[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
BUILT IN AMERICA: JOBS AND GROWTH IN THE MANUFACTURING SECTOR
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON DIGITAL COMMERCE AND CONSUMER PROTECTION
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
SECOND SESSION
__________
SEPTEMBER 26, 2018
__________
Serial No. 115-167
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
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COMMITTEE ON ENERGY AND COMMERCE
GREG WALDEN, Oregon
Chairman
JOE BARTON, Texas FRANK PALLONE, Jr., New Jersey
Vice Chairman Ranking Member
FRED UPTON, Michigan BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois ANNA G. ESHOO, California
MICHAEL C. BURGESS, Texas ELIOT L. ENGEL, New York
MARSHA BLACKBURN, Tennessee GENE GREEN, Texas
STEVE SCALISE, Louisiana DIANA DeGETTE, Colorado
ROBERT E. LATTA, Ohio MICHAEL F. DOYLE, Pennsylvania
CATHY McMORRIS RODGERS, Washington JANICE D. SCHAKOWSKY, Illinois
GREGG HARPER, Mississippi G.K. BUTTERFIELD, North Carolina
LEONARD LANCE, New Jersey DORIS O. MATSUI, California
BRETT GUTHRIE, Kentucky KATHY CASTOR, Florida
PETE OLSON, Texas JOHN P. SARBANES, Maryland
DAVID B. McKINLEY, West Virginia JERRY McNERNEY, California
ADAM KINZINGER, Illinois PETER WELCH, Vermont
H. MORGAN GRIFFITH, Virginia BEN RAY LUJAN, New Mexico
GUS M. BILIRAKIS, Florida PAUL TONKO, New York
BILL JOHNSON, Ohio YVETTE D. CLARKE, New York
BILLY LONG, Missouri DAVID LOEBSACK, Iowa
LARRY BUCSHON, Indiana KURT SCHRADER, Oregon
BILL FLORES, Texas JOSEPH P. KENNEDY, III,
SUSAN W. BROOKS, Indiana Massachusetts
MARKWAYNE MULLIN, Oklahoma TONY CARDENAS, California
RICHARD HUDSON, North Carolina RAUL RUIZ, California
CHRIS COLLINS, New York SCOTT H. PETERS, California
KEVIN CRAMER, North Dakota DEBBIE DINGELL, Michigan
TIM WALBERG, Michigan
MIMI WALTERS, California
RYAN A. COSTELLO, Pennsylvania
EARL L. ``BUDDY'' CARTER, Georgia
JEFF DUNCAN, South Carolina
Subcommittee on Digital Commerce and Consumer Protection
ROBERT E. LATTA, Ohio
Chairman
GREGG HARPER, Mississippi JANICE D. SCHAKOWSKY, Illinois
Vice Chairman Ranking Member
FRED UPTON, Michigan BEN RAY LUJAN, New Mexico
MICHAEL C. BURGESS, Texas YVETTE D. CLARKE, New York
LEONARD LANCE, New Jersey TONY CARDENAS, California
BRETT GUTHRIE, Kentucky DEBBIE DINGELL, Michigan
DAVID B. McKINLEY, West Virgina DORIS O. MATSUI, California
ADAM KINZINGER, Illinois PETER WELCH, Vermont
GUS M. BILIRAKIS, Florida JOSEPH P. KENNEDY, III,
LARRY BUCSHON, Indiana Massachusetts
MARKWAYNE MULLIN, Oklahoma GENE GREEN, Texas
MIMI WALTERS, California FRANK PALLONE, Jr., New Jersey (ex
RYAN A. COSTELLO, Pennsylvania officio)
JEFF DUNCAN, South Carolina
GREG WALDEN, Oregon (ex officio)
C O N T E N T S
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Page
Hon. Robert E. Latta, a Representative in Congress from the State
of Ohio, opening statement..................................... 1
Prepared statement........................................... 3
Hon. Frank Pallone, Jr., a Representative in Congress from the
State of New Jersey, opening statement......................... 4
Hon. Greg Walden, a Representative in Congress from the State of
Oregon, opening statement...................................... 6
Prepared statement........................................... 7
Hon. Janice D. Schakowsky, a Representative in Congress from the
State of Illinois, prepared statement.......................... 8
Witnesses
Nikki Moyers, Vice President, Operations, Jerl Machine, Inc...... 10
Prepared statement........................................... 12
Edward Paradowski, President, Apache Stainless Equipment
Corporation.................................................... 18
Prepared statement........................................... 20
Andrew Stettner, Senior Fellow, Century Foundation............... 26
Prepared statement........................................... 28
Eric Anderberg, Vice President, Dial Machine, Inc................ 35
Prepared statement........................................... 37
Submitted material
Blog entitled, ``How do we know the tax cut isn't working to
boost wages? Investment, investment, investment,'' Economic
Policy Institute, August 3, 2018............................... 73
Report entitled, ``A Federal Agenda for Revitalizing America's
Manufacturing Communities,'' Andrew Stettner and Joel S. Yudken 78
BUILT IN AMERICA: JOBS AND GROWTH IN THE MANUFACTURING SECTOR
----------
WEDNESDAY, SEPTEMBER 26, 2018
House of Representatives,
Subcommittee on Digital Commerce and Consumer
Protection,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:00 a.m., in
room 2123 Rayburn House Office Building, Hon. Robert Latta
(chairman of the subcommittee) presiding.
Members present: Representatives Latta, Kinzinger, Burgess,
Lance, Guthrie, McKinley, Bilirakis, Bucshon, Mullin, Costello,
Duncan, Walden (ex officio), Schakowsky, Cardenas, Welch,
Kennedy, Green, and Pallone (ex officio).
Staff present: Melissa Froelich, Chief Counsel, Digital
Commerce and Consumer Protection; Ali Fulling, Legislative
Clerk, Oversight and Investigations, Digital Commerce and
Consumer Protection; Elena Hernandez, Press Secretary; Paul
Jackson, Professional Staff, Digital Commerce and Consumer
Protection; Bijan Koohmaraie, Counsel, Digital Commerce and
Consumer Protection; Tim Kurth, Senior Professional Staff,
Communications and Technology; Austin Stonebraker, Press
Assistant; Madeline Vey, Policy Coordinator, Digital Commerce
and Consumer Protection; Greg Zerzan, Counsel, Digital Commerce
and Consumer Protection; Michelle Ash, Minority Chief Counsel,
Digital Commerce and Consumer Protection; Lisa Goldman,
Minority Counsel; Tiffany Guarascio, Minority Deputy Staff
Director and Chief Health Advisor; Carolyn Hann, Minority FTC
Detailee; Caroline Paris-Behr, Minority Policy Analyst; Andrew
Souvall, Minority Director of Communications, Outreach and
Member Services; and C.J. Young, Minority Press Secretary.
OPENING STATEMENT OF HON. ROBERT E. LATTA, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OHIO
Mr. Latta [presiding]. Good morning. I would like to call
the Subcommittee on Digital Commerce and Consumer Protection to
order this morning.
At this time I recognize myself for 5 minutes for an
opening statement.
Good morning again. I would like to welcome everyone to
today's Digital Commerce and Consumer Protection Subcommittee
examination of the state of manufacturing in America.
Thanks to policies designed to spur manufacturing in our
country, we are seeing a revival of the Made in America brand.
Factories are expanding, workers are being hired and rehired,
and wages are rising. A recent survey of small business owners
found optimism at an all-time high.
Small businesses are responsible for creating two out of
three new jobs. So, when they are raising wages, growing their
businesses, and investing in equipment, it is helpful to the
entire economy.
In my own congressional district, the 5th District of Ohio,
we are definitely seeing a resurgence of optimism. My district
stretches from densely populated urban centers like downtown
Toledo to small villages on the state line of Indiana, and we
probably have over 60,000 manufacturing jobs. In the over 900-
plus district meetings I have had since August of 2012,
overregulation is one of the most mentioned issues. I never
hear that regulation isn't necessary, but I always hear people
ask for regulations they can live with and comply with. It is
burdensome for businesses to navigate regulatory regimes when
they are busy improving operations and products for customers
or working to grow to reach more people.
Through policies this Congress and the administration
advanced, we are witnessing the rebirth of a healthy, strong,
and growing manufacturing sector. This includes one of our
witnesses today who comes to us representing Jerl Machine,
Inc., from Perrysburg. Welcome.
And again, we thank you all for being with us today. I look
forward to the hearing and hearing from you all.
According to the Congressional Research Service, the U.S.
is the world's second largest manufacturing nation, having been
overtaken by China in 2010. But the competition to regain the
crown is very much alive. In recent years, American
manufacturing output has risen steadily, this year reaching its
highest level in nearly 10 years.
Growing production also means growing jobs. Since 2017,
over 350,000 manufacturing jobs have been created in America.
This is a sharp reversal over the previous 2 years when the
Bureau of Labor Statistics was regularly reporting job losses.
The increasing demand for workers is creating new
opportunities across our country. Importantly, for the first
time in a long time, prosperity and opportunity are reaching
into rural areas that have long been left out of the recovery.
As a recent report by Brookings Institute notes, the growth of
the employment rate in small and rural communities has outpaced
that of large cities and other larger metropolitan areas. A
large part of the success is due to the return of manufacturing
jobs.
Restoring America's manufacturing sector has been a
priority of this Congress. Tax reform focused on lowering the
burdens for employers which they face in order to spur
production and job creation has helped fuel the manufacturing
boom. Perhaps that is why the National Association of
Manufacturers' Outlook Survey reports an all-time high in
manufacturer optimism for the second quarter of this year. They
also reported record or near-record highs when it came to their
expectations about hiring workers, raising wages, and making
investments. Our manufacturers know that opportunity is greater
now than it has been in many years.
Again, I look forward to hearing more about these trends
from our witnesses, as well as any ideas you have for how
policymakers can help remove barriers and further promote
manufacturing in America. We are grateful for the time that you
are here with us today, and we appreciate your testimony.
At this time, I would like to recognize the vice chairman
of the subcommittee, the gentleman from Illinois.
Mr. Kinzinger. Thank you, Mr. Chairman, for yielding.
And I thank all of you for being here today. I especially
want to welcome Mr. Anderberg. He is my constituent. He is the
vice president and co-owner of Dial Machine, which is a great
American manufacturing company located in Rockford, Illinois.
Mr. Anderberg helps run this family-owned business that has
been around for more than a half a century. He has a wealth of
experience in the industry and is a student of the history of
manufacturing and trade. It is not his first rodeo, either. He
was here back in 2003 in front of the Small Business Committee
talking about the state of manufacturing then.
Mr. Anderberg, thank you for making the trip to Washington
to give us all your unique perspective on the manufacturing
sector. It is definitely an honor to represent you in Congress.
With that, Mr. Chairman, I yield back.
[The prepared statement of Mr. Latta follows:]
Prepared statement of Hon. Robert E. Latta
Good morning, I'd like to welcome everyone to the Digital
Commerce and Consumer Protection Subcommittee's examination of
the State of Manufacturing in America.
Thanks to policies designed to spur manufacturing in our
country we are seeing a revival of the Made in America brand.
Factories are expanding, workers are being re-hired and wages
are rising. A recent survey of small business owners found
optimism at an all-time high. Small businesses are responsible
for creating 2 out of every 3 new jobs so when they are raising
wages, growing their businesses, and investing in equipment,
it's helpful to the entire economy \1\.
---------------------------------------------------------------------------
\1\ https://www.cnbc.com/2018/09/11/small-business-optimism-surges-
to-highest-ever.html
---------------------------------------------------------------------------
In my own congressional district, the 5th District of Ohio,
we are definitely seeing a resurgence of optimism. My district
stretches from densely populated urban centers like downtown
Toledo to small villages on the state-line of Indiana and we
proudly have over 60,000 manufacturing jobs. In the over 900
district meetings I've had since August 2012, overregulation is
the most mentioned issue. I never hear that regulation isn't
necessary, but I always hear people ask for soft- touch,
minimal regulation. It is burdensome for businesses to navigate
regulatory regimes when they are busy improving operations and
products for customers or working to grow to reach more people.
Through policies this Congress and Administration have
advanced, we are witnessing the rebirth of a healthy, strong
and growing manufacturing sector. This includes one of our
witnesses today, who comes to us representing Jerl Marchine
Inc. from Perrysburg. Welcome Ms. Moyers, and thank you very
much for joining us today, I look forward to hearing from you
and our other witnesses today.
According to the Congressional Research Service, the U.S.
is the world's second-largest manufacturing nation, having been
over-taken by China in 2010. But the competition to regain the
crown is very much alive. In recent years American
manufacturing output has risen steadily, this year reaching its
highest level in nearly 10 years.
Growing production also means growing jobs. Since January
2017, over 350,000 manufacturing jobs have been created in
America; this is a sharp reversal over the previous two years,
when the Bureau of Labor Statistics was regularly reporting job
losses.
The increasing demand for workers is creating new
opportunities across our country. Importantly, for the first
time in a long time prosperity and opportunity are reaching
into rural areas that have long been left-out of recovery.
As a recent report by the Brookings Institute notes, the
growth of the employment rate in small and rural communities
has outpaced that of big cities and other larger metro areas. A
large part of this success is due to the return of
manufacturing jobs.
Restoring America's manufacturing sector has been a
priority of this Congress. Tax reform, focused on lowering the
burdens employers face in order to spur production and job
creation, has helped fuel the manufacturing boom.
Perhaps that's why the National Association of
Manufacturer's Outlook Survey reported an all-time high in
manufacturer optimism for the second quarter of this year. They
also reported record or near record highs when it came to their
expectations about hiring workers, raising wages and making
investments.
Our manufacturers know that opportunity is greater now than
it has been in many years.
I look forward to hearing more about these trends from our
witnesses, as well as any ideas you have for how policymakers
can remove barriers and further promote manufacturing in
America. We are grateful for your time today and appreciate
your testimony.
Mr. Latta. Thank you very much. The gentleman yields back.
And I will yield back the balance of my time, and at this
time I will recognize the gentleman from New Jersey for an
opening statement.
OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF NEW JERSEY
Mr. Pallone. Thank you, Mr. Chairman.
A strong manufacturing sector is vital to our identity as a
nation, is the source of countless scientific and technological
breakthroughs, and it is essential to maintaining our national
defense capabilities. Manufacturing serves as an important
building block for a strong and stable middle class in this
country. Manufacturing jobs have historically paid more on
average than jobs in other sectors, and they tend to bring with
them strong spillover effects for local and regional economies.
In my home State of New Jersey, we have nearly 10,000
manufacturers from large pharmaceutical firms to small machine
shops, and these manufacturers employ almost 250,000 people and
contribute more than $30.1 billion to New Jersey's economy.
And I am pleased we are holding a hearing on the state of
U.S. manufacturing. Our communities are stronger when we can
develop well-paying and stable jobs. But the Republican
majority for two years now has repeatedly prioritized the needs
of large corporate interests and the wealthiest few. The
American people have not been fooled by Republicans' claims
about their giant tax scam. The American people know that the
benefits of the tax law overwhelmingly go to the wealthiest
few. And congressional Republicans also continue to push
harmful regulatory rollbacks that undermine innovation and job
growth.
Despite all the evidence to the contrary, Republicans are
likely to tout the successes of their tax scam today. Yet,
repeatedly, we have seen that most companies have not and do
not intend to use the money for capital investment. In fact, we
remember all too well watching President Trump's former lead
economic advisor Gary Cohn's distress when a group of CEOs were
asked if they intended to increase their investments when the
tax cuts become law, and almost none of them raised their
hands. Gary Cohn sent shockwaves asking, and I quote, ``Why
aren't the other hands up?'' Their hands did not go up because
they intended for most profits from the tax cuts to go to
shareholders, and that is exactly what has happened.
Contrary to the majority's claims, deregulation has also
caused substantial uncertainty and angst for manufacturers. For
example, eight years ago the CAFE standards were put into place
to increase fuel economy for cars and light-duty trucks by
model year 2025. U.S. manufacturers and their suppliers
innovated and invested in advanced technologies. CAFE provided
certainty to these firms, allowing them to invest in a pipeline
of jobs for the long term. And all of that investment and
innovation was upended in August when the Trump administration
announced a proposal to roll back CAFE. This announcement threw
into disarray well-laid plans for innovation and job growth.
The Trump administration's efforts to dismantle the Clean
Power Act have also created even more uncertainty for the
manufacturing sector. And this administration's efforts to
abuse emergency authorities to subsidize the coal and nuclear
industries threaten to hurt national gas-fired electricity
producers and the renewables industry while raising costs for
U.S. manufacturers at the same time.
So, what American manufacturers need is for the federal
government to prepare and implement a coordinated long-term
strategy for manufacturing success and job growth. Our key
competitors have figured this out already. Since 2015, the
Chinese government has invested billions of dollars into the
Made in China 2025 campaign, which is their 10-year plan for
transforming their economy from commodities to advanced
manufacturing.
And the Obama administration recognized this need and
established the National Network for Manufacturing Innovation,
now known as Manufacturing USA. This is a network of industry,
academic, and government partners working to increase U.S.
manufacturing competitiveness and spur innovation. To date,
this network has 14 institutes specializing in a variety of
advanced manufacturing sectors such as advanced robotics and
lightweight metals. The plan was to open three times as many
institutes, and I encourage the current administration to
follow through with this initiative.
It's time to stop making manufacturing policy on a whim
and, instead, to think strategically about the future needs of
this country. Mr. Chairman, American manufacturing also needs
companies to step up and invest, and not just in their plants,
but in their workers as well. Too often, good manufacturing
jobs become part-time jobs without benefits, and workers are
increasing losing their power to negotiate for better
conditions and higher wages. So, the federal government needs
the industry to be a partner in creating a vibrant
manufacturing economy. And I hope this hearing can explore that
partnership.
So, I yield back. Thank you, Mr. Chairman.
Mr. Latta. Thank you very much. The gentleman yields back.
And the Chair now will recognize the chairman of the full
Committee of Energy and Commerce, the gentleman from Oregon,
for 5 minutes.
OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OREGON
Mr. Walden. Thank you very much, Mr. Chairman. I appreciate
your leadership on this issue and the hearing that we are
having today.
As our witnesses will know, we have got a couple of these
going on today. So, some of us will have to bounce back and
forth.
I would just say at the beginning, I am glad to stack the
Trump economy up against the Obama economy any day of the week.
We actually have provided, as a result of Republican
majorities, the biggest tax relief since Ronald Reagan. We have
had significant regulatory relief, taking the dead hand of
overexcessive government regulation off the throats of
America's entrepreneurs, and they have responded at record pace
to create jobs in America, and to give us the best economy
nearly anybody in the working world has seen in their time. And
so, optimism is up. Jobs are up. There are more openings than
there are people to fill them, and we are moving forward with a
robust economy.
And this notion from the last President that we should get
used to a 1.5 or 2 percent GDP, and that is the new normal, the
best America could do, is just garbage. And so, we are seeing
it move forward at 4.2 percent GDP growth, and a very, very
strong economy, and it is because of the Republican policies we
have passed out of this committee and others, and down to the
President for signature.
But today we are going to hear about manufacturing. It is
essential and it is coming back in America. From car parts to
industrial equipment, to semiconductors, America's
manufacturing sector keeps us on the cutting edge of technology
and world leadership.
Thanks to historic achievements in tax and regulatory
reform, our country is undergoing a manufacturing revival
unlike we have seen in a very long time. The latest
manufacturing index from the Institute for Supply Management
has reached its highest level in 14 years. This number
translates into surging growth and increased production of
goods made in America.
With the resurgence comes the return of manufacturing jobs.
And in fact, The Washington Post recently reported, and I
quote, ``Jobs in goods-producing industries, mining,
construction, and manufacturing, grew 3.3 percent in the year
preceding July, the best rate since 1984.''
And with this increase in manufacturing jobs has come
rising wages. According to the August Bureau of Labor
Statistics quarterly release, compensation for workers has
risen to a nearly 10-year high. These are the facts.
The latest GDP report shows that our economy has grown at a
rate of 4.2 percent, and we anticipate this week's GDP report
will show similarly strong results. Further, earlier this
month, the National Federation of Independent Business--and my
wife and I were small business owners for 21 years--it reported
that its small business optimism index has surged to 108.8
percent, the highest level ever recorded in the survey's 45-
year history. These are the facts.
Of course, all these numbers can seem abstract, but what
they represent is not. Our economy is strong and growing. This
surge of American manufacturing has come from business, both
large and small. Jobs are being created. New products,
technologies, and medicines are being invented. And consumers
have more money in their pockets to spend, to put away for
their children's education, or save toward retirement. Workers
are once again able to find solid, dependable jobs with good
pay.
And it is all the result of this Congress, the Republican
Congress, investing in America by reducing the burdens and
taxes and unnecessary regulations imposed on job creators. You
know America has always been a nation of doers and makers. It
has always been a place where anyone with dedication and
ambition can start their own enterprise and take the future
into their own hands. By any measure, we are witnessing a
reinvigoration of that great and proud tradition as Americans.
So, I am proud of this committee's work. Most of it has
actually been bipartisan. And we are getting pro-growth, pro-
innovation policies and we are helping our entrepreneurs do
what they do best.
That includes we really appreciate our witnesses here
today. Thank you all for the help you are doing to grow jobs in
America. We know there is a lot more work to be done. We know
there are unsettled parts and challenges in the economy. But we
are here to be your partner, to help American workers succeed
and American businesses grow, and manufacturing get even
stronger.
So, with that, Mr. Chairman, I yield back the balance of my
time.
[The prepared statement of Mr. Walden follows:]
Prepared statement of Hon. Greg Walden
Good morning and thank you to our witnesses for appearing
before us today to discuss the state of a quintessential
American industry: manufacturing. From car parts, to industrial
equipment, to semiconductors, America's manufacturing sector
keeps us on the cutting edge of technology and world
leadership.
Thanks to historic achievements in tax and regulatory
reform, our country is undergoing a manufacturing revival
unlike any we've seen in a long time. The latest manufacturing
index from the Institute for Supply Management has reached its
highest level in 14 years. This number translates to surging
growth and increased production of goods made in America.
With this resurgence comes the return of manufacturing
jobs. The Washington Post recently reported, ``Jobs in goods-
producing industries--mining, construction and manufacturing--
grew 3.3 percent in the year preceding July, the best rate
since 1984. . .'' \1\
---------------------------------------------------------------------------
\1\ ''Under Trump, the jobs boom has finally reached blue-collar
workers. Will it last?'' (September 9, 2018)https://
www.washingtonpost.com/business/2018/09/09/under-trump-jobs-boom-has-
finally-reached-blue-collar-workers-will-it-last/?noredirect=on&utm--
term=.9c7b28e2a87f
---------------------------------------------------------------------------
And with this increase in manufacturing jobs has come
rising wages. According to the August Bureau of Labor
Statistics quarterly release, compensation for workers has
risen to a nearly 10-year high.
The latest U.S. GDP report shows that our economy has grown
at a rate of 4.2 percent, and we anticipate this week's GDP
report will show similarly strong results.
And further, earlier this month, the National Federation of
Independent Business reported that its ``Small Business
Optimism Index'' had surged to 108.8 percent, the highest level
ever recorded in the survey's 45-year history.
Of course, all these numbers can seem abstract, but what
they represent is not. Oureconomy is strong and growing. This
surge of American manufacturing has come from businesses both
large and small. Jobs are being created. New products,
technologies, and medicines are being invented. Consumers have
more money in their pockets to spend, to put away for their
children's education, or save towards retirement. Workers are
once again able to find solid, dependable jobs with good pay.
And it is all the result of this Congress investing in
America by reducing the burdens that taxes and unnecessary
regulations impose on job creators.
America has always been a nation of doers and makers. It
has always been a place where anyone with dedication and
ambition can start their own enterprise and take the future
into their own hands. By any measure we are witnessing a
reinvigoration of that proud tradition.
I am proud that this committee's dedication to pro-growth,
pro-innovation policies has contributed to this moment. I am
even more proud of America's workers and business leaders.
That includes our witnesses for today's hearing. Thank you
for all you do to help create jobs and keep America a place
where we make things that improve lives and change the world.
Please let us know what we in Congress should do to continue
supporting American manufacturing and the remarkable economic
growth we see today. It's our job to make it easier for you to
succeed.
Thank you and I yield back the balance of my time.
Mr. Latta. Thank you very much. The gentleman yields back
the balance of his time.
The Chair now recognizes the ranking member of the
subcommittee, the gentlelady from Illinois, for 5 minutes.
OPENING STATEMENT OF HON. JANICE D. SCHAKOWSKY, A
REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS
Ms. Schakowsky. Thank you, Mr. Chairman, and I apologize to
you, to our witnesses, and my colleagues for being late.
I want to thank you, and Mr. Stettner, Mr. Paradowski, Ms.
Moyers, and Mr. Anderberg for being here today.
Manufacturing helped build the American middle class.
Strong wages helped build products that Americans were proud
of. And unfortunately, too many misguided policies over the
last 30 years have allowed our manufacturing sector to slowly
whither away.
I am pleased to see that my colleagues invited as witnesses
executives from businesses that used the most recent Republican
tax cut to invest in their businesses by increasing wages and
better training for their workers. However, closer examination
of macro-level data, a very different story than the one that
we will be told today can be heard.
I would like to submit for the record this blog by Josh
Bivens from the Economic Policy Institute for the record. I ask
unanimous consent.
Mr. Latta. Without objection.
[The information appears at the conclusion of the hearing.]
Ms. Schakowsky. What this will show is that, despite the
Republican rhetoric, we haven't seen anything close to an
explosion in investment. Examination of the Census Bureau's
Manufacturers' Shipments, Inventory, and Orders Data from 1992
until today shows current investment levels far below that of
even 2009.
We shouldn't be surprised. At the end of the last year,
Republicans' political consultants connected business with
public relations firms before the tax bill was even signed into
law. They touted one-time bonuses as evidence that the tax bill
would lead to higher wages in the long term for workers. Today
is the next step in that well-orchestrated public relations
campaign, and I don't mean in any way to denigrate our great
witnesses that are here today.
So, where have the $2 trillion gone? Since the tax bill
passed, we have seen an explosion of stock buybacks. When
companies invest in buybacks, they juice their stock prices in
the short term, creating what Senator Warren described as a
sugar high, that leads companies to neglect investment in
equipment, wages, and worker training.
According to a recent report by the Roosevelt Institute and
the National Employment Law Center, in the 3 years prior to the
enactment of the tax law, public companies across the American
economy spent roughly three-fifths of their profits on
buybacks. So, what happens when Congress and the Trump
administration give corporate Americans more cash? Examining
the first half of this year, it is clear corporate America
likes to spend on buybacks. Share repurchases surged 43 percent
in the first half of this year versus a far less inspiring
increase of 27 percent for capital expenditures.
Consider Walmart, the Nation's largest employer. Walmart
supported the tax bill and claimed it would help workers, but
it is not clear how much of that $2.2 billion in annual tax
cuts actually helped its more than 1.4 million Americans.
Shortly after enactment, the Walmart board authorizes $20
billion in stock buybacks. The Roosevelt Institute released a
separate report estimating that, if Walmart had directed half
of that toward wages, hours worked compensation could have been
increased by more than $5 per hour, which would transform the
lives of many of those workers and help provide a living wage.
As Members of Congress, wI am looking at the time--as
Members of Congress, we are approached by employers all the
time who say they can't find qualified workers, that there is a
skills gap. I would argue that America's skills gap is really
more of a wage gap. The declines in union density and a focus
on core competence and executive salaries, instead of training
and capital investment, have dried up the private sector's role
in workforce development.
So, I am going to skip to the end and submit the whole
thing for the record.
I just want to say that what my Republican friends won't
tell you is how the administration's deregulatory agenda,
again, makes the wallets of the wealthy fatter while risking
health and safety of the middle class and working poor.
I hope that we will hear some of the good news today and
that what we are going to hear from all of you is that we can
do better in this country.
Thank you very much, and I yield back.
Mr. Latta. Thank you very much. The gentlelady yields back.
And that will conclude with our members' opening
statements.
The Chair would like to remind members that, pursuant to
committee rules, all members' opening statements will be made
part of the record.
And as the gentleman from Oregon stated, the chairman of
the full committee, we do have two subcommittees running
simultaneously today. So, members will be coming back and forth
during each committee hearing.
Once again, I want to thank our witnesses for being with us
today. We greatly appreciate your taking the time to testify
before our subcommittee today. And today's witnesses will have
the opportunity to give a 5-minute opening statement, followed
by a round of questions from our members.
Our witness panel for today's hearing will include Ms.
Nikki Moyers, who is Vice President of Operations at Jerl
Machine in Perrysburg, Ohio, right up the road from where I
live; Mr. Edward Paradowski, the President of Apache Stainless
Equipment Corporation in Beaver Dam, Wisconsin; Mr. Andrew
Stettner, the Senior Fellow at the Century Foundation, and Mr.
Eric Anderberg, the Vice President of Dial Machine in Rockford,
Illinois.
Again, we want to thank you all for being with us today.
And if you would, pull that microphone up close and just press
the button. You will see the little red light go on there.
And you are recognized, Ms. Moyers, for your opening 5-
minute statement. Thank you very much for being with us.
STATEMENTS OF NIKKI MOYERS, VICE PRESIDENT, OPERATIONS, JERL
MACHINE, INC.; EDWARD PARADOWSKI, PRESIDENT, APACHE STAINLESS
EQUIPMENT CORPORATION; ANDREW STETTNER, SENIOR FELLOW, CENTURY
FOUNDATION; AND ERIC ANDERBERG, VICE PRESIDENT, DIAL MACHINE,
INC.
STATEMENT OF NIKKI MOYERS
Ms. Moyers. Thank you. Good morning. Thank you, Chairman
Latta, and subcommittee members, for inviting me here on behalf
of my company.
My name is Nikki Moyers. I am Vice President of Operations
at Jerl Machine, Inc., in Perrysburg, Ohio. The company was
started by my grandfather, Bob Brossia, out of his garage in
1973. Today, Jerl boasts 67 employees and caters a variety of
industries. The state of American manufacturing is, obviously,
near and dear to us because it is our jobs, but also because it
is our family legacy.
In the past year, Jerl has seen a production resurgence
unprecedented in its 45-year history. Our core customers are
sending in more purchase orders than ever. We are hearing from
companies that haven't done work with us for over a decade, and
more and more new opportunities are surfacing.
Our suppliers are just as busy, proving that our good
fortune is not unique in this industry. And I attribute much of
the upswing to the passing of the tax cuts and JOBS Act late
last year, specifically its provision to cut corporate taxes.
We are on the right track to have our highest sales and
highest profit of year on record for 2018. Jerl has been able
to give much-deserved wage raises to our employees, has already
paid out two separate bonuses to all of our employees, and has
another plan for late November. We have also added three
machines to our shop floor to keep up with our orders.
But our growth is hindered. We are currently running at 60
percent capacity, despite the fact that our phones are ringing
more than ever. We are forced to turn away work because we do
not have the skilled labor to meet our deadlines. We cannot
fill our open positions, and the looming retirement of 15
percent of our workforce will only worsen this problem. I am
confident that the current manufacturing boom is not a fluke,
but unless strides are made to fill the skilled manufacturing
jobs that nearly every company like ours has, we cannot sustain
the growth.
It is no coincidence that I am here today as the lone
female up here representing my field. In my time at Jerl, we
have employed a single female machinist. Our workforce is over
90 percent Caucasian. Not only are we lacking in skilled
workers, we are suffering from a lack of diversity in
manufacturing.
And I think the answer lies in our schools. It is time to
fund the industrial arts and practical life skills as part of a
core curriculum. Fine arts education can't be allowed to cease
either, as so much of what we do requires the craft of an
artist's eye. Trade and technical schools must be touted by
counselors, teachers, and parents as options equal to
traditional 4-year colleges. Students need to know our field
and that we offer high-paying careers.
We are on the right track. The current administration has
shown that it values the manufacturing field and it recognizes
its impact on our country as a whole. As long as it continues
to facilitate open discussions such as this hearing,
manufacturing will endure with continued hard work. We have
never feared hard work. Bring on the future.
Thank you.
[The prepared statement of Ms. Moyers follows:]
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Mr. Latta. Thank you very much for your opening statement.
And, Mr. Paradowski, you are recognized for 5 minutes.
STATEMENT OF EDWARD PARADOWSKI
Mr. Paradowski. Good morning. Thank you, Chairman Latta,
Ranking Member Schakowsky, members of the subcommittee, for the
opportunity to testify before you today.
My name is Ed Paradowski. I am President of Apache
Stainless Equipment Corporation in Beaver Dam, Wisconsin.
Apache Stainless Equipment is a manufacturer of capital
equipment from high alloys, primarily stainless steel, with
annual revenues of approximately $43 million and 171 employees,
most of which are skilled trades people.
I also have responsibility for a second business, which is
a company called Dalton Ag in Lenox, Iowa. We are a
manufacturer of agricultural equipment; annual revenues of
about $9 million and 43 employees. Both businesses rely heavily
on the skilled trades, and that is the pacing item for both of
our businesses to grow.
Both Apache Stainless and Dalton Ag are part of a holding
company, Dexter Apache Holdings, which we have six companies
within our holding company, five of which are manufacturing
located in Wisconsin and Iowa. The five manufacturing
businesses operate in unrelated business segments. We are a 100
percent S corp ESOP. On a daily basis, as an S corp ESOP, we
are fulfilling the American dream for our current 897 employee/
owners. That number would be higher if we could find more
skilled trades people.
My testimony today will reflect my personal perspective on
the effects of current economic policy on the health of the
U.S. economy with a specific focus on the manufacturing sector.
To provide some backdrop for the testimony, I will give a
little bit of my personal background.
First, I would like to recognize Mr. Walden for
acknowledging entrepreneurs and opportunity.
I was born on the south side of Milwaukee, raised the
youngest of six kids, and I started a manufacturing company at
the age of 28 with no money and no real business experience.
So, I love the opportunity that this country provides. And the
root of my perspective is really based on the experience I have
had since then.
In the last 10 years, I have really focused heavily on
advocacy activities. I work very closely with local and state
government, national politicians, events such as this today. We
host politicians and anybody who is willing to come visit our
facility to educate them on what manufacturing is all about.
Our state chamber of commerce, Wisconsin Manufacturers &
Commerce, I work closely with them. They are an ally/partner to
our business. To work, government needs to be an ally/partner
to manufacturing and commerce in general. And they are a great
leader in the State of Wisconsin.
Most of you, I would suspect, are familiar with the MEP
Network nationwide. In the state of Wisconsin, our governing
overarching body for the MEP Network is the WCMP, Wisconsin
Center for Manufacturing & Productivity. I sit on that board
and, actually, I'm chairman of that board. So, the public-
private partnerships that the MEP Network provides, I am
familiar with that as well.
We all talk about education, education reform, and the
skills gap. The skills gap is definitely not a wage gap. We
could speak later to that.
Our Wisconsin Department of Public Instruction, which are
the K-12, they are the core of how our children are educated. I
have been a member at the very ground level of what we call the
Regional Career Pathways Project in the State of Wisconsin.
Actually, I was asked by our state superintendent to present
for the State of Wisconsin in the grant competition three years
ago, which the State of Wisconsin won a $2 million grant for
education reform. So, I am deeply involved in education reform.
It is one thing to talk about the problem; it is another thing
to get in there and to also help solve it.
And then, the National Association of Manufacturers was
mentioned. Actually, I am out here today for a board meeting,
which, unless I say something completely wrong, I will be
elected to their board tomorrow.
In summary, my perspectives are not just of a manufacturer,
but a manufacturer that works closely with other manufacturers,
with government, and with education. As I am running out of
time here, I will hit just a couple of the high points, and
really maybe just one philosophical perspective.
I use this as an analogy quite often, the role of
government in manufacturing. In a manufacturing business, we
make our money on the shop floor. We add value to raw materials
and we make goods and services. And myself and others in my
office, we are corporate overhead. Our corporate overhead needs
to do two fundamental things. We need to make our shop floor
more productive, maximize output/efficiency, and there are also
some compliance issues, safety and things of that nature. And
the second thing is there has to be a sustainable economic
balance between the cost of corporate overhead and how much
activity is going on on the shop floor.
In a soft year where manufacturing might soften a little
bit, I don't just put more burden on my shop floor in terms of
dollars; I actually have to downsize my corporate overhead. And
that is the role of government to the private sector, not just
manufacturing.
The private sector is really four fundamental things. You
mine it; you grow it; you make it; you invent it. And
government needs to be an allied partner to that process, so
that the private sector can grow. And tax reform is a piece of
that, as are tariffs, and there has to be a sustainable
economic balance between the cost of government and the size of
the private sector.
I will make one statement, as I am running out of time
here, very quickly. There was a comment that was made--oh,
where did it go?--there was a comment that was made regarding
Mr. Walden said that the government--no, I'm sorry, I already
acknowledged Mr. Walden. There was a statement that was made by
Mr. Pallone, actually, that industry needs to be a partner to
government. And that exactly is the problem; government needs
to be a partner to industry. I think we have got this a little
bit reversed.
Thank you.
[The prepared statement of Mr. Paradowski follows:]
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Mr. Latta. Thank you very much for your testimony.
Mr. Stettner, you are recognized for 5 minutes.
STATEMENT OF ANDREW STETTNER
Mr. Stettner. Good morning, Chairman Latta and Ranking
Member Schakowsky. First, let me commend the committee for
holding this hearing.
Over the past year, the Century Foundation and its Bernard
L. Schwartz Rediscovering Government Initiative sponsored the
High Wage American Project, researching and touring the
industrial Midwest to understand the future of manufacturing as
a provider of good jobs and economic growth. Representative
Schakowsky, several of the community leaders involved in the
tour had a chance to meet you 2 weeks ago today when they came
to Washington to present our findings, which I have submitted
for the record.
While no one in the Midwest has such rose-colored glass as
to believe manufacturing will ever provide 30 percent of the
jobs, like it used to, the message was loud and clear.
Manufacturing matters to communities. Our research finds that
in small towns in industrial states from Michigan to
Mississippi, manufacturing still accounts for one in four
private sector jobs. Manufacturing brings high-tech jobs to
these firms into small towns like Phillips, Wisconsin, where
Phillips Medisize has developed from a manufacturer of action
figures to a worldwide provider of advanced molding and
engineering services.
The time is right for Congress to take action to build a
proactive national manufacturing strategy. Resilient
manufacturers have added back 1.26 million of the 5.7 million
jobs lost from 2000 to 2010. But there are serious concerns.
Our diminished production capacity has kneecapped our ability
to innovate, as America had ceded its edge in high-tech
manufacturing to advanced East Asian nations and Germany. And
while manufacturing still pays 10 percent more than other jobs,
that wage advantage has eroded. Low-paid, temporary help
workers represent 11 percent of the manufacturing workforce
today, up from just 2.3 percent in 1989.
But a national manufacturing strategy must go beyond
international trade and tax issues. Rather, Federal policies
should focus on investments to create the conditions for
manufacturers to compete and thrive in a global marketplace and
for the manufacturing workforce to prosper.
Communities are taking action. The Federal Government can
help by helping them build public-private partnerships and spur
high-tech manufacturing, reinvest in the workforce, retain and
restore good jobs, and mobilize capital.
The future of U.S. manufacturing lies in being the most
high-tech, not the lowest cost. In Cleveland, we visited the
ArcelorMittal steel mill, the first in the world to create a
ton of steel with a single hour of labor, which sees a
strategic advantage in environmental regulations that increase
demand for high-grade, lightweight steel. Indeed, our ability
to be a global leader in the clean economy depends on a robust
manufacturing sector to create the next generation of green
products.
Look at our competitors. The Made in China 2025 campaign is
a multibillion dollar effort to take China from a commodity
producer to a leader in major advanced manufacturing exports
from alternative energy to rail equipment.
Manufacturing USA is our response. There are 14 applied
research institutes targeting technologies like 3D printing in
Youngstown, robotics in Pittsburgh, and super-strong,
lightweight metals in Detroit. But, to truly compete, we have
to step up Manufacturing USA into its full plan of 45
institutes and provide permanent Federal funding matched by the
private sector.
Now manufacturing can only grow if it has a workforce for
the future. In Chicago, our research found there are nearly
twice as many jobs open as workers hired. But manufacturing
workforce pipelines, apprenticeship, and vocational education
have withered. And a generation who experienced industrial
decline tell their children to shun factory jobs.
Congress can help by devoting resources that incentivize
employers to double the number of apprenticeships in
manufacturing in 5 years and provide new, focused resources at
the K-12 level. These programs need resources for mentoring and
support services to help women and people of color to break
into the trades.
That is the approach of Manufacturing Renaissance in
Chicago to help some of the young people in some of the most
violence-prone neighborhoods in the Nation to get industry-
recognized credentials they need for high-paying jobs. And
surely manufacturers will have more success recruiting when
they pay decent wages, respect collective bargaining, and
provide safe workplaces.
Communities are developing innovative ways to work with
local manufacturers to save and grow jobs, relying on smart,
more sustainable approaches than simply offering tax giveaways.
Pennsylvania Strategic Early Warning Network saves thousands of
jobs by providing targeted business turnaround assistance to
small and medium-sized companies at risk of closure.
Federal policies should give these communities stronger
tools by strengthening bedrock programs like the MEP, new
initiatives like layoff aversion in WIOA, and the recently-
authorized Defense Manufacturing Community Partnership Support
Program.
Lastly, the Federal Government should incentivize further
private investment in manufacturing through an industrial bank
focused on national needs and a clearinghouse that mobilizes
impact investors to bring sustainable manufacturing jobs back
into distressed communities.
In conclusion, manufacturing is regaining its footing, but
there is much more to be done. I urge the committee to continue
its focus on boosting the manufacturing sector, and I welcome
the opportunity to work with you in the future.
[The prepared statement of Mr. Stettner follows:]
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Mr. Latta. Thank you, Mr. Stettner, for your testimony.
Mr. Anderberg, you are recognized for 5 minutes for your
opening statement.
STATEMENT OF ERIC ANDERBERG
Mr. Anderberg. Thank you, Mr. Chairman, and thank you,
Ranking Member Schakowsky, and thank you, Congressman
Kinzinger, for allowing me the opportunity to be here today.
Dial Machine, we are family-owned for 52 years, a precision
contract manufacturer. We make parts for various industries,
mining, oil and gas, a lot of fossil fuel. We do work for the
government, defense, the national laboratories.
And I can tell you today, I don't want to sound like a
broken record, but our backlogs are way out and the work is
tremendous today. In my 25 years, I have never seen such
optimism. My father has been in this industry for 61 years and
never seen the optimism and the rate at which we are growing
here today.
Currently, to give you an idea, our sales, as of the third
week of September, we are 30 percent over all of last year,
over 50 percent over all of 2016. So, things are on the right
track.
I think three things have happened in Washington that have
helped the manufacturing sector. That is the tax, the
regulatory, and the trade policy changes that have been coming
forward.
Tax, the C corp and the last tax legislation, the C corps
got an income tax reduction to 21 percent. That has created
incentive for the large corporations to bring work back. And I
can tell you personally it has happened; we are benefiting from
it. I have been told from companies like Caterpillar that more
is coming. Large corporations are also investing in their plant
and equipment with that money.
S corps, such as ourselves, we didn't get the tax cut that
the C corps got. Hopefully, that could be changed. But that
extra cash and capital is being put to use. We are putting it
to use.
And also, along with that is the increase in the expensing
in the 179. And, then, increasing the accelerated depreciation
back to 100 percent has been a big boost, and it is an
extremely useful and important tool for manufacturers such as
ourselves to be able to afford to invest in capital equipment.
Because of all the increased activity, there is a scarcity
of labor. And because of tax--I credit the tax policy--the
wages have increased. We have been increasing the wages of our
people, in part, because it is a defensive mechanism to keep
other people from stealing our people. And also, we are
offering higher wages for people to start as applicants at our
place.
The regulatory environment. Rolling back regulations that
were hurting the fossil fuel industry, I will give you an
example, coal. We do a lot of work for Caterpillar, and all the
large mining bulldozers, we have parts in each machine.
Starting in 2013, we went from 2011-2012 we were making about
six to eight sets of bulldozers a day. In 2013, one model
dropped from 400 a year to 56 per year, and by 2016, we were
down to about a half bulldozer shipping a day. We are back to
five or six, but we are constrained because of capacity or
people.
So, the regulatory pushback has been terrific. My family,
we also farm. And so, you cannot have a regulatory environment
out here that is suggesting we are going to regulate puddles of
water on your farm or we are going to tax every head of cattle
for flatulence. That sends a terrible message to industry,
farming, and ranchers; we are not going to invest. You can't do
it.
And then, trade. This is probably the most important part
and probably the most significant change in 40 to 50 years. It
is the first time an administration has acknowledge the problem
we have with trade, international subsidized work coming into
this country or subsidized product. The Chinese steel industry,
the Chinese have been huge offenders, and we just cannot
compete. That change and the talk of subsidy, if you come to
Rockford, for example, I can point out many industries we have
lost over the past several decades. When people talk about we
are starting a trade war, well, I am here to tell you we have
been in a trade war in this country for over 40 years, and it
is the first time it has been acknowledged. It is the first
time we are doing something about it. And this has created a
level of confidence, too, that has helped to invest in your
plant and equipment.
The most significant challenge that manufacturing has, you
have already heard it, people. We can't get them. We need 10 to
15 more skilled individuals on our floor right now. And I am
here to tell you that we are turning work away. If I had the
capability, I could double the size of my plant if I had the
capacity of people, and we just can't get them.
Fingers can be pointed every direction. I think industry
didn't do a good enough job marketing ourselves to the
students, to parents, to educators, and the vo-tech schools
closed years ago, but they are reopening again, and that is
promising.
Apprenticeship programs. The small guys are training; the
large companies are not. And I think we need to enlarge the
pool of labor that everybody can work from, and we need to do
something to incentivize the large corporations to do so again,
because they just won't because it doesn't look good on
quarterly numbers, quite frankly. So, anything that could be
done with that would be tremendous.
There is just too much to talk about to do it in 5 minutes.
I hope I get some good questions, that we have good
conversation today.
Thank you.
[The prepared statement of Mr. Anderberg follows:]
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Mr. Latta. Thank you very much for your testimony and what
you say about can't find workers and other folks. I have heard
across my district it is the No. 1 issue out there.
This is going to conclude our opening statements from our
witnesses. And again, we appreciate you all being with us
today. We will start the questions from our members, and I will
start with my questions for 5 minutes.
Ms. Moyers, if I could start with you, Jerl Machine
provides precision metalworking products and services in
Perrysburg, Ohio. Could you tell the subcommittee what trends
you have seen in the marketplace for your products and
services, and how that has changed over the last couple of
years?
Ms. Moyers. Yes. Thank you very much.
Up is what we are seeing. In the last 2 years, we have been
steadily growing. We actually had, in 2016, one of our lower
sales, lower profit margins. It was a little bit, I think, of a
trend from the recession. We had gone up a little bit, and
then, it went back down. But, since the end of 2017, we have
seen nothing but up. We have grown our sales. We have grown our
profits. Our profits are nearly 20 percent so far for this
year, when we were seeing only single digits back into 2014.
And we have also increased our staff as much as we can. Of
course, we need to increase it more. But we have our phones
ringing off the hook and we are turning down work.
Mr. Latta. One of the things I know that has been mentioned
already--and I just brought up again--as I have seen across my
district, people just can't find folks to work. That is a big
issue out there, and it is a very competitive job market out
there.
What has been your experience with the wage competition in
the last couple of years?
Ms. Moyers. Well, I think there are two issues. We can't
find people to work and we can't find people that are skilled.
What we are finding are unskilled who don't necessarily want to
come to work every day, who don't want to work as hard as we
need them to work.
And the other issue is our skilled workers, there are so
few workers for the jobs that we need to fill that our
competitors, and also our manufacturing that we are friendly
with, are stealing our workers, or attempting to. We have had,
I believe, three or four in the past year that have said they
have gotten offers from companies that we are actually friendly
with and do business back and forth, because no one can find
the workers. So, they have had to resort to poaching them from
other manufacturers.
We have raised wages because we have to. So, talk that
corporations are not using the tax cuts and the money to raise
wages is just simply not true, because we have to. If we don't,
someone else is going to and we will lose our workers.
Mr. Latta. You bring up the point about finding folks that
are skilled out there and bringing them in. I know in some
companies they have said, look, if you are willing to work, we
will train you. With the legislation that was recently passed
on career and technical education here, do you see that is
going to be a help? I know in our area, and across Ohio with
our high school career centers, and also working with our 2-
year institutions out there--are you seeing something we should
be doing or do you see something that is bright on the horizon?
Ms. Moyers. It is a start. I think that investing in the
vocational schools and the trade schools, we are very fortunate
to have one in our backyard in Perrysburg, Penta Community
College, and they cater to kids for everything from
manufacturing to veterinary programs and culinary arts. They do
a little bit of everything and it is wonderful, and we get a
lot of our young employees from Penta. But it is a single
facility and they can only cater to so many people, and we need
more.
We also need the vocational skills and trade skills exposed
to students in regular K-through-12 schools. I think that we
need to divert funding to bring back the industrial arts, to
keep up fine arts. Even practical life skills, job interviews,
balancing budgets, financial things, they need this. We have
students who come in to job shadow and some of them we have
hired. And our young employees don't know how to fill out forms
for health insurance, don't know how to fill out the tax forms.
These are vital life skills that they need to have and we need
to be teaching them.
Mr. Latta. Also, you reference in your testimony the
innovation. What is the climate out there and the regulatory
changes that could help drive innovations for companies like
yours?
Ms. Moyers. My grandfather has taught me a lot of things.
And one of the things that he told me in the past couple of
years, when we were scaling back some of those overhead costs
that my colleague here was talking here, one thing he told me
we are never able to cut is going to trade shows, going to
machine shows, to learn about what they are doing, to see what
the new technology is, because that is what is going to keep us
in business. He has never been afraid to do that.
He started his business with some hand tools and a drill
press, and now we are mostly CNC machining. We are breaking
into new industries all the time, and I think that is so
important. And that is the way that manufacturing is going to
survive. We can't be stuck in our old ways. We can't be stuck
with old technology. That is why we need new, young blood into
the manufacturing, to encourage it.
Mr. Latta. Thank you very much.
My time has expired. At this time, I will recognize the
gentlelady from Illinois, the ranking member of the
subcommittee, for 5 minutes.
Ms. Schakowsky. Thank you. Thank you very much.
So, how many employees do you have, Mr. Anderberg?
Mr. Anderberg. We have about 60 right now.
Ms. Schakowsky. So, the three of you are small businesses.
And so, I think this is a problem, some of the issues of the
failure to close the wage gap or to invest in employees. It is
probably different, and I think that you referred to that, that
the private sector, large businesses, could do more to get
involved in training, in being a public-private partnership.
And you said, Mr. Paradowski, that your effort was to go to
the government and say that there had to be improvements in
education, and that it is really about government helping
businesses rather than the other way around. I would suggest
that your going and saying more tax dollars should be spent in
some ways is a copout in what industry ought to do in order to
help. Like we have in Germany, there are programs, public-
private partnerships with business to invest in the training of
workers. I am not really asking a question here. That is my
take and you can answer that. You can talk about that later.
But I wanted to ask Mr. Stettner on the research that has
been done. We have heard promises that the Trump tax cut would
lead to increased worker pay and investment in manufacturing.
However, we know that in the vast majority of cases--and I
think this refers mostly to the larger corporations--that did
not happen. In fact, economists analyzing the effect of the tax
cuts found no significant sign of boosting investment or
increasing wages.
So, Mr. Stettner, was there a boom in manufacturing
investment after the tax cut went into effect?
Mr. Stettner. Manufacturing has been on a rebound, I would
say a consistent rebound for the last 6 or 7 years. And the
challenge going forward is to increase those investments and
for companies to look at the workers as partners.
I think a great example that comes to mind is at the
ArcelorMittal steel mill they have authorized a strike because
the company is doing very well and workers are just asking for
their fair share of those profits in terms of wages and
healthcare benefits. And so, the move is going to have to be to
make sure that workers are treated as partners, so we keep our
skilled manufacturing workforce.
Ms. Schakowsky. So, is there some way that the tax breaks
could have been drafted in a way that would incentivize
investment and what might that look like?
Mr. Stettner. I am not going to say that I am a tax expert.
So, I don't want to get into the details. I do think there are
ways in which, in fact, the tax bill made it cheaper for
companies to outsource jobs overseas, and we need to really
close those gaps, so it is not cheaper to put production and
corporate headquarters overseas.
Ms. Schakowsky. Thank you.
I just want to go back to Mr. Paradowski. Other countries
have invested in long-term strategies for their manufacturers.
China has been mentioned, the Made in China 2025 campaign. But
Germany has what is called the Fraunhofer Society. And both of
these countries have retained more production and more jobs
than we have. The German plan is a public-private effort.
And I am just wondering what you think the private sector
could do, the manufacturing sector? Because everyone is talking
about we can't find the skilled workers. And if you want to
comment on this, and there is time, Ms. Moyers, I would be
happy to hear that.
Mr. Paradowski. I would love to comment. The way I look at
education, and I have stated this many times within the State
of Wisconsin, education is the supply chain, the commerce. I
don't know of anybody who goes to school to get an
accreditation just to have it hang on their wall. They are
doing it to ideally get a job.
So, within the K-12 space in Wisconsin, I think there is a
variety of things that need to happen. Awareness, nobody
aspires to----
Ms. Schakowsky. Yes, but I am not asking about what the
State of Wisconsin can do. I am asking what the employers can
do.
Mr. Paradowski. The employers can certainly provide the
data as to what jobs are out there, what the makeup of commerce
is. There are a lot of kids going through school to get
accreditations where there is not a job, and there are a lot of
jobs where we don't have workers. Thus, we call that the
``skills gap''.
I don't refer to what we offer at Apache Stainless
Equipment as jobs. I refer to them as careers. We want people
to come in, and it is market-based wages. We will take
unskilled people who we offer what we call the welding
bootcamp. If you have never welded in your life, if you can
come in and meet some basic requirements, passing a drug test,
have some work ethic, we will teach you how to weld and we will
pay you a market-based wage, which is far north of the minimum
wage. We have a hard time finding people to do that.
Ms. Schakowsky. OK. Do you mind if I continue for a while?
Mr. Latta. Go ahead.
Ms. Schakowsky. Thank you.
Before I go to Ms. Moyers, I wanted to ask Mr. Anderberg,
you mentioned that large corporations could be doing more. What
did you have in mind?
Mr. Anderberg. Well, I think there is a lot of short-term
thinking. And unfortunately for them, I think it is catching up
to them; they are realizing it.
I go back in the past. Thirty years ago, a lot of large
corporations and large manufacturers shuttered their credential
programs. They got rid of them. And now, a lot of those people
are retiring that went through those programs and there is a
big gap. And shame on them, I think.
Today, for example, in Rockford, we are fortunate; we have
the Rock Valley College, and we have an apprenticeship program
through our local Tooling and Machining Association that I am
on the board of. We have a very successful apprenticeship
program. It wasn't so some years back, but now we have over 120
apprentices for skilled machinists, tool and die trade in the
program just in Rockford today.
And we are the only ones training. The small manufacturers
are really the only ones training. And I think at some point
the larger manufacturers will have to train again. It might
take some time. But I think if there is something that could be
incentivized for them to start apprenticeship programs again--I
don't know if it is a tax credit. We talked about this.
Actually, I talked about this last week, and we had a board
meeting of our Tooling and Machining Association. Maybe a tax
credit or something like that.
I don't think we need to have taxpayer dollars going to the
benefit of companies, but maybe let them keep some of their
capital in the form of a tax credit, or something like that, if
they have an apprenticeship that is an accredited program. Our
apprenticeship program, it is accredited by the Department of
Labor. Everyone gets a Department of Labor certificate at the
end of their training. And so, maybe something like that could
be done, but I just think the only way you are going to get
them off the porch now is to incentivize them some way or
another.
Ms. Schakowsky. If I could? There is hardly anyone here
today. So, I wonder if Ms. Moyers could just say a few words?
Mr. Latta. Yes.
Ms. Schakowsky. Thank you.
Ms. Moyers. Thank you.
To speak to your question to Mr. Paradowski, I think that
what corporations can do is we need to make ourselves seen. One
of the things that we are doing at our corporation is, with
part of our charitable contributions, we donate to a place
called Imagination Station in Toledo, Ohio, which is a science-
based museum and activity center that is geared toward
children. We have done several activities with them. We have
donated for the past 5 years, and we have also been a part of
their outreach programs. They do a great STEM for girls
program, and we have done that.
I was lucky enough to be a participant one year. And so
many girls--and I think the ages were 8 to 13--so many girls
came up and said, ``I didn't realize a girl could be a
scientist. I didn't know I could do this. I didn't know that
there were these jobs.'' And that is one of the important
things, is we need to just get ourselves out in front of
people, so that they can see us and see what we do.
Ms. Schakowsky. Thank you.
I yield back.
Mr. Latta. The gentlelady's time has expired.
And just to follow up on Mr. Paradowski, what you said
about welders, that is the No. 1 job out in my district, that
if you have got that skill coming out of high school, you are
hired immediately.
The Chair now recognizes the gentleman, the vice chairman
of the subcommittee, from Illinois, for 5 minutes.
Mr. Kinzinger. Thank you, Mr. Chairman.
Again, thank you all for being here today.
Mr. Anderberg, should the government mandate wages that you
pay?
Mr. Anderberg. No. No.
Mr. Kinzinger. Give me, if you can, like generally, what is
kind of the average, if you kind of put all your employees
together, what is kind of an average hourly wage?
Mr. Anderberg. I would say the average hourly wage is up
into the mid-twenties.
Mr. Kinzinger. And has that, you said that is----
Mr. Anderberg. Not including benefits. Not including
benefits.
Mr. Kinzinger. And you said that has increased over the
last few years?
Mr. Anderberg. It is increasing, yes.
Mr. Kinzinger. And that is because of?
Mr. Anderberg. Scarcity.
Mr. Kinzinger. What would have happened if, say, 3 years
ago, Washington would have mandated the wage you are paying now
back when the economy was hurting?
Mr. Anderberg. Well, I will tell you, Congressman, as a
small manufacturer, we made the decision in the 4-year slump we
had between 2013 and 2017 to hold onto our people. We had built
enough cash reserves up that we held onto them, gave them 40-
hour weeks. And we made it; we ate up all our cash reserves in
those years. If we would have come out of that or had that come
down, I would have laid off more people. It is just you can't
do that.
Mr. Kinzinger. And can you think of----
Mr. Anderberg. Go ahead. Go ahead.
Mr. Kinzinger. Oh, no, please.
Mr. Anderberg. We talked about Germany. I have been in
German machine tool plants. I have been in German manufacturing
companies, and I don't want any mandates from the government.
One thing the Germans have done is they have mandated that, if
you are a manufacturing company, you have to have 10 percent of
your workforce in an apprenticeship program. That is pretty
good, but I think that is incumbent upon the manufacturer to
make that decision, not government.
Mr. Kinzinger. Yes, and I think there are some things to
learn from the German system. I like, in fact, they introduce
kids in high school, put them on different tracks, career
tracks, past opportunities, show them options. And I think that
is something, frankly, we can learn from. Germany has actually
been criticized significantly in the EU for what they call
keeping wages low. And so, I think to kind of look at the
German system and say that is the answer, I don't think it is,
even though, again, there are some things we can learn from
them. They are very obviously technologically advanced and
everything else.
But I do think it is important that, since the enactment of
the tax cut and the repealing of a lot of the regulations that
you talked about that have been stifling, 1.7 million jobs have
been created. Wages are up 2.7 percent. More than $4 billion
has been paid to employees in terms of bonuses.
Just 2 short years ago, three-quarters of manufacturers
were saying that the biggest business challenges were our tax
and regulatory environment. But, as of June this year, less
than 20 percent say that that is a top concern.
You look at it, and we should have these good arguments in
D.C. That is the point of this place. But, if you look at it
and you say, who are we asking, when you ask the people that
are actually making the jobs, that are manufacturing, what is
it you need and what is it you have seen, and they are telling
us I think, by and large, that we are creating a better
environment, and you look at the economic numbers, it becomes
pretty obvious that it is working. Unemployment is at an 18-
year low. It is not perfect. We still have a lot of work to do.
We have a lot of issues with training.
You said you employ about 60 people, 45 of whom are skilled
tradesmen, machinists, and assemblers, but you have a need for
another 10 or 15, and you can't fill it. You also mentioned
that this is a pervasive problem, not only in the manufacturing
sector, but everywhere. Can you give us a couple of examples of
other industries? And also, do you attribute the shortfalls to
the same factors that have led to the shortfalls in
manufacturing?
Mr. Anderberg. Yes, I could talk about the construction
industry. I know people who are building contractors,
excavators; their people are retiring, too, in the next couple
of years. I talked to one owner, Northern Illinois Service in
Rockford. They can't get anybody. He is really concerned about
his business.
There are other service industries, everybody, everybody
you talk to is having a problem getting people, specifically
young people. And this is something I want to speak to. I
touched on it a little bit in my writeup. This is a societal
issue we are facing. We just can't seem to get young people
into the trades.
And what I have also found, it is a global issue. Just
recently, we had a serviceman over from Germany to work on one
of our machines. We have gotten to know these people pretty
well. And we had another gentleman in earlier this year. We get
into this conversation, and they say--ythese guys fly all over
the world. They are in plants in Russia, China, India,
everywhere. And they have told me, both of them, that you go to
a plant in China or India, they tell us the same thing; they
can't get young people into this trade, into this type of work.
You walk into the plants; they are all older people.
So, it is a unique situation. It is a unique challenge. I
don't know if it is because manufacturing is not seen as a
technological industry. It is. And maybe it is more of a
marketing effort toward, like I said, the students, the
parents, the educators.
If you were at the IMTS show last week, there was a display
where they showed voice-activated commands for making machine
tools move. It is fascinating. My father and I were there, and
we happened to see a lot of students there that day, and they
had lounge couches there; you could sit and watch. It was the
only booth that I saw where students sat and were extremely
attentive to watching the demonstration. Maybe that is part of
the answer. Maybe it is increasing the technology, making it
more work like an app on your iPhone or your iPad. I think that
has something to do with it.
But I don't know. It is strange. I think everybody is
experiencing the same thing. You can't get young people in.
They last maybe a day and they don't come back.
Mr. Kinzinger. Thank you. I have a thousand more questions,
but I will just leave it by saying I think this is an area
where, frankly, there can be a lot of bipartisan cooperation.
We have these deep debates, but, ultimately, how can the
government restructure our programs that exist, not new
programs, but restructure them to make sure we are turning
people onto these opportunities?
So, thank you again for being here, all four of you.
And I yield back.
Mr. Latta. Thank you very much.
The Chair now recognizes the gentleman from Texas for 5
minutes.
Mr. Green. Thank you, Mr. Chairman. Thank you and the
ranking member for having this hearing.
And I want to welcome our witnesses.
Manufacturing--I come from the Houston area, the industrial
part--my companies that are hiring are refiners, chemical
plants, service industry, and the oil industry. What we have
seen, and I have worked for a number of years because the way I
got into college was I also was an apprentice at a newspaper. I
learned to print a newspaper in the 1960s. And I asked the
owner of the newspaper, I said, ``You hired me as an
apprentice. Why didn't you go to the high school we had in the
Houston area that had a printing vocational program?`` And he
said, ``Their technology is so far behind, we couldn't do it.''
So, over the last decades, we have taken vocational ed out
of high schools. And our community colleges have been the one
that should be taking it up. I have had a really good community
college in my area where we have refineries, chemical plants,
essentially, in a college who actually partners with the human
resources of these, Shell, LyondellBasell, you name it, and
say, what do we need to teach and get these students to have
also a 2-year degree? But, then, they can walk onto your plant
and work.
That has been really successful, and I have been trying to
get our other urban areas in Houston, community colleges, to
talk with the people who hire the folks. And I have been to the
locations and seen the training, and with these manufacturers
who are doing that. Is that commonplace, that community
colleges have taken over most of the vocational public?
The apprenticeship I went through just was not a public
one. It was a union, but I ended up being able to manage that
newspaper after I got my apprenticeship because I had also
gotten my undergraduate degree in business. I was just lucky to
be able to have that kind of situation; whereas, so many of our
young people coming out of high school, they may want to go to
college because that is where everybody says they should, but
they don't know how they can afford to get there. And that is
why an apprentice program in a community college, where you can
earn a living and you can also still go back and get you a 4-
year degree in whatever you want to do.
Each of you stated you don't have enough younger employees
to replace older employees who plan to retire. I have heard
that for a number of years. As you said, even nationally,
internationally, it is a problem.
How can individuals enter the manufacturing industry right
now if they don't have access to the educational programs like
a community college or Manufacturing USA, or in my case just
because the company wanted to hire me, and lightning strikes?
What kind of program could do it? And I am real familiar with
the German program. I have been to BMW and seen that. I don't
know if that structure would fit in our country, but I do know
we need to have an apprentice program that is viable, so
employers could count on the skills that they are learning
there, that they can come on the job and work.
Mr. Paradowski?
Mr. Paradowski. I would say that it is the awareness. There
is certainly a stigma around manufacturing. I know when I was
in high school in the early eighties, I went through a
technical high school, market trade and technical high school,
learned the trade. In school, we were all being told that, if
you don't have a 4-year degree, at some point soon you are not
going to have a job. So, I think maybe kids have been
brainwashed into thinking that they have to go to a 4-year
institution.
It is the awareness of what manufacturing is about. Our
facilities have become very technology-driven. It is not dark,
dirty, and dangerous like maybe some people believe.
Every single school teacher at the Beaver Dam High School
in our community has been through our facility, and most of
them have never been through a manufacturing facility prior to
coming through. That is our role as the private sector, is we
need to really drive the awareness that these careers; they are
not just jobs. It is very technology-driven. It is the future.
There will always be a sizable place in the economy for
manufacturing. It is not going away in its entirety. Anybody
who believes that is somewhat naive, I believe, and no
disrespect to anybody who might believe that.
But we certainly have a role to work as partners with
education and K-12 and the tech college system, and any of the
institutions out there that are educating our kids. Wisconsin
Tech College System is one of the best tech college systems in
the country. The average age of a tech college student in
Wisconsin is 27 years of age, which would lead me to believe
that they were out figuring out other things first before they
realized maybe I want to go down the path of a tech school. I
would rather that the average age be 18 or 19. That means that
the supply chain speeds to the workforce.
Mr. Green. Any other response? I thought I had 4 seconds.
Mr. Stettner. I just wanted to, when we talked about
existing programs, what it made me think of is community
colleges don't have an incentive to do technical training. A
lot of the Federal student aid programs will not pay for that
training, and the companies have to cover all the tuition. So,
we have to kind of level that playing field. I think it is one
kind of thing that we could do and I certainly support.
Mr. Green. Thank you, Mr. Chairman. I know because my first
two terms I was on Education and the Workforce, and that
committee has prime jurisdiction. But I would sure like to see
programs in our Department of Labor that would actually look
for those skills training that they can go out and walk onto
that job. So, thank you, Mr. Chairman.
Mr. Latta. Thank you very much. The gentleman's time has
expired.
And the Chair now recognizes the gentleman from West
Virginia for 5 minutes.
Mr. McKinley. Yes, thank you, Mr. Chairman.
And you on the panel, you saw an opportunity or you saw
earlier today in this hearing why Congress is considered to be
so dysfunctional when you saw the attacks that went underway
over the tax cut. When we are talking about manufacturing,
people want to go back on the other side and talk about the tax
cuts and that they haven't been productive. And the fact that
one person referenced the fact that they were all used for
buybacks, and I am sure there were some. I am sure there were
some. But just keep in mind that, according to Fortune
magazine, of the Fortune 500, the top S&P 500, they only
represent 17--and I shouldn't say ``only''--but they represent
just 17 percent of the workforce, the publicly-traded
companies.
So, we are dealing with 117 million jobs that are in these
small and medium-sized companies. They are not doing buybacks.
It is just a distraction of what this fight is about.
Because we have seen in West Virginia, as a result of the
tax cut, what it has done is strengthened our manufacturing. We
have had manufacturers that make truck parts, truck bodies, are
now going to triple the size of their operation in West
Virginia. Toyota that makes engine blocks is going to put $120
million more into it, thanks to the tax cuts, down in Buffalo,
West Virginia. ATK was bought by Northrop Grumman, and they are
going to expand their operation in manufacturing in West
Virginia. Boeing just bought Aurora Space Flight, making
aerospace parts, as a result of the tax cuts.
So, I am seeing some positive. It is larger companies, but
also I just had an opportunity this last weekend to talk with a
small manufacturing company, Panhandle, with Bob Contraguerro,
out of Wheeling. He didn't use it for buybacks or increased
dividends. He hired more people. He has expanded his operation.
He is buying more trucks. He is doing all the things he can,
but he is facing the same problem that you all have talked
about; he can't find qualified people for that.
So, my question has to do with the workforce. I think
across the country we have gone away from vocational education.
We are not making the incentives anymore for apprenticeship
programs in our trades.
I am chairman of the Building Trades Caucus, and we know
desperately we need plumbers, pipefitters, carpenters, and
electricians to be able to that. We have got to be able to get
that base back again.
So, I am curious to see, from your incentives or what you
are seeing, how would you suggest that we renew our interest in
vocational training and apprenticeship programs? What can we do
from Congress to make sure that we have a workforce? What would
you suggest, please? Any of you?
Mr. Anderberg. I think, for example, in Rockford, I think
every district or every area that has manufacturing recognizes
that shutting down the vo-tech schools was a big mistake. In
Rockford alone, we have had one high school, Jefferson High
School, start up their vo-tech training programs; it has been
over 5 years ago now. And it has been very successful. There is
another high school in Rockford that is starting their vo-tech
program again. Across the border in Beloit, Wisconsin, in
fact----
Mr. McKinley. We have to overcome a stigma.
Mr. Anderberg. Right.
Mr. McKinley. Someplace back in the seventies or eighties,
there was a stigma about, well, they are in a shop; they are
autobodies. How do we get that back and remove that stigma with
that?
Mr. Anderberg. I think we have to show that, if you are
going--I went to college and I have a master's degree--but I
think you have to show, if you go to a 4-year school and you
come out with a bachelor's degree, you are in debt, and that
the wages you are going to make aren't as much as somebody that
comes out of high school with math and an aptitude and goes to
work in a manufacturing operation, the amount of money they are
going to make.
The wages that we have in our manufacturing companies today
just in Rockford are tremendous. And then, because of the
scarcity, they have risen, and it is an attractive wage and it
is more than a living wage. The people that work in
manufacturing make more than the majority of the middle-class,
working individuals.
I can't put it all on manufacturing. You can point fingers
at everybody. We have to do a better job of marketing and
educating the public of what manufacturing is today. I don't
know how; maybe that is something Congress can step in and do.
Mr. McKinley. I am sensitive to it because my first job was
in manufacturing. I was on an assembly line in an ice plant, in
a neighborhood ice plant. So, I understand that we worked seven
days a week.
But, nevertheless, I appreciate your effort with it. I am
sorry that some people got distracted in trying to make this an
issue over the tax cut program. But, you see, there is a reason
they are doing that, and I am sorry.
And I yield back.
Mr. Latta. Thank you very much. The gentleman yields back.
And the Chair now recognizes the gentleman from Kentucky
for 5 minutes.
Mr. Guthrie. Thank you very much. It is nice to be here.
Sorry, there are a couple of other hearings going on, so I have
been in and out. I apologize.
But this first question is for Mr. Anderberg and Ms.
Moyers. As nearly everyone has mentioned this morning, the
workforce challenges you are facing are significant. This issue
is important to all of us and our districts.
Mr. Anderberg, one issue, in particular, you mentioned was
the need for increasing apprenticeship opportunities. And some
may not be focused on that. I recently started the
Congressional Apprenticeship Caucus with my colleague, Susan
Davis of California, and we introduced legislation to expand
awareness of apprenticeship opportunities by providing funds
for the states and the Department of Labor to get the word out
about opportunities.
There are a lot of challenges, but could you tell us what
are some of the biggest challenges that are specific to your
apprenticeships or earn-and-learn opportunities?
Mr. Anderberg. I think for us, and what we have
experienced, what I know my fellow colleagues back in Rockford
have experienced, it is simply finding a young individual that
wants to come to work every day, wants to do the work. And in
our instance, when we have someone come to the door that is
interested in a manufacturing job, what we do is we put them
into our apprenticeship program. And if they exhibit good
attendance, an aptitude, they are a good worker, if we ask
them, ``Do you want to become a machinist? Do you want to make
a career here?'' If they say yes, we pay for their
apprenticeship 100 percent. We pay for all their books, all
their costs.
And even if they are on a night shift, for instance, while
they are at school, because there is some night school and
night classes, we pay their wage while they are at school. I
don't want to penalize them. So, we bend over backwards to get
somebody into our apprenticeship program. The problem is
finding individuals to come in that want to do it. That is the
biggest problem.
Mr. Guthrie. Ms. Moyers, do you have any followup?
Ms. Moyers. Yes. We actually at Jerl also offer an
apprenticeship through the State of Ohio. We have not completed
an apprentice since 2014. We have had a lot of people enrolled.
We have put people through programs. And like Mr. Anderberg has
said, the young people are either not focused enough to want to
continue it--it is a 4-year program with us. And after a year,
they drop off, they start missing classes, failing classes.
The other issue, I think, that is hindering people from
offering apprenticeship programs is no one wants to train an
employee that another company is going to poach. So, because
the workforce, we have this skilled wage gap, it is really hard
to commit to putting the investment into those employees if you
are fearful they are going to jump ship and go somewhere else,
because, then, you have no return on your investment.
Mr. Guthrie. Right.
Ms. Moyers. I don't know what the solution is to that,
unfortunately.
Mr. Guthrie. Well, thanks. And, we are looking at other
things and other bills and other issues about getting people
into the workforce, and so forth. My argument is that these
people are wanted, they are needed, and what you just said,
wanted. In particular the farm bill we are debating that. And I
really believe this. If somebody is on some kind of benefit and
they don't get back into the workforce, then 5 years from now
they are going to be in the exact same spot.
But what you just described is what my experience is. I am
from a manufacturing background. If somebody will come to work
and show up every day and do their job, they are going to move
up and improve. And I will tell you the difference. If somebody
doesn't get back into the workforce, they are going to be in
the exact same shape 5 years from now. If they just show up for
work with even low skills or no skills, they are going to be
where you are talking about 5 years from now through an
apprenticeship or some kind of program, and be better off.
But I want to get to one other thing. I am changing the
subject. So, Mr. Anderberg, this is for you. My colleague Doris
Matsui and I are looking to drop a bill to direct the
Department of Commerce to establish a working group of Federal
and private stakeholders to define blockchain. That is one
thing, until we can even deal with policy, get the definition
of blockchain and study some of the implications for spectrum
policy in potential applications. We have a lot to learn and
hope this is a good first step in kicking off significant
conversations across the Federal Government.
Do you believe innovations in blockchain could be important
to your company and the manufacturing sector generally?
Mr. Anderberg. Yes. I think anytime Washington wants to
talk about manufacturing, it is a benefit. I remember coming
out here in the late '90s when it was discussed talking about
PNTR and some of the trade agreements. And I came out in small
manufacturing groups. They didn't want to hear us. They didn't
want to hear what we had to say of what was going to happen.
And I think the reality has become reality.
Anytime Washington has talked about manufacturing, I think
that is important. And we have talked here on the panel before
we started. You know, the is the Digital Commerce and Consumer
Protection Subcommittee. Yet, we have a USDA. I am not opining
for another bureaucracy. But how important manufacturing is to
our national defense, our economy. Shouldn't there be some type
of subcommittee or committee on manufacturing to keep watch on
some of these things? Maybe that is something. But I fully
appreciate anytime Washington wants to discuss, to talk about
manufacturing, because it is extremely important to our
country.
Mr. Guthrie. Thank you. I appreciate that.
My time is expired and I yield back.
Mr. Latta. Thank you very much. The gentleman's time has
expired and he yields back.
And the Chair now recognizes the gentleman from California
for 5 minutes.
Mr. Cardenas. Thank you very much.
I appreciate the opportunity to talk to some of the
practitioners out there in the real world. So, thank you very
much for being here.
Ms. Moyers, thank you for pointing out in your opening
statement about the lack of diversity, even in your own
company. And it is good to hear that it sounds like you would
love to welcome more diversity.
Is diversity good for business, for your business, for your
bottom line?
Ms. Moyers. Absolutely. It is good for every business. I
can't tell you how many times just myself, as a family member,
completely accepted in my business, walking in and I can
present an idea that I can tell no one at the table has thought
of before. And I don't know if it is because I am a woman. I
don't know if it is because I didn't stay in my industry; I
didn't start there. I have previous experience in other
industries.
But any time you get someone who is different, they offer a
unique perspective. If they have grown up in a different place,
if they have experienced different prejudices, experienced
different benefits from their race, their religion, their
sexual orientation, their gender, it is important because we
cannot continue--we have talked about manufacturing as needing
to be innovative and needing to progress, and we can't progress
if we have the same people making the decisions and deciding
to--excuse me; I lost my train of thought--making the same
decisions.
Mr. Cardenas. Well, Ms. Moyers, you just mentioned
something very interesting. That is, you mentioned a whole
breadth of different communities. Your product, is it
consumed--or who participates in that product? Is it across the
board or it is only one kind of community?
Ms. Moyers. No, we have a----
Mr. Cardenas. The ones that you just described?
Ms. Moyers. Our business is metalworking. Basically, we are
not an end product. We provide for other companies that produce
other things.
Mr. Cardenas. So, all communities that you just described
benefit from your product in some way or another?
Ms. Moyers. Absolutely. Absolutely. We work in multiple
industries, food packaging, automotive, elevator, energy. It is
nationwide.
Mr. Cardenas. There is another form of diversity----
Ms. Moyers. Right.
Mr. Cardenas [continuing]. Diversity of consumers, right?
Ms. Moyers. Yes.
Mr. Cardenas. OK. In some of the testimony, some of you
were talking about how young folks, it is hard to attract them
and get them involved in manufacturing, or what have you. My
office, my district office, we participate in manufacturing
day. We really make it a manufacturing week.
And one of the things that I came up with, and we are still
trying to tackle this issue--I happen to represent part of Los
Angeles. So, it is not uncommon to see an A-list star walking
down the street or somewhere in town, and you are like, whoa,
that is so-and-so. On that point, I think it is important for
everybody, whether it is you, the practitioners, us as
policymakers, or what have you, we have got to try to get
really cool spokespeople to encourage that manufacturing is
cool.
Another thing as well that I think is important, I think
that, on balance, manufacturing actually pays more on quasi-
entry-level skill set jobs than does other quasi-entry-level,
not-so-much-skill required jobs, like, say, working at a fast
food restaurant, or what have you, where many of our young
people end up, if they are determined to actually work, and
say, well, that is the only thing I have got. So, I have got to
put on this funny, little hat and I have got to punch that cash
register.
I think it is really important that your industry pay
attention to that. I think that you have a higher likelihood of
attracting a young person who already went out in the workforce
and got tired of working for minimum wage and tired working for
a job that requires almost no skills other than showing up for
work. I think that you have a higher likelihood that they will
actually be more attracted to trying to apply themselves for
one of your businesses and in manufacturing in general. That is
my take.
Since I was 13, I had one, two, three jobs at a time, or
what have you. That was my immigrant parent inculcation into my
life. So, I think I was a little lucky. So, by the time I got
out of high school, I was like it is just natural; I have one,
two, or three jobs at any given time. Today's younger folk,
they don't seem to have that kind of want for that kind of
effort.
So, I am just saying that I think that it is important,
especially for you practitioners, to just pay attention to what
is going on out there in the community. And instead of,
unfortunately, seeing them be not attracted for you, maybe
after they have already been in the workforce and realize that
you do have a better paying, better opportunity, career type of
opportunity for them, then maybe you will have a little bit
more stick to it from some of these younger folk.
I am looking at the clock; I am running out of time--but
one thing I definitely want to ask Mr. Stettner is, how can
manufacturers better attract and retain their next generations
of diverse employees and leaders?
Mr. Stettner. One thing I would say in interviewing
workforce practitioners who place people in manufacturing, many
of the programs only focus on getting the person the first day
of the job. They need more resources to help with concrete
things like child care and transportation, but also just
mentoring and coaching, especially if you have a first Latino
kid or the first Black kid going into an all-white workforce.
And it is also an educational piece on the manufacturers to
learn how are we going to make that person comfortable, how are
things people are saying on the floor making that person
uncomfortable, how do we change our culture to be more
welcoming to women and people of color? And what I have seen is
manufacturers are listening and they are working, and look at
those programs as a way to learn how to do that a little bit
better.
Mr. Cardenas. Thank you. I yield back.
Mr. Latta. Thank you very much. The gentleman's time has
expired.
And the Chair now recognizes the gentleman from
Pennsylvania for 5 minutes.
Mr. Costello. Thank you, Mr. Chair.
I would like to point to an example in my home district, in
Berks County, in fact, that highlights the success resulting
from many of the pro-growth policies such as the tax cuts and
JOBS Act. Carpenter Technologies, founded in Redding in 1889,
employing 2,000 people at its Berks County facility, produces
special alloy-based materials for aerospace, energy,
transportation, defense, and consumer electronics markets.
Carpenter Technologies recently announced a $100 million
investment in its mill in Redding because of the tax savings
they recently have found themselves having as a result of the
tax bill.
Capital investment is a strong signal of entrepreneurs'
confidence about the future. We need to focus on marrying those
free-market policies with workforce development, training to
help minimize the skills gap through apprenticeships, on-the-
job training for job seekers, and emphasizing curriculum in
schools that can be translated to the 21st century economy.
Can all of you talk about some of the training options your
potential employees need to be certified and if there are any
barriers for them to receive the proper training? The second
question, how can the Federal Government be a better partner in
fostering more workforce development opportunities to get folks
off the sidelines and into good-paying jobs in the
manufacturing sector?
Ms. Moyers. I think that, with my company specifically, we
are offering quite a bit. We offer tuition assistance for
anyone that is continuing education. Our apprenticeship is
fully paid. And basically, if you are willing to come to work
and work hard, we will invest in you and we will make sure that
you move up. Just like it has already been said, if you can
find someone who is unskilled who will show up to work every
day, we are going to train you and we are going to move you up
in our fields.
I am sorry, what was the second part?
Mr. Costello. Federal Government partnering.
Ms. Moyers. Yes.
Mr. Costello. How do they? How might they do it better?
Ms. Moyers. I think we have already covered it a little
bit.
Mr. Costello. I think so, but----
Ms. Moyers. I think education funding into vocational
schools and trade skills and life skills is vital. I think that
is the way that the government can help us.
Mr. Costello. That second part, maybe add where you may be
working with your local or regional workforce development
organization and how the Federal Government's role is or is not
involved in that, for the next folks. And we can go back to it
in a second.
Mr. Paradowski. I think the role of government, the K-12
space, we put too much incentive on SAT scores and truancy. I
have got four daughters, three in college, one in high school.
The mindset is, if you do well on the ACT, there is the center
lane that, if you are in it, you are a winner and everything
else is kind of a fallback. So, if you find yourself in a
skilled trade, it is because you couldn't make it on the main
lane. I think that is a challenge where it creates the stigma.
I think the things that will help is the awareness of what
is out there. I said it earlier; nobody aspires to be that
which they don't know exists. So, data in the K-12 space, here
are the opportunities that lay out there in the workforce. And
they are all equal valued. So that kids aren't conditioned to
think I have got to go to a 4-year school and take on that
debt, just to find out that what I got trained in isn't
something that either (a) has any market demand or (b) is
anything I enjoy doing.
Getting people off the sidelines is a tricky thing. I have
some data. It is a little bit dated. In the State of
Wisconsin--this was late last year actually--are unemployment
rate at the time was a little bit over 3 percent, which equated
to 109,000 people. Right now, the unemployment rate is below 3
percent. At that same point in time--and as everybody would
know, unemployment is those out of work looking for work--at
that same point in time, there was 1.4 million people in the
state of Wisconsin that were out of work not looking for work.
Some of those, in all fairness, might be people who don't need
to work. But I think it would be naive for us to think that
that is all of them.
There are a lot of people who are able-bodied that could be
additive to the workforce that aren't. Some of that might be a
fact that the K-12 system. Current gradation rate of Milwaukee
public schools is about 60 percent. So, four out of ten kids,
where are they going? I am a graduate of Milwaukee public
schools.
So, those things concern me deeply because, if they are not
going into the workforce, how do we get them into the
workforce? Maybe if there are more pathways equal valued, that
a 4-year degree is great; trade is great; military is great.
They are all equally great. Maybe less people opt out at an
early age. There is, obviously, a lot of other complicated
parts with opioid addictions and things of that nature. But
that is our opportunity to me, the people that are on the
sidelines. We have got to find a way to keep them in the game,
keep them on a pathway to be added up to the economy.
Mr. Stettner. There is obviously formula funding for career
technical programs, but they kind of fund the same programs
year after year. In the same way some of the programs like the
TAACCCT grants incentivize some really innovative activities
that led to the current boom in apprenticeship, I think we need
a focused program that would spur school districts to do
something innovative about the trades, not a big program, but
something, a competitive grant program that really got the
juices going and kind of show the Nation we can do more.
Mr. Anderberg. As far as barriers to training, again, I
think it has to do with an educational effort of the educators,
the parents, the students, and, obviously, opening the vo-tech
schools, which we are seeing in Rockford. In one instance, I
have talked to the program administrator in Rockford, and they
are looking at, for juniors and seniors that are going through
the program. This used to happen years ago, where you have a
half-day at a workplace and half-day in class. And so, then,
when they are ready to graduate from high school, they are in.
And then, from there on, there could be training.
As far as what can the Federal Government do, I guess maybe
helping create awareness. I don't want to repeat what they
said, but it is just helping the community colleges. If there
are vo-tech programs--I will step back. Years ago, I was told
that part of the problem with Congress is, of the 435
districts, only 35 districts have manufacturing in them of any
significance. I think that has been an issue over the years.
That is why things have fallen through.
So, the recognition here today, having us here today and
talking about this is a start, but I think there has to be more
awareness. If funding for some of the tech schools or for some
of the community colleges, like we have in Rockford, could
help, that would be terrific.
Mr. Costello. Thank you all very much. I yield back.
Mr. Latta. Thank you very much. The gentleman's time has
expired.
And the Chair recognizes the gentleman from Florida for 5
minutes.
Mr. Bilirakis. Thank you, Mr. Chairman. I appreciate it.
For Mr. Anderberg, Mr. Paradowski, and Ms. Moyers, I heard
from my local manufacturers, the stakeholders in Tampa and the
Tampa Bay area, that workforce development is one of the
biggest problems in this sector. I know many of my colleagues
have already highlighted this. And we have the vocational
training, the schools there. We have career academies, which I
worked on in the legislature. So, in other words, if there's an
area of need in the community, we focus on that particular area
of need through the career academies and the high schools. And,
of course, we have AMSKILLS. We have P-TECH, and we have
Marchman, and all the community colleges. They do an
outstanding job, but we need more. This is everywhere I go I
hear this.
But can you tell me about some of the other impediments,
because we did cover this, to growth in the manufacturing
sector? So, this is for Mr. Anderberg; you can go first,
please.
Mr. Anderberg. You said impediments to growth in the
manufacturing sector?
Mr. Bilirakis. Yes, yes. Well, besides the workforce.
Mr. Anderberg. Well, that is our biggest impediment at the
moment.
Mr. Bilirakis. Yes.
Mr. Anderberg. But I think right now it is tough to say
there are impediments because of what is taking place the last
year and a half, quite frankly, the change in tax policy, the
change in regulatory, the trade situation. We are going full
blast right now, and I don't see where there is an impediment
for manufacturing now solely, except for the lack of people.
Mr. Bilirakis. Good. So, you recommend we focus on the
workforce issue?
Mr. Anderberg. I think the workforce is probably the most
important thing that Congress could work on to help us. Again,
allowing us to keep our capital, the money we earn--I don't
wake up in the morning and think how I am going to spend my
money on a boat or something else. I think about how I am going
to improve my operation, what I am going to do to help my
people, grow my business. That is what we do with our money.
And I just want to thank you, thank Congress and this
administration for allowing that to happen. Everyone is
investing again. It is incredible.
Mr. Bilirakis. Very good.
Mr. Paradowski, any more besides the workforce issue? Any
other impediments?
Mr. Paradowski. Absolutely. I often give my four legs of
the stool that drive private sector growth speech. So, maybe I
will inject it right now. Logistics, energy, workforce,
although I wasn't supposed to say that word, and commerce-
friendly government. So, it is really the economic, how
friendly an environment as far as the government.
So, I will use a real-life, real-time example, Foxconn
making its investment in the southeastern part of Wisconsin.
Their focal points were those three things: logistics, being in
proximity to Milwaukee and Chicago, two international airports;
energy; workforce is certainly a thing, but the economic
environment that the government created in the State of
Wisconsin specifically for them to come there and compete.
Really, the argument, or maybe the fundamental difference
in a lot of the folks in this room is, the sun rises in the
East and free markets do what they do. If you can't compete--I
will cite something that Mr. Stettner said--highest tech, not
the lowest cost. Maybe there are some markets where you can be
that, but I know that if I wanted to go into the 4K LED TV
market, if I can't find a way to make one for $350 for a 50-
inch, I don't have a product. Markets do what markets do.
And as a global economy and the U.S. role in that, we have
to compete on a cost and performance basis or else we go out of
business. Companies go out of business every day. And those are
the four key things.
The impact of tax reform is a real impact. Look at GDP
growth. Anybody who says that tax reform didn't have an impact
is denying a key factor of GDP growth.
But one of the things that is a parachute on the car right
now is certainly workforce, but you asked me not to talk about
that. The regulatory environment, government needs to be an
allied partner. If government is really focused on helping the
private sector, changing the educational system in K-12, so
that many pathways are equally valued, that will go a long way.
I don't want to go down this rabbit hole, but legalized
immigration I think is a big piece. Half of our workforce is in
the last trimester of their career, between 50 and 65. And we
need to add bodies. GDP is a function of output and efficiency,
GDP growth, and we need to add workforce. We need to add
efficiency.
Mr. Bilirakis. Very good.
Ms. Moyers?
Ms. Moyers. I think I am going to sound like a broken
record, but I think that the bottom line is just that the
workforce is our biggest issue. Of course, personally, in our
company we have had cash flow issues in the past. We are not
having them right now because of the current climate, because
of the tax reform, because of deregulation. And I think more of
that is going to be helpful.
I guess the only thing that I can think of is making it
cheaper for businesses to run and do the things they do, so
anything that is cost saving to us. One of the biggest expenses
we have had in the past few years has been healthcare costs. We
cover healthcare for our employees. They pay a very small
percentage, and we don't want to make them pay more. And we
have no intention of taking it away, no matter what it costs
us, because we feel it is very value-added to our employees and
it is part of the reason they stay with us. So, that is one of
the things, that that rising cost is a big burden for small
business owners.
Mr. Bilirakis. All right. Thank you.
I have a couple more questions, but I will yield back. But
thank you very much for that information. Thank you.
Mr. Latta. Thank you very much. The gentleman yields back.
And looking down the dias here, there are no other members
wishing to ask questions.
First of all, I want to thank all of the witnesses for
being with us today, for giving your testimony, taking your
time away from your businesses to be with us. And it is great
to know that it is not just an issue in northwest Ohio or Ohio;
that the No. 1 issue out there is employees. And all the work
that you all are trying to do, from benefits to making sure
that you are investing in people out there for 2 to 3 months to
get them out there. So, I really appreciate you all being here.
Before we do conclude, I want to make sure that the
following documents are submitted for the record by unanimous
consent: the report by Mr. Stettner; also, the earlier document
that the gentlelady from Illinois submitted that was accepted.
[The information appears at the conclusion of the hearing.]
Mr. Latta. And pursuant to committee rules, I remind
members that they have 10 business days to submit additional
questions for the record. And I ask that witnesses submit those
responses within 10 business days from the receipt of the
questions.
And so, without objection----
Ms. Schakowsky. Mr. Chairman, if I could say just
something?
Mr. Latta. Oh, the gentlelady.
Ms. Schakowsky. So, Mr. Stettner, in your written statement
you talked about apprenticeship and vocational training and how
that has dwindled a bit. But you also said--and I think this
came up--that there is a generation who experienced industrial
decline, who are telling their children to shun factory work.
And I agree that, in part, it is a marketing approach to young
people.
Mr. Paradowski, you talked about careers, that these really
are careers. And I also think that we need to encourage women
to understand that this is a great opportunity for women to
participate and get more money; that more diversity in every
way is important. And so, I think that we need to help with the
marketing.
And maybe, Mr. Stettner, this is part of a manufacturing
strategy, that the Federal Government, along with the private
sector, can participate in, to make sure. I think some people
of a generation ago think about dirty factory floors and kind
of nasty work, and we have to help change that image, so people
see this as a lifelong career choice.
So, I just wanted to add that.
Mr. Latta. And again, as we have been hearing from all the
members here on the committee and from our witnesses,
manufacturing has changed out there. And I know that I was in a
plant not too long ago and asked a gentleman running a CNC
machine how long it took him to learn it. He said, ``I'm still
learning it.'' He had been there a year. A lot of folks don't
realize how much computerization is in plants today, and it is.
It is looking at everything from guidance counselors to
principals----
Ms. Schakowsky. Right.
Mr. Latta [coninuing]. To making sure that economic
development directors, going right down the entire line, right
down to the student, getting them out there to see what is
there and making that investment.
So, again, we really appreciate you all being here today
because this is really important to this economy. It is vital
to this nation. So, we appreciate you being here today, and
thank you for your testimony.
And with that, this subcommittee will stand adjourned.
[Whereupon, at 11:45 a.m., the subcommittee was adjourned.]
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