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66–201 2011

HELP WANTED: HOW PASSING 

FREE TRADE AGREEMENTS WILL HELP 

SMALL BUSINESSES CREATE NEW JOBS 

HEARING 

BEFORE THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

HEARING HELD 

APRIL 6, 2011 

Small Business Committee Document Number 112–008 

Available via the GPO Website: http//www.fdsys.gov 


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(II) 

HOUSE COMMITTEE ON SMALL BUSINESS 

SAM GRAVES, Missouri, Chairman 

ROSCOE BARTLETT, Maryland 

STEVE CHABOT, Ohio 

STEVE KING, Iowa 

MIKE COFFMAN, Colorado 

MICK MULVANEY, South Carolina 

SCOTT TIPTON, Colorado 

CHUCK FLEISCHMANN, Tennessee 

JEFF LANDRY, Louisiana 

JAIME HERRERA BEUTLER, Washington 

ALAN WEST, Florida 

RENEE ELLMERS, North Carolina 

JOE WALSH, Illinois 

LOU BARLETTA, Pennsylvania 

RICHARD HANNA, New York 

NYDIA VELA ́ ZQUEZ, New York, Ranking Member 

KURT SCHRADER, Oregon 

MARK CRITZ, Pennsylvania 

JASON ALTMIRE, Pennsylvania 

YVETTE CLARKE, New York 

JUDY CHU, California 

DAVID CICILLINE, Rhode Island 

CEDRIC RICHMOND, Louisiana 

GARY PETERS, Michigan 

BILL OWENS, New York 

BILL KEATING, Massachusetts 

LORI SALLEY, Staff Director 

PAUL SASS, Deputy Staff Director 

BARRY PINELES, General Counsel 

MICHAEL DAY, Minority Staff Directory 


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C O N T E N T S 

OPENING STATEMENTS 

Graves, Hon. Sam .................................................................................................... 1 

Vela ́zquez, Hon. Nydia M. ....................................................................................... 2 

WITNESSES 

Mr. Bill Patterson, Founder and Chief Engineer, TEI Rock Drills, Montrose, 

CO .......................................................................................................................... 3 

Mr. Phillip Wise, Owner and Operator, Wise Family Farm, Harris, MO ........... 9 

Mr. Trevor Myers, Chief Executive Officer, Cloyes Gear & Products, Inc. ........ 22 

Mr. Jason W. Speer, Vice-President, Quality Float Works, Inc., Schaumburg, 

IL ........................................................................................................................... 27 

APPENDIX 

Prepared Statements: 

Mr. Bill Patterson, Founder and Chief Engineer, TEI Rock Drills, Montrose, 

CO .......................................................................................................................... 6 

Mr. Phillip Wise, Owner and Operator, Wise Family Farm, Harris, MO ........... 12 

Mr. Trevor Myers, Chief Executive Officer, Cloyes Gear & Products, Inc. ........ 24 

Mr. Jason W. Speer, Vice-President, Quality Float Works, Inc., Schaumburg, 

IL ........................................................................................................................... 29 

Statement for the Record: 

Tipton, Hon. Scott .................................................................................................... 45 


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HELP WANTED: HOW PASSING FREE TRADE 

AGREEMENTS WILL HELP SMALL BUSINESSES CREATE NEW JOBS 

WEDNESDAY, APRIL 6, 2011 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

Washington, DC. 

The Committee met, pursuant to call, at 10:00 a.m., in room 

2360, Rayburn House Office Building. Hon. Sam Graves (chairman 

of the Committee) presiding. 

Present: Representatives Graves, Coffman, West, Walsh, 

Vela ́zquez, Critz, Tipton, Peters, Chabot, Fleischmann, Landry, 

Cicilline, and Richmond. 

Chairman GRAVES. We had a slight delay. We had a vote which 

we had to take. I want to thank all of you for joining us today on 

a very timely hearing on the importance of passing the pending 

free trade agreements specifically for small business. And it sounds 

like we have come to agreement at least today on the Colombian 

Free Trade Agreement. But I definitely want to thank all of our 

witnesses for coming and traveling long ways in many cases. 

Today we are going to hear directly from those businesses on the 

importance of passing free trade agreements and how it affects 

their ability to reach new markets and create new paying U.S. jobs. 

With the unemployment rate hovering around nine percent, passing the free trade agreements with Panama, Colombia, and Korea 

is an important tool for spurring job creation. Free trade boosts our 

economy by eliminating trade barriers and allowing U.S. exports to 

reach new markets, giving American companies an opportunity to 

grow. In 2010, total U.S. exports of goods and services reached $1.8 

trillion, including $12.9 billion from Missouri alone. Those exports 

equal 12 percent of the U.S. gross domestic product and translate 

into over 10 million jobs, including more than four million from 

small businesses. 

It has been nearly four years since these trade agreements were 

negotiated and no congressional action has been taken. As we remain idle, our major competitors, like Canada and the European 

Union, are aggressively moving forward to negotiate free trade 

agreements with other nations. If we fail to pass these free trade 

agreements before July 1st, our small businesses and farmers will 

lose even more market share to foreign competitors. We owe it to 

our small businesses to open new markets and lower trade barriers 

so that they can compete with their foreign counterparts and conVerDate Mar 15 2010 05:37 May 18, 2011 Jkt 006201 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 E:\HR\OC\A201.XXX A201

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tinue to increase their exports, grow their businesses, and create 

jobs. 

The independent U.S. International Trade Commission estimates 

that passing the free trade agreements would increase U.S. exports 

by $13 million and create over 75,000 jobs. Unfortunately, until the 

administration and Congress act on these agreements, small businesses will continue to face higher tariffs and these jobs will not 

be created. 

So I look forward to hearing from our witnesses on how passing 

free trade agreements is going to benefit them. And I now recognize Ranking Member Vela ́zquez for her opening statement. 

Ms. VELA ́ ZQUEZ. Thank you, Chairman Graves. 

The story of the economy this year has been one of recovery. Last 

week, the Department of Labor reported that over 216,000 new jobs 

were added in March. Payrolls are on track to see nearly two million jobs created by the end of this year. Small businesses are at 

the forefront of this recovery. They generate nearly two out of 

every three jobs, but among these engines of economic growth one 

group excels above all others. Small businesses that export tend to 

grow faster, create more jobs, and pay higher wages than businesses that do not. As the recovery continues gaining steam, small 

firms will increasingly depend on foreign trade to fuel new growth. 

Despite the many advantages of trade, it remains exceedingly difficult for entrepreneurs to sell their goods overseas. Even though 

small- and medium-sized businesses account for nearly 97 percent 

of American exporting companies, their exports account for only a 

third of U.S. goods shipped overseas. 

Studies show that only one percent of small- and medium-sized 

businesses are currently exporting. Most small exporters sell their 

goods to only one foreign country and to only one customer in that 

country. Clearly, there is a vast potential to grow exports among 

small firms and today’s hearing will help us understand how the 

pending trade agreements with South Korea, Panama, and Colombia can have that potential. 

There is a growing consensus that well balanced free trade 

agreements can be a significant driver of prosperity. By eliminating 

tariffs and other trade barriers, the pending agreements with 

Korea, Panama, and Colombia can help small firms expand sales 

globally and create jobs at home. 

More than 32,000 small businesses here in the U.S. export more 

than $17.8 billion in goods to these three countries. We should not 

underestimate the importance of getting it right. While well trusted trade agreements and balance trade relationships, an overly 

permissive approach to imports can push American businesses out 

of the marketplace and exacerbate our growing trade deficit. 

Even with potential benefits of free trade, there are looming 

issues in all three trade agreements. Panama’s recent economic 

growth has made it a sanctuary for tax evasion and money laundering. Under the South Korean agreement, other barriers such as 

efficiency standards and high taxes on American cars go unaddressed. 

Colombia’s persistent record of violence and human rights abuse 

against organized labor is the source of serious concern. Any trade 

agreement that opens these countries to an influx of U.S. capital 


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while ignoring problems like this will be a burden, not a benefit, 

to businesses in this country that played by the rules. Now more 

than ever our country needs policies that encourage fair trade and 

promote small business expansion. 

I look forward to hearing how the proposed trade agreements can 

achieve this goal. I would like to thank all the witnesses in advance for their testimony and I am pleased that they could join us 

and I look forward to hearing from you. Thank you. 

Chairman GRAVES. I might explain the light system for you. 

Each of you has five minutes to give your testimony, and when it 

comes down to one minute left the lights will turn yellow and red 

when your time is up. If you do go over a little bit, that is fine. 

Just please try not to go over too much. 

I would like to introduce Mr. Tipton to introduce his first witness 

of the day. 

STATEMENTS OF BILL PATTERSON, FOUNDER AND CHIEF ENGINEER, TEI ROCK DRILLS, INC.; PHILLIP WISE, OWNER AND 

OPERATOR, WISE FAMILY FARM ON BEHALF OF THE NATIONAL PORK PRODUCERS COUNCIL; TREVOR MYERS, CEO, 

CLOYES GEAR AND PRODUCTS, INC., ON BEHALF OF THE 

MOTOR AND EQUIPMENT MANUFACTURERS ASSOCIATION; 

JASON W. SPEER, VICE-PRESIDENT, QUALITY FLOAT WORKS, 

INC., ON BEHALF OF THE UNITED STATES CHAMBER OF 

COMMERCE 

Mr. TIPTON. Thank you, Mr. Chairman and Ranking Member 

Vela ́zquez. I am very proud to be able to introduce somebody from 

my home area, Montrose, Colorado, and an example of American 

entrepreneurialship, creativity, and job creation. 

And I want to welcome Mr. Bill Patterson from Montrose, Colorado. He is the founder and chief engineer of TEI Rock Drills, Inc. 

and is based in Montrose, Colorado. His company manufactures 

high tech drilling equipment for the mining and construction industry and has 40 employees. He is also the holder individually of six 

patents relating to rock drilling and noise control. He received his 

master’s degree in mechanical engineering from Ohio State University in ’71 where he was summa cum laude and in his current role 

he oversees full operation of the company and leads their international sales division. Thanks for being with us today, Bill, and 

I appreciate you making the trip. 

STATEMENT OF BILL PATTERSON 

Mr. PATTERSON. Thank you, Scott. And thank you for this. It is 

a unique opportunity for me. I have been here a long time ago but 

this is where the action happens and this is where we need to 

make sure that we do things for small business. 

Let me start by telling my story. You kind of heard the background there but I am a mechanical engineer and I started a company in 1980. And as with many entrepreneurs, I started the business after the company I served as chief engineer, Gardner-Denver 

was sold and the machinery division of which I was working was 

essentially cashed out. 

Now, I left there figuring I would never see another rock drill in 

my life except when I drove by it. But what I found is that the new 


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company, Gardner-Denver, could not produce. They laid off all their 

workers and I basically went and found the workers that were laid 

off. They were the ones that knew how to produce parts and I produced those parts for the clients, my clients that I knew, and basically became a pirate part manufacturer for Gardner-Denver. That 

is how I got started in business. And I thank Gardner-Denver all 

the time for doing that. 

You know, with our crew we became a family business. I brought 

my sons and daughter in. In fact, my daughter is president of the 

company. And we sell percussion and rotary rock drills. We are the 

last U.S. manufacturer of percussion rock drills in the United 

States. Albany Company does still market the jelly drill but we are 

actually the last one to actually produce rock drills. All the other 

companies have either been sold or basically have stopped production. And it is a good market. 

To increase jobs and sales we did expand into exports some time 

ago. I worked with the local Colorado Department of Labor in 

international sales and we started marketing primarily to South 

America. The language was one that we understood, and that is 

rule number one. You have to. If you are going to sell in any country you have to be a part of that country. 

And we became a leader in rock drilling equipment. Primarily, 

we sell attachments to construction equipment for limited access. 

Our current sales are over $8 million, of which about 40 percent 

typically is exported primarily to America—North and South America and Europe. We employ about 40 total workers and we pay 

good wages in Montrose, Colorado. That is the nice part about 

manufacturing. Manufacturing tends to pay good wages. It is not 

the service industry. It is a producing industry, yet it is a valueadded industry, and that is why I think it is so important. 

The benefits to trade and job creation. Today our brand is sold 

worldwide. We proudly put ‘‘Made in America’’ on every unit we 

sell because that really, I mean, it is amazing. Even here, I just 

got back and was down in Arizona and we had four units that are 

working on the solar generation plant down there and those workers said our stickers are falling off. Would you bring us more stickers? Because they are proud to be using a machine that is made 

in the United States. And it carries a quality connotation that we 

can also market to the rest of the world. 

If we are going to expand we need to be able to sell worldwide. 

It is very difficult for a small company to do this. And that is where 

we need the help because we need a level playing field to work 

with and Congress is in the best position to do that. So the free 

trade agreements under consideration are vital for providing a level 

playing field. 

In particular, what we have found is that one of the major problems is transportation. How do you get your product to the other 

country? And how do you make that as seamless as possible? The 

primary advantage of the NAFTA agreement for TEI Rock Drills 

was that we could produce a product, we could put it on the truck, 

and we could ship it into Mexico and Canada without changing 

shippers. And you would be amazed at how seamless it is today 

and how difficult it used to be. Everything would stack up in LaVerDate Mar 15 2010 05:37 May 18, 2011 Jkt 006201 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 E:\HR\OC\A201.XXX A201

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redo. So we need these direct transportation opportunities. That is 

an aspect that is in most of these bills. 

The other aspect of international trade that we always run into 

is what I call technical requirements. That is where you look at 

trade agreements as leveling the playing field in terms of what you 

have to pay. But even more so is individual companies do not erect 

technical barriers to your sales. And this also needs to be addressed. And we have filed—we can address most of these. We 

work 9,000 IFOs, 9,001. And all of these make it easier from a 

technical standpoint. 

And I see I am almost out of time so I had better hurry up. 

But again, what we get in there is Japan—as unique technical 

requirements. And if we are going to export there, Korea is working with the United States but that can be a lever to make Japan 

do the same thing. But tariffs are the largest barrier, but in particular it is value-added taxes that are used as a tariff barrier. And 

we get that in every country that we deal with. It is basically a 

sales tax. Not many people in the United States understand this, 

but it is as high in Brazil as 40 percent. So when we try and sell 

a product into Brazil, we get tacked on a value-added tax. 

And the final issue to be addressed, worldwide trade and touching intellectual property. We have patents. It is very difficult, very 

expensive, for any company to protect their patents. We protect 

them very vigorously but the problem is that, you know, you need 

more clout. And what can we do if they copy our product other than 

say, gee, that is too bad and go on our way? We need some clout 

and that is why it is important that these trade agreements have 

protection of intellectual property. 

In conclusion, I ask that you reduce the restriction starting with 

the manufacturing business because that is where good jobs are 

created. We need good value-added jobs. It takes a tremendous 

amount of money required per job. We estimate it costs a half million dollars in capital equipment for one good manufacturing job. 

For access to capital and the expertise, you can use—you can get 

that expertise. The patent needs to be advertised. 

And if I can say one thing from a business standpoint. Uncertainty is far more of a barrier than cost or others. We can overcome 

cost. We can be more efficient. But if we do not have a certainty 

with what we are going into as a business, it is the greatest barrier 

that we run into. 

So I thank you. I see I am over time but I appreciate the opportunity to come here and speak to you. 

[The statement of Mr. Patterson follows:] 


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Chairman GRAVES. Thank you, Mr. Patterson. At the very beginning of your testimony you said that this is where it all happens. 

And I assume what you meant by that is the Small Business Committee. 

Mr. PATTERSON. Yes. Well, I am talking, I mean, I should not say 

that. All politics are local. 

Chairman GRAVES. You said Small Business Committee. Quit 

while you are ahead. Next, I would like to introduce a constituent 

of mine, Mr. Phillip Wise. And Mr. Wise is the owner and operator 

of Wise Family Farm located in Harris, Missouri. He is a local pork 

producer and operates two 2,400-head hog facilities on 500 acres. 

He grew up on the family farm. He is an active member of the Pork 

Producers Association. He and his wife, Jane, live on their farm 

and are the proud parents of three grown children. I want to welcome you to the Small Business Committee. 

STATEMENT OF PHILLIP WISE 

Mr. WISE. Thank you very much. Thank you very much. Good 

afternoon, Chairman Graves, Ranking Member Vela ́zquez, other 

members of the Committee. 

I am Phillip Wise. I am a pork producer from Harris, Missouri, 

and unless you have made a series of really bad turns I am sure 

you have never been to my community. I do appreciate the opportunity to come here today and speak. 

The future of the U.S. pork industry and the future of American 

family farms such as mine depend on the continued expansion of 

exports. The U.S. is now the lowest-cost producer of pork in the 

world and the number one global exporter of pork. Last year nearly 

20 percent of pork produced in the United States was exported 

compared to only about 10 percent, I am sorry, six percent 10 years 

ago. In 2010, the United States exported more than 1.9 million tons 

of pork valued at $4.8 billion. 

There is no disputing that free trade agreements have been a 

major factor in the rapid growth of U.S. exports during the past 

two decades. Since the year before NAFTA was implemented in 

1994 as an example, U.S. exports to Mexico went from 780 percent 

to $986 million last year. Increasing pork exports is important to 

more than just pork producers. The U.S. pork industry supports an 

estimated 550,000 domestic jobs; 110,000 of those jobs are the result directly of U.S. pork exports. Just last year the U.S. exports 

grew by about a half million dollars. The USDA estimates that 

each one billion in meat exports generates approximately 12,000 

new jobs, meaning that last year the pork exports would have created approximately 6,000 new jobs. 

Currently, the United States has pending FTAs with Colombia, 

Panama, and South Korea. According to Iowa State University 

economist, Dr. Dermot Hayes, with full implementation, three 

FTAs will generate over $770 million in additional pork exports annually, causing live hog prices to increase by approximately $11.35, 

consequently creating more than 10,200 direct pork industry jobs. 

But in the year since these agreements were signed, the benefits 

the FTAs would have offered to our nation have been lost. Not only 

have we lost future benefits but also continue to lose current market shares in these countries. While we sit on our hands, other 


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pork exporting countries are moving forward with FTAs of their 

own with Colombia, Panama, and South Korea. In fact, both the 

European Union, Korea, and the Canada-Columbia FTAs are set to 

go in force in about 60 days, July 1st of this year. Dr. Hayes estimates or calculates that we will be out of the Korean and Colombian markets within 10 years, primarily due to the fact that the 

EU and Canada have these FTAs and we do not. 

Losing these markets means lost value to the hogs that I sell, 

which translates ultimately to less profits and less jobs in the community. I know firsthand how important agriculture is to America 

as a result of the farm crisis in the early ’80s. I shut down my business and reduced my farming operations and left the community. 

It was not until recently when things appeared to become somewhat more profitable that I returned back to the community that 

I was from after about a 15 year absence and began raising hogs 

again. Today, without those industry-wide exports, the price I received for my hogs would not allow me to remain in this business. 

In fact, for every hog marketed in 2010, approximately $56 of value 

is attributable to exports. 

This increase in profitability has led Farmland Foods to establish 

a plant in nearby Milan, Missouri, which has allowed local producers to expand their operations, which ultimately has saved 

small communities such as my own. In my own operation dealing 

with Farmland, approximately one out of three of every hog that 

I produced last year was exported. I can assure you that with the 

11.35 percent increase in live hog prices from these pending three 

FTAs, I will not be leaving the farming operation anytime soon and 

will strongly consider expanding my operations. 

Before concluding, I would like to point out the U.S. domestic 

policy can and does affect our exports. Currently, 366 the livestock 

industry is waiting for a final USDA regulation on the buying and 

selling of livestock and poultry, the GIPSA rule, which if implemented as currently drafted will have an absolutely devastating 

impact on producers. According to analysis of the rule conducted by 

Informa Economics, it would cost the U.S. pork industry nearly 

$400 million annually. That means our production costs would rise. 

And if we are no longer the world’s lowest-cost producer, our exports are going to suffer and all the FTAs in the world will not help 

us. The National Pork Producers Council continues to urge the 

USDA to scrap the current GIPSA rule and rewrite the regulations 

that stick to the five mandates that were given to Congress in the 

2008 USDA Farm Bill. 

In conclusion, if the United States fails to implement the trade 

agreements it has negotiated and fails to move ahead with new 

trade deals, it will forfeit sales to foreign competitors who are aggressively negotiating FTAs of their own. The National Pork Producers Council asks or calls on the Obama administration to send 

up the implementing legislation on the Colombia, Panama, South 

Korea FTAs and urges Congress to approve them before its August 

recess. 

On behalf of myself, the pork producers of the United States, agriculture in general, I just want to say thank you very much for 

your time and your consideration of this activity. Thank you very 

much. 


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Chairman GRAVES. Thanks, Mr. Wise. 

Next we will turn to Mr. Peters to introduce the next witness. 

Mr. PETERS. Thank you, Chairman Graves. I appreciate that. 

I would like to introduce Trevor Myers, who is the CEO of Cloyes 

Gear and Products, an automotive parts and manufacturing company with operations in Arkansas and Illinois and in Rochester 

Hills, Michigan, which is not only my hometown but I also have the 

pleasure of representing here in Congress as well. 

Cloyes opened a southeast Michigan local in the 1970s and they 

are a tier one supplier for General Motors, Ford Motor, and Chrysler, and a leader in the global market in manufacturing and supply 

of automotive timing drive systems and components. Mr. Myers has 

been with Cloyes since 1981 and he has served as CEO since 1997. 

He is testifying today on behalf of the Motor Equipment Manufacturers Association, which is representative and served manufacturers of motor vehicle components since 1904. I am happy Mr. Myers 

is here to join us to discuss how lowering trade barriers can help 

exports, create jobs, and also help provide insight into the perspective of manufacturers and auto suppliers on this most important 

issue. Welcome, Mr. Myers. Thank you. 

STATEMENT OF TREVOR MYERS 

Mr. MYERS. Thank you, Congressman. Good afternoon, Chairman 

Graves, Ranking Member Vela ́zquez, and other members of the 

Committee. Thank you for the opportunity to testify this afternoon. 

I am Trevor Myers, president and CEO of Cloyes Gear and Products. I am here on behalf of Cloyes and the Motor and Equipment 

Manufacturers Association (MEMA). 

MEMA represents over 700 companies that manufacture and remanufacture motor vehicle parts for the use in light vehicles and 

heavy duty original equipment and aftermarket industries. MEMA 

and Cloyes support the ratification of the pending free trade agreements with South Korea, Panama, and Colombia. My company is 

an example of how free trade can assist a small manufacturer, allowing it to grow and employ more American workers. 

Cloyes began as a small business in Cleveland, Ohio, manufacturing replacement engine timing gears in the 1920s. We moved to 

Arkansas in the early 1960s, beginning with approximately 25 people. In the 1970s, we began selling products to General Motors. In 

1985, we made the decision to go global. Our senior management 

went on a trade mission to Japan sponsored by the U.S. Department of Commerce, visiting Japanese vehicle manufacturers. Five 

years after this trip we began to do business with Nissan and today 

Nissan is our third largest customer. 

In late 2010, excuse me, in 2005–2006, KPS Capital Partners, 

LLC, took a direct majority investment in Cloyes. KPS kept the existing management and growth plan in place because both were 

sound. The KPS strategy is to invest in manufacturing businesses 

that need financial or operational turnarounds. In late 2010, our 

shareholders agreed to merge with HHI, another automotive parts 

manufacturing portfolio company of KPS Capital Partners because 

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poration. Today we still operate in an entrepreneurial style as an 

independent division. 

With approximately 750 employees, the Small Business Administration defines Cloyes as a small manufacturer in its product code. 

My company is truly a small manufacturer in the world of motor 

vehicle manufacturing. Workers United, an affiliate of the SEIU, 

represents the vast majority of our hourly U.S.-based employees. 

We are primarily a rural-based manufacturing business with two 

plants in Paris and Subiaco, Arkansas. These two locations employ 

approximately 600 people. Additional employees are located in Arkansas, Illinois, and Michigan, with a small number of international employees. Our employees know that they are competing 

in a highly competitive global marketplace. We are constantly 

training in new techniques, such as continuous improvement and 

six sigma black belt activities. The state of Arkansas and the University of Arkansas at Fort Smith have greatly aided this effort 

with their incumbent worker training program. 

Export business is growing rapidly. Currently, we export to the 

following countries and regions: France, Germany, Italy, Austria, 

Sweden, the United Kingdom, Colombia, and the Middle East. According to the National Association of Manufacturers, exports are 

now 22 percent of U.S. manufacturing production. We are a living 

example of this statistic. In three years, our non-NAFTA business 

will grow to approximately 25 percent of sales. In addition, we have 

benefited greatly from NAFTA, which has allowed us to freely sell 

original equipment and aftermarket goods to Mexico. 

Because of our superior value-added manufacturing capabilities, 

technology, and well trained workforce, sales of goods to Mexico 

produced by our U.S. workforce has grown approximately 25 percent per year. 

Trade with South Korea is particularly important to a company 

such as Cloyes. We began selling advanced engine components to 

Korea in October of 2010, a new system that employs approximately 30 U.S. hourly employees. Engines utilizing our components 

made in Korea are shipped to China, Thailand, Australia, and 

South America. Good trade relations are essential to the future 

growth of additional new programs. Moreover, new business opportunities are created in the U.S. with Korean transplant business— 

I mean transplant auto manufacturers, as they build U.S. manufacturing locations. We will begin producing an advanced engine component in the summer of 2011 as another example for sale to General Motors—India. This system will employ approximately 10 

hourly employees in our U.S. plants. 

On behalf of MEMA and Cloyes, I urge Congress to quickly consider and ratify all three pending free trade agreements. These 

agreements will increase trade and promote and increase U.S.- 

based jobs. Furthermore, the pursuit of the Trans-Pacific Partnership Agreement will open new market opportunities for us and 

other manufacturers. 

In closing, Cloyes and our employees have greatly benefited from 

free trade agreements and the free trade of goods to our international customers. Again, thank you for the opportunity to testify 

today and I welcome your questions when appropriate. Thank you. 

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Chairman GRAVES. Thank you very much. Next we will turn to 

Mr. Walsh. Please introduce the next witness. 

Mr. WALSH. Thank you, Mr. Chairman, and Ranking Member 

Vela ́zquez. 

It is my pleasure to introduce a constituent, Jason Speer. Jason 

is the vice president and general manager of Quality Float Works, 

Inc. in Schaumburg, Illinois. They manufacture a wide variety of 

metal floatation equipment that is used to control the level of liquids and they have 25 employees. Their parts go into automobile 

tanks, water heaters, aircraft, and other equipment. Jason is a 

member of the National Association of Manufacturers, the U.S. 

Chamber of Commerce Corporate Leadership Advisory Committee, 

as well as a member of the U.S. Department of Commerce Manufacturing Council. He is testifying today on behalf of the U.S. 

Chamber of Commerce. 

Jason, thank you very much for joining us today. 

STATEMENT OF JASON SPEER 

Mr. SPEER. Thank you very much, Congressman Walsh. Thank 

you, Chairman Graves, Ranking Member Vela ́zquez, and other distinguished members of the House Small Business Committee. 

My name again is Jason Speer. I am happy to be here. I am 

sorry if I look a little tired. I just got back from Chile and Peru 

the other day, so please forgive me. 

I live this. Trade is very much a part of what our company does. 

I travel around the world, constantly setting up distributors and 

working with our different distributors and helping our company 

grow. 

We are based, as Congressman Walsh said, out of Schaumburg, 

Illinois. We are a 96-year-old, fourth generation manufacturer. We 

manufacture these right here so you can kind of see what we do. 

I brought along a little visual aid. And we have noticed that our 

growth has come from international. 

Back in 2001, we put forth an international strategy, something 

which I had—since that time we had about three percent of our 

sales were from exporting, mostly to Canada and Mexico. Since 

that time, at that point we had about 13 employees. Since that 

time in 2010, our total annual sales, about 30 percent were actually from exporting. We export from China, Indonesia, all the way 

through Europe, Australia, and all across the world. And we are 

currently at around just under 30 employees. So we have definitely 

seen a significant growth in not only sales but our employees because of trade. We are currently setting up an office and warehouse 

in Dubai to service our customers in the Middle East and in Asia 

because of the demand that we are seeing. 

We strongly encourage these FTAs because we have noticed tremendous growth and advantage in our company being able to compete, especially in markets, simple markets like Oman or Chile 

where you would not think there would be a market. We noticed 

we have been able to compete and we have been able to get strong 

business relationships out of those countries that we have these 

FTAs with. 

I especially believe the President’s National Export Initiative 

cannot be achieved without the passage of these FTAs. It will cerVerDate Mar 15 2010 05:37 May 18, 2011 Jkt 006201 PO 00000 Frm 00031 Fmt 6633 Sfmt 6602 E:\HR\OC\A201.XXX A201

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tainly eliminate a significant amount of barriers and help us as 

manufacturers be able to export to meet the President’s goals for 

that program. 

All of our products are made right here in the United States and 

we are proudly, as Mr. Patterson said, ‘‘Made in the USA’’, it does 

carry weight and we have inquiries from all over the world based 

on what we do. We are known as one of the premier manufacturers 

of this and we are proud to say we are made in the United States 

and we employ our workers. If it was not for trade and exporting, 

back in 2009 we had a slump in our sales due to the economy. If 

it was not for exporting I do not think we would be standing right 

here. I do not think we would have made it to our 96th year. We 

might have gone out of business. Export has kept us alive and that 

is where we see the growth of our company. And that is where, to 

my wife’s dismay, I spend most of my time. I try to get on the road 

and build up our exporting business. 

Some of the best stimulus package would be to get these free 

trade agreements not help small businesses that do not have the 

resources like big businesses have to be able to give them a little 

bit of an advantage to get in. We lost a huge contract to a South 

Korean firm to a German company and I cannot imagine that part 

of it has to do with it. I mean, the eight percent tariff that we are 

going to face where the German company as of July will have a 

zero percent tariff for the same exact product. 

We have worked with the Department of Commerce in their export assistance programs and they have been a tremendous resource. And the manufacturing incentive programs. Nothing but 

great help in helping us export. 

You know, I believe that we can certainly compete with any company in the world as long as we are playing by the same rules. You 

know, I am convinced of the benefits, like free trade agreements, 

because I have seen a reduction in tariffs and government relations 

have proven and open sales in new markets that I never would 

have thought possible without these agreements. 

My company firmly believes that international trade is a critical 

role in fostering the economic growth for America’s workers and 

businesses of all sizes but especially for small businesses where we 

do not have the access of the resources like the big boys do. In 

working with the U.S. Chamber of Commerce which I am here on 

behalf of, they have been a great advocate in opening up new markets and helping small businesses reach out across the world. And 

again, we need the government to help small businesses like ours 

and to encourage us to do this. And again, these free trade agreements are just another way of helping us get these things done. 

You know, simply put, more opportunities on a level playing field 

means more jobs. You know, more jobs is what we all want and 

every little bit helps. 

Once again, I truly appreciate the opportunity to share my story. 

This is our product all made in the United States. It is what we 

do here and it has been a joy to be here and I welcome any questions or comments anyone has. Thank you very much. 

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Chairman GRAVES. Thank you, Mr. Speer. We will move into 

questions now. I am going to pass on mine. I have questions but 

we have a series of votes coming up so I want to try to get as many 

members as we can to ask. I know I will be back and I know they 

have a busy schedule. So I am going to turn to Mr. West. 

Mr. WEST. Thank you, Mr. Chairman, and Ranking Member 

Vela ́zquez. 

Mr. Patterson, one of the things that you talked about, and I 

also, when you talk about free trade there is also fair trade. We 

have to make sure that we have that level playing field and I think 

that we see some advantages out there with a country like China 

that we need to help to try to eradicate. But when you talk about 

a couple things here, you said reduce restrictions and regulations 

and also uncertainty, can you give me some examples of what you 

mean as far as some of the uncertainty out there that maybe Congress can help to alleviate? 

Mr. PATTERSON. Well, from an uncertainty standpoint, what 

often happens is that, and I hate to use the words kind of like a 

bait and switch, you basically enter into an agreement and then 

you find out that, oh, by the way, you forgot—back there, I mean, 

in terms of a contract. And when we talk about how to make it so 

it is a level playing field it is more along the lines of knowing that 

if you produce a product, by the time you get it to the marketplace, 

that whatever terms you have been working on, those will remain. 

That it will not be, after you have the product and you have everything ready to go and now the terms are maybe not even revised 

but restated and it creates a difficulty in terms of being able to 

market that product. And we have run into this several times. It 

is more on the technical end than it is on the financial end. 

Mr. WEST. The other question I had for anyone from the panel, 

when you talk about protection of intellectual property, do you see 

any problems out on the international court systems where maybe 

there is a disadvantage to you where some of these foreign countries can, you know, take your patents away and reproduce you and 

undercut you out there in the market? 

Mr. MYERS. Well, I would say we have experienced some copyright infringements. We are generally able to combat those through 

the use of the courts and so on in the United States. We do file 

patents in the countries that we do business with so we try to go 

internationally but I think as one of the panel members this is expensive. And I think ultimately it is up to the countries you do 

business with to enforce those laws. And at least with an agreement, if they are strong in intellectual property, there is an agreement that we can try to enforce. If there is no agreement and no 

agreement with intellectual property, then we really do not have 

any protection at all. But it is important and it is something we 

do need in the agreements. 

Mr. WEST. And Mr. Wise, I do want to say being from the south, 

keep those pork ribs coming. But I would also like to ask you, we 

have seen the second and third order effects, especially with the 

beef industry with the rise in food prices. And I am wondering do 

you see that also affecting your business in the pork industry? 

Mr. WISE. I am sorry. Can you restate that? 

Mr. WEST. I know. I am speaking southern. Just kidding. 


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Mr. WISE. I mean, I missed it. 

Mr. WEST. No, the thing is we have seen second and third order 

effects on the beef industry from the rise in food prices and so I 

am asking do you see the same thing happening as well in the pork 

industry? 

Mr. WISE. If I understand your question, for instance, these 

FTAs would add about $11.00 to the price of a hog. That is maybe 

four percent in the total value of the pig. And I see that as not a 

significant increase or cost to the consumer, you know, as an inflationary cost. 

Mr. WEST. I yield back, sir. 

Chairman GRAVES. I believe Mr. Critz is next. 

Mr. CRITZ. Thank you, Mr. Chairman. Just a couple of quick 

questions. 

For each person on the panel, how did you discover the foreign 

markets to which you could sell your products? 

Mr. SPEER. Sure, I can start. We worked with the Department 

of Commerce in a variety of programs and we have done matchmaking programs through them. Also, we see ourself as a premium 

manufacturer and people have sought us out in the niche market. 

And also just, you know, sometimes someone finds you over the 

internet, then that leads one path to another. 

Mr. PATTERSON. Yeah, I would chime in that it was a concerted 

effort. You have to decide that you are going to do this and then 

you have to, if you will, gather the resources in terms of help that 

you get. For us it was a caller in the State International Trade Office and they were able to help us by marketing, especially in Venezuela and Colombia at the time. And so you end up, you know, 

you have really got to make an effort. You have got to think I am 

going to do this and then you have to apply yourself and make it 

happen. It just—you cannot just fall off the log. You really have to 

push on it. 

Mr. MYERS. I would echo Mr. Patterson, Cloyes being in the 

automotive business, it continues to be global business. In the mid90s, as I said in my testimony, we began to look globally. For me 

it was a conversation that I had with another manufacturer who 

was selling overseas. I asked him how he did it and he said basically you go there. So we started going there and we got with the 

U.S. Department of Commerce, who put on a trade mission, went 

to Japan, and then we had the success after a number of years. 

And then we continued to go and visit the countries and actually 

find the opportunities. But it does take an effort and it is expensive. We are maybe a little bigger than some of the people at the 

table here so we had to commit the dollars. But it does take support, I think. It would be important for smaller manufacturers to 

have some kind of support to get overseas. 

Mr. WISE. I am not directly involved in negotiating trade, 

etcetera, but it does very directly affect how we raise our animals, 

how we feed them, even how we breed, the types of animals, 

etcetera. I mean, it has a very direct effect on how we do things. 

Mr. CRITZ. Well, the reason I asked that is that in my district, 

we have small business development centers, called Centers for 

Global Competitiveness, and they help companies get into that 


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market. You went to Commerce and asked how you get into this 

market. Is that a good analysis of your answers? 

Mr. PATTERSON. From our standpoint, yes. I mean, we wanted to 

expand and you have a market. We are in a niche market and it 

is so big. In order to expand that market we needed to export and 

go as worldwide as we could. But you have very limited access or 

limited resources in terms of small business. So it is vital to have 

these aid offices and these support structures out there that can 

help you. 

Mr. CRITZ. Thank you. Free trade agreements have had a different impact. I am from the rust belt, and when NAFTA occurred, 

we had a Volkswagen plant that shut down in my area and moved 

to Mexico because it was more cost effective. I don’t want to say 

I have heartburn, but I have a more antagonistic view of it. Certainly and especially when you are talking about foreign products 

that the United States produces, such as food products that we can 

export. I agree with Mr. Speer that we must level the playing field. 

I think Mr. West mentioned it as well, that there is a difference 

between free trade and fair trade, and it seems that our country 

frequently uses trade agreements for State Department purposes. 

It is wonderful that you folks are here, and I am glad to hear you 

are expanding into other markets because that is the future of our 

economy. 

Thank you, and I yield back. 

Chairman GRAVES. Mr. Walsh. 

Mr. WALSH. Thank you, Mr. Chairman. 

Much of the testimony, obviously, has been focused on the benefits of exports and how they will impact positively each one of your 

businesses and small business in general. Let me try to get your 

thoughts on the inverse of that. 

The potential positive impact on imports from the free trade 

agreements, we know that cheaper imports allow consumers to 

save money through cheaper, final products. They are also good for 

American businesses as well, which often use foreign raw materials 

and capital equipment. Just a quick thought from each one of you 

as to the positive impacts on each of your businesses through these 

trade—free trade agreements as related to imports as well. 

Mr. PATTERSON. Yeah, we work directly with foreign companies. 

In other words, we market the Beretta machines in the United 

States and we also market the Eurogrill which is a German product in the United States. And they market our products in Europe. 

And that is one of the ways that we got into Europe. And we are 

right now working with a Swedish company to market our products 

through the Swedish company. And that was how we were envisioning being able to, if you will, capture the Asian market because 

we are not large enough to really expand that market. But by 

teaming with other companies, in this case we are teaming with a 

Swedish company who are actually owned by a direct competitor to 

us, and you have to remember in our shop we have a sign here that 

says ‘‘Bring it on.’’ I mean, we are not afraid of foreign competition. 

But you have to have that ‘‘We can do it’’ attitude and not be afraid 

of foreign competition. 

Mr. WALSH. Other thoughts, gentlemen, on how cheaper and 

more reliable imports may impact your business as well? 


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Mr. MYERS. Well, in our business the components are very highly 

engineered. They go through vigorous testing. So there is a barrier 

in the fact that just to bring anything in does not work because it 

is critical to the automobile’s function. So maybe we have a little 

unique situation in the automotive industry. Certainly there have 

been knock-offs and so on but we see it as an opportunity because 

often our goods may go out as a single component and then come 

back as a complete transmission, for instance. And we are just beginning a new program with a foreign large company that is putting it together into a transmission. So we get the benefit of it coming back in its finished assembly. 

But it is, so we again, like Mr. Patterson, we are trying not to 

be afraid of it. We try to make sure we put the training in place 

for our workforce so they are highly productive. I think our workforce is one of the most productive. I think our U.S. workforce is 

highly—maybe the highest productivity in the world and we try to 

make sure they know that they are a part of this as well. They 

have to work with us and produce a very highly technical product 

and stay competitive because they are up against cheaper labor. 

Mr. WALSH. Mr. Speer. 

Mr. SPEER. We face a problem where we have had customers 

that have gone overseas or have got imports. And in one particular 

case they all failed so they came back at us desperately to rectify 

it. We do compete with foreign, say Chinese made imports. We 

cater to a higher standard and we—when I was just in Singapore 

they were saying that the Chinese imports would fail after a few 

months. And I said, well, we have a five-year guarantee so we are 

able to sell to that and able to work. Ours are quality made. But, 

yeah, there always, unfortunately, will be that end but we have 

been doing it for 96 years. We know what we are doing. We are 

kind of, you know, we bank on what we have done and on our 

name and it lends credibility. And it is something that we are always aware of but we are able to look at the other market that we 

can be in. We can add value by lasting longer. 

Mr. WALSH. Okay. Thank you, Mr. Chairman. I yield back. 

Chairman GRAVES. Mr. Richmond. 

Mr. RICHMOND. Thank you. Thank you, Mr. Chairman. Thank 

you, Ranking Member Vela ́zquez. 

Just a quick question for each of you if you can answer this pretty quickly. What is your major mode of transporting your goods 

over to your trading partners? And we will start with Mr. Speer. 

Mr. SPEER. Sure. Ours are small enough. A lot of times we will 

ship like UPS, FedEx. We do ship via container for larger orders. 

And so that is why we are establishing a branch in Dubai to help 

with smaller orders that we can ship locally at reduced prices. 

Mr. MYERS. Simply, ours go ocean freight. 

Mr. WISE. My product would be primarily truck and ocean 

freight. 

Mr. PATTERSON. We handle a lot of—the parts go typically in 

some type of either FedEx or UPS or DHL is no longer there but 

we do containers for the larger units. But the transportation costs 

from our standpoint is very critical because we are at the end. We 

are in western Colorado. We are not in the harbor so we have to 

be very careful on our transportation costs. 


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Mr. RICHMOND. Well, and I was asking that question because I 

represent the Port of New Orleans and after redistricting it appears that I am a representative of the Port of New Orleans, the 

Port of South Louisiana, and the Port of Baton Rouge. So when you 

talk about ports and you lump those together you probably have 

the largest port complex in the country. This gets us to a dredging 

issue, when you are talking about containers and the reliability of 

knowing that you are going to have the right depth for ships. How 

does that affect your planning when ordering containers, knowing 

that you have navigable waterways? And that could be for anyone. 

Mr. MYERS. I am aware that we are looking at transport up the 

Arkansas River through the port of, I think, New Orleans or one 

of the others you mentioned. So it may have an advantage in that 

regard that we can load straight onto containers into a modified 

river barge situation. And that just came up locally in a meeting 

we had, in a community meeting. So it could have an effect in our 

exports on how we go about the transportation, not having to truck 

it all the way to the port. And so I know that specific possibility 

is being developed. 

Mr. RICHMOND. When I talked to my port director about our largest export from the Port of New Orleans, he said our largest export 

is empty containers going back to other countries after they come 

here. How do we as a Small Business Committee or Congress, help 

fill those containers with American products as they are going back 

overseas, especially if we enact these trade agreements? 

Mr. PATTERSON. I would have to say that enacting trade agreements is the first step because if you are, I mean, it can be, I can 

remember one time I was working. I probably was trying to ship 

fresh fruit from California to the east coast on air freight. And the 

problem was that there was no product made in the east coast that 

California needed. So your deadhead going back is your major cost. 

Likewise, if we can set up and make the free trade agreement work 

and get the product flowing from the United States so that they are 

not deadheading, we reduce our transportation costs tremendously. 

And we always look at which port we can send this so I would like 

to know more about your port because we typically use Houston. 

Mr. SPEER. I would add, too, that, you know, educating small 

business through especially the Department of Commerce is educating the importance of exporting and how to is certainly vital to 

getting small business to get in there. And the programs that they 

do is vital to encouraging them and educating them how to do it 

because a lot of small businesses just do not know where to go. 

Mr. RICHMOND. Thank you, Mr. Chairman. And I yield back. 

Chairman GRAVES. Mr. Tipton. 

Mr. TIPTON. Thank you, Mr. Chairman. I appreciate again all of 

you for being here. 

One question we really have not talked a lot about today is when 

you export you have to fill out forms. Have you had any experience? Can you give any advice maybe to this Committee in terms 

of some of the regulatory requirements that you face that are encumbering your ability to be able to do your business and how we 

can do it better? 

Mr. Patterson, would you like to start? 


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Mr. PATTERSON. Well, it gets back to the uncertainty. I mean, 

quite often what we have had is I remember we were shipping into 

Chile and the problem really was more of a local. It was not at the, 

if you will, the state to state level. It was trying to get through this 

one port. And, I mean, you have these small, local problems. Well, 

for a small business it is a killer. I mean, we could not get our 

product through that port. And I am not sure exactly how the trade 

agreement is going to help that but somehow or other we need to 

stand together and work to make it so that they cannot exclude our 

products in any particular location. You know, just from a paperwork standpoint. That is entirely what it was. The paperwork is 

never right and it was used as a way, a trade barrier. But, I mean, 

you are fighting with your hands tied behind your back. 

Mr. TIPTON. Do any others care to comment on that? You know, 

I think that, and I go back to Mr. Patterson’s testimony, eight million dollars, I believe if I wrote it down correctly, in sales. Forty 

percent of that is going to be reliant on exports and spending about 

half a million dollars when it comes to capital investment to create 

one good manufacturing job. And I do have curiosity that is a little 

bit off because it will affect your ability to be able to create those 

jobs to be able to export. A lot of our current tax code, is that a 

consideration you have in some of those decisions that you are 

making? And even the health care legislation that was passed by 

the last Congress. 

Mr. PATTERSON. Well, the biggest problem that we have or that 

I notice is the complexity of the tax code. I do not—I mean, we all 

need to pay taxes. I mean, somebody has got to pay for everything 

that is going on. And I do not—how can I put it? I do not like to 

pay taxes any better than anybody else but I do not mind paying 

taxes. I feel that it does good in this country. But at the same time, 

I mean, you have to hire a tax expert to work out the tax forms. 

It just, you know, the problem is not the amount; the problem is 

all the exclusions and everything that you need to know. It costs 

you more to keep track of how to pay the taxes than it does to pay 

the taxes. And we need to focus on simplicity. 

Mr. TIPTON. So complexity is drawing dollars away that you 

could be investing, create exports, and drive American jobs? 

Mr. PATTERSON. Absolutely. Yeah. That is the way I feel. 

Mr. TIPTON. Any other comments on it? 

Mr. SPEER. One of the things that as small businesses, a lot of 

them are family-owned and operated, such as ours, and the state 

tax is a big burden on us having to pay insurance premiums. And 

rather than reinvesting back in our company we have to invest in 

that and prepare for that. And so that is one burden that small 

businesses do face. 

Mr. TIPTON. I did have one question. This got me curious. What 

is that particular float used for? 

Mr. SPEER. This is used in plumbing and also kennel waters, 

farm water. It just goes up and down and levels it. It is just a more 

standard variety that we have. We sell it all over the world. 

Mr. TIPTON. Great. And you are handing out samples? 

Chairman GRAVES. You know, Mr. Wise, I did want to give you 

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dustry and its exports are. When you come from a town of 105 people, how important is that industry to your community? 

Mr. WISE. In my small community, I do not know the exact number. I know there are approximately 3,500 people that are locally 

involved directly in the pork industry, either in the slaughter 

plants or on the farms. I, myself, employ about five people throughout the year, just as a farm/grower. 

If we did not—I left the community in the mid-80s. I might as 

well have turned out the lights when I left. I mean, there was 

nothing there. This was before the hog industry came into our community, just as it was beginning. 

Mr. TIPTON. Thank you, Mr. Chairman. I yield back. 

Chairman GRAVES. Thank you. We can start with Ranking Member Vela ́zquez and then we will come back to you, too. 

Ms. VELA ́ ZQUEZ. Thank you. 

Mr. Speer, the Korean Trade Agreement contains nothing to address the fact that South Korea has a history of currency manipulation. Does it make sense to ratify an agreement with no safeguards against currency manipulation? And how will that put at a 

disadvantage our American businesses? 

Mr. SPEER. Unfortunately, I cannot speak to the exact currency 

manipulation. I am just a business owner. I am not a policymaker. 

I do not know. Where I follow some of the trade agreements, I do 

not know it inside and out. But I just know from our end, as a company trying to export, it makes a difference. It does make a difference. That extra eight percent can make a difference between 

getting a sale or not. 

Ms. VELA ́ ZQUEZ. Thank you. 

Mr. Myers, there have been numerous reports of businesses in 

Colombia using violence and intimidation against labor unions and 

disregarding workers’ rights to the point that today the President 

announced an agreement with the president of Colombia for them 

to take steps to address those issues. So when companies like yours 

deal aboveboard with an organized labor force, does this type of 

disparity place U.S. companies at a disadvantage? 

Mr. MYERS. Well, first of all, I think it is a serious concern that 

we treat our workforce, well, and you are right. We do treat our 

people—while we work as a team, we consider them family. So in 

terms of safety and the welfare of our workforce, we work as a 

team. So if it is going on in other countries that we do business 

with, it should be a concern. I guess the point is if there is no 

agreement, then we have no leverage with that country. If there is 

trade going both ways, to me there seems to be some leverage 

through the agreement and I think it is important to have an 

agreement so you can at least have some input and maybe in a way 

some control over this serious problem. 

Ms. VELA ́ ZQUEZ. We have cases like in Colombia and Panama 

where businesses pay lower taxes, face less regulation, and have a 

ready labor force that will work for low wages. And every one of 

the witnesses expressed the fact that it is important for American 

businesses to have a level playing field so that you are not put at 

a disadvantage. Would that not put American businesses at a disadvantage? 


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Mr. MYERS. Well, it is very difficult for a company to compete 

with what our workforce does. They are highly productive. The 

parts—the product that we make. I am not speaking for the other 

witnesses here. It takes a trained workforce and the capital and 

the company as a whole to produce a product that somebody wants 

and the companies want. And that is how we get to it. And if you 

just take a low paid worker with poor conditions, they cannot 

produce the kind of products that our workers do. 

Ms. VELA ́ ZQUEZ. Sure. Mr. Wise. 

Mr. WISE. I guess my . . . I am damn good at what I do. Bring 

on the competition. 

Ms. VELA ́ ZQUEZ. Mr. Patterson. 

Mr. PATTERSON. I agree. It is the productivity. I mean, we can— 

we have the capability of being able to compete in a world market. 

But in order to do that we have to do it with increased productivity 

and better quality. And that has to be the focus. And we really do 

not run into this too much because the very workers that you are 

talking about as Mr. Myers talked, they really cannot produce the 

product that we produce. And so they are not really that much 

competition. I mean, they will produce a product but that product 

will not have the value that we can get for our products. 

Ms. VELA ́ ZQUEZ. Thank you. 

Chairman GRAVES. We will recess. We have three votes. We will 

recess for a short period of time and then we will be back. 

[Recess.] 

Chairman GRAVES. We will call the meeting back to order and 

I will turn to Ranking Member Vela ́zquez. 

Ms. VELA ́ ZQUEZ. I have no more further questions. 

Chairman GRAVES. And I have got a few. 

Out of—as much as anything else, when you see countries like, 

and this question is for all of the panelists—we will start with Mr. 

Patterson. When you see countries like Canada and the EU, which 

all are aggressively going after these free trade agreements, my 

question to you is how does that impact your ability to compete? 

Because obviously, you know, and I worried about losing those 

markets for a long, long time. And so that is the biggest thing. You 

know, what that does in terms of your long-term planning. You 

talked about uncertainty out there. You know, does that worry you 

considerably when you see these countries that are grabbing those 

units up? Mr. Patterson. 

Mr. PATTERSON. Yeah, we deal a lot with the European Union. 

And I have to say that right now we have an advantage over them 

mainly because of the currency exchange. But that can change 

overnight. And what the European Union has been doing has been 

primarily setting up technical standards. And the U.S. is well advised in my opinion to look at how these are structured and make 

sure that it is used to our advantage as well as theirs. It is molded 

around the IFO standards in terms of looking at quality. In other 

words, the IFO is really just there so that you can ensure that the 

vendors, the people you are buying from are providing a quality 

product and you can trace it back. So it is a bookkeeping scheme. 

It is definitely more costly to do it that way but in the long run 

I think that that is what the U.S. is also going to end up having— 

any successful U.S. manufacturer is going to have to address the 


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quality requirements in IFO. And in any trade agreement we need 

to look at to make sure that, you know, they have the same requirements selling here as we do selling there. 

And I would say the only other thing we have run into has been 

on the safety issues. Especially in the European market they have 

a lot of unique safety requirements for moving machinery that we 

have had to address. But at the same time we have been able to, 

I mean, how do I put this? Especially in the English market, we 

have come up with a solution to some of the safety requirements 

that they had for their drills. And I will have to admit, it was much 

to the dismay of the British and German producers that were selling in that country because they were not able to do that. 

So it can work. We need to be very careful of how we do this for 

that level playing field, but spell it out and tie it to an international standard, if you will, so that everybody has to follow that 

same technique, if you will, or process. Whether it goes to Germany 

or, you know, as an export or as an import. That is the way I would 

address it. 

Chairman GRAVES. Mr. Wise. I know for pork producers it is a 

little bit different and you obviously are not directly involved—— 

Mr. WISE. No, but—— 

Chairman GRAVES [continuing]. In export agreements but you 

have got to be worried about the aggressiveness. 

Mr. WISE. As Dr. Hayes has stated, particularly with the EU and 

Korea and Colombia, the Colombia FTA, we will be out of those 

markets within 10 years. Specifically in today’s Korea, our current 

market share in the last two years has reduced itself by about 15 

percent and we are continuing to lose competitive edge there as we 

speak today. 

Chairman GRAVES. In fact, you might even address, too, and you 

just did, the amount of market share that you have lost. Mr. Patterson. 

Mr. PATTERSON. We operate in a very technical, very niche-type 

market. And our focus is to dominate that niche worldwide, if we 

can. And so from that standpoint we focus more on making sure 

that our product is superior in any ways that we can. And of 

course, that is what the competition tries to do. We just try to be 

smarter about it. 

And I hate to use the term but we do not operate in a rope, dope, 

and soap market. I mean, we do not sell by the pound, we sell by 

the unit and we sell productivity. And it is entirely different from 

a marketing standpoint. So we can command and get higher margins than, if you will, if you are selling a product that is really 

based on a commodity basis where you have so many different producers, so many different people all producing the same thing. So 

then it gets down to kind of a relationship and, you know, it is a 

much tighter market than what we are dealing with. It is a lot different. 

Chairman GRAVES. Mr. Myers. 

Mr. MYERS. Mr. Chairman, if I understand your question, you 

are asking if we feel competition can get ahead of us if a trade 

agreement is signed by another country or area like the EU or 

some other country. 


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Chairman GRAVES. Yes. And then also as a dovetail to that, the 

fact that Congress and the administration have not acted on these, 

how much market share? 

Mr. MYERS. Well, the automotive business, maybe somewhat like 

Mr. Patterson’s business, is very technical. And our strongest competitors are in the EU and in Japan. So if they are ahead of us, 

their companies that we compete with can be ahead of us, if they 

are ahead of us in line to trade with the partners that we trade 

with, our customers. So it is a concern of ours that we get something moving so we do not get behind our strongest, most technical 

competitors. Our most technical competitors, much like you have 

heard others say, is not necessarily out of China but it is out of the 

EU, Japan. Those are developed countries that have the technology 

to compete with us. 

Chairman GRAVES. Mr. Speer. 

Mr. SPEER. As I stated during my testimony, we lost a major contract to a German company recently in South Korea and so it has 

caused us to reevaluate going into that marketplace at this time 

and sit back and look at other areas where we can compete better. 

But again, we are competing with a high quality—in the EU and 

that is our biggest competition. 

Chairman GRAVES. I appreciate all of you participating today 

very much. Again, I know some of you traveled a long ways to be 

here but we are going to continue to, you know, it is important, I 

think, to continue to look at these free trade agreements and we 

are going to try to get these passed just as quickly as possible and 

move forward. I very much believe that particularly in the agriculture field, which I am intimately familiar with. But I appreciate 

your testimony today on this very important issue and I would ask 

unanimous consent that members have final legislative—make 

statements and supporting materials for the record. Without objection, so ordered. 

And with that, this hearing is adjourned. 

[Whereupon, at 2.48 p.m., the hearing was adjourned.] 


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