[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]
HONORING THE NATION'S SMALL BUSINESS HEROES
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HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
FIRST SESSION
__________
HEARING HELD
MAY 8, 2019
__________
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Small Business Committee Document Number 116-018
Available via the GPO Website: www.govinfo.gov
__________
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HOUSE COMMITTEE ON SMALL BUSINESS
NYDIA VELAZQUEZ, New York, Chairwoman
ABBY FINKENAUER, Iowa
JARED GOLDEN, Maine
ANDY KIM, New Jersey
JASON CROW, Colorado
SHARICE DAVIDS, Kansas
JUDY CHU, California
MARC VEASEY, Texas
DWIGHT EVANS, Pennsylvania
BRAD SCHNEIDER, Illinois
ADRIANO ESPAILLAT, New York
ANTONIO DELGADO, New York
CHRISSY HOULAHAN, Pennsylvania
ANGIE CRAIG, Minnesota
STEVE CHABOT, Ohio, Ranking Member
AUMUA AMATA COLEMAN RADEWAGEN, American Samoa, Vice Ranking Member
TRENT KELLY, Mississippi
TROY BALDERSON, Ohio
KEVIN HERN, Oklahoma
JIM HAGEDORN, Minnesota
PETE STAUBER, Minnesota
TIM BURCHETT, Tennessee
ROSS SPANO, Florida
JOHN JOYCE, Pennsylvania
Adam Minehardt, Majority Staff Director
Melissa Jung, Majority Deputy Staff Director and Chief Counsel
Kevin Fitzpatrick, Staff Director
C O N T E N T S
OPENING STATEMENTS
Page
Hon. Nydia Velazquez............................................. 1
Hon. Steve Chabot................................................ 2
Hon. Abby Finkenauer............................................. 34
Hon. Jared Golden................................................ 22
Hon. Jason Crow.................................................. 34
Hon. Brad Schneider.............................................. 47
Hon. Antonio Delgado............................................. 4
Hon. Chrissy Houlahan............................................ 22
Hon. Angie Craig................................................. 4
Hon. Kevin Hern.................................................. 18
Hon. Jim Hagedorn................................................ 5
Hon. Pete Stauber................................................ 21
Hon. Tim Burchett................................................ 35
Hon. John Joyce.................................................. 36
WITNESSES
Ms. Gia Giasullo, Owner, Brooklyn Farmacy & Soda Fountain,
Brooklyn, NY................................................... 5
Ms. Amy Fox, President & Operations, Spiral Brewery, Hastings, MN 7
Mr. Nels Leader, Vice President, Bread Alone Bakery, Lake
Katrine, NY.................................................... 9
Mr. Robert Hoffman, Broker, Robert Hoffman Realty Inc., Albert
Lea, MN........................................................ 11
Mr. Jason Brochu, President and Co-Owner, Pleasant River Lumber,
Dover-Foxcroft, ME............................................. 23
Mr. Bill Skalish, Owner, Granite Tech, Inc. and The Benchmark
GRP, LLC, Landenberg, PA....................................... 25
Mr. Jerry Kortesmaki, Owner, London Road Rental Center, Duluth,
MN............................................................. 27
Mr. Dave Walton, Farmer, Iowa Soybean Association, Wilton, IA.... 37
Ms. Brittney Reese, Co-Founder and Head FIT Coach, FIT & NU,
Aurora, CO..................................................... 39
Ms. Colleen Cruze Bhatti, Owner, Cruze Farm, Knoxville, TN....... 40
Mr. Shawn Pulford, CEO, LB Water, Chambersburg, PA............... 42
APPENDIX
Prepared Statements:
Ms. Gia Giasullo, Owner, Brooklyn Farmacy & Soda Fountain,
Brooklyn, NY............................................... 52
Ms. Amy Fox, President & Operations, Spiral Brewery,
Hastings, MN............................................... 55
Mr. Nels Leader, Vice President, Bread Alone Bakery, Lake
Katrine, NY................................................ 59
Mr. Robert Hoffman, Broker, Robert Hoffman Realty, Inc.,
Albert Lea, MN............................................. 62
Mr. Jason Brochu, President and Co-Owner, Pleasant River
Lumber, Dover-Foxcroft, ME................................. 64
Mr. Bill Skalish, Owner, Granite Tech, Inc. and The Benchmark
GRP, LLC, Landenberg, PA................................... 68
Mr. Jerry Kortesmaki, Owner, London Road Rental Center,
Duluth, MN................................................. 70
Mr. Dave Walton, Farmer, Iowa Soybean Association, Wilton, IA 73
Ms. Brittney Reese, Co-Founder and Head FIT Coach, FIT & NU,
Aurora, CO................................................. 79
Ms. Colleen Cruze Bhatti, Owner, Cruze Farm, Knoxville, TN... 82
Mr. Shawn Pulford, CEO, LB Water, Chambersburg, PA........... 85
Questions and Answers for the Record:
Questions from Hon. Crow to Ms. Brittney Reese and Answers
from Ms. Brittney Reese.................................... 89
Additional Material for the Record:
Statement from Scott Asbjornson, Vice-President of Finance
and Chief Financial Officer, AAON, Inc., Tulsa, OK......... 91
Statement from Kristofor Sabey, Owner, Surf Liquors & Market,
Seaside Heights, NJ........................................ 94
HONORING THE NATION'S SMALL BUSINESS HEROES
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WEDNESDAY, MAY 8, 2019
House of Representatives,
Committee on Small Business,
Washington, DC.
The committee met, pursuant to call, at 10:05 a.m., in Room
2360, Rayburn House Office Building. Hon. Nydia Velazquez
[chairwoman of the Committee] presiding.
Present: Representatives Velazquez, Finkenauer, Golden,
Kim, Crow, Davids, Schneider, Delgado, Houlahan, Craig, Chabot,
Kelly, Balderson, Hern, Hagedorn, Stauber, Burchett, and Joyce.
Chairwoman VELAZQUEZ. Good morning. The committee will come
to order.
I thank everyone for joining us this morning and especially
thank the small business owners from across the country who
have taken time from their busy schedule to be here today. In
particular, I would like to welcome Gia Giasullo, owner of
Brooklyn Farmacy and Soda Fountain from my district. Thank you
all for coming here today.
Every year going back to the 1960s, our nation has
recognized National Small Business Week. While on this
committee we are focused on improving opportunities for Main
Street every week, today is a special opportunity to celebrate
the national recognition of small businesses, which truly are
the backbone of our economy.
This morning, we will hear directly from small firms that
we, as members of this committee, have been given the privilege
of representing in Congress. Today in America, there are 30
million small businesses that support over 56 million jobs, and
these firms are as diverse as the American people.
Joining us today are small businesses in a wide array of
industries such as restaurants, retail, manufacturing, and
farming. And as we will hear, they are making their communities
stronger, adding character to our Main Streets and fueling our
economy. I would like to thank each and every small business
owner testifying today for making the trip here and being a
part of this important week and conversation.
Throughout our history, so much of the American dream has
been about starting a small business, creating jobs, and
building communities around Main Street. When we talk about
taking a risk, no one exemplifies that better than small
businesses.
While today is certainly an opportunity to celebrate and
hear the success stories of small businesses, we also
acknowledge that starting a business is often not without its
own set of challenges. Access to affordable capital, finding
and retaining talented workers, accessing new customers, and
competing against larger corporations all provide headwinds for
small business success. Being the only committee dedicated
solely to the needs of small firms, we are committed to
promoting policies that encourage economic prosperity on Main
Street. That is why I am excited to hear from entrepreneurs
from across the country on the successful journey you have
made.
Today, we will be able to learn so much for these heroes of
small business, about determination, hard work, and creativity
that truly reflect the American spirit.
With that, I thank each of the witnesses for taking the
time away from your business to join us today. I look forward
to your testimony.
I now would like to yield to the Ranking Member, Mr.
Chabot, for his opening statement.
Mr. CHABOT. Thank you, Madam Chairwoman. And thank you for
having this hearing today. I would like to also welcome
everyone, including our distinguished witnesses to National
Small Business Week.
This week celebrates and honors the hardest workers in the
country as far as I am concerned. They rise early and retire
well after sundown on a daily basis, often wearing many hats
throughout the day to ensure their customers are satisfied,
their workers have what they need to get the job done, and that
their company is a success. You are the nation's entrepreneurs
and startups in small businesses, and your stories define the
American dream. You deserve the ability to operate freely
without the Federal Government causing roadblocks and getting
in your way. We want you developing the next product and
service, not laboring over burdensome regulations. We want you
creating jobs, not pouring over compliance paperwork. You play
a critically important role by representing over 30 million
small businesses that operate all across the country. You
create nearly two out of every three new jobs in the American
economy.
To put it simply, you are the driving force in the American
economy. That is why it is critical for this Committee to
continue its bipartisan--we work both across party lines,
Republicans and Democrats. I would prefer to be the Chair but,
you know, it did not happen last time, and we work with the
Chairwoman, and she is great. So we work together to create
jobs and try to get it right for America's small businesses.
Main Streets across the country all look different but they all
have one thing in common. They all have the most dedicated and
innovative workers around. From Ohio to Minnesota to Florida,
the nation's small businesses are busy moving forward.
I want to thank you for joining us today and sacrificing
time away from your growing businesses. Some of you traveled
across our great country to speak with us today and we
appreciate your time and your thoughts. And if I ever stop
talking we will get to them.
We look forward to talking with you and listening to your
stories and hearing about your successes, from retail to real
estate and factories to farms, your impact is vast and
important to America.
And before I yield back, I want to let all of those in
attendance know, especially our small business witnesses, that
you have all got great members of Congress representing you,
really on both sides here. The members of our Committee for the
116th Congress, and I think the Chairwoman would agree with me
on this, are, I think, perhaps the most engaged of any group
that we have seen in a while, both Republicans and Democrats
alike. Just about everybody is at every hearing working across
party lines to produce real bipartisan legislation that
benefits the American small business owners. So it is an honor
to serve with them, and I hope you send them all back to the
next Congress.
Now, after saying that we are all here at every hearing, I
have to announce that I have to go back to Judiciary and
Foreign Affairs. We are dealing with the Attorney General in
contempt motions there, and we are dealing with the simple
matter of China in Foreign Affairs. So those issues pale in
comparison to the issues dealt with in here, but I have to head
over there. And I want to thank Mr. Hagedorn in advance for
filling in for me, and my other colleagues who will be filling
in after him.
So thank you very much, Madam Chairwoman, and I yield back.
Chairwoman VELAZQUEZ. The gentleman yields back. Thank you.
And I agree with the gentleman that this is a committee
that works in a bipartisan way. We are here to really represent
your issues and I have to say that when I was the Ranking
Member, he treated me with respect. Now as the Chairwoman, I am
doing the same but I have to recognize there is nothing more
important than holding the gavel.
I would like to take a few minutes to explain the timing
rules. Each witness gets 5 minutes to testify and members get 5
minutes for questioning. There is a lighting system to assist
you. The green light comes on when you begin, and the yellow
light means that there is 1 minute remaining. The red light
comes on when you are out of time, and we ask that you stay
within the timeframe to the best of your ability.
We will begin with introductions for each panel before
moving on to your testimony.
With that, it is my pleasure to introduce Ms. Gia Giasullo,
owner of the Brooklyn Farmacy and Soda Fountain located in my
district. Brooklyn Farmacy opened its doors in 2010, and since
then has been serving up fresh, friendly, and delicious
sundaes, sodas, and ice cream floats. Along the way, Ms.
Giasullo has worked closely with our local small business
development center on business planning and recently obtained
an SBA loan so she can continue to grow Brooklyn Farmacy. While
running her business, Ms. Giasullo remains committed to
improving her community by hiring neighborhood youth each year
and offering leadership opportunities to aspiring local
entrepreneurs. Nominated in 2016 as New York's Small Business
Person of the Year, in so many ways she embodies the American
dream and Brooklyn Farmacy reminds us that a great food company
never goes out of style.
Welcome, Ms. Giasullo. I am very happy you could be with us
today.
I would now yield to Ms. Craig from Minnesota to introduce
our second witness.
Ms. CRAIG. Thank you, Madam Chair.
I am honored to introduce to the Committee Mrs. Amy Fox of
Spiral Brewing of Hastings, Minnesota, in my congressional
district. I also want to introduce to the Committee her
husband, Nick, and sister-in-law, Jen Fox, who are seated
behind her this morning.
Madam Chair, when members were asked to invite a hero of
the small business community to testify before our Committee,
Amy and her team immediately came to mind to share their story
here today. Spiral Brewery has an amazing story to tell. It is
a woman-owned business that has been open for just over a year
now, and in that time it has proven itself to be a destination
brewery and tap room that excels in sharing its craft. And I
have been there, and it has been shared with me, many times.
Over the past year, Spiral Brewery has become a destination
for beer lovers across Minnesota's metropolitan area and a beer
to seek out at liquor stores, bars, and restaurants in our
region. I am eager to have Amy tell you a little bit more about
her entrepreneurial experience, and again, I am so, so honored
and pleased that they are able to be here with us today.
Thank you, Madam Chair, and I yield back.
Chairwoman VELAZQUEZ. Thank you, Ms. Craig.
Now, I would like to yield to my colleague from New York,
Mr. Delgado, to introduce our next witness.
Mr. DELGADO. Thank you, Madam Chairwoman.
I am thrilled to introduce my friend and an exemplary small
business owner from New York 19, Nels Leader, vice president of
Bread Alone Bakery, as he testifies about the economic success
and sustainable business practices of Bread Alone Bakery in
Kingston, New York.
In 1983, Daniel Leader, Nels's father, moved to the
Catskill Mountains and started a small business baking
naturally fermented artisan breads he sold out of the trunk of
the family station wagon. Today, Bread Alone Bakery has grown
to four locations across the Hudson Valley and the Catskill
Mountains to farmers markets and to dozens of retailers across
New York State. Under Nels's leadership, Bread Alone has
expanded and maintained its commitment to certify organic
artisan bread and to our planet. The Leader family kicked off
their 35th year in business in 2018 by launching a solar array
on the roof of their headquarters in Kingston, and last year,
at least 25 percent of Bread Alone's energy came from the sun.
In addition to serving as vice president of the family
business, Nels is a trained climate leader for Al Gore's
Climate Reality Project, and a lecturer at the MBA and
Sustainability Program at Bard College in New York 19. Nels is
also a community leader in the Hudson Valley and Catskills as
he serves on the board of Woodstock Land Conservancy and Farm
Ferments. Nels holds a B.A. in economics from Colby College, an
M.B.A. from NYU's Stern School of Business. The engine of NY
19's economy is the work of small businesses and farms. As we
join to celebrate Small Business Week, I am proud to host Nels
Leader and highlight the example of Bread Alone, an innovative
small business that continues to improve while honoring their
family roots.
Good to have you here. I yield back, Madam Chairwoman.
Chairwoman VELAZQUEZ. Thank you, Mr. Delgado.
And now, finally, I would like to yield to my colleague
from Minnesota, Mr. Hagedorn, to introduce our last witness on
our first panel.
Mr. HAGEDORN. Well, thank you, Madam Chair. I really
appreciate you holding this hearing and celebrating Small
Business Week. It is a pleasure and honor to be with you.
I have the pleasure to introduce to you Mr. Robert Hoffman,
and his wife Angie seated behind him, from the great city of
Albert Lea, Minnesota, down there at the intersection of I90
and I35. And the Hoffmans own Robert Hoffman Realty, Inc., a
small real estate brokerage and property management firm in
Albert Lea. The Hoffmans are licensed in Minnesota and Iowa,
and they specialize in residential, rental, and commercial real
estate sales, and management in southern Minnesota. Owners
Angie and Robert are each licensed in real estate and members
of the Realtor's Association, the Minnesota Multi-Housing
Association, and the Hoffmans own and manage about 80 rentals
and are active volunteers and pillars to the community in
Albert Lea with their work and dedication to the Human Society,
the Chamber of Commerce, Lions Club, Heritage Preservation
Committee, and the Children's Center, and their local political
organization, believe it or not. And the Hoffmans do not happen
to have children, but they do have four rescue dogs. And we
welcome you and are looking forward to your testimony, Robert.
Nice to see you.
Chairwoman VELAZQUEZ. Thank you, Mr. Hagedorn.
Ms. Giasullo, you are recognized for 5 minutes.
STATEMENTS OF GIA GIASULLO, OWNER, BROOKLYN FARMACY & SODA
FOUNTAIN; AMY FOX, PRESIDENT & OPERATIONS, SPIRAL BREWERY
HASTINGS; NELS LEADER, VICE PRESIDENT, BREAD ALONE BAKERY;
ROBERT HOFFMAN, BROKER, ROBERT HOFFMAN REALTY INC.; JASON
BROCHU, PRESIDENT AND CO-OWNER, PLEASANT RIVER LUMBER; BILL
SKALISH, OWNER, GRANITE TECH, INC. AND THE BENCHMARK GRP, LLC;
JERRY KORTESMAKI, OWNER, LONDON ROAD RENTAL CENTER; DAVE
WALTON, FARMER, IOWA SOYBEAN ASSOCIATION; BRITTNEY REESE, CO-
FOUNDER AND HEAD FIT COACH, FIT & NU; COLLEEN CRUZE BHATTI,
OWNER, CRUZE FARM; SHAWN PULFORD, CEO, LB WATER
STATEMENT OF GIA GIASULLO
Ms. GIASULLO. Hello. Is that working? Okay. All right.
Hello, my name is Gia Giasullo, and I am the co-owner,
along with my brother, Peter Freeman, of the Brooklyn Farmacy
and Soda Fountain.
I want to thank Madam Chairwoman, Nydia Velazquez, for
inviting me, and the Committee, to participate in this
testimony. It is my honor to be here, and I thank you for the
opportunity to speak on behalf of small businesses.
There are a million faces of small businesses and I am just
one. I am here to give a face to one small business. And I am
here in solidarity with all the other small businesses across
America. Like me, they are committed to making their street,
their state, and their country a better place.
I am also here to express my gratitude to the Small
Business Association and the NYBDC, who invested in us and who
continue to support us. We received a 504 loan from the NYBDC
and we were also graciously awarded the Small Family Business
of the Year.
I would not be here with you speaking to you today without
their commitment. Their support came to us and allowed us to
invest in our business when despite our best efforts no big
banks would.
Finally, and most importantly, I am here today because I
strongly believe that small businesses provide priceless
contributions towards the overall wealth and health of a
community, and therefore, deserve your special attention and
support. We are like you in that we serve our community. So I
invite you to visit us and I invite you to speak with us.
The Brooklyn Farmacy is located on the corner of Henry and
Sackett in Carroll Gardens, Brooklyn. We are housed in a
restored apothecary and the original interior boasts a 100-
year-old penny tile floor, wooden drawers, and a tin ceiling.
There are nine red twirling barstools and a Bastian Blessing
soda fountain made in Chicago. We are a full-service soda
fountain with a staff of 15.
We are best known for our creative ice cream sundaes with
names like Affugazi Affogado and the Sundae of Broken Dreams,
made with vanilla ice cream, warm caramel, broken pretzel rods,
and fresh whipped cream.
In the late 1940s, before drive-thrus and bottled sodas,
the number of soda fountains in America reached 125,000 at its
height. There was a fountain on almost every Main Street USA,
serving as a watering hole for the community. Today, the
Brooklyn Farmacy is one of only a handful of full-service soda
fountains in America, but we proudly serve the same purpose as
a gathering spot for young and old alike. We are a slam dunk
for visiting grandparents, as well as several regulars who are
just hitting the ripe age of 4.
It has been 9 years since we opened our doors in 2010, and
since then we have watched gapped-tooth kids turn into college-
bound kids, several of them we have hired. We have hosted
birthdays, anniversaries, and showers. We have made hundreds of
egg creams at local fund-raisers. We have hosted senators and
assembly members for civic talks, even a wedding. The pink
bench outside our store has seen more than one bent knee
proposal.
We donate year-round to schools, and class visits are a
regular event. We have been featured on numerous cooking shows
and media outlets. We are visited by tour groups from all over
the world and we offer free egg creams all day on election
days, this most recently noted in an editorial in the New York
Times on how businesses can encourage citizens to vote.
Though we are a tourist attraction, we are committed to our
neighborhood. With weekly events like taught singalongs, a
knitting group, and a civics night, we have the opportunity to
be part of our community and in the end serve them more than
something to eat. We have antique rotary phones, typewriters,
and adding machines. In fact, our collection is getting a bit
out of hand. We have comic books, piles of them that we gently
place on the table if the cellphones come out. We have candles
and songs for birthdays. We make treats before your eyes. And
sometimes we invent things on the spot because, hey, kid, that
is a good idea.
We source locally and we pride ourselves on working with
vendors, some of whom deliver items on their bike. Our staff is
offered flexible schedules, and many have worked with us for
years as we employ them through schooling, travel, sports, and
performance schedules. We strive to foster community amongst
our staff, and we value their voices. We know that we are not
the last train stop for them, so to speak, but we encourage
them to embrace the philosophy of how you do anything is how
you do everything. We value hard work and by example teach
them. For many, we are a first job after school and weekends.
We also value the transitional time for youth gaining
independence, and we provide a safe place in a big city for
those who are away from home for the first time.
Can I have 10 more seconds, please?
Chairwoman VELAZQUEZ. Sure.
Ms. GIASULLO. Okay. This is not to say that this is not a
hard game to play. As business owners, we often wear all the
hats. If you give us an eighth day of the week, we would
probably work it. The cost associated with doing business can
be almost prohibitive, from insurance to payroll taxes to
credit card swipe fees, all before we have even bought a tub of
ice cream. A big company has the resources to hire for all
these positions, yet a small business person often needs to
juggle many positions at once. Look at me. Me, a designer,
marketer, copywriter, photographer, event planner, social media
producer, window designer, chef, waitress, soda jerk, and on
some occasions, a dishwasher who trains, schedules, hires, and
fires. For the record, I am the mother of two teenagers and
this summer I will be celebrating 25 years of marriage.
As I said from the beginning, I believe that small
businesses provide immeasurable value to neighborhoods and
communities. In our case, memories are created before our
eyes--first birthdays, first egg creams, first jobs. We are the
spot tourists plan to visit or find by luck. We are the spot
you would bring your visiting sister. We are the spot you come
to sit alone at the counter to read the paper. We are a real
place. We are that place. We value our customers, and by
extension, we value our community. We are not just the corner
store, soda fountain, a business without a face. I am my
customers' neighbor, and I am the face of a small business in
America.
I thank you for your time today.
Chairwoman VELAZQUEZ. Thank you, Ms. Giasullo.
And now, Ms. Fox, you are recognized for 5 minutes.
STATEMENT OF AMY FOX
Ms. FOX. Thank you, Chairwoman Velazquez and the other
members of the House Small Business Committee for the
opportunity to speak with you about Spiral Brewery and our
experience as a small business in Hastings, Minnesota. Thank
you also to Representative Craig for inviting Nick, Jen, and I
here today to testify and represent Minnesota's 2nd
Congressional District and our hometown.
About 6 years ago, we started dreaming of beer. Jen, Nick,
and I were drinking Minnesota craft beer and discussing our
deep love for our hometown, Hastings, Minnesota. In that moment
we saw Spiral Brewery. After a few months of dreaming, we
started transforming our big ideas into a plan, with countless
and tiring hours of industry research and informational
interviews. With the generous craft beer community in
Minnesota, we had the beginning of a business plan. After being
reconnected with our friends, Luke McGuire and Claire Sandahl,
we had the beer and we had our team. At this time, the craft
beer market was beginning to boom in Minnesota, but our region
was completely void of a tap room and distribution brewery.
Hastings is a unique town on the Mississippi River that was
in a time of transition and growth. The combination of this
geographical brewery void, the town's continued growth, and our
desire to contribute to our beloved hometown made it the
perfect time to bring Spiral Brewery to fruition in Hastings's
historic downtown Riverfront District.
After releasing our business plan in 2015, in order to
publicly announce Spiral Brewery, we began working with the
City of Hastings to amend brewing ordinances and regulations.
We are grateful that the city, both staff and elected
officials, and our local Chamber of Commerce, are supportive of
new business and were yearning for creative entrepreneurs.
Opening a brewery is an extremely expensive small business
endeavor. Spiral Brewing needed to raise $1.2 million for the
initial construction and upfront costs. Through consultation
and advice from the brewing community, industry research, and
valued business consultants, we knew we would like to solicit
over half our funds from an SBA loan to support our business.
Finding a financial institution to back a brewery is a complex
process and quickly became one of our biggest challenges.
Our team met with and discussed possible loans with about
10 different financial institutions locally and statewide. We
ended up securing funds through Pioneer Bank out of Mankato,
Minnesota. Pioneer Bank makes it their business to support
brewing and distilling in Minnesota. They understand the beer
and liquor industry and are willing to learn and grow with
their customers. This was most apparent in their creative
structuring of our financing. Pioneer Bank's intimate knowledge
of the SBA 504 loan program, along with expertise of Prairie
Land Economic Development Corporation, our SBA loan financier,
allowed for the appropriate budgetary line items to be covered
under the SBA 504 loan while other items were financed by a
loan direct from the bank. Simply put, Spiral Brewery would not
be able to open without the financial assistance from our
lender and the SBA 504 loan program.
The remaining financing of Spiral Brewery came through
individual equity investors. With community being in the
forefront of our business, a community-based funding model was
developed with nearly 100 percent of our equity investors
coming directly from the Hastings area. It has been this
community's support that has been one of our biggest joys and
kept us going through the countless challenges of opening
Spiral Brewery. They continue to be a pillar of support in our
ongoing progress.
Every day our Spiral team act as manufacturers, custodians,
event planners, servers, apparel designers, saleswomen,
delivery drivers, and cicerones. Running a small business comes
with daily joys and challenges as we often face unexpected
hurdles, but we would not be where we are today without each
one of our backgrounds and experiences.
Spiral Brewery has been open for just a year now and we
have become a destination brewery that distributes to bars,
restaurants, and liquor stores. Our brewery adds to the
vitality of established small businesses along our Main Street
where over half are also woman-owned and operated. Spiral
builds and encourages our local business and helps our city
prosper with new people to experience our community and spend
time and money in our historic downtown district. The story of
Spiral Brewery encourages our community to believe in people
with a dream and supports people who work hard for things they
are passionate about.
Thank you again for allowing me to testify today before the
Small Business Committee. I am happy to answer any questions
you may have.
Chairwoman VELAZQUEZ. Thank you, Ms. Fox. And you were on
time.
Mr. Leader, you are now recognized for 5 minutes.
STATEMENT OF NELS LEADER
Mr. LEADER. Good morning, and thank you for having me. I
appreciate your time very much.
My family and I own and operate Bread Alone Bakery, a
certified organic bakery in upstate New York. We have about 200
employees and every day ship about 15,000 loaves of bread to
our customers around the northeast.
I am here today to share with you the story of Bread Alone
and some observations from running our business. There was not
an exact plan when my father started the business in 1983. He
was a philosophy major guided by his instincts. He ended up in
cooking school with contemporaries, like Anthony Bourdain. In
reflecting on his decision to start a bakery he said,
``Sometimes you have to lose your mind to come to your
senses.''
As a young child, I can remember my dad trying to teach me
the responsibilities of running a business. I remember him
showing me the newspaper, pointing out the challenges that
people faced in our community and around the world. Though we
were never a political family, there was always a civic
ingredient in our breads. By baking simple, honest food, my
father contributed to our community. By setting an example of a
simple, moral life, my father aspired to touch more people than
he could feed. We use a quote from Nelson Mandela to capture
the spirit of the business: ``Let there be work, bread, water,
and salt for all.''
I joined the business 7 years ago, fresh from business
school and experiences gained from my first career as a
consultant. I found my passion at Bread Alone though, building
a thriving, viable company that also sustains our people and
planet. In this way, I strive to honor the history of Bread
Alone while maintaining a healthy bottom line.
First, a few words about our people. Unemployment in our
area is as low as 3.6 percent, but the poverty rate is as high
as 20 percent. The fact of the matter is that economics of
hourly work are untenable for too many of our employees and
community members. Though Bread Alone's average hourly wage is
50 percent above the New York minimum, and more than double
Federal, support services are insufficient. Too many of our
employees lack affordable childcare. Healthcare is too
expensive. Employees do not have access to transportation to
and from work. What would be a basic life interruption to many,
a car break down, a sick child, becomes an obstacle to economic
freedom and well-being.
Some of our employees have spent time in the criminal
justice system, often from a young age. These employees often
know little else. Adaptation to the workplace is a struggle. I
see our employees striving to do well, build a career and a
family, but the deck is stacked against them. Whether the
contradiction of the bakery, we are surrounded by underemployed
individuals, yet building a quality team remains our biggest
challenge. Though we invest all we can back into our employees,
financial realities only allow us to do so much.
This is where government can be most effective. Provide the
support that our hourly employees need to overcome the bumps
and bruises of life, a health emergency, job retraining, even a
brush with the law. When you invest more in your working class
constituents, you build up the workforce and give small
businesses, like Bread Alone, the ability to thrive.
And now some words about our planet. The last 4 years are
the hottest 4 years on record. I lived on East Seventh Street
in New York City when Hurricane Sandy brought flood waters to
within blocks of my apartment. Did the Capitol feel warm last
month? It was. It was about 6 degrees above the average for
April.
While the brunt of climate change is borne by the least
fortunate among us, we all feel its effects, even at the
bakery. An historic bomb cyclone in the Midwest this past April
flooded over a million acres of farmland. Farmers are
struggling to get crops in the ground for the harvest so prices
may increase this fall.
I hope for us and for all the hard-working farmers across
the world these dramatic conditions subside. But hope is not a
plan. We must decarbonize our economy to avoid the worst
effects of climate change. One of the farmers, Marshall
Cargill, that my father visited in the early days said, ``If we
do not take care of our land and take care of it now, who
will?''
To this end, we have rolled up our sleeves at the bakery
and gotten to work. On Earth Day 2018, we officially
commissioned 196 kilowatt solar array on the roof of our
bakery. We have committed to getting to 100 percent renewable
energy by 2030, and we plan to get there much faster than that.
This means more solar energy, adoption of battery-electric
vehicles, energy efficiency retrofits and more.
This process is not easy, but the good news is that our
customers want to see changes like never before. Our record
high 72 percent of Americans indicate that global warming is
personally important to them. Eighty-three percent of
millennials indicate that they want companies to implement
sustainability programs.
Both business and small government have an incredible
opportunity to respond. We have the technology. Our customers
and constituents want the change. But under current conditions,
resource constrained small businesses struggle to invest now
what they will not see back until later. This is a market
failure that the government can fix by more aggressively
incentivizing investments and renewable energy and sustainable
technologies. Bridge this gap and small businesses will thrive
by delivering both what our customers want and what our world
needs.
One more point. Decision-making is one of the constant
challenges of running a business. Decisions never feel perfect.
They are often scary. Almost all require change and adjustment
over time. We always remind the team at the bakery progress,
not perfection. The only bad decision is not making one at all.
The world will pass you by.
I am not a policymaker, but I imagine that your work is
extremely difficult. So many competing interests and
constituents to address, not to mention different views of the
world within yourselves. But supporting the best work of your
small businesses demands action. During your time of public
service, I urge you to embrace the moment, each other, and the
opportunity to serve your constituents. Like the small
businesses in front of you, seek progress every day. Thank you.
Chairwoman VELAZQUEZ. Thank you, Mr. Leader.
And now, Mr. Hoffman, you are recognized for 5 minutes.
STATEMENT OF ROBERT HOFFMAN
Mr. HOFFMAN. Thank you very much.
A very interesting panel to follow after listening to the
two speak on their foodservice and the brewery. I personally
quit drinking quite a few years ago but speaking in front of
Congress, a beer is starting to sound pretty amazing.
My wife and I have not traveled in a long time, and this is
our first time actually leaving because of the small business
that we own. As a matter of fact, I own a small business that
you have probably all heard of. There is a Robert Hoffman
Realty in every single city in every single state. And
honestly, most of them are not Robert Hoffman Realties, and
many of them are not real estate companies at all, but we all
know a Jensen Excavating or we have all had Mrs. Jerry's
salads. We have all been saved by Jim Kelly from Kelly Plumbing
and Heating. We have bought flowers from Addie's Florals or had
our watches fixed at Fisher's Jewelers. It just turns out that
we are really not good at naming our companies. We have all
just named them after ourselves. I do not think we have the
time or the resources for a proper advertising campaign.
My name, as I have mentioned, is Robert Hoffman. I run a
small real estate brokerage in Albert Lea, Minnesota. So small
that it is Robert Hoffman Realty, and I actually do not even
own it. My wife, Angie, owns 51 percent of our S corp, so Angie
owns Robert Hoffman. And Robert Hoffman Realty. A lot of lost
arguments happen when I say, ``I am Robert Hoffman,'' and she
says, ``I own Robert Hoffman Realty.''
Right after college I started in real estate, and now I
have about 15 years of real estate experience. And what I want
to talk about just quickly is that small towns are obviously
the hometowns to small business, and every little bit helps in
small business. My wife recently was able to leave her career
of 11 years to work for our small business, and that is not
nothing when it comes to small business. For her to leave a
large, fair, corporate position with a local newspaper that she
was at for 11 years to come work for our small business is
actually an honor.
We have actually been married for 514 weeks today. We got
married on Wednesday, July 1st, and every Wednesday I have
wished her a weekiversary. And today is our 514th weekiversary.
We will actually have been married for 10 years this July.
Angie and I actually met at a leadership class, and again, how
every little bit helps, I walked into a random leadership class
in Albert Lea, sat next to a, as you can see, very good looking
gal. Asked her what she was doing that weekend and she
accidentally gave away my surprise birthday party. So that is
how I met my wife who I currently work for. So that is how I
met my boss.
Like Jim had said, we are a small business. We just run and
manage and own 80 rental units, a nice real estate brokerage in
Albert Lea. We do commercial real estate as well, and one of
our successes is we have helped sell a couple of vacant
Walmarts to a nice company called Bomgaars from our area. As a
matter of fact, one of the Walmarts that we sold that was
vacant was in Jim's Blue Earth and in my Albert Lea. A success
story to that was filling places that were void. In Albert Lea,
it had actually sat vacant for 10 years, and then we were able
to fill it. With Jim's, that was the second one we had sold,
and that one did not take as long. You start to feel good about
selling Walmarts when you get a few of them under your belt.
However, if you have sold one or two, you have sold all of them
in your region.
Our small business, like so many other small businesses,
have the little things that help a lot. And our downtown just
went through a nice revitalization where my office is located,
so having the historic grants to help with our downtown
revitalization has helped my small business grow. And as a
matter of fact, this weekend, excuse me, this weekend, Albert
Lea is actually hosting the Governor's Fishing Opener. So a
small group of people got together and said, you know, I think
it is going to help with Albert Lea and our businesses if we
dredge our lake, and they started that about 12 years ago. Now,
our lake is being dredged, and this weekend our Governor's
Fishing Opener is in Albert Lea. So again, all these little
things really do help.
Many have given their all to see small businesses succeed.
We chose not to have kids. Work came first. This is only the
second time we have ever traveled. You can tell the small
businesses mean a lot to people. To even pole punch and say
that this does not mean everything to us, obviously, I would be
lying. We have had our successes and our failures. We have
concerns of one small accident and we are not there to run the
business anymore. We have employees that work for us and look
to us for their employment. It something goes wrong with that,
it is rather intimidating to not be there for them. So, like I
had mentioned, small businesses thrive in small towns, and
every little bit helps.
Just a real quick conclusion, two things. Just a small
story I like to tell about any situation, but it definitely
reflects small business. And the story goes, there is a
gentleman in a hole screaming for help and a small business
government regulator works up and says, ``I will pass a new
law,'' and walk away. And the gentleman, scared and in this
hole is still yelling for help. So then an inspector walks up
and says, ``We will change the process so this never happens
again,'' and walks away. And the small business owner is in a
hole, scared and still screaming for help. Then another small
business person jumps in the hole with him and he says, ``You
are crazy. Now we are both in the hole together.'' And the
other small business owner says, ``Yes, but I have been down
before and I know the way out.''
So every little bit helps. We appreciate things as small as
even this hearing or anything that you guys do for us in the
future. I appreciate all the time.
Chairwoman VELAZQUEZ. Thank you, Mr. Hoffman.
Let me thank all of the witnesses. Your moving stories,
powerful. I wish that every member of Congress were here
because sometimes, as Mr. Leader said, we need the synergy of
the work that you do to improve and strengthen Main Street, but
also how can the government play an important role, whether it
is knowing the unintended consequences of legislation that we
pass and that you are not an afterthought, that you are
provided a voice, and that is exactly what we are trying to do
here. So thank you so much for all the work that you do. And
when people say that small businesses are the engine that fuel
our economy, we mean it on this committee.
So Ms. Giasullo, I would like to hear from you, what was
your experience, as well as Ms. Fox, because both of you got an
SBA 504 commercial loan that you went through, and if there are
any improvements that you feel should be made to help expedite,
streamline the process, how can we better improve the lending
programs? Because that is one area that I intend to put some
energy into.
Ms. GIASULLO. I am very happy to answer that question. And
first of all, just want to again reiterate that one of the
unique aspects of working with the SBA and the NYBDC to get the
loan is that they heard and took into account our story.
Because, you know, as you have heard, the small business is not
just a business. There are actually people behind it and there
is a story. And I felt, you know, when we walked into the big
banks and we started off with telling our story, we came down
to three pieces of paper that they needed to analyze in order
to give us funds. We were more than those three pieces of
paper. And so I just want to acknowledge and the process and
that the totality of who we were was taken into account.
I think that the process took longer than it needed to, and
I think that there was information about what was needed from
us that could have been given more in the front that would take
more time to produce reports, et cetera. So I think that the
streamlining of the process could be stronger.
Chairwoman VELAZQUEZ. Thank you.
Ms. GIASULLO. I also think just to get some younger people
in some of those higher positions who are hungry, like we are.
Chairwoman VELAZQUEZ. Thank you. Thank you.
Ms. Fox?
Ms. FOX. I would actually just second everything that she
just mentioned. We actually were pretty lucky in finding
Pioneer Bank because unlike your experience, we actually found
a partner that did listen to our story and found that
important. And actually, we had a really seamless process
working with them and Prairie Land, who was our financier going
through the 504 loan process. It was pretty smooth. I mean,
having just opened a brewery, we were very comfortable with
mountains of paperwork, so that was not unusual to us. But they
really made it seamless and explained everything and were
really accommodating to our schedule in getting it all to work.
Chairwoman VELAZQUEZ. Thank you.
Mr. Leader, I am so pleased to see how you have grown, and
in the process you have done so in an ecofriendly manner. And I
really thank you for your commitment to sustainability and
protecting our environment.
But there is also one thing that you mentioned that struck
a chord, and that is investing in the working class, investing
in workers. How can the government help? What can we do? What
type of investment? Is it infrastructure? Is it training,
retraining?
Mr. LEADER. Sure. Thank you so much for the question and
the opportunity to talk about this a little bit more.
I will relay a very brief personal story. I think, like
many people in this room, I recently dealt with the care of an
elderly person in my family and saw them through the end of
their life. And in two recent experiences I engaged with the
Medicare system and it worked well. My grandparents were able
to pass with dignity, and the family was able to maintain our
lives without sacrificing our economic well-being because of
the success of that program.
What I see every day as a small business owner is that that
security, that healthcare security simply does not exist for
too many of our working class employees. So an issue that
affects all of us, and I know this is not a new issue to
highlight for you all but it deserves extra attention and I
want to use my time here to highlight it because that cost and
a lack of security that our employees have in their lives needs
to be fixed.
Chairwoman VELAZQUEZ. Thank you.
Mr. Hoffman, you mentioned that renovations in your
downtown area has led to many successful businesses and that
cleaning up a local lake would potentially bring in more
tourism. Do you think that a large scale infrastructure package
that modernizes roads, bridges, and lakes in towns like Albert
Lea would spur economy development in those areas?
Mr. HOFFMAN. I honestly do, but I do not want to fall peril
to not the small pieces of the puzzle as well. Small deed
grants that were available for buildings such as mine in an
historic area that helped small businesses with the non-sexy
things with our buildings sure have helped smaller scale. Large
broad stroke and large sweeping programs definitely do help but
often look past the smaller ones of us.
Chairwoman VELAZQUEZ. Thank you.
And I now recognize Mr. Hagedorn.
Mr. HAGEDORN. Thank you, Madam Chair. I appreciate the
testimony of all the witnesses and congratulations on building
up small businesses, successful small businesses. It is very
difficult. A lot of businesses, unfortunately, do not make it
to your level. And so we commend you and appreciate what you
are doing for our communities.
Ms. Fox, I would say thank you for mentioning Pioneer Bank
in Mankato. Those community banks of small businesses as well
are helping you, and I guess that access to capital is pretty
important, is it not?
Ms. FOX. Yes.
Mr. HAGEDORN. And what would you have done if you could not
go out and borrow the money or get the loans in order to start
your business? It would have been tough. Thank you.
And Robert, it is good to see you, Mr. Hoffman. Knowing you
a little bit, I can tell you that you are a hard worker. You
are the embodiment of what it means to be a small business
person. You and Angie both. And you put your capital at risk.
You put everything into this business. You work hard. You are
entrepreneurial, innovative, and what you do is so critically
important for our communities. You are helping to sustain folks
and help them find a nice roof over their heads. You are
creating opportunities where maybe sometimes the big box stores
leave our little towns and you are trying to fill those and
make sure that our communities are as vibrant as possible. And
we appreciate all that.
Robert, what exactly, when you look at government's role,
you talked a little bit about that being down there and needing
help. Government can be good and government can be bad. In the
areas of regulations and taxes, energy, workforce, healthcare,
what are your thoughts about what has been good and maybe what
needs to be better?
Mr. HOFFMAN. Honestly, Jim, I am in real estate, so we
really do not have much for regulation or paperwork, which is
not true at all.
We probably spend more time in regulation in our industry
than we do improving our industry, and I think that makes us
take two steps back every time we try and start a race.
Somewhere we fall peril to is being so close to Iowa with a
different business structure in both business and real estate
development. One example, obviously, is the Affordable Care Act
is not affordable for employers. Another example is we see a
strong brain drain in our region, two larger areas that just
plain may offer a little bit more, and the brain drain,
students leaving and not returning, has actually led to a
generation drain. So the students will leave Albert Lea, for
example, start a family somewhere else, and then soon to follow
is actually their parents who were community members of ours
but left now to be near their grandchildren. If we had
something to make things just a little bit easier to sustain
the population rather than maybe lose, and honestly, we have
not even been talking about growth yet. We are not in growth.
We are just trying to sustain. So, yes, a lot of extra
regulation has made it, honestly, a little bit easier to leave
than it has been to stay. As with investors. It is easier not
to invest in real estate in my area in particular, than it is
to invest. And what it has led to is no new market rate
apartments have been built in my town since 1990. So it is
tough to grow a community when we do not have a roof for the
new people trying to move to town.
Mr. HAGEDORN. So there is some competition between, for
instance, big businesses that can offer benefits and have some
hooks to bring in folks to be employed and smaller businesses
that sometimes have a tough time competing. And then there is
also a little difference between some urban areas and the rural
areas. And do you think that it would be important for
government to have some extra incentives to make sure that
folks have opportunities in the rural areas and that----
Mr. HOFFMAN. Yes, I definitely do, especially, like I said,
under the umbrella of housing. Right now, if somebody was to
look to Albert Lea to come live, whether it be a teacher, an
officer, or a new transferee to a company, and they know they
may not buy a home right away but they are looking for just a
comfortable market-rate rental to live in and we do not have
that to offer, we just plain lose them now to communities just
a little bit larger than ours who do have that housing
available. And we do not have housing being built in town
because it is just far too expensive to do it. Not just
expensive in the wood, the shingles, and the windows, but the
regulations required behind housing. In Minnesota, it is so
expensive. There was a recent MinnPost article just last week
stating building a building in Minnesota or across the river in
Wisconsin, that it is close to 30 percent more expensive to
build in Minnesota. Real tough to compete.
Mr. HAGEDORN. Maybe this weekend when you have the governor
down for the Fishing Opener you can talk to him a little bit
about that.
Mr. HOFFMAN. A couple of friends of mine that I honestly
grew up with and had a paper route together are the two hosting
the governor. Yeah, I am going to put a few bugs in their ears.
They are going to be in the boat with them for quite a while.
Mr. HAGEDORN. We appreciate your appearance. Thank you very
much
Madam Chair.
Mr. HOFFMAN. Thank you.
Chairwoman VELAZQUEZ. Thank you. The gentleman's time has
expired.
And now we recognize the gentleman from New York, Mr.
Delgado, for 5 minutes.
Mr. DELGADO. Thank you, Madam Chairwoman. And thank you,
each and every one of you, for your truly inspiring stories,
and to hear you all speak with such love and affection and
passion for what you do. It is incredibly heartwarming. So
thank you for your dedication and for your commitment and all
the opportunities that you provide for others in your
community.
I want to personally thank you, Nels, for coming. It is
good to have you hear and good to hear from you.
I want to talk a little bit about, or at least revisit your
conversation about the need to invest in green energy
technology, and so much of the incredible work that you and the
company as a whole have done to invest and help spur that
growth and take us in the right direction.
As somebody who has sort of prioritized this, can you
describe for me the ways that Congress can play a role in
incentivizing sustainable behavior so small business owners,
like yourself, are able to build and promote small green
businesses?
Mr. LEADER. Absolutely. And thank you for the question and
for having me here, Congressman Delgado. I greatly appreciate
it.
So let me start by saying that as big as this problem is,
in it I see incredible opportunity for small business. I
highlighted in my testimony that folks want to support
sustainable businesses out in the world. They want to vote with
their dollars, but everyone's life is busy so you have to give
them an easy choice. We have to do a lot of the work for them.
But there is great opportunity for small businesses to respond
to that demand.
To your question, Congressman Delgado, of what do we do,
let me give you some examples of what does work and what does
not work. I am going to start with the latter, what does not
work.
In winter 2018, when Bread Alone was planning the solar
array for our bakery, Washington announced and then rolled out
a 30 percent import tariff on solar panels. That changed the
economics of our project overnight. We had to spend money in
soft costs to replan it and then the economics of the project
overall were not as strong. So that sort of signaled to
business that there is uncertainty in doing this work is not
what we like to see. No business likes uncertainty. So we
cannot do that. What we can do, there are lots of tools that
are established that work to incentivize investments within
business. The section 179 program is a wonderful program. That
allows Bread Alone to purchase equipment and depreciate it on
an accelerated basis, thereby bringing down the cost of the
equipment. That is a great program. Federal investment tax
credits on renewable energy, that is a great program. So those
are examples of things that Congress can promote, extend, do
more of to incentivize renewable energy with small business.
Mr. DELGADO. That was great. Thank you.
And just a quick follow up. You know, obviously, there are
environmental benefits. You know, that is the goal. But, you
know, from a business mindset, can you detail a bit of the
economic outcomes from your vantage point with these kinds of
investments?
Mr. LEADER. Thank you for the follow up because that is a
critical point.
I highlighted earlier in my testimony that although I have
these values as an individual, I also see after the bottom line
of our business, and I come from a very traditional business
background. So I do not make decisions just out of a moral
judgment. I do it because it is good for our business.
We financed our solar array in a way that is essentially
cost neutral. We could have financed it a little bit longer and
it would have been cash flow positive.
Right now, across this country, the least expensive ways to
create energy are through solar and wind. That is the least
expensive way that we know to create energy on this earth. So
when you substitute more expensive energy with less expensive
energy, you can save money. It is a scary investment that pays
out over the long term and that is where government can step in
to solve that market failure.
Mr. DELGADO. Thank you.
With that, I yield back my time. Thank you, Chairwoman.
Chairwoman VELAZQUEZ. The gentleman yields back.
And now we recognize Mr. Hern, Ranking Member of the
Subcommittee on Economic Growth, Tax, and Capital Access from
Oklahoma, for 5 minutes.
Mr. HERN. Thank you, Madam Chairwoman.
I really appreciate you all being here today, and your
testimony is certainly near and dear to my heart. I have been a
small business person for 34 years, job creator, franchisee,
banking, manufacturing. I could go on and on, 30 or 40 small
businesses today.
I appreciate, Mr. Leader, first of all, you have got a cool
name. I was just thinking if you were to come into Congress and
get on the majority side your name would be Leader Leader. So
that would be kind of cool.
Mr. LEADER. I have a new career goal.
Mr. HERN. Yeah. Yeah. There you go. So put that on your
bucket list; right?
But, no, it is great to see you all here. And, you know,
one of the things, you know, I have never run for office before
and so when I got here it was sort of amazing to me the lack
of, people agree with your stories, they like your stories,
people who have never been in business before. But I have also
found it interesting when business people come here that they
think the Federal Government has an unlimited amount of money
and that somehow they can do it better than you can as
individuals. I applaud you, and each of you individually that
have done things for sustainability. I could talk about many,
many things we all need to do and have done to protect our
environment. And like you said, you have to still watch out for
the bottom line. The Federal Government, quite frankly, is part
of the problem that many people who have ideas cannot get into
business because of the regulatory processes. In fact, you had
mentioned that healthcare costs, and I think, Mr. Hoffman, you
mentioned it also. Prior to 2010--I saw where you had 200
employees--prior to 2010, did you offer health insurance?
Mr. HOFFMAN. I joined the family business in 2012, and I
would be stepping a little bit out of my comfort zone talking
about what we were doing prior to 2010 and earlier.
Mr. HERN. Sure. Sure.
Just quite frankly, the cost went up dramatically. I
offered insurance for years, and the cost went up dramatically
when we centralized the healthcare to the United States
Government as opposed to individual markets. Just a fact. We
can disagree all day long. It is just not the truth to say it
did not happen.
But when we talk about these things, you mentioned, and I
want to make sure to give everybody a chance here, thoughts
because you have varying levels of employment base, which puts
you, sort of divides you even in this group up here, the
Federal Government has done a great job of dividing you up as
small business people to pit you one against the other, or two
or three of you care about what the other person said, it is
just based upon your employee base. And I think if we truly
cared about all employees, all people, we would take all
regulations down to the smallest employee base of one. And that
way everybody is in lockstep in really, truly caring about the
individual worker.
So with that said, let us just start here on this end. What
are some of the regulatory processes that you have seen in your
business life so far that you would like to see maybe the
government get out of your hair?
Ms. GIASULLO. Well, there is always the health department
that I think in New York City is a bit outrageous. I mean, I
think that we just sort of budget in for it but----
Mr. HERN. I am sorry; if we could, let us keep it on the
Federal level because I agree with you, we could get rid of the
health departments.
Ms. GIASULLO. I am going to yield actually for that.
Mr. HERN. Okay.
Ms. GIASULLO. Because I feel like we are small and I do not
feel like we, you know, besides the loans that we have taken,
we do not have a lot of regulatory----
Mr. HERN. So tax issues? I mean, tax affects you obviously
a lot.
Ms. GIASULLO. I mean, taxes. I mean, I would love to be
able to offer my employees health insurance. I mean, I think I
can agree and say that this is a point that I cannot afford to
do and I would very much like to. But I am going to yield. I am
going to yield.
Mr. HERN. Okay.
Ms. Fox?
Ms. FOX. I know one of the biggest areas for us has to do
with the Federal excise tax. And I would encourage all of you
to support keeping that low, but also consider support for an
even lower bracket. Right now, the lowest possible bracket
ranges in producing between zero and 60,000 barrels of beer a
year, and we, in our first year, are going to be at about
1,000. So it really would help equal the playing field for
those new, small microbreweries to be able to compete.
Mr. HERN. Thank you.
And Mr. Leader, I want to, because I am going to run out of
time here, I would love to talk to you all day, all of you all.
But you mentioned 179. I am very familiar with that. QIP
obviously affects if you have a storefront and retail and
certainly would affect you dramatically as well. I want you to
know this, that it is actually a technical issue in the Tax
Code. It is actually available if we could just get it signed
off on. And while this is a very, you know, bipartisan
Committee, I also want to tell you that it is being sort of
held hostage right now to be traded off for something else, and
it affects small businesses in a real, real way, to be able to
write off stuff this year so you can employ more people, put
more capital to work. So, I would encourage us all to take what
you all have talked about here today, go back and talk to our
fellow constituents, our fellow congressmen and women, and ask
them to support the change on the QIP and the section 179 bonus
depreciation, accelerated depreciation tactics we have out
there.
Mr. LEADER. Do I have a moment to respond?
Chairwoman VELAZQUEZ. Time has expired. I could give you 10
seconds.
Mr. LEADER. Okay, thank you.
I mean, I would just thank you for the question,
Congressman Hern, and comments. You know, the section 179 to me
is such a great example of where government and business can
work together. So I know you initially asked about places where
I would like to see less regulation, but I love to focus on
victories and areas of alignment, and that is one great
example. And I know there are a lot more.
Mr. HERN. Thank you.
Chairwoman VELAZQUEZ. The gentleman's time has expired.
And now I recognize the gentlelady from Minnesota, Ms.
Craig, for 5 minutes.
Ms. CRAIG. Thank you so much.
My question is for Amy Fox. You noted in your testimony
that you are a woman-owned business. A woman-owned business. I
would like to hear more about and ask you to describe some of
the unique challenges, but also opportunities that have
presented themselves as a woman-owned business.
Ms. FOX. Sure, I would be happy to speak on that.
I know I have heard Representative Craig say many times
that beer is bipartisan, and it is, but really, the craft beer
industry is still a man's game. And it is pretty rare to have a
majority woman-owned and operated brewery, at least I know in
Minnesota, and I would imagine it would be nationally as well.
And so, you know, it does come with challenges being woman-
owned. In the process of opening Spiral Brewery, we did a lot
of meetings that my husband and I would take. We did experience
some sexism and different things where all of the people we
were meeting with would always address my husband first, even
though I was the one with the numbers and the information. He
would kindly then defer to me. So there was some of that. But
beyond that there also just I find that Jen and I both have to
work a little harder to prove ourselves, especially like in
sales. You know, liquor store owners and bar and restaurant
managers or buyers are really used to talking to a bearded man,
and so when we come in and try to sell, we have to work that
much harder to prove that we are knowledgeable and that we have
a good product.
And then there is also physical challenges. Despite how
strong I may look, I cannot lift a full keg into the back of a
car, for example. So Jen and I do most of the delivering, so
there are some challenges with that.
But we are really happy and proud to be joining the
downtown Hastings district where well over half are also
majority woman-owned, and we look forward to, you know, working
to change those perceptions.
Ms. CRAIG. You know, the Hastings community is just one of
those just beautiful river towns that we have across my
congressional district, but across America. Not too long ago
though, some of those river towns did not have a ton of
development in them. One of the most unique parts of going to
Spiral Brewery is just the equity ownership from people inside
the community. You can literally see just partial ownership by
neighbors. Tell me a little bit about how building and
maintaining those community relationships has impacted your
business, and what has it done for your town as well?
Ms. FOX. Well, we definitely would not be here today
without the support of our community, both financially and in
many other ways. But we were luckily able to secure 34
different individual equity investors on a minimum level and
they all had a connection to our community, most of which live
in our community. And so it is really important, and they feel
that ownership, and they come to the tap room all the time. And
we would not be here without their support.
Ms. CRAIG. That is great.
And then my final question is really about expansion
opportunities. I know that you are now distributing to liquor
stores and other areas around the community. Are there any
barriers that you have in sort of just breaking into that
broader market with so many microbreweries and big breweries in
Minnesota? And how can we make it easier for a small business
like yours to expand?
Ms. FOX. I did just already speak on the Federal excise
tax. That is definitely something that would help a small and
microbrewery help to level the playing field and compete. And
then other than that it is really, you know, we are in our
first year of business and money is tight, and you need money
to spend money. And you need money to grow. So it has been
interesting trying to figure out how to do that. You know, and
little things like mobile canning lines that have now popped
up, we do not have the space or the money to invest in
equipment ourselves so, you know, we are able to use companies
like that to come in and can for us and it opens up a whole
another industry and area for us to sell to.
Ms. CRAIG. Thank you so much, and thank you all for your
incredible success.
Ms. FOX. Thanks for having us.
Ms. CRAIG. And Madam Chairwoman, I yield back.
Chairwoman VELAZQUEZ. The gentlewoman yields back.
And now we recognize Mr. Stauber from Minnesota, Ranking
Member of the Subcommittee on Contracting and Infrastructure
for 5 minutes.
Mr. STAUBER. Thank you, Madam Chair.
Ms. Fox, I obviously came in here late, and my question for
you was going to be on the per barrel tax from $15 to $7.50.
Because you have only been in business for a year you have not
experienced that yet?
Ms. FOX. No, we only opened in 2018, so we luckily were
able to jump in right at that lower level.
Mr. STAUBER. Okay. I could share with you another brewery
in the district that I serve in Two Harbors, Minnesota, saved
$60,000 from that change from the Tax Cuts and Jobs Act. That
was real money for that hometown brewery. I just wanted to
share that with you. So good luck.
Ms. FOX. Thank you.
Mr. STAUBER. And Madam Chair, I yield back.
Chairwoman VELAZQUEZ. Thank you. The gentleman yields back.
And let me take this opportunity to once again thank our
distinguished panel for taking time to be with us. You are
excused and we will now take a moment to get our next panel set
up. Thank you.
[Recess]
Mr. GOLDEN. [Presiding] All right. Welcome to our witnesses
on today's second panel. And I will take a minute to introduce
you before turning it over for your testimony.
It is my privilege to introduce our first witness, Mr.
Jason Brochu, the president and co-owner of Pleasant River
Lumber in my district, in the 2nd Congressional District of the
State of Maine. Pleasant River Lumber is 100 percent U.S.
family-owned Maine business with 4 generations of experience in
the forest products industry. Over the years, they have built
their reputation on quality, service, and attention to detail.
In fact, an example of that detail is stamping an American flag
on pieces of lumber that come out of their mill. Perhaps Jason
will talk a little bit about that. I anticipate that we are
going to hear a little bit from Mr. Brochu about unfair trade
practices today that at times put American businesses at a
disadvantage, and I think that many people would agree that
there are many good American businesses out there that can
compete globally with any business in the world, but tough for
them to compete with the government. And that is something that
Jason is going to go into a little bit of detail about today,
whether it be dumping of steel or dumping of lumber at times.
We have to make sure that we are putting in place the proper
policies to protect our businesses from unfair trade practices
of other countries' governments.
I will say very quickly to you all here, this is a great
hearing I am going to enjoy very much. The Small Business
Committee, I think, is a special place in Washington. Many
people I have heard come from other Committees talking about
how the discussion and the debate had their blood temperature
running hot and then they come in here and things cool down
because we have a pretty bipartisan focus and reputation on how
we can help small businesses. Not a lot of party politics in
here, instead focusing on how we can work together to help
small businesses, like Pleasant River. So with that, I would
like to just say thank you for coming to Jason, and also his
brother, Chris, is here.
And next, I would like to turn it over to Ms. Houlahan from
Pennsylvania, to introduce our next witness.
Ms. HOULAHAN. Thank you, Mr. Chair. And thank you very much
to all of the panel for joining us today.
And it is my privilege to introduce Mr. Bill Skalish from
my community, from the beautiful Pennsylvania 6th Congressional
District. I think he will also have a similar conversation
regarding trade practices and tariffs as well, which are
seminal to the disadvantage that his business experienced.
But Mr. Skalish, for background, has offered products and
services to the hospitality industry for over 35 years. During
his career, he became a top performing, independent sales rep
for Vermax in Salt Lake City and in the early `90s accepted the
position of national sales marketing director. At that time,
Vermax was the largest cultured marble manufacturer of vanity
tops and tub surrounds serving the hospitality industry. After
leaving that organization, he moved back to Pennsylvania in
1999 to once again become an independent factory rep for
several manufacturers. Prior to that, and right out of high
school, Mr. Skalish served a 4-year apprenticeship with the
IBEW and became an inside journeyman wireman for the IBEW 654.
Currently, Mr. Skalish owns two companies, the Benchmark Group,
as well as Granite Tech, Inc., and Benchmark is an independent
rep organization that performs the sales and marketing
functions, and Granite Tech is structured solely as an import
company. Granite Tech and Benchmark Group, LLC's current
customer base includes the hospitality, multifamily and senior
living, and student housing industries. In addition to Mr.
Skalish's professional career, he has also had the privilege of
serving on the Board of Supervisors for the Franklin Township
located in Chester County, Pennsylvania. Thank you so much for
joining us today, sir, and for sharing your stories with us.
Mr. GOLDEN. Thank you, Ms. Houlahan.
Finally, I would like to yield to my colleague from
Minnesota, and the Ranking Member of the Subcommittee on
Contracting and Infrastructure, Mr. Stauber, to introduce our
last witness.
And I just want to say to Mr. Kortesmaki very quickly,
later this month, Mr. Stauber has invited me to come out to
your community to take part in a field hearing that I look
forward to very much to see your state, and you have got a
great representative here in Congress. So thank you.
Mr. STAUBER. Thank you for those kind words, Chairman
Golden. It is a pleasure to work with you on this Committee and
the rest of our colleagues.
Today, I would like to introduce a very good friend of mine
from Duluth, Minnesota. Hard worker, great family, and just a
really good friend of mine, Mr. Jerry Kortesmaki. He owns
London Road Rental Center in Duluth, Minnesota. Mr. Kortesmaki
is the owner of London Road Rental Center in Duluth, Minnesota.
Jerry is an expert in the field. London Road Rental offers
tools and equipment rentals in its Duluth, Minnesota location,
and party, wedding, and event rentals and supplies in its
Superior, Wisconsin location. Thanks to Mr. Kortesmaki's hard
work, he now runs a business that spans northern Minnesota and
Wisconsin. Mr. Kortesmaki is also active in the American Rental
Association, advocating the rental industry's growth, and he is
also an active member in the NFIB community. Welcome, Jerry.
Mr. GOLDEN. All right. Thank you, Mr. Stauber.
With this, I will turn it over to our panel, and we will
start with Mr. Brochu, who is recognized for 5 minutes.
STATEMENT OF JASON BROCHU
Mr. BROCHU. Congressman Golden, members of the Committee,
thank you for having me here today. I am here to provide
testimony regarding issues that affect my business in Maine,
Pleasant River Lumber Company.
Pleasant River owns and operates four sawmills and a
trucking company in the state of Maine. Our current employment
is about 300 people, and we are in the middle of a capital
expansion project that will increase our capacity by 50
percent, increase our employment by close to 20 percent, and we
are spending about $25 million throughout our operations. We
are primarily a producer of softwood lumber that is used for
housing construction throughout the United States. I will touch
on four issues today briefly--trade, taxes, labor, and
infrastructure.
A critical part of the business environment for our company
is the ability to operate our business free of foreign unfair
trade practices. For our company that means addressing Canada's
unfair trade practices through the U.S. trade laws or by
implementing an effective quantitative restraint agreement
against subsidized and dumped Canadian lumber imports.
The U.S. industry successfully launched trade cases against
Canada in November of 2016, resulting in anti-dumping and
countervailing duty rates which have forced Canada to adjust
their unfair trade and market behavior and allowed our industry
to expand. For my company specifically, leveling the playing
field against Canadian unfair trade practices is allowing us to
make the necessary investments to increase our capacity by 50
percent and add a lot of jobs. This means not only adding jobs
but making more lumber in the state of Maine and more lumber
for the U.S. housing market produced in the U.S.
Today, the U.S. lumber industry, through its association
with the U.S. Lumber Coalition, is working tirelessly to
maintain and defend this trade case against Canada's unfair
trade practices by working with the administration on NAFTA and
WTO appeals, as well as litigating the first administrative
reviews of the anti-dumping and countervailing duty orders
before the Commerce Department, under which importers' actual
duty liability is assessed. This is a rigorous administrative
process that we are very involved in.
Taxes. The Tax Cuts and Jobs Act, and listening to some of
the testimony earlier people have touched on this already, you
know, has been very helpful to our business in a couple of
different ways. Reducing the corporate tax rate allows us to be
much more competitive in a global market and the continuance of
bonus depreciation are two areas--the tax rate and the bonus
depreciation are two areas that allow us to grow and add good
paying jobs to our mills in Maine. The 100 percent bonus
depreciation has been a big part of our capital expansion in
allowing us and enabling us to do that project where we are
going to add, you know, a lot of jobs and a lot of economic
activity to the state of Maine.
One negative of the bonus depreciation is that it will
gradually be phased out starting in 2023, you know, and it has
been so important to our business we would like to see that
continue.
Another negative of the Tax Cuts and Jobs Act is the
elimination of the net operating loss deduction carryback. Our
industry is extremely competitive and has incurred losses in
nearly as many years as we have turned a profit. So prior to
the Jobs Act, the Tax Cuts and Jobs Act, losses incurred in one
year could be carried back to affect profits from the prior 2
years, and thus, recoup some of the taxes paid in the prior 2
years. These losses now must be carried forward to partially
reduce taxes to be paid in the future. That is another aspect
of that act that we would like to see changed going forward.
Besides those two, the act has been very beneficial to us and
allowed us to grow and expand.
Infrastructure is an essential component of the forest
products industry operations. We need massive investment in
infrastructure. Our place in Maine has a lot of issues on
infrastructure. We need Federal support for that. We transport
all of our lumber by truck or rail and it is very difficult. We
access a big part of the U.S. housing market, and we have a
hard time getting product there because of the crumbling
infrastructure.
We also need safe, secure, and abundant broadband. We had a
ransomware attack last year that cost our company around
$100,000 between outside vendors and internal work to fix that
issue. So for a company our size, it is not devastating, but
for a smaller business that cost would have been about the
same, and that is a big, big issue going forward.
The last thing I will touch on is labor. Labor is one of
the biggest issues we are facing. Unemployment in our state is
very close to zero effectively because anybody who wants a job
can find one right now. We need to train people in the trades.
We need to train people to do things and make things and we
have got a lot of jobs available. Good paying jobs and we need
to also allow anyone who is honest and willing to work hard
legally into our country to help fill these jobs and fuel our
economy. We have the work.
So I have on time left. Thank you very much. I appreciate
it.
Mr. GOLDEN. Thank you, Mr. Brochu. Impressive in 5
minutes--trade, taxes, infrastructure, broadband,
cybersecurity, labor, education, and immigration. It is not
bad. I am impressed.
With that, I will go ahead and recognize Mr. Skalish for 5
minutes.
STATEMENT OF BILL SKALISH
Mr. SKALISH. Thank you, Congresswoman Velazquez, Ranking
Member Chabot, and Congresswoman Chrissy Houlahan, and members
of the House Small Business Committee for the invitation. I am
honored to testify before you today.
My name is Bill Skalish. I am the owner of Granite Tech,
Inc. My business, Granite Tech, Inc., referred to as GTI, is a
small import business located in the small town of Landenberg,
Pennsylvania, and was started in 2005. Our business includes
the importation of cut-to-fit fabricated granite, marble, and
quartz countertops from China to end-users throughout the U.S.
Our customer base consist of the hospitality industry,
including Marriot International, where we are one of four
endorsed suppliers; Hilton, IHG, Wyndham, multifamily housing,
senior living facilities, and student housing across the
country. We currently have seven employees on salary.
In April 2018, Cambria filed a petition with the
International Trade Commission and Department of Commerce
alleging that imported quartz surface products from China
caused Cambria injury. In September 2018, granite and quartz
countertops were added to List 3 of the Section 301 tariffs and
10 percent was imposed. My business has been devastated by
these tariffs and the Departments of Commerce's initial
decision on the anti-dumping and countervailing Cases in
association with the Cambria petition. While the Cambria
petition primarily pertains to slabs, we are being tariffed on
not only the cost of the materials but also the labor to
fabricate the cut-to-fit countertops.
Our customers, including local general contractors,
developers, hotel owners, and hotel franchises, have also felt
these impacts. Numerous hotel projects have been placed on hold
and some cancelled because they were over budget not only
because of the extremely high proposed tariffs levied as cash
deposits on quartz surface products from China, but other
materials facing tariffs as well.
Furthermore, the current CVD/AD cash deposits, proposed
duties, affect numerous other companies throughout the country
with similar business models.
GTI's collective tariff rate on quartz surface products is
currently at 308.05 percent, again, 308.05 percent, which
includes the Section 301 tariffs. There is no way my small
company can survive this and could end up owing Customs and
Border Patrol in excess of $1.5 million in additional tariffs
alone.
Additionally, by collecting the antidumping and
countervailing duties in advance, coupled with the extremely
exorbitant percentage, Granite Tech is unable to operate as our
profit margin is nowhere near 300 percent.
In addition, during bond renewal in January, our collateral
dollar amount was so high at $200,000, money that Granite Tech
did not have due to the astronomical deposits we had to pay on
the last shipments that were in transit when the AD rate was
published in November, Granite Tech can no longer import
without a customs bond.
The impact of this case on us is particularly troubling
because GTI is currently in hibernation. Due to the high
tariffs, we lost two employees out of seven, who were on salary
and received substantial bonuses on GTI sales that are now
nonexistent. Granite Tech is in hibernation until the next
International Trade Commission hearing scheduled for tomorrow,
May 9, 2019, at 9:30am, and subsequent ruling, which should
happen in June. I will attend the ITC hearing as an audience
member as GTI can no longer afford legal fees pertaining to
this case. It is unclear whether GTI's import bond will be
reactivated due to nonpayment of cash deposits regardless of
whether they are refunded should the case be dismissed or the
percentages lowered.
I am hopeful that the ITC and DOC will be more realistic in
their findings and remedy the percentages, in addition to
rejecting critical circumstances, which are 90-day retroactive,
on both the countervailing case not currently proposed, and the
anti-dumping case proposed and cash deposits in collection. It
brings me great concern that the current administration already
seems to overlook the impact high tariffs have on small
businesses like mine in Pennsylvania and across the Nation.
I would like to thank you for your time and consideration,
and will be happy to answer any questions.
Mr. GOLDEN. Thank you, Mr. Skalish.
And finally, Mr. Kortesmaki, you are recognized for 5
minutes as well.
STATEMENT OF JERRY KORTESMAKI
Mr. KORTESMAKI. Well, I would like to thank you for the
opportunity to come here and speak my part.
Hello, I am Jerry Kortesmaki. I am the owner of London Road
Rental Center in Duluth, Minnesota, and Superior, Wisconsin. I
started my business new. I did not buy an existing business. I
started February 1st of 2002. My business has 10 full-time
employees and 20 seasonal employees. We have grown from nothing
to about a $2 million volume with a $2.5 million inventory in
17 years.
The Bush era tax cuts of 2001 and 2003 had a huge impact on
how I depreciate my equipment. I use section 179 and bonus
depreciation every year. This is one of the tax laws that is
really working for me and for all small businesses. I have come
to D.C. many times and lobbied hard to make this permanent. I
have been able to grow my business, my company faster because
of it and also, our economy has grown continually because when
I buy equipment, like excavators and skid steers, it creates a
lot of jobs in the U.S. Thousands of other small businesses use
it just like I do. I am kind of addicted to it. I either spend
the money or have to pay a lot more taxes because I do not have
the depreciation built up to write it off.
This has really helped me grow my business faster and
continually. The Job Cuts Act of 2017 saved me about $7,200
last year. With health insurance going up another 10 percent
this year and the commercial auto insurance going up 30
percent, the money was used up fast. We really needed that tax
cut to help cover and maintain things. We are an S corp, so the
pass-through tax cut that came through is very important to
small businesses like mine.
The rising cost of health care, and in fact, the Affordable
Healthcare Act took the health insurance away from most of my
employees. We used to have a $1000 deductible and the employees
could afford that. Now that the premiums have doubled and the
deductibles went to $6,000, the employees do not have the
ability to cover that $6,000 deductible. So basically, they do
not use their healthcare plans. Simply put, the Affordable Care
Act has been a disaster for small business. We chase the
insurance changes every year and it is a real hassle to keep up
with it. It takes a lot of time and energy trying to do the
best for our employees balancing cost with benefits.
I feel I have been successful despite the government, not
because of it. Things like the Salary Employee Pay issue a few
years ago caused a lot of issues. I had to change my pay
structure for my management people because of the threats of
fines and such, and then it was defeated or went away. That
issue cost me a lot of time and money.
The amount of regulation we have to deal with is huge. We
have three pickup trucks we use for deliveries. Most of our
deliveries are within 100 miles, and almost all of them are
within 25 miles. We are in two states. The businesses are about
8 miles apart. All of our drivers have to be 21 because 18 year
olds cannot cross that state line. They can drive 200 miles in
either state but they cannot drive across that imaginary line
between the two. Just a point of interest, an 18-year-old can
vote and he can go to war, but he cannot drive across a state
line. It is insanity at work.
There are so many regulations. Just the DOT as an example.
With drivers' records, drug tests, truck inspections daily and
annually, it is a huge cost to keep up on and to track. And
then there is the trailers. You have to do the same thing to
them.
We rent a lot of different types of equipment and there is
ANSI standards, OSHA requirements on scaffolds, ladders, lifts.
Very few people understand that ladders are almost outlawed now
in this country by OSHA. Then there is the new OSHA and silica
and dust regulations. The reason I bring this up is we just do
not need to know them for us; we are supposed to educate our
customers about them.
The Tier 4 diesel regulations that went into effect for
emissions, they are driving up the costs and making it really
tough to maintain our trucks and equipment and very expensive,
too. Our new diesel trucks are on longer reliable like diesels
were known for. They are continually in for repairs, emissions
repairs. And in Duluth, we have winter, not Tier 4 friendly at
all. The one from Maine probably runs into that same issue.
I have lived the American dream. My wife and I have worked
hard for many years to get there. We have jumped through hoops
and learned things I thought I would never know. We collect
sales tax for 14 different municipalities, and we collect
Federal taxes also. We collect child support and court
judgments for our employees. My wife works full time to keep up
with the taxes and the human resource training and records for
our little business. Keeping up with the changes in HR and the
taxes is a job in itself.
Something else to think about. Remember, small businesses
are tax collectors. We do not get paid to do it. We do not get
trained to do it. But if we make a mistake we sure get punished
for it.
In my time as a business owner, I think I have heard there
is 137 different Federal agencies making rules for us to
follow. Then you have Congress and the courts. We need to
simplify this complicated system and stop any nonelected border
agency from passing any rule or law. We elected you to make the
decision, not the bureaucrats. If it does not have enough
support for Congress to pass it, it should not be a law or a
rule.
I spend a lot of time working to keep these unelected
bureaucrats and these agencies happy. This is one of the
largest burdens on my small business. And all small businesses.
They touch every part of what I do every day, and I do not even
have enough time to touch on the employee issues and problems
that we are currently having.
Thank you very much. I will answer any questions.
Mr. GOLDEN. Thank you very much, sir.
And with that, I am going to start by recognizing the
Ranking Member, Mr. Stauber, who has a constituent who is going
to be carrying out the opening prayers on the House floor, so
we are going to let him ask questions first.
Mr. STAUBER. Thank you, Mr. Chair.
Jerry, that was well stated. You and I have talked about
those unelected, which you refer to as bureaucrats, putting
legislation that affects small businesses, and what you and I
have talked about and which this Committee understands, 99
percent of our economy is small business. And we, as a small
business owner myself for 29 years, there are ups and downs,
there are struggles. But what we need to do is make sure that
when we put legislation forward that we understand the
consequences, and it has to be a positive, a net positive for
our small businesses.
So I have got just two questions. Actually, three. And the
first one, you alluded to it in your statement, but did the Tax
Cuts and Jobs Act have a positive effect on your business?
Mr. KORTESMAKI. Yes, it did. A very positive effect.
Mr. STAUBER. And what did you say your savings were?
Mr. KORTESMAKI. Seventy-two hundred dollars.
Mr. STAUBER. And then the second question is, what would
you say if you had to pick your number one roadblock to be
successful in relation to the Federal Government. What would be
the number one roadblock?
Mr. KORTESMAKI. That is a gigantic thing. I know currently,
and it goes back to what we are battling with with the employee
issues is this 18 versus 21 on the Department of Transportation
rules. And it is a huge hindrance. We have a young gentleman
that is 19 years old now. He has been driving trucks in
Wisconsin, or he has to start in Minnesota to do it because he
cannot cross that line. And this young guy can drive a trailer
as fast backwards as he can forward after doing this for years.
But he cannot drive across that crazy line. And finding
people----
Mr. STAUBER. And that crazy line for the listeners here is
the bridge between Duluth, Minnesota, and Superior, Wisconsin.
Mr. KORTESMAKI. It is two bridges. Yeah.
Mr. STAUBER. The Blatnik and the Bong Bridges.
Mr. KORTESMAKI. You know, so that, and again, taxes is the
other big thing. The amount of money that we spend every year
with depreciation, with accountants, and with planning for the
tax. You know, and it goes back to that 179 has been great, but
I am addicted to the spending because I have to, or I have to
give the money to the government. So that is a choice I make,
which granted, has been great for the economy. It has been
fantastic because every year now I spend more money every year.
I project what I am going to grow. I project how much I spent
last year. And John Deere out of Moline, Illinois, they love
me. We have got a lot of yellow big steel out there.
Mr. STAUBER. And then the last question, Jerry, you know,
you commented that you have come out to Washington and
testified several times. From your perspective, what can we, as
a Committee, work on to make sure that small businesses like
yours thrive?
Mr. KORTESMAKI. Balancing all these regulations against
cost. Every time these regulations come up there has to be a
formula in there to understand the fact that it costs us so
much money, and somehow as they go forward in all of these
other, Department of Transportation, OSHA, all these, they are
having their meetings outside of you. Again, if there is a way
to regulate them to make it that they have to bring stuff to
you to get it passed instead of just them making the rules and
making the changes and, you know, even their ability to tax is
totally wrong because you are my congressman. I elected you to
make these decisions and to make these things. I did not elect
them, so.
Mr. STAUBER. Thank you, Mr. Kortesmaki. I can say that we
have been here several months here as a freshman, and I really
appreciate this Committee talking about some of the exact same
things you had mentioned about the repercussions of legislation
or the repercussions of legislation by unelected folks.
Mr. KORTESMAKI. It is rulemaking that really kills us. It
is not just legislation; it is rulemaking.
Mr. STAUBER. Agreed. And we have talked about that as well.
So I would just want in closing, Jerry, I want to just
congratulate you and Kathy on that American dream. You are
living it. You are employing people, and I want to say from our
perspective of Minnesota's 8th Congressional District, you have
been a steward of small business and you understand it. And of
course, your affiliation with the National Federation of
Independent Business, they understand small business, too, and
we appreciate that. So I want to thank----
Mr. KORTESMAKI. A couple of seconds left.
Mr. STAUBER. Yeah, go ahead.
Mr. KORTESMAKI. The thing on the healthcare issue, what it
did to taking it away from my employees, the sad story of when
my mechanic crushed his ATV and we had the $1,000 deductible,
he was able to take care of that in one year. With the $6,000
deductible, and this guy makes close to $50,000 a year--he is
not super poor, he is not wealthy--that would devastate him. We
need to figure out how to fix this healthcare issue that for
small business to offer it has become such a burden, and I do
not want to just turn my employees over to government-
controlled health care. It is something that I do not see
working.
Mr. STAUBER. Thank you, Mr. Kortesmaki, and I appreciate
your attendance.
Back to you, Mr. Chair. Thank you.
Mr. GOLDEN. Thank you very much.
At this point, I am going to recognize myself for 5
minutes.
I just want to point out very quickly, Mr. Kortesmaki, that
you were talking about the rulemaking aspect of all this and
you elected your member of Congress to come here and make
decisions and not folks at agencies and departments. And Mr.
Stauber and I actually worked together on an instance to fix
something just like this. It was the Runway Extension Act that
the last Congress passed. Mr. Stauber sponsored the bill to fix
the issue and I am the cosponsor, and it is the same thing. We
have got an agency that is trying to ignore the intent of
Congress and we are here to try and make sure that we are going
to hold them to the original intent of the legislation.
I also wanted to point out, I am sure Mr. Stauber has
cosponsoring, as I am, a bill, the trucking issue you talked
about with truck drivers under 21. I have got you beat. In
Maine, Fort Kent to Kittery, a truck driver can drive 362 miles
under the age of 21 and then to go from Kittery to Portsmouth,
New Hampshire, 2.3 miles, they cannot do it. So I am with you
on that as well as a common sense reform.
I want to take a couple of minutes to talk a little bit
about trade, and I think we have a good opportunity to talk
about the importance of having a process and consistency as
best we can as a government.
I thought, Mr. Brochu, you might, having listened to Mr.
Skalish talk a little bit about the softwood lumber duties and
the process behind it and how it is more of a scalpel rather
than a sledgehammer approach to dealing with unfair trade
practices with another government.
Mr. BROCHU. Yeah, thank you.
You know, for the softwood lumber industry, the trade issue
with Canada, the unfair trade issue goes back to the early
`80s. It has been a long, long process, and there have been
periods of duties and periods of agreements and, you know, so
the last agreement ran out a few years ago. And at that point,
shortly after, there was the 1-year standstill period as part
of the agreement, and then the industry triggered another
investigation and filed a trade case against Canada. And
throughout that process what we as an industry need is
enforcement of the trade laws, and that is what we are asking
for. And it is a very long process to get to where we are now,
and it is a long process going forward. But the investigations
have shown an unfair situation that hurts the U.S. industry and
it hurts U.S. jobs and costs U.S. jobs and prevents our
industry from growing and adding the jobs and investing in the
mills to get us to the size that we should be or could be. So
the proof is in the pudding in the lumber anyway, and this is a
very long, drawn out process, but the lumber industry in the
United States is investing like crazy, growing like crazy. We
are adding big, big, big billions of dollars of investment into
mills, into jobs all throughout the country. We are a little
part of that up in Maine and we are happy to do it, and the
confidence that we have going forward that we have a level
playing field plays into that big time.
Mr. GOLDEN. And am I correct, and this is my understanding
of it, is that the process is so detailed and the
investigations there are actually identifying specific
companies who are carrying out, taking part, or benefitting
from some of these unfair trade practices, and there is almost
a scale in terms of what people have to pay, can you talk a
little bit about that?
Mr. BROCHU. Yeah, there are certain companies that have
different rates applied to them, and then there is a general
rate. And that is all part of the existing trade laws, how they
get to that point. So this is all a process, and it started
under the Obama administration, this current iteration of it.
You know, my first meetings down here on this current case were
with Ambassador Froman of USTR under President Obama. So it
takes a long time to do this properly and to enforce the U.S.
trade laws.
Mr. GOLDEN. I appreciate you taking a little bit of time to
talk about it, and I am sure that Mr. Skalish, you are going to
have more time to talk about it from a different perspective
but I think what you see here is a long, drawn out, thoughtful
process that is very detailed in going after some specific
issues here, and I think it is a good example of how we can
enact good trade policies when we see an unfair practice.
Real quick. You have got about 30 seconds left here. But
you talked a little bit about the labor stuff. Anything
specific come to mind that you think we could focus on that
would help you out?
Mr. BROCHU. We need people. I know immigration is obviously
a big issue, but we do not have enough people to fill the jobs
that we have right now. And I think we need to have more of an
emphasis as a country on trades versus the different types of
jobs. We are going to have plenty of computer programmers in a
few years. We need people to run equipment. We need people to
program. You know, there are plenty of computer jobs in our
mills as well but we need electricians, we need mechanical
people, we need millwrights. We need those types of skills that
are going to fuel the economy, and that is what we need.
Mr. GOLDEN. Thank you very much. I could not agree more. I
think you mentioned $60,000, $70,000 salary in Jackman, that is
doing real good in rural America.
With that, I am out of time. Nothing to yield back, and
next we will recognize representative Chrissy Houlahan.
Ms. HOULAHAN. Thank you, Mr. Chair.
I have questions, two questions, one for Mr. Skalish. And
thank you so much again for coming today and sharing your story
with us and our Committee. And in your testimony you spoke
about Cambria, which is the leading producer of quartz surface
product in our country, and them petitioning the Department of
Commerce and International Trade Commission and alleging that
the imported quartz surface products that were coming in from
China were causing injury to Cambria.
Can you talk a little bit more about the Department of
Commerce and International Trade Commission's response to that,
and possibly ways that we can be helpful to alleviate the
unintended consequences and the problem that you are
experiencing?
Mr. SKALISH. Well, number one, I am not sure Cambria is, in
fact, the leading domestic manufacturer of quartz surface
products in the U.S.
The Trade Commission, or the ITC, and then the final
decision by the Department of Commerce, made three rulings, or
actually two rulings. September 21st, after the hearing, they
initiated a countervailing duty of 34.38 percent and did not
find critical circumstances, which means that they will not go
back 90 days retroactive. On September 24, 2018, granite and
quartz were placed on the List 3 of the Section 301 tariffs at
10 percent currently, possibly 25 percent here in the very near
future. On November 20, 2018, the Department of Commerce
published an industry-wide antidumping cash deposit duty rate
of 290 percent. And they did find critical circumstances, which
go back 90 days retroactive.
What happens is that we are under contract with our
customers. When they went retroactive, we had shipments already
on the order to land that same day or days after the
retroactive duty period. So we are being tariffed on those
duties. Currently, we have paid over $1 million in tariffs with
a proposed $1.5 million in additional tariffs when they start
to go after the antidumping 90 day retroactive tariffs. So our
company is devastated. I mean, we are basically done because of
those tariffs.
Ms. HOULAHAN. And is there anything that you can think of
in terms of reversing the retroactiveness of it that would be
helpful so that we can be surgical rather than sledgehammer?
Mr. SKALISH. Exactly. But yeah. Eliminating the retroactive
tariff, finding critical circumstances on the antidumping would
be extremely helpful. That would reduce my liability from that
$1.5 million or more to go away, which would be very
beneficial. Again, we already paid almost $1 million. We had
contracts with customers and they are not willing to go back
and say, okay, we have been tariffed now. We would like to add
those tariffs to the invoice. Well, they come back and say,
well, we have a contract with you. The contract is for $50,000.
We are not paying any more money for tariffs. So who has to
absorb it? We do.
Ms. HOULAHAN. Yeah.
Mr. SKALISH. And that is what we have done.
Ms. HOULAHAN. Thank you. I understand. And thank you very
much for your compelling testimony.
With the remainder of my time I would love to ask Mr.
Brochu a question regarding your testimony that had to do with
cybersecurity and the fact that you were kind of hijacked in a
way. I would love to understand a little bit more about the
story of the hack and also if you could speak more in depth
about how you were prepared? Did you know that you were
vulnerable? Did you have any assistance? And what can we do to
help small businesses like yours to be less vulnerable to
cyberattack and to be more able to withstand them once they
happen?
Mr. BROCHU. Yes. Thank you for the question.
Our particular instance, it was a ransomware attack and it
locked up a lot of data. And we recovered what we could. We had
to rebuild everything, and it all started with somebody opening
an attachment. It was a very innocent thing. It was disguised
to look just like an internal email. So it is so sophisticated
now and so complex that it is becoming a major expense to our
business. And we, through that process, exposed some gaps that
we had in security that we spend a lot of money now to fix. So
it is becoming one of those costs of doing business that you do
not talk a lot about but it is becoming very significant.
So what can the government do to help, I think whatever
emphasis needs to be put on this from a research level and all
the way down to an implementation, I think the security issues
that the government faces is the same as what we are facing
now. And if it is unaddressed, it is going to be a competitive
disadvantage to businesses going forward, and I think the role
the government can play in that is to work on it on a level
where it does not become a competitive disadvantage to us.
Ms. HOULAHAN. Thank you very much. And you should know that
this Committee passed through three different bills last week
that went to the floor last week and have now passed the House
that have to do with cybersecurity in the small business space,
and now obviously the challenge is to get it through the Senate
as well.
So thank you so much for your time, and I yield back.
Mr. BROCHU. Thank you.
Mr. GOLDEN. With that, I want to thank everyone for coming
and providing some very compelling testimony about your
businesses. I want to say congratulations to all of you on the
work that you do and jobs that you create in your communities.
And just the breadth of the conversation is impressive and I
think it gives you a sense of everything that we deal with in
this Committee, so thank you for sharing your thoughts. And we
will be using that as best we can to help you moving forward in
this Committee.
With that, we are going to shut down this panel and move on
to a third. So thank you very much.
[Recess]
Ms. FINKENAUER. [Presiding] This hearing will come to
order. I would like to first welcome our witnesses today on our
final panel. I will take a minute to introduce each one of you,
but before that, I am going to first yield to Congressman Crow,
who is going to introduce his witness and ask the appropriate
questions as well. Thank you all again so much, and I yield now
to Congressman Crow.
Mr. CROW. Thank you, Madam Chair. I appreciate you yielding
to me and going a little bit out of order here this morning. It
is nice to be with all of you today and to welcome you and to
listen to just a few of the Nation's small business heroes'
stories.
It is an honor to introduce a small business hero from
Colorado's 6th Congressional District which I represent.
Brittney Rae Reese is the cofounder of FIT & NU, Colorado's
first fitness and nutrition club for women of color and proudly
located in Aurora, Colorado. Brittney has a strong
entrepreneurial spirit which has weaved itself through
everything she has done in her 32 years. She has accomplished a
lot in her professional life, but what inspires me is the
saying she lives by, ``If you lead with good and purposeful
intent, then great things will come out.'' Which I
wholeheartedly agree.
Brittney started her college career at Colorado State
University studying apparel design and construction and was
very active in the Black Student Alliance. She began to learn
about business by studying at the Art Institute of Colorado and
by creating an event, production, and design company called
Chocolate Piece Productions at the age of 21. She then
relocated to Los Angeles to continue her studies at the Art
Institute of LA, while working as a publicist assistant for a
number of Hollywood influences and lifestyle brands. She kept
pushing herself to grow, which led her to move across the
country to Brooklyn, New York, and it was there that she found
her love for fitness. While living in New York, she began to
train and learn more about fitness, continued to build her
passion to inspire others, and it eventually took her to
Central America. It was upon her return where she and her
sister Joslyn decided to dedicate their life's work to help
women of color reach their optimal fitness and wellness through
FIT & NU, their habit-based fitness and nutrition company. And
I am so glad that they decided to launch and run this business
in their hometown of Aurora. Since launching in 2015, Brittney
has worked to touch hundreds of women's lives in her hometown,
and even more online. She has led women to achieve physical
wellness, but also goes further to work on self-actualization,
esteem, love, belonging, safety, and security. I am proud to
have Brittney Reese representing my district as a small
business hero, and I know she will achieve a great amount of
success through her good and purposeful living.
Now I will do something that I never do, and I have to
apologize and excuse myself from this hearing. As many of you
know, my district had our third mass shooting just yesterday
with a mass shooting at a school in the southwest part of my
district, so I am going to leave now and head to the airport to
be with the families during this time. So I apologize for
having to excuse myself, but I welcome you again and I thank
you for your leadership.
Madam Chair, I yield back.
Ms. FINKENAUER. Thank you, Congressman Crow. I appreciate
your time today. Thinking of you, wishing you well on your
journey, and thinking of your district.
Now, it is my pleasure to welcome our next witness here
from my home state of Iowa, Mr. Dave Walton, a local farmer and
executive director on the Board of Directors at the Iowa
Soybean Association. Happy to have you here. Mr. Walton farms
with his wife and two sons. In addition to growing soybeans and
corn, they also raise beef, cattle, and sheep, and own a small
seed company in their hometown. Mr. Walton and his wife also
have a new trucking company that they started up with their two
sons to make sure that there were opportunities for their sons
to come back to the farm. Right now, folks across Iowa know
that things are tough, particularly in rural Iowa, given the
ongoing trade war and retaliatory tariffs, and there is plenty
to do. Mr. Walton, you give me hope every day. It is folks like
you that I go back to Iowa and chat with that always give me
hope, even when things are tough. I am very grateful for you to
be here today and tell your story. Thank you very much, Mr.
Walton.
I would now like to yield to Mr. Burchett from Tennessee to
introduce our next witness.
Mr. BURCHETT. Thank you, Chairlady, and thank you for this
opportunity to be here. I guess I should have said Madam Chair
which would have been more appropriate. I am just from
Tennessee. That is what we always used to say in the
legislature, so I apologize, Madam Chair.
I am honored to be here today to talk to you about a small
business that is in East Tennessee. Tennessee is a proud small
business state and 99 percent of the businesses in my state are
considered small businesses. These are job creators who employ
more than half of Tennessee. These are the people who put their
blood, sweat, and tears into their passions, and I want to get
the government off their backs like a lot of you all do. I ran
a couple of small businesses myself, and I understand what it
takes in that community.
My guest at the Committee today is no different. Colleen
Cruze Bhatti--did I get that right Colleen? Pretty close? All
right. Owner of Cruze Farm in Knoxville, Tennessee, is a
fixture in our community. Cruze Farm is a family dairy farm in
East Tennessee. Colleen and her staff actually milk Jersey cows
and bottle their own whole, pasteurized Jersey milk which I
guess I should say for the record there are a couple of gallons
of the whole variety and the chocolate variety in my
refrigerator, and I would say there are a couple of tubs of
their ice cream but it never gets to the freezer usually. When
my wife gets it out of the bag, it is already getting eaten by
myself or my daughter, Isabelle, or my wife. They also have
their milk in the mom and pop grocery stores and the food
cooperatives throughout East Tennessee, and most importantly
though, Cruze Farm has some of the best ice cream you will ever
have, which I noted. I was out there eating, and they also sell
pizza, if you can believe that with, I guess, the cheese that
they make themselves. I was out there one Sunday after church
with my wife and daughter, and there was another guy there, and
he was telling me about their marketing skills, and the trendy
word that I guess you young folks use a lot is ``branding''.
And their branding is excellent, and he said to me,
``Burchett,'' he said, ``this is like being at the early days
of Chick-fil-A.'' And I thought that was some pretty high
standards.
I do not want you all to take all this from me, but I want
you to know I am very happy to introduce my good friend,
Colleen, for you all to hear her story. Colleen, thank you for
being here.
Ms. FINKENAUER. Thank you, Mr. Burchett.
Finally, I would like to yield to my colleague from
Pennsylvania, who also sits as the Ranking Member of what I
think is the best Subcommittee--Rural Development, Agriculture,
Trade, and Entrepreneurship--along with me. Dr. Joyce, I would
be happy to have you introduce our last witness.
Mr. JOYCE. Madam Chairwoman, thank you very much. And you
are right, this is the best Subcommittee.
Today I welcome Mr. Shawn Pulford, the CEO of LB Water
Services of Chambersburg, Pennsylvania. Mr. Pulford is in his
fourth year as the CEO of LB Water Service. LB Water has been
providing quality water and wastewater solutions for decades,
and over that time, LB Water Services has grown from one sales
office in Selinsgrove, Pennsylvania, to eight full-service
locations covering Pennsylvania, Maryland, and Virginia. Their
large inventory and proprietary fleet of delivery vehicles
ensures that LB Water Services can supply the products, the
services, and support that their customers need the most. Shawn
has lived in various places throughout the United States in his
career, but he considers Elmira, New York to be his home. He is
a graduate of PMC Widener University where he received his
degree in business administration. Shawn is the proud father of
three grown children, hopefully one watching as it streams
live. In his spare time, Shawn enjoys being with his family and
friends, playing golf, watching baseball, and most important
for this Subcommittee, being the CEO of LB Water Services.
Welcome, and thank you.
Ms. FINKENAUER. Thank you, Dr. Joyce.
Now I want to just take a minute to explain how the timing
rules work. Each witness will get 5 minutes to testify and then
members get 5 minutes to ask questions. There is a lighting
system that you will see right in front of you to assist you.
The green light comes on when you begin, and then the yellow
light means that there is just 1 minute remaining. The red
light then comes on when you are out of time, and we ask that
you stay within the timeframe to the best of your ability.
Thank you all again for being here today, and I cannot wait
to hear from you all.
With that, we will start with Mr. Walton, who I would like
to recognize for 5 minutes.
STATEMENT OF DAVE WALTON
Mr. WALTON. Good morning, Ms. Chairwoman, and members of
the Committee. I am honored to address you here today. Thank
you for inviting me to speak as we recognize the positive
impact of entrepreneurs and small business owners. It is truly
an honor to speak on behalf of millions of hard-working farm
families who are an important segment of the small businesses
of America.
Once upon a time, the thought of testifying before the U.S.
House of Representatives would have struck fear into my heart.
Turns out, it is a walk in the park compared to farming and
operating a business that sustains my family and provides
employment and economic opportunity for Iowa, a state built on
agriculture.
For more than 100 years, the Walton family has farmed the
land I call home near Wilton, Iowa. But in 1835, we were the
first European settlers to establish a farm, plant and harvest
a crop in the area now known as Cedar County. But that is not
where our story begins. Centuries ago, after a dispute with the
King of England, my ancestors were given a choice. They left
England and arrived in the Colonies during the early 1600s,
settling on Staten Island first, and then began their migration
to Iowa, first to Long Island, New Jersey, Ohio, and Indiana,
before setting down roots in
I come before you today as an eastern Iowa farmer who has a
passion for providing food, fiber, and fuel for a growing and
more demanding world population. My wife Paula, sons Brad,
Alex, and I grow soybeans and corn, raise beef cattle and
sheep, and operate a seed company in our hometown of Wilton.
Recently, we established a trucking company to transport sand,
gravel, and fertilizer to help provide additional revenue and
an opportunity for our sons to join the operation as partners.
For the past year, farm families like mine have not been in
a celebratory mood. Regardless of running a diversified
enterprise, managing cash flow responsibly and doing things the
right way and for the right reasons, I can tell you firsthand
these are difficult times, perhaps the most difficult I have
faced as a farmer. This may come as a surprise given the
Nation's historically low unemployment and solid gains in most
financial indices, but make no mistake, farmers, the
communities in which they live, and the businesses they
patronize, are hurting. Soybean prices, a major source of
revenue for my operation, are at 10-year lows, down almost $2
per bushel from this time last year.
While I would like to say all is well in rural America, it
is not. There is no one reason why prices farmers are receiving
for their products are well below the cost of production.
Rather, it is a multitude of challenges, some placed upon us by
government's action or inaction, and some by our own making.
Combined, inaction on these critical issues are creating
the kind of financial headwinds the likes we have not seen
since the 1980s. If action is not taken immediately by Congress
and the administration, the crops some farmers are currently
planting may be their last.
While America's farmers are astute at producing, what we
need are markets. Many of you gathered here today understand
the direct correlation between action you take and the
livelihoods of those who farm and operate small businesses.
When access to markets is blocked, farm prices fall.
Conversely, prices react positively when demand increases. And
I can think of few better examples of that demand increase than
promoting and enhancing consumption of homegrown, renewable
fuels like biodiesel.
I want to recognize Congresswoman Finkenauer for leading a
bipartisan effort in the House to retroactively extend the
biodiesel tax credit. This action helped shine a light on the
need for boosting prices and demand. This issue resonates with
her as Iowa is the number one biodiesel producing state,
producing nearly 365 million gallons last year, supporting
nearly 4,700 full-time jobs in Iowa, and given most renewal
fuel production facilities are in rural communities, the
biodiesel tax credit and renewable fuels industry are a major
boost to communities often most in need of good-paying, blue-
collar jobs and economic vitality.
For our farm, biodiesel production adds 63 cents to the
market value of every bushel of soybeans, or about $40 an acre
by generating greater demand for the oil found in each soybean.
That is an additional $40 across my farm that would enable us
to reinvest an extra $12,000 this year into an operation to
update machinery, like a 20-year-old tractor that is wearing
out or invest in technology to continue to improve our
efficiency.
Biodiesel not only diversifies our fuel supply so we are
less dependent on foreign oil, it saves every U.S. consumer at
least 17 cents on every gallon of diesel. It improves the
environmental quality by reducing greenhouse gas emissions by
up to 86 percent. In a climate where everyone is looking for a
win, this is a win, win, win. It lowers the cost of food and
fuel and improves the air we all breathe. This should be a slam
dunk.
Continued inaction on this topic is unacceptable. If
Congress does not extend the biodiesel and renewable diesel tax
incentive, small businesses like mine and the biodiesel
producers in our small towns will continue to suffer.
The same can be said for trade. Continued disputes and
disruptions with our trading partners have created tremendous
financial strain for America's farmers and small businesses.
China is America's number one market for soybean exports.
Nearly one of every three rows of soybeans grown in the U.S. is
exported to a country of 1.4 billion people. That is no longer
true today. As a result, the downward pressure on soybean
prices has been dramatic since the U.S. and China became
embroiled in an escalating trade war almost 1 year ago. China's
retaliatory duties primarily targeted agricultural products,
including an extra 25 percent tax on U.S. soybeans.
Any trade war involving food hits states like Iowa, and
small businesses like mine, particularly hard. Adding to the
complexity and pessimism is that no one knows when the anxiety
and pain will ease. This makes planning for the future nearly
impossible. Until the trade issues are resolved, we are stuck
in limbo, unable to move forward with any clear direction. I
can tell you this is not an enviable position for any business
owner. We thrive when the future is clear and barriers are
removed.
It is my sincere hope is that these issues will be resolved
quickly so many more generations of Waltons can continue this
400 year journey of farming in this great country. I look
forward to continuing the conversation and stand ready to
assist you and your colleagues in crafting solutions and moving
these issues across the finish line.
Thank you again for allowing me to share my story on behalf
of Iowa's soybean farmers. I am happy answer any questions you
may have.
Ms. FINKENAUER. Thank you, Mr. Walton. And again, I'm just
very grateful to have you here today making sure Iowans are
heard in Washington.
Next, I would like to recognize Ms. Reese for 5 minutes to
hear her testimony as well.
STATEMENT OF BRITTNEY REESE
Ms. REESE. Thank you. Chairwoman and members of the Small
Business Committee, thank you for hosting this hearing to honor
small business heroes and for inviting me to speak today. I
would also want to thank my representative, Congressman Jason
Crow, for giving FIT & NU the opportunity to speak here about
the work we are doing as small business owners in his district.
My name is Brittney Rae Reese, cofounder of FIT & NU,
Colorado's first fitness and nutrition club for busy women of
color, located in Colorado's 6th Congressional District in the
city of Aurora.
My sister Joslyn and I started FIT & NU in 2015 with the
mission to help busy women of color improve their health, ease
their minds and influence their communities and families to
live well. We do this through functional fitness training and
habit-based nutrition coaching. When asked why we were selected
as a Small Business Hero, we were told because we ``take
advantage of our resources, we work hard, and bring passion.''
My sister and I work well together and maintain a family
relationship that extends to the women we serve.
FIT & NU celebrated its official grand opening as a fully
staffed and equipped boutique fitness and nutrition club in
March of 2019, not only positively impacting health and
wellness for women in the community we grew up in, but
employing, collaborating, and contracting with other small
businesses and entrepreneurs as well. Hard work and
determination alone did not get us here. The success my sister
and I have enjoyed so far is due largely to the support of
local nonprofits, like the Women's Business Center at Mi Casa
Resource Center and Community Enterprise Development, also
known as CEDS. These are two Colorado organizations that equip
women and minority business owners in our pursuit of impact,
longevity, and profitability. I highlight these organizations
because of the work they do to propel low-income entrepreneurs
like myself through glass ceilings, out of cycles of poverty,
and beyond gender wage gaps.
Between 2014 and 2018, Mi Casa created 721 jobs, launched
35 new businesses and hosted countless workshops on topics
ranging from finance and HR to strategic planning and social
media marketing. CEDS has financed 213 businesses and placed a
total of $4.05 million in investments with the help of the
Small Business Administration.
So when I think of what Congress can do to help small
businesses, it would be to continue programs in the Small
Business Administration that fund organizations like Mi Casa
and CEDS that support disadvantaged businesses, such as
minority-owned and women-owned businesses. This will afford us
to grow beyond the uphill battle as startups, and give us the
resources to hire team members, implement marketing campaigns
beyond grass root efforts, and to become more sound business
operators and owners.
Also, as Congress passes legislation that allocates capital
funding in support of small businesses, the focus should be on
helping businesses develop and sustain internal operations.
As low-income business owners, we are our main human
resource. We would like to help ourselves and other disinvested
people and communities join the economic mainstream. Wage
subsidy programs and debt relief are amongst those of interest
to us.
Furthermore, if Women's Business Centers and Community
Development Financial Institutions did not exist, we, the
disadvantaged black women visionaries, low-income
entrepreneurs, change agents of global health, refugees and
minorities would not have access to low cost developmental
services and capital to grow.
In closing, we are thankful for the contributions Congress
has made thus far to bridge the social and economic gap for
women like me. However, many of the available resources are
still directed at larger companies, yet businesses that are
small to the Federal Government need these partnerships with
organizations that see them as large.
I hope my testimony affirms that women and minority-focused
organizations do make a difference and that they are the
lifeline to making the American dream work. Thank you again for
the opportunity to share our story on behalf of all women-owned
and minority-owned businesses.
Ms. FINKENAUER. Thank you so much, Ms. Reese. And again,
I'm grateful to have you here today.
I would now like to recognize Ms. Bhatti for 5 minutes for
her testimony.
STATEMENT OF COLLEEN CRUZE BHATTI
Ms. BHATTI. Thank you all. And thank you, Mr. Burchett.
I met Mr. Burchett about 6 years ago I would say. I was
scooping ice cream at a farmers market. And I do not know if
you remember this, but he was teasing me about how expensive my
ice cream was. And I said--do you remember what I said?
Mr. BURCHETT. My wife will pay for it?
Ms. BHATTI. No. I said, ``Mr. Burchett, if you had to milk
the cows you would charge twice as much.'' I am happy to say I
have not gone down in prices or quality, and 6 years later we
are selling more ice cream than I could have ever dreamed of.
And that is due to our community in Knoxville, Tennessee has
completely supported our business, and because of them we are
really thriving.
I am here today with my husband, Manjit Bhatti. He is a
first generation American. His parents are from India, and I
met him actually trying to sell milk at a restaurant. He was
cooking. He was about to go to law school. I talked him out of
law school, and now he is a full-time dairy farmer with me. We
are living the dream together and making good quality milk in
Tennessee.
So I am here today to tell you about who my small business
heroes are, and that is my parents. They started the farm in
1980. They got married when my dad was 38, my mom was 29. They
met ice skating. They married 3 months later and my dad told my
mom, I have this dream. I want to bottle milk. And he is a
fourth generation dairy farmer. Everyone in the family sold
milk but they never learned how to put it in a bottle and sell
it directly to a customer. And my dad was determined to figure
out how to do that.
But he could not have done it without my mom. My mom is the
brains. She is so smart, and she supported him completely. And
within 1 year they were bottling milk, pasteurizing and
bottling milk. They got their permit, and they would not have
gotten the permit if it was not for my mom. And they started
selling milk directly to customers.
So I went off to college, not totally sure I would come
back to the farm, but I really did miss the farm. And I really
just appreciated what my parents had built and how much work
and love they put into that dairy farm. I do not know if you
know much about dairy farms but it is a completely different
culture. The cows come first before anything in life. So on
Sunday mornings, instead of church we are milking cows
together. It is a unique culture and I am really happy to carry
that on.
So my mom encouraged me after college to come back to the
farm. And I came back and my goal was to sell the milk surplus
that the farm had. We had quite a bit of extra milk that we
were not selling, and I also wanted to make ice cream. So the
way I started selling it was giving it away. You know, if you
cannot sell something you give it away and you make customers.
Oh, my goodness. And that is how I really built the business
was by giving milk away and meeting our community. And I was
kind of like a politician in a way really just out there giving
milk away and trying to tell everyone about what we were doing
at our farm.
Mr. BURCHETT. Except we give other people's stuff away, not
our own.
Ms. BHATTI. And I started marketing the farm through social
media, which has been really successful for us. We use
Instagram and Facebook, and it is free. And so we meet our
customers just through social media.
In 9 years, the business has really grown. We have three
storefronts and about 70 employees. And what really motivates
me to run a great business are the people. I love people and I
love my employees. And I do not offer health insurance yet but
that is a goal. And as a small business owner, I realize the
responsibility I have in employing America's future. And I take
it seriously. Employment is much more than merely providing a
service in exchange for an hourly rate. I believe that small
business owners in America have a unique opportunity to help
define what employment can be in this century. And I believe
that a job has to be something that one takes pride in. It can
be fulfilling. It must be nourishing, not draining, and it has
to facilitate physical and mental health. It must provide a
forum for community and friendship, because at the end of the
day we, Americans, we spend all our time at work.
So at Cruze Farm, our motto is to work hard and to love
harder. And through my business I am building the America that
I dream of.
Thank you so much for your time today.
Ms. FINKENAUER. Thank you, Ms. Bhatti. And I wish you would
have brought some of the ice cream with you. Oh, my goodness.
Ms. BURCHETT. She did. It was already eaten. I am sorry. I
confiscated it. It is in the office.
Ms. FINKENAUER. Thanks for not sharing!
Thank you again.
Now I would like to recognize Mr. Pulford for 5 minutes.
STATEMENT OF SHAWN PULFORD
Mr. PULFORD. Thank you, and good morning. And thank you,
Chairwoman. And I would like to recognize the other
distinguished members of the House of Representatives Committee
on Small Business, and specifically, Congressman Joyce for
inviting us today.
I am honored to testify before the Committee in recognition
of National Small Business Week, representing one of our
Nation's small business heroes, LB Water Service, Inc.
My name is Shawn Pulford, and I am the CEO of LB Water. Our
company was born in 1970, when our founder, Lehman B. Mengel
capitalized on a market need for readily needed infrastructure
materials in the central and south central region of
Pennsylvania. In a timespan of nearly 50 years, we have grown
from three employees in one location to 225 employees in eight
locations.
LB Water is now the leading provider of innovative
solutions for water, wastewater, and stormwater throughout the
mid-Atlantic region. We serve cities, counties, municipalities,
contractors, engineering firms and development companies. And
many of our manufacturers, as well as our customers, are also
small businesses. We also now operate two affiliated companies,
Stormwater Solution Source and 540 Technologies.
Stormwater Solution Source provides stormwater and
environmental solutions that help state and local governments,
contractors, and companies meet increasing regulations
governing the management of stormwater and erosion and sediment
control. 540 Technologies serves an expanded region of 21
states, offering smart city solutions for water-loss
management, street lighting, electric metering, data
acquisition and management to both public and private entities.
In 2002, LB Water's owners sold the company's assets to the
employees, and LB Water has operated as a 100 percent Employee
Stock Ownership Plan (ESOP) company ever since. Our company is
one of more than 6,600 ESOPs in the United States that,
combined, employ 14.3 million workers. It is because of the
provision for ESOPs in The Employee Retirement Income Security
Act of 1974 (ERISA) that LB Water has been able to attract and
retain its high-caliber workforce, invest in top-notch training
and equipment, and provide exceptional benefits to our
employee-owners. In addition, LB Water's status as an ESOP has
provided the foundation for our company's success.
I am pleased to say that LB Water has experienced
tremendous growth in the last 5 years. This is due, in part, to
increases in both public and private investment. We are
benefiting from relief provided by the Federal tax cuts as
well. As we consider the south central region of Pennsylvania,
which includes Congressman Joyce's district as well as our
Chambersburg location, we can see economic development at work.
The region is becoming home to manufacturing and distribution
operations for many companies. We have witnessed the
construction of 15 new warehouses, each exceeding 1 million
square feet, along the I-81 corridor from the Maryland line to
Harrisburg, Pennsylvania. We and other businesses in this
region have experienced a positive residual economic impact due
to this increased activity.
However, the area is quickly reaching full employment, the
need for skilled labor is high, and concerns are mounting
regarding the ability of I-81 to handle the increased traffic
demands in the corridor.
At LB Water and our affiliated companies, most of our
solutions are designed to address our Nation's aging subsurface
water infrastructure, much of which is well over 100 years old
and in dire need of replacement. This critical infrastructure
remains ``out of sight and out of mind'' until a major failure
occurs. Using advanced detection technologies, we can see,
hear, and pinpoint even small water leaks and provide solutions
before they become big events that appear on the nightly news.
Yet, repairs alone cannot solve the state of our country's
deteriorating water infrastructure. Much of it needs to be
replaced. For more than 2o years, Congress has discussed the
need for comprehensive infrastructure legislation to address
the country's transportation and subsurface water
infrastructures, both of which are essential for economic
development and as well as quality of life.
As LB Water and other small businesses look ahead to future
opportunities and growth, it is clear that this is a critical
matter upon which the Federal Government could act. We strongly
urge Congress to pass a comprehensive infrastructure bill that
funds needed improvements to our Nation's crumbling water
distribution systems along with our Nation's highways, bridges
and airports.
I would like to conclude my testimony by saying that it has
been a tremendous honor for me to appear before this Committee
today to tell our story and to speak to some of the issues that
impact the day-to-day operations of LB Water. We truly believe
we are an American success story. I am proud of our 100 percent
employee-owned company, what we have accomplished, and how we
are positioning ourselves to continue to succeed in the future.
This has been a great opportunity. I thank you very much,
and I will be happy to answer any questions.
Ms. FINKENAUER. Thank you so much, Mr. Pulford. And thank
you again to all our witnesses here and all that you have
shared with us. I am excited to get to learn more as we ask our
questions.
To begin, I will recognize myself for 5 minutes and start
with Mr. Walton. I know some folks are probably wondering why I
keep bringing farmers from Iowa to testify in front of the
Small Business Committee, but I take every opportunity I can to
remind Washington that our farmers are also our small business
owners. And again, thank you so much for being here.
You know, we have gotten to chat over the last few days
about quite a bit that is impacting our state right now.
Obviously, the uncertainty with the trade war is one of the
things that I am very concerned about, as are all our friends
back in Iowa. One of the things we can be doing here in
Washington is trying to help our farmers as much as we can with
certain things like the biodiesel tax credit extender. I know
you touched on this in your testimony a bit, but I am wondering
if you can explain more about what it would mean to extend the
biodiesel tax credit. It expired 16 months ago durig the last
Congress and we need to get this done. What would it mean for
your family farm and your businesses, but also as we have
talked about earlier, what would it mean for the communities
surrounding you and the small businesses on Main Street that
rely on our farmers doing well for them to do well? If you
would be able to elaborate on some of that and just how
important it is that we do everything we can right now to
support you guys, and again, do everything that we can for our
state to be able to grow.
Mr. WALTON. Sure. And thanks for the question because this
is one that has been kind of a struggle for us.
The biodiesel tax credit extension is one that the
producers are looking for. They have to go throughout the year
not knowing whether or not they are going to get a retroactive
tax credit for the gallons that they produce. So they have to
make a decision, do we price it in or do we not price it in?
And a lot of them are pricing it in thinking that it is coming
because it had been retroactively put in place. Sixteen months
ago that stopped happening, so those producers are throttling
down production. They are in some cases shutting down
operations. And the effect of that is they are on longer
creating demand for the soybean oil that we produce. And a
soybean, you basically have two things once that soybean is
processed. You have meal, which is used for feed purposes and
then you have oil, that can be used for a number of things, one
of which is the production of fuel. When we lose demand for
oil, that affects also the price of the meal because now oil
becomes a waste product that either has to be disposed of or
has no value and that raises the price of meal. So when you
raise the price of meal, that costs more to feed to an animal,
whether it be a pig or a chicken or a dairy cow, and raises the
cost of production for those livestock farmers, which in turn
raises the cost of food.
But what it means for the grain farmer is that we could
potentially lose that 63 cents a bushel of value that the oil
adds to the soybeans. And if I am not profitable, like I said,
it is about $40 an acre for us. And for this year that is the
difference between profit and loss. So if I am not making a
profit, I have no money to spend. We have already looked at
every single expense in our operation and we have cut out
everything critical, and most of those are personal expenses.
We are not buying new vehicles. We are not spending money on
clothes. The grocery bill has been paired back as much as we
can. So we are making all those kinds of cuts, and those are
dollars that are not being spent in the community. It is not at
the restaurant. It is not at the clothing store. It is not at
the supermarket. And small town America, they rely on those
dollars even more critically than they probably do in urban
areas because they have a smaller customer base. So it has a
really wide-reaching effect when Ag is not doing well, and it
probably is amplified in those small businesses in small towns
across Iowa in the Midwest. So that is the thing that we are
working with here is if the profitability of soybeans or any
commodity goes away for us it has that effect that we do not
have dollars to spend in the community. We do not have dollars
to spend at the equipment dealership to upgrade equipment, and
that in turn goes to the manufacturer and they cannot pay their
workers or are shutting down, and I know right now Deere has
throttled back operations on the Ag sector, and that is a
direct result from the profit ability loss in Ag. So it is a
pretty direct correlation.
Ms. FINKENAUER. Yeah. Well, thank you again, Mr. Walton,
for uplifting these issues. We will keep doing that the best we
can here in Washington to make sure that Iowans are heard loud
and clear, and that we elevate the effects of everything that
is going on here and how hard they are hitting our state. Thank
you, Mr. Walton.
I know my time has expired, so I would like to recognize
Mr. Burchett for 5 minutes to ask his questions as well.
Mr. BURCHETT. Thank you, Madam Chairlady. I have several
questions. I only have 5 minutes.
Mr. Walton, you said that the soybean, let us see, the
biodiesel I believe is what you said, there was a cost savings
associated with that for you all. Is that cost savings there if
we do not provide the cash incentives to it? Is it profitable
to you all?
Mr. WALTON. That is kind of hard to say where I sit because
the biodiesel industry is what creates that value for us. And
so when we have a functioning biodiesel industry that
profitability is there. If the biodiesel industry goes away, I
think we have to default back to where it was before we had a
robust biodiesel industry and adding that 63 cents. It may be
somewhere between zero and 63. I do not know where that is. So
that cost savings would be borne on the meal side. So it would
raise the cost of meal. So it is hard to say. But I would say
that it would be definitely between 63 and zero, but where that
number is, I do not know.
Mr. BURCHETT. Okay. Okay. Thank you.
Ms. Reese, your story is very compelling, and I dig it.
Ms. REESE. Thank you.
Mr. BURCHETT. What hurdles do you experience as a woman of
color in a very specialized business it seems? It seems that
there is a--I do not know the makeup of Colorado, but when you
say we are going to target women of color just in a specific
industry, I am curious, what hurdles have you experienced? And
are there other folks, maybe local chambers of commerce or what
have you that would actually get with the other ladies that
have been in similar situations and say here is where we are
at, here is what can happen to you?
Ms. REESE. Absolutely. We have managed to partner with a
number of organizations in Colorado and are currently working
with a more national organization that is located here in D.C.,
the Black Women's Health Imperative to help span our reach. And
just overall, obviously in Colorado, the population of women in
color is lower. We happen to be located in a city with the most
populated African American women. So we were pretty strategic
about that because we know that this is important even though
we are not the majority in our city. However, we are looking at
it from a national stance starting where we are from and then
hoping to expand. Some of the biggest challenges I would say is
really identifying where we can create these strategic
partnerships that will help our bottom line of saving and
serving the most women of color in Colorado. So we are working
diligently with that, and I think that as we get our name out
there a little bit more, Colorado is becoming a big hub for
people to, you know, for transplants. So I think that we can
start to ride that wave a little bit more once our name gets
bigger.
Mr. BURCHETT. Cool. My brother lived there and my nephew
was born there, so.
Ms. REESE. Oh, there you go.
Mr. BURCHETT. But he is back home now.
Ms. Bhatti, finally, you know, it is a family-owned
business, and I know that in family-owned businesses, you know,
especially in the dairy business, I remember Paul Harvey, the
old radio guy said one time, he said that he read this letter
from a guy who sent it to his dad, and he was going to boot
camp in the military and he said, ``you know, we are up every
morning at 5:30, and we work all day and then we are in bed by
7:00.'' And he said, ``If I had known it was going to be like
this, I would have left the dairy farm years ago and joined the
Army.''
And I am wondering with family, and I know your family and
your husband is here and your boys, where it is legal, are
there any incentives to bring family into the business to
continue it? You know, we always talk about we would like to
hand the businesses off to the family, but it just seems, it is
just the big boys. We will cut a deal for the big boys. But to
locally owned folks like you four, nobody is up here beating
the drum for you all.
Ms. BHATTI. Well----
Mr. BURCHETT. That might just be a no.
Ms. BHATTI. I guess in our situation, I think we are doing
all right. I do not know if you know, my dad put a conservation
easement on the farm. So it is going to stay a farm, whoever
along the way wants to farm it. Maybe not the next generation,
maybe the next one. But I mean, in our situation, I think we
are going to stay a farm forever. Maybe.
Mr. BURCHETT. Good.
Ms. BHATTI. That is the goal.
Mr. BURCHETT. That is the goal.
I am always worried with farming. You know, everybody
pushes farming but then, if I am stepping on toes here I really
do not care, it becomes the Walmart model. You know, they bring
in gasoline and they sell it cheaper than everybody else can.
Ms. BHATTI. Right.
Mr. BURCHETT. And then all of a sudden we have replaced all
these hardworking mechanics with minimum wage hour greeters and
they drive everybody out of business and then they jack the
prices up after they get in. I see that in the dairy industry a
lot, and that concerns me.
Ms. BHATTI. My dad is 76 and he is pretty wise, and he
really believes people are going to come back to quality and
smaller businesses because smaller businesses are able to
provide higher quality. And so if he is right then we are
headed that direction.
Mr. BURCHETT. I have never had anything bad from them. It
is sinfully good. And I meant what I said about it being in my
freezer. It never makes it to the freezer. It always gets eaten
up. But thank you, and thank your husband for coming in and
getting away from your boys.
Ms. BHATTI. Thank you.
Mr. BURCHETT. Thank you.
Ms. FINKENAUER. I would like to recognize Congressman
Schneider now for 5 minutes.
Mr. SCHNEIDER. Thank you. And I want to thank the Committee
for hosting this hearing on celebrating our small business
heroes. I want to thank our panel for joining us today and
sharing your experiences, your perspectives. This is the third
of three four-people panels. We have had 12 companies here
sharing their stories and just touching a little bit on what
drives our economy, what makes the American economy so strong,
which is small business.
Ninety-nine percent of our business entities are small
businesses. Two-thirds of all new jobs created in this country
are created by companies like you. And I think it really is a
testament that you are here.
I talk in this Committee a lot about the four things
businesses need. You need a business model. Each of you have
defined your model. We cannot really help you with that. You
need access to good talent and making sure we have a trained
workforce, people who can do the work, bring the creativity,
the ideas, the American work ethic that drives our economy. You
need access to capital. I am sure all of you and the folks who
have been here before talked about needing to get to that
capital. And ultimately, we need a stable business environment.
And all of us can work to provide that. Our rule here. I think,
in Congress is trying to clear away obstacles and give some
stability, because if we do not, it is harder for you to make
the decisions you need to make in your investments.
And we see that business is hard. Two-thirds of small
businesses make it to their second year. Only half make it to
their fifth year, and only a third make it to the tenth year.
And there are lots of reasons for that but business is hard.
But the flipside is small business people are the most
optimistic people, business people we have in our country. They
are the entrepreneurs. They are the ones who have faith in the
future, because if you did not have faith in that future, you
were not going to make the investment to do this. So again, I
just want to celebrate what you all do, the fact that these are
some of our small business heroes that drive our economy, and
thank you again for being here.
One of the things that concerns me is that, especially on
startups, if you look at just the numbers, 25 percent of
business startups are women, and that may be somewhat
overstating it.
Ms. Reese, you started your business a couple years ago. I
know the area well. I actually grew up in Colorado. I grew up 3
miles from your business off Monaco and Hampton, so it is close
to home. And I know what you are trying to do. It is a great
story. But from your perspective, what incentives, support
systems are in place that helped you get off the ground? What
more could government do? What could we be doing to make it
easier for folks like you to make that decision to turn that
optimism into opportunity?
Ms. REESE. Thank you for the question.
We really found a lot of value in the Women's Business
Centers. More specifically, Mi Casa Resource Center. We first
sought them out when this was just an idea and we needed some
guidance, and we have been with them ever since. And this is
something that I advocate for. I am constantly bragging about
the services that we receive from them to our clients, and I
just think this is something that all business owners should be
aware of and obviously take advantage of. I understand that the
Women's Business Centers are all over the Nation. However,
there is a possibility that they may not be reauthorized. So I
think if Congress were to assure that the reauthorization would
go through, and then assisting with building their mission,
which is to help build more of these businesses and support
more women-owned businesses, that would just be invaluable
because I do not think we would be as far as we are now if we
did not have their support.
Mr. SCHNEIDER. Great. Thank you for sharing that.
Ms. Bhatti, I want to turn to you. I am sorry, I missed
your testimony. You are in Knoxville? Are you right in the city
or are you a little further out?
Ms. BHATTI. So, our farm is about 15 miles, 20 miles east
of downtown Knoxville.
Mr. SCHNEIDER. Okay. So it is relatively close so this may
not apply. But one of the things I believe is that if we can
help our rural communities cultivate small businesses and
provide opportunities for farms, farmers, but also to
businesses that support them and other opportunities that
support the economy, we have a better chance at keeping and
attracting more young people to these communities and making a
difference.
You talked, I liked what you said that your dad made the
decision to keep the farm as a farm in perpetuity. But how do
we make sure that we are bringing more young people into these
communities? What programs might make a difference? And you
have 21 seconds.
Ms. BHATTI. Well, I was not in FFA, but that is a great
program. Are you familiar with the FFA?
Mr. SCHNEIDER. I am. I am.
Ms. BHATTI. Okay, great. You know, that is a good question.
I think that what we are doing on a small scale is, well, we
have actually mostly female employees, and so we have brought a
lot of young women to the farm to work who would have never
thought they wanted to farm. So it is exposure to something
new, and I think on a small scale is what you should focus on
rather than large scale.
Mr. SCHNEIDER. I am guessing close enough to Knoxville you
have access to broadband where you are.
Ms. BHATTI. Well, not at the farm but close by. Yeah.
Mr. SCHNEIDER. We need to make sure that we have it
everywhere and I think that is one of the things, I know that I
had the chance to install an accounting system in 1985, `85-
'86, at a farm in western Washington, just at the cutting edge
of trying to bring up that technology. We need to make sure
that our farmers have the technology they need and I think
broadband is a piece of that.
I am over my time so I want to thank the Chairwoman, and I
yield back.
Ms. FINKENAUER. Thank you, Congressman.
Now I would like to recognize Dr. Joyce for 5 minutes.
Mr. JOYCE. Thank you, Madam Chairwoman.
I will not speak for Chairwoman Finkenauer, but I will tell
you that I feel that we all have great admiration for what you
bring to the table and what you do. You truly are the heroes.
Look at this Subcommittee which Chairman Finkenauer leads as a
bipartisan support of what you do.
I want to address one issue with Mr. Pulford which he
mentioned, and I think distinguishes him from the other
panelists. And I again applaud you for being here today.
Your business, LB Water Services is an ESOP. An ESOP is an
employee-owned business. Would you please address for us as
Committee and for the entirety here today how ESOPs
specifically allow you to progress in the business world and
how that allows you to truly be one of the heroes that presents
today?
Mr. PULFORD. I would be glad to. Thank you for asking me
that question.
Oops, yeah, that is even more important.
You know, due to the tax advantages that we get as an ESOP
from the Federal Government, we are able to provide superior
benefits to all 225 people. We are one of only 3 percent of the
companies in America that provide employee benefits at no cost
to the employee, and that includes their families, which is if
anybody is in business and knows what it costs per person
today, it is a huge, huge expense. And it enables us to provide
the kind of training, both professionally as well as personally
to help people grow and prosper in their jobs. It helps us to
solve problems with our customers, whether it is providing leak
detection or leak monitoring advice to a city or it is
providing the infrastructure that they need.
I agree with the person, we are trying to create value in
everything we do, and the benefits of the ESOP really give us
the fuel that we need every day to provide that kind of success
for our employees, all of our employees. I think one of the
things we are really proud of is that the last time there was a
recession we grow. So again, we are looking at the ESOP as the
foundation.
The other thing that it really does for us, and I will not
take a lot of time, is it helps us to create a culture, and the
culture is not of I, it is more of we and us. And again, it
provides us to provide superior benefits, provides us to put in
better training, and the result is that we get employees that
do not leave. Once people are vested into the ESOP, we rarely
lose an employee that we want to lose. Some people we let go
for other reasons maybe but we are really proud of the record
that we have with the employees that we have and the growth
that we have enjoyed, I look at how much we have grown in the
last 5 years and it is about 50 percent. And it is all due to
the homegrown talent that we provide. And ESOP is the
foundation for all that.
Mr. JOYCE. Thank you for that answer.
I would like you to address another issue that you briefly
discussed in your presentation with us, Mr. Pulford. You talked
about how your industry, how your company, how the heroes that
you work with would provide for us additional work in the
crumbling infrastructure system. Our responsibility in the
116th Congress is to work and provide an infrastructure
solution. Tell us how that impacts your business, please.
Mr. PULFORD. Oh, man. Well, it provides a trickledown to
every individual, whether they are homegrown. I mean, if you
look at cities, when they go to open up a fire hydrant to fight
a fire, the hydrant does not work, okay, it is broken and it
has been there for months. We need to address these problems.
The quality of the drinking water. The fact that pipes are
crumbling and it is draining out. So maybe you lose 30 percent
of your treated pure water goes out through leaks in the
system. And I am not saying it is across the board but these
are the big issues that are facing us. And if we do not address
them, we are not going to be able to attract people to come
into our communities, and quality of life, we are going to lose
people out of our jurisdictions and our states and everything
else. And that is why the whole infrastructure bill is vital
right now. We see it. We are in the rust belt so we see it just
more than probably everybody else in the country right now.
Mr. JOYCE. Mr. Pulford, thank you. Thank the other small
business heroes for being here with us today. And I yield my
time.
Ms. FINKENAUER. Thank you, Dr. Joyce.
Again, I just want to say thank you on behalf of the
Committee and how grateful we are that you all are here today
telling us your stories. They are all such different stories
from all over the country, but I appreciate you coming to
Washington and taking the time out of your very busy schedules.
I know you all are very, very busy right now, especially back
in Iowa where we are planting right now--or trying to at least.
It means a great deal to have these stories uplifted and told,
and you all really are small business heroes. That is not
hyperbole. You all are contributing so much to your local
communities but also to the future of our country, and we are
all very grateful to hear your perspectives.
Mr. Walton, I appreciate the fact that you are here
uplifting what is happening on the ground in Iowa when it can
often be lost in the numbers versus the actual stories of what
folks are living and going through every day. You highlighted
what we can be doing to move forward and keep our family
farmers afloat when they are facing a great deal. Thank you so
much for being here.
Ms. Reese, you are an inspiration, and it is an honor to
get to meet you here today. You were able to uplift issues that
you face but also talk about what has worked and give us ideas
of what we should be investing in and creating more of. That is
our job here--hear what has worked and how we do it better, and
also hear what has not worked and how we fix it. That is one of
the things that actually does happen here in Washington, and
very specifically on this Committee. Thank you so much for
helping us do our job better with your testimony here today.
Ms. Bhatti, the hope that you shared today is infectious.
It is exactly the type of hope that gets folks to have those
ideas to start a business and take it to the next level. Your
story is exactly what we need to be seeing more of in our
country right now--how you not just grew up on a farm but then
also decided to expand, have creative ideas, and run with it.
That is how our country continues to grow. Thank you so much
for all that you have done, and I look forward to hearing more
about the success and hopefully, somebody is going to bring the
ice cream to the Small Business Committee.
Mr. Pulford, thank you for being here today as well. Your
dedication to your employees and their success and their growth
is palpable, and we could all feel that here today. I'm
grateful for your expertise, especially when it comes to water
infrastructure and how incredibly important it is that we make
investments in it. I also sit on the Transportation and
Infrastructure Committee, serving as Vice Chair of the Highways
and Transit Subcommittee, so I know how important it is that we
uplift these issues. Thank you for bringing that perspective
here today.
Again, you all have done so much, and I look forward to
seeing hopefully a bright future here. We will do our jobs here
in Washington, continuing to listen to folks back in our
district and across the country. We hope to make you proud
here. Thank you so much and happy National Small Business Week.
With that, I want to make sure that I ask unanimous consent
that members have 5 legislative days to submit statements and
supporting materials for the record.
Great. Thank you all again and have a good rest of the
afternoon.
Without objection, so ordered.
Thank you.
[Whereupon, at 1:00 p.m., the committee was adjourned.]
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