[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]
THE SBA OFFICE OF INTERNATIONAL TRADE AND THE STEP PROGRAM AS KEY TOOLS
FOR RECOVERY AND EXPANSION
=======================================================================
HEARING
before the
SUBCOMMITTEE ON ECONOMIC GROWTH, TAX, AND CAPITAL ACCESS
OF THE
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTEENTH CONGRESS
SECOND SESSION
__________
HEARING HELD
JULY 19, 2022
__________
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Small Business Committee Document Number 117-062
Available via the GPO Website: www.govinfo.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
48-012 WASHINGTON : 2022
HOUSE COMMITTEE ON SMALL BUSINESS
NYDIA VELAZQUEZ, New York, Chairwoman
JARED GOLDEN, Maine
JASON CROW, Colorado
SHARICE DAVIDS, Kansas
KWEISI MFUME, Maryland
DEAN PHILLIPS, Minnesota
MARIE NEWMAN, Illinois
CAROLYN BOURDEAUX, Georgia
TROY CARTER, Louisiana
JUDY CHU, California
DWIGHT EVANS, Pennsylvania
CHRISSY HOULAHAN, Pennsylvania
ANDY KIM, New Jersey
ANGIE CRAIG, Minnesota
SCOTT PETERS, California
BLAINE LUETKEMEYER, Missouri, Ranking Member
ROGER WILLIAMS, Texas
PETE STAUBER, Minnesota
DAN MEUSER, Pennsylvania
CLAUDIA TENNEY, New York
ANDREW GARBARINO, New York
YOUNG KIM, California
BETH VAN DUYNE, Texas
BYRON DONALDS, Florida
MARIA SALAZAR, Florida
SCOTT FITZGERALD, Wisconsin
MIKE FLOOD, Nebraska
Melissa Jung, Majority Staff Director
Ellen Harrington, Majority Deputy Staff Director
David Planning, Staff Director
C O N T E N T S
OPENING STATEMENTS
Page
Hon. Sharice Davids.............................................. 1
Hon. Dan Meuser.................................................. 2
WITNESSES
Ms. Mary Waters, Deputy Commissioner, International Trade,
Georgia Department of Economic Development, Atlanta, GA........ 5
Mr. Luther L. Tooks, Chief Executive Officer, Pyramid Foods, LLC,
Shawnee, KS.................................................... 7
Mr. William E. Spear, Manager, Office of Export Promotion, The
State of New Jersey Business Action Center of the New Jersey
Department of State, Trenton, NJ............................... 8
Mr. Devan Walding, Vice President of Sales, RADIUS Corporation,
Kutztown, PA................................................... 10
APPENDIX
Prepared Statements:
Ms. Mary Waters, Deputy Commissioner, International Trade,
Georgia Department of Economic Development, Atlanta, GA.... 22
Mr. William E. Spear, Manager, Office of Export Promotion,
The State of New Jersey Business Action Center of the New
Jersey Department of State, Trenton, NJ.................... 25
Mr. Luther L. Tooks, Chief Executive Officer, Pyramid Foods,
LLC, Shawnee, KS........................................... 28
Mr. Devan Walding, Vice President of Sales, RADIUS
Corporation, Kutztown, PA.................................. 29
Questions for the Record:
None.
Answers for the Record:
None.
Additional Material for the Record:
None.
THE SBA OFFICE OF INTERNATIONAL TRADE AND THE STEP PROGRAM AS KEY TOOLS
FOR RECOVERY AND EXPANSION
----------
TUESDAY, JULY 19, 2022
House of Representatives,
Committee on Small Business,
Subcommittee on Economic Growth,
Tax, and Capital Access,
Washington, DC.
The Subcommittee met, pursuant to call, at 10:00 a.m., in
Room 2360, Rayburn House Office Building and via Zoom, Hon.
Sharice Davids [chairwoman of the Subcommittee] presiding.
Present: Representatives Davids, Newman, Bourdeaux, Andy
Kim, Meuser, Garbarino, Young Kim, Van Duyne, and Donalds.
Chairwoman DAVIDS. Good morning. I call this hearing to
order.
Without objection, the Chair is authorized to declare a
recess at any time.
I would like to begin by noting some important
requirements. Standing House and Committee rules will continue
to apply during hybrid proceedings. All Members are reminded
that they are expected to adhere to these rules, including
decorum.
House regulations require Members to be visible through a
video connection throughout the proceeding, so please keep your
cameras on. Also, please remember to remain muted until you are
recognized to minimize background noise.
In the event a Member encounters technical issues that
prevent them from being recognized for their questioning, I
will move to the next available Member of the same party and I
will recognize that Member at the next appropriate time slot
provided that they have returned to the proceeding.
American entrepreneurs are nearly always looking to expand
their businesses. Whether it is hiring new workers, offering
new products, or opening new locations, small business owners
always have an eye on growth. In recent years, increased
globalization and digital adoption have led many small
businesses to expand their offerings to international markets.
Approximately 166,384 small businesses in the United States
currently export, accounting for about 26 percent of all U.S.
exports, and $341 billion in export sales.
However, small business exporters represent only 3 percent
of the total U.S. small employer firms. With 96 percent of all
consumers, and two-thirds of the world's purchasing power
residing beyond U.S. borders, increased exporting has the
potential to boost the small business economy.
Recognizing this, the Small Business Administration created
the Office of International Trade in 2010. OIT works in
cooperation with other federal agencies and public and private
sector groups to encourage small business exports and provide
small business export assistance.
Small firms are often discouraged from selling their
products overseas due to the complex exporting process, the
capital required to fill foreign orders, and expertise
necessary to follow international rules and regulations.
These unique challenges spurred Congress to create a 3-year
state trade and export promotion pilot grant initiative in
2010. In 2015, Congress authorized the program through 2020 and
renamed it the State Trade Expansion Program, otherwise known
as STEP. STEP provides small firms with the knowledge and
support they need to expand into new markets and export their
products abroad.
The program awards matching funds to states and territories
for participation in trade missions, international marketing
efforts, workshops, export tradeshow exhibits, and other
promotional activities. Over the years, these initiatives have
helped thousands of small businesses overcome the barriers that
stop many firms from participating in the international
marketplace. In fiscal year 2021, SBA supported $832 million in
export sales from STEP and assisted over 3,400 small
businesses.
Last Congress, the House passed H.R. 6133, the STEP
Improvement Act of 2020, which would have reauthorized STEP for
4 fiscal years, increased grand spending flexibility, and made
a range of additional improvements. The Committee plans to
introduce similar legislation this Congress.
As we prepare for STEP reauthorization, we must look
closely at what is working well in the program and identify
areas for improvement. Improving operations and efficiency
within STEP will help American entrepreneurs break into
exporting and boost the overall economy.
I look forward to hearing from our witnesses about their
experience with STEP and the actions Congress and SBA can take
to ensure the program helps as many small businesses as
possible.
I would now like to yield to the Ranking Member, Mr.
Meuser, for his opening statement.
Mr. MEUSER. Thank you, Chairwoman Davids, very much. And
thank you certainly to all of our witnesses for attending with
us, both live and on video.
Small businesses are job creators, innovators, and drivers
of the United States' economy. They also export high quality
products which showcase American manufacturing, agriculture,
and energy across the globe. According to the SBA, small
businesses comprise 96 percent of all exporters in the U.S. In
my home state of Pennsylvania, the U.S. Census Bureau found
that over 88 percent of the state's exporters are small firms
which resulted in $12.5 billion in exported products in 2019.
The SBA's Office of International Trade assists small
businesses in export promotion activities through management
and training programs and the State Trade Expansion Program
grants the STEP grants. The STEP program partners with states
and territories to increase the number of small businesses that
export, increase the value of exports by small businesses, and
it creates a number of small businesses exploring significant
new trade opportunities.
Many states use STEP awards to facilitate foreign trade
missions and tradeshow exhibits, or provide consulting,
marketing, and website services. Pennsylvania has received
several STEP awards since the program's inception and has
effectively used the STEP funds for its financial assistance
plan, the Global Access program (GAP), which GAP is designed to
be flexible and allow companies to use STEP funds to their best
advantage.
It has resulted in quite a numerous number of success
stories. Gilson-Snow, for example, a premium snowboard and ski
design and manufacturing company located just outside of my
district in Winfield, Pennsylvania, was started by a middle
school science teacher and his class. The company was awarded
GAP funds for digital marketing on Facebook and Instagram,
which resulted in sales totaling nearly $20,000 during the
campaign and increased brand awareness in Australia and New
Zealand markets.
Another example is Pepro, LLC, out of Oil City,
Pennsylvania. Pepro, LLC, is a veteran-owned small businesses
that specializes in mobile and remote communication shelters
which ensures communications are not interrupted during
emergencies or natural disasters. They used GAP funding to
cover costs associated with attending the International
Wireless Communications Expo in Las Vegas. Their president,
Kelly Lander, stated GAP funding has been a great benefit to
us. Our biggest sales effort for international business is the
IWCE Trade Show. GAP funding pays for our booth space, which is
our largest expense. This funding was especially helpful during
2021 in dealing with challenges related to COVID. So clearly, a
great return on investment in this program.
Small businesses face many barriers to exporting, including
limited capacity, resources, access to capital. Unfortunately,
the pandemic created additional challenges and resulted in many
canceled trade shows, missions, and travel, which hindered the
ability of STEP awardees to conduct activities.
Further, economic headwinds very much caused, many would
argue, by the Biden administration policies, have hindered
small business operations, including exporting. A recent survey
from Goldman Sachs, 10,000 small businesses found that 80
percent of small businesses say broader economic trends, such
as inflation, supply chain issues, and workforce challenges,
are having a negative impact on their business.
Last week, inflation soared to nearly a 41-year-record high
as prices skyrocket month after month, it is not surprising
that the Job Creators Network polling found that 72 percent of
small businesses did not believe that the Biden administration
policies were doing enough to combat inflation.
This is a top problem for small business owners. Small
businesses in my district tell me every day that inflation is
forcing them to raise prices, modify operations, and is
hindering their ability to plan for the future, and certainly
to invest in inventory and other capital investments.
I appreciate very much the Chairwoman for calling this
important hearing on the STEP program today, and I look forward
to working together to increase small business exports and
empowering innovators with the tools they need to reach new
markets. However, if we truly want to help small business, we
must reduce regulations that slow domestic production. We must
make our small businesses and large businesses in the U.S. the
most competitive in the world. We need to adamantly oppose any
tax increases and make the 2017 tax cuts permanent which will
have great positive effect and predictability for small
businesses. And we also need to end much of the excessive
spending that has attributed to soaring inflation.
So, I will end by just being clear. Continued reckless
inflationary spending in Washington, increase in taxes and
regulations will not support small businesses in their efforts
to expand and export.
I yield back, Madam Chairwoman.
Chairwoman DAVIDS. Thank you. The gentleman yields back.
I would like to take a moment to explain how this hearing
will proceed. Each witness is going to have 5 minutes to
provide a statement, and each Committee Member will have 5
minutes for questions.
Please ensure that your microphone is on when you begin
speaking so that everyone can hear you, and make sure that you
return to mute when you are finished.
With that, I would like to introduce our witness.
Our first witness is Ms. Mary Waters. Since 2015, Ms.
Waters has served as Deputy Commissioner for International
Trade for the Georgia Department of Economic Development. Under
her leadership, Georgia rejoined STEP after a multiyear absence
and her work has helped Georgia become a top 10 exporting state
for the first time in 2020. Ms. Waters is also currently
serving as president of the State International Development
Organization, Inc. (SITO), the premier U.S. organization
dedicated to supporting state international trade agencies and
state development programs. Welcome, Ms. Waters.
Our second witness is Mr. William Spear. Mr. Spear is the
manager of the New Jersey Office of Export Promotion and
director of New Jersey STEP, both of which are part of the New
Jersey Department of State. He has worked for the state for
more than 23 years and graduated with an Associate of Applied
Science degree from Union County College and a Bachelor of
Science in Business Administration from St. Elizabeth
University. Welcome, Mr. Spear. I got tongue tied because I
have an associate degree, too. Got excited about it.
Our third witness is Mr. Luther Tooks. Mr. Tooks is the CEO
of Pyramid Foods, LLC. Mr. Tooks' company produces Pitmaster
LT's barbeque sauces and rubs which he has perfected over the
course of 3 decades. Mr. Tooks is a proud U.S. Army veteran and
Kansas City barbeque pitmaster. Mr. Tooks utilized STEP to
export his products which since 2020 have been available in the
U.S., Canada, Europe, and the Middle East. Welcome, Mr. Tooks.
I will now yield to the Ranking Member, Mr. Meuser, to
introduce our final witness.
Mr. MEUSER. Thank you, Madam Chairwoman.
Our next witness is Mr. Devan Walding. Mr. Walding is the
vice president of Sales at RADIUS Corporation, which is located
in my district in Kutztown, Pennsylvania. He is responsible for
the company's international growth strategy, including opening
new markets and increasing brand awareness and revenue. RADIUS
Corporation was founded in 1983 and is a second generation,
family-owned and woman-led company. RADIUS Corporation
manufacturers sustainable oral healthcare products here in the
United States, including toothbrushes, toothpaste, floss, and
even pet care products. Through Pennsylvania's export program,
the company received three STEP-funded global access program
awards in recent years to help offset the costs of their
initiatives in Italy, Russia, and Germany. RADIUS has received
countless awards for their innovation and contributions to
export promotion. In 2015, they received the Governor's Export
Impact Award, and in 2016, they received the President's ``E''
Award which is the highest recognition an American company can
receive for making a significant contribution to the expansion
of United States exports. Most recently, the SBA announced
RADIUS Corporation as the Eastern Pennsylvania Export of the
Year for 2020. They have also received awards from Martha
Stewart, AskaDentist.com, Baby Maternity Magazine, Family
Choice, and many others for their design, sustainability, and
high quality products. It is a great honor to represent small
businesses like RADIUS Corporation who are driving innovation,
manufacturing high-quality American made products, and making
the world a better place.
Mr. Walding, I would like to welcome you to the
Subcommittee today. We all look forward to hearing more about
ways we can support small businesses in their export ventures.
And thank you to all the witnesses for joining us. And I yield
back.
Chairwoman DAVIDS. Thank you. The gentleman yields back.
Again, thank you all for being here. And I will start off
by recognizing Ms. Waters for 5 minutes.
STATEMENTS OF MARY WATERS, DEPUTY COMMISSIONER, INTERNATIONAL
TRADE, GEORGIA DEPARTMENT OF ECONOMIC DEVELOPMENT; WILLIAM E.
SPEAR, MANAGER, OFFICE OF EXPORT PROMOTION, THE STATE OF NEW
JERSEY BUSINESS ACTION CENTER OF THE NEW JERSEY DEPARTMENT OF
STATE; LUTHER L. TOOKS, CHIEF EXECUTIVE OFFICER, PYRAMID FOODS,
LLC; DEVAN WALDING, VICE PRESIDENT OF SALES, RADIUS CORPORATION
STATEMENT OF MARY WATERS
Ms. WATERS. Thank you very much, Chairwoman Davids, Ranking
Member Meuser, and Members of the Subcommittee, thank you for
the opportunity to testify this morning. Representative
Bourdeaux, it is a pleasure to see you online this morning as
well. Good to be here from Georgia.
In my role as the deputy commissioner for International
Trade with the Georgia Department of Economic Development, I
oversee the state's international trade program and lead a
global team focused on helping Georgia companies grow through
exporting. More than 80 percent of the exporters that we serve
are businesses with fewer than 100 employees. I am also the
current president of the State International Development
Organizations, or SIDO, a non-partisan organization comprised
of state international trade offices.
I want to thank the Committee for your commitment to small
business exporters and to the State Trade Expansion Program.
STEP is a valuable resource for our businesses in Georgia, and
a key program in our agency's ongoing efforts to help companies
increase their exports.
Exporting is an important avenue of growth for small
businesses and for the U.S. economy as a whole. Diversification
of sales helps businesses mitigate risk, become more resilient,
and globally competitive.
In Georgia, total trade with the world exceeded $166
billion last year, and that includes more than $42 billion in
exports. However, of the more than one million small businesses
in Georgia, the U.S. Department of Commerce estimates that
fewer than 11,000 Georgia companies exported in 2019.
The mission of SIDO's member states is to help small
businesses begin exporting and expand to new markets. STEP is a
vital component of our shared mission and provides companies
with the confidence and support to start the export process.
I would like to provide a brief overview of STEP in
Georgia. Georgia was an early participant in the STEP program
in 2011 and 2012, but we stepped away in 2013 after our
application was denied. Due to the financial impact of the
pandemic on our small businesses, we wanted to expand our trade
services to include financial assistance awards, and we applied
for a STEP grant in 2020. Georgia was fortunate to receive
$162,488 in STEP 9 base year funding and the response from our
small businesses has really been tremendous. To date, STEP
funds have assisted 124 small businesses, including 23 new-to-
export firms and exporters have already reported more than
$1.69 million in sales for a return on investment of 10.4-to-1
during the initial grant performance period.
We use STEP funds to help companies participate in trade
shows, travel to meet new customers in foreign markets,
participate in U.S. commercial service programs, and other
approved activities. And I would like to highlight a couple of
great success stories. Take for example a minority-owned
agribusiness company using $1,725 in STEP funds to travel to a
trade show in the Middle East. As a result of participation,
this company reported more than half a million in export sales
to three new markets.
A woman-owned business in Georgia's booming fintech
industry used $6,000 in STEP funds to participate in two trade
shows during 2021. As a result, the company has expanded sales
of more than $100,000 to five European markets. Or take for
example, a minority-owned, new-to-export firm using STEP funds
to travel to a trade event in South Africa that is now
negotiating potential contracts with two new customers.
These are just a few examples of how STEP helps our local
businesses compete in the global economy. And it is important
to note that small business export success is a shared mission
with our federal partners. STEP serves as a nexus program that
connects state and federal trade agencies to develop a more
coordinated assistance plan for exporters.
At SIDO, we are committed to working closely with the SBA
and Congress to continue to strengthen the STEP program.
Reauthorization is critical to supporting greater U.S. exports
in the years to come.
And before I conclude, I want to provide a few
recommendations on how we can continue to strengthen the
program. More details are included in my written testimony.
First, measure ROI by long-term outcomes and by taking all
components of the trade process into account. Achieving an
export sale, especially for new-to-export firms, involves
several steps and can take years depending on the industry. In
determining ROI, it is very difficult to separate one component
from the other because all are part of the reason for a
company's success.
Second, reducing the administrative burden. This includes
the application process, the quarterly reporting requirements,
as well as the A-STEP system.
And third, increasing funding to $30 million or more.
Increased funding will allow grantees to support more trade
activities and increase the value of financial awards direct to
small businesses, which achieves the primary objectives of
STEP.
I want to thank the Committee again for your support and
leadership, as well as SBA's Office of International Trade, for
their partnership. We strongly support the reauthorization and
full funding of the STEP grant program and look forward to
working together on that process.
Thank you again. I look forward to your questions
Chairwoman DAVIDS. Thank you.
Mr. Spear, you are now recognized for 5 minutes.
Mr. Spear, I believe you might be muted.
No, we still cannot hear you.
Okay, Mr. Spear, we will come back to you after. The
technical team will help you.
Mr. Tooks, you are recognized for 5 minutes.
STATEMENT OF LUTHER L. TOOKS
Mr. TOOKS. Can you hear me?
Chairwoman DAVIDS. We can.
Mr. TOOKS. Oh, okay. Thank you. Thanks for allowing me the
opportunity to serve as a witness and it is my pleasure to
visit with you virtually, Congresswoman.
My name is Luther Tooks, and I am the owner and CEO of
Pyramid Foods, a small company based in Shawnee, Kansas. And we
have been in operation since 2016.
As you said earlier, our core business is in the co-packing
and distribution of Pitmaster LT's BBQ sauces and rubs and
seasonings.
We began communicating with Lu Chang and the Kansas
Department of Commerce in 2018, shortly after becoming
interested in exploring the exportation of our products. I
reached out to Lu and he scheduled an introductory meeting with
me in his office. And during that meeting, he gave me a
comprehensive overview of the STEP grant program and how it
could be used as a resource to help us succeed in exporting our
products.
We decided in 2018 to embark on a mission to export of
products to Canada, and through the STEP program, more
specifically, the KITMAP grant program, we were able to get
assistance to a grant to get our labels redesigned,
reformatted, and get our labels translated in Canadian French,
as well as English. And have our marketing brochures also
interpreted into Canadian French. And that allowed us to begin
exporting to Canada in 2019.
We decided in 2021 to embark on another mission to export
of BBQ products to Mexico. And again, working with Lu, it was
determined that the STEP KITMAP program once again would offer
the grant assistance we needed to successfully get our products
exported to Mexico.
We consequently did apply and received a grant to help get
our marketing brochure and labels again translated into Spanish
this time. And in addition, we were able to get our labels
properly formatted to meet the requirements for sale in Mexico.
And that as a big challenge.
But as a result of that assistance, in both instances, we
were able to distribute our products into Mexico and Canada our
sales are increasing from year to year.
We would not have been successful without the education and
the financial support we received through the Kansas Department
of Commerce and the STEP program. And we are grateful for those
two opportunities.
Chairwoman DAVIDS. Thank you, Mr. Tooks. And we will come
back to you, well, I know I will because we have to talk about
BBQ.
Mr. Spear?
STATEMENT OF WILLIAM E. SPEAR
Mr. SPEAR. Yes, thank you so much.
Chairwoman DAVIDS. Oh, there we go.
Mr. SPEAR. How is that?
Chairwoman DAVIDS. All right. You are recognized for 5
minutes.
Mr. SPEAR. Thank you, Chairwoman Davids, Ranking Member
Meuser, and to all the Members of the Subcommittee, for having
the opportunity to testify before you today. And Chairman,
compliments on your associate degree. It works a big deal here
in New Jersey.
Further, allow me to specifically acknowledge Congressman
Andy Kim of the Third Congressional District of New Jersey and
his work on the Subcommittee. And also, thank you, Subcommittee
for your continued support of small exporters and of the STEP
program. It is a pleasure to share the importance of both of
those here in New Jersey.
My name is William Spear. I am the manager of the Office of
Export Promotion and the director of the State Trade Expansion
Program. Our office and the program are in the New Jersey
Business Action Center under the leadership of Executive
Director Melanie Willoughby. We are housed in the New Jersey
Department of State, led by Secretary of State Tahesha Way. And
on behalf of Governor Phil Murphy, whose administration
encourages New Jersey-based businesses to export globally, we
are pleased to highlight how your efforts strengthen our
commitment.
I would like to start with three numbers which I will come
back to. Those numbers are 4.6 million, 185 million, and 527.
But now about the state:
We are the fourth smallest state in the country. However,
we have the ninth largest gross domestic product. In 2021, New
Jersey exports were $49.4 billion, up 30 percent. As a result
of that, we are the 10th largest exporting state.
Small companies and small businesses in New Jersey make up
the majority of exporters.
We are sixth in the number of small and medium sized
exporters.
We are seventh in the amount of exports from those
companies, and we are fifth in the percentage of small and
medium sized exporters.
And please note, those data are from the U.S. Census Bureau
and the U.S. Bureau of Economic Analysis.
Given the significant presence of small businesses in New
Jersey, which SBA reports makes up 99.6 percent of all business
in our state, any resource program or assets that support those
businesses are important.
SBA's STEP program established its importance with our
office a long time ago. We see the value of the STEP program
every day. We watch it assist small exporting companies to
increase and diversify their revenues, pay higher wages, and
create and retain jobs.
However, New Jersey has not always had the type of success
that we are being asked to talk about today. In the first years
of our participation, we had a very, very steep learning curve
as a granting entity. We were a great exporter but we were
learning what it meant to be a granting entity.
We built our program on two core principles: Be stewards of
the federal money, and to treat the money as if it was your
state's. Both of those were instilled by the early SBA STEP
leadership. From the beginning, we looked to support the best
small companies we could find. As a result, the program now
begins to reflect those activities.
And now I would like to come back to those numbers I first
shared.
From 2017 to 2022, the State of New Jersey has received
$4.6 million of SBA awards.
$185 million of actual export sales of U.S.-made goods and
services have directly resulted from companies receiving those
awards.
Five hundred twenty-seven New Jersey jobs have directly
come from either being created or retained by those STEP
awards.
And given that we still have two grant programs open, those
numbers are subject to increase, of which we are very, very
pleased.
However, the numbers are really only a bit of a secondary
point with regards to the measurement. The real measurement is
in the companies themselves and these three quotes:
``NJ STEP is an excellent program that has allowed us to
meet with foreign food buyers.'' And that is from a socially
and economically disadvantaged, new-to-export firm.
``The NJ STEP provided strong support for our firm's export
activity and helped to increase international sales.'' That
from a woman-owned exporting firm.
And, ``Without NJ STEP, our firm would not be in business
today. Support from the program helped to create international
marketing material, paid for booths, and helped market our
brands. We create jobs from STEP.'' And that is from a socially
and economically disadvantaged, woman-owned, new-to-export
firm.
We have many other things that we could talk about, but
allow me to close with a confirmation of our partnership with
SBA to continue to grow the program for the benefit of all of
its stakeholders.
Thank you so much, Madam Chairman.
Chairwoman DAVIDS. Thank you, Mr. Spear.
Mr. Walding, you are now recognized for 5 minutes.
STATEMENT OF DEVAN WALDING
Mr. WALDING. Good morning. And thank you to the
Subcommittee for allowing me to testify today.
So first of all, I will put a little bit more detailed
introduction on RADIUS, the organization.
So RADIUS is a second generation, family-run oral care
manufacturer based in Kutztown, Pennsylvania. For over 39,
almost 40 years, we have been trusted to make ecofriendly,
natural, and innovative oral care products for the whole
family, including toothbrushes, toothpaste, floss, and travel
accessories. And actually, if you have never seen our products,
they are pretty unique insomuch as there was a part back in the
early `80s was an ergonomically right-handed toothbrush.
Specifically now, with our landfill biodegradable samples,
vegetable brush bristles, replaceable toothbrush head
technology, and certified organic toothpaste, we continue to
redefine what should be the conventional oral care offering
even now for your pets.
We are proud to be supporting sustainable U.S. jobs in
addition to being a certified WBENC, (Women's Business
Enterprise National Council) Member and WOSB (Women-Owned Small
Business).
As earlier mentioned, we are proud to be the recipient of
the President's ``E'' Award for exports in 2016, recognizing
our significant contribution to the expansion of U.S. exports.
We currently have 30 staff Members and have exported to as many
as 40 different countries. As much as 25 percent of our
business at any given time can be directly attributed to
international sales, and we were also the two-time recipients
of the PPP loans, the first in 2020 and the second in 2021.
Just a little bit about myself. So, my name is Devan
Walding, and I am the VP of Sales here at RADIUS. I have three
citizenships, including being American, Canadian, and
Australian. I have lived, worked, and studied in all three
countries. The majority of my career has been working in
international sales, including time spent as a contributor in
Australia for an American firm.
In 2021, I took over global sales responsibilities at
RADIUS, and I am currently, albeit at a different college
during pandemic for my MBA at the University of Wisconsin, and
I am proud to work for a family-run, Made in America business
located in Kutztown, Pennsylvania.
Specific about the STEP program. So, to be clear, RADIUS is
a small company with limited resources. And we also have a very
unique value proposition in terms of what we offer in our oral
care portfolio products. Selling our product requires effort
and time be it domestically or internationally. We are not
simply a ``me too'' product where somebody can just pick it up
and resell it. We are constantly pursuing international
expansion opportunities to be able to fit via both digital and
physical formats, online and in person. We engage with both
state and federal resources, including the Pennsylvania
Department of Community and Economic Development in addition to
the U.S. Commercial Service. These assets continue to prove
invaluable as we seek expertise and expert opinion where we
cannot always afford it ourselves. This access and support
allow us to compete in an increasingly competitive global
marketplace while also promoting Made in the USA product and
providing quality local jobs.
The STEP program has enabled us, RADIUS, to participate and
compete in channels that we would otherwise struggle, or simply
not be able to afford. The sheer availability of these grants
allows us to start a dialogue around what opportunities would
provide the best return on investment for our brand, and
ultimately Made in in American products. Finding the funds to
participate in many of these initiatives is often a roadblock
that limits our ability to participate, thus keeping us off the
global stage and constricting potential new sales.
While tracking the material impact of these investments can
sometimes take years to confirm, our ability to invest in sales
programs, through the flexibility of the STEP program, keeps us
agile enough to remain competitive. Most recently, the
Cosmoprof Trade Show in Bologna, Italy, had over 220,000
attendees with 144 countries of origin. We received inquiries
from 13 separate countries. The impact of show attendance
cannot be understated. We sell a physical product and the
ability to showcase RADIUS, in person, could be the material
difference between security new business and not.
Trade shows, among many other STEP approved programs
accelerates our go-to-market strategies, increases our product
visibility, and adds credibility to our brand. We have been
called the best oral care company you have never heard of and
we are committed to changing that with the assistance of the
STEP program. Thank you.
Chairwoman DAVIDS. Thank you, Mr. Walding. And thank you to
all of our witnesses. We appreciate you taking the time and
sharing your experiences with us.
So I am going to begin by recognizing myself for 5 minutes.
I always think it is funny when I recognize myself. I do not
know why.
So I often say that entrepreneurship is baked into the DNA
of the Kansas Third Congressional District, and I say that
because it is true. But BBQ is definitely the lifeblood of
Kansas City and our community is extremely proud of the small
businesses that produce our world famous cuisine from sauces to
dry rub and everything in between resulting in slow smoked
perfection as we call it. Which is why I am so thrilled to have
Mr. Tooks of Pyramid Foods here today with us to speak about
his experience in entering the STEP program from Shawnee,
Kansas. And through exporting, Mr. Tooks and Pyramid foods are
able to spread the love of a good dry rub and sweet Kansas City
BBQ sauce far and wide. Exporting presents certain an
incredible opportunity for small businesses to expand their
customer base and increase sales, but the processes that these
businesses have to go through to become an exporter are
certainly complex and can be intimidating, which we heard a bit
about already.
But Mr. Tooks, I am curious, if you could share with us
what interested you in exporting your products? And what were
some of the immediate challenges that you faced? And also
curious how you got connected with the STEP program there in
Kansas to help you navigate that process.
Mr. TOOKS. Okay. I am sorry. It took me a second to unmute
myself.
Chairwoman DAVIDS. No problem. Go ahead.
Mr. TOOKS. I got interested in exporting our products
through having met with some representatives from the World
Trade Center Food Export Association in a couple of meetings
and got invited to participate in some foreign trade missions.
And during that process, I had the opportunity to present our
products to buyers from all over the world, really. And it was
out of those meetings I learned exporting was a tough business.
I mean, it is tough enough trying to sell your products in the
U.S. but trying to sell to foreign markets is a lot more
challenging in that you have got pricing to deal with and you
have got regulations to get your products out of the U.S. and
into these countries. Just a lot of regulations to deal with.
But fortunately, there are organizations around to help you get
through--the World Trade Center, Kansas Department of Commerce,
and Food Export Association. And so what I just had to do was
meet with Lu Chang representing the Kansas Department of
Commerce to help me navigate through getting our products
properly packaged, labeled, to meet the requirements of a
couple of countries to start out with. Canada, what we learned
in the early stages of exportation, was it was just that we
start out--because they imported a lot more American made
products than anybody else. And that is where we started out.
And so what we learned in the process was that you needed
someone to help navigate through all of the regulations. And
so, we found someone to help with that. And then helped get our
labels translated into both English, well, they were already in
English, but to be dual labeled, to be translated into Canadian
French, which we learned was different than French in France.
We went through all the design work and then we had to make
sure that the ingredients were properly formatted. Then we had
to make sure that our marketing materials that we had to share
with our business distributors were able to use those materials
for their customers. Well, the STEP program was great for help
with that because we were able to apply for grants to help with
the translation, label redesigns, and the printing of the
labels. Without that, we would have never got----
Chairwoman DAVIDS. Thank you, Mr. Tooks. Thanks, so much.
My time has actually expired. But I look forward to talking to
you more. I will come visit you when we are all back in the
district.
With that, I will turn to the Ranking Member. I will yield
to the Ranking Member for 5 minutes.
Mr. MEUSER. Thank you, Madam Chairwoman. And thank you, Mr.
Tooks, for your testimony. And Madam Chairwoman, I certainly
hope that we can get some of that great BBQ perhaps exported
here. I will not misstate exactly how you folks express
yourself when it comes to your very special BBQ, but I will
help you eat it. So hopefully, Mr. Tooks can oblige.
Thank you all for your testimony. I am going to Mr. Walding
since he is from the great Commonwealth of Pennsylvania and in
my district. Mr. Walding, excellent to hear about your company,
your growth, being based there as a rural manufacturer is
really special, so congratulations.
Now, could you elaborate a little bit more on how the
awards of our STEP program, and in Pennsylvania known as the
GAP awards have specifically helped you reach new foreign and
international markets?
Mr. WALDING. Yeah. Thanks for the opportunity to speak
again. And I apologize if I was not coming in clear earlier.
So, our products are consumable, all right, and certainly,
oral care over the past decade especially has become
increasingly competitive. And so as we establish ourselves, you
know, we have got a lot of equity here in the U.S., but
sometimes our ability to translate those in America, that
sustainable premium characteristics that certainly set us apart
and really make us, you know, what should be the conventional
oral care offering in some international marketplace can be
tough. And so specifically, in going to trade shows or trade
missions and participating in these types of events, it does
allow us not only to in one single, let's call it 2 or 3 days,
what would take probably months and months of these types of
interactions, right, on Zoom or on Microsoft Teams or digitally
or email, you can achieve in a matter of 5 or 10 minutes. You
know, there is just such a material impact. I mean, I am not
selling, I am not a SAS. I do not sell a service. I sell a
product. And so we need to export that to these destinations.
We often go through distribution. There is a lot, similar to
Mr. Tooks, there is a lot that goes on between when we make
that toothbrush in Pennsylvania to when it arrives in country
and then goes to distribution and then hits that retail shelf.
So these types of foreign trade missions are absolutely
critical to not only the participation and awareness of our
brand security new potential business but also to getting
material feedback on whether or not those market are, in fact,
where we should be spending our time, be it the RADIUS time or
the assets that we have allocated towards that. So making sure
that we can confidently use what materials and resources we
have is equally as important as the context that use just to
make sure that we are as effective using the tools, the limited
tools that we have.
Mr. MEUSER. Great. Thanks. Yeah. I do have some experience
in international sales and entering new markets so I can
understand the challenges, and I am glad that this STEP program
provides at least the catalyst and some resources to help you
be successful.
Let's just talk about competitiveness as a whole quickly.
The price index inflation is at a 41-year high. How has this
impacted your export strategy and operations? And as well,
small business optimism has declined for a number of months
now. Expectations for better business conditions are really at
an all-time low since the early 1980s. Given the current
inflation levels and small business climate, how will tax
increases, so I am going to ask you about that as well, tax
increases affect your operations, affect your margins, affect
your ability to be very competitive and the number of people
that you continue to hire?
Mr. WALDING. Great questions. And I think somebody, I
apologize, who mentioned it earlier, but predictability is a
big one for us as a small manufacturer and trying to keep
steady, consistent jobs in rural Pennsylvania. And we delivered
a price increase earlier this year, the most significant in
decades throughout this organization as we have tried to keep
our products competitive and our pricing relatively static. And
we no longer could afford to remain in business if we did not
do that. And when there are premium product or more of a
commoditized product, I think we all feel the same pressure on
our margins and our ability to sustain ourselves in the long
term. And so specifically things like, and given the
inflationary environment, we are making adjustments ourselves,
certainly, but with the best interest for keeping us and our
longevity front and center. Certainly any tax reform or
increase to us would certainly be of material impact to
sustaining ourselves and our profitability.
Mr. MEUSER. Thank you.
I will yield back, Madam Chair, and I look forward to the
invitation to lunch.
Chairwoman DAVIDS. Noted.
The gentleman yields back.
The Chair will now recognize Congresswoman Bourdeaux from
Georgia for 5 minutes.
Ms. BOURDEAUX. Thank you so much, Chairwoman Davids, for
holding today's hearing and thank you, Ranking Member Meuser. I
want to also thank our witnesses, and especially Ms. Waters, my
fellow Georgian, for joining us today. Sorry I cannot be there
in person but I had a scheduling conflict.
But did want to talk with you for a few minutes about
international trade in Georgia and how you use the STEP
program. In your testimony, you talk about how Georgia
participated in STEP 2011 to 2012, then had an application that
was denied in 2013, so it was out of the program for a while,
and then very pleased to see we are back in it in 2020 and
2021.
So as a state that has seen significant economic growth and
benefits from trade, both with and without participate in STEP,
can you speak to the benefits of STEP and how it has helped
enhance Georgia's small businesses' ability to do business
overseas over the past 2 years?
Ms. WATERS. Great, Representative Bourdeaux. Thank you very
much for that question. It is a great question. And I will say
that Georgia has a very well-established trade program. Our
team has been doing this for the better part of 30 years and
for pretty much the entirety of that time we have been focused
on small businesses. And so we always viewed the STEP program
both in its pilot years and now getting back into it in 2020,
we have really seen the ability to lean on STEP as one tool in
our overall tool kit of how we on an ongoing basis support our
small business exporters through counseling and referral to
resources and market entry, market intelligence, introductions
to customers. We really look at our services, if you will, in
terms of a spectrum of assistance from a band new new-to-export
company that is just starting to get that little flicker really
through to the process of connecting with partners in markets
and actually achieving those export sales. And so what the STEP
program does allow us to do, we really think of it as an
additional service that we can provide to companies because
that financial piece is so critically important.
I was a trade manager in this team before I went to the
private sector, and now I am back sort of running the
international trade team for the department. And the common
thread is so many small businesses, they do have really cool,
really innovative products and that passion is there for their
businesses and for their products and technologies, and they
just need assistance and they do not necessarily know where to
start. And a program like STEP I think for our businesses,
small businesses in Georgia, it is one thing to know that you
have got a really well structured trade program and resources
that are there to assist you as the small business, but knowing
that there is that financial backing that you can, if you do
your homework and you apply and you say I have been wanting to
get to this international trade show for 4 years and I have
never had the budget to do it but I know if I make the
commitment now I am going to get some percentage of that money
back and that frees me up to globalize my website, get my
labels translated, do more in the international sphere that
really can tip the scales for small businesses and take
exporting from a priority in a company's focus to being a top
priority and really being able to truly get into the
international market. That is the value of STEP for our Georgia
companies.
I will say that the pandemic really was the tipping point
for us as a state to get back into the program and I want to
recognize SBA and the improvements they have made to the
program over time. It really is a significantly different
program now than it was in 2011 when we started out. But being
able as a very adept export development state, to be able to
offer direct financial assistance awards to these companies
really does make the difference and every dollar that we can
get into the hands of those companies does matter because it
frees up a dollar that they can then continue to expand their
export sales.
Ms. BOURDEAUX. Thank you so much. That was actually really
helpful to hear that contrast back and forth.
Unfortunately, I am short on time, but would love to talk
with you more just because we have such an international and
diverse community in the 7th District. And I know a lot of my
immigrant communities have, you know, one foot in this country
but one foot in the country that they immigrated from and I
think there might be some interesting opportunities for
partnerships with you all for them and to help boost their
business.
With that, again, welcome to D.C. Good to have you here,
and I yield back the balance of my time.
Chairwoman DAVIDS. Thank you. The gentlewoman yields back.
The Chair will now recognize Congresswoman Young Kim, the
Ranking Member on the Subcommittee for Innovation,
Entrepreneurship, and Workforce Development for 5 minutes.
Ms. YOUNG KIM. Thank you, Chairwoman Davids. And I would
also like to thank my Ranking Member Meuser for holding this
hearing. And I want to thank our witnesses, especially Ms.
Waters, for joining us in person and other witnesses joining us
virtually.
We are here to analyze the work of SBA's Office of
International Trade and STEP program. I want to let you know
that I am very proud to represent California's 39th
Congressional District. I represent the parts of California,
Orange and San Bernardino counties and it is home to San Pedro
Bay Port Complex. Nearly 25 percent of the nation's total
exports pass through the San Pedro Port Complex. So I have seen
the supply chain crisis very, very closely at home.
Unfortunately, supply chain crisis and this issue have been
exacerbated by workforce and truck driver shortages, burdensome
regulations, which California is known for, and warehouse
capacity problems. In my home state of California, we have this
onerous legislation AB5. That will change the definition of an
independent contractor and force truck drivers to comply with
onerous licensing requirements and AB5 could only lead to more
trucking shortages and to the estimated shortage of 80,000
truck drivers nationally.
To further compound our supply chain and workforce issues,
one of the owners of a logistics company in my district told me
for every five people they hire, one does not show up. They do
not show up for work. Workforce shortages are only adding fuel
to the fire of inflation. So to paint a picture of that
magnitude of the problem, at the end of May, the federal
government's Job Openings and Labor Turnover Survey found that
there was a near record of 11.3 million job vacancies across
the nation.
I want to ask a question to both you, Ms. Waters, and Mr.
Spear. We have heard that STEP reporting requirements are more
detailed and burdensome than grants from the Department of
Commerce and other agencies. So can you give us an overview of
how your office manages STEP programs and the reporting
requirements?
Ms. WATERS. I will take a first shot at this. I will say
from Georgia's perspective, there is an administrative burden
in STEP with respect to the application process as well as
quarterly reporting. I think it is worth it because the value
is there for the companies and certainly as a state grantee
that is again new to the program, we are absolutely willing to
make that tradeoff because we know the value is there for small
businesses. But I think the most effective way to address
administrative burden within the STEP grant is to continue to
work together in partnership with SBA Office of International
Trade with this Committee, with Congress, to focus in on the
core priorities of the program, the core objective of STEP, to
get new small businesses into exporting and to help those
exporters get to new markets and to collaboratively focus on
concise performance metrics that get to that outcome driven
perspective instead of calculating ROI on a quarterly basis and
going really into very specific data that to my understanding
is not required by Congress on a quarterly basis because that
does take time away from when we could be assisting small
businesses in the export process.
And with that I yield my time.
Ms. YOUNG KIM. Mr. Spear, as you respond to my same
question that I posed to Ms. Waters, can you suggest how we can
ensure that program is meeting its performance metrics while
also reducing administrative burden?
Mr. SPEAR. Well, yes. Let me give you the short answer.
Yes. Many of the points that have been raised today are
absolutely significant. However, in New Jersey, we have taken
some steps to kind of reduce that burden already. When we query
our companies, we simply ask for actual sales and projected
sales and actual jobs and projected jobs. So that is the
minimum that we can get to get back. I mean, there are other
things that we could include that would be indicators, but we
have minimized it by minimizing what we ask the companies. We
have done that with regard to that. And we have actually found,
although we have not had as many experiences with other
agencies, we actually did back away from applying for another
agency's grant earlier in the year because the burden was
actually heavier than what we found at SBA.
Ms. YOUNG KIM. Thank you.
Chairwoman DAVIDS. Sorry, I was like totally thinking about
your question. The gentlewoman's time has expired.
The Chair will now recognize Congressman Garbarino for 5
minutes.
Mr. GARBARINO. Thank you, Chairwoman, and thank you to the
Ranking Member for having this hearing.
I know, Ms. Waters, you spoke briefly about what you had to
deal with and your small businesses with the height of the
COVID-19 pandemic. I do not know if you got to say everything
you wanted to say regarding how that affected the businesses in
your state and the effect on exports.
Ms. WATERS. Thank you for that question. I will say the
conversations that we were having with our small businesses as
the pandemic was starting, you know, many of our same small
businesses were looking at EIDL loans, were looking at PPP
financing, and really our grant program started in October of
2020. And when we were able to go back to our exporters and
say, you know, we now have this money that we want you to be
able to continue to stay focused to the extent possible on
export development and international markets. What we
absolutely did not want to happen in Georgia was for some of
our really great small businesses to lose focus from the
importance of international growth. You know, we were asking a
lot of our small businesses at a very challenging time and a
lot were understandably focused on making payroll and
continuing to sustain themselves during the pandemic. But those
companies that were really in a position to maintain themselves
and sustain, we did not want them to have to step away from
international development in any way. And so being able to
follow up with those companies and say, look, for any upgrades
that you need to make to your website right now, any kind of
new strategy development that you are looking at for
international markets, using the pandemic as an opportunity to
kind of restrategize about what exporting will look like in the
future, you now have resources through STEP to make some of
those changes. We had a lot of companies that were still very
eager to be involved in international trade events and a lot of
global events went virtual. And so we had companies that were
needing to buy really high quality audio and video equipment to
be able to participate virtually with global buyers at these
new hybrid or virtual trade events.
Mr. GARBARINO. I do not mean to interrupt. I am running out
of time. So you would say that the money, the businesses took
advantage of this program and they have been successful in
using it?
Ms. WATERS. Yes. I think that is true, taking into
consideration that there continues to be some postponement and
cancelation of events through COVID but by and large companies
did take advantage of the opportunities. Yes.
Mr. GARBARINO. Good. Good. All right.
Mr. Spear, would you agree with that? Did you see the same
things with your companies in your state?
Mr. SPEAR. That is correct. We actually saw, it was
interesting, the newer-to-export companies were much more
creative in asking about STEP and how it might embrace their
international efforts by internationalizing their websites. So
yes, overall, but as a nuance, it was the newer-to-export
companies that moved that mark a lot more so than our more
experienced exporters.
Mr. GARBARINO. Okay. So, it sounds like in both states one
of the activities that was most popular was internationalizing
the websites. What else was popular amongst the small
businesses? What else did they use their money on?
Mr. SPEAR. For New Jersey, anything that did not require
getting into a plane and travel was looked at. So taking your
website and using that as the lead entity of your export
process, 100 percent. We had a lot of people do that. But also
things as mundane as translating a product catalogue into a
foreign buyer's language or translating a website. Things like
that. There were several U.S. Commercial Service, and U.S.
Commercial Service is kind of like the unsung hero in the
background. They took many of their longstanding services and
virtualized those so that you did not have to have a company
travel into country to take advantage of what is easily the
best service provider in international business bar none. But
their assistance and their entrepreneurialism helped companies
take advantage of STEP funds as well.
Mr. GARBARINO. Ms. Waters, anything you want to add about
anything else that your businesses were able to use the money
on?
Ms. WATERS. No. I would simply echo what Mr. Spear just
shared.
Mr. GARBARINO. Okay. I appreciate that. And I have got 8
seconds left, so I yield back. Thank you, Chairwoman.
Chairwoman DAVIDS. Thank you. The gentleman yields back.
The Chair will now recognize Congresswoman Van Duyne,
Ranking Member of the Subcommittee for Oversight,
Investigations, and Regulations, for 5 minutes.
Ms. VAN DUYNE. Thank you very much, Madam Chair, and to the
Ranking Member for holding this hearing today.
Mr. Walding, when you think about all that is going on in
the economy right now--labor market issues, 9.1 percent
inflation, supply chain slowdowns--would you say that dealing
with these has slowed your ability to grow your export
business?
Mr. WALDING. I switched audio. Is that okay?
Ms. VAN DUYNE. I can hear you just great. Thank you.
Mr. WALDING. Okay, great. Yeah. So I would say absolutely.
We are seeing softening across both domestic and international
markets and we are doing our best right now to pivot in terms
of what are realistic expectations both in terms of current
markets that we currently participate in, but also in terms of
where we see growth and where we want to be participating.
Right? So metering I think, and we were talking about
predictability, just trying to digest what the impact is going
to be in 3, 6, 9, 12 months is really kind of where we are as
an organization, you know, piecing out what is happening
domestically versus what is happening internationally. And I
think specifically for us, you know, things like foreign
exchange is causing a significant burden as a function of
inflation and some other regulatory environments. So, yeah, we
are taking major steps to kind of course correct or to get some
realistic expectations heading over into the next 6 to 12
months.
Ms. VAN DUYNE. Thank you. And Mr. Walding, one of the
things that the congressional Democrats are discussing right
now is a massive reconciliation bill that many would think
would include a tax hike on small businesses. How do you think
that would affect you in the current climate?
Mr. WALDING. I think that any additional cost pressures
that small businesses like ours, again, we do not want to lay
off. Right? We want to expand. But also, we have got to be
cognizant of what we can digest as an organization in terms of
sustaining our business over the long term. You know, it is no
small feat for any small business to overcome those first
couple of years, let alone be kind of innovators and curators
going against global giants for almost 40 years. We anticipate
and we expect ourselves to be doing the same for the next 40.
An increase in taxes is simply just going to burden our ability
to remain competitive and where do we pass that cost on. Right?
So, I mean, we are either going to feel it on our bottom line
having to make some tough calls internally or we pass that on
to the consumer. Like I said earlier, we had to do that just by
virtue of inflationary environments, making us increasingly
less competitive going against, like I said, some major
contract manufacturers or international players where we, like
I said, we butt up against this every day.
Ms. VAN DUYNE. I appreciate that answer.
I am going to ask this of the whole panel starting with Mr.
Walding.
If you had to identify your top three challenges right now,
what would they be?
Mr. WALDING. At the moment----
Ms. VAN DUYNE. We have got four witnesses so I am hoping
you can just kind of, without having to----
Mr. WALDING. Yeah, sure. The first one for us is going to
be I would say foreign exchange is a big one for us at the
moment. I would say supply chain would be the second. And to a
lesser extent, I would say retaining talent.
Ms. VAN DUYNE. Okay.
And then Ms. Waters?
Ms. WATERS. Thank you. I would say for the companies that
we work with, strength of the dollar is a barrier right now.
Workforce considerations are very real for our small
businesses. And ongoing supply chain disruption and uncertainty
about where the next disruption might come from are at the top
of our list.
Ms. VAN DUYNE. Thank you.
Mr. Spear?
Mr. SPEAR. Thank you so much. Echoing both of the first two
witnesses, what I would add to that is the companies we are
looking at right now are really, really, really young and new
to exporting. And so at the moment, when we have a conversation
about supporting their export activities, they have not fully
fleshed out what their own export activities are.
And so if we could have a way to get them further educated
and then layer possible financing on top of it, that would move
that conversation along really, really quickly.
Ms. VAN DUYNE. So the top three issues that you have got is
education of your workforce and financing?
Mr. SPEAR. Actually, more education just on the aspects
that there is a market beyond the 21 counties of New Jersey and
the United States of America.
Ms. VAN DUYNE. All right. Mr. Tooks? Mr. Tooks?
Mr. TOOKS. I was on mute right quick.
Ms. VAN DUYNE. There you go.
Mr. TOOKS. Number one, the ingredients cost. We have to
source our own ingredients. Our products are made from a
manufacturer and they are experiencing costs and ingredients,
and I think a lot of it has to do with transportation. But the
second thing would be our cost for moving our products here in
the U.S. but just as much across the borders of Mexico and
Canada.
So increased transportation costs have a direct impact on
our ability to grow and it also has a negative effect on making
our margin because we cannot pass on all of those costs.
Ms. VAN DUYNE. All right. Thank you very much. I yield
back.
Chairwoman DAVIDS. Thank you. The gentlewoman yields back.
Again, thank you all for joining us today. Thank you to our
witnesses for taking the time and thank you to our Committee
Members.
Expanding into international markets can definitely boost
small businesses across the country and grow the American
economy. And given these benefits, we have to make sure that it
is as easy and manageable as possible for small businesses to
be able to sell their products abroad.
We have heard extensively from our witnesses today about
the unique challenges that exporting presents for small firms,
and by advancing policies that address these concerns we can
certainly alleviate some of these obstacles and ensure that
American small businesses have a place in the global economy.
I am looking forward to collaborating with my colleagues on
the Committee as we reauthorize the STEP program so that we can
better serve entrepreneurs.
Without objection, Members have 5 legislative days to
submit statements and supporting materials for the record.
And if there is no further business to come before the
Committee, without objection, we are adjourned.
[Whereupon, at 11:06 a.m., the subcommittee was adjourned.]
A P P E N D I X
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