
customers. I will follow up with you on the data that you
recognize with our team so we can follow up on that.
Mr. McKinley. Thank you very much. I yield back the balance
of my time.
Mrs. Blackburn. Gentleman yields back. At this time, Mr.
McNerney, you are recognized for 5 minutes.
Mr. McNerney. I thank the chairwoman. Thank you panelists
for your testimony today.
Mr. Hinrichs, I am honored to have you in front of me. How
would you say that the new fuel efficiency standards that have
been promulgated recently have affected innovation and job
creation with Ford and with the American manufacturers in
general?
Mr. Hinrichs. Sure. At Ford we were a big supporter of the
one national standard and all the work that went on, including
back in the 2007 Energy Independence and Security Act. Let me
give you an example of how the future looks with Ford in that
regard.
We took a plant in Michigan called the Michigan Truck Plant
which produced Expeditions and Navigators, large SUVs, and
converted it into making small cars, and now that plant makes
Focus, C-Max hybrid, C-Max plug-in hybrid, Focus battery
electric vehicle, all in the same plant, down the same line,
only place in the world where we do where that is done. That is
the future. That is what is driving advanced technology is with
the fuel economy standards.
At Ford, we believe it is very important that we use data
with the government together for the upcoming midterm review to
make sure that we are all moving forward, consumers and the
industry, to meet the expectations of the one national standard
over the next several years.
Mr. McNerney. Are you leveraging research being conducted
at the national labs like Sandia National Labs, their internal
combustion facility for your innovation and new product design?
Mr. Hinrichs. We have partnerships throughout the United
States and with universities, with national labs, with all
kinds of different--and other companies as well, looking at
everything from hydrogen to, of course, batteries and
electrification of the vehicles, and what is happening with
compact natural gas and everything else. All of that is part of
the future in the industry.
Mr. McNerney. Well, my first question was regarding
effective fuel economy regulation on innovation. What about
federal regulation on safety? Is that a big impact on
innovation and job creation as well?
Mr. Hinrichs. Both advanced technology for fuel economy and
also for safety is affecting the industry. It is one of the
reasons why we brought in our remarks the need for homologation
around regulation around the world because we are a global auto
industry now. We use global platforms. We compete globally.
In regards to safety specifically, the most important thing
is that we work together to make sure that we have the intended
results, obviously, for the customers and the other
individuals, pedestrians around the area, but we want to stay
focused on the delivery of those safety features that have the
best benefit.
Mr. McNerney. Thank you. How are foreign nations leveraging
their workforce impacting your ability to manufacture in the
United States on a competitive basis?
Mr. Hinrichs. Well, auto manufacturing takes place in many
countries around the world. I think when you look at it, what
we have asked for is that any--and we supported all the U.S.
Free trade agreements, that any free trade agreement going
forward takes into account all aspects of what can happen, both
tariff and non-tariff barriers, and also, to make sure that
there is a discussion around what mechanisms could be in place
around currency manipulation. We feel that is another issue
that needs to be addressed in free trade.
The American economy is the largest economy in the world
and the American auto industry is the second largest in the
world and it is one of the most attractive for people to
compete in. We want to make sure that if we are going to have
free trade and fair trade in the United States, that other
countries play along the same way. We are old-fashioned that
way.
Mr. McNerney. I think I like your answers because they are
kind of to the point and brief and they don't wander around for
5 minutes.
Mr. Dahl, I want to ask you a little bit about the impact
of American education on our ability to be productive and
competitive with overseas companies.
Mr. Dahl. Again, we believe that education of the STEM
areas is absolutely vital to our future success. We have seen,
as we stated earlier, a challenge in getting applicants for not
only the manufacturing jobs, but also from an engineering
perspective, so we feel it is absolutely vital as a part of our
future here in North America from a manufacturing and a R&D
center.
Mr. McNerney. Are we, in your opinion, competitive on the
educational aspect in order to keep competitive on the
production and economic sectors?
Mr. Dahl. I don't want to comment on the competitiveness of
North American educational system. I can just only state that,
again, we are still having some challenges here. We have
challenges in other areas as well, but our focus here is North
America, United States in trying to get those education levels
to be satisfactory for our employment.
Mr. McNerney. Thank you. I yield back.
Mrs. Blackburn. Gentleman yields back.
At this time, Mr. Johnson, you are recognized for 5
minutes.
Mr. Johnson. Thank you, Madam Chairman.
I came to Congress in 2010 after the 2010 election from the
auto industry. I worked for a company that manufactured
electronic components, highly-engineered electronic components
for all of the automotive and many of the recreational vehicles
and 18-wheel tractors and those sorts of things, so I have
watched with interest the progress that you folks have made in
job creation in spite of the challenges that you had.
Let me just, I want to take a little bit of a broader scope
in my questions. How does U.S. Energy policy affect your
manufacturing process? And with all the progress that you have
made, do you see progress in this area maybe stalling, or even
reversed, by tighter environmental controls, any concerns?
Mr. Hinrichs. Well, one of the most exciting things
happening in the United States actually is the whole natural
gas and what is happening in that side of the business that
could possibly lead to lower energy costs for manufacturing in
the U.S.
In regards to in general, regulatory environment, as we
discussed, one of the big areas of opportunity we believe that
exists here in the U.S. Is to work collectively with the U.S.
And other governments to homologate regulations around the
world when it comes to fuel economy, safety, other things,
without sacrificing the intended outcomes of both those areas.
But we think actually manufacturing can been more
competitive in the U.S. With a lower energy cost base, which is
certainly encouraging right now.
Mr. Johnson. So it would stand to reason, then, with
increased pressure from Washington, to regulate hydraulic
fracturing and kind of stymie the development of oil and gas
development, domestic energy development, and the shale plays
across the country. That would have a negative impact
potentially on your industries.
Mr. Hinrichs. Well, what I will say is the auto industry is
energy intensive, so the ability to lower energy costs in the
United States would help make automotive manufacturing in
America more competitive.
Mr. Johnson. Mr. Dahl, any comments?
Mr. Dahl. I can only second Mr. Hinrichs' commentson that.
It definitely would make us more competitive manufacturing-
wise.
Mr. Johnson. Great. Again, in a broader context, sorry for
putting you on the spot, but what Federal agency have you found
to be most helpful in dealing with, and this is not a trial so
you can't take the Fifth, so.
Mr. Hinrichs. I think the correct answer is all agencies
are great to work with, and we enjoy our relationships with all
of them as a large manufacturer in the United States.
I will make a general statement, and that is, we are U.S.
Citizens, we are Americans, we all have the same interest at
heart. We want our country to be great. And so agencies that
listen and work for collaborative solutions are the ones that
we think are most effective because ultimately, we all want the
same thing, but we have to find the best way to get there.
Mr. Johnson. Right. OK. Mr. Dahl, any thoughts?
Mr. Dahl. I think we have had very good relationships with
all of the agencies, so I can't single out one or the other at
this point in time.
Mr. Johnson. Well, without putting you too much on the
spot, the reason for this line of questioning, of course, is,
we hear from manufacturers all over the country and businesses
all over the country about the negative impacts of the
regulatory burden that comes out of Washington. I mean, the
cost for starting a manufacturing company, sustaining a
manufacturing company, complying across the board with the
massive mountain of Federal regulations. If there is a
regulatory burden that causes you the most frustration, what
would that be?
Mr. Hinrichs. I wouldn't call it frustration, but clearly,
in the auto industry, one of the most important opportunities
we have working with the government has been around fuel
economy and emissions, and it is a very important topic for all
of us, so that is one of the most important topics. I wouldn't
call it frustrating, but it is certainly one of the most
important.
Mr. Johnson. You are right. You are quite the diplomat.
Mr. Dahl. Actually, I wouldn't look at regulation. I would
look at the current economic uncertainty, which is really the
major factor that is affecting our investments in manufacturing
right now.
Mr. Johnson. OK. Well, thank you. Madam Chairman, I yield
back. Thank you, gentlemen.
Mrs. Blackburn. I thank the gentleman for his time. Mr.
Kinzinger, you are recognized for 5 minutes.
Mr. Kinzinger. Well, thank you, Madam Chair, and I want to
thank this committee for holding this hearing. This is kind of
a step in a longer process we have had in talking about
manufacturing in this company, and I think it is very
important. In the last--and I thank you-all for coming in, too,
by the way. In the last two decades, we have seen a steady
decline in America's share of global manufacturing activity.
This is due, in part, to increased competitiveness from
emerging economies but also due, I think, to outdated economic
policies.
Today we have had the opportunity to hear from a key part
of that in auto manufacturing, a sector that we have seen hit,
major lows, frankly, and then come back from those major lows
into what today appears to be resurgence in a very good, a very
positive day.
I have a couple of questions for each of you. I don't think
I am going to take all my 5 minutes. Well, it will be up to
you.
Mr. Hinrichs, first, Ford has recently expanded operations
in Chicago to produce the Ford Explorer, and as a result, the
supply base has benefited very successfully. In the case of
Illinois, do you know approximately, of course, how many
suppliers you have that support those assembly operations and
do you know, again, in general, how many--how much you purchase
annually from these suppliers? I know it is asking for a very
specific number, so it doesn't have to be very specific.
Mr. Hinrichs. That is why I lean back. We have 200, 250
suppliers in Illinois, and we purchased well over a billion
dollars' worth of material each year in Illinois.
Mr. McKinley. By the way, I know it is a good question if
you have to lean back. That is always a good thing, if you have
to get the information from behind.
Mr. Hinrichs. It is hard to memorize everything.
Mr. McKinley. I understand that. Also in your testimony you
mention currency is an issue that should be addressed as part
of trade agreements. How does currency impact your ability to
expand exports specifically in the Chicago area, in Illinois,
but in general.
Mr. Hinrichs. Well, as I said earlier, we think the free
market should set currency rates, and if a government has
intervened in the past or threatens to intervene in the future,
that affects currency rates. We don't think that is what fair
trade represents and what free trade should represent for the
United States. We compete with global manufacturers, whether
producing in Chicago or producing anywhere in the United
States.
Ultimately, the global platforms we are on and the vehicles
we ship around the world are competing with great companies,
strong companies around the world, and we need a fair and free
environment to do that in, and it can't just be one-sided from
the United States' perspective.
Mr. McKinley. Thank you. That actually brings to mind maybe
a little bit of a separate subject but very related to this.
Illinois is a manufacturing hub, obviously, a center of the
country in both transportation and people and everything else,
but we have created, in our State, some terrible economic
policies. I am not going to ask you guys to comment on this,
but some terrible economic policies, including increasing our
corporate tax rate in the middle of a recession, which makes
zero sense to me, and what we have seen is we are competing
with Indiana, with Wisconsin, with Iowa, with the south, and we
are having to fight tooth and nail to try to even keep
manufacturing in our State, much less get new manufacturing,
but what you see is, although those competiveness, that
competitiveness we have at the State level against other
surrounding States, frankly they are winning, as a country, we
have to compete like that around the world. Gone are the days
where we can put up the walls and say, well, we are just going
to do business here at home now. We have to understand that
just like Illinois competes with Indiana, we are competing with
India, with China, and so we have to create that environment. I
think that is what you gentlemen are getting to is the idea
that to create an environment here, we want to expand in the
United States. This is where we want to be, you know. The
weather is fine here, everything is good, the people are great,
just create an environment that we can do that so that we can
be competitive and access the consumers around the rest of the
world.
Mr. Dahl, you have a facility in the small town of Watseka,
Illinois, which I represent, and you have, I think,
approximately 130 employees, so thank you for that great
injection into the economy there. I understand you have dealt
with manufacturing operations around the world. What do you
believe makes the U.S. Unique relative to other countries and
economies and what are some of the lessons learned in that
process?
Mr. Dahl. I go back to the unique innovative can-do
attitude here within North America. The United States in
particular, the associates don't give up, they see a problem
and they pursue it, and they find a solution and they are
willing to work outside of their normal boundaries as a team to
find that, and that is one of the main things that attracts us
here to the United States.
Mr. McKinley. Thank you. And I think that is a good point,
because you see as government comes in and forces more
regulation in some cases, I think it stifles innovation and
especially with the uncertainly in the economy, you have a lot
of young entrepreneurs right now that may have an idea that
have no idea how to pursue it because it has created such an--
they don't know if it will be successful, what the economy is
going to look like.
Finally, does Bosch conduct research and development
activities in the United States and what informs your business
decision on where to conduct R&D activities?
Mr. Dahl. We have corporate R&D centers in Palo Alto,
California and in Pittsburgh, Pennsylvania. We have R&D centers
in our various divisions that do regional specific R&D for
particular products, and then also support the global
development, R&D for the rest of the divisions.
Mr. McKinley. OK. Thank you. Gentlemen, thank you, and
Madam Chair, I yield back.
Mrs. Blackburn. The gentleman yields back.
Mr. Harper for 5 minutes.
Mr. Harper. Thank you, Madam Chair. And I welcome and
appreciate each of you taking time from very busy schedules to
join us and give us a little insight into what is going on.
Question for each of you, and I will start with you, Mr.
Hinrichs, would be, talking about intellectual property
protection for the industry. How important is that to you, what
are we not doing properly, and what could we do better?
Mr. Hinrichs. Where it manifests itself, and from OEM
perspective in the auto industry is typically in after-market
parts, and one of the things that, of course, we do is we stamp
the Ford Blue Oval where we can on our own after-market parts
that are obviously designed and up to our standards. But
counterfeit components that go into the after-market business
is where the auto industry is most interested in intellectual
property protection, and I think we just need to continue to be
diligent in enforcement, both of our expectations of what comes
into these borders but also with other governments to ensure
that that is a priority that recognition of intellectual
property rights is something that is fundamental to global
business competitiveness.
Mr. Harper. Mr. Dahl.
Mr. Dahl. I absolutely concur. I think our biggest
challenge is in the after-market area. We do have issues there.
The department is actually 100 percent dedicated to finding
these counterfeit parts and to eliminating them, so any support
we can get to basically at the borders to ensure that they are
not coming in is key.
Mr. Harper. Thank you. Mr. Hinrichs, you have managed
facilities in a number of different States, and I am sure they
are varied in what is there. If you were looking at helping any
place in the country, here is how you put your put your best
foot forward, these are the things that we found are most
effective to help on competitiveness, what advice would you
give to a local area if you are talking about a new product
line, you are going to be look at your existing facilities and
comparing them, what is it that stands out that you would say
was good advice?
Mr. Hinrichs. Yes. Well, we actually work with the State
agencies to attract and hire personnel, so the first thing
would be good cooperation and good screening processes for
training--for uncovering the talent that wants to come to work.
It is not just about someone is willing to work, but can they
work in a team environment, are they willing to upscale their
technical capabilities, et cetera.
We work with many of our States, including Commonwealth of
Kentucky, where we had good training and development funds to
support the continual development of our workforce. I think
that is very critical and one, I think, we can differentiate at
the local level.
The other thing is partnerships with local community
colleges or educational institutions to do some of that skilled
trade development, the apprenticeship development that Scott
talked about or also in our own facilities, those are good
examples. I think the best advice I can give is just be willing
to listen to what the needs are and find creative solutions
because we want to be in your area.
Mr. Harper. I thank each of you. In order to allow
sufficient time for the next panel, I yield back.
Mrs. Blackburn. Thank you, and we appreciate the gentleman
for yielding back and appreciate each of you being here today
at this time. We want to thank you and say the first panel has
concluded.
We would ask our second panel to bear with us as we have a
very short recess and give the clerk time to preset your name
plates so you will know where to take your seat. This first
panel is concluded.
[Recess.]
Mr. Terry [presiding]. All right. We are back in after this
short recess. Thank you for all of your patience in this
matter.
Since all have been previously introduced by our original
opening statements, Mr. Wehrman, you can begin. You have five
minutes.
STATEMENTS OF JAMES C. WEHRMAN, SENIOR VICE PRESIDENT, HONDA OF
AMERICA MANUFACTURING, INC.; CHRIS NIELSEN, PRESIDENT, TOYOTA
MOTOR MANUFACTURING TEXAS, INC.; SCOTT E. PARADISE, VICE
PRESIDENT, MARKETING AND BUSINESS DEVELOPMENT, MAGNA,
INTERNATIONAL; ANNETTE PARKER, ED.D., EXECUTIVE DIRECTOR,
AUTOMOTIVE MANUFACTURING TECHNICAL EDUCATION COLLABORATIVE
(AMTEC); WILLIAM A. SMITH, EXECUTIVE DIRECTOR, GOVERNMENT
AFFAIRS AND COMMUNITY RELATIONS, AMERICAN AXLE & MANUFACTURING;
AND KATHY M. KINSEY, DEPUTY SECRETARY, MARYLAND DEPARTMENT OF
THE ENVIRONMENT, MEMBER OF THE ELECTRIC VEHICLE INFRASTRUCTURE
COUNCIL
STATEMENT OF JAMES C. WEHRMAN
Mr. Wehrman. Good morning, and thank you, Chairman Terry
and Ranking Member Schakowsky for inviting me here to testify
today. My name is Jim Wehrman. I am the senior vice president
of Honda of America Manufacturing in Marysville, Ohio. Today I
would like to give you an overview of Honda's evolving presence
in the United States, and then I will spend a few minutes
discussing areas where we think the government could be helpful
to manufacturers.
Honda's three decades of manufacturing in this country have
been a real success story for our company, and through that
success, we believe we have made a significant contribution to
the U.S. economy as well. Our automobile presence in the U.S.
began in 1969 by importing every vehicle that we sold here, but
early on, our founder, Mr. Soichiro Honda, determined that to
be successful we needed to build our products close to our
customer.
So in 1982, we became the first Asian manufacturer to build
automobiles in America, and since then, we haven't looked back.
Last year, more than 90 percent of the vehicles we sold in the
U.S. were built in North America, and as our local presence
grew, we added many functions associated with building cars,
including new R&D facilities, design centers, testing and
certification laboratories and parts manufacturing facilities.
Today, Honda operates nine manufacturing facilities across the
United States, four of which have the capacity to produce more
than 1.3 million Honda and Acura vehicles. Our other U.S.
facilities produce 1.5 million auto engines, 1.3 million
transmissions, 2 million general purpose engines, more than
400,000 power equipment products, and more than 575,000
altering vehicles and ATV engines.
Our 14 research and development facilities perform all
aspects of new model development with 24 Honda and Acura models
conceived, designed, and engineered in the U.S. since 1991.
Honda employs over 28,000 American associates nationwide. We
are supported by an extensive network of over 500 parts and
materials suppliers in 34 States with almost $22 billion
purchased from U.S. suppliers in 2012, but the process does not
end there. It continues to evolve, and in the last 2 years
alone, Honda has invested $1.3 billion to expand our U.S.
manufacturing capabilities to position our company to export
vehicles from the U.S. to 49 different countries and U.S.
territories worldwide.
This expansion is simply the next step in the evolution of
our U.S. operations. In 2012, Honda exported more than 90,000
vehicles, a number that we expect to double in the coming
years, and in 2 years, we expect to be a net exporter. We will
export more vehicles than we import.
Moreover, we recently announced our intention to focus new
responsibilities here in the U.S. for Honda's global
operations. Historically, all of our global model development
was led by Japan. In the future, though, the U.S. will serve as
a center for developing our manufacturing processes for some of
Honda's highest selling vehicles. Associates here in America
will lead the effort to generate new ideas, develop processes
and then change trained associates from Honda factories
throughout the world in those new techniques.
Our next frontier in the U.S. is Honda Jet, an advanced
light jet aircraft that delivers class leading performance,
fuel efficiency, comfort, and quality. Our competence in the
U.S. as a manufacturing base is reflected by the decision to
locate the world headquarters of Honda Aircraft in Greensboro,
North Carolina.
Now, I would like to talk about two areas that we think the
government has a key role to play in helping strengthen
manufacturing. We hear so much today about the gap between
skills workers need in today's manufacturing environment and
the skills workers have, but we also know that the government
is facing difficult budgetary choices, and workforce
development programs need to harness the joint power of the
public and private sectors to ensure the productivity of the
American workforce.
One of the ways Honda fosters workforce development is
through partnerships with local education institutions. For
example, Honda Manufacturing of Indiana has worked with Ivy
Tech Community College to develop training curriculum for
Honda's equipment services and die services associates.
Now, most auto makers today are also developing alternative
fuel vehicles. Honda is the only auto maker currently producing
six different drive trains and improve more fuel efficient
internal combustion engine, hybrid, plug-in hybrid, battery,
natural gas, and fuel cell vehicles. 10 States currently
require manufacturers to sell a total of 5 million advance
technology vehicles between now and 2025.
At the moment, however, the infrastructure simply does not
exist to support these vehicles, and what is the greatest
concern to us is that with the exception of California, States
plans to assure that that infrastructure will be in place
during their infancy. The Clean Air Act grants authority to
California and other States adopting California's regulations
to require these advance technology vehicles. However, neither
California nor the EPA believes it has the authority to assure
that the necessary infrastructure will exist. That places auto
makers in an untenable position. We are required to sell the
vehicles but there is no assurance that the infrastructure will
be there to support them.
30 years ago, when Honda began auto production in the U.S.,
many doubted the wisdom of that move.
Mr. Terry. Wrap up.
Mr. Wehrman. I guess my light is----
Mr. Terry. Wrap up.
Mr. Wehrman. OK. Well, today, U.S. auto production exceeds
our production in Japan, and our U.S. operations are assuming
leadership for much of Honda's global manufacturing direction.
We continue to believe in the ability of the U.S. to compete
globally. Thank you very much----
Mr. Terry. Thank you.
Mr. Wehrman. --for the opportunity to testify.
Mr. Terry. Thank you.
[The prepared statement of Mr. Wehrman follows:]
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Mr. Terry. Mr. Nielsen.
STATEMENT OF CHRIS NIELSEN
Mr. Nielsen. Thank you, Chairman Terry and Ranking Member
Schakowsky and members of the subcommittee. My name is Chris
Nielsen, and I thank you for the opportunity to participate in
this hearing. I am president of Toyoto Motor Manufacturing,
Texas, our facility in San Antonio that builds Tundra and
Tacoma pickup trucks. I would like to spend the next few
minutes sharing Toyota's view and how we might work together
with Congress to improve U.S. manufacturing.
First, I am proud of the auto industry, the role it plays
in the U.S. economy and the role that Toyota plays in both. We
have been part of the U.S. automotive story for over half a
century. It had been U.S. manufacturers for nearly 30 years.
Today we have 10 plants in the U.S., and with our four other
North American plants, we produce 12 models, accounting for 70
percent of our U.S. vehicle sales. And this substantial
manufacturing footprint also is boosting our ability to export.
Our U.S. operations currently ship vehicles to 21 global
markets, soon to be 23. Across these operations, sales and R&D,
Toyota employs over 31,000 people in the U.S. and we are
directly and indirectly are responsible for 365,000 jobs.
Now, let's talk about how we can make all that productivity
even more competitive. The topic on which I would like to focus
my remarks is workforce training. If you visit an automotive
manufacturing plant, one thing will be immediately obvious.
People build cars. While there is a great deal of automation in
modern auto plants, producing quality automobiles requires
skilled, disciplined, and well-trained workers.
Sadly, even with relatively high unemployment, our sector
struggles to attract work ready applicants. In fact, nationally
600,000 skilled technical jobs are currently unfilled. Why?
Manufacturing is not as widely viewed as a rewarding career as
it once was, despite the excellent pay and benefits in today's
advanced manufacturing jobs, and for those advanced jobs, only
5 percent of our candidate pool is qualified. Most applicants
have only a single discipline such as a welder or a programmer,
and many have basic educational deficiencies.
Toyota is not sitting still in confronting these issues. A
great example is our Advanced Manufacturing Technician, or AMT
program, developed in 2010, now rolled out across most of our
plants and endorsed by the automotive manufacturing technical
education collaborative as a best practice. To date, Toyota
graduates have a 100 percent pass rate in the technical written
exam, which is double the historical average.
Congress can help the sector in two major ways: First, the
government can help encourage cooperation among itself,
academia, and the private sector to improve K through 12 STEM
education and teacher recruitment. Second, you can help focus
resources on workforce programs that encourage nationally,
portable credentialed programs likes AMT, emphasize next
generation multi-skilled worker training, and encourage
coordination between community colleges and local employers to
help ensure curriculums meet local employment needs.
Many of the right resources are already in place, but for
manufacturing to remain competitive into the 21st century and
beyond, technical and intellectual training must be more
balanced and also more available. Toyota will do its part. We
hope Congress will help by encouraging funding of programs,
promoting the kinds of technical skills that the 1.7 job
automotive sector needs to carry it forward into the future.
I would like to close on a real positive note, and I am
going to stick with what I know best, which is the great State
of Texas. Conventional wisdom is to locate plants near
suppliers for obvious efficiencies, but in the case of the
plant that I run, we went where the buyers were. Texans
purchase about 20 percent of this country's Tundras. Our
challenge was both to find skilled workers and to provide
suppliers the opportunity to set up local operations. We
offered suppliers space on our property, and today there are 21
on-site suppliers in San Antonio. A third of the suppliers are
minority-owned, and two-thirds of our workforce is Hispanic.
As you know, when the world's economy slowed, cars and
especially trucks were dramatically affected, but we retained
all of our employees and reinvested in their training and
development. We asked for their help in improving operations,
so we were ready when the economy came back. We preserved jobs.
There are nearly 6,000 on site. And we may soon be in a
position to create more, provided we can find the skilled
workers we need.
Now, let me finish where I started in behalf of the 31,000
Toyota workers in the U.S., we are proud of what we have
accomplished. With the right kind of training in the American
workforce, there is no limit to what this country can do. We
are committed to a successful and competitive industry for the
long term, and know that a highly trained U.S. workforce is
essential to the success of our company and to the American
economy. Thank you.
Mr. Terry. Thank you very much.
[The prepared statement of Mr. Nielsen follows:]
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Mr. Terry. Mr. Paradise, you are recognized for 5 minutes.
STATEMENT OF SCOTT E. PARADISE
Mr. Paradise. Mr. Chairman and members of subcommittee, my
name is Scott Paradise. I am responsible for marketing business
development in the Americas for Magna. On behalf of our 20,000
American employees working at 62 manufacturing facilities in 15
States, it is a pleasure to be here today to share Magna's
perspectives in the future of American automotive
manufacturing. Magna, if you are not aware, we are a most
diversified supplier in industry today. We make--what we don't
make is tires and glass, and just about everything else we do,
including contract manufacturing and only contract
manufacturing for OEM customers so we don't compete against
them.
We are completely global. We were established in 1957. We
are the number one supplier to the industry in the USA, and we
are the number four supplier globally in the market.
We have over 400 manufacturing and product development
facilities in 29 countries, and our sales last year were
approximately 31 billion U.S. dollars.
I am also pleased to inform you that Magna has increased
our investment here and are hiring here in the United States.
Between 2009 and 2017, we have committed to investing nearly
$840 million in 22 new or expanded facilities, and in the
process, we alone at inside of Magna are creating 6,500 new
jobs in communities such as Michigan, Kentucky, Tennessee,
Missouri, Alabama, South Carolina and Georgia. These are
meaningful jobs with good pay and good benefits, the kind of
jobs that support families and help build for a better future.
Let me commend Chairman Terry and Ranking Member Schakowsky
for convening this important hearing today. It is critical to
the health of the U.S. economy that Congress and the automotive
manufacturing industry work together to encourage innovation
and job growth. In that regard, I will focus my remarks on the
need for a partnership between government industry as a means
of growing the manufacturing base in the United States.
Before discussing areas where the Federal Government can
contribute to a successful partnership, I will briefly call the
members' attention to my written statement that highlight areas
where Magna and other private sector manufacturers must control
their own costs, including R&D workforce development and
product costs. While not exhaustive, they are illustrative of
the types of cost that industry can control.
Now I would like to focus to the public component of the
successful public/private partnership and would like to propose
several areas in which Congress and this subcommittee should
take particular care in order to ensure American leadership in
the automotive manufacturing sector, that is, regulation and
legislation, corporate tax rates, workforce development, and
other incentives.
When it comes to regulation and legislation, the key
objective from Magna's perspective is to continue the active
dialogue and collaboration between the public and private
sectors to ensure that any new legislation or regulation that
changes policy objectives in a way that does not create new
problems where none previously existed. In my written
statement, I point out several errors where industry and
policymakers have worked collaboratively to leverage the
expertise and innovation of the private sector to meet certain
policy objectives, including those related to driver safety and
fuel efficiency standards. I would also suggest that hearings
such as today's are critical to making this process work for
U.S. consumers, manufacturers, and the U.S. economy.
Another issue that Congress should address is the high
corporate tax burden in the United States. It has been
mentioned earlier. The U.S. corporate tax rate is the second
highest among OECD countries and is a drag on American business
and job creators. The high corporate rate discourages capital
investment in the U.S. as companies may be lured to locate
major operations in countries with a lower tax burden such as
Mexico.
Reducing the overall tax burden on corporations in the U.S.
would help spur greater capital investment, increase
manufacturing output, promote job retention in the United
States, and stimulate the U.S. economy.
In addition, the United States is unquestionably the top
high skilled manufacturing nation in the world. While market
forces have pushed many low skilled manufacturing jobs broad,
U.S. manufacturing industry has been undergoing something of a
renaissance through high skilled labor, including in the
automotive sector.
Competition, however, is strong across the globe, and for
America to compete, we will need is a top caliber workforce to
meet the needs of the 24th century manufacturers. Congress
should therefore work to develop workforce training initiatives
that respond to employer needs and prepare American workers for
the high skilled jobs of the future. Such workforce development
initiatives could include investing in community colleges and
stimulating K through 12 vocational training, creating new
scholarships for high skilled manufacturing programs,
leveraging government procurement to place greater emphasis on
new manufacturing technologies, adequately funding Workforce
Investment Act programs and supporting innovative public/
private initiatives at the local and State level.
For example, one State public/private initiative that has
been particularly successful is Michigan's Community Ventures
program. It is collaboratively run between Governor Rick Snyder
and Michigan MEDC Corporation. Out of that program, we have
hired 75 people who were not working at the time and put them
to work inside of our facilities. It has been a great success.
Lastly, Congress can encourage the growth of the
manufacturing sector through tax incentives. Such initiatives
could include energy efficiency tax credits, R&D tax credits,
infrastructure investments to modernize and improve our
Nation's roads, bridges, ports and schools.
In conclusion, the automotive manufacturing industry is a
key drive of the U.S. economy and we look to continue to
participate in it heavily, and on behalf of Magna's 120,000
employees and the 20,000 here, we appreciate your time. Thank
you.
Mr. Terry. Appreciate yours.
[The prepared statement of Mr. Paradise follows:]
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Mr. Terry. Mr. Smith, you are now recognized for your 5
minutes.
STATEMENT OF WILLIAM A. SMITH
Mr. Smith. Well, good afternoon. And thank you, Chairman
Terry, Ranking Member Schakowsky, committee members for
providing this opportunity to present some issues we face in
automotive manufacturing. My name is Bill Smith, and I am
executive director of Government Affairs and Community
Relations for American Axle & Manufacturing, a tier one
automotive supplier headquartered in Detroit, Michigan.
AAM is a $3 billion supplier of automotive driveline and
drivetrain systems. We operate more than 30 locations across
four continents, with 12 of our facilities located in the
United States. We have invested over $2.3 billion in these
facilities, and we are in the middle of $100 million investment
in new tooling and equipment for our Three Rivers, Michigan
facility to launch a new industry leading disconnecting all-
wheel drive system, which will provide enhanced fuel economy
and safety over existing driveline systems in the industry.
AAM currently employs 3,000 associates in the United States
and another 8,400 in other countries. I have worked for AAM
since 2005 and have had the personal pleasure of starting up
new manufacturing operations in China, Poland, and the United
States, and prior to my work for AAM, I spent 37 years in other
manufacturing companies for a total of over 45 years of
manufacturing experience. I feel that manufacturing is one of
the key engines that will drive our economy to the next level.
Let me provide some supporting data.
Across the Nation, 12 million Americans are employed
directly in manufacturing jobs. For every dollar invested in
manufacturing, $1.48 is added to the economy, the highest
multiplier of any economic sector. Manufacturers in the United
States perform two-thirds of all private sector R&D in the
Nation, driving more innovation than any other sector. However,
our competitiveness is slipping, so much so that it is now 20
percent more expensive to manufacture in the United States
compared to competing countries.
Manufacturers are poised and ready to power the economy
with the right policies in place. I would like to offer four
areas in which we can focus to improve our manufacturing
competitiveness.
Number one, corporate tax reform; two, energy; three, R&D
incentive; and four, workforce training. The United States now
has the dubious distinction of having the highest corporate
income tax rate among the Nations in the OECD as mentioned.
Other countries are lowering corporate tax rates. We need to
create a national tax climate that enhances the global
competitiveness of manufacturers in the United States, and we
need Congress to consider reducing the corporate tax rate to a
level that will make the United States competitive with other
major trading partners.
And in the area of the energy, energy is now becoming a
significant competitive cost advantage for manufacturing in the
United States compared to our major trading partners. We can
widen this gap and enhance our energy security by embracing
every energy resource at our disposal with steps such as
approving construction of new domestic and cross-border
pipelines, new transmission lines, expanding energy-related
transportation infrastructure. Also, we can standardize and
streamline regulations and policies to provide access to
traditional energy resources, electricity generation, and the
expansion of renewable alternative energy.
Moving to R&D. Innovation propelled the United States to
its global leadership position in manufacturing, but other
nations are eager to take our place and are establishing R&D
incentives that are more attractive than those offerred by the
United States. We must provide a strong and permanent
competitive research and development R&D incentive. We need a
stable, forward-looking R&D incentive in place to guide our
budgeting decisions to perform R&D in the United States.
And finally, moving to workforce training and skills. World
class manufacturing demands world class talent proficient in
STEM disciplines. Skills must match our level of manufacturing
technology. AAM is currently hiring approximately 500
associates at our Three Rivers, Michigan facility. Due to
skills mismatch, we were only able to hire one in three
applicants for manufacturing assembly positions. And on a
national level, more than 600,000 manufacturing jobs are
unfilled due to skills mismatch. These skills gap threatens
U.S. competitiveness.
Our manufacturing workforce today is required to understand
statistical process control, value stream mapping, machine
maintenance and other numerous skills to maintain our
competitive position, so we need to put a national focus on
increasing proficiency in STEM education and start generating
interest in manufacturing careers much earlier in our education
systems.
So, in summary, we need your help in supporting and
enacting policies to address corporate tax reform, energy, R&D
incentives, and the workforce skills gap. It is our belief at
AAM that these actions in these key areas will improve our
manufacturing competitiveness and stimulate economic growth and
job creation. Thank you.
Mr. Terry. Thank you. Perfect timing.
[The prepared statement of Mr. Smith follows:]
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Mr. Terry. Ms. Parker, you are now recognized.
STATEMENT OF ANNETTE PARKER
Mr. Parker. Thank you, Chairman Terry and Ranking Member
Schakowsky and members of the subcommittee for the opportunity
to testify today. My name is Dr. Annette Parker, and I am
executive director of the Automotive Manufacturing Technical
Education Collaborative, AMTEC, at the Kentucky Community and
Technical College System, KCTCS.
I am proud to be here today to share our story and to
discuss with you how we can further support automotive
manufacturing in the United States.
In order for the United States to be able to keep its
leadership position, or competitiveness in the global economy,
the workforce must keep pace with the knowledge and innovation
in advanced automotive manufacturing, and other STEM
disciplines.
The Automotive Manufacturing Technical Education
Collaborative was created because education leaders in Kentucky
and other States came together and recognized this key
challenge for the automotive manufacturers to maintain the
flexible workforce and develop new worker competencies that
would enable automakers to maintain high performance work
organizations that create jobs and add value to products and
services.
We recognize that highly skilled engineers are part of the
solution; however, there also needs to be, we need to fill the
gap from middle-skilled workers and technicians in advanced
automotive manufacturing.
These types of workers generally have an associate degree
or industry recognized post secondary credential. Yet,
institutions of higher education are not producing the number
of students needed by our employers. These types of workers
also need the fundamental skill-sets that are common across all
of the automotive manufacturing companies, and it is the basis
of the development of the AMTEC center.
The auto workers have shared with us that they need work-
ready employees with the basic skills to whom they can provide
specific company training. In order to meet industry skills,
AMTEC has recognized that the automotive industry requires
uniquely trained employees to support increasingly flexible and
lean manufacturing lines, fluctuating customer demands, a
growing focus on green manufacturing, and rapidly improving
technology.
In response to these industry demands, AMTEC offers an
industry-endorsed, multi-skilled maintenance certification
assessment, validated college curriculum aligned to industry-
endorsed skill standards, shared best practices and educational
models among colleges and industry partners, and flexible
career pathways to fit unique needs of students, employers, and
employees.
AMTEC, through the leadership of the Kentucky system, built
a collaboration of approximately 35 community colleges and
automakers in 12 States to build consensus in the development
of national standards for multi-skilled maintenance or
mechatronics technicians for the automotive manufacturing
sector; the development of competency measurement tools to
assess knowledge skills and abilities of incumbent and future
STEM technicians; the development of career pathway models that
follow the key success factors in order to create a pipeline
for the future workforce; and we also have AMTEC academies that
we convene with key stakeholders to share those best practices
and learn and grow from each other.
Through the development of standards, competency-based
modularized curriculum, and assessments, AMTEC has created a
unique collaboration of industry in colleges that provide
education of workers prized by the industry. In 2011, the
National Governors Association, through a case study selected
AMTEC as a model in national best practice.
The NGA states that the AMTEC story shows that it is
possible for governors to work collaboratively with industry,
with community colleges, and with each other to provide people
with the opportunity to build their technical skills and ensure
both America's future prosperity and their own economic
security.
AMTEC is at the forefront of education because the future
workers involves a very different kind of technical worker, a
very different kind of partnership, and a very different kind
of education. As a collaborative, we are excited about the
future as we work with K-12 educators, community colleges,
automotive manufacturers and suppliers, to ignite our students'
interests to educate them to compete globally and accelerate
them into the workplace to become competent, well-educated STEM
workers in the advanced automotive manufacturing industry.
AMTEC academy events have been successful in convening
college and industry stakeholders to learn and grow from
locally specific best practices. As a matter of fact, the next
AMTEC academy is hosted by Nissan, at the Tennessee Technology
Center in Murfreesboro, Tennessee, April 11th and 12th, 2013.
The recommendations that AMTEC would provide include
continued funding in support of collaborative efforts across
the automotive sector and other sectors that drive supported
national standards and assessments. We recommend the expansion
of collaborations that engage K-12 higher education, industry,
and government entities.
The National Science Foundation Advanced Technological
Education Funds have been critical to the development and
success of AMTEC and similar centers of excellence that need to
be continued with support funding.
And finally, these efforts should be national in scope, and
therefore cross local, regional, and State lines to increase
collaboration and effectiveness while reducing duplication of
funds and efforts. Thank you, again, for the opportunity to
speak today.
Mr. Terry. Thank you.
[The prepared statement of Ms. Parker follows:]
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Mr. Terry. Ms. Kinsey.
STATEMENT OF KATHY M. KINSEY
Ms. Kinsey. Chairman Terry, Ranking Member Schakowsky,
members of the subcommittee, my name is Kathy Kinsey. I am a
Deputy Secretary at the Maryland Department of the Environment,
and I want to thank you for the opportunity to be here today to
address the subcommittee on an issue that we believe is very
central to the long-term future of the automobile industry in
this country. And that is the need for alternative fuel
vehicles and development of a robust fueling infrastructure in
the Nation.
Maryland has enjoyed a very long association with General
Motors, and the future of the automotive industry in this
country is very important to us. Baltimore is now home to GM's
new Allison Transmission Plant, which manufacturers the
electric drive trains for the Volt, and also which will start
production next week of electric motors for the new Spark EV
that they are manufacturing.
So expansion of the alternative fuel vehicle market is
particularly important to us. We see it as critical to
achieving our air quality and our long-term greenhouse gas
action goals. Many in this room know very well that poor air
quality is one of our State's most intractable environmental
problems, and in spite of the tremendous progress that we have
made in reducing emissions and improving fuel efficiency of our
automobiles, car and truck emissions remain a major cause of
our ozone nonattainment problems in Maryland and on the East
Coast, and atmospheric deposition of nitrogen is responsible
for nearly one-third of the nutrient pollution in the
Chesapeake Bay, and half of airborne nitrogen oxygen oxide is
attributable to the mobile source industry sector, mobile
source sector.
Transportation is second, only to the energy sector as a
source of greenhouse gas emissions in our State. So expansion
of the electric vehicle market is a very high priority for the
O'Malley-Brown administration in our State, and you know, we
are very committed to developing a robust market, and a fueling
infrastructure for plug-in vehicles in our State, and we are
moving forward on a number of different fronts to do that.
And I really would like to respond to the characterization
that our, the development of our infrastructure is in its
infancy. Our draft greenhouse gas plan which is due to be
finalized very shortly, has set a goal of 60,000 plug-in
electric vehicles on the road in Maryland by 2020. Last year
the legislature passed two very important bills removing
potential regulatory barriers to development of a State
charging network infrastructure charging network.
This year the legislature passed two bills extending tax
credits for plug-ins, and charging stations both, and extending
HOV lane access, and I will say that GM worked very closely
with us on those initiatives to ensure passage of both of those
bills.
We have in Maryland and will continue to provide
significant State funding for installation of public charging
stations. In 2010 and 2011, we awarded $.5 million in matching
grants for charging stations. This year, Governor O'Malley has
committed $1 million in his capital budget for charging
stations at MARC and Metro stations. And we now have more than
350 public charging stations in the State. And this ramp-up has
occurred over a relatively short period of time.
Two years ago, our general assembly established the
electric vehicle infrastructure council, and it is comprised of
members from all of the interest groups. GM was a member of the
council, and we looked comprehensively at all of the barriers
and challenges in our state to establishing a robust charging
infrastructure network.
There is a final report that was issued in December with
many, many recommendations for removing barriers, enhancing the
market, developing our charging infrastructure, and it included
a very detailed blueprint for installation of a state-wide
charging network that would be adequate to service 60,000 PEVs
that we hope to have on the road in Maryland by 2020.
And this year because of the work that we have done on that
council, the general assembly extended the council for another
3 years to continue to work so that we can dig a little deeper
into some of the more challenging aspects of developing the
infrastructure network, develop pilot demonstration projects,
engage in more outreach and education.
We have been working collaboratively in Maryland with the
other East Coast states through the Transportation Climate
Initiative on a regional initiative to develop a charging
network along the I-95 corridor on the East Coast that is going
to hopefully enable long-distance travel throughout the region.
And in closing, I just want to say that I--we in Maryland,
I believe we have demonstrated our very strong commitment to
working with the automobile industry, the charging station
manufacturers, the utilities, our sister States, and the many
other stakeholder groups to make the necessary investment in
our infrastructure.
And we have seen a significant expansion of the
infrastructure in a short period of time, a big upward trend in
EV sales in Maryland, and we expect it to continue. Thank you
very much.
Mr. Terry. Thank you very much.
[The prepared statement of Ms. Kinsey follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Terry. My first question goes to Mr. Wehrman and Mr.
Nielsen. And as manufacturers with U.S. facilities, will an
E.U./U.S. free trade benefit you, and what would you like to
see in this area? Mr. Wehrman first.
Mr. Wehrman. Yes, as I mentioned, the export has become a
much bigger part of our business for Honda in North America.
And without question, any Free Trade Agreement certainly helps
us. We recently began exporting to Korea as a result of the
Free Trade Agreement that was signed with South Korea, and that
is very beneficial to us. We would expect to see more
opportunities to export to Europe, to the E.U. as a basis of--
based on our Free Trade Agreement or any other Free Trade
Agreement, for that matter. It certainly opens opportunities.
Mr. Terry. And what would we need to have in that trade
agreement to facilitate your exports of U.S. manufactured
Hondas?
Mr. Wehrman. Naturally, elimination of any tariff barriers,
but also looking at non-tariff barriers and ideally, any work
towards harmonization of standards. Because clearly, the
difference in standards increases the cost of manufacturing.
The more commonality, the more volume we can get, the more
competitive we can be, both in North America, and in other
markets as well.
Mr. Terry. Mr. Nielsen.
Mr. Nielsen. Chairman Terry, I believe a very similar
response as a global automaker, we strongly support free trade
across the globe. So any type of--we are supportive of trade
agreements with all regions, including Europe. And to the
second part of your question, also we are in support of
harmonization activities, but I would add not only between the
U.S. and Europe, but also harmonization on a more global basis.
A forum does exist today that all automakers are a part of, and
we think----
Mr. Terry. What is that?
Mr. Nielsen. I am sorry?
Mr. Terry. What is the forum?
Mr. Nielsen. I am sorry, I don't recall the exact name but
it is a world, a global harmonization forum that allows
participants from each of the main global regions to work on
harmonization across the globe. And you know, as a company that
exports to 23 global markets, that is critically important to
us.
Mr. Terry. Thank you, and then for Mr. Paradise and Mr.
Smith. You have facilities in Europe and the U.S. How do you
see the potential for Free Trade Agreement to benefit your
companies? And we will go with Mr. Paradise first.
Mr. Paradise. Anything that has to do with free trade, we
are supportive of, and anything, as Chris pointed out, that
balances, and makes sure that things are fair between
countries, is important to us.
We can manufacture anywhere in the world, but if we can
have a balanced trade agreement between us, and be able to ship
product back and forth without unnecessary tariffs that
penalize our products, that is where we are looking to get to.
Mr. Terry. All right, Mr. Smith.
Mr. Smith. Thank you, Mr. Terry. We don't make decisions at
AAM strictly based on trade policy, but are very much in
support of trade policies that are well thought out and
balanced across the planet.
Mr. Terry. OK, and then again to Mr. Paradise and Mr.
Smith. Both of you in your testimony mentioned the U.S. Tax
Code. Now, obviously we aren't Ways and Means, but we are
working to get their jurisdiction moved to us.
Thank you for laughing. I am going to ask the same question
I did of our first panel in that respect. Do you have any feel
for what a reformed corporate Tax Code should look like by way
of, is the appropriate number 20 percent, or 25 percent? Have
you guys had any feel?
Mr. Smith, you seem----
Mr. Smith. Well, again, the gray hair comes from a lot of
thinking and things like that about the world. Certainly,
something 25 percent or south thereof would be really good.
Mr. Terry. Do you think that would level the playing field
so you could be more competitive, not at a disadvantage?
Mr. Smith. It may not completely level the playing field,
but certainly puts us a little bit more in the game. Working in
other countries, there is a lot of very aggressive folks out
there that we work with that try to attract our business, and
at least that moves it in the right direction.
Mr. Terry. Mr. Paradise.
Mr. Paradise. Anything you can get us 30 percent or below
will make us competitive. When you look at the success that
Mexico has had in securing OEM facilities which ultimately
attract us as suppliers to be close by, nowadays logistics
costs are huge and we are under huge pressure to locate as
close as we can to the OEMs.
Mr. Terry. All right, very good. I yield. I am going to
recognize Ranking Member Schakowsky.
Ms. Schakowsky. OK, as promised, Mr. Wehrman and Mr.
Nielsen, I wanted to go back to the issue of rearview video
systems in the cars. And let me just state, again, I am going
to be meeting with a woman this week whose husband tragically
ran over and killed their 1 year old, and then 5 years later,
he committed suicide.
These are just agonizing situations, and when we lose two
children a week, they are not rare. So these kinds of systems
could reduce by 95 percent those accidents.
So you may not have these numbers now. I would like to know
the percentage of cars served by your companies that currently
come with display screens, and your projections for next year,
and when you think you might reach 100 percent. What percentage
of new cars sold by your companies have rearview cameras
standard, and what percentage of Honda and Toyota cars sold in
Japan have rearview cameras?
Let me get to that. Are there different standards for what
is standard in a car in the U.S. when it comes to safety, U.S.,
and other markets? Let me start with you, Mr. Wehrman.
Mr. Wehrman. First of all, yes, there are different
standards, but I can't say I am an expert as far as what the
standards are in Japan compared to North America because my
focus is, of course, on North America.
Ms. Schakowsky. Sure.
Mr. Wehrman. Regarding the rearview cameras, 96 percent of
the Hondas sold in the U.S. do have rearview cameras today. And
our intention is over the next couple of years, to make that
100 percent. And that is not based on regulation. It is just
based on our overall commitment to safety, and because
customers do appreciate this feature and they want this
feature. So that is what has driven it.
Our general feeling on the regulation is certainly a
regulation that improves the safety, is something to be
considered very heavily. We would recommend it be based on a
performance standard than a specific technology. It may very
well be over the next couple of years that a better technology
for detecting a child behind the car might be available
compared to video, and we would like to have that flexibility
to adapt the best and most effective technology should that
happen.
Ms. Schakowsky. Thank you. Mr. Nielsen.
Mr. Nielsen. I am pleased to say that for all of our trucks
and sport utility vehicles, we currently have rearview vision
systems available. And as you know, those are the vehicles that
are the most critical in terms of rear visibility. We have rear
visibility systems available on most, all of our passenger cars
as well. I don't have a specific number for you.
Ms. Schakowsky. As an option?
Mr. Nielsen. As an option, that is correct. And also we are
supportive certainly of the role in principle. We would also
like to also understand the technical detail, but we agree that
this is a very important issue and are very supportive of it as
well.
Ms. Schakowsky. Thank you. I wanted to ask Dr. Parker a
question. So you are saying that right now, the certification
process is just for Kentucky and for AMTEC, but that you are
working to make a national standard so that a certification can
be available provided there is certain training?
Ms. Parker. Yes, we believe that the standards for the
fundamental skills for multi-skilled maintenance is essentially
the same across all manufacturers, all automotive
manufacturers, and have thus worked with our industry partners
to define what those standards should be and to develop
standards that follow APA requirements of high stakes
assessments that they are using to analyze incumbent
workforce--worker skills, and also to certify new STEM students
that are coming through the pipeline.
Ms. Schakowsky. Now that we have other manufacturers is
there anyone who doesn't agree that some sort of a national
certification or standard of competency would be helpful, so
that is a good direction to go in. And thank you for your
leadership.
I wanted to ask Ms. Kinsey, are you aware that there is a
battery project going on right now in Illinois, a collaboration
of universities and industry to make a more efficient battery
for cars smaller and better? Are you aware of that?
Ms. Kinsey. I am not familiar with that.
Ms. Schakowsky. OK, so you know, hopefully, we are going to
be able to be on the leading edge of technology. I just want to
tell you. I myself would be more interested for my next car and
my Ford--are they still here--is 10 years old, so it is
probably time for me to be thinking about it.
But it is typical, a grandmother's car with 78,000 miles on
it. I should get something good when I trade it in. The
infrastructure issue really is critical, so you are saying that
the technology is all there, but--and Maryland has made a
commitment. What about other States where people are
considering buying electric cars?
Ms. Kinsey. Well, the Transportation Climate Initiative,
which is comprised of the Northeast States, New York, Rhode
Island, Massachusetts, all along the corridor down through
Maryland, are working collaboratively together. I mean, all of
the States in the Northeast are working on various
infrastructure initiatives, and we are working together on this
regional initiative.
So I can't speak with specificity about what other States
are doing outside of their involvement with us in this regional
initiative. I do know that New York is also a leadership State.
They have done a lot with the development of the infrastructure
in that State.
Ms. Schakowsky. Thank you so much.
Mr. Terry. Thank you. Mr. Guthrie, you are recognized for 5
minutes.
Mr. Guthrie. Thank you, and I welcome Dr. Parker here from
our great Commonwealth. She is from Woodford County. I think
Mr. Stronach has a place in Woodford County, a rather nice
place, from Magna, who owns Magna. And it is a show place for
horse country there. It is just wonderful. So thanks. And your
facility in Bowling Green, we appreciate that very much.
What is interesting, I was saying earlier that my father
worked for the automotive industry. I also had job at Ford in
1982 when I was a senior in high school, too. And I would tell
you, I would bet if you had all of the CEOs, or guys in your
level here talking about what can we do to make the automotive
industry more competitive and jobs staying in America, not some
of you sitting here, but some of maybe earlier their
predecessors would have said, we need barriers. We need to make
sure that we don't have other competition coming in, because, I
mean, I have lived through that.
And now you are not, nobody is here asking for that. And
nobody is here saying we need lower wages, we need whatever.
What you are saying is, we need better tax rates. And I was in
a meeting with the President and he said that we could agree
that we need a corporate tax reform. That is not our committee,
unless Chairman Terry pulls something off, but I know that our
chairman in the Ways and Means is working for that.
So hopefully, this is a call to Washington to come together
because of our bipartisan meeting here today, and we all want
manufacturing to stay in America. And there is one thing easy
that you said, not easy to do, but something we can do to have
immediate impact, and that is regulatory certainty. All of you
said it, and energy, is what we are discussing the Keystone
Pipeline in another meeting right now.
But the question of how we are going to get this workforce
trained, and we have unemployed people, people dropping out of
the workforce, that is a little longer term because you have
got to change. But my question I guess is for Dr. Parker, and
any of you that want to add, everybody here says they are
looking for workers. Everywhere I go in my district say they
are looking for workers. We know people aren't working. And how
do we get people into the KCTCS system, which is our community
college and technical school system in Kentucky, or in these?
Why is the market not working for labor? I think you said
600,000 unfilled manufacturing jobs in America today. Why isn't
the market working for labor?
Ms. Parker. Well, I have done some research in this area,
and one of the things that the research has shown in
manufacturing, specifically, is that we were of the thought
that people didn't understand that manufacturing is not your
father's old manufacturing environment. And they just needed to
understand that, young people and parents.
And the research has shown that that is really not the
issue. They understand that manufacturing is high tech now.
They understand that it is important to our economy, and that
they need it in their backyards. But they don't think that
their kids should go into manufacturing, parents, so what we
have to do is a better job of the understanding that the skills
that these workers will have, these STEM students will have are
transferrable in manufacturing, because over the last 30 years
as we have become global at companies, it is very important
that they do have a global footprint, that there has been this
fear that all jobs would go to China.
So we need to do a better job of informing our parents and
our young people about what a job and the skills in
manufacturing would provide to them and to their future. And
then I think we need to quit condemning, and we don't do this
in Kentucky, so let me make that clear, but we need to quit
condemning K-12, and come together with K-12 and with business
and industry to provide those solutions.
And we do a good job of that with several of our programs.
We have an outstanding program that Mr. Nielsen referred to
that is emulated in Kentucky at Bluegrass Community and
Technical College, where the college, the companies and
actually not just Toyota. Toyota is providing this for everyone
in Scott County in that region, and the K-12 systems all come
together and work together towards these issues.
And so it informs the young people and informs the parents
about good jobs, good skills, and a future, and that is where I
think we need to go.
Mr. Guthrie. Because, like I said, they closed the Ford
plant. I told this story, but a friend of mine, beginning of
our senior year of high school said, I know somebody with some
pull that can get me on at Ford. Graduate from high school and
work for 30 years and retire and be in the middle class. But if
you show up today to one of your facilities with only a high
school ability, you can't afford because the productivity is
not there, but if they show up with industrial maintenance,
with all of these different lists, they are middle class. I
mean, they are literally middle-class jobs in Kentucky for
people with those skills.
And what I am trying to figure out, in State government,
and here, how do we get, why isn't the market working, because
it seems like somebody would want to make $60- or $70,000 a
year with skills for 2-year skills instead of working at
minimum wage or somewhere for the rest of their life. And we
haven't been able to make that connection yet, and we have got
to figure out how to do it as a country, because people can
that, I mean, we need those jobs.
Ms. Parker. Right. I think we need to do a better job of
informing our parents and our young people that manufacturing
is a good, viable career, and that you need an education beyond
a high school education and the community colleges have a
significant role to play there.
Mr. Terry. That is a good point, and before I recognize the
gentleman from Maryland, Mr. Sarbanes, I will say that just
this last week we had that same discussion in a forum back
home. And yet, we talk about K through 12. When you are in high
school, they judge themselves about how many kids go to a 4-
year college. And so we have got to turn that thought that
somehow if a kid doesn't go to a 4-year college, that that is a
failure on the high school part.
Ms. Parker. Exactly.
Mr. Terry. And that is just not true.
Ms. Schakowsky. May I make one quick comment? Wheeling High
School, in Wheeling, Illinois, is a STEM high school, and I am
telling you, these kids are job ready, if they want to be, when
they graduate from high school. So it is not simply, and there
are ways to do it even in high school.
Mr. Terry. Yes, and that is where we need to get that back
into the high schools, as she testified. So the gentleman from
Maryland, Mr. Sarbanes, you are recognized for 5 minutes.
Mr. Sarbanes. I appreciate it, Mr. Chairman. I want to
thank the panel for being here.
Ms. Kinsey, I wanted to ask you a couple of questions.
First off, thank you for the integral role you have been
playing in Maryland's efforts to be really on the cutting edge
when it comes particularly to sort of the takeup on electric
vehicles. And I want to congratulate you and the Maryland
Department of the Environment, the council that you are a
member of, and Governor O'Malley, frankly, for the commitment
that is being made to that.
And you sort of described the phenomenon that if you build
it, they will come, in a sense. If you build an environment in
which it is easier to access these opportunities than not, you
will start to get the sort of engagement and traction that we
want to see.
What I was curious about, is kind of looking back over
Maryland's coming to this experiment. What were some of the
things that were identified as real hurdles that maybe you
discovered afterwards weren't as tough to overcome as maybe
they had been made out to be?
What was some of the narrative ahead of Maryland really
taking the plunge on this that was borne out in the experiment,
and what parts of that narrative sort of refreshingly did you
discover weren't as kind of sinister or daunting as they may
have seemed to be? I would be curious about that.
Ms. Kinsey. Well, I guess I would answer that by saying
that we have a lot of challenges remaining, and I will
acknowledge that. Funding is a huge issue for us right now. The
electric vehicle charging stations are not, comparatively
speaking, very expensive, but funding public charging stations,
given our budget constraints at the State level and the Federal
level, is a challenge. We definitely need to work to get more
funding committed and dedicated to charging stations.
I think that we are starting to see in Maryland much
greater acceptance of the need, the understanding, the need for
these vehicles. One of our biggest challenges going forward is
working with employers. Everybody has an electric plug in their
home, so everybody can charge their electric vehicle at night
overnight. That is not the problem. The challenge that we are
facing going forward is convincing employers to start
installing these vehicles so that--the charging stations so
that their employees will start buying these cars and driving
to work with confidence.
I mean, range anxiety is one of the two biggest barriers to
acceptance of electric vehicles, plug-in vehicles. The other
one is the cost. And so these things are all intertwined. And I
think if we can expand significantly the number of charging
stations, I think we are going to see a very, very significant
increase, very rapidly of the number of stations. But that is a
challenge.
And the other big challenge that we are going to be looking
very closely at going forward when our council reconvenes later
this fall, is urban charging and multiunit dwelling charging
situations. These are very challenging because most residents
in these situations don't have access to a garage, or a private
driveway, or an electric plug.
And so we really have to come up with some really good,
creative solutions to providing that charging infrastructure in
the urban and in multidwelling settings. So we need to have
some demonstration projects in some of our urban areas. We
would like to start working on getting employers and businesses
to install charging stations that can be for use of employees
and patrons during the day, but then for residents at night
when the businesses are closed.
Mr. Sarbanes. That is helpful because you have identified
really out of all of the various things that need to be focused
on, the two key factors are the charging station
infrastructure, and the range anxiety. And they are
interrelated. Obviously, if you have got more charging stations
along the way, you are going to be less anxious. I mean, I have
range anxiety. I have hesitated to take the plunge because I
commute every day from north of Baltimore, and I think that
that distance is just enough to produce that extra level of
range anxiety, and worry about whether I can get here in time
for the chairman's hearing. So that is an impediment to me.
But the availability of charging stations would obviously
help with that, and the manufactures have a role to play in
terms of the vehicles themselves and their ability to overcome
that range anxiety. But again, I want to congratulate you on
the efforts Maryland has made and you have mentioned GM and
some of the others who have really stepped up and made that a
collaborative experiment, and I think it is an exciting thing
to watch. Thank you.
Mr. Terry. At this time, we recognize the vice chairman of
the committee, Mr. Lance. You are recognized for 5 minutes.
Mr. Lance. Thank you, Mr. Chairman, and I apologize for
being at committee and then leaving and then coming back. I
have followed your testimony, and it is a pleasure to be with
you all.
Mr. Wehrman, I want you to know that I have a 2004 Honda
Accord with 175,000 miles on it as of yesterday, and it is
going strong, four-cylinder stick shift, but not an electric
car yet for the reasons that my colleagues have suggested.
Mr. Nielsen, it was a pleasure to meet with you and your
colleagues in the chairman's office, and we had a wonderful
discussion about initiatives to encourage young people to enter
manufacturing, because these jobs do provide high salaries, and
strong benefits, and I know that Toyota, and others are working
in this area.
It is my understanding that San Antonio is the seventh
largest city in the United States, and it is the largest
majority Hispanic city in the country. And perhaps you have
discussed this with colleagues, but would you elaborate on
career opportunities afforded to the Hispanic community by
Toyota, especially given the diversity of San Antonio's
population?
Mr. Nielsen. Thank you very much for that question. We
really embrace the fact that we are a part of the San Antonio
community. We have been welcome with open arms from when we
first broke ground almost 10 years ago, and being a key
participant in the community, and providing job opportunities
for the young people in the community is really important to
us.
And we look at our workforce development at several
different levels. Of course, we commented in the testimony
about our Advanced Manufacturing Technician program which
really starts at the high school graduate level, and allows
them to do a work-study program, 3 days at work, 2 days at
school to earn enough money to pay for their education so they
can earn an Associate's Degree without having to go into the
significant debt that so many people have to go into to earn
their degrees.
But we have really looked to go even further than that. We
start really at the middle school level in supporting a lot of
STEM initiatives in the community to expose the young people,
especially on the south side of San Antonio, to careers and
opportunities.
Mr. Lance. Is that the side that has the larger Hispanic
population?
Mr. Nielsen. It is. It is. The plant is located on the
south side and overall, San Antonio is about two-thirds
Hispanic but on the south side it is maybe 85, 80, to 90
percent. So that is, most of the population is located there.
Mr. Lance. Thank you. Would there be comments from other
members of the panel on this issue as how we move forward to
make sure that young people are trained appropriately for the
positions that your great companies provide? Ms. Parker.
Ms. Parker. Yes, I would just like to say that Mr.
Nielsen's program with the Alamo Community College District is
an exceptional program, that Toyota has taken a major
leadership role within AMTEC, and across the country as a best
practice. And it has also been used outside of the automotive
industry with Lockheed Martin, and over 10 years, that same
program has been offered to Lockheed Martin, and the program
has students now that one of their students, a model student,
is a chief negotiator for Lockheed Martin now and has attained
her Master's Degree.
So it is an outstanding program that has support from the
government of San Antonio, the industries in San Antonio, and
the college, and K-12 system.
Mr. Lance. I thank you. I think that this will be a
continuing issue, especially since so many young people are in
debt as a result of higher education, and although interest
rates are currently low, I would imagine at some point they
might increase, and it would further exacerbate an already
extremely difficult situation. And obviously, we have to move
in the direction in the 21st century of making sure that young
people are well educated and well educated in the positions
that your companies and others provide. And although I do not
agree with the President on all issues, I certainly was in
support of his statements during the State of the Union address
that we need a fundamental analysis of higher education in this
country. Costs are extremely high, and have far outstripped
rates of inflation, and I commend the efforts of all on the
panel who have been involved in this, and I thank you for your
participation today.
Thank you, Mr. Chairman.
Mr. Terry. Thank you, Mr. Lance. And now the gentleman from
Texas, Mr. Olson, you are now recognized.
Mr. Olson. I thank the chair, and good afternoon, and
welcome to the panelists. I appreciate you coming back after
the Snowquestration. Thank you, thank you, thank you for coming
back here again.
As you can tell, I am a Texan. And whenever we have a
chance to brag about Texas, then by golly, I am going to brag
about my home State.
Coming up on the screen here, is a picture that I am sure
all of you saw during the Super Bowl, the most recent Super
Bowl with a Toyota Tundra pickup truck towing the Space Shuttle
Endeavor to its final resting place in California. I saw that
commercial and thought, this is Hollywood with the special
effects, but then I talked to Mr. Nielsen. No. This was
actually a Toyota pickup truck made in San Antonio, Texas,
modified with a special trailer hitch that pulled the shuttle
over the bridge. The problem right there is that bridge could
not withstand the weight of the shuttle and the track that NASA
had to get over the bridge. That was the big obstacle, getting
the shuttle from LAX Airport to the museum. Toyota stepped up
and got that to its destination.
That picture is Texas in pecan shells, Tundra pickup truck,
Space Shuttle Endeavor, and you see in the back, Randy's Donut
Shop. Thank you, Mr. Nielsen, for getting that space shuttle
home.
And again, I want to talk to you about Toyota's motivation
for locating in San Antonio, Texas. You had a choice to do that
almost a decade ago, which created, as you know, 6,000 direct
jobs through both Toyota Motor Manufacturing and your parts
suppliers. And they have actually moved with their plant on
site.
So can you tell me about the business climate in Texas, how
that influenced the move, State, and local tax incentives,
ability to purchases a large piece of land and big suppliers,
21 of them right there in San Antonio? Tell me about that.
Mr. Nielsen. Well, thank you very much for recognizing our
Tundra product. We are awfully proud of the product we make,
and that was a proud day for us towing the shuttle, and
certainly, if there is a shuttle available to tow to the space
center in Houston, we would be more than happy to do that as
well.
Mr. Olson. We are working on that.
Mr. Nielsen. But our decision to locate in Texas was really
first and foremost driven by, that is where the market is. That
is the largest pickup truck market really in the world, and we
wanted to be located there. And we found that working with both
the State, and the local governments in Texas to be just a
wonderful experience, a very pro-business environment, very
supportive of us.
We needed some infrastructure put in place, specifically
around training, since in the San Antonio area, manufacturing
was not a large part of the economy, historically. And we put
in place initial training programs that initially serviced
Toyota, but as Ms. Parker has mentioned, now are serving many
other companies as well, such as Boeing in their facility where
they provide the technical support and service for Air Force
One; Lockheed Martin, and a number of additional companies,
international companies as well, that are located in the San
Antonio area and are able to take advantage of the education
infrastructure that we have put in place through cooperation
with State and local governments.
Mr. Olson. And sir, as you know, San Antonio is military
city U.S.A.; Air Force bases, Army Hospital, Brooke Army
Medical Center. Would you elaborate on what Toyota has done
about our combat war heroes coming back from Iraq and
Afghanistan, who joined your team, I mean, and came back with
special skills, advanced training, how does that translate to
the workplace?
Mr. Nielsen. The transition of so many returning veterans
came at the perfect time for us as we were struggling to fill
many of these multi-skilled maintenance technician positions at
our plant. And of course, our education programs we are putting
in place will be very helpful for us in the long run, but in
the short run, in order to close some of the gaps, we could
focus on recruitment of some of the returning veterans. And I
am very proud to say that just over the course of the last
year, we have hired 30 returning veterans from all branches of
service. They come in with both the technical skills they
learned in the service, but perhaps even more importantly, the
ability to work as a part of a team to be very disciplined. And
I think that has been extremely helpful to us at the plant, and
we are very proud to be able to offer good employment
opportunities to those returning veterans.
Mr. Olson. As someone served in the Navy for 10 years,
thank you, thank you, thank you for taking care of our
veterans. They have been fighting for our freedom. They deserve
our support when them come back home. I guess we all can work
hard going forward, and as we said, make sure that blue collar
does not become some sort of term of delusion. I mean, these
are good-paying jobs.
Right down to Eagle Ford Shale right there south of San
Antonio. You get out right now with a high school degree, maybe
a couple of years of trade school, junior college, learn some
skills, pass a drug test, you can be making $65,000 bucks now
right off the bat; $100,000 within 5 years.
That is good money that provides for a family. That is just
great. We need to make sure the American people realize, the
kids realize they have got a future in manufacturing. I yield
back the balance of my time.
Mr. Terry. Thank you. I appreciate the 5-minute Texas
commercial.
Mr. Olson. I can go another 5 minutes.
Mr. Terry. I bet you could. I bet you could. So, and I just
have to counter by saying, there is something special about
being in the middle of America, with great rail and truck
access.
So, with that, I ask unanimous consent to include in the
hearing record a statement by the Motor & Equipment
Manufacturers Association, and I know we have run that by your
side already.
So hearing none, so ordered.
[The information appears at the conclusion of the hearing.]
Mr. Terry. Ms. Schakowsky, you also have a request?
Ms. Schakowsky. I do. I would like to put in the record a
statement from the American Federation of Labor and Congress of
Industrial Organizations.
Mr. Terry. And without objection, so ordered.
[The information appears at the conclusion of the hearing.]
Mr. Terry. So thank you. You have provided excellent
testimony and feedback from our questions. All of you were
spectacular, and we thank you, and you are now adjourned.
But I have to say before we adjourn up here, remind members
that they have 10 working days to submit any questions for the
record. You may receive questions from us, and we would
appreciate a timely reply to those questions that we were
unable to answer or ask. So with that, we are adjourned.
[Whereupon, at 1:08 p.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Prepared statement of Hon. Fred Upton
We are a nation of builders, and the auto industry is a
source of great pride. The auto industry produces a product
that touches the daily life of nearly every American, but I
think the great impact of the industry on our economy may not
be widely understood.
Our nation's auto manufacturers, suppliers, and dealers
have certainly faced some challenges in the last decade--but
the sector is on the rebound. Vehicle output is on the rise,
sales are up, and the Big 3 have all recently announced they
plan to expand operations and hire more employees.
The auto industry, comprised of auto manufacturers,
dealers, and parts suppliers, touches all 50 states. It is the
largest industry in the country with over 1.7 million people
employed in designing, engineering, and manufacturing of
vehicles and parts. The multiplier effect of the industry is
calculated at 8 million jobs here in the U.S.
Of course, my home state of Michigan has a proud and
storied history as the Auto State and our rich tradition
continues: 125 auto companies transformed Detroit into Motor
City in the early 20th century, directly and indirectly
employing hundreds of thousands of workers. To this day, the
impact on Michigan still resonates: auto manufacturing and its
downstream impact employ over 20 percent of Michiganders. In my
southwest Michigan district, close to one-third of the
manufacturing is auto related. I am especially pleased that
William Smith from American Axle is testifying today--the
company has a long tradition in Three Rivers, Michigan.
American Axle and its workers have played a prominent role in
Michigan's comeback--recently announcing they are investing
more than $100 million in the Three Rivers plant and are adding
an additional 500 jobs.
Although this hearing is not about safety mandates or other
auto regulation, I want to be clear about our interest in those
topics: we intend to have industry back to discuss those issues
in the future. There are exciting developments in the auto
safety realm such as vehicle-to-vehicle communication and other
active safety systems that we wish to explore. Today, however,
we are most interested in hearing about the challenges facing
the industry as well as the success stories. This is an
important time in auto manufacturing.
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