[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
STRATEGIC PLANNING FOR NATIONAL
MANUFACTURING COMPETITIVENESS
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON RESEARCH AND TECHNOLOGY
COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
WEDNESDAY, JULY 10, 2013
__________
Serial No. 113-40
__________
Printed for the use of the Committee on Science, Space, and Technology
Available via the World Wide Web: http://science.house.gov
---------
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COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
HON. LAMAR S. SMITH, Texas, Chair
DANA ROHRABACHER, California EDDIE BERNICE JOHNSON, Texas
RALPH M. HALL, Texas ZOE LOFGREN, California
F. JAMES SENSENBRENNER, JR., DANIEL LIPINSKI, Illinois
Wisconsin DONNA F. EDWARDS, Maryland
FRANK D. LUCAS, Oklahoma FREDERICA S. WILSON, Florida
RANDY NEUGEBAUER, Texas SUZANNE BONAMICI, Oregon
MICHAEL T. McCAUL, Texas ERIC SWALWELL, California
PAUL C. BROUN, Georgia DAN MAFFEI, New York
STEVEN M. PALAZZO, Mississippi ALAN GRAYSON, Florida
MO BROOKS, Alabama JOSEPH KENNEDY III, Massachusetts
RANDY HULTGREN, Illinois SCOTT PETERS, California
LARRY BUCSHON, Indiana DEREK KILMER, Washington
STEVE STOCKMAN, Texas AMI BERA, California
BILL POSEY, Florida ELIZABETH ESTY, Connecticut
CYNTHIA LUMMIS, Wyoming MARC VEASEY, Texas
DAVID SCHWEIKERT, Arizona JULIA BROWNLEY, California
THOMAS MASSIE, Kentucky MARK TAKANO, California
KEVIN CRAMER, North Dakota ROBIN KELLY, Illinois
JIM BRIDENSTINE, Oklahoma
RANDY WEBER, Texas
CHRIS STEWART, Utah
VACANCY
------
Subcommittee on Research and Technology
HON. LARRY BUCSHON, Indiana, Chair
STEVEN M. PALAZZO, Mississippi DANIEL LIPINSKI, Illinois
MO BROOKS, Alabama FEDERICA WILSON, Florida
RANDY HULTGREN, Illinois ZOE LOFGREN, California
STEVE STOCKMAN, Texas SCOTT PETERS, California
CYNTHIA LUMMIS, Wyoming AMI BERA, California
DAVID SCHWEIKERT, Arizona DEREK KILMER, Washington
THOMAS MASSIE, Kentucky ELIZABETH ESTY, Connecticut
JIM BRIDENSTINE, Oklahoma ROBIN KELLY, Illinois
LAMAR S. SMITH, Texas EDDIE BERNICE JOHNSON, Texas
C O N T E N T S
Date of Hearing
Page
Witness List..................................................... 2
Hearing Charter.................................................. 3
Opening Statements
Statement by Representative Larry Bucshon, Chairman, Subcommittee
on Research and Technology, Committee on Science, Space, and
Technology, U.S. House of Representatives...................... 6
Written Statement............................................ 7
Statement by Representative Lamar Smith, Chairman, Committee on
Science, Space, and Technology, U.S. House of Representatives.. 8
Written Statement............................................ 10
Statement by Representative Daniel Lipinski, Ranking Minority
Member, Subcommittee on Research and Technology, Committee on
Science, Space, and Technology, U.S. House of Representatives.. 11
Written Statement............................................ 11
Witnesses:
Dr. Jonathan Rich, Chairman and CEO, Berry Plastics, Inc.
Oral Statement............................................... 13
Written Statement............................................ 16
Ms. Deborah Wince-Smith, President and CEO, Council on
Competitiveness
Oral Statement............................................... 21
Written Statement............................................ 23
Mr. Zach Mottl, Chief Alignment Officer, Atlas Tool and Die
Works, Inc.
Oral Statement............................................... 36
Written Statement............................................ 39
Discussion....................................................... 48
Appendix I: Additional Material for the Record
Submitted statement by Representative Eddie Bernice Johnson,
ranking Member, Committee on Science, Space, and Technology,
U.S. House of Representatives.................................. 60
STRATEGIC PLANNING FOR NATIONAL
MANUFACTURING COMPETITIVENESS
----------
WEDNESDAY, JULY 10, 2013
House of Representatives,
Subcommittee on Research and Technology
Committee on Science, Space, and Technology,
Washington, D.C.
The Subcommittee met, pursuant to call, at 1:35 p.m., in
Room 2318 of the Rayburn House Office Building, Hon. Larry
Bucshon [Chairman of the Subcommittee] presiding.
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[GRAPHIC] [TIFF OMITTED] T2219.002
[GRAPHIC] [TIFF OMITTED] T2219.003
[GRAPHIC] [TIFF OMITTED] T2219.004
Chairman Bucshon. The Subcommittee on Research and
Technology will now come to order.
Good morning and welcome to today's hearing entitled
``Strategic Planning for National Manufacturing
Competitiveness.''
In front of you are packets containing the written
testimony, biographies, and truth-in-testimony disclosures for
today's witness panel. I now recognize myself for five minutes
for an opening statement.
Again, good afternoon. I would like to welcome everyone to
today's hearing, which is being held to examine H.R. 2447, the
``American Manufacturing Competiveness Act,'' sponsored by the
Subcommittee Ranking Member, Mr. Lipinski.
Manufacturing has been a critical part of the American
economic competitiveness since the industrial revolution. Many
of the groundbreaking technologies that are widely deployed
today are the result of American ingenuity and manufacturing.
Manufacturing represents approximately 11 percent of the
American economy, and manufacturing output has risen by 13
percent over the last several years. Manufacturing also has the
greatest multiplier effect of any major sector in the American
economy. According to the Bureau of Economic Analysis, for each
dollar spent in manufacturing generates an additional $1.35 in
spending.
In my State of Indiana, there are 9,698 manufacturers, and
probably changing every day, employing 556,537 workers. With
16.4 percent of our workforce employed in the manufacturing
industry, Indiana ranks first in manufacturing employment and
second in manufacturing as a gross state product nationwide.
The 8th District of Indiana is home to many of these
manufacturers and I have seen the work being done firsthand at
manufactures like Berry Plastics, whose CEO will testify today,
Toyota Motor and Alcoa, amongst many others.
Universities--along with the manufacturers, universities
like Vincennes University, the University of Evansville, and
the University of Southern Indiana, offer degrees related to
advanced manufacturing and are working closely with businesses
to develop a talented and well-trained workforce, which is
critical.
Clearly, manufacturing is of critical importance to the
American economy. However, employment in this sector is
significantly lower as a share of the economy than in the post-
World War II era. Further, we have seen reports from prominent
think tanks such as the Information Technology and Innovation
Foundation, arguing that America is losing its competitiveness
in manufacturing and may suffer relative decline as a result.
As a country, we lack a strategic plan to guide economic
policy decisions that affect American manufacturing
competitiveness. We have heard a number of proposals by the
Administration to establish expensive Federal manufacturing
programs. However, these programs have come without a plan that
addresses the comprehensive competitive environment faced by
today's American manufacturers.
Today's hearing allows us to examine the American
Manufacturing Competitiveness Act of 2013, which calls on the
National Science and Technology Council's Committee on
Technology to develop a national manufacturing competitiveness
plan. It would task the Committee with conducting an analysis
of the factors that affect American manufacturing
competitiveness such as tax issues, trade, workforce, and
intellectual property factors.
The goals of the strategic plan are to promote economic and
employment growth in the manufacturing sector, support a
skilled workforce, enable innovation and investment in
manufacturing, and support national security. I believe such a
strategic plan, if developed responsibly, can have positive
implications for America's manufacturers and can lead to
policies that improve our competitiveness.
However, I have some reservations about the development and
implementation of the plan. First, it is critically important
that a strategic plan reflects the real needs of our Nation's
manufacturers and should not be politicized and used as a tool
to advance favored interests.
Second, reflecting the recommendations of the President's
Council of Advisors on Science and Technology, a manufacturing
plan must not serve as industry policy. The Federal Government
should not be in the business of picking winners and losers.
Finally, we should ensure that this plan does not promote
manufacturing at the expense of all the other sectors of our
economy.
I am looking forward to hearing from our witnesses on their
thoughts about the proposed legislation, including any
recommendations they have for possible improvements.
I would like to thank our witnesses for being here today
and look forward to their testimony.
[The prepared statement of Mr. Bucshon follows:]
Prepared Statement of Subcommittee on Research and Technology Chairman
Larry Bucshon
Good afternoon, I'd like to welcome everyone to today's hearing,
which is being held to examine H.R. 2447, the American Manufacturing
Competiveness Act, sponsored by the Subcommittee's Ranking Member, Mr.
Lipinski.
Manufacturing has been a critical part of American economic
competitiveness since the industrial revolution. Many of the
groundbreaking technologies that are widely deployed today are the
result of American ingenuity and manufacturing.
Manufacturing represents approximately 11 percent of the American
economy, and manufacturing output has risen by 13 percent over the last
several years. Manufacturing also has the greatest multiplier effect of
any major sector in the American economy. According to the Bureau of
Economic Analysis, each dollar spent in manufacturing generates an
additional $1.35 in spending.
In my state of Indiana, there are 9,698 manufacturers employing
556,537 workers; with 16.4 percent of our workforce employed in the
manufacturing industry, Indiana ranks first in manufacturing employment
and second in manufacturing as a gross state product. The 8th district
of Indiana is home to many of these manufacturers and I have seen the
work being done firsthand at manufactures like Berry Plastics, whose
CEO will be testifying before us today, Toyota Motor and Alcoa. Along
with the many manufacturers in our district, universities like
Vincennes University, the University of Evansville and the University
of Southern Indiana offer degrees related to advanced manufacturing and
work closely with these entities to develop a talented and well-trained
workforce.
Clearly, manufacturing is of critical importance to the American
economy. However, employment in this sector is significantly lower as a
share of the economy than in the post-World War II era. Further, we
have seen reports from prominent think tanks such as the Information
Technology and Innovation Foundation, arguing that America is losing
its competitiveness in manufacturing and may suffer relative decline as
a result.
As a country, we lack a strategic plan to guide economic policy
decisions that affect American manufacturing competitiveness. We have
heard a number of proposals by the Administration to establish
expensive federal manufacturing programs. However, these programs have
come without a plan that addresses the comprehensive competitive
environment faced by America's manufacturers.
Today's hearing allows us to examine the American Manufacturing
Competitiveness Act of 2013, which calls on the National Science and
Technology Council's Committee on Technology to develop a national
manufacturing competitiveness strategic plan. It would also task the
Committee with conducting an analysis of the factors that affect
American manufacturing competitiveness, such as tax, trade, workforce,
and intellectual property factors.
The goals of the strategic plan are to promote economic and
employment growth in the manufacturing sector, support a skilled
workforce, enable innovation and investment in manufacturing, and
support national security. I believe that such a strategic plan, if
developed responsibly, can have positive implications for America's
manufacturers and can lead to policies that improve our
competitiveness.
However, I have reservations about the development and
implementation of this plan. First, it is critically important that a
strategic plan reflects the real needs of our nation's manufacturers
and should not be politicized and used as a tool to advance favored
interests. Second, reflecting the recommendations the President's
Council of Advisors on Science and Technology, a manufacturing plan
must not serve as industrial policy. The federal government should not
be in the business of picking economic winners and losers. Finally, we
should ensure that this plan does not promote manufacturing at the
expense of other sectors in the economy.
I am looking forward to hearing from our witnesses on their
thoughts about the proposed legislation, including any recommendations
they have for improvements. We thank our witnesses for being here today
and we look forward to your testimony.
Chairman Bucshon. And I now recognize the Ranking Member,
Mr. Lipinski, the gentleman from Illinois, for his opening
statement.
Mr. Lipinski. Thank you, Mr. Chairman. I would like to
thank you and I would like to thank Chairman Smith for holding
this hearing on this bipartisan bill I introduced with
Representative Kinzinger, as you said, the American
Manufacturing Competitiveness Act, H.R. 2447. I have been
working for the last four years on this legislation to put more
Americans to work by creating an economic environment that
would boost domestic manufacturing.
In each of the past two Congresses under both Democratic
and Republican majorities, this bill has passed with
overwhelming support, and I am hopeful that we can work
together to not only pass the bill in the House but finally get
this commonsense idea into law. At its core, this legislation
is simply about bringing the private and public sectors
together to develop a forward-looking set of recommendations
for tax, workforce, energy, trade, R&D, regulatory, and other
policies that would best enable domestic manufacturers to
compete globally and put more Americans to work.
A vibrant manufacturing sector is critical for America's
economic success and success of the middle class. In 2011,
manufacturing contributed $1.8 trillion to our Nation's economy
and accounted for 47 percent of all U.S. exports. Successful
manufacturers provide the economy with huge job numbers. For
example, Boeing employs 172,000 people compared to Facebook,
which employs about 4,900 people. These are jobs with wages and
benefits that are 1/3 higher than in other sectors.
Plus, manufacturing has an incredibly high multiplier
effect. For every manufacturing job we create, we add five
additional jobs, and as a source of nearly 2/3 of U.S.
investment in research and development, manufacturing drives
innovation. When we lose our capacity to manufacture, we lose
much of our ability to create the breakthrough technologies and
products of tomorrow. Simply put, made in America equals
American jobs and a strong economy. And let us never forget
that manufacturing is critical to defending America. We cannot
afford to outsource our Nation's defense.
While manufacturing remains vital to the American economy,
since the 1970s, the number of manufacturing jobs has been
shrinking from 20 million in 1979 to fewer than 12 million
today. The recent recession hit workers in manufacturing
especially hard, and China is poised to overtake America as the
world's leading manufacturer. The hemorrhaging of manufacturing
jobs has contributed to the stagnation of middle-class wages.
Since 2000, inflation adjusted median household income has
fallen by about $4,800. But recently, there have been good
signs with American manufacturing showing signs of a comeback.
Continued American leadership in innovation and a domestic
energy boom could help spur a manufacturing renaissance.
However, challenges do remain. Many other nations have
national manufacturing strategies. It is not just countries
like China but also Japan, Germany, United Kingdom, and many
others have strategies to help their domestic manufacturers.
Meanwhile, the United States has a multitude of overlapping
Federal agencies and policies that impact manufacturers without
any coordination.
Let me be clear. What this bill calls for is not an
industrial policy or picking winners and losers, but the
Federal Government already has countless departments, agencies,
programs, and policies that affect manufacturing from our tax
code to our energy and environmental policies to name just a
few. Most importantly for this committee, our government also
has policies and programs related to research and development,
technology transfer, education, and workforce. However, we have
no one examining the impact that government policies are having
on manufacturing and how we can be more efficient and
effective. This is why I have introduced this legislation.
Through coordination of various government agencies that
are most involved in manufacturing and, most importantly,
coordination with private sector leaders, an evaluation would
be conducted of our manufacturing sector's current state and
what policies would create the best economic environment in
which manufacturers would thrive. It is vitally important that
this be a recurrent effort wherein we can reassess the global
and domestic economic environment, technology developments, and
other events that will help the United States adapt its
policies with the changing world.
At the end of the day, this bill is about setting aside
politics and implementing policies that will create an
environment conducive to the flourishing of American
manufacturing, which is vital for middle-class American jobs
and for national security. If we continue to muddle through
without a coordinated plan, government will still be impacting
manufacturing but in an uncoordinated, often inefficient,
sometimes wasteful manner that handcuffs American businesses.
We should change this policy.
I look forward to hearing from all of our witnesses about
how we can best do this. Thank you.
[The prepared statement of Mr. Lipinski follows:]
Prepared Statement of Subcommittee on Research and Technology
Ranking Minority Member Daniel Lipinski
I would like to thank Chairman Smith and Chairman Buschon for
holding this hearing on the bipartisan bill I have introduced with Rep.
Kinzinger, the American Manufacturing Competitiveness Act, H.R. 2447.
I have been working for the last four years on bipartisan
legislation that would put more Americans to work by creating an
economic environment that would boost domestic manufacturing. In each
of the past two Congresses--under both Democratic and Republican
majorities--the bill has passed with overwhelming support. I am hopeful
that we can now work together to not only pass a bill in the House, but
finally get this common-sense idea into law.
At its core, this legislation is simply about bringing the private
and public sectors together to develop a forward-looking set of
recommendations for the tax, workforce, energy, trade, R&D, regulatory,
and other policies that will best enable domestic manufacturers to
compete globally and put more Americans to work.
A vibrant manufacturing sector is critical for America's economic
growth and the success of the middle class. In 2011, manufacturing
contributed $1.8 trillion to our nation's economy and accounted for 47
percent of all U.S. exports. Successful manufacturers provide the
economy with huge job numbers. For example, Boeing employs 172,000
people compared to Facebook which employs about 3,000 people. These are
jobs with wages and benefits that are one-third higher than in other
sectors. Plus manufacturing has an incredibly high multiplier effect.
For every manufacturing job we create, we add five additional jobs. And
as a source of nearly two-thirds of U.S. investment in research and
development, manufacturing drives innovation.
When we lose our capacity to manufacture, we lose much of our
ability to create the breakthrough technologies and products of
tomorrow. Simply put, ``Made in America'' equals American jobs and a
strong economy.
And let us never forget that manufacturing is critical to defending
America. We cannot afford to outsource our nation's defense.
But while manufacturing remains vital to the American economy,
since the 1970s the number of manufacturing jobs has been shrinking,
from 20 million in 1979 to fewer than 12 million today. The recent
recession hit workers in manufacturing especially hard, and China is
poised to overtake America as the world leader in manufacturing. The
hemorrhaging of manufacturing jobs has contributed to the stagnation of
middle-class wages--since 2000, the inflation-adjusted median household
income has fallen by about $4800.
But recently there has been some good news, with American
manufacturing showing signs of a comeback. Continued American
leadership in innovation and a domestic energy boom could help spur a
manufacturing renaissance. However, challenges remain and need to be
addressed. Many other nations have national manufacturing strategies.
This is not just countries like China, but also Japan, Germany, and the
United Kingdom, among many others, have strategies to help their
domestic manufacturers. Meanwhile the U.S. has a multitude of
overlapping federal agencies and policies that impact manufacturers
without any coordination.
Let me be clear, what this bill calls for is not an industrial
policy or picking winners and losers. But the federal government
already has countless departments, agencies, programs, and policies
that affect manufacturing, from our tax code to our energy and
environmental policies to name just a few.
Most importantly for this Committee, our government also has
policies and programs related to research and development, technology
transfer, education and workforce.
However, we have no one examining the impact that government
policies are having on manufacturing and how we can be more efficient
and effective. This is why I have introduced this legislation. Through
coordination of various government agencies that are most involved in
manufacturing, and most importantly, coordination with private sector
leaders, an evaluation would be conducted of our manufacturing sector's
current state and what policies would create the best economic
environment in which manufacturers would thrive. And it is vitally
important that this be a recurrent effort, wherein we can reassess the
global and domestic economic environment, technology developments, and
other events that will help the United States adapt it policies with
the changing world.
At the end of the day, this bill is about setting aside politics
and implementing policies that will create an environment conducive to
the flourishing of American manufacturing, which is vital for middle
class American jobs and for national security. If we continue to muddle
through without a coordinated plan, government will still be impacting
manufacturing, but in an uncoordinated, often inefficient, sometimes
wasteful manner that handcuffs American business.We should change this
policy.
Chairman Bucshon. Thank you, Mr. Lipinski.
The Chair now recognizes the Chairman of the full
Committee, Mr. Smith, for an opening statement.
Chairman Smith. Thank you, Mr. Chairman. Also, I would like
to thank the Subcommittee's Ranking Member, Dan Lipinski, for
sponsoring the bill we are considering at this hearing, the
American Manufacturing Competitiveness Act of 2013. And, Dan, I
didn't realize until your opening statement that you have been
working on it for 4 long years. So I am glad we are having this
hearing today.
And I support Mr. Lipinski's overarching goal, the creation
of a manufacturing strategy to better guide government policies
and Federal spending. We must foster innovation so that
powerful new technologies are developed here and not overseas,
and so that the United States provides the best environment in
which to do business. Made in America is a label we want to see
on advanced technologies coming out of American laboratories
and factories. And I am looking forward to this hearing today
to focus our discussion on what challenges American
manufacturers currently face, what issues this Federal
manufacturing strategy should address in order to ensure
American competitiveness, and possible policy recommendations
as well.
Finally, Dr. Rich, I understand you manufacture a number of
objects, but one of them is fancy coffee cups we have in front
of us today up here. So thank you for that.
And thank you, Mr. Chairman. I will yield back.
[The prepared statement of Mr. Smith follows:]
Prepared Statement of Committee Chairman Lamar Smith
Thank you, Chairman Bucshon, for yielding me time. I would like to
thank the Subcommittee's Ranking Member, Dan Lipinski, for sponsoring
the bill we are considering at this hearing, The American Manufacturing
Competitiveness Act of 2013.
While I share the reservations expressed by Dr. Bucshon about some
aspects of the bill, I support Mr. Lipinski's overarching goal-the
creation of a manufacturing strategy to better guide government
policies and federal spending.
We must foster innovation so that powerful new technologies are
developed here and not overseas and so that the United States provides
the best environment in which to do business. ``Made in America'' is a
label we want to see on advanced technologies coming out of American
laboratories and factories.
I'm looking forward to this hearing today to focus our discussion
on what challenges American manufacturers currently face, what issues
this federal manufacturing strategy should address in order to ensure
American competitiveness, and possible policy recommendations.
I would also like to make a public commitment to Ranking Member
Johnson that the Committee will hold a hearing on her manufacturing
bill in September.
Chairman Bucshon. Great.
If there are Members who wish to submit additional opening
statements, your statements will be added to the record at this
point.
Chairman Bucshon. Now, it is my pleasure to introduce our
witnesses. Our first witness is Dr. Jonathan Rich, the Chairman
and CEO of Berry Plastics, which is located in Evansville,
Indiana, in my district.
With a portfolio of more than 13,000 products, Berry
Plastics is one of the largest global manufacturers of flexible
and rigid plastic packaging for food, personal care,
pharmaceutical, healthcare, and industrial applications--
including the cup that Chairman Smith just pointed out.
I had the opportunity to tour their headquarters in
Evansville and see firsthand the impressive manufacturing done
at this facility. And Berry Plastics employs 15,000 workers at
88 global manufacturing facilities with approximately 70 of
those located in the United States.
Dr. Rich has a bachelor's of science degree in chemistry
from Iowa State University and a Ph.D. in chemistry from the
University of Wisconsin, Madison. In 2010, he was granted an
honorary doctorate of science degree at Iowa State University.
Dr. Rich is an inventor with more than 25 issued United States
patents and has published 14 scientific journal articles. He is
a past Director of the Rubber Manufacturing Association and the
International Institute of Synthetic Rubber Producers and is a
member of the American Chemical Society and the Society of the
Plastics Industry. Welcome, Dr. Rich.
Our second witness is Ms. Deborah Wince-Smith, President
and CEO of the Council on Competitiveness. She has more than 20
years of experience as a senior U.S. Government official.
Notably, she served as the Nation's first Senate-confirmed
Assistant Secretary of Commerce for Technology Policy in the
Administration of President George H. W. Bush overseeing
Federal technology transfer policy, implementation of the Bayh-
Dole Act, and the White House National Technology Initiative.
Ms. Wince-Smith graduated magna cum laude from Vassar College
with a bachelor's of arts degree. At King's College at the
University of Cambridge she read for a master's degree in
classical archaeology. In 2006, she received an honorary
doctorate in humanities from Michigan State University.
I now would like to yield to the Ranking Member, Mr.
Lipinski, to introduce our third witness.
Mr. Lipinski. Thank you, Mr. Chairman. It is my pleasure to
introduce our final witness, Mr. Zack Mottl. Mr. Mottl is the
fourth generation of his family to own and operate Atlas Tool
and Die Works, which is located in Lyons, Illinois, in my
district. The company was founded in 1918 and it is a world-
class precision manufacturing facility offering a broad array
of metal manufacturing services for the defense, aerospace,
telecommunication, electronics, and medical industries, among
others.
In his current role as Chief Alignment Officer, Zack works
not only to meet the business needs of new and current
customers but he is engaged in outreach and development
strategies that identify operational improvements. In addition
to his leadership at Atlas, Zack is serving a second term on
the Tooling and Manufacturing Association of Illinois Board of
Directors. TMA represents over 1,000 member companies. In 2011
he was elected by the board to serve as TMA's Chairman.
I have been to Atlas a number of times and I am always
impressed with the work that they are doing and I appreciate
hearing from Zach about the difficulties that small
manufacturing businesses are facing in America. It is my
pleasure to have Zach testify today and offer his perspective
on the need for national manufacturing strategy. With that, I
welcome Zach Mottl and I yield back.
Chairman Bucshon. Thank you. I now would like to recognize
Dr. Rich for five minutes for his testimony.
TESTIMONY OF DR. JONATHAN RICH, CHAIRMAN AND CEO, BERRY
PLASTICS, INC.
Dr. Rich. Well, good afternoon, Mr. Chairman and Members of
the Committee. My name is John Rich. I am the Chairman and CEO
of Berry Plastics Operation.
Berry Plastics, headquartered in Evansville, Indiana, in
Indiana's 8th Congressional District, is one of the largest
food, personal care, healthcare, pharmaceutical, and industrial
packaging companies in the United States. Starting from a small
beginning in 1967 with three employees and one plastic
injection molding machine, today, we employ over 15,000 people
at approximately 70 United States manufacturing warehousing
facilities, which are located in more than 30 different States.
A significant milestone was reached last October when we
took the company public and shares of our common stock began
trading on the New York Stock Exchange. While Berry Plastics is
not a household name, we have over 13,000 customers and we
manufacture over 50,000 different packages with our products
being found in nearly every household in America, and I have
yet to meet someone who doesn't have at least five of our
products at home right now.
Even though Berry is a significant industry player, the
global packaging industry in which we participate is extremely
competitive. As such, we are diligent in pursuing those
initiatives which will allow us to best meet or exceed our
customer's expectations. Berry's competitive advantage is
rooted in our expertise in manufacturing. Each year, we
typically invest approximately $250 million in state-of-the-art
capital equipment and $50 million in product and manufacturing
process research and development. These investments in
manufacturing innovation, new product development, and the
investments we have made in training for our people are the
primary factors which have allowed us to grow at over 20
percent per year since 1995. It is also the principal reason
that we have been able to compete and win in the ever more
challenging global marketplace. And yet, if we stop innovating
and investing in new technologies either as a company or
country, then our success will quickly disappear.
Throughout our history, Berry has worked cooperatively with
federal, state, and local governments with the mutual goal of
growth that in turn creates new jobs that generates consumer
spending and tax revenues in our communities. When it all
works, we create exciting new products for our customers, new
jobs for our communities, and increased value for our
shareholders.
A great example of this is our new thermal packaging
technology that we have branded Versalite, an example of which
you have in front of you. Hopefully, nobody will ever have to
burn their hand again on a cup of coffee here coming soon to a
coffee store near you. So to fully develop the initial
conceptual ideas behind Versalite, we had to invent a new
material, new product, and a new manufacturing technology.
I am very pleased to say that all of this is being
installed in our new factory in Madisonville, Kentucky. The
support extended by the state and local agencies in the
proximity of the new plant to our core engineering base in
Evansville made locating in Kentucky the right decision for
Berry Plastics. Manufacturing at this one facility should
create over 400 new jobs for a community in need of employment
opportunities for its citizens.
However, it is important to understand that not only is the
competitiveness of America's manufacturing industries vital to
the stability and success of our local communities, it is also
vital to our national security. While Berry has not
historically participated extensively in government contracts,
we have done some work in the past but are not currently
working on any active contracts.
To be successful, Berry, like other manufacturing
companies, must have the ability to invent state-of-the-art
products, manufacturing processes, and equipment, but it is
imperative that we have the ability to recruit and train the
best workforce in the world. The most important single factor
that determines our success at Berry and the key to maintaining
and expanding America's leadership in manufacturing lies in the
development of outstanding engineers, scientists, and our
manufacturing labor force. In this regard, Berry--and companies
like Berry, have benefited from the important partnerships that
we have with universities, vocational schools, and government
laboratories and agencies. The strengthening of that
relationship between private industry and government is a vital
part of the legislation being proposed.
My own personal experiences a good example of the long-term
benefits of government investments in research and development
for which I have always been grateful. As an undergraduate
student at Iowa State, I worked in the Department of Energy's
Ames lab. While a graduate student, I worked on the research
sponsored by the National Science Foundation in the Air Force
Office of Scientific Research.
I am pleased to appear here today in support of the goals
targeted by H.R. 2447. The bill's objectives of promoting
growth, jobs, sustainability, and competitiveness is vital to
our national interest and critical to helping us progress in
recovering from the economic downturn, the lingering effects of
which continue to be felt by companies like Berry.
Perhaps the most important aspect of the proposed
legislation is the goal of supporting the development of
skilled workforce. The government is in a unique position to
support manufacturing-related research and development at
United States universities and vocational institutes. It is
important that this support contain both generic and targeted
objectives. Government agencies such as NSF, the Department of
Energy, National Institute of Standards, Department of Defense,
NASA, and others are particularly well-suited to carry out this
mandate.
In light of the time, let me close by saying that to
succeed it is imperative that we invest in new materials and
manufacturing processes like those being supported in this
bill. I am happy to support the bill and would be willing and
interested in participating in however the private sector may
be involved in the development of the strategic plan. I thank
you very much for the opportunity to appear here.
[The prepared statement of Mr. Rich follows:]
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Chairman Bucshon. Thank you, Dr. Rich.
Ms. Wince-Smith, you are recognized for five minutes for
your testimony.
TESTIMONY OF MS. DEBORAH WINCE-SMITH, PRESIDENT AND CEO,
COUNCIL ON COMPETITIVENESS
Ms. Wince-Smith. Thank you, Chairman Bucshon, Ranking
Member Lipinski, and Members of the Subcommittee, for inviting
me to discuss H.R. 2447, the American Manufacturing
Competitiveness Act of 2013 introduced by Congressman Lipinski.
My name is Deborah Wince-Smith, and I am the President and
CEO of the U.S. Council on Competitiveness. This organization,
almost 30 years old, is a nonprofit, nonpartisan organization
comprised of CEOs, labor leaders, university presidents, and
national laboratory directors. We come together to set an
action agenda for U.S. competitiveness, productivity, and
leadership to raise the standard of living and security for
every American.
Although America remains the world's top producer, our
Nation has surrendered important manufacturing sectors. They
were not all lost in the pursuit of cheap labor or the result
of products becoming low-margin commodities. We have lost
production of cutting-edge innovations developed in America
because, among other reasons, we have had tax, regulatory,
workforce-skills challenges, finance, and infrastructure
limitations that made production elsewhere more competitive.
The Council on Competitiveness has long recognized that
technologically advanced manufacturing and production is
essential to our Nation's economic growth, prosperity, and
national security. Indeed, America's leadership in the
development and deployment of next-generation manufacturing is
directly linked to our future innovation capacity across all
sectors of our economy, including the service economy.
In 2009, the Council launched our flagship U.S.
Manufacturing Competitiveness Initiative under the leadership
of Samuel Allen, a CEO and Chairman of Deere, our Chairman of
the Council, and a distinguished group of CEOs, university
presidents, labor leaders, and lab directors. Since the start
of this initiative, we have held over 18 strategic dialogues
across the country, including most recent discussions on the
future of additive manufacturing hosted at Oak Ridge National
Lab and cyber-enabled manufacturing hosted at Sandia National
lab. These strategic dialogues have together hundreds of
experts and practitioners from the broader network of the
Council, including CEOs from multinationals and startups,
research universities, community college presidents, and the
laboratory environment as well, and we together challenge
ourselves to think: what can we do to achieve America's full
manufacturing potential and accelerate the innovation that
underpins this transformation?
The central recommendation and analysis of the
manufacturing initiative have been captured in our landmark
report MAKE: An American Manufacturing Movement, which we
released to the Summit in 2001. MAKE plays out many policies
and actions the Council recommends to develop a national
manufacturing strategy, including many in the concrete
initiatives the Administration and Congress have implemented,
such as in advanced materials, smart sensors and robotics,
additive productions, data analytics, and cyber security, and
digital fabrication utilizing the power of high-performance
computing for large enterprises and ensuring we bring this
capability down into the supply chain of our small and medium-
sized businesses.
The Council has called for policy reform and legislative
action to create an innovation-friendly ecosystem to attract,
retain, and support from startup to scale-up the high-value
investment in manufacturing production. We have worked with
Deloitte to produce two ground-breaking reports looking at what
CEOs around the world think about manufacturing
competitiveness. In both reports, CEOs ranked access to
innovative talent and national economic policies such as trade,
tax, IP protection, and standards as the top two drivers of
manufacturing competitiveness.
The Council has long recognized that the cost and access to
sustainable energy has a huge impact across every sector. We
are very excited to form a new partnership with the Department
of Energy, the American Energy and Manufacturing
Competitiveness Partnership, to explore the pivotal linkages
between energy and new opportunities for the public and private
sectors to develop new models for energy efficiency and to
embed energy productivity through all manufacturing processes.
Without strong public and private support for the complete
lifecycle innovation and production process, the United States
cannot maximize the return on its innovation investments
measured in jobs, growth, tax revenue, and national security.
In closing, we urge Congress and the President to develop
and implement a national manufacturing strategy to maximize
America's manufacturing potential. The American Manufacturing
Competitiveness Act under consideration today by the
Subcommittee is key to our future. The Council strongly
supports an enactment by the House and Senate.
Thank you again, Mr. Chairman, for having me today, and I
look forward to your questions.
[The prepared statement of Ms. Wince-Smith follows:]
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Chairman Bucshon. Thank you very much. That buzzing means
they have called a vote but we will finish your testimony, Mr.
Mottl, and then after approximately a 45-minute interruption,
then we can--we will take some questions. So I recognize Mr.
Mottl for five minutes for his testimony.
TESTIMONY OF MR. ZACH MOTTL, CHIEF ALIGNMENT OFFICER, ATLAS
TOOL AND DIE WORKS, INC.
Mr. Mottl. All right. Good afternoon. Thank you very much,
Chairman Bucshon, Members of the Committee, Ranking Member
Lipinski, for providing me the opportunity to speak before you
today.
Manufacturing is a subject very near to my heart. I am the
4th generation of my family, since 1918, to own and operate our
business, Atlas Tool and Die Works. I am also the Vice
President and co-owner of Abet Industries, as well as Accushim,
Inc. The businesses are located in Lyons and Lagrange,
Illinois, in Representative Dan Lipinski's district. All three
companies are my family's related businesses in precision
manufacturing. We make various parts and assemblies for the
defense, aerospace, telecom, electronics, medical, and
industrial industries. Together we employ around 80 people.
I also serve as Chairman of the Tooling and Manufacturing
Association of Illinois. TMA represents 1,000 small and medium-
sized manufacturers in the Midwest and together we employ
around 30,000 skilled workers.
As an advocate of the critical importance of a healthy and
growing manufacturing sector in any national economy, I am here
to support passage of the American Manufacturing
Competitiveness Act of 2013. I commend Congressman Lipinski and
Congressman Kinzinger for their great bipartisan work on this
legislation. I think it is great that the Administration and
Congress are also working to advance manufacturing policy.
After all, we really haven't had a national manufacturing
policy since Alexander Hamilton's ``Report on Manufacturers''
in 1791.
One thing that strikes me about this bill is that it makes
no assumptions of the best path forward to ensure America is
the global manufacturing leader. That is important because
there are so many diverse opinions. We have heard from other
experts that various things that the manufacturing sector might
need. Some people feel free trade is a problem; others say it
is tax policy or energy policy. Still other people say it is
fine and nothing is needed. With all these opinions, it is
difficult to develop a path forward and a much-needed national
manufacturing strategy.
The bill creates a system to thoughtfully and methodically
evaluate the issues surrounding the industry and then outlines
a framework to develop a plan for success. As a business owner,
I know planning is critical. Plan, execute, review: that is the
basic core of any good business model. But unfortunately, when
an organization doesn't operate with a plan, what happens is a
plan to fail.
I also support the Administration's efforts in launching
the National Network for Manufacturing Innovation. As you know,
most of the innovation occurs at the local level and is
realized by small and mid-size companies in small steps at a
time as part of their processes. However, there are some
critical components we need from government to be successful.
We need predictability and stability, especially in the areas
of taxes and regulation. We need research and development tax
credits to be permanent. We need a practical relationship
between business and government. Too often, I find we are
moving at different speeds with government usually moving
slower than the private industry as needed to create innovation
and jobs.
We need government programs to be easily accessible to
small and mid-size manufacturers and to know what tools are
available. Large manufacturers can more easily navigate the
government juggernaut but small and mid-size companies like
mine are often overwhelmed.
With regard to the much-discussed skills gap in our
workforce, I believe there is a gap in manufacturing and here
is why. As a generation of manufacturing shifted overseas, many
high schools, technical schools, and even community colleges
scaled back hands-on training programs. Today, with
manufacturing on the rebound, jobs coming back to the United
States, many manufacturers like myself can't find the skilled
workers to run the highly complex technologically advanced
machinery we now use. Many of the remaining training programs
have become fragmented and disconnected. Too often students
earn credentials that are not portable and are not nationally
recognized.
There has been a lot of discussion about STEM recently, and
I would be remiss if I didn't address the subject. I fully
support STEM and agree with the need in this country for
advanced learning. However, I submit that technical training
needs to be on par with advanced learning. We need to offer
young adults at least two tracks to career success where
technical training is valued just as much as a four-year
college degree.
Right now, the United States is operating without a plan in
the world economy when it comes to manufacturing, and this is
unacceptable for a global superpower. We simply must be the
world leader in manufacturing. As we heard, manufacturing is a
critical industry and does generate a lot of wealth and a great
multiplier effect. In addition, we have got good jobs that
values skills and you can find a lifelong career. It is
critical for the national defense and additional facts are
included in my written testimony.
Many other countries understand these facts. They are
constantly and actively working to court manufacturers to
work--locate within their borders. We live in a world with many
competitors. They are working to surpass the United States in
many areas, and if we ignore what they are doing and neglect to
create our own strategy, I can assure you they will succeed.
China, Russia, Brazil, Canada, the U.K. have a clear and
detailed strategy and they are actively working to foster
success. They are asking the questions: What can we do to help
you sell more product, be more competitive? How can you create
more jobs? Furthermore, many of these countries already have
developed best practices when it comes to supporting their
sectors.
The American Manufacturing Competitiveness Act will not
only bring the United States into line with our economic
competitors but it will also compel us to study them and learn
from them. This type of benchmarking is a standard best
practice management technique.
Ultimately, the success of any industry depends on many
factors. However, our collective will to ensure and achieve
success is probably the most important factor. This act and
ultimately the strategy developed out of it is an important
first step to ensure the long-term health.
I applaud Congressman Lipinski, Congressman Kinzinger for
their leadership to develop and sponsor the bill. I urge you
all to please pass this out of Committee and ultimately the
full House. Thank you for your time and consideration and I
look forward to your questions.
[The prepared statement of Mr. Mottl follows:]
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Chairman Bucshon. Thank you very much.
At this point, we have been called to a vote so the
Committee will stand in recess while we vote and reconvene ten
minutes after the last vote. That would be in approximately 45
minutes to an hour. Thank you.
[Recess]
Chairman Bucshon. The Committee will come back to order.
Thanks again for the patience of our witnesses and everyone
in the crowd and the Members. And we wanted to make sure with
the great testimony of our witnesses that we had an opportunity
to ask some questions that would help us along the lines of
what we are discussing today and as it relates to
manufacturing.
I will recognize myself for five minutes to start the line
of questioning, and I will start with Dr. Rich.
If you had two or three things that Congress could do to
help improve America's competitiveness in manufacturing, could
you give us a little insight about what you think those might
be?
Dr. Rich. Yes. Again, I think the number one most critical
item is that we develop and create a base of well-trained and
skilled people. The investments that the bill will make in that
training, the investments in research and development, making
sure that we have the most competitive workforce available in
the world, I think that is the number one priority that--for
companies like ours where we are vitally dependent on our
engineering base. So I would urge the Committee to make sure--
to make the appropriate investments in people.
Secondly, I think the investments in medium- and long-term
research projects are also vitally important. Along those
lines, the government is especially well-equipped to invest in
the development of certain vital technologies, including
materials, diagnostics, sensors, ergonomics, investments in
technology that will ensure that our work places are both
productive and safe and so forth.
So--but I completely agree with your opening statement in
that we should be careful not to over-intrude into the
marketplace and try to pick, as you say, winners and losers. I
think there, private industry is much more adapted to both
responding to the marketplace and, frankly, to taking the bumps
when those decisions turn out to be wrong. Private industry and
our investors know what those risks are when they take them as
opposed to taxpayers, I think, who are oftentimes, you know,
less sure of what those risks might be in advance. So I
completely agree with your position on that.
Lastly, I think the third thing that I would say is that--
to have a longer-term perspective, to have a longer-term
perspective on the vital technologies that are going to be
necessary again ranging from the capabilities and logistics,
the ability to manufacture things rapidly and on time are going
to be very important. So those are three things that I would
say.
Chairman Bucshon. Great, thank you. And I will talk with
Ms. Wince-Smith.
My understanding is that some of our trading partners
require transfer of intellectual property, IP, in exchange for
access to their markets. China, for instance, has set certain
IP transfer requirements through forced partnerships with
American companies. In other cases, IP has been stolen through
cyber espionage. How important is it for our manufacturing
strategy to consider these unfair trade practices other
countries are doing that may be detrimental to American
manufacturing?
Ms. Wince-Smith. Well, I think it is absolutely critical
and I think it is a bedrock issue. There is, as we know,
tremendous innovation in the next generation of capabilities of
manufacturing, and there is no question that it is being
targeted. We have the data and facts on the cyber attacks that
are coming from China and other parts of the world but
particularly China after specific intellectual property. It is
also being acquired, as you mentioned, Mr. Chairman, through
the forced technology transfer that goes and partnerships.
But I do think we have to change the way we deal with
intellectual property in terms of the infringement and
protection. Right now, the burden is really on those entities
who have been infringed as opposed to the infringers. And, you
know, just as we have very strict standards, legal standards,
and industry standards around safety and health for food
products that--what comes into the country, how it is made, and
all those things, one of the suggestions I would have is that
we need to think about creating a new standard for intellectual
property certification that when any component or product comes
in to this country and any finished entity, there has to be a
certification from the producer that they have not infringed
intellectual property just as they have to do this.
So an example I would use is Kellogg's cereal. When they
make cereal in Europe, they have five standards to meet on how
much vitamin D goes in and they do that in order for this
product to be sold.
And so I had the honor to be--and I am on the IP Theft
Commission that is chaired by former Governor Jon Huntsman and
retired Admiral Dennis Blair, and our report came out in May,
just one factoid. If China had the level of intellectual
property protection that the United States has, the estimate in
this report is we would have an additional $1 trillion in GDP
and 2 million more jobs.
Now, the manufacturing part is key to this and so that has
to be at the heart of any national manufacturing strategy.
Chairman Bucshon. Great, thank you. My time has expired.
Mr. Lipinski is recognized.
Mr. Lipinski. Thank you. I am usually watching and I know
exactly when the--when my time is coming, but I am very
interested in listening to what the responses that you had were
and there are some things I want to follow down--you know,
continue up on.
But first I want to thank all of you for your support of
the legislation, and certainly, I think most people here agree
and I certainly agree that we don't want to be here picking
winners and losers but there is so much more that can be done
just sort of to set out the environment, create the
environment, because there is so many government--I think that
is one of the things that I have faced with this bill is people
say, well, just let the private sector be. But we all know--you
all know that there is a lot of ways that the government is
impacting manufacturing already. It is just not doing it
necessarily in a smart, thoughtful manner. So I thank all of
you for the support of the bill.
I look forward to trying out this cup, and tomorrow morning
when I drink a cup of tea, I will put the hot water in there
and test that out. So thank you, Dr. Rich.
And, Ms. Wince-Smith, thank you for all of your work with
the Council on Competitiveness. We have worked together on a
lot of manufacturing issues, and I think it is very important
that you raised technologically advanced manufacturing here
because I think a lot of people, when they think about
manufacturing, they don't think about advanced manufacturing
and about new technology and the opportunities that are
available and more and more are being made available every day,
especially through the great research and development that is
going on in this country at private industry and also in our
research universities and national labs.
And so I think that is very important that people don't
just think about manufacturing as what we have done in the
past, although we don't want to abandon that. We want to
continue to do that type of manufacturing, but we also have to
look to the future.
But I want to start--I want to follow up on one of the
points that Dr. Rich had said about education and workforce.
Mr. Mottl, in your testimony you mentioned that the Tooling and
Manufacturing Association of Illinois has a new program, the
Bridgework and Pathways Initiative, focusing on augmenting the
manufacturing and training programs of 48 of Illinois'
community colleges. Can you tell us a bit more about this
initiative and its goals because obviously this is something
that we all understand is critical right now, and some people
look out there and say how could you possibly have a shortage
of qualified workers in anything with our high unemployment?
But I hear that from manufacturers all the time is the
difficulty in finding qualified workers. So can--Mr. Mottl, can
you tell us about that program, anything else you want to talk
about in that area?
Mr. Mottl. Thank you. Yes, well, the Bridgework and
Pathways program is--our goal is to get kind of a standard
curriculum going among the 48 community colleges so I, as a
manufacturer, know that if you have a certification in 5 axis
precision machining, it is a standard program and I know what I
am getting when I hire an employee. Also, to help build
enthusiasm for these type of programs, a lot of times, you
know, parents don't want their children to go into these
programs and what I would really love to see from the Federal
Government is the Department of Education revalue these
training programs.
But we find with students who go into them and ultimately
come to work for my member companies is that they are like to
come and go from the program. They will come and they will take
some courses, they will get a certificate, and then they will
work for a little bit but they will come back and take some
more classes and layer that together. So what we are trying to
do is develop a set of stackable credentials that can add up
ultimately to a degree. Maybe you would take some capstone
courses or some humanities courses and then end up with a
degree. So the whole time they are working, they are earning a
living with one of our member companies hopefully, and earning
a degree that will ultimately add up to--whether it is an
associate's degree or a four-year college degree.
But we have just found that in general the programs are
very fragmented, everybody a different program, and it didn't
necessarily jive with what manufacturers like myself wanted out
of the program. So that is what we are doing with Bridgework
and Pathways.
Mr. Lipinski. Thank you. And I will yield back the rest of
my time and hopefully have a chance to ask a few more
questions. Thank you.
Chairman Bucshon. Ms. Esty, you are recognized for five
minutes.
Ms. Esty. Thank you, Chairman Bucshon, for holding today's
hearing, and I am proud to join Representative Lipinski in
cosponsoring this important legislation. And I want to thank
the three of you for your patience with our unpredictable
voting schedule.
I, too, want to follow up on this discussion, this very
important discussion about workplace--workforce development
because it really does seem to be in a lot of ways the
linchpin.
In Connecticut we are working very hard on these same
issues. I have a long-time manufacturing district which is
struggling with this, and I am hearing from manufacturers in my
district like Ward Leonard in Thomaston and Access Technologies
in Farmington and Altek Electronics in Torrington and hearing
directly from these same questions about certification
programs, access to training programs, credentialing issues.
And frankly, one of the issues that we have been struggling
with is the legacy of having lost these manufacturing jobs in
the past, and we have been looking at this issue about young
people who might be very interested themselves if they knew
more about the salary ranges, what the work entailed, but their
parents or grandparents may be deeply suspicious because their
experience was so bad with these jobs having been lost.
Now, that being said, you know, from your perspective and
experience, what do we think the best way is to engage young
people? How do we bring them in? Is this something we should be
looking with getting better teaching and more exciting teaching
in elementary and secondary school in STEM technologies? Should
this be around apprenticeship-in-training programs? You know,
what can you suggest to us is the best route to go?
Mr. Mottl. I am assuming that is for me. Yes, I have an
interesting perspective on that. So we have done a summer camp
program at TMA. That is one of our first steps. We now do a
program for young kids. I think they are in the fifth grade and
sixth grade and they come to our summer camp program on
manufacturing. In fact, it is going on right now. It is a 2-
week program and a lot of what we do is we take them to
manufacturers and show them the high-tech manufacturing. It is
computerized. It is one person operating multiple machines that
are doing multiple operations. It is really high-tech stuff.
And I think that manufacturers, especially small ones, we sell
ourselves short and forget to say we are high-tech. We really
are. And so that is one program we have done.
Also, we have together a pamphlet--had the pleasure of
having--Sydney Hoyer came to visit and we were able to show him
at TMA the pamphlet that we have for young people, and what it
does is it shows different careers in different wage ranges and
salaries and the training you need to get there. So you can see
that if you spend a few thousand dollars and take a couple
months of certification programs, you can come out right away
making 30, 40, even $50,000 a year as a machinist. And that is
where you get the parents excited. They say, boy, I don't have
to load up on 30 grand in college debt. I can take a few
thousand dollars of training courses and come right out and be
working.
So I think that is important to get the parents on board
because I personally have hired people and had a young person
ready to take the job and the parents said, no, you are not
going to go work in manufacturing. That is not the career for
you. So I think that is important.
Also, we have Women in Manufacturing Committee at TMA who
is working with the Girl Scouts to get a program going getting
young girls into engineering and STEM programs. So I don't know
all the details of the program because they are just putting it
together, but that is something that they are working with the
Girl Scouts in Chicagoland area again at a very young age.
Ms. Esty. And actually for all of you following up on this,
we have discussed previously in this Subcommittee the German
model and looking at what Germany has done in its vocational
training. And for all three of you, if you could suggest to us
whether you--what lessons you think are learnable by us for
best practices for beefing up that relationship between the
business community and the educational community to provide the
skills we need now?
Dr. Rich. Well, I can speak directly to that having lived
in Germany for three years and worked in a chemical facility
there. I was able to participate in the training program there.
I think, look, we have to have the appropriate apprentice-
in-training programs here in the United States. We do it a
little bit differently here. In Europe, many times the
companies will take multiple years of apprentice programs but
people also commit to working their whole lives with the same
company. Here we have the dilemma of people moving company to
company more, and this is where I think there is a great
opportunity for partnership between private enterprise and the
government.
In the State of Indiana we have a terrific program through
the Ivy Tech vocational schools. At Berry we take tremendous
advantage of that. Those kinds of--and we also provide a lot of
the financial support for that in addition to the government.
So I think those kinds of government industry cooperations can
be a terrific part of what this bill is all about.
Ms. Wince-Smith. I would just add that, you know, the
workforce boards in each State have access to significant
funding from the Department of Labor and that we really need to
ensure that those resources are being aligned with the demands
and needs that are coming, you know, from the employers as a
first order.
Secondly, there are a number of very innovative advanced
labor unions. I will mention the pipefitters and plumbers in
particular. I know that union very well. Its President is very
active in the Council on Competitiveness. This union, you know,
does very high-skilled work. They do the welding on nuclear
subs. You go through their training, they pay for everything,
you get a certificate as a journeyman welder. You make,
depending on where you are in the country, 60 to 80,000 a year.
They are bringing that training to our military bases for
returning veterans. It is a very strong partnership with the
companies that use pipefitters and plumbers. So that
collaborative ownership between business and labor needs to be
extended to other parts of the economy.
And finally, I would say on the engineering issue that was
raised, STEM is absolutely critical; we know that. But we also
need to take the E in STEM and blow that out because at the end
of the day everything we are talking about requires
engineering, design engineering, engineering that goes through
the whole product cycle. And we are not elevating the
engineering discipline in this country to the way we can and
should.
The Council on Competitiveness is making this a very
thrust--big thrust. We are teaming with Lockheed Martin to
create the National Engineering Forum, which we hope over time
will become the Davos for engineering. But engineering is
something that needs to start, you know, in K through 12 and
really be elevated the way it was at different times in our
history.
Chairman Bucshon. Thank you. We will have I think one more
round of questioning and then we will adjourn the hearing. I
guess I can ask Dr. Rich this question. The nature of
manufacturing today is very complex and it is difficult to
clearly differentiate sometimes between manufacturing and the
services that support it. How would you recommend the NSTC,
Committee on Technology, take into account the very complex
network of the players developed--when developing--involved
when developing a manufacturing strategy? And is it appropriate
to develop policies that treat manufacturing differently from
other sections of the economy when there is such this
interconnectedness? How do you fit that all together?
Dr. Rich. Well, I think the lines of distinction between
service and manufacturing are clearly blurring, right. A lot of
that has been driven by the tremendous advances in IT
technology which allows you to put support and service into the
products that you make. So I don't think you can disconnect
those two subjects anymore and I would urge the Committee to
think about how you take the appropriate technologies,
especially in IT, and apply those.
When we make a product, our relationship with the customer
doesn't end after we have at the product in a box and shipped
it out. We have a lifetime responsibility for that product and
a lifetime responsibility for the relationships with our
customers. So I wouldn't draw a hard line of distinction there.
Chairman Bucshon. Ms. Wince-Smith?
Ms. Wince-Smith. Yes, absolutely. Manufacturing and
services are merging, blending as Dr. Rich said, and a lot of
the value now comes from this merger. So you think of a company
like Deere where, you know, they are making the most advanced
high-tech equipment in the world for harvesting and agriculture
and other applications. They are also a weather forecaster.
They are a consultant to farmers. And all their--and all that
gets wrapped around. And you think of the great potential of
data analytics and all of that for enabling--advance that, too,
as part of this.
So we really need to look at manufacturing in a different
way with different language. It is an extended enterprise.
Everything from the ideation, the design, the advanced
research, how the logistics supply chain enables this, again,
that is a lot of IT capability and you know the whole--full
lifecycle. So service innovation and how it links to
manufacturing should be a very important part of the strategy.
Chairman Bucshon. Mr. Mottl, you have comments on that?
Mr. Mottl. Yes, I would say, you know, as a small business,
we are selling more and more services to our customers as well.
They have outsourced their engineering. They don't do any work
in-house. They say we need you to make the product. We need you
to design it as well. So we will sell design services, but I
would say maybe I am not an honest broker, but I think
manufacturing is certainly the most important industry we have
here. I mean clearly--but the multiplier effect is what speaks
for it, you know.
When you are in manufacturing, you need transportation. It
is the factors of production. You buy equipment and that
requires shipping services. You need attorneys, you need
lawyers. And obviously service needs, you know supporting--
every industry has supporting services but manufacturers,
simply because of the factors of production, whether you are
bringing your raw materials in, you are shipping finished goods
out, you are bringing equipment income, you are building a
building to do it, you know, that is why I think it is the most
important industry.
Chairman Bucshon. Okay. Thank you. I yield to Mr. Lipinski.
Mr. Lipinski. Thank you. Yes, I am tempted to just use the
five minutes and ask Ms. Wince-Smith to continue to say all
these great things about engineers is one of the--as one of the
dozen engineers in Congress, I like hearing the importance of
engineers and engineering.
But I am going to have a general question first for Mr.
Mottl, then Dr. Rich, and then Ms. Wince-Smith what you can add
to that. The question is what can the--in your opinion what can
the Federal Government do--I know, Mr. Mottl, we have talked
about issues with the State, but leave those off the table.
What could the Federal Government do to make your business more
competitive?
Mr. Mottl. Well, you know, a lot of business owners will
say just stay out of the way, and, you know, that is important,
but setting a level playing field and setting a good table. I
like to use the analogy of a buffet. If you set a great buffet
out, we will all come and eat so--or, you know, whether it is
the tax policy, energy policy. If we have good stable planning
and policies, I can build my business around that. If I don't
know what is going to happen tomorrow whether it is the R&D
credit or energy policy, we saw a lot of products into the, you
know, oil and gas production industry. Is that industry going
to be growing like it is growing now or is it going to change
in a few years? It is very hard. So stability is important from
my perspective.
Transportation is really important, too. The Federal
Government does a lot for transportation. I am constantly
moving goods in, bringing in raw materials, and shipping out
finished goods so I need a good, stable transportation network
that is well maintained.
Of course, you know, we talked about the IP theft and trade
issues. You know, I saw what happened in the telecom
electronics industry. My company historically builds mechanical
switching. Western Electric was our customer, then AT&T, and
all throughout, but I saw what happened when we kind of open
the doors and bought the cheapest product we could buy. We lost
a lot of the value that we added here in the United States when
it went, you know, to the lowest-cost country.
So I think sometimes some government policies need to look
at, you know, what is worthwhile to be building here? What is
the cost of it? You know, you can pay less for a product but
the value maybe isn't there because you didn't get the jobs,
you didn't get the growth, you didn't get the tax from, you
know, those jobs and that sale of the product. So a little bit
smarter planning maybe on trade issues I think would be
important for businesses like mine as well.
Mr. Lipinski. Dr. Rich?
Dr. Rich. Again, I think, first and foremost, the most
important thing which again is being addressed in this bill is
the investment in people.
Beyond that, I would say the appropriate balance of
regulation is also important. Let me give you a specific
example. My personal view is that we are on the cusp of one of
the greatest industrial revolutions here in the United States
that we have seen since may be the beginning of the 20th
century with the development of North American shale gas.
That--this sheer extraction of the energy, the lower cost will
create thousands of jobs, but the secondary industries which
create new materials, new products based on that will create
even more jobs.
We have to be able to develop this infrastructure and
simultaneously protect the air and the water that we all need.
I always view that is the concept of responsible progress. We
can make responsible progress and develop these natural
resources. It is going to require a lot of new technologies. I
don't accept the fact that it can't be done and not
simultaneously protect the environment. There is a tremendous
opportunity for new technology there but we also have to have
balanced regulations to make sure that we can take advantage of
these resources.
This could be the greatest industrial revolution that we
have seen certainly in my lifetime, and it will create an
enormous number of jobs.
Mr. Lipinski. Thank you. Ms. Wince-Smith, anything to--you
want to add to that?
Ms. Wince-Smith. I would just add, you know, I fully
endorse what my two colleagues here have said. You know, the
whole issue of America going from being a country that is
energy weak to energy strong as we lead the transformations to
a low-carbon world in the future is so important.
But one thing that government can do that no one else can
do is to really capitalize and assist in the way these
transformations in the science and technology and their
deployment. You know, if we can be the country that, you know,
develops and manufactures at scale non-lithium batteries, if we
can be the country that, you know, sets the standards for
additive manufacturing production, we know what the future is
beginning to look like and there are ways in which if we
capture the--not just the research but the deployment here, it
will be huge.
And so this bill is very important because it talks about
an integrated strategy. Defense Department has huge needs and
capabilities here. You link that with NSF and DOE and the other
parts of the government with the, it is just--we have
tremendous potential. So connecting the dots, you all have in
the government the capacity to do that and the private sector
will really come to the table as well.
Mr. Lipinski. All right. Thank you.
Chairman Bucshon. Thank you. Ms. Esty, five minutes.
Ms. Esty. I would love to follow up on that last point and
relate it to--for all three of you. First question is on the
role of basic research and in manufacturing in particular if
there are areas that--again that the Federal Government has an
important role to play in basic research. So that is the first
question. And the second one is this linkage that you just
mentioned, Ms. Wince-Smith, about the linkage for deployment.
We have some vigorous debate going on. We had votes this
afternoon that had to go exactly around this issue. What should
be the role of the Federal Government in deployment of
technologies and of research that is being developed? So I
would love your thoughts on both of those questions. Thank you.
Ms. Wince-Smith. I will just use one example that captures
it. I had the opportunity two weeks ago to be at University of
Toledo in Ohio and coming from Akron I knew Toledo but I wasn't
aware that this university really did all the basic research
for the jettisons of the solar industry that builds on their
glass history and things. And, you know, they created--first
solar came out of that entity but, you know, all the
manufacturing, all the infrastructure went to China for a lot
of the capital cost regulatory issues.
So somehow, we have to link this basic research where we
still lead the world in many areas with the condition for
ensuring deployment, and that of course gets to the power of
government procurement, state procurement, as well as perhaps
even--and this may sound a little pushing the envelope, but why
can't we think the way some of our competitors do about
creating some advanced manufacturing zones where there are huge
privileges and opportunities to be the first users of these
capabilities?
I heard in Toledo they have a plan to create buildings that
will be net zero energy with the next-generation solar panels.
How can we make that happen?
So it is exciting but we have some challenges because the
rest of the world is looking at our basic research as the seed
corn for their next-generation products and services, and we
have got to make sure we capture the value here as well.
Ms. Esty. One of the things that would be helpful to follow
up on is this question I--which I think you are absolutely
right about--state and government procurement being part of
that investment by the society, by taxpayer dollars, and the
society ensuring we develop those robust markets here, not just
the technology that then is produced elsewhere, but that we put
our bang for the buck behind it to get to scale because we
aren't getting to scale. And that remains a problem. And it is
not good enough just to develop the technology and license it
to the world, or worse yet, have them steal it and take it and
develop it elsewhere.
So helping us and thinking about the right way to do those
procurement rules so it doesn't--picking winners and losers,
you know, how do you develop criteria that is not picking
winners and losers and yet is putting a goal out there that our
great engineers and scientists work towards to achieve and then
bid on and then take advantage of, as you mentioned, Mr. Mottl?
We have to find a way to incorporate the value of producing it
here, the value of those jobs, as compared to the value of
paying people who can't find work.
And we need help on that because it isn't part of our
calculation now and I think it should be. When you look at what
is the lowest-cost producer for DOD, you should estimate the
cost of not employing American engineers, the cost of not
having visas for high-tech students who came to this country
and would love to stay.
Mr. Mottl. Well, there is a great quote by Abraham Lincoln.
I am going to butcher it a little bit on the numbers though. He
said, you know, we can buy our rails from England and we will
have the rails and they will have the gold or we can make the
rails here for maybe a little more expensive. I am butchering
the numbers, but he said then we will have the gold and the
rails. So we need to think about that and that value.
But, you know, when we talk about the tech transfer, we had
a unique discussion here before about Argonne labs. I am right
there. My company is right nearby and they brought myself and
some other small manufacturers in and said, hey, we have all
these patents and technologies. How can we partner with you to
get them? We scratched our heads and said, you know, we just
don't have the capital. As a small business, access to some
kind of low-cost capital where I could use that money and tie
up this technology and have the time to figure out how to use
it.
Where they said, you know, a lot of Korean companies buy up
all their patents, in particular one company, and they have a
lot of cash and I don't know if that cash is somehow
supplemented through government programs, but that is--they are
getting a lot of the technology simply because they have access
to the cash. And if I had the ability to have the cash and the
time to play with the technology, I know I could--you know,
companies like mine could work with it.
Chairman Bucshon. Okay. Thank you.
I would like to thank all the witnesses for their valuable
testimony and the Members for their questions. The record will
remain open for two weeks for additional comments and written
questions from Members. The witnesses are excused and the
hearing is adjourned.
[Whereupon, at 3:46 p.m., the Subcommittee was adjourned.]
Appendix I
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Additional Material for the Record
Submitted statement by Committee Ranking Member Eddie Bernice Johnson
Thank you, Mr. Chairman. This afternoon we are examining
legislation--introduced by my colleague Mr. Lipinski--that would
require the development of a national strategic plan for manufacturing.
I strongly believe that if the United States is to remain
competitive in the long-term, we need to ensure that American companies
maintain their capacity to manufacture new and innovative products here
at home.
While the United States is struggling to sustain its competitive
edge other countries are focusing their full attention on
manufacturing. They are aggressively investing in research and
development.
And they are implementing the policies and programs necessary to
build a 21st century economy now.
We simply cannot afford to stand idly by and watch our competitors
position themselves ahead of us. A robust and healthy manufacturing
sector is just too important for our economy and our national security.
That's why I am pleased that we are examining Mr. Lipinski's
legislation today. We need to create a strategy that outlines a vision
and set of goals for manufacturing.
I had hoped that my Republican colleagues would have agreed to my
request to broaden the scope of today's hearing to include
manufacturing legislation that I authored. It would have also been
useful for the Committee to hear from the witnesses on proposals that
may well be part of such a strategy.However, that being said, I've been
recently been informed that my colleagues plan to hold a hearing on my
bill in September.
My legislation, the Advancing Innovative Manufacturing Act of
2013--or the AIM Act, makes strategic investments in manufacturing
research, development, and education. It brings the public and private
sectors together to tackle the research needs of industry. It provides
small and medium-sized manufacturers with innovation vouchers that will
allow them to make their companies and products more competitive. And
finally, it ensures that our community colleges are preparing students
for the manufacturing jobs of the future.
We need our manufacturing sector to be the most sophisticated in
the world, using the newest technologies and the most efficient methods
and processes. By doing this, we can ensure the survival of our
manufacturing sector and maintain our global leadership.
I am hopeful that while not specifically asked to comment on what
should or should not be a part of our efforts to revitalize American
manufacturing, today's witnesses can offer the Committee some
recommendations on what areas we should prioritize.
Thank you, Mr. Chairman. I look forward to having a more detailed
discussion of the programs proposed in my legislation in September as
the Chairman has committed to me.