U.S. GOVERNMENT PRINTING OFFICE

60–971 WASHINGTON : 1999

SMALL MANUFACTURING AND THE CHALLENGES

OF THE NEW MILLENNIUM

HEARING

BEFORE THE

SUBCOMMITTEE ON TECHNOLOGY

OF THE

COMMITTEE ON SCIENCE

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

FIRST SESSION

SEPTEMBER 23, 1999

Serial No. 106–43

Printed for the use of the Committee on Science

(

(II)

COMMITTEE ON SCIENCE

F. JAMES SENSENBRENNER, JR., Wisconsin, Chairman

SHERWOOD L. BOEHLERT, New York

LAMAR SMITH, Texas

CONSTANCE A. MORELLA, Maryland

CURT WELDON, Pennsylvania

DANA ROHRABACHER, California

JOE BARTON, Texas

KEN CALVERT, California

NICK SMITH, Michigan

ROSCOE G. BARTLETT, Maryland

VERNON J. EHLERS, Michigan

DAVE WELDON, Florida

GIL GUTKNECHT, Minnesota

THOMAS W. EWING, Illinois

CHRIS CANNON, Utah

KEVIN BRADY, Texas

MERRILL COOK, Utah

GEORGE R. NETHERCUTT, JR., Washington

FRANK D. LUCAS, Oklahoma

MARK GREEN, Wisconsin

STEVEN T. KUYKENDALL, California

GARY G. MILLER, California

JUDY BIGGERT, Illinois

MARSHALL ‘‘MARK’’ SANFORD, South

Carolina

JACK METCALF, Washington

RALPH M. HALL, Texas, RMM

BART GORDON, Tennessee

JERRY F. COSTELLO, Illinois

JAMES A. BARCIA, Michigan

EDDIE BERNICE JOHNSON, Texas

LYNN C. WOOLSEY, California

LYNN N. RIVERS, Michigan

ZOE LOFGREN, California

MICHAEL F. DOYLE, Pennsylvania

SHEILA JACKSON LEE, Texas

DEBBIE STABENOW, Michigan

BOB ETHERIDGE, North Carolina

NICK LAMPSON, Texas

JOHN B. LARSON, Connecticut

MARK UDALL, Colorado

DAVID WU, Oregon

ANTHONY D. WEINER, New York

MICHAEL E. CAPUANO, Massachusetts

BRIAN BAIRD, Washington

JOSEPH M. HOEFFEL, Pennsylvania

DENNIS MOORE, Kansas

Vacancy

(III)

C O N T E N T S

SEPTEMBER 23, 1999

Page

Opening Statement by Representative Constance A. Morella, Chairwoman,

Subcommittee on Technology, U.S. House of Representatives ......................... 1

Opening Statement by Representative James A. Barcia, Ranking Member,

Subcommittee on Technology, U.S. House of Representatives ......................... 5

Opening Statement by Representative Debbie Stabenow, Member, Subcommittee on Technology, U.S. House of Representatives ............................... 6

WITNESSES

The Honorable Raymond G. Kammer, Director, National Institute of Standards and Technology:

Oral testimony .................................................................................................. 9

Prepared testimony .......................................................................................... 12

Biography .......................................................................................................... 24

Mr. Jerry Jasinowski, President, National Association of Manufacturers:

Oral testimony .................................................................................................. 25

Prepared testimony .......................................................................................... 27

Biography .......................................................................................................... 34

Financial disclosure .......................................................................................... 36

Mr. John Churchill, Quality Assurance Director, Wilcoxon Research:

Oral testimony .................................................................................................. 37

Prepared testimony .......................................................................................... 39

Biography .......................................................................................................... 44

Financial disclosure .......................................................................................... 45

Mr. Norm Braddock, President, Saginaw Remanufacturing:

Oral testimony .................................................................................................. 46

Prepared testimony .......................................................................................... 48

Biography .......................................................................................................... 54

Financial disclosure .......................................................................................... 56

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SMALL MANUFACTURING AND THE

CHALLENGES OF THE NEW MILLENNIUM

THURSDAY, SEPTEMBER 23, 1999

HOUSE OF REPRESENTATIVES, COMMITTEE ON SCIENCE, SUBCOMMITTEE ON TECHNOLOGY, Washington, DC.

The Subcommittee met, pursuant to notice, at 1:00 p.m. in room

2318, Rayburn House Office Building, Hon. Constance Morella

[chairwoman of the Subcommittee] presiding.

Chairwoman MORELLA. I’m going to call our Subcommittee, the

Technology Subcommittee of the Science Committee, to order. As

we begin, I want to thank you for coming to our hearing on small

manufacturing and the challenges of the new millennium.

If I had to guess, most Americans probably don’t stop to think

about the daily impact that small manufacturing has on our lives.

And yet it’s all but impossible to get through a day without using

products created by small manufacturers. All we need to do is look

around our hearing room today to realize just how much we depend

on the work of small manufacturers. Everything from the clothes

we wear to the chairs we sit on to the computer equipment that

we use to broadcast this hearing live on the Internet can be attributed in part to the products of small manufacturers.

Small manufacturers make up over 95 percent of all United

States manufacturers, employ one out of every ten American workers. It’s not surprising, then, that small manufacturers contribute

so greatly to our Nation’s economic growth and prosperity.

In recognition of this vital sector of our economy, 1999 has been

declared the year of the small manufacturer. From Pennsylvania

and Maine to Nebraska and Tennessee, small manufacturers have

gathered across the country in state-wide celebrations. And yesterday, we welcomed hundreds of small manufacturers to the National

Manufacturing Summit held here in Washington. This is the defining event of this year-long celebration.

The National Summit was orchestrated to bring together leaders

from industry, government and academia in order to explore the

challenges and opportunities facing America’s small manufacturers

in the next decade and to develop action that will enable a vital

sector of our economy to prosper well into the 21st century.

Four of the major challenges addressed by participants of the National Summit included electronic commerce, international trade,

work force development and sustainable manufacturing. We’re convening this hearing today in conjunction with the National Summit. This hearing seeks to review the findings of the Summit and

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discuss the appropriate role of the Federal Government in helping

small manufacturers excel in the four areas I just mentioned and

to be able to remain competitive in the years to come.

One Federal program that’s assisted small manufacturers is the

National Institute of Standards and Technology’s Manufacturing

Extension Partnership, or MEP. MEP, through a national network

of locally operated centers, provides small manufacturers with costeffective access to a variety of services, ranging from financial planning and product development to quality management and human

resource direction.

Last May, I introduced H.R. 1744, the National Institute of

Standards and Technology Act of 1999, which authorizes the NIST

MEP program at $106.8 million for fiscal years 2000 and 2001.

This amount is about $7 million above the Administration’s fiscal

year 2000 request for MEP.

The MEP program does have a significant amount of support

among members of the Science Committee, and indeed, my colleague, the Ranking Member, is a strong supporter, as is Ms.

Stabenow.

Today we would like to examine MEP’s effectiveness in helping

small manufacturers remain competitive. And we also want to explore ways that MEP can be improved so that it would reach more

small manufacturers without significantly expanding the current

number of MEP centers.

[The statement of Mrs. Morella follows:]

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Chairwoman MORELLA. We have a distinguished panel of witnesses with us today to share their thoughts on the future of small

manufacturing, and I thank them very much for being here. I look

forward to their testimony, and I want to recognize the very distinguished, hard-working Ranking Member of the Subcommittee for

his opening statement, Mr. Barcia.

Mr. BARCIA. Thank you very much, Chairwoman Morella. And I

want to join you in welcoming our distinguished panel to this afternoon’s hearing. I especially want to thank our two small business

panelists for taking time away from their companies to travel to

Washington, D.C. to help advise this Subcommittee about the Manufacturing Extension Partnership and the challenges facing small

manufacturers today.

When the Manufacturing Extension Partnership was first established, small manufacturers were struggling to compete against offshore manufacturers. The MEP was conceived as a public-private

partnership to assist our small businesses in meeting global competitive challenges, and it has been very successful. The Michigan

Manufacturing Technology Center in my home state of Michigan

has assisted hundreds of small and medium size manufacturers

throughout the State of Michigan by providing training and assistance in a broad array of areas, such as quality assurance, lean

manufacturing techniques, performance benchmarking and environmental management.

In Michigan, where many small and medium size manufacturers

are a part of the auto industry supply chain, these second and

third tier suppliers must be competitive with companies around the

world. By working with the Michigan Manufacturing Technology

Center, they are. Now the challenges facing small manufacturers

are changing. They still have to compete in a global marketplace,

but they also face new challenges. Small business must become

Internet literate, because more and more business transactions are

occurring over the Internet.

If small manufacturers want to remain competitive, and be a

part of the supply chain, they must adopt these new ways of doing

business. Along with adopting new technologies, small businesses

need a technically literate work force. Whether hiring new employees or providing professional development, small manufacturers

must ensure that their employees have the skills to integrate these

new technologies into the workplace.

Finally, small manufacturers not only need to be competitive

with imports in the United States, they need to be aggressive as

exporters. These are just a few of the new challenges facing our

small and mid-sized manufacturers. I want to commend the Modernization Forum, the National Association of Manufacturers, and

the Manufacturing Extension Partnership for organizing the National Manufacturing Summit for small and medium manufacturers. This Summit was the first step in formulating a policy to address the challenges facing our small manufacturers.

Again, I want to thank our distinguished panel for appearing before the Subcommittee, thank our Chair, our distinguished Chair,

Chairwoman Morella, for this timely hearing and the opportunity

for these panel guests to share their insight and their expertise

with us as we hope to chart the future of our efforts here in the

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Congress at assisting small and medium size manufacturing businesses.

With that, I look forward to listening to all of your comments.

Thank you, Madam Chair.

Chairwoman MORELLA. That you, Mr. Barcia. When I introduce

the panelists, I will let you introduce your constituent from Saginaw.

I’m pleased to recognize Ms. Stabenow from Michigan.

Ms. STABENOW. Thank you, Madam Chair. I join with both of you

in welcoming our speakers today and particularly Norm Braddock

from the great State of Michigan. I’ll join Mr. Barcia in welcoming

him. I know first-hand that he has tremendous experience in economic development and working with small manufacturers in

Michigan, also working with the auto industry and with the MEP

program. So we’re extremely pleased to have you here with us as

well as the other panelists.

I’m interested in the same kinds of issues that have been talked

about by our Chairwoman and Ranking Member, extremely interested, in addition to the issue of technology in the classroom. Yesterday we had a hearing addressing issues of barriers to bringing

technology to the classroom. I know that work force development,

education, are critical to small and large manufacturers and certainly welcome your thoughts in that area as well as other issues

related to technology, e-commerce, what we’re doing in terms of

support and technology for our small manufacturers.

I am, as has been indicated, a strong supporter of the MEP program. I do want to also indicate I am a strong supporter of the Advanced Technology Program. And while I’m pleased with the additional dollars we have been able to put into the MEP program, I

am very concerned about what has been happening to ATP and am

very concerned that at the moment we do not have dollars in for

new awards, and would certainly welcome your thoughts about the

importance of partnering around technology research issues.

And I know in Michigan, this has been extremely helpful. ATP

has really made a difference in jobs and economic development.

And I’m hopeful that as we move along, we’re going to be able to

address that, because I’m concerned that MEP is doing well, ATP

is doing well in my state, but ATP at this point in time is not receiving the kind of support from Congress that it needs. And so I’m

hopeful that we can correct that.

So I thank you very much, and I appreciate being a part of the

hearing.

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Chairwoman MORELLA. Thank you, Ms. Stabenow.

I’m sure she mentioned that because she saw Mr. Kammer, Director Kammer here, of the National Institute of Standards and

Technology. We do have a distinguished panel.

Mr. Kammer, who’s certainly no stranger to this Subcommittee,

is going to share with us his efforts to assist small manufacturers.

We’re also joined by Mr. Jerry Jasinowski, President of the National Association of Manufacturers, also no stranger to Congress.

He’ll give us an overview of the recommendations that came out of

yesterday’s National Manufacturing Summit. I’m also pleased to

point out that Mr. Jasinowski was recently selected by the Washingtonian Magazine as one of the ten most influential association

heads in Washington. I would like to congratulate him.

I forgot to bring my copy so you could autograph it, Mr.

Jasinowski. [Laughter.]

In addition, we have Mr. John Churchill, Quality Assurance Director at Wilcoxon Research, a small manufacturing company located in Gaithersburg, Maryland, the great Gaithersburg, Maryland. Happens to be in my Congressional district, and I’m proud of

the work they’ve done.

I’m eager to hear his thoughts about the challenges that face

small manufacturers and how we can help companies continue to

prosper.

I leave the introduction of Mr. Norm Braddock to Mr. Barcia.

Mr. BARCIA. Thank you very much, Chairwoman Morella.

I am very privileged and pleased to introduce a good friend and

a very successful businessman, Mr. Norman Braddock. And I know

that Representative Stabenow and I share our pride in a Michigan

native appearing before our Subcommittee, especially one who has

been so successful in every aspect of his life. He’s an outstanding

father and husband and very, very involved civically in Saginaw

County and Michigan state-wide organizations, as well as his extensive experience that he brings to us today in the manufacturing

sector.

Norm is a lifelong resident of Saginaw, Michigan, and spent

more than 20 years working at Saginaw Steering Gear, a division

of General Motors, which is now known as our Delphi plant up in

Saginaw County. He held various managerial positions at Delphi,

including manufacturing supervisor, workers compensation adjuster, benefit plan supervisor, labor relations supervisor, senior

buyer and general supervisor of purchasing.

After a very successful career with General Motors, Norm started

the Saginaw Remanufacturing Company as a joint venture to rebuild power steering pumps. His successful business soon diversified production to include inspection and sub-assembly of various

other original automotive parts.

Norm, as I mentioned, is an active member of the Saginaw business community, serving as the director of numerous professional

organizations, and I’ll just mention just a few, but we could spend

a great deal of time if we included all of the organizations he’s active and involved in. Including the Saginaw African-American and

Minority Business Association and the Saginaw Valley Manufacturers Association, he also currently serves, and has been a very acVerDate 20-MAR-2000 09:15 Mar 29, 2000 Jkt 062292 PO 00000 Frm 00011 Fmt 6633 Sfmt 6602 E:\HEARINGS\60971.TXT pfrm07 PsN: 60971
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tive member of the Saginaw County Chamber of Commerce, where

he currently serves as the secretary.

And I think Norm offers us a unique perspective. He has spent

20 years, as I mentioned, working for General Motors, and is now

the president of his own successful manufacturing company. He understands both the demands of major corporations, and the challenges that small and medium size manufacturers face.

I look forward to listening to his unique perspective on the Manufacturing Extension Partnership, and the needs of small businesses, and how effective that program has been in the past, and

what we might be able to do in the future to ensure its continued

valued assistance to our small and medium size manufacturing

base in the United States.

So Norm, I’m very pleased to introduce you to our Subcommittee.

Chairwoman MORELLA. Thank you, Mr. Barcia.

It is the policy of the Science Committee and all its Subcommittees to swear in the witnesses. So if you would stand and raise

your right hand.

[Witnesses stand.]

Chairwoman MORELLA. Do you swear that the testimony you are

about to give is the truth, the whole truth and nothing but the

truth?

[Witnesses respond in the affirmative.]

The record will indicate affirmative responses.

Our pattern is to allow each panelist to speak about five minutes. It could be a little bit over if necessary. Your written testimony in its entirety is included in the record, so you can alter it,

synopsize it, whatever you want to do.

Director Kammer, let’s start off with you, sir.

TESTIMONY OF RAYMOND G. KAMMER, DIRECTOR, NATIONAL

INSTITUTE OF STANDARDS AND TECHNOLOGY, TECHNOLOGY ADMINISTRATION, U.S. DEPARTMENT OF COMMERCE, GAITHERSBURG, MARYLAND

Mr. KAMMER. Chairwoman Morella, Representative Barcia, Representative Stabenow, thank you very much for inviting me here to

share some of what NIST does to improve the competitiveness of

America’s small manufacturers.

Manufacturing is critical to the U.S. economy. Overall, it provides nearly 20 percent of the Nation’s GDP and about 17 percent

of all jobs, and about 24 percent of all wages. As you know, Secretary of Commerce Daley declared this year to be the year of the

small manufacturer. That was endorsed by the National Governors

Association in their February meeting. And most recently, President Clinton declared this week to be Small Manufacturing Week,

so this hearing’s timing is very, very appropriate.

I’ll defer to the other members of the panel in summarizing the

first national manufacturing summit. I will say, though, from my

point of view, it was extraordinarily successful. And I would also

like to publicly thank Jerry Jasinowski and NAM and Judy

Justinas and the Modernization Forum for their leadership in making this a successful summit.

I’m going to focus on two of NIST’s programs, primarily on MEP

and then share a little bit of information with you about the qualVerDate 20-MAR-2000 09:15 Mar 29, 2000 Jkt 062292 PO 00000 Frm 00012 Fmt 6633 Sfmt 6602 E:\HEARINGS\60971.TXT pfrm07 PsN: 60971
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ity program in small manufacturing, simply because I thought that

that would be of interest, and I don’t think the Committee’s heard

all this information. Our closest NIST relationship, of course, with

small manufacturers, is MEP. MEP provides hands-on information

to the Nation’s 385,000 small manufacturers. And over the last two

decades, these small firms have generated about 3⁄4 of all new manufacturing jobs and account for about 55 percent of the value-added

money in manufacturing.

Yet many small manufacturers find it difficult to stay current

with modern technology, and in comparison with larger manufacturing firms, their productivity is growing somewhat more slowly.

But the MEP can help. And Phil Shapiro, who is the professor in

the School of Public Policy at the Georgia Institute of Technology,

recently said that systematic evaluation studies have confirmed

that MEP is having a positive effect on business and the economy.

And I’m going to give you the results of a few of those studies.

The U.S. Census Bureau surveyed about 4,400 firms that had

been served by the NIST MEP in 1997. That represents about 5

percent of all the firms we’ve served since the beginning of the program. These companies reported an increase in sales of $236 million, reduction in inventory of $31 million, a savings of $24 million

in labor and materials. And they also reported they’d invested $193

million in modernization and created about 6,700 new jobs.

A second study that was done by MEP that matched firms we

had served in Pennsylvania with firms that we had not served that

were similar in their endeavor covered about 2 percent of everybody that we’ve served, and that showed that on a per capita employee basis, the MEP client firms created value at a rate of about

$2,300 a year for each employee, in comparison to about $500 a

year for the firms that we had not served.

And then a final example, a study of the New York MEP found that the State’s investment of about $5 million generated an additional $225 million or so of value-added income in New York between 1995 and 1997. And it created 2,600 new jobs.

I can’t resist sharing one example with you. I met a man yesterday at the Summit who is the president of the Best Cheesecake in

the World Company. They’re in Chantilly, Virginia, and I sampled

the product, it’s quite good. The firm is about a $2 million a year

firm. They have 19 employees.

Last year, they consulted with the Virginia MEP. And based on

that consultation and suggestions for improving their production

processes, the firm was able to add $91,000 in profitability. On a

$2 million base, that’s actually an extraordinary, that’s a 5 percent

return on investment in one year’s consultation.

And he’s very pleased with it, and was very proud of the company and very proud of his relationship with the Virginia MEP.

Let me just say a few words about the quality program and with

that, I’ll close. But of the 34 companies that have won the

Baldridge Award, 24 are manufacturers. Some of these are the

largest companies in the world, but some of them are nearly the

smallest companies in the world, for instance, Texas Nameplate,

Trident Precision Manufacturing and Wainwright Industries.

Since 1995, Texas Nameplate, who won last year, has increased

the number of orders shipped by 16 percent and raised its on-time

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delivery record from 95 to 98 percent. Wainwright Industries,

which was a 1994 small business winner, has reduced its customer

reject rate by 91 percent, cycle time is better by 90 percent, and

it’s used the Baldridge framework to drive 10,000 quality and process improvement suggestions that they have implemented since

1994.

One of our winners in the first year is Globe Metallurgical. So

that’s ten years ago. And in the ten years since they won the

award, they’ve increased revenues by about 200 percent, and

they’ve increased profitability by 300 percent. And that’s a very

hard thing to do, to increase your profitability while you increase

revenues.

So as I said at the beginning of my remarks, manufacturing is

important to NIST. For almost 100 years, we’ve viewed it as our

job to help the Nation’s manufacturers. I’m proud of what we’ve accomplished, and I’m excited about beginning the next century of

service to American industry.

In closing, let me thank the Committee for sponsoring us in a

display that is in the Rayburn foyer that shows the products of

some of the small manufacturers that we work with. I invite people

to come and take a look if they get a chance.

Thank you for inviting me.

[The statement of Mr. Kammer follows:]

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Chairwoman MORELLA. Thank you, Director Kammer. I hope

they will drop by and look them over. We’ll publicize that.

Mr. Jasinowski, delighted to have you here and hear from you,

sir.

TESTIMONY OF JERRY JASINOWSKI, PRESIDENT, NATIONAL

ASSOCIATION OF MANUFACTURERS, WASHINGTON, D.C.

Mr. JASINOWSKI. Thank you very much, Madam Chairman. And

thank you for your leadership and good humor and general grace

in this region in a Congress that has been enhanced by your spirit

and personality and leadership a great deal. And thank you, Congressman Barcia, for sponsoring this hearing as well.

I would be remiss if at the very beginning in summarizing the

Summit that we’ve just had not to indicate that there is a strong

element of partnership that came out of this between NIST, the

Extension program and the small manufacturers and business in

general. I think that it’s easy to underestimate the extent to which

there are great opportunities for government and the private sector

to cooperate on a whole host of things, whether or not it be the

DARPA program or the investments we make in health or the magnificent leadership we’ve had on the quality program, and now this

continued strength in the Extension program which is very valuable to small manufacturers.

And many of the small manufacturers that I was with yesterday

are members, we have 10,000 small manufacturers, said to me that

they’ve found it very valuable to be able to develop those partnerships. And that cuts across the issues of trade, technology and

training that we’re examining at the Summit. So that was a crosscutting theme that came through, and I think is important for this

Committee to have someone from the private sector emphasize.

And I think the second, and to thank both the NIST and the Extension program leadership that we had on the Summit, and that

we have generally from those two fine institutions. I think the second point I’d make, Madam Chairman, is that manufacturing has

made an extraordinary comeback in this country and we now see

productivity in manufacturing that is running at 4 percent, which

is twice the rate of what it is in the country as a whole. We have

about 60 percent, 2⁄3 of the technology in this economy is either

done by or created by manufacturing. It is much more high-tech

than anyone has any sense of at all.

And that is as true of small manufacturing as it is of large manufacturing. If there is anything that is striking, it is the extent to

which these people we were with yesterday are much more technologically sophisticated than you would imagine. For example, in a

survey we did for this event, 80 percent of the small manufacturers

we surveyed, 80 percent, have a web site. Whereas if you look at

the figures for American business as a whole, it is only 20 percent.

And I think that’s because manufacturing, by the nature of its

process, is a rather sophisticated operation that requires computers

and all the software and information processing that’s a part of

this. And we have been doing this now for a long time in order to

increase our productivity and be competitive. And so it’s a productivity, technology community, and that goes for the small manufacVerDate 20-MAR-2000 09:15 Mar 29, 2000 Jkt 062292 PO 00000 Frm 00028 Fmt 6633 Sfmt 6602 E:\HEARINGS\60971.TXT pfrm07 PsN: 60971
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turers who contribute about 60 percent of the value of manufacturing as a whole, and about 65 percent of manufacturing jobs.

So this is a high-tech group. Most of the people who are making

extraordinary success in e-commerce and e-business are small companies, I might add, many of which are software and other kinds

of manufacturing companies.

I think, well, we learned important things in the trade and environmental area that I’ve outlined in my testimony. And I would say

just a sentence on each, because I want to go on to the other two

areas, which I think it’s more important to stress. In the area of

the environment, what was stressed is the need for greater flexibility, greater cooperation with respect to the private sector, and

the public sector, and improved emphasis in the private sector on

seeing environment as a quality enhanced program.

It was striking how much more friendly small manufacturing

feels about its state environmental representatives than it does the

EPA. And I know that Administrator Browner will be interested in

that, and she’s making an effort to try to respond more to small

manufacturers.

But there’s an important lesson there, and it indicates that if you

have cooperation, if you have early warning and all of that, these

regulatory initiatives at the environmental level can work much

better.

In the trade area, the single message that came through that

was most important is that nobody fully understands, including

small manufacturers, all the benefits associated with global trade,

that you have in fact a lot more people who are gaining from that

than is possibly recognized. I think the two areas that are of far

greater importance which I have emphasized are e-commerce and

the training area.

And in the e-commerce area, we simply need to provide much

better information to the small manufacturers, a better tool kit for

them to get involved in, greater bandwidth access and an opportunity to have the infrastructure that they need. In terms of their

payoff, focusing on the supply chain, as has been suggested earlier

by the Committee, is the area that will pay off the most.

On work force issues, it was generally agreed this is the number

one issue facing all small manufacturers in terms of education and

training. Eighty-three percent of all small manufacturers say they

still have a hard time finding the employees they need. And there

what we need is again partnerships with the community colleges,

with the work force investment extension, with the extension programs in order to solve this program together.

Beyond that, small manufacturers need to look at the training

thing as part of a larger profit sharing and empowerment effort. If

you look at the best companies, they succeed because they give the

workers a stake in the enterprise, in terms of how it’s run, how

they share in the profits, and in terms of incentives, for them to

be fully trained.

So I think, Madam Chairman, those are the main conclusions

from the conference as I saw them, from the perspective of the National Association of Manufacturers.

[The statement of Mr. Jasinowski follows:]

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Chairwoman MORELLA. Nice, succinct testimony. Thank you, Mr.

Jasinowski. We’ll have a chance to ask further questions, ask some

questions on it.

Mr. Churchill, delighted to have you here, sir.

TESTIMONY OF JOHN CHURCHILL, QUALITY ASSURANCE DIRECTOR, WILCOXON RESEARCH, GAITHERSBURG, MARYLAND

Mr. CHURCHILL. Good afternoon, Chairwoman Morella and Representative Barcia and Members of the House Technology Subcommittee.

As a representative of a small business located in Gaithersburg,

Maryland, in Chairwoman Morella’s district, I’m honored to appear

before the House Technology Subcommittee. I’d like to thank

Chairwoman Morella, first for inviting me to testify and to share

some of the experiences we’ve had with the programs, and also for,

to let you know we appreciate the work that you’ve done to help

make an environment favorable to small businesses in our district,

as we compete in the international marketplace.

I’m Director of Quality Assurance at Wilcoxon Research, Incorporated. It’s a small company that designs and manufactures vibration sensors and associated equipment, it’s sort of a very specialized part of the market. A little bit about the company, just to give

you some background, Wilcoxon Research was formed in 1960. It

remained a very small company until around the 1980s, at which

point we started to grow quite rapidly. We employ currently around 110 people and sell about $9 million

worth of product to laboratories, to the U.S. Government, to other

equipment manufacturers, original equipment manufacturers, and

also to end users. The sensors that we manufacture are primarily

installed to monitor bearings on rotating shaft type of equipment,

such as helicopter rotors, power generation equipment, cooling fans

and paper mills. These instruments allow customers to reduce their

costs and become more competitive through predictive maintenance, lets them monitor their equipment and optimize it, and prevent unexpected shutdowns, that sort of thing.

We’ve used the Technology Extension Service now, which is a

manufacturing extension partnership program administered

through the University of Maryland, on several occasions. I’d like

to briefly talk about two of the occasions. In my written testimony

I have several more, and more details there.

The program, though, first it has provided us access to technical

information, experts in specialized equipment, to help us solve

problems that, in a timely manner, that would be very difficult for

us to solve otherwise on our own, with limited resources that a

small business has. In 1992 and 1993 time period, we were experiencing a number of failures out in the field in a certain application

of the product that we supply. They were associated with paper

mill applications that had a very high temperature and high humidity and caustic chemicals presence. Something there was causing our sensors to fail.

We got in touch with the Technology Extension Service after attempting to solve the problems with the sensors on our own. They

gave us access to a scanning electron microscope, also provided us

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access to conformal coding experts and gave us information on

processes and materials associated with that. They were able to

help us review our vacuum and nitrogen purge systems, which

were part of the processing that we used, help us to interpret some

residual gas analysis testing that we had had performed at a commercial service, but we had difficulty interpreting the results of

that.

And they also finally gave us access to a highly accelerated stress

test chamber, which allowed us to prove out some of the potential

solutions before we actually worked them into our product. So with

their help there, and that was help that we would find very difficult and costly to find on our own. We were able to correct several

sources of the problems that we had and remain competitive in

that market. Basically at that time, that market represented about

50 percent of our sales, so it was an extremely important market

to us. And having quick, immediate access to that information was

very valuable.

Another occasion, they helped us improve the yield and reliability of some of our smaller electronic circuits. Many of the markets that we serve desire small, lightweight units as is the general

trend in all technical instrumentation. One method of achieving

that is through wire bonding technology. That’s a method of assembling electronic circuit in a much smaller package.

We had purchased some wire bonding equipment and had attempted and fairly successfully got it up and running and written

the processes involved with it. But yet, we were still experiencing

a fairly high failure rate internally. And we had some, we weren’t

quite sure of the reliability of the product that we had going out

the door.

The Technology Extension Service was able to provide us with a

wire bonding expert from the Naval Research Laboratory who

helped us optimize our processes, including in the areas of test

handling and storage burn-in, cleaning and coding. And they greatly assisted us in getting that process up and running now.

And as I mentioned, we had several other examples of the way

we’ve made use of these services. And I’d be happy to answer any

questions that you have. Thank you.

[The statement of Mr. Churchill follows:]

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Chairwoman MORELLA. Thank you, Mr. Churchill.

Mr. Braddock, pleasure to have you with us.

TESTIMONY OF NORMAN BRADDOCK, PRESIDENT, SAGINAW

REMANUFACTURING, SAGINAW, MICHIGAN

Mr. BRADDOCK. Thank you. Good morning, Congresswoman

Morella and Members of the Subcommittee.

My name is Norman Braddock and I am President of the Saginaw Remanufacturing Company in Saginaw, Michigan. I’m honored to have this opportunity to testify before you today. And I’m

especially pleased to testify before my local Congressman and

friend, Jim Barcia, and also before Ms. Stabenow, Congresswoman

Stabenow, who will become the next U.S. Senator from the great

State of Michigan. [Laughter.]

I traveled here to Washington, D.C., to participate in the 1999

Manufacturing Summit. And I thoroughly enjoyed the opportunity

to discuss the challenges I face with other small manufacturers,

agencies, elected officials and staff. Today I would like to discuss

my experience in how the Manufacturing Extension Partnership, or

MEP, has helped me address some of these challenges.

After 20 years in General Motors in their manufacturing, personnel and purchasing departments, I established the Saginaw Remanufacturing Company in 1991 as a remanufacturer of hydraulic

power steering pumps for General Motors service parts operations,

and Daimler Chrysler’s Mopar Parts Division. Our product is used

in the after-market and is sold to car dealers around the world for

service and warranty work. We also provide assembly, sub-assembly, inspection, testing, rework and recycling services to Delphi

Automotive Systems in Saginaw for their OEM business.

Today Saginaw Remanufacturing employs 63 people and our sales are expected to exceed $3 million this year. During my first

several years in business, I found it difficult to accurately predict

the cost of production, and would often build a cushion into my

quotes for particular jobs to ensure that I covered all of my expenses. When I received a flyer from Saginaw Valley State University’s Center for Manufacturing Improvement for an activity-based

costing seminar, I thought it was something that I had better check

out.

CMI is the regional office for the Michigan Manufacturing Technology Center, Michigan’s MEP center. Activity-based costing, the

activity-based costing seminar, sparked my interest to learn more

about accurately calculating costs for each of my product lines. And

I wanted to contact the MMTC for more information.

As a result, I contracted with them for $7,500 and came away

with an invaluable insight into the financial breakdown of my business operations. By better understanding how each part of my production process contributes to the overall cost of products, I was

better able to predict the cost of new products and provide more accurate quotes to potential customers. I could also identify which

jobs were the most profitable and concentrate my efforts on those

particular jobs.

I also received assistance with a strategic business plan. I needed

that for QS9000 registration. And also, I received market analysis

information from the MMTC. I feel that my company is a real sucVerDate 20-MAR-2000 09:15 Mar 29, 2000 Jkt 062292 PO 00000 Frm 00049 Fmt 6633 Sfmt 6602 E:\HEARINGS\60971.TXT pfrm07 PsN: 60971
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cess story and that the MMTC has been a strong partner in achieving that success. They provided me with expertise that I could not

find anywhere else. They are impartial, knowledgeable and they

are an ally in today’s fierce marketplace. They continue to call with

referrals and advice, and have even given me input on contacting

other potential customers.

I also want to differentiate MEP services from those from their

private sector counterparts. Most large private sector consultants

do not actively solicit my business, and when they do, very junior

level people have been assigned to perform the work. In addition,

the services often were not tailored to fit my particular needs.

The MMTC, on the other hand, aggressively marketed to me and

continues to provide guidance about new services and programs

that can help me remain competitive. I feel that they are very business savvy and very business conscious, and are truly in my corner.

I have two other challenges I want to briefly mention to you. As

many of you know, the big three auto makers are moving from assembling parts to assembling modules of parts, and pushing more

and more assembly, engineering and design work to lower tier suppliers. This puts great pressure on small manufacturers like myself

to more effectively communicate with my customers and my supplier chain.

In addition, there are more demands to comply with various

quality standards and to have more in-house engineering and design expertise. I sincerely appreciate the opportunity to participate

in this 1999 National Manufacturing Summit. And while I’m keenly aware of the many challenges small manufacturers like me face,

the Summit gave me a chance to interact with hundreds of others

who are struggling with these same problems, and have helped us

to understand how we might tackle them.

The breakout sessions were right on target. The e-commerce and

work force forums addressed some of the specific challenges I just

mentioned. I attended the international trade session, and I strongly believe that the future competitiveness will heavily rely on our

ability and my ability to conduct business globally and on-line, and

obtain accurate, timely information about my customers and suppliers.

It is extremely difficult for small manufacturers like me to wade

through the hype about the internet and determine exactly what

I need to implement and identify the resources to do it. I look forward to working with the MMTC, and continue to address these

new set of challenges.

Once again, I want to thank you for this opportunity to speak to

you today and particularly before my local Congressman, Mr. Jim

Barcia. Thank you.

[The statement of Mr. Braddock follows:]

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Chairwoman MORELLA. Thank you very much, Mr. Braddock.

Thank all of you for your testimony.

We’ll start our round of questions, but, I don’t know what’s happened, Mr. Braddock, but we have also Ms. Rivers from Michigan.

So we’ve been kind of overwhelmed with the Michiganers here.

[Laughter.]

And we also have Mr. Baird, who has joined us, too, from the

great State of Washington.

I’m going to start off asking you some questions about yesterday’s real standards day as it applies to your response to international standards, whether they are barriers, whether there

should be changes, the whole concept of standard setting. I wonder

what impact, if you’d like to comment, do international standards

have on small manufacturers. Then I want to go into whether or

not small manufacturers have difficulty exporting to the European

union or elsewhere because of technical standards. And whoever

would like to start off, Mr. Jasinowski is in front of the microphone.

Mr. JASINOWSKI. I’m happy to start off from a broad sense. I

must say that when you have a discussion of international trade

with both large and small manufacturers, standards comes up as

a major barrier with respect to trade in Europe. As you know, the

trans-Atlantic dialogue in Tab D are focused on those questions at

a large company level. And the effort is to try to get the private

sector to agree on harmonization of reducing standards that are

different in each country, whether or not they are internet standards or tire standards or whatever.

So in a large, generic sense, it is a major barrier to trade, and

I think the private sector would like to see them reduced. I don’t

know if they’re particularly worse for small manufacturers, but my

sense would be at least in some areas that it is.

Chairwoman MORELLA. Mr. Churchill, do you want to comment

on that?

Mr. CHURCHILL. Yes. We have several standards that are applied

to our products, particularly to CE standards, with the low voltage

directive and the EMI requirements and the ATEX requirements

they have. They have put considerable, we’ve put considerable costs

and resources into complying with those standards. It is a little difficult at times to find out which standards we need to comply with.

Chairwoman MORELLA. Are small manufacturers, do you think,

represented adequately on the international standard setting

boards, or even national, you know?

Mr. CHURCHILL. Yes, I believe so, but I don’t have a lot of experience on the representation that’s there on the board.

Chairwoman MORELLA. Mr. Braddock, would you like to comment on that, sir?

Mr. BRADDOCK. The international standards I’m most familiar

with is ISO9000, International Standards Organization. And the

auto industry action group took that a step further a few years ago

and created QS9000, which is Quality Systems. And actually, they

enhance the ISO9000 standards to make it a little bit more strict,

but that’s not a problem, because any standardization of standards,

whether they be local or international, is a benefit to small busiVerDate 20-MAR-2000 09:15 Mar 29, 2000 Jkt 062292 PO 00000 Frm 00060 Fmt 6633 Sfmt 6602 E:\HEARINGS\60971.TXT pfrm07 PsN: 60971
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ness and even bigger businesses, because everyone operates out of

the same playbook.

And as long as they’re fair and objective, small businesses don’t

have a problem. As a matter of fact, when QS9000 first came out,

we agonized over all the work involved in getting registered. Because it requires you to document everything you do, and then

prove that you’re doing what the documentation says.

And after getting into it, after a few months, I made my organization aware of the fact that whether the customer required us to

do this or not, it’s still the right thing for us to do, because it gives

us, it helps us to franchise the business, it gives us a blueprint,

and it forces us to be disciplined enough to do what it is we ought

to be doing anyway, do our documentation.

Chairwoman MORELLA. Does the Federal Government have any

role to play in assisting small manufacturers on standards issues,

or none?

Mr. JASINOWSKI. Madam Chairman, I would like to say that I recall now that we did a survey for the Summit which asked the

exact question you have asked. Of small manufacturers, and 50

percent of those answered said that standards were a major barrier

to trade. I think that since the big guys are over there taking care

of themselves, it remains for NIST, the NAM, the Department of

Commerce and those other agencies that represent small manufacturing to raise this as a major issue.

So I would say yes, and all of us need to be very active on it.

Chairwoman MORELLA. And I left the last word to you, Mr.

Kammer.

Mr. KAMMER. Thank you. Standards clearly do represent barriers

to small companies in the United States. You just have the information barrier, large companies have technical libraries of standards, small companies, you know, simply can’t afford the overhead

that this implies. One of the roles for the Federal Government is

just to provide the information. I think that’s a helpful thing to do.

The International Trade Administration estimates that, in addition to the problem just of information gaps, that somewhere between 10 and 20 percent of our trade with the EU, that we would

have 10 or 20 percent more trade with the EU if it weren’t for the

Eurocentric nature of the standards. To put that in perspective,

this last year, we did $400 billion worth of trade with the EU.

So it’s a large number.

Chairwoman MORELLA. My first five minutes elapsed, so I will

recognize Mr. Barcia.

Mr. BARCIA. Thank you, Chairwoman Morella.

Chairwoman MORELLA. Excuse me, we have been joined by Mr.

Udall. I want to acknowledge him.

Mr. BARCIA. Thank you. The first question I have I’d like to direct to Mr. Braddock, but also any comments that any of the panel

members would care to make. Mr. Braddock, one of the major challenges facing all manufacturers is developing a skilled work force.

You serve back in Michigan on the Governor’s Work Force Board.

Could you address some of the work force issues facing small and

medium size manufacturers and how do you think we could address this issue more effectively?

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In addition to training of people new to the work force, would you

also address the issue of professional development of the existing

work force in terms of keeping their skills current as technology

advances and different skills are required in an ever-changing

manufacturing environment and how we might address in the long

term professional development for small and medium size work

forces, and small and medium size manufacturing?

Mr. BRADDOCK. Well, speaking from a practical experience, there

is a great demand for high skilled, high wage and high demand

people to fill those types of positions. I’ve somewhat resolved those

issues for myself personally by creating another company called

Reman Personnel Services, a staffing agency that does nothing but

go out and seeks people to fill positions, not only in my business,

but also for other local businesses.

And you’re right, good people are hard to find, and even to retain

good people, you have to treat them fairly, pay them competitive

wages and then provide them with some career opportunity once

they come in your door, to do other things beyond what they’re

doing for you. It’s an ongoing challenge.

But I think our best solution is to work within the school systems, the public and private school systems, to work with teachers,

in order for them to educate our children to be prepared to go to

work, not just after high school and not just after college, but

through trade schools. Not all children are college material.

So we need to identify early who those children are who need to

go to trade school so that we can get more electricians, carpenters,

pipe fitters, plumbers, people that, and we need to educate people

about, as I learned this week, about manufacturing, and the fact

that there are good manufacturing jobs out there in the world that

need to be filled. I would venture to say as a parent that if I found

out that my son couldn’t be a doctor, I’d be just as happy if he

could be an electrician working in a manufacturing facility.

Mr. BARCIA. Any other panel guests care to comment?

Mr. JASINOWSKI. I would first of all say how proud I am of Mr.

Braddock’s answer, since I think he reflects the kind of entrepreneurship that is so characteristic of all of these small manufacturers. My wife and I had dinner with several of them the other night

and she said, you know, they are so positive that it just takes your

breath away after you’ve spent time with them.

But turning to policy, two things. One, I think manufacturers

can do more themselves. And I have been urging that manufacturers invest 3 percent of payroll in training, and we’ve created something called a virtual university which now allows us to provide online training to our companies. And it has been enormously popular

so far. And I think on-line training is going to be a big answer to

the problem, because it’s much more cost effective and much more

flexible.

Second, I think we ought to take a look at tax policy and see if

there are incentives associated with training. We have some in the

tax law already. We at the NAM are going to be looking at other

tax incentives.

Mr. BARCIA. If no one else has anything, I’d just like to follow

up, I think on both Mr. Braddock’s and Mr. Jasinowski’s comments,

with the second question. I think you’ve partially answered it, but

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if you have any specific suggestions on what we might do to be

more responsive, I would appreciate that. I’ll start with Mr. Braddock, but again, anyone that would like to comment, I would appreciate your responses.

Mr. Braddock, e-commerce has become the latest buzz word in

Washington policy circles. In your testimony, you mentioned some

of the challenges your company faced in going on-line. What kinds

of assistance can the Manufacturing Extension Partnership provide

to small businesses going on-line? Also, what are some specific examples of how small manufacturers could or would do business

transactions over the internet? Could you comment in that regard?

Mr. BRADDOCK. Sure. I, unlike many small manufacturers, I was

able to afford to hire a private consultant to help me get an e-mail

address and they’re working on a web page. And I assume that others who are not aware of the need that I am, because I went to

a conference in Orlando earlier this year that said, if you don’t

have dot com after your name, you’re not in business.

The MEP, I think, can provide technical assistance for people

who, like myself and others, in order to help us determine first of

all, not only how to get on the Internet, but how to use it once you

get there, how it can benefit your business. As you may know, you

can get on the Internet, but you can waste a lot of time there, or

you can take care of a lot of business there.

I think they can help us learn how to train our work force, our

people, how to use other private sector consultants, if they’re out

there, and how to just be able to make money in the e-commerce

world. Because obviously, there’s a lot of money to be made over

the Internet. And likewise, there’s a lot of money to be lost if you

don’t know what you’re doing.

Mr. BARCIA. Thank you.

Chairwoman MORELLA. Did you want to comment on that, Mr.

Jasinowski?

Mr. JASINOWSKI. Well, I think that the one thing I would add to

it is that, I raised at the conference yesterday the need for a Federal web page that would provide information on e-commerce successes to the manufacturing community generally. And Elliott Maxwell, who was there from the Commerce Department, indicated

they were working on that. I would just say that this Committee

could push the notion of a central place for e-commerce in terms

of not policy, but how to succeed in your own business. Between the

Department of Commerce and the Extension Program and NIST,

I’m sure they can get it on-line soon.

Chairwoman MORELLA. Very good idea.

I’m pleased now to recognize Mr. Baird from Washington State.

I don’t know whether Manufacturing Extension Center is near you

or not.

Mr. BAIRD. I confess I don’t, but I’m intrigued by the program,

and that’s what I wanted to ask about. Thanks, Madam Chair.

This sounds like a pretty good deal. It sounds like a Government

program that actually works and we’re always happy to hear that

we do some good things around here. We hear enough of the negative.

I’m interested, Mr. Jasinowski, does your organization have any

sense, or could you estimate maybe the cost benefit ratio that we

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get out of this, in terms of from your feedback you may have, or

Mr. Kammer?

Mr. JASINOWSKI. Well, I think Mr. Kammer can do better than

I. I have to say that historically, we have not been as close a partner of the Extension Program as maybe we should have been, and

in some cases, the Extension Program may not have in all cases

been quite as strong as it could have been.

I think in the last several years there has been a greater awareness of the potential for payoff. I was just saying to Mr. Kammer

that I wanted to send out a letter which had a list of specific examples, like Mr. Braddock and Mr. Churchill was mentioning, in one

paragraph, so that more small manufacturers could see specific examples of how things work.

So I think it’s good to calculate cost benefit ratios. But I think

we’re at a point where we’re trying to make the marriage more

solid than take credit for having lived together for 40 years.

Mr. BAIRD. Good analogy. Mr. Kammer, have you a comment on

that?

Mr. KAMMER. Yes, sir. We asked the Census Bureau to survey

some of the people that we’ve worked with. We’ve worked with

about 77,000 small firms at this point. And they did a survey that

was 4,400, which we think is enough to draw conclusions from.

And for those 4,400, for the period of the survey, which was one

year, 1997, the companies reported increased sales of $236 million.

They also said that they created and retained about 6,700 jobs.

I’m almost brave enough to multiply that by 20, because it was

about 5 percent, but not quite. But at least the sign is right, the

magnitude is significant. The Government cost on an annual basis

is about $100 million, $105 million a year. The States then put up

the same amount, about $105 million. And then fees pay the rest

of the costs. So it’s about 1/3, 1/3, 1/3. And the ratios seem very

good.

Mr. BAIRD. What sorts of outreach do you do, Mr. Kammer, with

small manufacturers?

Mr. KAMMER. We have about 2,000 technology agents that are

supported by this common fund. And they’re located in about 400

places. We’re in all States, including yours. And if I may, I’d like

to share an information package with you later on.

Mr. BAIRD. I was going to ask that, thank you.

Mr. KAMMER. And we visit, we’ll call on you directly, we’ll go to

your meetings of the Jaycees, we’ll go to your meetings of the

Chamber of Commerce, you know, the traditional ways that people

in the United States seem to network and that works very well.

You know, we’re a good country for that kind of thing.

And we find that this works well. Not everybody’s interested in

working with us or anybody else in the Government. But when people are, we’re happy to work with them. We want to.

Mr. BAIRD. Thank you very much.

I’m going to ask what may seem to be a bit of an off the wall

question. But we mentioned earlier the issue of standards. And I’m

continually amazed that our Nation doesn’t switch to the metric

system. And in the issue of international trade, is that a significant

obstacle for folks?

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Mr. KAMMER. The United States is metric in almost all respects

except for the interface with human beings. Your car has metric everything except the odometer, the speedometer and tires. I have a

set of old English ratchets that I used to play around with cars,

they won’t fit on my car now.

Mr. BAIRD. You round the bolts off when you use them.

Mr. KAMMER. That’s all you can do with that. But at the retail

level, we as a society seem pretty conservative about making the

change.

Chairwoman MORELLA. Except we run 5Ks. [Laughter.]

Mr. BAIRD. But how about in the manufacturing realm? Is that

an issue for you? Or either, not just in that, but in the work force,

having a work force that’s savvy on metrics?

Mr. CHURCHILL. It’s not been much of a real barrier to us. We

often end up with two models of products that are identical except

one has metric mounting threads and one has English mounting

threads, depending on where we sell it. And it complicates things

a little bit in that regard.

Mr. JASINOWSKI. I’d have to say generally that manufacturers

have moved to the metric system for the most part, reflecting just

what Ray was saying. So you do have a schizophrenic world out

there in which a lot of it has happened. But we don’t see it, because it’s not happening at the consumer level.

Mr. BAIRD. We should keep that a secret, and they’ll think we’re

plotting. [Laughter.]

Mr. BRADDOCK. Well, you’ve heard of bilingual. We’re bi-numeral.

Mr. BAIRD. That’s very well put.

Thank you very much, Madam Chair.

Chairwoman MORELLA. Thank you, Mr. Baird.

Now I’m pleased to recognize Mr. Udall.

Mr. UDALL. Thank you, Madam Chair. And I want to welcome

the panel as well. I thought I would begin by directing a question

to Mr. Jasinowski, but if others of you would like to answer it, I’d

appreciate that as well.

You, I believe, and I did arrive a little bit late, but stressed that

improved efficiency is mandatory, I think was the term you used,

in order for a small manufacturer to stay competitive. Improved efficiency, in my experience, can reduce resource used, waste streams

and energy consumption, all areas that I’m very interested in.

What role do you think the MEP program can play in assisting

small manufacturers to increase and improve their efficiencies?

Mr. JASINOWSKI. That’s a very good question, Mr. Udall, because

it came up at the conference, and we had a whole working session

that focused on sustainable development, which was the way the

conference labeled the whole effort to try to bring efficiency and environmental excellence together. I think there was a uniform conclusion among the manufacturers, which is important, that the

quality movement in this country, which has been so profound in

affecting manufacturing processes, have convinced most manufacturers that it’s better to eliminate all the waste that you can for

efficiency reasons.

And that, by the way, also helps on the environmental grounds,

so that our paradigm for production is that small is beautiful in

manufacturing, or less is more. Most people don’t know that, beVerDate 20-MAR-2000 09:15 Mar 29, 2000 Jkt 062292 PO 00000 Frm 00065 Fmt 6633 Sfmt 6602 E:\HEARINGS\60971.TXT pfrm07 PsN: 60971
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cause sometimes we’re fighting particular regulations because we

don’t agree with them. But that was the ethic.

And then beyond that, they felt that we ought to try to increase

the information flexibility between the regulator and the manufacturer and have more cooperation. And we had a survey showing

that 70 percent of the small manufacturers got along fine with

their State environmental agency, and only 7 percent felt the same

way about EPA. So there’s something about the gap in communications, which is fairly profound from the manufacturers point of

view, which would generally tend to agree with your paradigm.

Mr. UDALL. So your feeling is the MEP program could help

bridge that gap in situations?

Mr. JASINOWSKI. Yes, I think that I should have said explicitly

the whole sense was that this was what the MEP could help with

in terms of improving that communication.

Mr. UDALL. Anybody else on the panel have a comment in that

particular area?

Mr. KAMMER. Perhaps I could also point to the opportunities in

better engineering and the supply chain. The supply chain exists

when one supplier perhaps provides a compressor, another supplier

puts it in an engine, a third person puts it in an automobile, just

a kind of a crude example. Most engineers estimate that the waste

at this point in the supply chain, because it’s not well engineered,

the first guy didn’t talk to the third guy, he only talked to the second guy, is about 1/3 of the cost.

Well, that’s a lot. That’s a very fertile area. On the other hand,

it’s very hard to work in, because the third guy doesn’t perhaps

even know who the first guy is. And the notion of working on supply chains is one that’s in very active discussion within the MEP

and among our customers and among the MEP center directors

right now.

Mr. UDALL. You may be aware of some of the experiments in industrial ecology that are going on, particularly in Scandinavia. I

think there’s, the Danes have a very interesting industrial situation where they recycle lots of material, including the waste energy

that’s used in one production process. And there are some fascinating efforts going on here in the same regard.

Mr. KAMMER. That’s an area where, actually there’s a lot of operational waste energy sharing now in Europe. And there’s hardly

any in the United States.

Mr. UDALL. Hopefully we’ll have a chance in this Committee to

encourage that more in this country, through some of the mechanisms available to us.

I want to just, I have another question, but I also want to just

also remark, it’s always good to see Mr. Kammer here. We have a

NIST facility in my district in Boulder. I continue to be just astonished by the work that you do in such areas as gauging the amount

of electricity in a microchip that you can’t even see with the human

eye, and setting those kinds of standards. My hat’s off to the people

that work there and the commitment that they have, and also the

great addition to our community in Boulder that the facility provides.

I had heard one criticism of the MEP program, and I think Congressman Baird alluded to it, or you mentioned it, there are sites

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in every State, is it’s not always accessible to small manufacturers.

Is that a legitimate concern, and if so, what do you do to respond

to that?

Mr. KAMMER. There’s 385—yes, it’s a legitimate concern. There’s

385,000 manufacturers. We’ve been in existence ten years. We’ve

worked with about 77,000, at that rate in a century, we’ll have

talked to everybody.

One of the things that we’re focused on is trying to find ways to

increase the scope. We’ve got 2,000 technology agents out there.

That’s a lot. I’m not sure that the next step is to add another 1,000.

Can we work through the Internet? Can we provide more tools

such as the Y2K tool that we provided to allow people to self-diagnosis? We reached 300,000 manufacturers, small and medium manufacturers, with that tool, which shows that there are ways to increase our scope. And we didn’t add any people in order to do that.

So that’s one of the notions.

I think in addition to that, there’s some practical limitations

right now. We’re perhaps a few centers short of where we should

be, just on geography. We’d like to be no more than two hours drive

time from anybody that has an issue. We don’t think people get in

the car and drive much more than two hours, either our agents or

people who perhaps have a problem. And there’s a few areas of the

country where I couldn’t honestly say that we’re two hours drive

time away.

Mr. UDALL. Thank you. Thank you, Madam Chair.

Chairwoman MORELLA. Thank you, Mr. Udall. You’re always

true to your heritage, environmentally and in many ways, in the

home and the area that you represent. And I’m pleased also to represent a NIST location in Gaithersburg, Maryland.

I was curious, also, and you pretty much answered it, with regard to whether or not there are complaints of people not being

close enough, and you talked about sending out the experts, and actually wanting to do more, and having that possibility there. I

guess I wanted to pick up on the training programs that you may

have. You know, remember we passed the H1B Visa program. And

already, it was utilized by the end of May, at the numbers that we

had increased of international people who could give us expertise.

Now, this is two questions. First of all, do you find in your work,

and just particularly small manufacturers, and I know you would,

Mr. Jasinowski, representing all of them, do you find that there is

a need for another piece of legislation that would increase that, the

number that we allow into the United States for a period of years?

And in addition to responding to that, do you have programs where

you work with the community, with the colleges, and you know,

Mr. Churchill, do you work with our school system in some way on,

do you partner in any way with the community college that you

have?

I wonder whether or not Mr. Braddock, you utilize our educational network for it. And also, attached to that is the idea of,

do you ever talk to counselors in high school about manufacturing

jobs? You know, I think, Mr. Kammer, I think NIST gives an

award to some of these high school kids who are involved in manufacturing.

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I remember one year contacting one of them, he said, you’re like

the first one who even gave any recognition other than a little

blurb in the newspaper for this. And I just think that we just don’t

let young people know that there are these jobs available.

So I guess I’m talking about training personnel, the further need

to go outside the United States for experts, whether temporarily or

long into the future. Whoever wants to start off.

Mr. BRADDOCK. I mention in my testimony that I became aware

of the Manufacturing Technology Center through Saginaw Valley

State University, the extension of the MEP in Saginaw. Likewise,

I’ve been very active in the community, I encourage children to

come through my plant on tours, I’ve spent a lot of time in the

metal schools and the high schools, local high schools. Matter of

fact, I’m a candidate for local school board.

And I know that we need to educate our children on manufacturing and manufacturing jobs, and to expose them at an early age

of what manufacturing is all about. So that’s been on my agenda

since day one for the last 10 years. And it does make a difference.

It makes an impact for kids. A lot of kids, even if their parents

work in a plant, don’t know what the inside of a plant looks like.

So they’ve had an opportunity themselves to come in and take a

look at it.

Chairwoman MORELLA. It just occurred to me, you need to educate parents, too. Many of us think Harvard, Yale, you know, we

just don’t want anything that deals with manufacturing. Have you

found that to be the case, too?

Mr. BRADDOCK. Oh, definitely. I mentioned earlier that many

parents expect their children to graduate from high school and go

on to a four year college and graduate, be doctors, lawyers and

whatever. But the trade schools offer just as much opportunity for

children to become electricians and skilled trades people that we

need in manufacturing.

I will mention that one of the ongoing concerns right now, for

small manufacturers, is the fact that there’s not just a shortage at

our level, but also at the large manufacturing level. What typically

happens is they use us as a feeder program, and they take our

skilled trades people and advance them up, which leaves us having

to be a training ground for the larger manufacturers.

So there’s all the much more need for us to have a feeder system

and our best feeder system is through the high schools, the trade

skills, and to identify early who these kids are, get them in apprenticeship programs so that there is an abundance, if not an abundance, at least an adequate supply of people that we need in order

to keep our business running.

Chairwoman MORELLA. Mr. Churchill, I’d love to hear from you.

Mr. CHURCHILL. Yes, we do have difficulty at times finding qualified people to join our organization. Particularly in the more experienced and more technical qualifications, not necessarily people directly out of a school situation.

We have worked with or participated in job fair programs at

Montgomery College, the local community college there. I believe

we’ve had some success there with the entry level type technicians

and some assembler applications there. And we’ve also worked a

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little bit with Maryland University on some co-op type programs to

help bring in some people.

The type of technology we employ is a little unusual for this

area, I believe. I believe that’s why we’re having difficulty finding

qualified applicants. And you can get a lot of computer people and

military type applicants here. We’re more into analog and more

hand assembly work here. It is a difficulty we have.

Chairwoman MORELLA. Mr. Jasinowski, I know, since you do

large and small, maybe you want to address the issue.

Mr. JASINOWSKI. Well, I did want to, from a small point of view,

because I think that if anything, Mr. Churchill understates a little

bit the severity of the problem. The survey we had showed 83 percent have a problem finding skilled workers. And at the conference,

people just were talking and talking and talking about how impossible it is, that they’re giving bonuses, that they’re going out and

dragging them in from the street in order to get it.

So I think it’s a severe skill shortage right now for small manufacturers. And they’re scared to death, because they’re afraid the

large guys are going to take their people anyway.

So I think that we must have a renewal of the H1B and we must

do better on the education front, because our labor force is slowing

down, and we still have 30 or 40 percent of the people who apply

for manufacturing jobs can’t meet the tests of basic mathematics

and critical thinking. So I think it’s a severe problem.

I think at the same time manufacturers have got to get into the

schools and help solve the problem themselves better. And I was

just thinking that last year, we gave an award to members of Congress for what we called manufacturing legislative excellence,

which means you voted our way. And we went in your district and

we gave them out.

But I as thinking maybe we ought to give an award for cooperation in the education system. And bring the schools in, do the plant

tours and somehow involve members of Congress in that. We’ve got

to somehow make this more politically profitable to everybody involved.

Chairwoman MORELLA. It’s a great idea. I like it.

Any comments you want to add, Mr. Kammer?

Mr. KAMMER. I think several. I don’t think our society for the

most part realizes that manufacturing jobs pay 12 percent more

than service jobs. And if you were making a choice and you could

have a lifetime 12 percent pay raise, I think I know what most people would choose. But they’re not knowledgeable and, therefore,

they’re not motivated.

About 20 years ago, the common wisdom was that 5 percent unemployment was the irreducible minimum on employment rate,

that 5 percent was sort of the component of our society that wasn’t

educable, or wasn’t motivated. We’re at 4.6 percent I think this

month on unemployment, so we’ve sort of broken that barrier. But

no wonder there’s a lot of pressure. There’s so many, there’s a lot

of jobs chasing relatively few people.

I personally think one of the big issues is increasing the skills

of our population, so that they can do the more sophisticated jobs,

so that they can partake of higher paying jobs. The Baldridge

award just this last year, with the permission of Congress and this

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Committee, added education as a new category. I have some optimism that that will ultimately have the effect on our K–12 as well

as our colleges, but most importantly, K–12, that we’ve had in

manufacturing. If that were to happen, it would be a wonderful

boon to society. But we will see, we’ve just started.

Chairwoman MORELLA. I guess the bottom line continues to be

education, education, education, basic skills, letting people know

what the opportunities are, doing the mentoring, getting out there,

working in partnerships. I will now recognize Mr. Gutknecht has

joined us, and I want to now recognize Mr. Barcia for a second

round of questioning.

Mr. BARCIA. Well, I appreciate the testimony we just received,

also, because I want to highlight and thank you, Chairwoman

Morella, for agreeing last year to graciously hold a public hearing

in my district in Bay County, on the campus of Delta Community

College, Delta College.

And Mr. Braddock, I’m not sure if you’ve interfaced with college

officials, but we kind of during that public hearing highlighted the

success of the advanced technology education component of the National Science Foundation, in which Delta College administrators

and faculty have designed specific curriculum to impart the skills,

training and education necessary for our two-year community college students to go directly into the work force.

We had three major manufacturing companies, Dow Corning,

Dow Chemical and General Motors, who testified as to the success

of that interaction between college administrators and faculty, designing the specific curriculum and classes that are needed with

the latest state of the art equipment in the plants, so that when

that student graduates, after two years of higher education, they

go directly into the work force, and in some cases making between

$50,000 and $60,000 a year to start.

And I think what we might want to do in Congress is see how

we can reinforce the financial resources of NSF with regard to the

ATE component. And then also, I’m not sure, Mr. Braddock, if

you’ve had any contact with Delta College up there in terms of

helping train some of your future employees, or retrain existing

workers.

Mr. BRADDOCK. Being a graduate of Delta College, in 1991 the

first 15 people that I hired went through an extensive training program at Delta. They spent four hours in the classroom and four

hours in the work place as part of the startup of my business that

long ago. So I’ve had a long term relationship with Delta.

But let me also say this, is that we have a vastly underserved

population of people in our communities, particularly in the minority community, who are underemployed, who need training in order

to access even entry level positions in most manufacturing facilities.

And even though manufacturing can range anywhere from making furniture to making rockets, it’s not all rocket science. Once

people have gotten in the door, proven themselves to be good, get

to work on time, proven that they have some good work ethic, you

can typically train the average person to do whatever it is they

need to do, as long as they’re willing to show up every day and be

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on time and then pay attention to what it is they’re supposed to

be doing.

So I think it goes back to the whole point of education being the

key, and letting people know that if they do the right things, they’ll

have an opportunity to get a better and better job as time goes on.

Mr. BARCIA. I’m not sure if anyone else wanted to comment, but

again, I want to thank Chairwoman Morella. I think we had a very

successful public hearing on the campus up there last spring, and

a lot of these points that Mr. Braddock just made were demonstrated in terms of the testimony that was provided to our Subcommittee. So thanks.

Chairwoman MORELLA. Demonstrates the kinds of things that

can be done throughout the country with partnerships between the

educational institutions and the private sector to train young people.

I’m delighted now to recognize Mr. Gutknecht from the great

State of Minnesota.

Mr. GUTKNECHT. Well, thank you, Madam Chair. And I apologize

for not being here. We had another hearing going on over in the

Budget Committee on the issue of education. And we were privileged to have Governor Jeb Bush from the State of Florida testifying, former Governor Voinovich from the State of Ohio testifying.

And it was interesting, when you have people from Ohio, Florida

and Michigan involved in the debate, sooner or later there was

some discussion of football. And it was interesting, and I was privileged in a previous life, I worked for the former captain of the

Green Bay Packers. It’s a long way to go to make a point here, but

one of the things that struck me and in some of the things that

you’ve said, and I will take more time to review some of the testimony about education, training and so forth.

The one thing about Vince Lombardi, he had a relatively small

playbook. But he believed in doing a limited number of things but

doing them extremely well. And it seems to me, and this came out

sort of in the testimony about education as well, sometimes we’ve

gotten so sophisticated, we’ve tried to do so many things in education, that we’ve forgotten some of those basic fundamentals.

I think you’ve alluded to this, that if kids have basic skills, if

they can read, if they can write, if they can perform arithmetic, if

they’ve got good English language skills, it strikes me that even

small manufacturers, and I do an awful lot of plant tours in my

district, and I’ll tell you, I encourage all members to do this, because it’s amazing to see what’s going on in American manufacturing.

You raised the issue of 4 percent unemployment rate. In our district in Minnesota, it is about 2 percent. Literally, we are beyond

full employment. I mean, there are people working in my district

who really don’t want to work. They’re literally going out on the

streets, you know, and I literally had talked to people at church,

and they say, well, yeah, I really didn’t want to go back to work,

but they kept calling me, so I’m working 28 hours a week, or I’m

working 30 hours a week or I’m doing something else.

But anyway, I really do think at some point we do have to get

back to some of those basics. And I think sometimes with education, we miss the real story.

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In terms of more sophisticated training, I will tell you, every

business that I talk to, they say, if you give me somebody who will

show up on time, who has a good work ethic, who can read, write,

perform arithmetic and has, in fact, they don’t even have to have

great English language skills, I mean, if they have just basic

English language skills, we will train them. And within a relatively

short period of time, they will be making a good living in manufacturing.

And I don’t so much have a question, and I see for the record

the heads were basically nodding on my last comment, they don’t

have to respond to that. But I do think it’s important for hearings

like this, and we need to be talking about how important manufacturing is to our long-term economy. I think there is a school of

thought, and we need to do all we can to dissuade people from this

way of thinking, that manufacturing is not important to our longterm economic future.

The service industry is wonderful. Even high technology is great.

But I think at the end of the day, we have to recognize that manufacturing has to be part of our whole economic mix.

And so I’m delighted that you’re here. I apologize, I missed most

of the testimony and as a result, can’t even ask a particularly good

question, because it may already have been asked.

But again, I want to thank Chairwoman Morella for putting this

hearing together, and I want to thank all of you for coming. And

don’t think just because we didn’t have a huge attendance that

members don’t care about this. It’s just that they have a wicked,

sort of a wicked habit around here of piling meetings on top of

meetings.

But thank you very much for coming.

Chairwoman MORELLA. Thank you, Mr. Gutknecht. Maybe you

didn’t ask questions, but you made good statements. I couldn’t

agree more.

I just want to ask one kind of final question. Mr. Churchill and

Mr. Braddock, where would you be today if you didn’t have the

Manufacturing Extension Program? I notice Mr. Davis, who’s a

former member of Congress, who’s sitting over there, too. Nice to

see you.

Mr. CHURCHILL. That is a little hard to answer precisely. But the

Manufacturing Extension Program has helped us greatly. As I

mentioned earlier, one of the problems we had to solve represented

about 50 percent of our sales at that time. And the effect of even

losing that market, the reputation would have affected other markets we were in as well.

So I would say they helped greatly in keeping us where we are.

Chairwoman MORELLA. Would you have gone to an independent

contractor, or a consultant?

Mr. CHURCHILL. We attempted to go to independent contractors

prior to contacting the Extension Program Service. They are difficult to find, and also the speed at which we needed to find them

was critical, too. And the ease of being able to call up the Extension Service, once we found out about their services, was greatly

appreciated. We could call them up and then in a matter of days,

Mr. Vinicor would come back with some help.

Chairwoman MORELLA. Mr. Braddock, do you echo that?

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Mr. BRADDOCK. Yes. It’s a pretty easy question for me to answer,

because as Congressman Baird was asking a question on how we

quantify, how would you do a cost analysis of the benefit, I was sitting here thinking that my sales are more than doubled since

partnering with the Michigan Manufacturing Technology Center.

And when I think about the services they provided me, if I had

to go out there and get those in the private sector, and I have done

some private sector consulting, I’d probably have to pay twice as

much and get half as much benefit from it, particularly when you,

my experience has been with private consultants is you sit there

and you tell them everything you know about your business and

what it is you do, and then they give you a report that tells you

basically what you told them. No real ideas come out of it.

And what I’ve found with the Michigan Manufacturing Technology Center is that they do research and they contact their other

business contacts and they come back with ideas that you can

choose, pick and choose from and actually make good, sound business decisions on. And I’m fortunate to be in a position where I can

make those decisions in my business very quickly, based on the information that I get from various sources. And that’s my biggest

challenge, is to make the right decisions.

But the better information I have, the better resources I have,

the better decisions I can make.

Chairwoman MORELLA. Excellent. Good. You’ve offered some

great commentary and responses to questions, Mr. Braddock. We’re

pleased to have you here, I’m very proud of you. And Mr. Churchill,

I look forward to also going through your plant, Wilcoxon, at some

point.

Mr. CHURCHILL. Oh, yes, we’ll invite you.

Chairwoman MORELLA. Mr. Jasinowski, please know, I read your

testimony, I mean, I know what you said about the estate tax.

[Laughter.]

And the other taxation, I guess R&D would be the, to make permanent, something I agree with, to make permanent the tax credit.

And I thank you for your leadership in the entire area. NAM has

made a big difference, including in helping to crack that Y2K bill

that passed. So it’s a pleasure to have you here.

Mr. Kammer, we keep giving you more and more responsibility

and you keep being able to, with your very loyal staff, to be able

to fulfill it. And this is another area where you’ve done such a

great job, with the MEP program. And I thank you all. And if we

have questions from the Subcommittee, we’ll be happy to get them

to you, if you would be willing to entertain them.

And I want to thank Terry Fish for being such a great staffer,

helping with this program and also Mike Quear, on the minority

side, for the work that he has done.

And so I thank all of you. Our Subcommittee meeting is adjourned.

[Whereupon, at 2:35 p.m., the Subcommittee was adjourned, to

reconvene at the call of the Chair.]