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INCREASING THE COMPETITIVENESS OF U.S.

MANUFACTURERS

FIELD HEARING

BEFORE THE

SUBCOMMITTEE ON REGULATORY REFORM AND 

OVERSIGHT

OF THE

COMMITTEE ON SMALL BUSINESS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED EIGHTH CONGRESS

FIRST SESSION

SPARTANBURG, SC, NOVEMBER 17, 2003

Serial No. 108–45

Printed for the use of the Committee on Small Business

(

Available via the World Wide Web: http://www.access.gpo.gov/congress/house 

COMMITTEE ON SMALL BUSINESS 

DONALD A. MANZULLO, Illinois, Chairman 

ROSCOE BARTLETT, Maryland, Vice 

Chairman 

SUE KELLY, New York 

STEVE CHABOT, Ohio 

PATRICK J. TOOMEY, Pennsylvania 

JIM DEMINT, South Carolina 

SAM GRAVES, Missouri 

EDWARD SCHROCK, Virginia 

TODD AKIN, Missouri 

SHELLEY MOORE CAPITO, West Virginia 

BILL SHUSTER, Pennsylvania 

MARILYN MUSGRAVE, Colorado 

TRENT FRANKS, Arizona 

JIM GERLACH, Pennsylvania 

JEB BRADLEY, New Hampshire 

BOB BEAUPREZ, Colorado 

CHRIS CHOCOLA, Indiana 

STEVE KING, Iowa 

THADDEUS MCCOTTER, Michigan 

NYDIA VELA ́ ZQUEZ, New York 

JUANITA MILLENDER-MCDONALD, 

California 

TOM UDALL, New Mexico 

FRANK BALLANCE, North Carolina 

ENI FALEOMAVAEGA, American Samoa 

DONNA CHRISTENSEN, Virgin Islands 

DANNY DAVIS, Illinois 

GRACE NAPOLITANO, California 

ANI ́BAL ACEVEDO-VILA ́ , Puerto Rico 

ED CASE, Hawaii 

MADELEINE BORDALLO, Guam 

DENISE MAJETTE, Georgia 

JIM MARSHALL, Georgia 

MICHAEL MICHAUD, Maine 

LINDA SA ́ NCHEZ, California 

BRAD MILLER, North Carolina 

[VACANCY]

J. MATTHEW SZYMANSKI, Chief of Staff 

PHIL ESKELAND, Policy Director 

MICHAEL DAY, Minority Staff Director

SUBCOMMITTEE ON REGULATORY REFORM AND OVERSIGHT 

EDWARD SCHROCK, Virginia, Chairman 

ROSCOE BARTLETT, Maryland 

SUE KELLY, New York 

TRENT FRANKS, Arizona 

JEB BRADLEY, New Hampshire 

STEVE KING, Iowa 

THADDEUS MCCOTTER, Michigan 

[RANKING MEMBER IS VACANT] 

DONNA CHRISTENSEN, Virgin Islands 

ENI F. H. FALEOMAVAEGA, American 

Samoa 

ANI ́BAL ACEVEDO-VILA ́ , Puerto Rico 

ED CASE, Hawaii 

DENISE MAJETTE, Georgia

ROSARIO PALMIERI, Senior Professional Staff

(II) 

C O N T E N T S 

WITNESSES

Page 

Aldonas, Hon. Grant, Undersecretary for International Trade, Department 

of Commerce ......................................................................................................... 3

Young, Mr. Daniel, CecD, Managing Director, Business Development Division, 

South Carolina Department of Commerce ......................................................... 8

Eisen, Ms. Phyllis, Vice President, Manufacturing Institute, National Association of Manufacturers .......................................................................................... 17

League, Ms. Barbara, Corporate Secretary, League Manufacturing, Greenville, SC ................................................................................................................. 19

Moore, Ms. Deborah, Spartanburg Technical College, Spartanburg, SC ............ 22

APPENDIX

Opening statements: 

Schrock, Hon. Edward L. ................................................................................. 29

Prepared statements: 

Aldonas, Hon. Grant, Undersecretary for International Trade, Department of Commerce ........................................................................................ 30

Young, Mr. Daniel, CecD, Managing Director, Business Development Division, South Carolina Department of Commerce ...................................... 44

Eisen, Ms. Phyllis, Vice President, Manufacturing Institute, National 

Association of Manufacturers ....................................................................... 49

League, Ms. Barbara, Corporate Secretary, League Manufacturing, 

Greenville, SC ............................................................................................... 53

Moore, Ms. Deborah, Spartanburg Technical College, Spartanburg, SC ..... 55

(III) 

(1)

INCREASING THE COMPETITIVENESS OF U.S. 

MANUFACTURERS 

MONDAY, NOVEMBER 17, 2003

HOUSE OF REPRESENTATIVES

SUBCOMMITTEE ON REGULATORY REFORM AND

OVERSIGHT

COMMITTEE ON SMALL BUSINESS

Washington, DC 

The Committee met, pursuant to call, at 9:36 a.m., at the 

Spartanburg Technical College, Spartanburg, South Carolina, Hon. 

Edward L. Schrock [Chairman of the Subcommittee] presiding. 

Present: Representatives Schrock and DeMint. 

Chairman SCHROCK. Let me call this hearing to order. Let me introduce myself. I am Congressman Ed Schrock, I am privileged to 

represent the Second Congressional District of Virginia, and I am 

here in South Carolina where there is a soft place in my heart. The 

first place my wife and I lived after we were married was Charleston. So that is real special to us, and I can even tell you where, 

it was 1551 Highway 7, Apartment 202—so that is how important 

is was to me and how much I remember. So it is really nice being 

back here, especially with my friend Jim DeMint, and I really look 

forward to this hearing this morning. 

Jim is an absolutely fantastic advocate for small business and I 

can tell you the people of the Fourth District of South Carolina are 

truly blessed to have him representing them in Washington. 

In my role as Chairman of the Subcommittee on Regulatory Reform and Oversight of the Small Business Committee, I often hear 

from small manufacturers on what it takes to increase the competitiveness of U.S. industry. 

Jim has told me what an amazing group of entrepreneurs and 

community leaders reside in this district. I am anxious to hear 

from those witnesses today and I want to thank Jim for making 

this event possible today. 

Manufacturers in this country face the same problems as many 

other small businesses—high energy prices, the high cost of health 

insurance for employees, high cost of regulatory compliance, and a 

tax code that is not always helpful to them—usually not ever helpful to them. 

It is incumbent upon Congress and the President to do everything in our power to remove the barriers to manufacturers success 

and survival. Jim and I are working on many initiatives to do just 

exactly that. We are working on tax relief for domestic manufacturers, we have passed bills to provide association health plans and 

2

health savings accounts and our committee is working to reauthorize the Small Business Administration in a way to make it more 

helpful to small manufacturers by raising loan limits and encouraging government agencies to buy more goods from them. 

With that, Jim, thank you again for bringing us here and I will 

turn it over to you to introduce our witnesses today. 

Mr. DEMINT. Thank you, Congressman. I would like to thank all 

of you for being here, particularly you, Congressman Schrock. The 

Chairman of the Subcommittee is traveling with us today. 

I particularly enjoy working with the Congressman on the Small 

Business Committee and I appreciate his leadership, particularly 

as it relates to regulatory reform and oversight. 

I would like to also thank Spartanburg Technical College for 

hosting us in this brand new community room. This is a world 

class facility here, a real resource to Spartanburg, to job creation, 

and I thank you all for allowing us to be here. 

I am convinced that American manufacturers stand at a crossroads today. Faced with international competition, the burdensome 

regulations that the Congressman has already mentioned, consistent fear of litigation, it is no wonder that this country and our 

manufacturing sector is facing difficult times. 

We are here today to identify those issues which are proving 

most troublesome to manufacturers in the U.S. More importantly, 

we are here to talk about solutions. I firmly believe that there are 

steps that we in Congress can take to reduce regulatory burdens, 

to boost the number of skilled employees in the workforce and to 

improve the business climate in America for our manufacturers. 

While it is important to look at our trading partners and our 

trade agreements, to ensure that they are being enforced, I believe 

there is ample room for improvement right here at home in the 

policies of the United States government towards domestic manufacturers. 

I would like to thank all of our witnesses for being here today, 

especially those who have traveled long distances to be here. I am 

eager to hear your testimony and I am looking forward to hearing 

from you about what is working, what is not working and what we 

can do to make our manufacturers more competitive. 

I would like to introduce our first panel beginning with Grant 

Aldonas. He is our first witness today. We have worked very closely 

together on a lot of issues and I appreciate his attention to our office, he has been in our office a number of times working on trade 

issues and trade enforcement. 

Mr. Aldonas is the Undersecretary for the International Trade 

Administration of the United States Department of Commerce. And 

if the rule that the longer your title, the less you get paid applies, 

you are in a heap of trouble, Mr. Aldonas. 

Mr. ALDONAS. Certainly on a per hour basis. 

[Laughter.) 

Mr. DEMINT. Mr. Aldonas serves as Secretary Evans chief advisor on international trade issues. Previously he worked with the 

Chief International Trade Counsel, to the Chairman of the Senate 

Finance Committee. Mr. Aldonas has also worked in a private law 

practice and served in positions in the Office of the United States 

Trade Representative and of the State Department. 

3

So Mr. Aldonas, thank you for being here. 

I would also introduce Daniel Young. Mr. Young is the Managing 

Director of the Business Development Division for South Carolina 

Department of Commerce. In his position, Mr. Young and his staff 

provide industrial prospects information on the strategic advantages of locating in South Carolina. Since 1989, Mr. Young worked 

with the South Carolina Department of Commerce in different capacities related to research and economic development. He is a recognized authority on state tax incentives in South Carolina and I 

certainly appreciate you being here to share your insight. 

Mr. YOUNG. Thank you, Congressman. 

Mr. DEMINT. Mr. Aldonas, we will start with your testimony. 

STATEMENT OF THE HONORABLE GRANT ALDONAS, U.S. 

DEPARTMENT OF COMMERCE 

Mr. ALDONAS. Thank you, Congressman. 

Chairman SCHROCK. Let me just make one quick comment. Because we all have planes to catch, we will ask that you keep your 

opening statements, if you can, to five minutes. At that point, the 

trap door that was installed this morning will open and down you 

will go. 

[Laughter.] 

Chairman SCHROCK. So if you can try to do that. 

Mr. ALDONAS. Definitely will. Thank you, Mr. Chairman; thank 

you, Congressman DeMint. Thank you for giving me the opportunity to participate in the hearing as well as being on the panel 

with Dan. 

I want to discuss the Bush Administration’s plan to boost jobs 

and help domestic manufacturers. This administration appreciates 

both of your leadership in raising the concerns of Virginia and 

South Carolina manufacturers with the highest levels and making 

folks in Washington understand the challenges that industry is facing. In that role, I know you both helped in shaping the President’s 

Manufacturing Initiative and I look forward to working with you 

and of course the Committee, which has done yeoman’s service over 

time. 

I really want to compliment you both in terms of the effort on 

the reauthorization of Small Business Administration. It is a vital 

link. People oftentimes do not know that small companies like Intel 

and Microsoft started with Small Business Administration loans 

and it is an incubator for so much of what is important in small 

business in the United States. And I want to thank you both for 

your contribution on that side. 

I particularly would like to draw on both your experience in Virginia and South Carolina in the effort to attract investment. When 

I have been across the country over the last six to nine months 

meeting with manufacturers in 23 roundtables, companies large 

and small, the ultimate question is how do we attract investment 

in the United States, how do we make sure that this is an attractive place to invest in manufacturing. And there are a number of 

factors that play into that. But both Virginia and South Carolina 

have an amazingly strong record of attracting investment, creating 

domestic investment as well as attracting foreign direct investment 

to your respective states. And I think there are lessons for us in 

4

the federal government as well as across the country in looking at 

the laboratories that both Virginia and South Carolina represent. 

I have been looking forward to today’s hearing for another reason 

as well, because it offers me a chance to review some of the findings from the roundtable discussions we had with manufacturers 

and to talk a little bit about our trade relations and how that fits 

in the context of the overall effort to create and foster an economic 

environment in which manufacturing can succeed in the United 

States. 

In fact, Secretary Evans and I just returned from Beijing a week 

or so ago, where we did have a length conversation with Premier 

Wen and a number of the subsidiary officials about the trading relationship and made a fundamental point which I think we should 

all bear in mind. I think we all recognize that with China, they 

have, by moving in the direction of free market and leaving socialism behind in most respects, they have made a lot of progress over 

the last 20 years and lifted 300 million people out of poverty. On 

the other hand, they have 900 million left to go. And one of the 

things we need to be constantly aware of is the degree to which we 

are ensuring the playing field is level between ourselves and the 

Chinese so that they are not exporting their unemployment to our 

shores, as a practical matter. 

And because trade in goods, manufactured goods, makes up the 

largest volume, two-thirds of everything that is traded worldwide, 

you feel the pinch in manufacturing before you do in other sectors. 

And I think that explains a lot of what has been going on in U.S. 

manufacturing recently. And I will come back to that as I go 

through my testimony. 

I first wanted to lay out a little bit about the economic context 

that our manufacturers find themselves in. One of the most important things to understand is that manufacturing really does play 

a critical role. I worry that there is a bit of a crisis of neglect in 

the country about manufacturing, not understanding just the central role that it does play. It represents 14 percent of our GDP, 11 

percent of our employment. But those numbers really do not reveal 

what the manufacturing sector does. 

As a practical matter, most of the innovation in our country begins with innovation inside the manufacturing sector. That innovation translates into higher productivity, not just in the manufacturing sector, but on farms. When I visited John Deere in Des 

Moines, I was fascinated to see what they were doing with new 

spindles, which you would think of as low tech manufacturing. It 

is actually a very high tech operation, it means that cotton farming 

across the country—Texas, California and the south—is much more 

efficient, much more productive and has made us world leaders in 

the export of cotton. 

What that means is you start in the manufacturing sector with 

innovations that really drive change throughout the economy in a 

positive direct and has always been our competitive edge in many 

respects. So we are always concerned about when you are at the 

tipping point, when you lose the benefit of that innovation that is 

key to raising our standard of living as we go forward toward our 

economic future. 

5

I also want to take issue though that many times I think people 

argue that American manufacturing is being hollowed out and the 

numbers belie that. We have the strongest manufacturing sector in 

the world. We are both the largest producer and the largest exporter of manufactured goods. I think I always surprise people 

when I tell them that our manufacturing sector standing alone 

would be the fifth largest economy in the world. It would be larger 

than the entire Chinese economy, as a practical matter. 

And it is good to keep in mind that what we have got out there 

in the United States are an enormously terrific bunch of people in 

the manufacturing sector who are excellent competitors. And that 

is really what makes us strong and will keep us strong, if we have 

the wisdom I guess to foster that. Some of the comments you were 

both making about what we needed to do in trade policy as well 

as keep our side of the street clean at home really go to the heart 

of whether or not we can foster manufacturing in this country. 

South Carolina’s experience, I would say, Congressman DeMint, 

is instructive in terms of what you do to try and create that environment. In 2002, South Carolina saw $9.7 billion in export sales, 

which was up 35 percent from the 1999 level of $7.1 billion. What 

is interesting about that is through that period of 1999 to 2002, 

what South Carolina was doing was really working against the 

tide. The dollar was at an all time high since 1985, you had very 

slow growth in economies abroad, but you still had South Carolina 

exporters making good in a market that was very difficult for them 

to compete, by raising the volume of their exports. And so it is a 

real tribute to sort of the economic environment that has been fostered here in the state. 

Of course, those figures translate into jobs for South Carolinians 

as well as a higher standard of living throughout the state. And 

that is why manufacturing not only matters, but is worth fighting 

for. Although I think we are starting to see the economy turn 

around and after a very tough spot, the manufacturing sector is beginning to participate in the broader recovery, at 7.2 percent 

growth in the third quarter, an uptick in employment, certainly 

stronger growth in the manufacturing sector with industry’s supply 

management figures showing not only good growth but prospects 

for future orders being up significantly. And so I think things are 

turning around. 

That should not give us any sense of complacency by the manufacturing sector. There are still some root problems that we have 

to grapple with. I think again, both some on our side of the street 

as well as some on the trade side. And that is what the President’s 

Manufacturing Initiative is really designed to come to grips with. 

The manufacturing recession actually started earlier than the rest 

of the recession in the economy, it started early in 2000. And at 

that point, there had been significant pressure on pricing for a long 

time, particularly since the Asian financial crisis in 1997 and the 

dropoff in some of our major export markets. And what that has 

meant is not only a significant contraction in manufacturing in the 

recession, but also a sharp downturn in employment. Employment 

losses in manufacturing represented about 90 percent of all job 

losses during the recession and during the recovery. 

6

And I think what surprised all of us is the extent to which the 

economy has been growing since 2001 after the President’s tax plan 

went into effect. You still have seen continuing job losses in manufacturing, there is tremendous pressure to raise productivity and 

reduce costs and that has had an impact on the ability of manufacturers to start the hiring process again. So while recessions are traditionally harsh on the manufacturing sector, normally in the postwar recessions, overall economic activity has dropped about two 

percent, whereas manufacturing has dropped about seven percent 

in those recessions. Here, you had a relatively mild recession, but 

manufacturing was still off by six percent. So this one has been extraordinarily harsh on the manufacturing sector. 

That reflects both some cyclical changes as a part of the business 

cycle as well as the more structural issues. And the structural 

issues, there is no mystery to them. I like to say that, you know, 

if you are serious about manufacturing, we have to get serious 

about things like tort reform, things like getting our energy costs 

down, things like getting our healthcare costs down, things like 

getting regulatory costs under control. 

If you ask many small businesses about what their current biggest problem is with our Tax Code, the will tell you it is the cost 

of compliance as much as it is the effective rate. They will take a 

look at things like the depreciation schedules under the alternative 

minimum tax, which is known in manufacturing sectors as the 

anti-manufacturing tax, and if you go through the mechanics of 

both what it costs a company because of those depreciation schedules and the fact that you effectively have to keep three sets of 

books in order to comply with the tax law. I remember when I was 

starting out as a young lawyer, when you were required to keep 

two sets of books, now as a practical matter to comply with the 

law, you have got to keep three. And there is a cost attached to 

that. We oftentimes do not think about the cost. 

I would say that what we have had—and this is not through any 

level of intent, I think we all understand that, but at all levels of 

government and in every branch—and I include the courts here—

we have a tendency to make individual decisions without understanding the multiple burdens we have imposed on manufacturing 

as a part of the process. That is true of what we do inside administrations, both at the federal and state level with environmental 

regulation, energy regulation. It is also true with the courts when 

they make decisions in tort suits or allow asbestos class action litigation to go on for 20-30 years without compensating anybody and 

not resolving the cloud that hangs over business investment as a 

consequence of that. 

So there are an awful lot of things, as you were commenting, 

Congressman DeMint, that we could clean up on our side of the 

street. No doubt about it. 

Now, having said that, we do have some immediate and striking 

problems on the international front. And I would say this is both 

on the financial and on the trade side. For a long time, we used 

to have the luxury of thinking about these worlds of international 

monetary policy and trade policy as separate worlds. We started 

out after World War II with a fixed exchange rate regime. The 

trade policy part of it kind of functioned on its own. That has not 

7

existed since 1973. As a practical matter, things that happen in 

currency markets can dwarf anything that happens on the trade 

side. And I am happy to say that the President understands that. 

He has been willing, and Secretary Snow has been willing, really 

to confront many of our trading partners about the problems we 

face on the currency side, to make sure that they understand that 

it is economic fundamentals that drive currency rates, not government intervention. 

On the trade side, I have seen a number of the pieces of legislation that advocate things like across-the-board tariffs. Those things 

do not take into account the diversity of our own manufacturing 

base, the extent to which we are well integrated into the international economy and that we need to make sure that we stay integrated in the international economy to succeed, including in manufacturing. 

That said, there are places where we lack, and much of that 

comes down to whether or not we are willing to enforce our WTO 

rights and whether we are willing to be aggressive in the use of 

the trade remedy tools that we have available to us under the law. 

I am happy to say that I think the Administration has been aggressive on those fronts. I know, for example, China, which presents in 

many respects the biggest challenge that we are grappling with on 

the trade front, over half of the anti-dumping cases in the Commerce Department are focused on China. 

And I do want to come back to China, because it does present 

something of a unique problem. But I never want to let anyone else 

off the hook. As a practical matter, the Japanese have intervened 

as heavily as the Chinese in terms of the currency market. That 

is a problem still for auto manufacturers 20 years after this was 

a significant political issue. 

There are still a lot of inadequacies as far as I am concerned in 

the trading system, much of which we are trying to resolve in the 

current negotiations. For example, you know, throughout the postwar period, we always left a little more on the table because we 

wanted the system to move ahead. It was part and parcel of a process of making sure that the allies hung together in the cold war. 

But those days have passed too. And the fact that our tariffs are 

below two percent, whereas tariffs in much of the rest of the world 

are above 15, some places as high as 30 to 50, is simply unfair. The 

only way to do that, frankly, is to negotiate in the WTO and ensure 

that other people come down to our level and we can go to zero at 

that point. We can make sure that we clean this out and move toward what would represent free trade. But we are going to have 

to do that at the negotiating table. It is something where in the absence of the President’s ability to go to the WTO and meet with our 

trading partners in these fora, we will not solve that problem for 

American manufacturers. 

With that, let me turn the China. China presents some unique 

problems. As I was alluding to earlier, I think over 20 years, they 

have shifted away dramatically from a reliance on socialism. But 

we should not be under any illusion that that process is complete. 

This is still a non-market economy in many respects. I know here 

in South Carolina, it is true in Virginia as well, when I think about 

the textile industry, I have not heard a textile manufacturer say 

8

they were not willing to compete on a level playing field. But when 

I think about a Chinese industry that is still, you know, by conservative estimates, 50 percent state-owned, where those companies continue to be financed by state-owned banks, where the companies simply do not face the pressure to earn a profit, you have 

got a very different system at work than you do here in the United 

States. Not to put too fine a point on it, but, you know, for American companies, if you are a small manufacturer, your bank will 

pull your financing, your working capital now because they do not 

like the look of what is going on with your asset values. You might 

still have good solid cash flow, you have met every payment that 

you have made, the bank may still pull the loan, based on the covenants. That does not happen in China. And if they do not face the 

same capital market pressures, frankly the playing field is not 

level. 

So a lot of what we have been talking about with the Chinese 

recently is to bring them up short in terms of saying there is not 

only a system of laws in the WTO that you have to comply with 

and have not yet complied with, but beyond that, you have to understand that an international trading system, to be free, and for 

the Chinese to get the best benefit out of it as well as for us to get 

the best benefit out of it, it assumes certain things about the workings of the market. And until the reform process is complete in 

China, we will not actually have resolved the fundamental issue. 

So our pressure has been on them to fundamentally reform the 

sorts of things that are going on in their economy, whether it is on 

the currency side or whether it is on the trade side. Because until 

we are through that process of reform, we will see continuing friction in the trading relationship and we will see a demand from 

manufacturers, justified in my view, to use the trade remedy tools 

that are available to us to offset what is fundamentally different 

between our economy and the Chinese economy. Until the day 

when we are through that process, my guess is that we will continue to face those problems and have to work through those with 

the Chinese. 

I will say, to their credit, they are—every time we have met with 

the Chinese recently, they are willing to engage in a very frank 

and constructive conversation about what needs to be done. They 

are certainly dedicated to closing the trade deficit at this point. We 

have emphasized to them that one time purchases of Boeing aircraft or automobiles in Detroit or textile equipment in South Carolina or for that matter even fabric is not enough. It still has to be 

that plus the structural changes that have to go on in the Chinese 

economy before we will be satisfied that there is in fact a level 

playing field. 

With that overview, let me stop there and I will be happy to take 

your questions when the time comes. 

Mr. DEMINT. We do have some questions for you but we will 

allow Mr. Young to share his thoughts with us first. 

[Mr. Aldonas’ statement may be found in the appendix.] 

STATEMENT OF DANIEL YOUNG, SOUTH CAROLINA 

DEPARTMENT OF COMMERCE 

Mr. YOUNG. Thank you very much, tough act to follow. 

9

South Carolina Department of Commerce is the recruiting arm, 

the industrial recruiting arm for the State of South Carolina. We 

work very hard, we market the state, we work very hard to bring 

in international and national companies to our state, primarily in 

manufacturing. That is one of our target industries. Manufacturing 

is the backbone of the South Carolina economy. It not only creates 

jobs for the people in the state, but it also pays for government 

services and pays property taxes that eventually go to educate our 

children. Over the past five years, we have been successful in 

bringing in 100,000 announced new jobs from industry and over 

$20 billion worth of capital investment. And 80 percent of that is 

in the manufacturing sector. 

Despite those gains, however, over the past five years, we have 

got 90,000 fewer South Carolinians employed ion the manufacturing sector. That is very troubling. Some of that comes from moving away from the labor intensive industry that has historically 

been a part of South Carolina’s economy. The textile industries 

where we used to have one person working a loom, now is run by—

is one person working a room full of looms, machinists where 

threat is shot back and forth at two or three times a second by a 

puff of air that actually is a vacuum going back and forth. It is an 

amazing process. That has evolved from a bullet of water that actually was shooting back and forth only two times a second. So the 

industry has changed, all of manufacturing has changed in much 

the same way. 

We think of, for example, we are in the shadows of BMW Manufacturing Corporation, one of our crown jewels in the state that we 

were fortunate enough to bring in 10 years ago now. You go in 

there and there are machines that are building cars. You do not 

see a room full of people, it is not an assembly line with people 

here all over the place, it is a lot more mechanical. 

But we have been successful in South Carolina in bringing in industry. One of the things that we have used to do that is to reduce 

the cost of doing business. It has been the state government’s strategy to get the State of South Carolina out of manufacturers’ pockets as much as possible. We have done that through an aggressive 

incentive program and an aggressive tax program, where we 

offer—we have lowered the cost of doing business as much as possible by reducing corporate income taxes, creating credits that 

allow companies that are creating jobs to offset their corporate income taxes. We have eliminated a lot of sales taxes, almost all 

sales taxes, that a manufacturer would pay in South Carolina have 

been exempted. We also have created some other programs that 

allow them to reduce both the startup cost of doing business and 

the ongoing cost of doing business. 

We work with existing industries same as if they are a new industry because those existing industries are generally branch manufacturing plants and a branch manufacturing plant within say a 

Michelin is competing with another branch manufacturing plant 

perhaps in Oklahoma or perhaps in Newfoundland, Canada or perhaps in France, for expansion dollars. And if a plant is not growing, the plant is dying. We work those just as competitively as if 

it was a new company coming into the state. Existing industries 

are eligible for the same types of incentives that a new industry is. 

10

We have seen the job losses over the past few years. And in 2000, 

there were two plants a month on average closing their doors in 

the state. Those were very painful to watch happen. Each one was 

lost opportunity for the state and for the citizens of the state. But 

as those job losses were occurring, on the state level as far as business retention, providing incentives or trying to save those companies, it is a very tough sell for the state in that those dollars, dollars that we put towards retaining those jobs are hard, they are 

fresh out of the general fund. They create great fiscal strain on the 

state at a time when we are already seeing budget cuts left and 

right. 

In conclusion, just let me say that manufacturing is the backbone 

of the state. It will always be the backbone of the state. We do 

want manufacturing jobs and we are working as hard as we can 

with federal sources as well as state sources to try to save those 

jobs. 

[Mr. Young’s statement may be found in the appendix.] 

Chairman SCHROCK. Let me yield to you, Senator. 

Mr. DEMINT. Thank you. 

Chairman SCHROCK. —Congressman DeMint. I am thinking 

ahead. 

Mr. DEMINT. Not so fast. 

I will start with Mr. Aldonas. The U.S. textile industry, as you 

know has filed four petitions for relief under the China Textile 

Safeguard Provision in the China Trade Agreement. 

Mr. ALDONAS. Yes. 

Mr. DEMINT. One of my I guess priorities since being in Congress 

was to push China to play under the same rules that we do under 

the WTO. And as part of that, I insisted that these safeguards be 

a part of that in case China imports grew faster than we could accommodate them. 

What is the status of these safeguards and what is the time line 

that the Administration has for that? 

Mr. ALDONAS. I am glad you asked me that, Congressman 

DeMint. 

First of all, I want to thank you for your support for the industry 

and for our actions with respect to China on these issues over time. 

It is important, I think, for the Chinese to understand that this is 

not an issue that is just the Administration speaking, that this is 

Congress speaking frankly, and that it is our industry talking and 

it is the American people talking when we say we are willing to 

accommodate China and see them grow, hopefully prosper so they 

can pull the other 900 million out of poverty, but definitely to make 

sure that the playing field is level as a part of that. 

And you are right on point in saying that the Textile Safeguard, 

when it was negotiated by the past Administration, was there because of pressure from Congressmen like both of you in making 

sure that what they were doing was providing a way of addressing 

the fundamental problems that we have with China in this area. 

It is not just a question really of the fact that their industry would 

expand so much in the absence of heavy government involvement, 

but you have got something unique with China. A good way to put 

that, Congressman, is that if it was based on wages alone, wages 

are actually a lot lower in other parts of the world, they are lower 

11

in Indonesia right now, certainly lower in Africa, certainly lower in 

parts of India. The investments going to China, are in part because 

of heavy government involvement on behalf of that industry, and 

that is what we are competing against. And to that extent, I view 

these safeguards as a way of addressing those fundamental problems, not simply trying to grab the fact that we are seeing too 

many imports, which was kind of traditionally the way things 

worked under the quota regime for years, with textiles. 

Now I expect that on schedule there will be a vote today in the 

Committee to implement the textile agreements on the safeguard 

actions, the meeting is scheduled for 4:45 this afternoon. My own 

view is that there is a strong case for the safeguards. If you look 

at the standard that was included as a part of the WTO agreement, 

we are supposed to be looking at whether there has been market 

disruption and a threat to the orderly development of the trade. In 

that context, it is important to know that in the lowest of the cases 

we are facing, you have seen about a 300 percent increase in China’s imports and perhaps the most significant case on knit fabric, 

you have seen a 27,000 percent increase in imports. Virtually all 

of the knitting machines in the world are being imported into 

China right now because of the efforts of the Chinese government 

to trap investment into the knitting sector. 

What that means is that our guys are competing not just with 

manufacturers in China, but with the Chinese government. To me, 

that is a legitimate point at which I think you do have to bring the 

Chinese up short. 

I was with my counterpart from China this past week talking 

about textiles. Certainly from the Administration’s perspective, 

there is a broader problem and we would be far better off in a constructive dialogue with the Chinese to deal with the problem comprehensively. 

We are using the safeguards frankly as a way to engage in those 

consultations because the way the mechanism works, if CEDA does 

in fact vote in favor of the safeguards, we do introduce a quota, but 

as a practical matter we also engage in consultations with the Chinese, so there is a good opportunity there if the Chinese are willing 

to pick it up with us, to work out a more constructive relationship 

so we do not see the quick rise and fall and the things that are 

damaging industry because it is difficult to adjust to those inflows 

in any given year, as a practical matter. 

So I am hopeful that the action will be positive on those and that 

where we end up is in a broader conversation with Chinese about 

the sector as a whole. 

Mr. DEMINT. So you expect, anticipate a positive vote today for 

these safeguards? 

Mr. ALDONAS. I do. At the same time, you know, you never say 

never and you never actually say you won until you have counted 

the votes. So my own reaction is that, you know, people understand 

the problem we are trying to grapple with the Chinese. I think we 

could always do a better job, us collectively I mean, in trying to get 

the word out about what is really going on. I worry a little bit honestly, Congressman, that oftentimes because of the protection that 

the textile industry has had over the years, that the sentiment is 

that these particular safeguard actions are just more of the same. 

12

They are not, they are grappling with some fundamental problems 

with China that go well beyond what the industry has faced before. 

And we need to sort of dwell on that. 

Mr. DEMINT. You mentioned the currency issue. 

Mr. ALDONAS. Yes. 

Mr. DEMINT. I think we would agree that the market forces 

without the tariffs and the quotas long term is the better policy, 

but without some market force behind the currency, it is going to 

be hard to get there. What do you think will happen? I know you 

have put some pressure on the Chinese too. Do they recognize that 

we have got an issue there? 

Mr. ALDONAS. They do and they have committed themselves to 

moving toward a float eventually. I think they are very worried 

that if they opened up the capital account right now, that they 

would see a fairly dramatic outflow of funds and that would undercut deeply their economic growth. And from their perspective, you 

know, they basically have to generate above eight percent growth 

just to keep up with the number of people coming into the market 

in terms of employment. So they are loathe to do that. 

I also have to say that China is about the only other engine in 

the world economy right now. So I do not think as an American 

economy, we actually have a vested interest in slowing down China’s economic growth. 

Now having said that, we are happy to work with them on the 

fundamentals of their financial system to make sure that it does 

work and it can get to the position where they can eliminate the 

capital controls that maintain the peg and I know Secretary Snow 

has succeeded, as did the President, in persuading them that we 

have to get after those problems. 

I do expect that they will take a number of steps short of a revaluation in effect to revalue. For example, when they—this goes a little bit back to what we saw in the 1960s when we still had a fixed 

exchange rate regime—a lot of countries at that time would try and 

do what was the equivalent of a revaluation by doing things like 

eliminating the rebate of value-added taxes on exports that has the 

effect of making them a little less export competitive, has the same 

effect as would be a revaluation in some sense. But ultimately you 

have to grapple with the fact that they have got to pay and that 

it ought to be set by the market. And so while immediate action 

may actually be harmful to the Chinese economy and indeed to 

what is our fastest growing export market, we have got to see some 

steady action on this front. And I think that they have to understand they are going to continue to see us react on the trade side 

because if you cannot solve the currency problems, you see the friction on the trade side and they are going to have to understand 

that until we resolve this problem with respect to the currency, we 

are going to have continuing friction on the trade side and we will 

have to use the trade remedies that are available to us. 

Mr. DEMINT. Mr. Chairman, do you have some questions? 

Chairman SCHROCK. I sure do. Let me ask one question. 

I want to go back to what you said, Mr. Secretary, and you mentioned some of the problems that manufacturers are having, tort 

reform and, you know, regulatory restrictions and the AMT, which 

is anti-manufacturing. That said, I want to ask you both, what are 

13

the departments within the federal government and your state government doing to make sure that they are sensitive to the cost of 

regulatory compliance to manufacturing? Because we hear, I hear 

that all the time at home, we hear it in Washington, that you have 

lawyers breathing down your back, you have OSHA, you have EPA, 

on and on it goes. And that is just killing business. What are we 

doing to make sure the federal and the state agencies are not being 

overly restrictive on how they handle these things? 

Mr. ALDONAS. Well, traditionally it has been the province of the 

Office of Management and Budget and frankly one of the complaints that we have heard from manufacturers as we went 

through the roundtables, Congressman, was the need for a stronger 

focus within the federal government on manufacturing. That is one 

of the reasons the President stepped forward and said we have got 

to create an Assistant Secretary for Manufacturing Services in the 

Commerce Department, make them the focal point for this and 

then give them the kind of tools so they can be helpful in analyzing, whether it is legislation or whether it is regulations, in 

terms of its cost on manufacturing. And that is something where 

we have been working closely with Chairman Wolfe as well as with 

Chairman Gregg on the Senate side in the appropriations process, 

not only to establish that Assistant Secretary, but provide the tools 

they would need so they can be helpful in addressing these issues. 

I think beyond that, we need to make manufacturing sort of the 

forefront of any issue and any argument about where we are going. 

I am conscious of the fact that despite the best intent of any Administration, if you look at the Tax Code, it is complex because we 

write complex tax laws in Congress. 

Chairman SCHROCK. By design. 

Mr. ALDONAS. By design. And I think what we need to do frankly 

is make sure that we give you the ammunition so that as a part 

of the debate whenever any tax bill goes through, for example, that 

one of the things that people are thinking about is what is the impact on manufacturing. 

And if I could just go a little bit further. There is one lens that 

we should look at any government action through. We now live in 

a global economy, whether it is a small manufacturer in South 

Carolina or a big manufacturer in South Carolina, whether it is a 

small manufacturer in Virginia or a big manufacturer in Virginia; 

they get up every morning competing in a global economy, like it 

or not. And it is here to stay. 

And as a consequence, every step we take, whether it is in the 

Administration or whether it is in Congress or in the courts, we 

should look at it from the point of view of whether or not the action 

we are about to take will help our manufacturers compete in a 

global economy or hinder their ability to compete. And we need to 

essentially provide the tools inside the Administration that illuminates those issues and makes sure those costs are clear. 

Chairman SCHROCK. No matter what we pass in Washington, tax 

or otherwise, there are unintended consequences. 

Mr. ALDONAS. Absolutely. 

Chairman SCHROCK. Seems like there have been severe ones. 

I was impressed with your testimony, you said some of the things 

the state was doing and it looks like you mean business. 

14

Mr. YOUNG. We do mean business. 

Chairman SCHROCK. That is a play on words, I know, but— 

Mr. YOUNG. It sounded good. 

And on the regulatory side, we have our state environmental 

group, they work with industry to keep industry in compliance and 

try to get them ready for their permitting process as quickly and 

as smoothly as possible. While they are certainly within the mandates of EPA, they work with them as well as possible. 

On the taxation side, actually at the state level for a manufacturer, we in the lower half of the state, we are out of their pockets 

except for a few sales taxes they pay. We have user friendly forms 

that are available on the Internet and we are trying to be as pro 

business as possible and we work with companies to try to keep 

them in business. One of the things, when I talked about the investment numbers, 85 percent of the jobs that are created in manufacturing investment within the state comes from existing industries. Once they are here, we work with them as well as we can 

to keep them active and profitable. 

Chairman SCHROCK. Let me ask one final question. Is the worst 

over for manufacturing or is it going to have to get worse before 

it gets better? 

Mr. ALDONAS. I think in terms of the business cycle, the worst 

is over. You have got strong growth, we will see the numbers turn 

around even in employment. 

The worst is not over though in the broader structural issues, because if you think about it, some very positive things have happened over the last decade—the end of the cold war, trade barriers 

have come down as we have succeeded in moving through trade 

agreements and you have had a technological revolution that 

makes more trade possible than ever. But any time you have those 

constraints on a market, it means that there will be a build up of 

capacity much more than there would be in a free market state. 

And now when you peel those sorts of barriers away, you have got 

a tremendous over-capacity problem in manufacturing worldwide 

and until we adjust through that and supply and demand come 

back into balance, there will be very tough times. And our goal has 

to be how do we make sure that our guys understand their place 

in the supply chain and can compete. And a lot of that is stripping 

away the costs that we impose on our businesses. 

I mean I was impressed by the things Dan was saying, because 

it is a model for what we ought to be doing at the federal government level. Thinking about taking the tax man out of your pocket, 

you know, my wife is the Assistant Secretary of Treasury for Tax 

Policy in the federal government. We do not do our own taxes. 

[Laughter.] 

Mr. ALDONAS. It is too complicated and, you know, Pam, fortunately is a farm kid from Minnesota up in the Red River Valley 

and her view of the tax law is if it is too complicated for my sharecropper father, it is too damn complicated. Probably have to edit 

that out, but the fact of the matter is, that is where we are and 

South Carolina is a much better model from the point of view of 

manufacturing because that is what we have to do, we have got to 

make sure that they have the capital to acquire the technology and 

expand. A growing business is one that is going to succeed. If we 

15

are just satisfied with the status quo, that is not going to work because of these broader pressures. 

Chairman SCHROCK. Mr. Young, you lifted some of those things, 

was that done in your State House with your Senate and your 

House? 

Mr. YOUNG. Yes. 

Chairman SCHROCK. It was voted. You need to bring them up to 

Washington, because there are people up there who just do not get 

it, they think business is the bad guy and business is favored over 

the individual. Well, without business, the individual does not 

work. And I just do not know why they do not understand that. 

Mr. YOUNG. Well, actually our Governor came from Washington, 

Governor Sandford was in the House not too long ago. 

And I would like to agree with something the Undersecretary 

said. The capacity issue is an issue. I mean the manufacturing side 

has taken such a hit that you have got a lot of floor space available. Certainly that floor space is going to have to be filled before 

we are going to see a lot more new investment come in. 

And I will be honest with you about something else, the labor intensive industries that the south has historically been our bread 

and butter and what I refer to as our backbone, those jobs are 

probably going to continue to dwindle away. We cannot compete 

with a China where they are getting paid on a fraction of what a 

South Carolina worker makes per hour. And certainly we are only 

a fraction of what you are getting paid in other parts of the United 

States. Some of those jobs are going to continue to go offshore and 

that is going to happen. 

Chairman SCHROCK. Everybody thinks of the automotive business as tens of thousands of people. Well, I have a Ford plant in 

the district I represent and you have the BMW, it is all robotics. 

Mr. YOUNG. It is all robotics. Plus you have got a system where 

certain goods will be made in the United States, those that cost too 

much to ship in and the automotive industry is one of those. And 

we have made some hay in the State of South Carolina and all 

across the southeast on automotive and automotive suppliers and 

will continue to do that. But those traditional—if you look up into 

North Carolina where you have got textiles and you have got the 

furniture industry and you have got that too in your state as well. 

That is a double whammy that we did not have to go through. We 

just lost the textile jobs. Certainly North Carolina also lost on their 

telecommunications side as well with the fiber optic cable. 

Chairman SCHROCK. Well, you might remember the brouhaha in 

the Army when they made the new black berets, they were all 

made in China. 

Mr. YOUNG. Ooh. 

Chairman SCHROCK. And the House had a fit. Now there are 

hundreds of thousands of those things sitting in warehouses because they said no, they have got to be made in America. That is 

where it has got to be. 

Mr. DEMINT. I understand you gentlemen can stay for the 11:00 

roundtable with the media, is that right? 

Mr. ALDONAS. Yes. 

Mr. YOUNG. Yes. 

Mr. DEMINT. Well, we want to get the other panel in, but— 

16

Mr. ALDONAS. Could I tell a joke just to close? 

Chairman SCHROCK. Sure. 

Mr. DEMINT. I think we probably need one. 

Mr. ALDONAS. There is a lesson there, which is that, I was talking to one of the guys in the auto industry in Detroit and he was 

saying that look, we have got to help you out, just happened to be 

in places like South Carolina or Virginia, Tennessee and Kentucky, 

did not happen to be in Detroit any longer, and he said for Detroit 

to compete, we are going to have to move to one man, one dog manufacturing. Well, I have heard of lean production methods, I had 

never heard of one man, one dog. He said yeah, if we were going 

to compete with South Carolina, we would have to have one man 

to come in and turn on the machines and have the dog bite him 

if he tried to do anything else. 

[Laughter.] 

Mr. ALDONAS. So I mean the lesson there I think is that what 

you are seeing, particularly across the southeast, is that there has 

been a real effort to create the environment to attract that level of 

investment, but it is going to have to keep moving up the value 

chain and has to increase its productivity, which does mean less 

employment. 

Mr. DEMINT. Right. 

Chairman SCHROCK. Sure does. Thank you both, we really appreciate it. 

Mr. DEMINT. Please stick around for a few minutes and we want 

to get our second panel to move into position here. 

Let us move ahead because I know the media wants to get directly at you, so the roundtable is coming up. 

But we appreciate you folks being here this morning. I want to 

start with Phyllis Eisen. Thank you so much for being here and I 

turned to the questions rather than the introduction. Let me get 

back here. 

Ms. EISEN. No, do not go through the whole thing. 

Mr. DEMINT. No, just briefly. 

Our first witness on the second panel is Ms. Phyllis Eisen. Ms. 

Eisen is the Vice President of the Manufacturing Institute of the 

National Association of Manufacturers. Ms. Eisen travels around 

the country speaking about the need for local communities to take 

steps to ensure a skilled workforce, and we are delighted that she 

could be with us here today to share her research and findings. 

I also want to introduce my friend Barbara League, very involved 

with the community and Ms. League is the Corporate Secretary of 

the League Manufacturing, an 85-year old small manufacturing 

firm in Greenville. Ms. League serves in many volunteer capacities 

and on several commissions including as Chairman of the State’s 

Consumer Affairs Commission. Thank you for joining us, Barbara. 

Deborah Moore. Ms. Moore is our final witness today and Ms. 

Moore is here today to speak on her experience working in our onestop shop. She will tell us about that in a minute. She is currently 

employed by Spartanburg Technical College, but prior to that, she 

worked for over 20 years in the textile industry. Ms. Moore has a 

powerful story to share with us today and I look forward to hearing 

from you. 

We will start, Ms. Eisen, with you. 

17

STATEMENT OF PHYLLIS EISEN, MANUFACTURING INSTITUTE 

Ms. EISEN. Thank you and I appreciate it—I will sum up my remarks, but I would appreciate it if my whole testimony could be 

put into the record. 

Chairman SCHROCK. Without objection. 

Ms. EISEN. And I want to thank both of you for doing this and 

focusing on manufacturing. Not just for small business, which by 

the way makes up, of course, 95 percent of where all Americans 

work, but makes up a majority of the National Association of Manufacturers. They are truly the engine that is continuing to drive 

this economy and will into the future. And they do need attention 

and respect. 

Thank you again for focusing on just manufacturing. The heartbeat of this economy—I am a real cheerleader for manufacturing, 

I have been involved in it for 25 years and been privileged to both 

work for a manufacturing company, Mack Trucks, and to represent 

the NAM. 

This is a very unique time, as you know, and I do not need to 

go into all the issues that the Undersecretary did, but support the 

fact that this is our good time in this country and how we decide 

to support and promote manufacturing and the people who work in 

it. When we say we are at a crossroads and a turning point, it is 

not an idle discussion. 

It is our view that if we do do the kinds of things we know we 

must do, we will continue to be the leader in the world, the industrial leader in the world. We think the innovation and the creativity that comes from manufacturing is unique to this country 

and unique to the people who work in it. And if we continue, again, 

to provide the foundation for that, we can be second to none. 

I also want to say that I am pleased that we are in this facility, 

in the technical college here in South Carolina’s extraordinary community college and technical college system and I just want to say 

that community and technical colleges are manufacturers’ first 

choice of training providers and have been for 14-15 years, since we 

began asking them. And they need support and help too, they are 

having their trouble in River City, to say to least, in this economy 

and I think they need to be supported. 

We are in a bit of a perfect storm right now in manufacturing 

in the workforce and that is what I am going to focus on for just 

the next few minutes. The storm is between the demographic, global and technology changes that the Undersecretary talked about. 

They have come together uniquely to provide us with a set of challenges in creating a skilled workforce as we have never had before. 

The smartest generation that we have ever had, the most skilled 

generation, is beginning to retire, the baby boomers. In two years, 

they will seriously begin retiring, by 2010 they will begin peaking 

in their retirement. We will be short about four to five million 

skilled workers at that point. By 2020, most of them will have been 

retired. A few will be left on their walkers and running around, but 

short of that—oh, yeah, me too—short of that, we will see pretty 

much the end of the baby boom generation in the workplace. That 

is only, gentlemen, 14 years from now. We used to say 2020 looks 

like forever—14 years from now. And we will be short, according 

to demographers, about 10 to 14 million skilled workers. They 

18

argue about it, just as all economists argue about everything, as 

demographers do, but it is a big number. We have got to fill it. The 

generation behind them is not as large, though they are fairly well 

skilled. 

However, there is also a significant number of minorities and immigrants, as we are only growing by immigration in this country, 

and we have not had a policy for a long time, an immigrant policy 

in this country looking truly at diversity and the challenges of a 

culturation in language into our workforce. We have a numbers 

policy but we really probably need to think about having immigrant policy. 

The second part of that storm are the technological changes that 

are just at the very beginning. I happen to have two children that 

work for Intel and what they tell me is happening in the chip industry is mind-boggling. We are just on the edge and it is taking 

smarter, more technically skilled workforce that has strong math 

and science. And I will promise you, we are not producing that in 

this country. 

And finally, all the globalization issues. 

We are in the middle of that storm. And as a result, we are in 

trouble in manufacturing. And I have come here to tell what I 

think is a frightening story but one that we can fix. I am going to 

sum this up quickly so that we can get to questions, but we had 

to find out what 80 percent of our manufacturers consistently said 

that they were having a serious to very serious to moderate problem finding qualified employees. That means employees who can 

read and write and calculate appropriately and show up to work 

on time, stay all day and have some communications and technology skills. They could not find them. Jobs were going empty 

even during the recession. We had to find out, so we went out and 

had a conversation with the country and we found out three critical 

things and they are in a publication which I would also like to submit for the record called Keeping American Competitive: A Talent 

Shortage Threatens U.S. Manufacturing. 

Number one—and we did an extraordinary number of interviews 

and focus groups on the standard research methodology with 

Deloitte & Touche, a partner of ours. We found that the majority 

of Americans had no connection in their mind between the growth 

of their economy and the stability and robustness of a manufacturing sector. They had disassociated the two. They thought most 

of our goods had gone overseas, the production of our goods had 

gone overseas and that was just fine with them, except for the people whose jobs were affected. The rest did not mind because they 

said that their goods would be cheaper. So I want to tell you that 

in their heads, there is a huge disconnect and we have to understand that. 

Two, to a person, from young people, their parents, old and poor 

and rich and middle class, from every region of this country, politicians and manufacturers themselves told us the image of manufacturing was dark and dirty and dangerous and all the Dickensian 

words and it devastated us. We knew that for a long time, manufacturing has not been good, but the unrelenting picture of assembly line workers wearing hairnets, acting like robots, a bunch of 

young women in this country told us they would rather work with 

19

dead bodies in a funeral home than work in manufacturing, in a 

modern manufacturing sector. The knowledge that manufacturing 

was high tech, complicated, exciting, innovative and creative is not 

understood in this country at almost any level. 

Finally, the third thing that stunned us and we are out to fix 

was that there is not in this country at all any career education 

as there are in many, many other countries, who hold it as a priority, particularly in Europe and now parts of Asia. 

There is no consistent career education given except by parents 

in this country and most of the young people that we focused and 

surveyed told us they get about three hours every six months from 

their parents and that is mostly from their mothers. Forget it, 

dads, you are not in that picture. 

Because of the lack of career education, young people do not 

know what they need to take in order to get into a family supporting job for the future. They do not understand the course work, 

they do not understand what they need to learn. Teachers do not 

understand it, administrators in the education system do not understand it and it is this lack of understanding, this lack of conversation between the education community and the business community that is killing us. 

There is one goal, and that is to get your child into university. 

Nothing wrong with that. Unfortunately only 25 percent of our 

young people who begin a college education finish a five or six year 

program now and about 87 or 88 percent actually are pushed into 

college by the schools. 

So we have a problem. We decided to really tackle it because we 

just cannot lay down and roll over. In order to attract manufacturing to this country, to this state, to any state, we are going to 

have to build a labor pool second to none in the world. We do not 

have it now. We still have that unique creativity and innovation 

but we do not have the labor pool, they are not getting it in school, 

business is spending close to $100 billion a year in education and 

training, and unfortunately half of those dollars go for basic literacy. We must end this or we will not have the labor pool here 

and there will be no reason for any companies to come here. 

We are going to be launching a careers campaign beginning this 

spring. We are going to go to several pilot cities around the country 

and we are going to try to bring these communities together before 

we go nationwide. 

Thank you. 

[Ms. Eisen’s statement may be found in the appendix.] 

Mr. DEMINT. Thank you, Ms. Eisen. I think you have hit on one 

of the most important obstacles to long term manufacturing, particularly in this state. Nearly half the students who start high 

school do not finish. And that is a tough one. 

Ms. League. 

STATEMENT OF BARBARA LEAGUE, LEAGUE MANUFACTURING 

Ms. LEAGUE. I would like to echo Phyllis’ remarks in welcoming 

you back to Greenville and thanking both of you so much for affording us the opportunity to express our concerns over this most 

important issue. And Jim, I would certainly like to commend you. 

20

You have got one of the best staffs known to man. I hope you realize that, they are wonderful. 

Mr. SCHROCK. Does that come with a pay raise? 

[Laughter.] 

Mr. DEMINT. Yes. 

Ms. LEAGUE. During my lifetime, Greenville-Spartanburg has 

evolved from being the textile center of the world where little to no 

emphasis was placed on education, to becoming a most diverse 

international manufacturing base where jobs are now driven by 

knowledge and necessitate undergraduate and graduate programs. 

The old K-4 mentality has been irrevocably replaced by K-20. Mr. 

Young and you are absolutely correct in that. 

Manufacturing today requires skill and knowledge. With our 

technical education systems, both Greenville and Spartanburg, as 

well as the eight university consortium in our University Center located in Greenville, Greenville-Spartanburg is competently positioned for her competitive place in our global economy to supply 

any industry with skilled and knowledge workers. And I would like 

to talk with you more about that, because we are a model for the 

nation. 

G.F. League Manufacturing Company is a fourth generation family owned, family operated custom fabricator located in Greenville 

since 1917. We have been proactive and innovative by upgrading 

our technology and machinery, hiring more knowledge workers, severely cutting budgets and greatly diversifying the industries we 

serve in order to stay in business. 

North America is hemorrhaging manufacturing jobs. We have 

lost over 2.6 million manufacturing jobs in the last two years. We 

have lost the textile industry and are losing the furniture industry. 

Our company receives auction notices on a weekly basis from third, 

fourth and fifth generation 100 year old plus businesses that have 

closed their doors forever and many of those businesses are in 

North and South Carolina. 

In September, I delivered a 14-pound box of these two-page notices to Senator Lindsey Graham in Washington and asked him to 

please work with our newly formed Congressional Manufacturing 

Caucus and Representatives Dan Manzullo and Tim Ryan to help 

us prevent the continuation of this devastation. I also asked him 

to share that with you. 

There are, in my opinion, several reasons this is happening. All 

companies are primarily responsible for doing everything they can 

to remain competitive by having a near constant cycle of product 

development based on new research, new technology and new 

ideas. However, many of these companies that have gone out of 

business did do everything they could, and they still lost their businesses. Maybe they just simply did not start soon enough being 

proactive. 

And to respond to Mr. Aldonas’ statement, we are not playing on 

a level playing field. The inequities in currencies, labor costs and 

over-restrictive mandated regulations is killing U.S. industries. We 

must have in place fair trade policies and they must be consistently 

enforced. 

The governments of China, Japan, Taiwan and Korea, in particular, have severely undervalued their nation’s currencies, makVerDate 0ct 09 2002 13:20 Jan 07, 2005 Jkt 000000 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 G:\HEARINGS\93137.TXT MIKEA
21

ing it more expensive to sell American goods in their countries and 

cheaper for their products to be sold in the United States. 

For these countries to be able to produce materials to manufacture a product, purchase all the required hardware for that product, assemble the product with all the necessary hardware, ship it 

halfway around the world and then sell it in our country for less 

than the hardware alone would cost a U.S. manufacturer is neither 

logical, fair, moral, nor ethical. Our government must recognize 

this. 

We desperately need tax incentives for all existing small businesses. We need Congressional reforms in export control policies, 

we need legislation passed to lighten the mountains of regulations 

that we are forced to comply with. Or, all other countries must be 

held accountable for the same regulations. That is not happening. 

Commodity-like manufacturing is going away and will almost 

certainly never return to our shores. However, the ingenuity of 

America’s entrepreneurs is an inherent strength that our nation 

must leverage. Anything the federal government can do to promote 

innovation—research tax breaks, encouraging more public/private 

partnerships between small business and research institutions—

will lead to long term growth for small manufacturers. 

The United States cannot afford to lose its industrial base. Without a manufacturing foundation, a service industry cannot exist. 

The future of our country’s economic success depends on Congress 

giving our United States manufacturers a fighting chance to survive. 

Thank you. 

[Ms. League’s statement may be found in the appendix.] 

Mr. DEMINT. Thank you, Ms. League. Ms. Moore. 

STATEMENT OF DEBORAH MOORE, SPARTANBURG 

TECHNICAL COLLEGE 

Ms. MOORE. Thank you for inviting me. 

Mr. DEMINT. Pull your mic just a little closer to you since you 

speak softly. Thank you. 

Ms. MOORE. Thank you for inviting me here today. 

When I was 20 years old, I started out in textile as a battery 

filler. During the next 25 years, I worked most of the time in textiles. I was a hard worker and a quick learner. I quickly learned 

to do other jobs until I finally became a weaver. I was proud of the 

quality and quantity of my work. From 1985 until November 1999, 

I was a weaver at John H. Montgomery Mill in Chesnee, South 

Carolina. Most of the workers at the mill either grew up together 

or went to school together. We were extensions of each other’s families. When word came our plant was to be closed because of 

NAFTA, I was heartbroken. I felt I had lost a member of my family. 

I did not think I had the skills to do anything but textiles. I 

knew it would be useless to try to get a job in another mill because 

they were facing the same loss as our mill. I had a child and had 

to think of our welfare and our future. I knew I would need new 

skills to rejoin the workforce and the only way to get them would 

be to go back to school. I was terrified at the prospect of going back 

to school at the age of 45. I had been out of school for 27 years. 

22

With the help of the One Stop Career Center and the JTPA, I 

was able to attend Spartanburg Technical College and receive an 

Associate Degree in Office Systems Technology. They paid for my 

tuition and books for the five semesters that I attended. I started 

school in January 2000 and graduated in July 2001. I even made 

the Dean’s List four out of the five semesters I attended. 

Chairman SCHROCK. There are not many people here that can 

say that. 

Ms. LEAGUE. That is right. 

Ms. MOORE. Thank you. If not for the support and encouragement from the One Stop Career Center and Charlton Williams, I 

may have given up and not graduated. Charlton kept telling me I 

could do it and she had faith in me. I am very grateful there was 

a One Stop to help all the displaced workers who lost their jobs 

then and are still helping displaced workers now. 

The help from the One Stop did not stop when I finished school; 

they also helped me find a job. When a position came open in the 

Financial Aid Office of Spartanburg Technical College, Charlton encouraged me to apply. I applied and was hired for the position. The 

position was a temporary one under contract, but I was happy to 

have the opportunity to prove myself. When the job became a permanent position, Charlton again encouraged me to apply. I did and 

I was hired for the permanent position. 

I have worked in the Financial Aid Office since I graduated and 

am in a position to see other displaced workers who are going 

through what I did and being helped through the One Stop. I try 

to encourage them when they come in and say ‘‘I am 40 something 

and I have been out of school for a long time, I do not know anything else.’’ I just at them and say, ‘‘You can do it, I did.’’ 

[Ms. Moore’s statement may be found in the appendix.] 

Chairman SCHROCK. That is a great story. 

Mr. DEMINT. Mr. Chairman, questions? 

Chairman SCHROCK. I will follow you. 

Mr. DEMINT. I want to go back to Ms. Eisen. I have traveled 

around the state and heard the same things that you are talking 

about, that there are jobs open, but that our education system is 

not producing folks who can do the work. It seems to me that our 

whole concept of education needs to change along with the concept 

of manufacturing, which is now an internationally competitive 

business. That the idea of children going to school 12 years or more 

with the intent of teaching them no skills, or learning in an abstract that applies in no way to a career seems to be an antiquated 

idea and that we know children learn better earlier. And to wait 

until they are in college, if they go—but as I mentioned before, in 

South Carolina, we have a problem of now almost nearly half who 

start the ninth grade do not even graduate high school and the 

number of jobs that these folks can do, you know, gets less and less 

every year. 

Is the National Association of Manufacturers, or are you looking 

at different ways to shape not just college level education—— 

Ms. EISEN. Absolutely. 

Mr. DEMINT [CONTINUING] But it would seem college is too late 

for people to get a vision of the whole manufacturing industry. 

What are we doing there? 

23

Ms. EISEN. Well, I agree wholeheartedly that it does seem a bit 

insane to expect people to learn the way we used to learn and try 

to have the same expectations we used to have in a different world. 

The definition of insanity I believe is doing the same thing over 

and over and expecting a different result. 

Mr. DEMINT. Right. 

Ms. EISEN. We cannot do that any more. What do we do and 

what are we promoting and asking Congress to support to is a redesign of the school system into promoting career technical education from the early grades on. That used to be called vo-tech. We 

do not call anything vo-tech any more. That again brings up images 

of loser, you are a second class citizen, there is not a parent that 

wants their kids basically to be in vo-tech. And if they are, they 

are not going to talk about it at the cocktail party I can promise 

you. 

But we need to look at it differently. As a matter of fact, the Administration promoted last year, and I understand will be reauthorized next year, a new way to look at the old vocational education money as career and technical education money only and 

that no money would go to schools unless they could show that 

what they were teaching in their schools was connected in some 

way should the child or young person want to a post-secondary credential, a post-secondary degree of some sort, whether it is an associate degree or a full degree, but they could use what they learned 

and connect with high levels, high standards of academic learning, 

the learning they need for, as I said, career and a technical education. Charter schools are doing that around the country and 

there is a whole movement now of career academies in high schools 

and even beginning as young as junior high that are focusing 

young people and their parents. But if we do not capture the imagination of the parents and the educators who are pressured, again 

as I said, to get those college applications filled out no matter what 

those kids want or can do or cannot do. 

It is a vicious circle and it is about a culture, it is about a different way of thinking. It is what we call flexaskillability at NAM, 

we call it creating a flexible individual who has multiple skills and 

the ability to be mobile and move around. That is the 21st century 

worker. And workers and young people who do not have those 

skills will not have a family supporting job in too few years. Now 

as far as the extraordinary problems of drop outs and illiteracy, the 

President certainly in his no child left behind legislation, has attempted to begin that process by saying every child will learn to 

read by the end of third grade. It is getting a slow start, there are 

issues with it, but it is the right way to go. 

If I had my way, I would blow up every school in this country, 

call a holiday like FDR did with the banks, I would send everybody 

home and reorganize the schools to fit into 21st century thinking. 

We cannot learn the old way any more. It does not work, it does 

not work in industry. 

I will tell you the number one skill that employers look for—

number one, beside obviously being able to read and write and calculate. We do not think that is such a big huge bar—is teamwork. 

We work in teams in manufacturing. You cannot product just in 

24

time and do customization in any event unless you pull your units 

together. Is teamwork being developed in schools? Very, very few. 

So I leave it at that. 

Mr. DEMINT. I agree. I really think the focus on careers and applied learning is a way to keep kids in school, because if they cannot see any relevance to what they are learning, it is hard to keep 

their attention. So I think certainly moving towards careers in 

school is a way to improve academics. 

Ms. EISEN. When you reauthorize the Perkins Act next year, 

think about that—— 

Mr. DEMINT. I will. 

Ms. EISEN [CONTINUING] If the status quo people come up and tell 

you you do not need any change and the new folks come up and 

tell you it must be integrated in career and technical education. 

Mr. DEMINT. Yes. 

Mr. Chairman, questions? 

Chairman SCHROCK. Status quo does not get in my office. 

Ms. EISEN. Does it? 

Chairman SCHROCK. They do not. And you are absolutely right 

about the education. It is like every parent—you know, we wanted 

our son to go to college. Why? Because we wanted him to go to college. He did and did well, but a lot of kids are not cut out for that 

and they need to be in another role. 

Ms. EISEN. That is right. 

Chairman SCHROCK. I really enjoyed your testimony, and I enjoyed yours, Ms. League, but I loved yours. You are a living, 

breathing example of what can happen when somebody has a situation like you did. You are the real heroine—and others like you are 

the real heroines in this country who have managed to come back 

up, and I really admire you. When I read your testimony on the 

plane, I could not wait to meet you, so we are really happy you are 

here. 

I want to ask you a question, but I want to base it on something 

that Ms. Eisen asked that maybe a lot of us did not hear. I understood you to say that funding for institutions like this technical 

center are in short demand as well, which could hamper the longterm viability of this place. 

And I wonder, do you think worker retraining program have 

enough resources like for this place here and are we meeting the 

needs of everyone who comes to this technical center? 

Ms. MOORE. I think there are a lot students that still feel like 

there is not enough to go around. We have a lot of students that 

do not get to go because they do not have the funding. 

Chairman SCHROCK. Do you have grants? I should know this—

does the state fund a center like this? 

Ms. MOORE. Yes. 

Ms. EISEN. Very little bit. 

Chairman SCHROCK. Do you get federal funds? 

Mr. DEMINT. There are some federal grants. 

Ms. EISEN. Seven percent. 

Chairman SCHROCK. Where do the funds come from? The students I guess, huh? 

25

Ms. MOORE. A lot of the students do pay for it, but we have federal grants because we have financial aid and that is a grant that 

helps some students. 

Chairman SCHROCK. Okay. 

Ms. MOORE. But with the One Stop, it is state. 

Chairman SCHROCK. But not everybody is getting the help that 

they need to get through, what do they do, just have to drop out? 

Ms. MOORE. They do, because we have so many of them that are 

displaced now. 

Chairman SCHROCK. Yeah, that just exacerbates an already difficult problem. 

Ms. League, I want to ask you, are there specific laws and regulatory practices in your experience that are hurting manufacturers 

like you and I just wondered if you could name them specifically? 

In my mind, I think I perceive what they are but you are where 

the rubber meets the road and I would like to know what regulations and authorities are getting in your way. 

Ms. LEAGUE. Tort reform is very high on my list. 

Chairman SCHROCK. Suing has become a national pastime in this 

country. 

Ms. LEAGUE. It is incredible. And there again, we are just not 

playing on a level playing field because last week I heard of a company in Korea that has started a wine company called Napa Valley. 

I mean, you know, and they can do that. The people in California 

are not real happy about that, but it’s perfectly legal there. We 

have to be very careful about trademarks, copyrights, et cetera, et 

cetera, and should be but they just should be held accountable for 

the same things. Tax incentives is another thing. We would like to 

be able to have more help getting our employees to Greenville 

Tech, Spartanburg Tech for higher skill level jobs or to our University Center for degree programs. Specifically those are the big 

three. 

Chairman SCHROCK. EPA, OSHA, do they drive you crazy? 

Ms. LEAGUE. Oh, yeah, but I mean that has been going on since 

the beginning of time and all those programs are necessary, but I 

think—— 

Chairman SCHROCK. Yeah, but I will tell you something—— 

Ms. LEAGUE [CONTINUING] It is overburdensome. 

Chairman SCHROCK [CONTINUING] I think they have just gone 

overboard. 

Ms. LEAGUE. It is overboard, it truly is and does not need to be 

as—the reams of paperwork that we have to go through to be in 

compliance is just not necessary. 

Chairman SCHROCK. I know, the paperwork drill is just totally 

out of hand. We are trying to do something about that too with the 

Paperwork Act. It is just unbelievable. 

Ms. LEAGUE. Yes. 

Chairman SCHROCK. Ms. Eisen, what can Congress do specifically before the end of this year—I know that is coming right up—

to increase the competitiveness of U.S. manufacturers? 

Ms. EISEN. Well, you are going out by Thanksgiving, you have to 

hurry. But— 

Chairman SCHROCK. We hope we are out this Friday, but do 

not— 

26

Ms. EISEN. I know, so you are going to have to hurry. But nonetheless, I would suggest that final passage of the Workforce Investment Act that was established in 1998 in order to consolidate dozens upon dozens of programs that run things like One Stops and 

other public systems should be passed and signed into law. I do not 

know if there are still issues to work out in conference, but it will 

be shortly. I say that because our public training system is the only 

one that really gets to people like Ms. Moore and allows them—it 

is small, it is only somewhere between 11 and 13 million dollars 

a year. I mean you can put that in a wing of some new weapon, 

but at any rate, it is there. Again, there has been an attempt by 

this Administration, I give him credit, to bring a dual system approach to this public system, making both the customers, the job 

seeker and the business and bring that together and create this extraordinary One Stop system that is beginning to work. It takes 

time but it does need to be reauthorized and it does need to have 

business services in it, because the people left out have been the 

small businesses. That is where the jobs are and that is where the 

outreach needs to be. 

Chairman SCHROCK. You are obviously traveling all over the 

country talking to manufacturers—and I know I am not allowed to 

say the word factories, so what— 

Ms. EISEN. No, you are not. 

Chairman SCHROCK. I am not, I know that. It is not politically 

correct. What do you tell people who work in a manufacturing environment who worry about their long term economic security? 

Ms. EISEN. I say there is probably no security in any job anywhere. I am asked that all the time. I am asked that by union 

workers, I am asked that by non-union workers and by our own 

manufacturers. The truth is we live in a tumultuous, agitated 

world economy. I do not see that ending. 

I think the Undersecretary again made a very clear picture of 

that. It is what it is. Become flexible, become skilled so you can do 

lots of different things, as Ms. Moore has learned to do, and you 

may have to be mobile. We are not seeing—you know, manufacturing is coming back. It is coming back, not however, on the big 

macro picture but it is coming back in specific industries and in regions. In due course, we are going to see regions in this country 

competing as much against each other as we are going to see them 

competing with countries around the world. And each region has 

to look at what its skills are and what it can provide in order to 

come off on top. But there is no—I am afraid there is no sweet answer to a stable—what is stable today? Healthcare? I do not think 

so. What is stable? Politics? No, that’s not very stable. There are 

no more stable industries any more. 

So I say get out there, it is white water all the way, and learn 

to swim in it. 

Chairman SCHROCK. I did not know politics was an industry, but 

I guess it is. 

Ms. EISEN. Well, sure it is. 

Chairman SCHROCK. It is. 

Ms. EISEN. I am not sure what the goods you are—I am teasing. 

It is a great industry. 

[Laughter.] 

27

Chairman SCHROCK. You are just saying that because it is true. 

Ms. EISEN. It is a great industry. 

Mr. DEMINT. Mr. Chairman, I think if you would gavel this official hearing to a close, what I would like to do is get our panelists 

maybe up here and have some of the folks in the audience and 

some of the media have a chance to ask a few questions. 

Chairman SCHROCK. Sure. I would like that. Let me just say one 

quick thing. We are not holding this hearing just to hold this hearing. We are holding this hearing because we know there is a problem and people like Congressman Jim DeMint and Congressman 

Ed Schrock need to go back and scream and holler and get something done about it. That is what we have done with every hearing 

we have held. We are not here just for the cameras to come and 

take pictures of the two of us. That makes no sense. There is a 

problem in this country, it is bad, it is getting worse, and we need 

to be up there fighting to make sure it stops and we reverse the 

trend. 

So you can rest assured as long as this guy is living and breathing and still elected, I am going to be working to make sure we get 

this trend turned around and Jim DeMint has been, is and will 

continue to do the same thing. 

So I appreciate the opportunity for me to come to South Carolina 

and I am delighted to be here with Jim and believe me, we are 

going to go back an rattle some cages and cages are being rattled 

and it is starting to affect the leadership on both sides of the aisle, 

because they are having some members on the Republican side and 

the Democrat side who say no, we are not voting for that unless 

this and that happens and I think that is a very good thing. It 

could bode very well for all of industry in the coming years. 

Mr. DEMINT. And let me just add one point. I think the difficulty 

is that there are a lot of us who in some ways like to recreate a 

past that maybe never existed at all, and to have some kind of stable job market. We have seen that as long as economies grow, they 

are going to continue to be in a state of flux, and change is happening so much more rapidly today that what we need to get back 

to is these workers with the—what is it—— 

Chairman SCHROCK. Flexaskillability. I am going to use that. 

Mr. DEMINT [CONTINUING] Flexaskillability in our education system. But what we hope this hearing will do in addition to giving 

us some concrete things to go back and work on at the federal level 

is to focus people locally on the real situation that we face, which 

is a world economy. There is no way we can put walls around this 

country or this state and keep that from happening. In fact, with 

95 percent of the people in this world living outside of this country, 

the real opportunity for manufacturers here is to sell to them. But 

to do that requires better trade agreements, more competitiveness 

here at home, a whole different way of thinking, particularly with 

our education system. And so to start thinking differently, to make 

the best of this century, is what we are trying to do, and to come 

up with some real solutions. 

And all of you folks have been tremendously helpful and you 

have certainly put some ideas on my notepad that I want to go 

back and work on. 

28

But Mr. Chairman, if you will close us, I think there are some 

other folks who would like to ask some questions. 

Chairman SCHROCK. Thank you all for being here and we will go 

to the next phase and this hearing is adjourned. Thank you. 

Mr. DEMINT. Thank you. 

[Whereupon, at 11:01 a.m., the Subcommittee was adjourned.]

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