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77–041 PDF 2012

TRADE ADJUSTMENT ASSISTANCE FOR U.S. FIRMS: 

EVALUATING PROGRAM EFFECTIVENESS AND 

RECOMMENDATIONS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON GOVERNMENT ORGANIZATION, 

EFFICIENCY AND FINANCIAL MANAGEMENT 

OF THE

COMMITTEE ON OVERSIGHT 

AND GOVERNMENT REFORM 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

NOVEMBER 14, 2012 

Serial No. 112–190 

Printed for the use of the Committee on Oversight and Government Reform 

( 

Available via the World Wide Web: http://www.fdsys.gov 

http://www.house.gov/reform 

(II) 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM 

DARRELL E. ISSA, California, Chairman 

DAN BURTON, Indiana 

JOHN L. MICA, Florida 

TODD RUSSELL PLATTS, Pennsylvania 

MICHAEL R. TURNER, Ohio 

PATRICK T. MCHENRY, North Carolina 

JIM JORDAN, Ohio 

JASON CHAFFETZ, Utah 

CONNIE MACK, Florida 

TIM WALBERG, Michigan 

JAMES LANKFORD, Oklahoma 

JUSTIN AMASH, Michigan 

ANN MARIE BUERKLE, New York 

PAUL A. GOSAR, Arizona 

RAU ́ L R. LABRADOR, Idaho 

PATRICK MEEHAN, Pennsylvania 

SCOTT DESJARLAIS, Tennessee 

JOE WALSH, Illinois 

TREY GOWDY, South Carolina 

DENNIS A. ROSS, Florida 

FRANK C. GUINTA, New Hampshire 

BLAKE FARENTHOLD, Texas 

MIKE KELLY, Pennsylvania 

ELIJAH E. CUMMINGS, Maryland, Ranking 

Minority Member 

EDOLPHUS TOWNS, New York 

CAROLYN B. MALONEY, New York 

ELEANOR HOLMES NORTON, District of 

Columbia 

DENNIS J. KUCINICH, Ohio 

JOHN F. TIERNEY, Massachusetts 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

JIM COOPER, Tennessee 

GERALD E. CONNOLLY, Virginia 

MIKE QUIGLEY, Illinois 

DANNY K. DAVIS, Illinois 

BRUCE L. BRALEY, Iowa 

PETER WELCH, Vermont 

JOHN A. YARMUTH, Kentucky 

CHRISTOPHER S. MURPHY, Connecticut 

JACKIE SPEIER, California 

LAWRENCE J. BRADY, Staff Director 

JOHN D. CUADERES, Deputy Staff Director 

ROBERT BORDEN, General Counsel 

LINDA A. GOOD, Chief Clerk 

DAVID RAPALLO, Minority Staff Director 

SUBCOMMITTEE ON GOVERNMENT ORGANIZATION, EFFICIENCY AND FINANCIAL

MANAGEMENT

TODD RUSSELL PLATTS, Pennsylvania, Chairman 

CONNIE MACK, Florida, Vice Chairman 

JAMES LANKFORD, Oklahoma 

JUSTIN AMASH, Michigan 

PAUL A. GOSAR, Arizona 

FRANK C. GUINTA, New Hampshire 

BLAKE FARENTHOLD, Texas 

EDOLPHUS TOWNS, New York, Ranking 

Minority Member 

JIM COOPER, Tennessee 

GERALD E. CONNOLLY, Virginia 

ELEANOR HOLMES NORTON, District of 

Columbia 

(III) 

C O N T E N T S 

Page 

Hearing held on November 14, 2012 ...................................................................... 1 

WITNESSES 

Ms. Patricia M. Britton, Vice President of Business Development, Topflight 

Corporation, Glen Rock, PA 

Oral Statement ................................................................................................. 5 

Written Statement ............................................................................................ 8 

Mr. Thomas G. Zieser, President and CEO, Jace Systems, Cherry Hill, NJ 

Oral Statement ................................................................................................. 10 

Written Statement ............................................................................................ 14 

Mr. Drew Greenblatt, President, Marlin Steel Wire Products, Baltimore, MD 

Oral Statement ................................................................................................. 18 

Written Statement ............................................................................................ 20 

Mr. Bryan Borlik, Director, Trade Adjustment Assistance for Firms, Economic 

Development Administration U.S. Department of Commerce 

Oral Statement ................................................................................................. 31 

Written Statement ............................................................................................ 33 

Mr. Williams J. Bujalos, Director, Mid-Atlantic Trade Adjustment Assistance 

Center 

Oral Statement ................................................................................................. 41 

Written Statement ............................................................................................ 44 

Mr. J. Alfredo Gomez, Acting Director, International Affairs and Trade, U.S. 

Government Accountability Office 

Oral Statement ................................................................................................. 48 

Written Statement ............................................................................................ 50 

APPENDIX 

The Honorable Todd Russell Platts, Member of Congress from the State 

of Pennsylvania, Opening Statement ................................................................. 77 

The Honorable Gerald E. Connolly, Member of Congress from the State 

of Virginia, Opening Statement .......................................................................... 79 

The Honorable Elijah E. Cummings, Member of Congress from the State 

of Maryland, Opening Statement ....................................................................... 81 

Western Trade Adjustment Assistance Center, Clarification Memorandum ...... 83 

(1) 

TRADE ADJUSTMENT ASSISTANCE FOR U.S. 

FIRMS: EVALUATING PROGRAM EFFECTIVENESS AND RECOMMENDATIONS 

Wednesday, November 14, 2012 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON GOVERNMENT ORGANIZATION, 

EFFICIENCY, AND FINANCIAL MANAGEMENT, 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, 

Washington, D.C. 

The subcommittee met, pursuant to call, at 10:18 a.m., in Room 

2247, Rayburn House Office Building, Hon. Todd Platts [chairman 

of the subcommittee] presiding. 

Present: Representatives Platts, Lankford, Towns, Connolly, Norton, and Cummings (ex officio). 

Staff Present: Alexia Ardolina, Assistant Clerk; Molly Boyl, Parliamentarian; Katelyn E. Christ, Professional Staff Member; Linda 

Good, Chief Clerk; Mark D. Marin, Director of Oversight; Tegan 

Millspaw, Professional Staff Member; Jaron Bourke, Minority Director of Administration; Beverly Britton Fraser, Minority Counsel; 

Jennifer Hoffman, Minority Press Secretary; Adam Koshkin, Minority Staff Assistant; and Elisa Lanier, Minority Deputy Clerk. 

Mr. PLATTS. The committee will come to order. I want to welcome 

everybody here and first apologize for keeping everyone waiting 

with my delayed arrival, and especially for our witnesses on both 

panels. I appreciate your understanding with rescheduling this 

hearing from back in October when—it was the first time I had to 

cancel a hearing and you would not have wanted to be with me. 

I was unfortunately very under the weather and couldn’t speak literally because of a throat issue, but we do appreciate your patience 

and returning here today to share your testimony. 

Today’s hearing will evaluate the Trade Adjustment Assistance 

for Firms program, or TAAF. TAAF is a program administered by 

the United States Department of Commerce and it has helped 

small and medium sized companies in the United States stay competitive with overseas markets for the past 50 years. TAAF operates out of the Commerce Department’s Economic Development Administration and has been helping firms since it was first put in 

place in 1962. 

The program is currently authorized through 2013 at an annual 

spending level of $16 million. TAAF support is provided to eligible 

firms through a network of 11 EDA funded Trade Adjustment Assistance Centers, or TAACs, located throughout the country. The 

2 

director of the TAAC for the Mid-Atlantic region, Mr. Bill Bujalos, 

is here with us today. 

Consultants at each TAAC work along side eligible trade impacted firms to develop business recovery plan or ‘‘adjustment proposals’’ that are tailored to increase productivity for their specific 

business model. Companies have 5 years to implement proposals 

once they are approved with EDA typically covering up to 50 percent of the implementation cost. 

According to the American Business Council, 829 were firms assisted nationally through TAAF from 2006 through 2010. More recently in 2011, 149 American firms with average sales of $20 million and approximately 100 employees each received a total—I’m 

sorry, received a total of $12 million in financial assistance through 

TAAF. The vast majority of these small companies were in manufacturing in an industry that is still struggling nearly 4 years after 

the 2009 recession. 

Today’s hearing will evaluate the extent to which TAAF has increased the productivity of participating firms. According to EDA’s 

most recent annual report, firms receiving funds in 2009 now report that average sales actually decreased by 1.6 percent, average 

employment decreased by 1.9 percent. This low productivity is 

thought to be temporary, however, as companies often need time to 

adjust to their new business strategies. Firm performance must 

also be considered alongside broader economic indicators like the 

nationwide unemployment rate which has remained considerably 

strained for the past several years. 

Mr. Bryan Borlik, Director of TAAF at EDA, is here today and 

will be part of our second panel to explain the operation of TAAF 

along with some of these long-term performance considerations. 

Another goal of this hearing is to determine how Congress can 

improve execution of TAAF. In 2010 the United States Government 

Accountability Office claimed the impact of Federal assistance to 

firms through TAAF was unclear. In September of this year the 

GAO released an updated report arguing that the program has 

been useful for participating firms. We will hear from GAO today 

as well about their recommendations of how to make TAAF even 

more effective going forward. 

Today we will also hear from companies in our first panel of witnesses that have participated in the TAAF program. This subcommittee is honored to have these job creators from these firms 

with us who have received TAAF assistance to testify how they’ve 

been impacted. And we welcome Ms. Patricia Britton of Topflight 

Corporation in Glen Rock, my home district. We are delighted to 

have you here with us to share your knowledge and insights. We 

also have Tom Zieser of JACE Systems in Cherry Hill, New Jersey 

and Drew Greenblatt of Marlin Steel in Baltimore which is located 

in the full committee member’s—the full committee’s ranking member’s district, Mr. Cummings. We sincerely appreciate all the witnesses being with us today and thank them for their willingness 

to share their knowledge and insights regarding the TAAF program. 

There is no doubt that trade is critical to the prosperity of our 

country. The United States is the world’s largest trading nation. In 

2011 alone we exported goods and services totaling over $2.1 trilVerDate Aug 31 2005 09:12 Dec 10, 2012 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 C:\DOCS\77041.TXT APRIL
3 

lion. These exports supported nearly 10 million jobs. It can therefore be easy to overlook what a devastating impact increased overseas competition has had on the profitability of our small businesses. It is a well known fact that small businesses are key engines of new job creation and that small U.S. Companies are struggling in the face of international competition. 

So today we want to focus on these firms, on the severe economic 

dislocation that businesses today often face when trying to meet 

their bottom lines on a daily basis. 

We must ensure that in doing right by our Nation’s trade impact 

and employers we also protect the financial interest of all American 

taxpayers. I look forward to hearing from our witnesses about how 

we can help continue the TAAF program and make it even stronger 

so that the firm should participate or not just survive but will prosper in an increasingly competitive and globalized world in which 

we live. 

I’m now honored to recognize the distinguished ranking member 

and the former chair of the full committee, Mr. Towns from New 

York, for his opening statement and again, Ed, appreciate your patience with my late arrival. 

Mr. TOWNS. Thank you very much, Mr. Chairman, and thank 

you for holding this hearing. 

I’m pleased to join you today to talk about the Trade Adjustment 

Assistance Program for firms. It is important that we focus on and 

celebrate those initiatives that are aimed at preserving American 

small businesses and creating jobs. 

The Economic Development Administration and the Department 

of Commerce has done a terrific job at improving the Trade Adjustment Assistance Program through the Recovery Act of 2009. As a 

result hundreds of United States companies have been able to turn 

around businesses, business loss, due to important competition and 

create or preserve much needed jobs. This is an important program 

and I hope that we can do something today to make sure that it 

continues and even that it’s expanded. 

In the last 10 years United States free trade agreements with 

countries like South Korea, Panama and Colombia have increased 

goods imported into this country by $1.3 trillion. Naturally many 

small businesses struggle to compete with imported goods and 

some are plunged into economic distress. Others who cannot make 

the right adjustment simply go out of business. Many struggling 

businesses are built by people who have worked for years, sometimes decades maintaining those businesses. Some of those companies are the foundation of an entire community, either as the largest employer or the largest provider of important services. Others 

support the livelihood of countless families and businesses with 

their presence. 

I am pleased to welcome the representatives of a few of those 

companies here today. You have unique and impressive stories of 

change and development. Thank you all for taking the time to 

share your journey with us on the impact of trade assistance. 

Too many here in Congress take the position that the government should not take any part in whether private businesses succeed or fail. But I think that view is too short-sighted. Global trade 

rules may confer benefits, but they can also have consequences that 

4 

may be severe for certain workers and certain businesses. I do not 

believe there’s a single trade impacted company just sitting around 

waiting for a government handout for its survival. Rather, there 

are hard working companies needing a helping hand and tools to 

make them better positioned in the globalized economy. Sometimes 

that is all a small business needs to remain competitive. The Trade 

Adjustment Assistance Program does just that. 

I look forward to hearing the testimony from you. And just before 

I get going I want to make certain that I have the correct pronunciation of your name. Is that Mr. Zieser or Mr. Zieser. 

Mr. ZIESER. Mr. Zieser, sir. 

Mr. TOWNS. Okay, fine. Thank you very much. I’m helping the 

members of the committee. Thank you, I yield back. 

Mr. PLATTS. I thank the gentleman and yield to the gentleman 

from Virginia, Mr. Connolly, for an opening statement. 

Mr. CONNOLLY. Thank you, Mr. Chairman. And I want to thank 

you. I think this is I think your penultimate hearing as chairman 

of this subcommittee, one more, yeah. And I just want to thank you 

for your friendship and your leadership. You have approached 

issues with judicious analysis, you have avoided strident headlines, 

you have avoided bitter partisanship, and I think you are a model 

that many could learn from and as a member on this side I just 

want to tell you how much I’ve appreciated your friendship and 

your collegiality. 

Mr. PLATTS. Gerry, I appreciate the kind words, and members of 

my local media that are shadowing me here today are going to 

think I paid you. 

Mr. CONNOLLY. If it helps him back home, he’s the most strident 

Republican I have ever met. 

Mr. TOWNS. Would the gentleman yield? 

Mr. CONNOLLY. I certainly would yield. 

Mr. TOWNS. I would like to associate myself with the remarks of 

the gentleman of Virginia. 

Mr. PLATTS. Appreciate it. Gerry, Ed and I have traded seats 

here where I was chairman and he was ranking member and then 

he was chairman and I was ranking member and now we’re back. 

Mr. CONNOLLY. I hope to do that with James. 

Mr. PLATTS. I think one of the hallmarks of our subcommittee, 

not just for that but from our members, is that approach that you 

just referenced. It is about policy, about issues, not partisanship. 

So I certainly thank you for your kind words. 

Mr. CONNOLLY. This subject is also a terribly important one. I 

come from a district that very much is supportive of free trade. And 

if you look at what’s happened both to our export performance and 

the value of trade, it clearly overall has been beneficial to the 

United States and we need to put more pressure on export driven 

parts of our economy, because compared to so many other economies it is actually a small percentage of our GDP. And the 14 trade 

agreements we’ve had in the last number of years I think on balance clearly have benefited the United States as well as our trading partners. However, it does, the fact of the matter is trade liberalization leaves some behind. That’s why this subject is so important in terms of the adjustment programs we’ve got and how are 

we doing. And it’s important both from an economic point of view 

5 

in trying to help communities under distress, but also frankly from 

a political point of view in terms of trying to broaden the stakeholders in free trade. If we fail to do that, if we fail to adequately 

address the fair part of free trade, we’re going to lose a fragile coalition in this country of support for broadening and further liberalizing trade regimes. 

So I look forward to the testimony. I think GAO has done a great 

job. And again Mr. Chairman, I thank you for having a hearing on 

this committee that doesn’t begin with a conclusion. 

Mr. PLATTS. I thank the gentleman. We will keep the record open 

for 7 days if anybody wants to submit additional statements or extraneous materials for the record. 

I am delighted to welcome our first panel: Ms. Patty Britton, as 

I said, Vice President of Topflight Corporation in Glen Rock, Pennsylvania; Mr. Tom Zieser, President and CEO of JACE Systems in 

Cherry Hill, New Jersey; and Mr. Drew Greenblatt, President of 

Marlin Steel in Baltimore, Maryland. 

Pursuant to committee rules, if I could ask all three of you to 

stand and raise your right-hand and we will have you sworn in. 

Do you solemnly swear that the testimony you are about to give 

this committee will be the truth, the whole truth, and nothing but 

the truth? 

[Witnesses sworn.] 

Mr. PLATTS. Thank you. You may by seated and let the record 

reflect that all three witnesses affirmed the oath. 

We will set the clock at 5 minutes. Ms. Britton, we will start 

with you, but if you need to go over that, it is kind of a guideline 

but we want to make sure we get a chance to have your testimony. 

We do appreciate the written testimonies. I got through my final 

one that was revised yesterday last night late but that gives us an 

opportunity to be better prepared for today’s hearing. So we appreciate you submitting them in advance. 

Ms. Britton. 

WITNESS STATEMENTS 

STATEMENT OF PATRICIA M. BRITTON 

Ms. BRITTON. Good morning, Mr. Chairman and members of the 

committee. Thank you for having me here today. 

Since 2003 I have worked at Topflight Corporation in Glen Rock, 

Pennsylvania in a variety of roles, most recently as Vice President. 

Topflight is a printer and convertor for the medical electronics, consumer and cosmetics industry with customers primarily in the 

U.S., as well as a few in Europe and Asia. We are a privately held, 

family-run organization initially formed in 1943 to manufacture 

airplane parts for World War II. 

In the forties, Topflight made hundreds of thousands of small 

parts, such as rivets, bolts, nuts and connectors. In fact, employees 

at the time found that handwriting the identification tags for so 

many parts was in some cases more time consuming than actually 

producing the parts. So with good old-fashioned American ingenuity Topflight invented one of the first desktop label printers in 

their machine shop and began to label these parts with what 

looked like printed Scotch tape. 

6 

Once the war ended Topflight embarked on a business reinvention, the first of many business reinventions over the years. Mr. 

Huber, Topflight’s owner, convinced Black & Decker, our very first 

customer, who is still a customer today, to replace the metal name 

plates which were bolted on to their hand tools with a pressure 

sensitive adhesive label. This was a revolutionary concept at the 

time, and as a side note, Mr. Huber’s contemporary with Stan 

Avery, who you will recognize the name of Avery Dennison. Mr. 

Huber went on to create many patents, including the first tamperevident label, which was more than 20 years before the Tylenol 

scare, and an entire business and industry was born during those 

years out of innovation and manufacturing. 

Since that time Topflight has undergone changes, many changes 

in customers, product lines and capabilities, as I’m sure almost all 

businesses do that survive for that long period of time. However, 

in recent years the pace of technological change and intense competitive pressure have resulted in a business climate unlike any I 

have seen in the past. For example, instead of pricing escalators 

being written into our contracts as they were many years ago, we 

are now negotiating contracts where customers expect year over 

year price decreases, the most recent one when a major customer 

asked for a 7 percent price decrease. In order to continue doing 

business with them it is a requirement. This means that as our 

costs rise and our prices decrease, our margins erode unless we 

find ways to become more efficient. 

Reverse auctions on top of that have allowed overseas competitors with a much lower cost basis to drive down pricing to 

unsustainable levels in some of our markets. Often these companies are not held to the same quality or regulatory standards as 

U.S. companies, so again their costs are lower. And in addition 

their overhead in general is less. 

I believe that Topflight and many other manufacturers have 

risen to the challenges of continuous improvement and have found 

ways to become more lean in response to these issues. However, 

that strategy can only go so far in sustaining and growing a business. By the end of 2009 Topflight was feeling the effects of the 

economic slowdown and unprecedented pricing pressures. In fact, 

our revenue had decreased within 2 years by almost 30 percent. 

And most of this was from competition from offshore manufacturing locations. Many of our consumer products customers were 

moving their lines overseas. 

The erosion of the business had begun and in face of the new reality Topflight needed to do something different. In 2009 Topflight 

worked with Mantec, a manufacturing consulting company based in 

York, Pennsylvania, on a program called Eureka, which was intended to create a process and environment of innovation. In the 

course of those meetings representatives from Mantec mentioned 

that Topflight may qualify for assistance from MATAAC based on 

the amount of business we were losing to the overseas competitors. 

The timing couldn’t have been better. 

I contacted the MATAAC group and began the required paperwork. We were assigned a consultant, Todd Shevlin, who was able 

to provide guidance and insight into where we might benefit from 

the program. In the course of his management interviews, it beVerDate Aug 31 2005 09:12 Dec 10, 2012 Jkt 000000 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 C:\DOCS\77041.TXT APRIL
7 

came clear that many of the problems facing our business came 

back to lack of critical data and technology integration. For example, we didn’t know the true cost of producing products. We didn’t 

know which product lines and customers were the most profitable. 

In many cases the time it took to process an order was longer than 

what was required to make the order, very similar to our innovation problems back in the 1940s. 

Many manufacturing and paperwork processes were manual, 

which wasted time and introduced errors, and our estimating software was not integrated with our costing system so we couldn’t tell 

if we made the product as specified. Basic information needed to 

analyze the business was missing, making strategic planning almost impossible and largely based on educated guesses. 

So Topflight, with MATAAC’s input, decided to use the funds in 

2011 to implement an ERP system that integrated all functional 

areas of our company from estimating to cash collections, including 

the entry of shop floor manufacturing data. We chose Radius, a 

printing and packaging system tailored to our industry, and 

launched the software in February of this year. Going through the 

management interview process and obtaining the grant was a key 

factor in deciding to go forward with this investment. 

Although it’s too early to analyze the full effects of this implementation, I can say that since 2009 all of Topflight’s key indicators and metrics are moving in the positive direction. Most notably, 

we are on track to replace revenues lost to offshore locations and 

have been able to increase our revenue per employee by 20 percent. 

On the qualitative side managers are now having in-depth conversation about costs, profits and margins now that were not possible with our old system. Inventory accuracy increased, which has 

reduced our carrying costs and raw materials, one of the major expenses. 

Based on Topflight’s experience with MATAAC, I am a very 

strong believer in this program. In order to compete in today’s ultra 

competitive global environment manufacturers need to be willing to 

do things differently, to innovate, to train and to respond to constant change. MATAAC and its team helped us do just that. 

Thank you for your time and attention. 

Mr. PLATTS. Thank you, Ms. Britton. 

[Prepared statement of Ms. Britton follows:] 

8 


Insert offset folio 1 here 77041.001

TESTIMONY OF 

PATRICIA M. BRITTON 

VICE PRESIDENT, TOPFLIGHT CORP. 

BEFORE THE 

UNITED STATES HOUSE OF REPRESENTATIVES 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM 

SUBCOMMITTEE ON GOVERNMENT ORGANIZATION, 

EFFICIENCY AND FINANCIAL MANAGEMENT 

SEPTEMBER 19, 2012 

Good morning Mr. Chainnan and members of the conmlittee. Since 2003, I have worked at Topflight 

Corp. in Glen Rock, PA in a variety of roles, most recently as Vice President. Topf1ight is a printer and 

converter for the medical, electronics, cosmetics and consmner goods industries with customers 

primarily in the U.S., as well as a few in Europe and Asia. We are a privately held, family-run 

organization, initially fomled i111943 to manufacture airplane parts for World War II. 

In the 40's, Topflight made hundreds of thousands of small parts, such as rivets, nuts, bolts and 

connectors. In fact, employees at the time found that hand writing the identiiication tags for so many 

parts was in some cases more time consuming than producing them. So with old-fashioned American 

ingenuity, Topflight invented one of the first desktop label printers in their machine shop and began to 

"label" those parts with what looked like printed scotch tape. 

Once the war ended, Topf1ight embarked on a business reinvention, the iirst of many over the years. Mr. 

Huber, Topf1ight's owner, convinced Black & Decker to replace the metal name-plates that identified 

their power tools with adhesive backed labels. This was a revolution817 concept at the time. Mr. Huber 

went on to create many patents including the first tamper-evident label (more than 20 years before the 

Tylenol scare made tllem commonplace). A business and an entire industry were born. 

Since that time, Topf1ight has undergone changes in customers, product lines, and capabilities as I'm 

sure almost all businesses do that survive for so long. However in recent years, the pace of technological 

change and intense competitive pressure has resulted in a business climate unlike any I've expel~enced. 

For example, instead of pricing escalators being written in our contracts Witll customers, we are now 

negotiating contracts where customers expect year-over-year price decreases in order to continue doing 

business with them. This means that as our costs rise, our prices decrease and our margins erode unless 

we find ways to become more efficient. 

Reverse auctions have allowed overseas companies with a much lower cost basis to drive down pricing 

to unsustainable levels. Often these companies aren't held to the same quality or regulatory requirements 

as US comp811ies. So in addition to their lower labor rates, their overhead in general is less. 
9 


Insert offset folio 2 here 77041.002

I believe that Topflight and many other manufacturers have risen to the challenges of continuous 

improvement, and have found ways to become more lean. However, that strategy can only go so far in 

sustaining and growing a business. By the end of2009, Topflight was feeling the effects of the 

economic slowdown and unprecedented pricing pressnres, mainly due to competition from offshore 

manufacturing locations. Many of our customers had sourced manufacturing to China and Mexico and 

the erosion of our business was steady. In the face of this new reality, Topflight needed to do something 

different. 

In 2009 Topflight worked with Mantee, a manufacturing consulting company based in York, PA on a 

program called Eureka intended to create a process and environment of innovation. In the course of 

those meetings, representatives from Mantec mentioned that Topflight may qualify for assistance from 

Mataac based on the amount of business we were losing to overseas competitors. The timing couldn't 

have been better. 

I contacted the Mataac group and began the required paperwork. We were assigned a consultant, Todd 

Shevlin, who was able to provide guidance and insight into where we might benefit from the program. 

In the course of his management interviews, it became clear that many of the problems facing our 

business came back to a lack of critical data and technology integration. For example, we didn't know 

the true costs of producing our products. We didn't know which product lines and customers were the 

most profitable. In many cases, the time it took to process an order was longer than what was required to 

make the order. Many manufacturing and paperwork processes were manual, which wasted time and 

inh'oduced elTors into our system. Our estimating software wasn't integrated with our costing system so 

we couldn't tell if we made a product as specified. Basic infonnation needed to analyze the business was 

missing, making strategic planning almost impossible and largely based on educated guesses. 

Topflight, with Mataac's input decided to use the funds in 2011 to implement an ERP system that 

integrated all functional areas of our company, from estimating to cash collections, including the entry 

of shop floor manufacturing data. We chose Radius, a printing and packing system tailored to our 

indusuy, and laLillched the software in February oftbis year. Going through the management interview 

process and obtaining the grant was a key factor in deciding to go forward with this investment. 

Although it's still too early to analyze the full effects of the implementation, I can say that since 2009 all 

of Topflight's key metrics are moving in positive directions. Most notably, we are on track to replace 

revenues lost to offshore locations and have been able to increase our revenue per employee by 20%. On 

tbe qualitative side, managers are having in-depth conversations about costs, profits and margins now 

that were not possible with previous data. Inventory accuracy has increased, which has dropped the cost 

of carrying excess raw materials. 

Based on Topflight's experience with Mataac, I'm a strong believer in this program. In order to compete 

in today's ultra-competitive global market, manufacturers need to be willing to do things differently, to 

innovate, train and respond to constant change. Mataac and its team helped us to do just that. 

Thank you for your time and attention. 
10 

Mr. PLATTS. Mr. Zieser. 

STATEMENT OF THOMAS G. ZIESER 

Mr. ZIESER. I thank you, Mr. Chairman, for the opportunity to 

testify before the committee regarding the effectiveness of Trade 

Adjustment Assistance for Firms. Since 1999 I have been President 

an CEO of JACE Systems. 

JACE Systems is a medical device manufacturer and medical 

services provider in Cherry Hill, New Jersey, approximately 8 

miles east of Philadelphia. Our products are used by patients recovering from orthopedic surgery to their joints. The company manufactures devices that exercises the patient’s affected joint in a passive manner immediately following their surgery. This is commonly 

referred to as continuous passive motion therapy, and the devices 

used in CPM therapy are identified as CPM machines. Most common application is after surgery of the knee, usually total knee replacement, or sports injuries like anterior cruciate ligament, or 

ACL, repair. Other applications for our product include the hand, 

wrist and toe. Surgery to the hand and wrist are usually a result 

of trauma and injuries in the workplace. These products are particularly helpful for complex injuries that involve bone, soft tissue 

and nerve damage. The devices are used to prevent the formation 

of scar tissue, adhesions, reduce swelling and edema and reduce 

the need for pain medication. 

The company also manufactures a neuro muscular electro stimulation device, MNES, JACE TriStem, that is used to reduce pain 

and swelling and also retrain damaged muscles, soft tissue and 

nerves. When the knee ECPM is at the end of range of motion the 

CPM pauses and the TriStim stimulates the muscles through a 

small electrical current via attached skin electrodes. The net result 

is the flexion and extension of the joint, combining with electro 

therapy hasten the rehabilitation of the joint. Patients return to 

work and resume daily activities as a result of our therapy. 

The company has been in business since 1990. Our products are 

used throughout the United States and also exported to Europe 

and Japan. The company is an FDA licensed medical device manufacturer with ISO 9001 and ISO 13485 certifications. The company 

is also recognized by Japan as a foreign medical device manufacturer. The K 100–A knee CPM is also recognized by the European 

Union to display the CE Mark on our product. 

My business experience includes an undergraduate Bachelor of 

Science degree from Northland College in Ashland, Wisconsin and 

a Masters of Business Administration from Seton Hall. My entire 

career has been in health care. I have held positions at Nations 

Healthcare, Haemonetics, Baxter international, Fresenius USA and 

so on. Positions held range from sales rep, product manager, sales 

director, sales of business development manager, vice president 

and general manager. 

JACE Systems competes in the highly regulated medical device 

industry. Over the last several years the demands and complexity 

of foreign regulations have had significant impact on our manufacturing operations and opportunity. Our flagship product, the K 

100–A knee CPM, was introduced in 1994. It is electrically powered 

and controlled by a sophisticated hand controller that is micro procVerDate Aug 31 2005 09:12 Dec 10, 2012 Jkt 000000 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 C:\DOCS\77041.TXT APRIL
11 

essor controlled through a soft push button panel and viewed on a 

liquid crystal display. There is also an interface on the controller 

for the TriStem that is often used to retrain and exercise muscles 

affected by the surgery. 

Prior to the formation of the European Union most countries accepted the U.S. FDA 510K product registration as proof of acceptance and under the underwriters UL seal for electrical safety. The 

Medical Device Directive Council of the EEC of 14 June 1993 concerning medical devices, is intended to harmonize the laws relating 

to medical devices within the European Union. The M.D. Directive 

is a new approach and consequently for a manufacturer to legally 

place a medical device in the European market the requirements 

of the medical directive had to be met. Manufacturers products 

meeting harmonized standards have a presumption of conformity 

to the directive. Products conforming with the directive must have 

a CE Mark applied. The directive was most recently reviewed and 

amended in 2007 and a number of changes were made. 

Compliance with the revised directive became mandatory in 

March 2010. These included products currently distributed in the 

EU. Consequently there was no grandfathering for our products. 

JACE Systems had to be retested to the new standard. We were 

essentially excluded from selling new products in the European 

Union and our dwindling sales efforts were only for the replacement parts for the existing fleet of machines. 

Consequently, without the CE Mark our sales declined, beginning in 2004 and 2005, and caused decreased profitability. JACE 

Systems was forced to reduce overhead and lay off employees. I 

was discussing our predicament with the U.S. Commercial Team 

and they recommended I contact MATAAC to discuss our situation. 

I applied for a grant and submitted the necessary documentation, 

and in February 2008 we were approved for a matching grant of 

$73,000. That is for every dollar JACE invests in a MATAAC approved project MATAAC will match it dollar for dollar. 

In April our grant was approved and project work began. The 

electrical safety testing was done at BEC Laboratories in Pottstown, PA at a cost of 15,000 and 6,000 respectively. The ISO registrations and quality management systems were completed by Enterprise Strategy Group at a cost of 24,000. After the tests were 

completed additional engineering and design had to be done. Nelson Design Services in Willow Grove reviewed our circuit board for 

compliance to the new standard at 17,000. And none of these 

projects would have been done in the short timeframe without the 

MATAAC matching grant assistance program. 

Since acquiring a CE Mark in ISO registrations we have seen 

our sales to Germany increase to 177,000 in 2011 from a low of 

76,000 in 2007. In addition, we have hired one new employee in 

2010. But the real impact of the assistance, however, is not just 

seen at JACE Systems and the test laboratories and design services we contracted with. We are an assembly operation. We purchase parts and assembly for many companies in our area and 

throughout the USA. The grant assistance helped JACE design 

new tools and first articles that reduced cost, improved design and 

made us more efficient. For example, C&K Plastic, Metuchen, New 

Jersey, redesigned our tools that vacuum formed the plastic pieces 

12 

for the K 100–A knee CPM at a cost of $9,970. The new design reduces waste and evens out our parts inventory imbalances. Kaiser 

Medical designed a new anatomical hinge movement for $10,000 

that reduced cost and increased flexion and range of motion from 

120 degrees to 130 degrees. Pittsville Plastics, Pittsfield, Massachusetts, created first articles for $30,000 for injection molded parts 

that reduced our unit cost and increased assembly efficiency. JACE 

Systems is the export engine for the many companies that do not 

export at all. JACE Systems is the tip the of spear in all of our export efforts. 

The MATAAC grant has not only helped the companies listed 

previously, it also had a trickle down effect that aids in the sales 

growth and development of many other small companies in the 

past year. Cardinal Precision, Oreland, PA received no grant assistance but they fabricated the metal parts that are the product of the 

MATAAC funded Kaiser Medical anatomical hinge that netted Cardinal sales of $27,000. Youngtron Electronics, Hatfield, PA, designed the circuit boards and the electronic layouts that make us 

compliant to the CE requirements. That netted the sales of $9,000 

to them. 

Should I stop? 

Mr. PLATTS. Go ahead and finish. 

Mr. ZIESER. Okay. 

In addition to helping small companies grow JACE made significant purchases from large companies like Merkle Korff in Chicago, 

$23,000; Thomson Linear, Radford, VA for 30,000. 

Gaining the CE Mark has also helped JACE develop businesses 

in Turkey. Turkey signed a Customs Union agreement with the 

European Union in 1995. The CE Mark enables us to sell our products in Turkey and enabled JACE to establish a beachhead in that 

part of the world and distribute our products to the Middle East 

region, a rapidly growing market for Made in America medical 

products. We have shipped 1 knee CPM to Turkey and it is being 

evaluated in a large hospital group, and I expect positive results 

after the trial period. We also received inquiries from the UAE, 

Saudi Arabia, Kuwait, Egypt and other countries in that area, and 

because of the language and cultural differences and time it is difficult for a small company to establish business relationships in 

that part of world. I sincerely believe that our partner in Turkey 

will help JACE establish business in the Middle East. 

So the data and information gathered from the K 100 was extremely helpful in establishing our presence in Mexico. Mexico does 

not require a CE Mark, they do require medical device manufacturers registration and approval by the Mexico Health Authority to 

market and sell in Mexico. We identified a distributor while participating in the U.S. Commercial Trade Winds event in Mexico City. 

The distributor, Kuxtal DME, assisted us in getting our knee CPM 

approved and registered with the Mexico Health Authority. Much 

of the technical information and test data we completed for the CE 

Mark was also required by the Mexico Health Authority. Having 

this data available greatly accelerate our product registration. Consequently, Kuxtal was successful in selling five knee CPMs in a 

public tender to the Mexico Defense Department in June of this 

year, and there are other tenders coming in the next few months 

13 

and I feel it will be equally successful to penetrate Mexico and establish a beachhead for Central and South America. 

In conclusion, I want to thank the committee members for allowing me to share my JACE Systems journey. I encourage you to support the TAAF and other programs like Trade Winds the Americas 

offered by the U.S. Commercial Service. They are a valuable resource for small companies like JACE to compete in the world and 

provide jobs for JACE employees and the many suppliers throughout the USA, and thanks again for your time and attention. 

Mr. PLATTS. Thank you, Mr. Zieser. 

Mr. ZIESER. That was over 5 minutes. 

Mr. PLATTS. We are glad to have your knowledge and to hear 

your story, and one of the aspects of your story, and I know in Mr. 

Greenblatt’s testimony, is not just dealing with the competition 

from abroad but is actually helping you to export products from 

America abroad and that’s an important part of what this program 

is all about. 

[Prepared statement of Mr. Zieser follows:] 

14 


Insert offset folio 3 here 77041.003

TESTIMONY OF 

THOMAS G. ZIESER 

PRESIDENT AND CHIEF EXECUTIVE OFFICER OF JACE SYSTEMS 

BEFORE THE 

UNITED STATES HOUSE OF REPRESENTATIVES 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM 

SUBCOMMITTEE ON GOVERNMENT ORGANIZATION, EFFICIENCY AND 

FINANCIAL MANAGEMENT 

SEPTEMBER 19, 2012 

Thank you Mr. Chainnan for this opportunity to testify before the committee regarding 

the effectiveness of Trade Adjustment Assistance for Finns (TAAF). Since 1999 I have 

been the President and Chief Executive Officer of JACE Systems. JACE Systems is 

medical device manufacturer and medical services provider located in Cherry Hill, New 

Jersey approximately 8 miles East of Center City Philadelphia. Our products are used by 

patients recovering from orthopedic surgery to their joints. The company manufactures 

devices that exercise the patients affected joint in a passive manner immediately 

following their surgery. This is commonly referred to as Continuous Passive Motion 

(CPM) therapy and the devices used in CPM therapy are identified as CPM machines. 

The most common application is after surgery of the knee, usually total knee replacement 

(TKR) or sports injuries like Anterior Cruciate Ligament (ACL) repair. Other 

applications for our products include the hand, wrist and toe. Surgery to the hand and 

wrist are usually the result of trauma and injuries in the work place. These products are 

particularly helpful for complex injuries that involve bone, soft tissue and nerve damage. 

The devices are used to prevent the fonnation of scar tissue and adhesions, reduce 

swelling and edema and reduce the need for pain medications. 

The company also manufactures a neuro muscular electro stimulation device (NMES), 

JACE TriStim, that is used to reduce pain and swelling and also retrain damaged muscles, 

soft tissue and nerves. When the knee CPM is at the end range of motion (ROM) the 

CPM pauses and the TriStim stimulates the muscles thru a small electrical current via 

attached skin electrodes. The net result is the flexion and extension of the joint, 

combining with electro therapy hasten the rehabilitation of the affected joint. Patients 

return to work and resume daily activities as result of our CPM therapy. 

The company has been in business since 1990. Our products are used throughout the 

United States and are also exported to Europe and Japan. The company is an FDA 

licensed medical device manufacturer with ISO 9001 and ISO 13485 certifications. The 

company is also recognized by Japan as a foreign medical device manufacturer. The K 

100-A knee CPM is also recognized by the European Union (EU) to display the CE Mark 

on our product. 
15 


Insert offset folio 4 here 77041.004

My business experiences includes an undergraduate Bachelor of Science Degree from 

Northland College in Biology and Masters Degree of Business Administration from 

Seton Hall University. My entire career has been in health care. I have held positions 

with companies that include Baxter International, Haemonetics, Nations Health Care and 

Fresenius USA. Positions held range from Professional Sales Representive, Product 

Manager, International Sales Director, International Business Development Manager, 

Vice President and General Manager. 

JACE Systems competes in the highly regulated medical device industry. Over the last 

several years the demands and complexity of foreign regulations have had significant 

impact on our manufacturing operations and opportunity. Our flagship product, the K 

100-A knee CPM machine was introduced in 1994. It is electrically powered and 

controlled by a sophisticated hand controller that is micro processor controlled thru a soft 

push button panel and viewed on a Liquid Crystal Display (LCD). There is also an 

interface on the controller for the TriStim that is often used to retrain and exercise 

muscles affected by the patient's surgery or trauma. Prior to the formation of the EU, 

most countries accepted the US FDA 510K product registration as proof of acceptance 

and the Under Writers Laboratory (U/L) seal for electrical safety. The Medical Device 

Directive (MDD) Council Directive 93/42IEEC of 14 June 1993 concerning medical 

devices, is intended to harmonize the laws relating to medical devices within the 

European Union. The MD Directive is a 'New Approach' Directive and consequently in 

order for a manufacturer to legally place a medical device on the European market the 

requirements of the MD Directive have to be met. Manufacturers' products meeting 

'harmonised standards' have a presumption of conformity to the Directive. Products 

conforming with the MD Directive must have a CE mark applied. The Directive was 

most recently reviewed and amended by the 2007/47/EC and a number of changes were 

made. Compliance with the revised directive became mandatory on March 21, 20 I O. 1 The 

MDD included products currently distributed in the EU, consequently, there was no 

"grandfathering" for our products. JACE Systems medical devices had to be re-tested to 

the new "harmonized" standard and certified with the CE Mark. We were essentially 

excluded from selling new product in the EU. Our dwindling sales efforts were only for 

replacement parts for the existing fleet of machines in the EU. Our EU sales were 

managed by an independent sister company in Germany, JACE Systems Gmbh. 

Consequently without the CE Mark, our sales declined in 2004 and 2005 and caused 

decreased profitability. JACE Systems was forced to reduce overhead and layoff 

employees. I was discussing our predicament with the US Commercial Service Trenton, 

NJ office and they recommended I contact the Mid Atlantic Trade Act Assistance Center 

(MATAAC) to discuss our situation. I applied for a grant and submitted the necessary 

documentation and paperwork. In February 2008, JACE Systems was approved for a 

matching grant of $73,000.00 That is, for every dollar JACE invests in a MATAAC 

approved project, MATAAC will match it dollar for dollar. 

In April 2008, our grant was funded and the Project work began to bring our flagship 

product, the K 100-A to CE Mark status. The electrical safety testing and electronics 

emissions testing (EMC) was completed at BEC Laboratories in Pottstown, P A at a cost 

of $15,370 and $6,750 respectively. The ISO Registrations and Quality Management 
16 


Insert offset folio 5 here 77041.005

Systems (QMS) requirements were completed by the Enterprise Strategy Group at a cost 

of $24,000. Aftcr the tests were completed, additional engineering and design 

requirements had to be achieved. Nelson Design Services in Willow Grove, P A reviewed 

our circuit board layout for compliance to the new standard at a cost of$17,060.00. None 

of these projects could have been done in the short time frame without the MAT AAC 

matching grant assistance program. 

Since acquiring CE Mark and ISO Registrations we have seen our sales to Germany 

increase to $ 177,318.00 in 2011 from a low $ 76,000 in 2007. In addition we have hired 

1 new employee in 20 I O. The real impact of the assistance however, is not just seen at 

lACE Systems and the test laboratories and design services companies we contracted 

with to get us CE Ready. lACE Systems is an assembly operation. We purchase parts and 

assemblies from many companies in our area and thru out the USA. MATAAC grant 

assistance helped lACE design new tools and ftrst articles that reduced cost, improved 

design and made us more efficient. For example, C&K Plastics, Metuchen, Nl redesigned our tools that vacuum formed the plastic pieces for the K 100-A knee CPM at a 

cost $9,970. The new design reduces waste and evens out our parts inventory imbalances. 

Kaiser Medical Inc, Southampton, Nl designed a new anatomical hinge movement for the 

K-lOO-A for $10,000 that reduced cost and increased flexion end Range Of Motion 

(ROM) from 120° to 130°. Pittsfteld Plastics Engineering, Pittsfteld, MA created ftrst 

articles at a price of $30,000 for injection molded plastic parts that reduced our unit cost 

and increased assembly efficiency. lACE Systems is the export engine for the many 

companies that do not export at all. lACE Systems is the tip of the spear in all of our 

export efforts. 

The MAT AAC Grant assistance has not only helped the companies listed previously. The 

MATAAC Grant assistance also has trickle down effect that aids in the sales growth and 

development of many other small companies in the past year. To name a few, Cardinal 

Precision Co., Oreland, P A received no grant assistance but they fabricated the metal 

parts that are the product of the MATAAC funded Kaiser Medical anatomical hinge 

project that netted Cardinal sales of $27,258. Another example is Youngtron, Hatfteld 

PA. Youngtron had no direct MATAAC Grant assistance but they are now supplying the 

redesigned circuit boards and electronic layouts that make us compliant to the CE 

Requirement that netted sales of $9,287. Maven Medical Manufacturing, St. Petersburg, 

FL supplies the synthetic lamb wool soft good that supports the patient's limb while it is 

in the CPM machine netted sales of $77,648. In addition to helping small companies 

grow, lACE made signiftcant purchases from large companies as well. Merkle Korff 

Corporation, Elk Grove Village, IL sold lACE $23,999 worth of electric motors and 

Thomson Linear Motion, Radford, VA sold lACE $30,672 worth of precision ball screws 

in 2011. 

Gaining the CE Mark has also helped lACE develop business in Turkey. Turkey signed a 

Customs Union agreement with the EU in 1995. The CE Mark enables us to sell to 

Turkey and more importantly, enables lACE to establish a beach head in that part of the 

world and distribute our products to the Middle East region, a rapidly growing market for 

Made in America Medical products. We have shipped 1 knee CPM to Turkey and it is 

being evaluated at a large private hospital group. I expect positive results after the trial 
17 


Insert offset folio 6 here 77041.006

period is over in October 2012. JACE Systems also receives inquiries from the UAE, 

Saudi Arabia, Kuwait, Egypt and other countries in that area of the world. Because of 

language, cultural differences and time difference, it is difficult for a small company to 

establish business relationships in that part of the world. I sincerely believe that our 

partner in Turkey will help establish JACE systems in the Middle East. 

The data and information gathered from the K 100-A testing was extremely helpful in 

establishing our presence in Mexico. Mexico does not require a CE Mark. They do 

however, require medical device manufacturer's registration and approval by the Mexico 

Health Authority to market and sell your product to hospitals and compete in public 

tenders. We identified a distributor in Mexico while participating in US Commercial 

Service Trade Winds the Americas business development mission. The distributor 

selected, Kuxtal DME, Mexico City, MX assisted us in getting our knee CPM approved 

and registered with the Mexico Health Authority. Much of the technical information and 

test data we completed for the CE Mark was also required by the Mexico Health 

Authority. Having this data readily available greatly accelerated having our product 

Registered with the Mexico Health Authority. Consequently, Kuxtal DME was successful 

in selling 5 knee CPM's in a Public Tender to Mexico Defense Department in June 2012. 

There are other tenders coming in the next few months and I feel he will be equally 

successful in our efforts to penetrate the Mexico market and also establish a beach head 

for Central and South America. 

In conclusion, I want to thank the Committee members for allowing me to share my 

JACE Systems journey. I encourage you to support the TAAF and other programs, like 

Trade Winds the Americas offered by the US Commercial Service. They are a valuable 

resource for small companies like JACE to compete in the world and provide jobs for 

JACE employees and the many suppliers throughout USA. Thanks again for your time 

and attention today. 

I. Wikipedia Medical Device Directive 
18 

Mr. PLATTS. So Mr. Greenblatt. 

STATEMENT OF DREW GREENBLATT 

Mr. GREENBLATT. Thank, Mr. Platts. Good morning to the members of House Committee on Oversight and Government Reform. 

My name is Drew Greenblatt. I’m the owner of Marlin Steel. We 

make wire baskets, sheet metal fabrications all in Baltimore City. 

We export to 36 countries, we import nothing. The Trade Adjustment Assistance for Firms program, TAAF, is one of the many tools 

that we have used to help us create a dramatic turnaround for our 

company. We were established in 1968. Right now we’re rocking 

and rolling, we’re growing. We won the INC 5000 honor roll. We 

are the 162nd fastest growing company manufacturer in America 

out of 223,000 companies, and we hire only people from the city of 

Baltimore. We have had many distinguished visitors in our factory, 

including Secretary Geithner, Senator Mikulski, Senator Cardin, 

amongst many other representatives from the State of Maryland. 

We have embraced many new ideas to grow, but TAAF is one of 

the ones that has really helped ignite us. 

MATAAC is the organization that works with us so very closely. 

The value of assistance in helping us grow can be best understood 

to understand where we came from. I sold a security system company that was small, I used that as down payment to buy Marlin. 

We made bagel baskets. I felt like a genius when we bought it because there was a bagel basket boom in the nineties and we were 

going to grow to the Moon we thought. We were quickly in a bad 

way, it was a perfect storm. 

The first thing that happened was the Atkins diet. I don’t know 

if you remember the Atkins diet in the late nineties. Last place you 

want to be if you own a bagel basket manufacturer. All of a sudden 

everybody stopped eating bagels because of the carbs. Also China 

started dumping bagel baskets into America. They started selling 

bagel baskets for cheaper than I could buy steel. So I couldn’t pay 

my employees. I couldn’t have them weld, I couldn’t pay rent or I 

couldn’t have a marketing campaign, couldn’t do health insurance 

to compete with China. 

So we were in a devastating position. We were about to close. We 

were losing a lot of money, we were hemorrhaging cash. We had 

to transform. Right around that time we had a fortuitous phone 

call from an engineer at Boeing who needed a custom made basket. 

We designed it, engineered it, and sent it to them. They were delighted and this was the epiphany that saved my company. 

We morphed from commodity bagel baskets, which was a disastrous business model, to precision engineered sheet metal fabrications and wire baskets and it that has taken us and grown us and 

that’s why we are doing so well. 

We have invested over $3 million worth of robots. We don’t fear 

the competition anymore, we actually love shipping overseas. 

That’s 25 percent of our business and 25 percent of our employees’ 

compensation. When I first bought the company the average employee was making 6 bucks an hour and their health insurance 

plan was you walk to the emergency room. Now they have Blue 

Cross/Blue Shield and we’ve come a long way. 

19 

The beauty of TAAF is that it makes manufacturers have skin 

in the game. We pay 50 percent, TAAF pays the other 50 percent. 

So we’re really focused on making sure our money is spent well, 

but it is like giving our money steroids so it is amplified and accelerated, the benefits are pushed forward faster. So it helped us 

graduate out of bagel baskets much quicker into this precision 

manufacturing. 

TAAF has done things like help us get ISO, like Mr. Zieser, and 

it has also helped us with other products like business software. 

For example, we bought an American made laser, we buy steel 

from Pennsylvania and we export this part to Japan, a Japanese 

automotive factory, okay, 100 percent USA made, made in Baltimore City. The training for my engineers was done through a 

TAAF program. It is very expensive. I had to fly them to Connecticut, they had to spend over a week there. We sent six people 

to learn how to run our laser to its fullest extent. And that’s why 

Japanese automakers are buying from a Baltimore company using 

American made lasers and American made steel so that we could 

ship to Japan. 

See, American manufacturers have a significant challenge. We’re 

competing with Vietnam where they pay a buck an hour. We are 

competing with China where they pay $2.50 an hour. We are paying our guys $20, $25 bucks an hour. And for us to meet that kind 

of competitive head winds we have to be much more productive. We 

have to work smarter, not harder. You have heard that line. So it 

is imperative that we arm our employees with the best training 

and the best skills and the best technology so that we can beat 

them. That’s imperative, and that’s going to grow jobs in this bad 

recession. 

It’s critical that we coddle American manufacturing in our country. $75,000 is the average compensation of an American manufacturing employee. You can send a kid to college, you can buy a 

home, you can take vacation with that kind of livelihood. 

So in conclusion, please support TAAF. It is critical for us growing and being able to compete with foreign competition. 

[Prepared statement of Mr. Greenblatt follows:] 

20 


Insert offset folio 7 here 77041.007

Marlin Steel Wire Products 

2640 Merchant Drive 

Baltimore, MD 21230-3307 

USA 

Phone 410.644.7456 

Fax 410.630.7393 

w\,vw,Marlin\Vire.com 

www.SheetMetaIFabrication.com 

Drew Greenblatt, President 

Testimony for 

Committee on Oversight and Government Reform 

Subcommittee on Government Organization, Efficiency and Financial Management 

Wednesday, September 19, 2012 

Good morning to members of the House Committee on Oversight and Government Reform Subcommittee on 

Government Organization, Efficiency and Financial Management, to Chairman Platts, to my colleagues who 

have utilized the Trade Adjustment Assistance for Firms and other distinguished guests. My name is Drew 

Greenblatt and I am president of Marlin Steel in Baltimore, Maryland. We manufacture precision-engineered 

wire basket, wire forms, machined components and sheet metal fabrications. 

The Trade Adjustment Assistance for Firms (T AAF) program is one of many tools that we've employed to 

accomplish a dramatic turnaround in our business. Marlin, which was established in 1968, has grown 

revenue and profit the past six years in a row in spite of the difficult economy. Inc. magazine recently named 

us to its list of the fastest-growing U.S. companies, a feat particularly rare for a manufacturer. Of the nearly 7 

million private companies in America, we ranked among the top 5,000 for growth, and 162" among 

manufacturing companies. As a growing employer located in a city, we were also named among the "Inner 

City 100" this summer by the Initiative for a Competitive Inner City. The organization was founded by a 

Harvard Business School professor to recognize economic vitality in urban areas. Our operation has been 

cited as a model for innovation by state and national business organizations. As such, we have hosted tours 

for very distinguished visitors during the past year or so, including U.S. Treasury Secretary Timothy 

Geithner, U.S. Trade Representative Ron Kirk, U.S, Senator Barbara Mikulski and several members of 

the U.S. House of Representatives from Maryland. We have embraced many new ideas and opportunities 

such as TAAF to accomplish our transformation. We were introduced to TAAF through the MidAtlantic Trade 

Adjustment Assistance Center (MATAAC), which is chartered by the Economic Development Administration 

of the U.S. Department of Commerce to manage Trade Adjustment Technical Assistance. The value of that 

assistance in helping us grow can be best understood by recalling where we've come from. 

After selling a small home·security systems supplier in the mid·1990s, I used the proceeds to buy a small 

factory that made baskets to hold bagels for bakeries and food stores. We felt like geniuses when suddenly 

bagel chains began opening up around the country and the simple bagel became a trendy food. It was a good 

time to be in bagels and a good time to be the nation's biggest maker of bagel baskets. But before we had 

much time to congratulate ourselves on our foresight and intuition, a double whammy hit. First, the Atkins 

diet swept the nation. Now if there is a time not to buy a business tied to bagels, it would be prior to a low-
21 


Insert offset folio 8 here 77041.008

carb diet craze. Second, Chinese companies began dumping steel into the U.s. cheaper than Marlin could buy 

it. It had never occurred to me that the Chinese might get into the bagel basket business, but the challenge 

that presented was immense: Even if our employees forfeited their paychecks, we dropped all insurance and 

halted all marketing, we still could not have matched the Chinese on the price they were selling bagel baskets. 

We were hemorrhaging cash. We were on the verge of shutting the plant, distributing pink slips and forfeiting 

all of our investment and sweat equity. 

About that time, a representative from an aerospace concern contacted us to inquire whether we could build 

a basket to hold a delicate airplane part as it went through the manufacturing process. We knew nothing 

about making baskets for anything but bagels, but when the caller said price wasn't a concern for him if we 

could deliver what he wanted, a light bulb went off. Very quickly, we had to sharpen our focus on precision 

and engineering. Bagel baskets did not require great meticulousness. The bagel wasn't going to fall out if the 

basket weave was off a little. That first specialty basket was a challenge. We had no testing procedures, no 

process for quality assessment, no blueprints, no real training. Our most sophisticated measuring tool was a 

tape measure. Our direction was clear: transform or die. 

Today, we have invested more than $3 million in robots that have supercharged our precision and our 

production. We made a good chunk of that investment during the recession, so confident were we in finding a 

niche to exploit Our clients include major companies in health care, aerospace, defense, automotive and 

telecommunications. We no longer fear foreign competition. In fact, we're taking business from it We ship 

Marlin baskets to 36 countries, including China. We are competing aggressively with foreign manufacturers 

whose countries subsidize raw materials and currencies. We were named one of Maryland's top businesses 

for international trade by the World Trade Center Institute and last year accompanied a Maryland trade 

mission to Asia. Our story has been featured by the likes ofCNN, New York Times, The Economist, The 

Atlantic magazine, Fox Business News and the Washington Post because at a time when Americans are 

concerned that the country has lost its edge in the global market of manufacturing. we've discovered a "secret 

sauce" to thrive. Marlin employees who once made $6 an hour and couldn't afford a car now receive 

performance-based bonuses that exceed the paychecks of peer employees at our competitors. Having a 

competitive, viable, thriving company is the best protector of jobs. 

How did the Trade Adjustment Assistance for Firms program help make us more nimble and competitive? 

We have been able to leverage TAAF to double our investments in technology and training. On roughly a 

dozen occasions since September 2010, we have matched our own spending totaling more than $75,000 - our 

"skin in the game" -- with the same amount from TAAF. Those investments have helped us gain ISO 9000 

certification, purchase state of the art software and retrain employees in new welding techniques and lasercutting equipment. We realized that even after we had graduated from hagel baskets to more specialized and 

profitable wire products, we couldn't relax and stand pat Your competition is not static. Markets change. 

Improvement is a continuous process. We had huilt a solid business in wire products and I think that we 

could continue to grow in that area. But our clients indicated they would appreciate us more if we were able 

to supply them with sheet-metal products or with the sheet-metal components for our wire baskets that they 

had to get from other suppliers. 

The T AAF match enabled us to move twice as fast as we could have otherwise to meet the demands of the 

market We needed advances in robotic equipment, in software upgrades and in computer-aided design 

capability to make that transformation. We recently had the first month in which we sold more products in 

sheet metal than in wire baskets and wire forms. That hadn't happened for this company in 45 years. That 

ability to pivot quickly protects and creates jobs. Our employees could care less if their paychecks are coming 

from the fruits of sheet metal or wire. The T AAF program also helped us become more competitive by 
22 


Insert offset folio 9 here 77041.009

helping us pay for a top-to-bottom review to achieve ISO 9001: 2008 certification. Many clients want to know 

if a prospective supplier has the ISO seal to ensure the quality of production. For engineering in our field, ISO 

certification is rare. That valued assessment improves our ability to compete for business in the global 

market. 

We could make such investments without a program such as TAAF, but more slowly and in the face of 

overseas competitors who play by different rules and who benefit from subsidized raw materials and gamed 

currency. These other emerging manufacturing nations want to eat our lunch. Our labor costs are higher. We 

are not going to win by paying workers $7.50 an hour while Vietnam is paying a buck an hour. Our material 

costs are higher. China subsidizes its raw materials. The Chinese offer manufacturers 10 years of interest-free 

financing. That's what we're up against. Our environmental controls are more costly. When we chrome-plate 

something, the effluent we're putting out of our vendors plant has to have less nickel and chrome than the tap 

water coming in. Now I'm not suggesting I want the Chinese system. On my trade-mission trip to China last 

year, the smog in Shanghai has stunning. The Yangtze River is about as wide as the Inner Harbor in Baltimore, 

several hundred meters, but you couldn't see across it I wouldn't want their system. I like the Chesapeake 

Bay that flows a few miles from my plant. I want my family and other families to be able to eat crabs from it 

In a typical Chinese factory, the value added per employee - revenue divided by number of employees--

averages about $14,000 a year. In America, it's $150,000 or more. The American worker is only going to be 

able to continue living with a higher wage, more benefits and greater job security if you help make them more 

productive. You do that with a heavy emphasis on automation - computers, software, robotics - so they can 

produce a quality parts faster. Get the American workerto $175,000 value-added, then $200,000, then 

$250,000 hy improving productivity and you can achieve a better quality of life. Many people think if we're 

paying factory workers $25 an hour, their argument is how do we get it to $23? That's wrong. I want to get 

my guys to $27 an hour, and if! can get from $173,000 now to $200,000 in value-add, it's easier for me to do 

that Yelling at my employees more is not the trick to more productivity. I need to give them the tools to push 

out more stuff more quickly and at higher quality. 

T AAF helped us advance our use of technology to grow our market and our workforce. A decade and a half 

ago, Marlin employees made six dollars an hour while making 300 bends an hour by hand. It was all shoulder, 

all muscle. Accidents were common, sometimes debilitating. Now, with investment in robots, we're able to 

make 20,000 wire bends in an hour while going more than 1,360 days without a safety incident Our cost per 

bend has dropped from 2 cents to 0.0015 cents per bend, which helps counter the advantage of cheap labor 

and lax standards for overseas competitors. Now we export wire forms to China - Made in the USA. How cool 

is that? 

The story of Marlin Steel shatters the notions too many have come to presume ahout the American worker 

and American competitiveness. Our transformation has relevance for employers looking for better ways to 

motivate and manage their workplace and for policymakers focused on how to strengthen job creation and 

trade policy. 

The average manufacturing employee makes about $75,000 a year. You can buy a house, send a kid to college, 

take a vacation on that level ofincome. When I bought Marlin nearly 15 years ago, I was the only employee 

with a car. Now my employees complain to me that they need to jockey to get a parking space near the 

factory. There are no Lamborghinis out there, but everyone owns a car. It makes me very proud. As a nation, 

we are still the number one manufacturer - bigger than China. If manufacturing were its own economy, it 

would have the eighth largest GDP in the world. But we can do better. We will do better. American ingenuity, 

resilience and drive just need to be reawakened. I believe that factories can provide great jobs and superb 
23 


Insert offset folio 10 here 77041.010

benefits - a way to grow the nation's middle-class with solid meaningful jobs. The TAAF program is helping 

us achieve that goal. 
24 

Mr. PLATTS. I want to thank each of you for your testimony and 

certainly wish each of your companies continued success in going 

forward. As Mr. Greenblatt, I think you had it in your testimony, 

which I think captures now we export wire forms to China made 

in the USA. How cool is that? That’s a perfect summation of what 

we want to help do, is to promote American products, American 

workers and competing throughout the world. 

Let me ask if each of you could give me one thing we want to 

look at is how the program is benefiting companies and each of you 

shared that, but also the operation of the program, and so if you 

could share from the time you first learned of the program, one, 

were you on a waiting list, did you have to wait at all before you 

were able to start participating? And if you were or were not, what 

would be the general time frame when from when you first learned 

of it, submitted materials for certification and then were actually 

able to access grant or technical assistance to start putting it to use 

in your companies? Go left to right. 

Ms. BRITTON. The entire process from us, actually we were more 

of the holdup on our end just trying to gather the documents but 

start to finish it was about 7 months. 

Mr. PLATTS. And so really not a waiting list issue for you. 

Ms. BRITTON. No waiting list at all, no, very efficient. 

Mr. PLATTS. Mr. Zieser. 

Mr. ZIESER. Yeah, I would say about 6 months from the initial 

meetings to—the hardest part was for us to get the necessary documentation and the financial data that MATAAC required. 

Mr. PLATTS. And the 6 months, was that until were you certified 

as eligible or until when you actually had an approved—— 

Mr. ZIESER. It was a 6-month process to get the approval. 

Mr. PLATTS. Of your certification. 

Mr. ZIESER. Yes. 

Mr. PLATTS. And then from there going forward actually accessing grant funds. 

Mr. ZIESER. Yeah. We had to gather the 8 most recent quarters 

of financial history and sales and personnel records, that kind of 

thing, head count, and we submitted it to, you know, to Bill and 

they analyzed it and they’d come back with a few more questions. 

So it was a process. It was good for us to understand our business 

better by just going through that effort. And the analysis that they 

provided was very helpful too. Upon approval they gave us a written report about weaknesses within our company that we needed, 

we should address, that kind of thing. 

Mr. PLATTS. And that kind of gets into the second question I had, 

it wasn’t just financial assistance but the managerial expertise. 

Mr. ZIESER. Yes. Yes, of course the whole spectrum of the organization. It was business, manufacturing, but financial, also more 

strategic 5-year type of plan, that type of thing. As opposed to just 

here is your money and do it, it was very good assistance. 

Mr. PLATTS. Mr. Greenblatt. 

Mr. GREENBLATT. There was no waiting list for us, it was an extended process for us. I think a lot of small companies to survive 

the recession have had to streamline their organization. And unfortunately that means we are running extremely lean and thin and 

we don’t have a lot of talent to spend the time to do the paperwork. 

25 

I don’t think it is MATAAC’s fault. I think they have a tremendous 

number of regulations they have to adhere to do their job. I would 

recommend, this is constructive criticism, to streamline the paperwork. It is a lot of paperwork and I think that probably inhibits 

the growth of this program because the people you most want to 

embrace this have a tremendous challenge organizing all that paperwork and getting it over. And again, MATAAC was doing their 

job adhering to the law; however, if you want to grow this program, 

my suggestion to you is massively reduce the paperwork necessary 

because it is very cumbersome and it is challenging for us to accomplish that when we are so lean and we are obviously fighting 

these Chinese imports. 

Mr. PLATTS. Yeah, you are for the most part small companies to 

begin with, maybe medium, so you are smaller staffed and so 

you’re struggling to keep the doors open from a prioritization of 

manpower. 

Once you went through the certification process and then were 

then receiving some technical assistance or grant assistance, can 

you share how MATAAC, and I think all three of you were part of 

MATAAC for the mid-Atlantic, how they stayed with you through 

that process, because I think, Mr. Zieser, you just said they didn’t 

just say here is money, good luck. But can you share how they kind 

of partnered with you as you moved forward with your implementation plan? 

Mr. ZIESER. Well, all projects have to be approved. You’re right, 

why do you think this project would help with your business. There 

was some conversation around why I need to get this tool made to 

improve the efficiency of the thermaform plastics. They were very 

understanding, and they agreed with the logic behind it when you 

saw the inventory imbalances in the stockroom. And we did have 

discussions with John Mercer, was our contact and he has since retired from MATAAC, but he was very helpful along the way. 

Mr. PLATTS. But stayed with you kind of moving through that 

implementation stage? 

Mr. ZIESER. Uh-huh, yes. 

Ms. BRITTON. Our experience was very helpful as well through 

both the analysis and the implementation. Our consultant helped 

us really formulate some of the arguments that we needed to go to 

the owner of our business about making a technology purchase. 

Our owner is 92 years old, went through the Depression, is very 

technology averse. So we had to spend quite a lot of time really 

truly understanding the depths of how this would change our business and improve it and allow us to change going forward. So I 

would say the most value that they brought through that implementation was helping us hone that argument with the owner. 

Mr. PLATTS. Okay. I yield to the ranking member for the purposes of questions. 

Mr. TOWNS. Thank you very much, Mr. Chairman. You know, listening to the comments, and evidently the program was extremely 

helpful, let me ask this question. Do you believe the companies 

would be in its current position of growth and profitability if it did 

not participate in TAAF? Do you believe the company would have 

been? 

Just right down the line. 

26 

Ms. BRITTON. I do not, because I can say that this help was the 

deciding factor in us going with this technology. And in savings 

alone from previous technology we are probably looking at about 

$120,000 worth of savings, that’s hard savings. In addition we’ve 

been able to save on raw material inventory. We think that is going 

to come out to almost $200,000 a year. In addition, we now know 

about our profit lines, profitable products. We are on track this 

year to improve our EBITA by about 12 percent. I don’t think any 

of those things would have been possible without this grant, it just 

wouldn’t have happened. 

Mr. TOWNS. Mr. Zieser. 

Mr. ZIESER. Our particular problem is being in the medical device industry, it is highly regulated, and the regulations, especially 

in Europe and throughout the world, are moving targets. There 

used to be, like I said in my presentation about the FDA to be the 

bellwether for the world, but the Europeans have cleverly outwitted us and really putting burdensome regulations and testing 

that needs to be repeated and repeated and repeated. And without 

this MATAAC money I certainly couldn’t afford the design for circuit boards and sophisticated things like that. We just don’t have 

that talent pool within our business. We are an assembly operation, we put parts together. We utilize the software programs for 

the machines, which the body doesn’t change; a leg moves the way 

it moved centuries ago. It is really a no-brainer, why they put all 

these burdensome and heavily expensive regulations in front of us. 

It just—we are going through it now again in Japan with this IEC 

60601–1, which is a new standard for electrical safety. They had 

to put our machine into a humidity chamber, 90 percent humidity 

for I don’t know 8 hours to see if it would short out. You know, you 

don’t take these machines into a sauna. So why they make this regulation so intense it is just ridiculous. 

Mr. TOWNS. Mr. Greenblatt. Thank you very much. 

Mr. GREENBLATT. I think it is an accelerant, it cranks you up, 

you get to the results faster rather than being pokey. We’re in a 

recession now so everybody needs to get super charged. We have 

to get fired out of this recession fast. 

Mr. TOWNS. Do you have a message for the Members of Congress 

that are responsible for the TAAF budget in the future; do you 

have a message? 

Ms. BRITTON. Anything you can do to accelerate innovation and 

help manufacturing is absolutely imperative. Manufacturing has 

been moving away from this country and it provides jobs and that 

flow needs to stop and reverse. 

Mr. TOWNS. Thank you. 

Mr. ZIESER. I say again we’re at the tip of the spear, many of the 

people and vendors and suppliers that we do business with would 

never export anything, but we’re the assembly operation that collects their output, puts it in a package and moves it across the border. And for those reasons small companies like myself are really 

dependent upon this type of grant assistance to push us over the 

mark and keep us competitive. 

Thank you. 

Mr. GREENBLATT. This helps American manufacturers that have 

been hit by trade improve their game so they can be profitable and 

27 

retain their employees and hire new ones and prosper in the future. 

Mr. TOWNS. Thank you very much. On that note, Mr. Chairman, 

I yield back. 

Mr. PLATTS. Mr. Connolly. 

Mr. CONNOLLY. Thank you, Mr. Chairman, and I was particularly struck, Mr. Zieser, by what you said a lot of other manufacturers would never export anything. And I happen to believe that 

may be part of the problem with the U.S. economy. We’re rather 

insular, we have a huge domestic market, we don’t have to. Or at 

least historically we didn’t have to. But frankly as you look at the 

global economy we have got to reposition ourselves to be competitive. And I very much appreciate all three of your stories in terms 

of how this program—and I want to pick up on what you just said 

Mr. Greenblatt. It isn’t just help us survive, it actually is reposition 

us to be competitive against Chinese, to pick one country. I was 

particularly struck, I love your story, I mean, bagel baskets, and 

now we’re doing precision, custom fit, laser guided products for 

very sophisticated clientele and we’re out of the bagel businesses, 

and we have ceded it to the Chinese, I guess, but you have been 

able to create a new niche, with this help, I wonder if you could 

tell us a little more about that story. If the Chinese are paying 

$2.50 an hour for a worker and you’re paying $25. I mean on its 

face it sounds like you’re doomed, you can’t possibly compete with 

that, and yet you are. I wonder if you could just expand a little bit 

on that transition and how you’ve in a sense gone global too with 

what you’re doing. 

Mr. GREENBLATT. We’re using three techniques to beat China, 

quality, engineering, quick. We are not going to be the cheapest 

guy in town, but we’re going to give the best quality parts in the 

world. So for example our laser, it cuts plus or minus 4/1000ths of 

an inch. Okay, our punch, our sheet metal punch is punching plus 

or minus 4/1000ths of an inch. China can’t touch that. We have a 

press break in the back that when it bends 132 tons of force, it’s 

like 66 cars, it’s doing it plus or minus 10 microns. 

So we’re offering the best quality. We’re also offering engineering. 20 percent of my employees are degreed mechanical engineers. 

So we are coming up with innovations that blow away our competition. So we are figuring out ways to hold parts in baskets so that, 

for example, Toyota, a big client of mine, is able to run their factory more efficiently. So they are getting 33 percent improvement 

in their product lines and their projects, okay, they don’t have to 

hire 33 percent more people or they don’t have to build 33 more 

factories. They just need to use my baskets which are engineered 

and so innovative that it makes sense to buy from us. 

And the third reason is quick. We ship faster than anybody else 

in the world. Two weeks ago we got an order for 4,500 baskets that 

a Chinese company couldn’t deliver and we did it in 4 business 

days. We never made these baskets before. So we go from 0 to 60 

faster than anybody else. 

So again it is quality, it is engineering and it is quick. That’s the 

critical secret sauce for our effectiveness. 

Mr. CONNOLLY. When were you in the bagel basket business 

were you in the export business? 

28 

Mr. GREENBLATT. We were in Brooklyn, New York, and an export 

to us was shipping to the Bronx. 

Mr. CONNOLLY. Now you are in the export business. 

Mr. GREENBLATT. But now we ship to 36 countries. 

Mr. CONNOLLY. How did you develop the expertise to do business 

overseas? How did you make that—I am thinking about what Mr. 

Zieser said because it is so true about so many people are just not 

export oriented and yet you made that transition quite successfully 

and it is now a key part of your business model. 

How did you do it? 

Mr. GREENBLATT. It’s a great point. I mean, 11 percent of American manufacturers export. It’s 25 or so—28 percent in Canada. 

And they’re very similar to us. But it’s 45 percent in Germany. So 

we’re missing a key strategy to grow. If we were to grow at 20 

something percent, like the Canadians, the recession is over. It’s all 

done. 

So what we need to do is get manufacturers to focus on 95 percent of the world’s consumers. We’re just 5 percent. 

Mr. CONNOLLY. How did you do it? 

Mr. GREENBLATT. We did it by—we have a significant Internet 

presence. We’ve translated our Web site into multiple languages. 

And what happened also is we get a lot of referrals. So we sell to 

Americans transplants. So like a Japanese factory that’s built here 

will have engineers that talk with the mother office and refer us. 

So we ship to—as Congressman Platts mentioned, we ship wire 

forms to China now. 

Mr. CONNOLLY. Yeah, but you had to, if I can, just one second, 

Mr. Chairman, if your idea of export was to the Bronx, and today 

you’re shipping to 36 countries, you had to learn—you had to learn 

about laws governing entrance to other markets, you had to learn 

about free trade or unfree trade laws that might have tariff and 

non-tariff barriers to your ability to export. You had to look at their 

laws in terms of, like Mr. Zieser was talking about, European 

standards that are an impediment actually to your exporting your 

product, maybe deliberately to protect domestic markets. You had 

to learn all that. You had to deal in other cultures and other languages you weren’t used to doing. How did you manage that successful transition? Did that cost a lot of money? 

Mr. GREENBLATT. It’s a challenge. Mostly, we’re dealing with mechanical engineers—degreed mechanical engineers, process engineers, and in many of these countries they speak English fluently. 

So there was less of a language topic. Number two, we’re not selling a product that a consumer’s using in a medical environment. 

We’re selling a wire basket that goes into a factory in another 

country. So there’s less—the Singapore equivalent of the FDA is 

not going to be focusing in on me. So I have some advantages over 

some of the medical firms out there; smaller medical firms. 

So it’s a challenge. The biggest challenge is the cost differential. 

I mean, making something in America costs 20 percent more than 

it does in Canada or in Germany or in France. So that’s our biggest 

disadvantage. And we have to get more competitive with these 

countries so that we can thrive and prosper more. 

Mr. CONNOLLY. If the chairman would allow. 

29 

Mr. ZIESER. You know, it’s funny, he mentions Canada. Canada 

is our largest trading partner. Unless you’re registered with Health 

Canada—and that application fee, I believe, is like $35,0000—you 

can’t export over there. And then they also have to charge you a 

certain percentage of your sales in Canada. So talk about these 

regulations, it is a trade barrier between USA health care companies or private medical device manufacturers and trading in Canada. And that’s something that maybe not this committee, but I 

would just like to bring that to your attention. 

The other thing about medical devices, small companies, I rely 

a lot upon the services of the U.S. Commercial Service. They have 

market sector specialists in all these countries. They help you identify. They do a gold-key search program. They identify potential 

distributors, customers. You can go on a site visit like with this fellow in Turkey; I met him once. We do Skype over the Internet for 

training. Because after you sell our products, you have to warranty 

them and you’ve got to make guarantees to the customer that 

you’re not going to be stuck with a lemon and how do you repair 

and reprogram the devices? There are sophisticated electronics involved. 

So it’s kind of a challenge to set up an operation in a foreign 

land, especially for a small company. And I rely a lot on the U.S. 

Commercial Service and all the services that they offer. 

Mr. CONNOLLY. Thank you, Mr. Chairman. 

Mr. PLATTS. Thank you. 

One quick final question and we’ll wrap up this panel. You basically have all addressed this but not stated this specifically. In 

dealing with your TAAC—MATAAC, in this case—it sounds like 

the expertise of the staff you’re dealing with all were very good 

matches for what your needs were. Because of the loss of one our 

witnesses, we’re not going to have another TAAC represented. 

But is that an accurate statement, that when you were seeking 

that expertise, that the staff at the TAAC or those consultants that 

you worked with through the TAAC all really were good matches 

for the level or the type of expertise for your specific industry, your 

specific needs, whether it was regulatory help or working through 

other countries or data gathering and really getting the knowledge 

base that you needed internally? Is that a fair statement, that they 

had that level of expertise? 

Ms. BRITTON. No, I wouldn’t say it was anything down to the 

technical level or specific product knowledge of the technology at 

all. I think it was more the business processes around it. He asked 

enough questions. He surfaced enough conversation. Sometimes 

they say in metrics and manufacturing what you look at gets— 

what you measure gets changed. And there’s a large amount of 

truth in that with the MATAAC group. Because they have your entire management team focusing and talking and taking time out of 

their day-to-day operations to think about improvement and what’s 

better. And just that breakaway—and as you were saying—Mr. 

Greenblatt was saying—it’s very lean—and it is for all of us very 

lean—the mere fact that we broke away and spent that time generated a tremendous amount of improvements and thoughts that I 

don’t think we would have gotten without that assistance. 

30 

Mr. PLATTS. Based on that, so it’s a fair statement then that 

when we look at the funding of this program, that the funding of 

the TAAC staff that facilitated that communication is an equally 

important part as the actual grant money that go out to a company 

to implement some changes. 

Ms. BRITTON. There is no question. Because if somebody just 

drops money on you and you go along doing business the same way 

you’ve always done it, then nothing fundamentally has changed except maybe your bank balance. So I think it’s absolutely critical. 

Mr. PLATTS. Thank you. 

Mr. ZIESER. I agree with Ms. Britton. What you measure, you 

will improve upon. You’ve got to measure the right stuff. And they 

certainly helped us measure the 

yardsticks and set goals and mileposts and so on. And I really 

appreciated their help. 

Mr. PLATTS. Great. Mr. Greenblatt. 

Mr. GREENBLATT. We worked with Todd Shevlin. And he was Aplus. 

Mr. PLATTS. I want to thank each of you again for your testimony, both written and your testimony here today, and giving us 

some good insights of where the rubber meets the road. We hear 

a lot about programs here, but how they actually are implemented 

and benefiting or not. Clearly, as you shared, they are, in this case, 

benefiting your companies. And we wish you a great continued success. Thirty-six companies today, 50 tomorrow, and keep climbing. 

Thank you again. 

We’re going to take a very short break while we reset for the second panel. And we’ll stand in recess for about 5 minutes. 

[recess.] 

Mr. PLATTS. We’ll reconvene our hearing here. I appreciate our 

second panel of witnesses. One, I appreciate, again, your patience 

with the change in date from earlier in the fall, as well as your patience here today. 

We are delighted to have three individuals who have some great 

insights to share with us: Mr. Brian Borlik, Director of the Trade 

Adjustment Assistance for Firms program at the Commerce Department’s Economic Development Administration; Mr. Bill 

Bujalos, Director of the MidAtlantic Trade Adjustment Assistance 

Center, and we heard great testimony about your center and your 

staff and your assistance to our previous witnesses; and Mr. J. 

Alfredo Gomez, Acting Director of International Affairs and Trade 

for the Government Accountability Office. 

Now that you’re seated, if I could ask you to stand so I can swear 

you in. I apologize for having you to get up and down. Will you 

raise your right hand? 

Do you solemnly swear or affirm that the testimony you are 

about to give this committee will be the truth, the whole truth and 

nothing but the truth? 

The record will reflect that all witnesses answered in the affirmative. 

As with our previous panel, the clock will be set at 5. Kind of 

a guideline. If you have need some extra time, that’s fine. And we’ll 

look forward to your testimony and then getting into a Q and A 

with you. 

31 

Mr. Borlik, if you’d like to begin. 

STATEMENT OF BRYAN BORLIK 

Mr. BORLIK. Chairman Platts, Ranking Member Towns, and my 

own Member of Congress, Mr. Connolly, Congressman Connolly, 

thank you very much for the opportunity to provide testimony 

today on behalf of the Department of Commerce’s Economic Development Administration on the Trade Adjustment Assistance for 

Firms, TAAF, program. I’d also like to quickly thank some of the 

TAAF directors for being here today. Bill here, Dave Hansberger, 

and of course, some of our important clients, JACE Systems, Topflight Corporation, and Marlin Steel Wire, for being here. 

Through the Trade Adjustment Assistance for Firms program, 

the Department of Commerce is committed to helping firms 

throughout the United States adjust to import competition and to 

increase their own competitiveness and to save and create jobs. The 

mission of the TAAF program is to help U.S. firms regain competitiveness in the global economy, and as a result, save and create 

jobs. The program has received high marks from participating 

firms, as well as from GAO, whose new report finds that the program has a positive impact on the firms that it helps. 

Through the TAAF program firms can receive matching funds 

that expand markets, that strengthen operations, and increase 

competitiveness. The program essentially provides cost-sharing 

technical assistance in the development of business recovery plans, 

which are known as adjustment proposals, or APs, and also matching funds to implement projects outlined in those proposals. Firms 

contribute a matching share to create and implement their recovery plans. 

The TAAF program supports a national network of 11 Trade Adjustment Assistance Centers, or TAACs, to help U.S. firms in all 

50 States, the District of Columbia, and the Commonwealth of 

Puerto Rico. Firms work directly with the TAACs to apply to EDA 

for eligibility for assistance in the preparing and implementing 

strategies to strengthen their competitiveness. 

As you’ve heard today from other witnesses, TAACs add great 

value to the TAAF program. The expertise and structure of the 

TAACs allow them to provide technical assistance to firms on a 

timetable customized to the unique needs of each firm. TAAC directors and their staff bring extensive business experience, knowledge 

of information systems, management, marketing, and quality to 

identify projects 

best-suited to improve the competitiveness of each unique firm 

that they serve. 

Upon the creation of the Trade Adjustment Assistance division at 

the Economic Development Administration in late 2009, we developed a 2-year strategic plan to address challenges the program was 

facing in terms of operational efficiency and customer service. And 

since then, the average turnaround time for EDA certification of 

petitions has decreased from 89 days to 36 days, while the average 

turnaround time for the approval of adjustment proposals has decreased from 20 to 16 days. And this was achieved despite significant increases in the number of petitions from firms and APs submitted to EDA for approval. Also, 100 percent of EDA grants to the 

32 

Trade Adjustment Assistance Centers are now being processed on 

time and all payments being disbursed on time to the TAACs. 

And finally, relationships have improved between EDA and the 

TAACs as well as among TAACs themselves as a result of several 

meetings that we’ve held between TAAC staff, EDA, and program 

stakeholders, including Congress. 

Looking forward, EDA intends to focus on developing an improved performance measurement process for all of our programs, 

including this program, TAAF, over the next couple of years. To assist with this effort, EDA has partnered with the University of 

North Carolina Chapel Hill and George Washington University to 

develop draft performance measures utilizing state-of-the-art performance measurement and program evaluation techniques. 

Looking at recent TAAF program evaluations, the fiscal year 

2012 Senate Report on Appropriations directed the Office of Inspector General at the Department of Commerce to review the administrative costs of the TAACs and also called on GAO, of course, to 

evaluate TAAF program operations and effectiveness. And this past 

May, the Department of Commerce OIG completed their report, 

stating that they did not determine the level of administrative 

costs of the TAACs to be unreasonable. 

GAO’s newly released report contains positive findings regarding 

the effectiveness of the TAAF program, including that program 

participation has resulted in a 5 percent to 6 percent increase in 

sales, and a 4 percent increase in productivity. It also found that 

manufacturing firms reported that the program was associated 

with increased sales and productivity. An impressive 73 percent of 

the firms reported the program helped them with profitability, 71 

percent said it helped them retain employees, and 57 percent reported that the program helped them actually hire new employees. 

Just as a quick aside, I must say how impressed I was with the 

professionalism and the thoroughness of the GAO team. It was 

truly a pleasure to work with them. And I truly and EDA truly appreciates their report, and thank them for that. 

So with that, I’d like the thank you for the opportunity to provide 

testimony. We look forward to working with you and continuing to 

work to improve the Trade Adjustment Assistance for Firms program. Thank you. And I’ll be happy to answer any questions you 

have when you like. 

Mr. PLATTS. Thank you, Mr. Borlik. 

[Prepared statement of Mr. Borlik follows:] 

33 


Insert offset folio 11 here 77041.011

Testimony of 

Bryan Borlik, Director 

Trade Adjustment Assistance Division 

Economic Development Administration 

U.S. Department of Commerce 

u.s. House of Representatives 

Committee on Oversight and Govenunent Reform 

Subcommittee on Govenunent Organization, Efficiency and Financial Management 

September 19, 2012 

INTRODUCTION 

Chairman Platts, Ranking Member Towns, and distinguished members of the 

Committee. Thank you for the opportunity to provide testimony on behalf of the 

Department of Commerce's (DOC) Economic Development Administration (EDA) on 

the Trade Adjustment Assistance for Firms (TAAF) program. Through this program, the 

Department is committed to helping firms throughout the United States adjust to import 

competition, increase their own competitiveness and save and create jobs. 

MISSION 

The mission of the TAAF program is to help U.S. firms regain competitiveness in the 

global economy, and, as a result of increased international competitiveness, save and 

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create U.S. jobs. The program has received high marks from participating firms, 

particularly those involved in manufacturing, as well as from the independent 

Govemment Accountability Office which as recently as last month noted that the 

program has helped manufacturing and service firms. Through the T AAF program 

import-impacted U.S. agricultural, manufacturing, production, and service firms can 

receive matching funds for projects that expand markets, strengthen operations, and 

increase competitiveness through T AAF. The program provides cost-sharing technical 

assistance in the development of business recovery plans, which are known as 

Adjustment Proposals (APs), and matching funds to implement projects outlined in the 

proposals. Firms contribute a matching share to create and implement their respective 

recovery plans. 

The T AAF program supports a national network of 11 Trade Adjustment Assistance 

Centers (TAACs), some affiliated with universities and some independent non-profits, to 

help U.S. firms in all SO States, the District of Columbia, and the Commonwealth of 

Puerto Rico. Firms work with the T AACs to apply to EDA for certification of eligibility 

for assistance and to prepare and implement strategies to guide their economic recovery. 

As I think you will hear from other witnesses during this hearing, T AACs add great value 

to the T AAF program. The expertise and structure of the T AACs allow them to provide 

technical assistance to firms on a timetable customized to the unique needs of each firm. 

The TAACs facilitate this by acting as a liaison between the firms and EDA, 

"translating" the program (its requirements, benefits, etc.) into the "language" of small 

businesses. TAAC directors and staff bring extensive business experience, knowledge of 

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infonnation systems, management, marketing and quality to identify projects best suited 

to significantly improve the competitiveness of each unique finn they serve. Projects can 

include export development strategies, International Organization for Standardization 

(ISO) certification to facilitate overseas sales, marketing and sales process improvements, 

new product development and more. 

TRADE ADJUSTMENT ASSISTANCE DIVISION AT EDA 

Upon the creation of the Trade Adjustment Assistance Division (TAAD) at EDA in late 

2009, a two-year strategic plan was developed to address challenges the program was 

facing in tenns of operational efficiency and customer service. 

Some of these challenges were: 

• On average, it took 89 days for EDA to certify petitions for eligibility under the 

program and 20 days to approve APs; 

• According to T AAC Directors, EDA was often late in processing payments to 

TAACs as well as in awarding grants to TAACs, which resulted in unacceptable 

levels of uncertainty for both TAACs and their clients in receiving the funds 

necessary to provide efficient services to clients; and 

• Relationships between EDA and the TAACs, as well among the TAAC Directors, 

were strained as a result of these challenges. 

Since the creation of the TAAD and the implementation ofEDNs strategic plan for 

improving the program, the following accomplishments have been realized: 

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• The average turnaround time for EDA certification of petitions has decreased 

from 89 days to 36 days, while the average turnaround time for approval of APs 

has decreased from 20 days to 16 days. This accomplishment was achieved 

despite significant increases in the number of petitions and APs submitted to EDA 

for approval. For example, in FY 2010, EDA certified 53% more petitions than in 

2009 (114 more petitions in 2010 than in 2009) and approved 54% more APs (93 

more APs in 2010 than in 2009). 

• 100% of EDA grants to T AACs have been processed on time, and all payments to 

TAACs have been disbursed on time. Prior to the creation of the TAAD, TAAC 

directors reported late processing of payments to TAACs as well as in awarding 

grants to T AACs, which resulted in uncertainty for both T AACs and their clients 

in receiving the funds necessary to provide efficient services to clients; and 

• Relationships have improved between EDA and the TAACs, as well as among the 

T AACs themselves as a result of several meetings convened by EDA between 

TAAC staff, EDA, and program stakeholders, including: 

o A TAAF Program Conference in March 2010 with TAAC Directors 

focused on developing a set of best practices in the area of submission of 

petitions for certification and APs to EDA, with the goal of increasing the 

quality of submissions to EDA and thereby increasing program efficiency 

and operations; 

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o An informational briefing and roundtable discussion with Congressional 

stakeholders in July 2010, in which T AAC Directors and two of their 

clients provided briefings on the T AAF program to staff of the Senate 

Finance and House Ways and Means Committees; 

o A meeting between EDA and T AAC Directors and staff in 

September 2011 to develop outreach strategies to increase program 

visibility and participation by firms in states with relatively low 

participation in the program, and to strengthen partnerships with other 

Federal programs, such as NIST's Manufacturing Extension Partnership 

program. This meeting also served as a program introduction to the U.S. 

Government Accountability Office (GAO) as they began their evaluation 

ofTAAF program effectiveness; and 

o A Performance Measurement Strategic Planning Meeting in February of 

this year to explore improvements in TAAF program performance metrics 

in connection with EDA's efforts to improve metrics for all of its 

programs. 

Looking forward, EDA intends to focus on developing an improved performance 

measurement process over the next two years. EDA is currently implementing a 

performance measurement improvement process for all of its programs and activities, 

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which began in late 2011 and consists of two phases: planning and development, and 

implementation. The one-year planning and development stage is expected to be 

completed by the end of this year, and includes researching and identifying improved 

metrics and indicators, testing the metrics and indicators across the full portfolio of ED A 

investments, and developing a work plan for implementing measures that are adopted. 

To assist with this effort, EDA has partnered with the University of North Carolina and 

George Washington University to develop draft performance measures utilizing state-ofthe-art performance measurement and program evaluation techniques. 

The subsequent implementation phase will include obtaining OMB approval of data 

collection forms, developing a database to store collected data, and updating 

programmatic guidance and regulations. The entire process is expected to be completed 

by the fall of2014. The end result is expected to be more effective program 

management, for all of ED A's programs, including the TAAF program. 

EVALUATIONS OF THE TAAF PROGRAM 

The Fiscal Year (FY) 2012 Senate Report (112-78) of the U.S. Senate Committee on 

Appropriations for the Commerce, Justice, Science, and Related Agencies Appropriations 

Act, 2012 (H.R. 2596) directed the Commerce Department's Office of Inspector General 

(OIG) to review the administrative costs of the TAACs and the U.S. Government 

Accountability Office (GAO) to evaluate TAAF program operations and effectiveness. 

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On May 11, 2012, OIG presented DOC with a copy of the letter to the Committee 

reporting their findings related to TAAC administrative costs. As part of their review, 

OIG obtained expenditure data from a sample of three TAACs Western TAAC in 

California, New England TAAC in Massachusetts, and the New York State TAAC 

focusing on the use of Federal funds provided by EDA. Based on their analysis, OIG 

stated that they "did not determine that the level of administrative costs to the three 

TAACs to be unreasonable." 

GAO presented the Commerce Department with the draft report, Trade Adjustment 

Assistance: Commerce Program Has Helped Manufacturing and Services Firms, but 

Measures, Data, and Funding Formula Could Improve (GAO-12-930), on August 17, 

2012. Overall, the report contained positive findings regarding the effectiveness of the 

TAAF program. As part of this study, 117 ofl63 firms responded to GAO's survey on 

the firms' experience with the TAAF program, an extremely high response rate. As 

noted in the report, nearly all of the responding firms reported they were generally or 

very satisfied with the program. Manufacturing firms, specifically, reported that the 

program was associated with increased sales and productivity. Notably, an impressive 73 

percent of the firms reported the program helped them with profitability, 71 percent said 

it helped them retain employees, and 57 percent reported that the program helped them 

hire new employees. 

CLOSING 

I would like to thank Chairman Platts, Ranking Member Towns, and distinguished 

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members of the Subcommittee for the opportunity to provide this testimony. The 

Department of Commerce looks forward to working with Congress and continuing our 

work to improve the Trade Adjustment Assistance for Firms program. Thank you, and I 

look forward to answering any questions you may have. 

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41 

Mr. PLATTS. Mr. Bujalos. 

STATEMENT OF WILLIAM J. BUJALOS 

Mr. BUJALOS. Thank you, Mr. Chairman. I am Director of the 

MidAtlantic TAAC, responsible for administration of TAAF in New 

Jersey, Pennsylvania, Virginia, West Virginia, Maryland, Delaware, and the District of Columbia. My testimony has been submitted earlier, so let me just briefly outline it so that there should 

be some time for questions. 

I’ve been the director of MATAAC for the last 13 years, and I 

have to tell you, I am struck by the utter uniqueness of this program. I could be wrong, but in my humble opinion, there’s no other 

agency or endeavor in the Federal Government that does what we 

do. TAAF is an example of the government acting smart by doing 

only a little. And doing it well. It’s not a manufacturing assistance 

program. It’s not a jobs program. It’s not a corporate welfare program. Firms in the program receive no public money. TAAF doesn’t 

pick up the pieces after catastrophic layoffs have taken place and 

attempt to create new careers out of whole cloth. 

We’re not consultants. We don’t sell projects to keep our employees busy. In other words, we don’t compete against the private sector with public money. It is a firm stabilization program. It is a 

trade remedy aimed at small firms under existential threat. Let’s 

be clear. I believe in free trade. Let me say that again. I believe 

in free trade. 

Further, I believe that it should be the policy of this government 

to support the eventual elimination of all barriers to global free 

market. Our focus is exclusively on heretofore competitive small 

enterprises. Heretofore they were competitive, blindsided by tides 

of imports, in many cases. Sure, they should have kept up with the 

latest news about pending trade agreements that might affect 

them. Sure, they could have mitigated the damage had they done 

so. Of course, it wasn’t smart to ignore the necessary business process upgrades so that they wouldn’t be surprised as imports 

ballooned. Shame on them for spending so much time trying to 

make payroll by Thursday afternoon. 

We’ve heard from previous testimony how lean some of these 

companies are. And I can tell you from personal observation, that’s 

not quite an accurate statement. It’s beyond that, in many cases. 

More often than not, by the time I see them, they’ve spent the last 

few years burning working capital—burning it—in a vain attempt 

to remain competitive through price cutting. I mean, that’s all they 

had, just that. 

For example, the aggregate profile of firms entering TAAF in my 

region include the following: A 20 percent sales decline, a 10 percent productivity decline, a 60 percent earnings decline, and more 

than 12 percent of the employees have been let go. More than simply not sustainable, this profile is a death spiral for a small business. And there are ripple effects. More than three-quarters of the 

firms that I deal with are located in rural areas where they are either the primary employer or, in some cases, the only employer in 

the township. 

42 

We only do three things: One, we prove trade injury; two, we develop business plans unique to each firm’s specific circumstances. 

Three, we partner with them in engaging outside consultants to 

implement change. In other words, to take on the risks associated 

with not doing the same things over and over again and expecting 

different results. 

Our overarching mission then is the upgrade of global competitiveness, something that only they can achieve. That’s why they 

have so much skin in the game. Not only do they not receive any 

public money—and actually, they have to pay into the program— 

but they also must do something to get any benefit out of it. 

Does it work? Well, nationally we surveyed just under 1,000 active clients. Nationally. This isn’t just MidAtlantic, or MATAAC. 

These are the aggregate results since program entry. Aggregate results. Some companies do better. Some don’t do as good. These are 

the aggregate results: 4 percent jobs growth, 26 percent sales 

growth, and 21 percent productivity growth. 

And by the way, I’m not foolish enough to believe that 

TAAF can claim sole responsibility for those results. We played 

a part, as did the consultants that we engaged and the managers 

that provided leadership, and the employees who learned how to 

work a lot smarter than they used to. This isn’t trivial, in my view. 

When then entered the program, every company was seriously injured and unable to compete against imports. What we did at the 

end of the day was facilitate an environment where entrepreneurs—and you’ve seen some of them today—could execute 

change that heretofore was financially unattainable, at least immediately. Probably in several years, if they had some luck. 

Could the program be improved? I believe it can be. For instance, 

if our mission is the upgrade of the global competitiveness of the 

trade injured—that specific classification of company—then what’s 

the best methodology we should use to measure, track, and score 

that achievement? Secondly, what’s the optimum deployment of resources that we do engage? Third, what minimum levels of acceptable performance should be evaluated, scored, ranked and held accountable against the TAACs? And would it be worthwhile at some 

multiyear interval, yet to be defined, to rank TAACs by their score 

and subject the lowest one to a rebidding of their cooperative agreement? And given the importance of our mission, shouldn’t we require substantial—and I’m using that word deliberately—substantial business credentials of all key hires going forward? 

And finally, we’ve all heard the term AP or adjustment plan. 

This is an adjustment plan. When we add the financials, it’s about 

a hundred pages. It’s not trivial documentation. Shouldn’t approval 

of the adjustment plans be devolved to the TAAC directors by virtue of the fact that these tones are robust business plans unique 

to each firm’s financial, organizational, and operational circumstances, and that short of actually remedying themselves, nobody external to the TAAC is qualified to evaluate them in any 

meaningful way. 

Make no mistake, even if none of what I’ve just 

outlined, those four or five things, if none of those things were 

ever implemented, TAAF is still an impressive, agile, focused and 

effective trade remedy as it is. Its business model is such that I 

43 

would argue should we ever get serious about the revitalization of 

the Nation’s small business sector, we would be well advised to at 

least consider it a platform of choice. 

I thank the committee for giving me this opportunity to share my 

point of view on TAAF, but I only help manage it. It’s more important that you listened to and you heard the actual entrepreneurs 

that have benefited from what we do, because they’re at the front 

line. The friend that was sitting right here, they’re at the tip of the 

spear, not us. 

Thank you very much for at least allowing me to be part of the 

discussion. 

Mr. PLATTS. Thank you, Mr. Bujalos. 

[Prepared statement of Mr. Bujalos follows:] 

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TESTIMONY OF 

WILLIAM J. BUJALOS 

DIRECTOR OF THE MIDA TLANTIC TRADE ADJUSTMENT ASSISTANCE CENTER 

BEFORE THE 

UNITED STATES HOUSE OF REPRESENTATIVES 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM 

SUBCOMMITTEE ON GOVERNMENT ORGANIZATION, EFFICIENCY AND 

FINANCIAL MANAGEMENT 

NOVEMBER 14, 2012 

Thank you Mr. Chairman for this opportunity to testify before the committee regarding the 

effectiveness of Trade Adjustment Assistance for Firms (TAAF). Since 1998 I have been the 

Director of the MidAtlantie T AAC (MATAAC) located in a suburb of Philadelphia. MAT AAC is 

a private sector non-profit entity, one of 11 such centers (or TAACs) that contract with the US 

Department of Commerce through its Economic Development Administration (EDA) to manage 

T AA for Firms throughout the nation. As part of that network my responsibility is to assist small 

firms in New Jersey, Pennsylvania. Virginia, West Virginia, Maryland, Delaware and the District 

of Colwnbia. 

By way of credentials let me state that I have a Bachelor of Science Degree in Mechanical 

Engineering, have held engineering and executive positions in a variety of both publicly-traded 

and privately-held firms ranging in size from less than 20 to tens of thousands of employees in 

both manufacturing and service sectors both domestically and internationally. Positions held 

include: Process Engineer, Project Engineer, Project Manager, Engineering Director, Plant 

Manager, General Manager, Business Analyst, Vice President, Executive Vice President and 

Owner in the: steel, chemicals, batteries, plastics, medical device and management consulting 

industries. 

No other agency or endeavor of the federal government does what we do. In my view TAA for 

Firms is a uniquely smart use of the people's money - an example of the government doing little 

but doing it well. It's not a mannfacturing assistance program. It's not corporate welfare. It is a 

trade remedy. An initiative focused exclusively on previously quite competitive small companies 

now under existential threat - contributed to by growing iruports frequently resulting from our 

free-trade agreements. Every day I see small family-owned enterprises that have been in existence 

for generations who have spent the last couple of years burning working capital in a vain attempt 

to remain competitive. Sure, they should have kept up with the latest news about pending trade 

agreements that might affect them. Sure they would have mitigated the damage had they done so. 

Of course it wasn't smart to ignore the necessary business process upgrades so that they wouldn't 

be blindsided by imports. 

Shame on them for deciding to make payroll by Thursday afternoon instead. 
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By the time I see them they're reduced to fighting for their survival from a posItIOn of 

significantly diminished financial strength with price-cutting as the only tool left. For example, 

the aggregate profile of firms entering TAA in my region is as follows: 

20% sales decline 

10% productivity decline 

60% earnings decline 

And more than 12% of employees had been laid off 

Does anyone really think that a business exhibiting these stats is in any way sustainable? In my 

previous life we had a term for it - death spiraL And consider, more than three-quarters of them 

are located in rural counties; in many cases they're a primary employer sometimes the only 

employer. So the effects often aren't just on the firm but the community at large. 

I believe strongly in the benefits of free trade. In my view the movement of goods and services 

across borders is a hallmark of a capitalistic free market system. Further, I believe the eventual 

elimination of barriers to free trade should be this government's policy. In that context TAAF is a 

well thought out "ounce of prevention" designed to help small privately held enterprises navigate 

the minefield they may find themselves in as a consequence. 

There are numerous misconceptions about what we are. Some in Congress have claimed that we 

are "consultants" and that we "grossly overcharge companies." Further that we "... have been 

known to charge exorbitant overhead rates of 60 percent of grant funding ... " and that a high 

percentage of the firms assisted have gone out of business anyway. None of that is true. What is 

true is that people like me have failed miserably at educating some folks. 

To clarify: we prove trade-injury, we develop specific business plans aimed at upgrading 

weaknesses found and we then partner with our clients in hiring outside consultants to implement 

a bundle of knowledge-based upgrade projects thus identified. Our objective is the enhancement 

of their global competitiveness. 

TAAF has been a benefit to both service and manufacturing sectors for decades. Firms in 

this program receive no public money. They do receive technical assistance critical to 

their survivaL They receive it from other small businesses: mostly one, two or three 

person consulting shops trying to succeed in the economy too and identified either by the 

client firm itself or as a result of competitive bids. We pay half of the fees for the 

assistance and the firm pays the other half during our relationship with them. 

They have lots of skin in the game. Companies in this program actually pay into it. The 

success of small trade-injured enterprises in this program requires that management 

decide to conduct business differently. In other words, to succeed they must confront the 

risks associated with NOT doing the same old things over and over again - they have to 

address a permanent change in their behavior ... a difficult assigument in good times! 

We don't pick up the pieces after catastrophic layoffs have occurred and try to create new 

careers out of whole cloth. Our job is to help prevent catastrophe in the first place. It's a 

lot cheaper and immensely more effective. 

TAA for Firms is not a jobs program but a trade remedy through firm-stabilization. Our 

overarching mission is the increased global competitiveness of the trade-injured. 
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We gage success with long-tenn tracking methodologies using measured results - not calculated 

ones. For instance last year's national survey of about a thousand active clients showed in the 

aggregate since program entry: 4% jobs growth, 21 % productivity growth and 26% sales growth. 

At MATAAC we define competitiveness upgrade as share growth, or simultaneous growth in at 

least three of the following four metrics: 

o Sales 

o Productivity 

o Earnings 

o Jobs 

Rarely do these results occur early. They require sustained project implementations over time. 

T AAF just isn't a quick fix. Very little in business ever is. And importantly, since we are not a 

consulting finn, we are free to speak painful truths with clarity and directness without the need to 

sell project types to match the skill sets of our employees. Put another way, we don't use the 

people's money to compete against the private sector. 

The truth about our overhead rates is exemplified by our experience in the MidAtiantic states: 

rather than cover several counties with a staff of as many as 10 or more, MATAAC covers 6 

states with a staff of 4, resulting in an overhead rate for 2011 of just 16%. Put another way, 84¢ 

of every dollar expended hits the street. Regarding sustainability as a going-concern, consider that 

97% of the finns assisted were still in business five years after entry into the program and fully 

half of those not in business didn't go out of business. They were acquired. 

National ROT! speaks for itself. From '07 through '11 funding for TAAF totaled $71.2 million 

and the program returned more than $14 in taxes for each dollar spent 

Investment per job: 

Fooding,ftldera1 fiscal ye:u:2!107 1020n t. 

Total jobs impacted2 

Irivestm'!Dt Per joSi . 

Econoinie Impact pet job: 

Income, average manuf~cturingjob 

·FooeraJ,statexeV:~l!ne (llrmannfact..iiiiig @~O.?%·, 

Income nmltiplier3 

Fooera1,state",yenuj:lon In!lltiplierj()bs ........ . 

">,,~~,~~,~ fe~~r,~l, ~;,~~,!~~,~re,~:l!~~ per m~nuf':l,c,tu,~,i~~j,~:~4 

Return on Taxpayer Investment 

$71~217,976 

77,015 

$925 

$44,221 

$9,154 

$22,111 

$4,577 

$13,731 

1,485% 

I realize that these numbers may seem heroic. That doesn't make them wrong. I believe they 

suggest that T AAF works quite possibly better than most of what the federal government does 

on any given day. 

Funding covers FY 2007 to 2011, includes only federal government expenditures, and includes funding only for the Trade 

Adjustment Assistance Centers. It does not include the administrative costs of the U.S. Department of Commerce. 

Jobs impacted are those retained and generated at firms completing at least one technical assistance project by December 

31,201 J. It does not include the impact of assistance for finns that entered the program after December 31, 2011. 

Multiplier jobs are those jobs generated in providing goods and services required by the employed manufacturing workers. 

Although often estimated at 2 or 2.5, for the purpose of this analysis, a conservative multiplier of 0.5 was used. 

Manufacturing job revenue is calculated at an average hourly rate of $21.26 (US Statistical Abstract 2011), an annual 

income of$44,221 was assumed, and the multiplier income per manufacturing job is $22,111. 

Annual revenue per job disregards local income tax or property tax revenue. 
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Could T AAF be improved? Sure. 

Speaking as a private citizen with some business experience T would say that if we're to be every 

bit as serious about the general continuous improvement of the program as we are about the 

competitive performance of our clients, we should be open to better ways of doing our job if for 

no other reason than at the end of the day our real client is the American taxpayer. 

1. If our mission is as I've stated i.e., the upgrade of the global competitiveness of the 

trade-injured, then what is the best methodology we should use to measure, track and 

score that achievement - regionally and nationally? 

2. What is the optimum national deployment of our resources (assets, personnel and 

management systems) to be engaged to fulfill that mission? 

3. What are the minimum levels of acceptable performance against which each TAAC 

should be evaluated, scored, ranked and held accountable for in that process? 

4. Might it not be worthwhile at multi-year intervals to rank TAACs by their score at 

mission achievement over the period and subject the lowest ranked to a re-bidding of 

their cooperative agreement? 

5. Given the importance of the mission, shouldn't we require significant business 

credentials of all key staff hires going forward? Especially manufacturing credentials? 

6. Shouldn't approval of Adjustment Plans be devolved to the TAAC Directors by virtue of 

the fact that these tomes are robust business plans nnique to each firm's financial, 

organizational and operational circumstances and that, short of actually writing them 

themselves, no person external to the TAAC (especially without business credentials) is 

qualified to evaluate them in any meaningful way? 

But even if none of what I've just outlined is ever implemented, I am still convinced that Trade 

Adjustment Assistance for Firms remains an agile, focused and highly effective program just as it 

is. Further, I would argue that someday if we ever get serious about revitalizing the nation's small 

business sector we might consider this business model as a sharpened arrow in our quiver and 

not just for the trade-injured either. 

Let me be clear. I'm just an engineer, not an economist. But I do know what it is to work hard for 

a living and I've seen quite enough to appreciate the utter folly of Keynesian economics. In my 

view the fundamental purpose of business is and ought to be the enrichment of those risking their 

own investment. Jobs are a natural consequence of their success. Therefore for me it's pretty 

simple. We should develop those policies that would promote a level of business success equal to 

none on the planet. Small firms in any capitalist society are more precious than gold - more so 

especially now given our current circumstances. I am reminded that for each million people that 

are out of work, America needs to create an environment in which entrepreneurs will create 

10,000 new ones ... and that's presuming we don't lose too many of the ones we already have! 

I am convinced that TAAF, coupled simultaneously with a much more robust focus on free trade 

agreement ratification and a critical review of current tax and regulatory policies would go a long 

way in reversing what has become an existential chokehold on that part of our economy that 

produces most of the people's take home pay. 

But I only help manage Trade Adjustment. It's a lot more important for you to hear from folks 

like the entrepreneurs that were kind enough to join me today. Their experiences are direct and 

more relevant. 

Thank you for asking me to be a part of the discussion. 
48 

Mr. PLATTS. Mr. Gomez. 

STATEMENT OF J. ALFREDO GOMEZ 

Mr. GOMEZ. Mr. Chairman, Ranking Member Towns, Mr. 

Connolly, good morning. I’m pleased to be here today to discuss the 

Trade Adjustment Assistance for Firms program administered by 

EDA. 

Over the past decade, U.S. imports have almost doubled, reach- ing $2.7 trillion in 2011. During the same period, the U.S. entered 

into free trade agreements with 14 partner countries. 

Mr. Chairman, as you noted in your opening statements, although trade expansion can be beneficial for all trade partners, 

many firms and workers experience difficulties adjusting to import 

competition. The program, through 11 centers, or TAACs, across 

the country provides technical assistance to these firms so that 

they can remain competitive in the global economy. 

My statement today is based on a report that we issued recently 

in response to a mandate that we review the operations and effectiveness of the program. I will focus on three main areas: First, the 

results of recent legislative changes in the program’s operations; 

two, the performance measures and data that EDA uses to evaluate the program and what these tell us about the program’s effectiveness; and three, how program funding is allocated and spent. 

First, we found that the changes that Congress enacted in 2009 

contributed to improvements in program operations and increased 

firm participation. For example, the creation of a director and other 

full-time positions for the program reduced the time to certify 

firms. Also, the inclusion of service sector firms and the expansion 

of the look-back period from 12 months to 36 months resulted in 

additional firms participating in the program. 

Second, we found that EDA’s performance measures and data 

collection for the program provide limited information about the 

program’s outcomes. EDA does not systematically maintain data 

collected by the centers on the firms they assist, resulting in gaps 

in centralized data that EDA could use to evaluate the program 

and need reporting requirements. Given the weaknesses we found 

in the data collection, we undertook further analysis to determine 

the program’s impact. So our economic analysis showed that there 

is a small positive and statistically significant relationship between 

program participation and sales. Firms participating in the program experienced a growth of 5 to 6 percent in sales, although 

other factors had a stronger effect on performance. 

So we also conducted a survey of 163 firms that participated in 

the program. The survey showed that the program had a positive 

effect. The graphic on page 7 of my statement shows some of the 

survey results. So, for example, we found that more than 90 percent of the firms reported that they were satisfied with the services 

they received from their center and the consultants. And you heard 

some specific examples from the first panel this morning. Also, 82 

percent of the firms reported that the program helped them stay 

in business. 

Third, in terms of how funds are allocated and spent, we identified several weaknesses pertaining to EDA’s funding formula. EDA 

49 

has allocated funding to the 11 centers. However, its formula does 

not take into account the potential number of firms in need of the 

program and differences in cost across the centers. Consequently, 

centers that may have a greater number of trade-impacted firms 

receive similar funding as those centers serving a much smaller 

number of firms. A revised formula should use reliable and appropriate measures of need in each State or region. 

In summary, although funding for the program at less than $16 

million is small relative to the rise in imports over the past decade, 

our economic analysis and survey results show that the program 

has delivered positive results for firms. The changes that Congress 

enacted in 2009 gave EDA and the centers’ officials more flexibility 

in certifying firms and increased firm participation. 

Lastly, EDA’s allocation formula does not factor in differences in 

program need and cost across the regions. We have recommended 

that Commerce establish more effective performance measures, improve its data collection efforts, and allocate funds in a way that 

considers program needs and costs. 

Mr. Chairman, Ranking Member Towns, Mr. Connolly, this completes my statement. I would be pleased to respond to any questions. 

Mr. PLATTS. Thank you, Mr. Gomez. 

[Prepared statement of Mr. Gomez follows:] 

50 


Insert offset folio 23 here 77041.023

GAO 

For Rt'iease on Delivery 

Expected at 10:00 a.m. EST 

Wednesday, November 14, 2012 

GAO·13·166T 

United States Government Accountability Office 

Testimony 

Before the Subcommittee on Government 

Organization, Efficiency, and Financial 

Management, Committee on Oversight and 

Government Reform, House of Representatives 

TRADE ADJUSTMENT 

ASSISTANCE 

Commerce Program Has 

Helped Manufacturing and 

Services Firms, but 

Measures, Data, and 

Funding Formula Could Be 

Enhanced 

Statement of J. Alfredo Gomez, 

Acting Director, International Affairs and Trade 

GAO 

Accountability * Integrity * Reliability 
51 


Insert offset folio 24 here 77041.024

Chairman Platts, Ranking Member Towns, and Members of the 

Subcommittee: 

I am pleased to be here today to discuss the Trade Adjustment 

Assistance (T AA) for Firms program, which is administered by the 

Department of Commerce's (Commerce) Economic Development 

Administration (EDA). Over the past decade U.S. imports have almost 

doubled, reaching $2.7 trillion in 2011. During the same period, the United 

States entered into free trade agreements that liberalize trade with 14 

partner countries. Further trade liberalization is being pursued, including a 

Transpacific Partnership among 11 nations in the Asia-Pacific region. 

Although trade expansion can enhance the economic welfare of all trade 

partners, many firms and workers experience difficulties adjusting to 

import competition. Congress has responded to concerns about these 

difficulties with trade adjustment assistance programs.' Established in 

1962, the TAA for Firms program provides technical assistance to help 

trade-impacted, economically distressed firms make adjustments that 

may enable them to remain competitive in the global economy. In fiscal 

years 2009 through 2012, EDA received $15.8 million annually for the 

T AA for Firms program. EDA uses its appropriation for the T AA for Firms 

program to fund 11 TAA Centers (center), which provide assistance to 

U.S. manufacturing, production, and service firms in all 50 states, the 

District of Columbia, and the Commonwealth of Puerto Rico. 

Congress amended the T AA for Firms program under that part of the 

American Recovery and Reinvestment Act of 2009 known as the Trade 

and Globalization Adjustment Assistance Act (TGAAA) of 2009 and 

mandated that we review the operation and effectiveness of these 

amendments. My testimony is based on our September 2012 report that 

examined (1) the results 01 the legislative changes on program operations 

and partiCipation, (2) the performance measures and data that EDA uses 

to evaluate the program and what these tell us about the program's 

effectiveness, and (3) how program funding is allocated and spent. 

other TAA programs focus on workers, farmers, and communities. 

Page 2 GAO~13~166T Trade Adjustment Assistance 
52 


Insert offset folio 25 here 77041.025

My statement today summarizes our findings on each of the three issues 

discussed in our report2 

First, we found that the four changes mandated by the 2009 legislation 

contributed to improvements in program operations and increased 

participation: 

Creation of director and other full-time positions: The creation of a 

director and other full-time positions for the program resulted in 

reduced firm certification processing times for petitions. 

New annual reporting on performance measures: EDA has submitted 

three annual reports to Congress on these performance measures as 

a result of the legislation. 

Inclusion of service sector firms: According to our analysis of EDA 

data, the inclusion of service sector firms allowed EDA to certify 26 

firms not previously eligible for assistance from fiscal years 2009 

through 2011.' 

Expansion of/he "look-back" period from 12 months to 12, 24, or 36 

months: Our analysis of EDA data shows that 32 additional firms 

participated in the program from fiscal years 2009 through 2011 

based on the expansion of the look-back period from 12 months to 12, 

24, or 36 months. Prior to the legislative changes, firms were only 

allowed to compare sales and production data in the most recent 12 

months to data from the immediately preceding 12-month period. 

2More detail is available in the report, GAO. Trade Adjustment Assistance: Commerce 

Program Has Helped Manufacturing and Services Firms, but Measures, Data, and 

Funding Formula Could Improve, GAO-12-930 (Washington, D.C.: Sept. 13,2012). We 

conducted our work from July 2011 to September 2012 in accordance with generally 

accepted government auditing standards. Those standards require that we plan and 

perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis 

for our findings and concluSions based on our audit objectives. We believe the evidence 

obtained provides a reasonable basis for our findings and conclusions based on our audit 

objectives. 

3Examples of service sector firms assisted by some centers include architectural 

engineering firms, telecommunications firms, and software development firms 

Page 3 GA()..13-166T Trade Adjustment Assistance 
53 


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Our review found that from fiscal years 2008 through 2010 EDA certified 

and approved an increased number of petitions and business recovery 

plans. According to staff at several T AA Centers, the economic downturn 

contributed to the increase in firms applying for and receiving assistance 

from the T AA for Firms program during this time period because more firms 

could dernonstrate a decline in sales and employment. Additionally, EDA 

officials and T AA Centers staff stated that the 2009 legislative changes 

increased interest in and demand for the program by prospective firms. 

EDA certified fewer petitions and approved fewer recovery plans in fiscal 

year 2011 than in fiscal year 2010. EDA officials and T AA Centers staff 

attributed the decline to a lapse in the legislative changes from February 

to October 2011; uncertainty regarding the program's future funding; and 

improvement in the economy, which prevented some firms from 

demonstrating decreases in employment, sales, and production. 

Second, we found that EDA's performance measures and data collection 

for the T AA for Firms program provide limited information about the 

program's outcomes, although our economic analysis found a statistically 

significant association between participation in the program and an 

increase in firm sales. EDA collects data to report on 16 measures to 

gauge the program's performance, such as the number of firms that 

inquired about the program and the number of petitions filed, but most of 

these measures do not assess program outcomes. EDA is exploring 

better ways to assess the effect of their efforts on firms. 

We found that EDA does not systematically maintain data collected by the 

TAA Centers on the firms they assist, resulting in gaps in centralized data 

that EDA could use to evaluate the program and meet reporting 

requirements. We identified the following issues: 

Gaps in centralized data. According to EDA officials, the agency 

maintains databases of information from petitions, such as firm 

location, or information about sales or production, but EDA does not 

maintain the necessary data to conduct a quantitative analysis of the 

program, such as whether a firm is a public or private firm or a 

multiplant firm. 

EDA relies on multiple data requests from the TAA Centers. EDA 

frequently makes additional requests to the centers to obtain their 

program data when preparing required reports. 

Page 4 GAO·13·166T Trade Adjustment Assistance 
54 


Insert offset folio 27 here 77041.027

Data requests require verification but can still result in inaccuracies. In 

addition, EOA relies on each of the centers to validate its data. 

However, when we compared EOA's data with data provided by the 

centers, we identified errors in EOA's data. 

Lack of guidance results in dissimilar information across centers. EOA 

has also not developed guidance on the format and types of program 

data that centers collect, which has contributed to a lack of 

comparable data on program activities across the centers. 

Given the weaknesses we found in EOA's performance measures and 

data collection, we undertook further analysis to determine the impact of 

the TAA for Firms program. Our analysiS of data collected from the TAA 

Centers showed that the program was statistically associated with 

increased sales and productivity for manufacturing firms, although some 

factors were more strongly correlated with improved performance than 

was participation in the T AA for Firms program. 

We determined the following: 

There is a small positive and statistically significant relationship 

between program participation and sales. Overall, we estimate that 

the effect of participation in the program was an increase in firm sales, 

ranging from 5 to 6 percent on average, if all other factors are held 

constant. The effect was greater for firms with 300 or fewer 

employees, which account for 95 percent of firms in our sample. 

Using productivity (firm sales divided by employment) as one outcome 

variable, we also found that the effect of the program on productivity 

was about a 4 percent increase. 

As imports rose, sales declined for TAA for Firms clients. Our analysis 

shows that import penetration' was highly statistically Significant and 

most likely had a very negative effect on firm sales. According to our 

estimates, for every 1 percentage point increase in the industry import 

penetration ratio, sales of firms included in our analysis decreased by 

about 16 percent on average. 

4!mport penetration is defined as the ratio of imports to apparent domestic consumption, 

which shows the share of the U.S. market for the particular product served by imports. 

Apparent domestiC consumption is derived by subtracting net exports (exports minus 

imports) from U.S. industry sales or shipments. 

PageS GAO-13-166T Trade Adjustment Assistance 
55 


Insert offset folio 28 here 77041.028

TAA for Firms participation combined with market growth increased 

firm performance. We found a statistically significant and positive 

effect of industry market growth on firm sales after firms participated 

in the program. 5 Specifically, for firms participating in the program, the 

percentage change in firm sales increased as market growth 

increased. For firms in relatively high growth industries, such as 

certain types of metal manufacturing, plastic pipe manufacturing, and 

flooring industries, the combination of participation in the program and 

industry growth affected sales more positively, with such firms 

experiencing a 6 to 10 percent increase in sales. 

Our survey of T AA for Firms participants also showed that the 

program had a positive effect. We conducted a survey of 163 firms 

that had a recovery plan approved in fiscal year 2009 to obtain their 

views about their experience with the program; we received 

responses from 117 of the 163 firms, with a final response rate of 72 

percent. The survey included questions about the TAA Centers, the 

consultants who carried out the projects included in the business 

recovery plans, and the outcomes of the firm's participation in the 

programS More than 90 percent of responding firms reported that 

they were either very or generally satisfied with the services they 

received from their T AA Center and the consultants who performed 

work for them (see fig. 1). Over 80 percent reported that the program 

helped them to identify projects and business process improvements, 

and 62 percent said that the program helped them to identify 

management weaknesses. 

5For market growth, we used yearly value of shipments data from the Census Annual 

Survey of Manufacturers from 1997 to 2010. For 2011, we estimated a projected value of 

shipments. We then estimated market growth rates for each industry (as determined by 

the six-<Jigit North American Industry Classification System) associated with each firm by 

taking the natural log differences of the value of shipments divided by the change in year. 

Log growth rates are often used in economic modeling and empirical analyses. 

6For complete survey results, please see Trade Adjustment Assistance: Results of GAO's 

Survey of Participant Firms in the Trade Adjustment Assistance for Firms Program 

(GAO-12-935SP), an e-supplementto GAO-12-930. 

PageS GAO~13~166T Trade Adjustment Assistance 
56 


Insert offset folio 29 here 77041.029

Figure 1: TAA for Firms Program Clients Expressed Satisfaction with Program and Results 

Satisfaction 

The program helpad 

the firm to ktentlfy ... 

The program helped 

the firm with ... 

Cumulative percentage 

Pmjeetsthefi,moouldundertake Potential 

to 

business 

improW! business 

process !§§f:~ Improvements 

Management weaknesses 

Domestic competition 

Import competition 

Marketing and sales 

Staying in business 

Profitability 

Retaining employees 

Management practices 

Operational planning 

Strategic planning 

Oeveloplng new products 

ManufacturIng processes 

Hiring new employees 

Cost management 

Export sales 

SOlllce GAO 

2. 4. 6. •• 100 

Percentage 

~ __ Very satIsfied orhe!ped a!ot 

~ __ Generally satIsfied or helped abttle 

'4 

82 

73 

" 

64 

63 

62 

59 

59 

57 

55 

Notes: The difference between the cumulative percentage and 100 percent represents responses that 

were either "didn't help,~ "as satisfied as dissatisfied," ~genera!ly dissatisfied:' u very dissatisfjed,~ 

"don't know," or "no response/not appUcable." 

3 0ue to rounding, ~he cumulative percentage adds up to 34. 

Page 7 GAO~13~166T Trade Adjustment Assistance 
57 


Insert offset folio 30 here 77041.030

In narrative responses to our survey's open-ended questions, 22 firm 

representatives said that the program helped their business to grow or 

improve. In addition, 30 respondents wrote positive comments about their 

TAA Center's attentiveness to their needs and the ease of working with 

their center. For the complete results of our survey, please see GAO's esupplement, GAO-12-935SP. 

Third, in terms of how funds are allocated and spent, we identified key 

weakness pertaining to EOA's funding formula. 

EOA has allocated funding to the 11 T AA Centers using a funding 

allocation formula that comprises a set of weighted factors; however, the 

formula does not take into account the potential number of firms in need 

of the program and differences in costs across the centers. According to a 

key standard-beneficiary equity-a funding allocation formula should 

distribute funds according to the needs of respective populations and 

should take into account the costs of providing program services, so that 

each service area can provide the same level of services to firms in need. 

EOA's funding formula divides two-thirds of allocated funding equally 

among the 11 centers according to base funding and two fixed factorsgeographic size and number of firms. The funding formula divides the 

remaining one-third of allocated funding among the centers according to 

three variable factors: 

approved business recovery plans, 

employees in approved recovery plans, and 

firms achieving expected results.' 

However, EOA's funding formula does not include a direct measure of the 

number of firms potentially in need of the program. To meet the 

beneficiary equity standard, the formula should use reliable and 

appropriate measures of need in each state or region' Consequently, 

is measured by the percentage of a center's clients who reported satisfaction with 

the assistance received, and assistance being demonstrated by the center's payment to a 

third~party consultant helping the firm implement a project 

sSee GAO, Vocational Rehabilitation Funding Formula: Options for Jmprowng State 

Grants and Considerations for Petformance Incentives, GAO-09-798 (Sept. 30, 2009). 

Page 8 GAO-13~166T Trade Adjustment Assistance 
58 


Insert offset folio 31 here 77041.031

centers that may have a greater number of distressed firms due to import 

competition potentially receive similar funding as those centers serving a 

much smaller number of trade-impacted firms. 

EDA's allocation of funding also does not take into account variations in 

T AA Centers' costs of providing firms assistance, even though to meet 

the beneficiary equity standard, a formula should account for differences 

in the cost of providing services in each region so that each firm may 

receive the same level of assistance. However, we found that centers' 

direct and indirect costs to operate the centers varied considerably from 

one center to another during the cooperative agreement years 2008 to 

2010. Because EDA's funding formula does not take into account 

variations in centers' costs of providing firms assistance, EDA cannot 

ensure trade-impacted firms in different service areas receive the same 

opportunities for assistance through the centers. The available evidence 

we analyzed suggests there is wide variation in the number of firms 

centers are able to assist and the amount of funding they may provide to 

implement approved business recovery plans, raising questions about 

whether limited program funding is being used as effectively as possible. 

In conclusion, although funding for Commerce's TAA for Firms program, 

at less than $16 million, is small relative to the $1.3 trillion rise in imports 

over the past decade, our economic analysis and survey results show 

that the program has delivered positive results for participating 

manufacturing and services firms. We found that these firms receive 

individual attention from T AA Center professionals located in their 

regions, practical help in developing business recovery plans, and federal 

matching funds to pursue projects designed to address competitive 

weaknesses and capitalize on strengths. 

The changes to the TAA for Firms program that Congress enacted in the 

TGAAA in 2009 gave EDA and TAA Center officials more flexibility in 

certifying firms, strengthened professional management of the program, 

and improved transparency regarding the program's performance. 

However, enhanced accountability can be accomplished only through 

better measures of how the program is helping firms adjust to import 

competition. Better and more readily retrievable data would give EDA and 

Congress a more comprehensive and complete picture of program 

activities and enable more meaningful and ongoing analYSis of impact. 

EDA can do more to ensure that its allocations reflect firms' and regions' 

varied needs for assistance and T AA Centers' varied costs in providing 

this assistance. EDA can also encourage more efficient program 

administration by making the cost of services a criterion in its funding 

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59 


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Contacts and Staff 

Acknowledgments 

(320943) 

formula and by incentivizing TAA Centers' cost-containment efforts, so 

that more funds are available to serve firms. 

In our report, we recommended that Commerce establish more effective 

measures of program outcomes, improve its data collection, and allocate 

funds in a way that considers program needs and costs. Commerce 

concurred with our findings and recommendations. EDA has recognized 

many of the weaknesses we identified and has already made initial efforts 

to address them. 

Chairman Platts, Ranking Member Towns, and Members of the 

Committee, this completes my prepared statement I would be pleased to 

respond to any questions you may have. 

For further information on this statement, please contact J. Alfredo 

Gomez, at (202) 512-4101 or gomezj@gao.gov. In addition, contact 

points for our Offices of Congressional Relations and Public Affairs may 

be found on the last page of this statement. 

Individuals who made key contributions to this testimony include Kim 

Frankena, Assistant Director; Christina Bruff; David Dayton; Leah DeWolf; 

Barbara EI Osta; Bradley Hunt; and Erin Preston. 

Page 10 GAO~13~166T Trade Adjustment Assistance 
60 

Mr. PLATTS. I will yield myself 5 minutes for purposes of questions. Most of my focus is going to be on really a cross-section of 

all three of your testimonies and the administration of the program. Because clearly, from the previous panel, companies are benefiting from the program. And certainly the three that were here 

today and their interactions with MATAAC shared their great appreciation and, in fact, they perhaps wouldn’t still be in business 

today, but for that assistance. But looking at the big picture is 

what I really want to try to focus on on this panel. 

Mr. Borlik, in your written testimony as well as today, you talk 

about improving your performance evaluation of the program. I 

think that’s critically important. In your written testimony, you say 

EDA intends to focus on developing an improved performance 

measurement process over the next 2 years. 

I guess a two-part question. One, is that performance measurement process that you’re looking at going to include annual review 

of the TAACs? My understanding is their contracts are renewed 

annually. Is that accurate? 

Mr. BORLIK. That is correct. The grants are made annually. They 

are for several years, usually. But several years. But yes, annually. 

Mr. PLATTS. As far as this new approach on performance, is there 

going to be a more involved review or evaluation of that performance of each of the 11 TAACs as part of this new process. And then 

you talked about in your testimony that in putting this new process 

in place, that it’s going to take 2 years. The second part of my 

question is: Why is it is going to take 2 years? 

Mr. BORLIK. Right. So the performance analysis process, performance improvement process that we’re working on with the University of North Carolina and George Washington is going to include 

the TAAF program and the intent is certainly to develop a whole 

suite of performance measures where EDA with its regular programs now focuses on investment leveraged and on jobs created. 

With the TAAF program, we look at a number of performance 

measures, including the sales and employment and productivity of 

participating firms at the time of certification, after 1 year following certification, and 2 years after completion of the program. 

So the point of this performance measurement improvement system is going to result in an increased larger suite of performance 

measures. And we plan to work in collaboration with the TAACs 

and with a great amount of EDA grantees and also with Congress 

along the way to develop what those metrics will be, and then yes, 

the intent would be to apply the relevant metrics to the TAAF program in close consultation with the TAAC directors. 

Mr. PLATTS. But specifically, to the evaluation of the 11 TAACs, 

is there going to be a strengthened, enhanced annual review of 

those? Again, why the 2 years? 

Mr. BORLIK. Right. So yes, the performance metrics that we develop would be applied to the TAACs. We don’t know exactly what 

those will be quite yet. We’ll work in consultation with the TAACs 

to make sure those make sense, but the intent is to apply those to 

each of the 11 TAACs, whatever those end up being. 

The 2 years, that takes into account the GPRA, or the Government Performance Reporting Act, requirements for forms that need 

to be filled out by grantees. But it’s not as if we won’t be able to 

61 

do anything for 2 years. We’re going in phases. And we anticipate 

fairly soon, hopefully over the next 6 months or less, 3 to 6 months, 

to actually begin piloting some of these measures and sharing those 

with the Trade Adjustment Assistance Centers. 

We’re in the process right now with the our research partners of 

developing a suite of what those measures might be like. It’s not 

going to take 2 years to completely develop those. The 2 years is 

the whole process when you include the 9 months for developing 

the forms for GPRA reporting. 

Mr. PLATTS. I won’t be in this position a year from now and the 

coming 2 years. Perhaps Mr. Connolly or Mr. Lankford. As two retiring Members, Ed and I won’t be here, but we know our colleagues that still will. 

When I read your testimony in preparation for the hearing—and 

I am glad you’re focusing on performance evaluation—but we’re 

talking about a 2-year plan to put that in place and then begin. I 

hope it’s 3 to 6 months and not just as a pilot but that—that is 

one heck of a long time. 

Related to that specific evaluation of the TAACs, do you know 

when—and I know you’re relatively new in your position in the division being stood up—but when the last time any one of the 

TAAC’s contracts was put out for bid; rebid? 

Mr. BORLIK. No. They have not been. They traditionally have not 

been. I know that that—the Department of Commerce’s OIG alludes to that—not alludes, but recommends that we consider doing 

that. 

Mr. PLATTS. My understanding, it’s been 30 years. Is that accurate? 

Mr. BORLIK. Right. Yes, I think it has been about 30 years. 

Mr. PLATTS. When I read that, it seemed like 30 years we’ve not 

rebid any of these seems pretty much a closed market. And competition for those companies that are participating for the government itself, the fact that we’re not looking at is there something 

else in that region, wherever it may be, that may able to do it better, we don’t know unless we ask. 

Mr. BORLIK. Right. It’s a great question. I think the Department 

of Commerce is open to that possibility. We would want to work 

very closely with Congress on that because I do know that we have 

some stakeholders in Congress who feel strongly about whether or 

not to bid it out. But I would say the Department of Commerce is 

open to that. 

Mr. PLATTS. Well, any of my colleagues that want to stand in 

front of the camera and say they don’t think it’s a good idea to 

rebid taxpayer contracts on a regular basis, I would love to stand 

next to them and tell them why I think it’s a good idea. Because 

to me, when I read that, I hope that’s part of that reinvigorated 

performance process, is that these are 11—no disrespect, Mr. 

Bujalos to yours. I don’t have the data to compare you to the other 

10. But the fact that we’re not saying, Hey, here’s what you’re 

doing. Let’s see if somebody else can do it better or not. But the 

fact that we’re not even asking the question over 30 years is just 

unacceptable. 

Mr. BORLIK. Point very well taken. 

62 

Mr. PLATTS. To my colleagues that will be here, I hope that question is followed up on very closely. 

I’ve got a whole host of other questions that relate to, Mr. 

Bujalos, your testimony. And Mr. Gomez. But we’ll come back 

around for a second round. But I’ll yield to the ranking member for 

purposes of questions. 

Mr. TOWNS. Thank you very much, Mr. Chairman. 

Let me ask, if you have companies that are not failing because 

of trade injury, do you think this model would work? 

Mr. BUJALOS. Oh, yeah. I mean, I can’t be any more specific than 

that. I’ve had a long history of working in companies. And in my 

last gig before I took this gig, I was vice president of one of the 

East Coast’s largest management consulting firms. And I’ve spent 

a long amount of time with a lot of companies that weren’t tradeinjured. And I spent that time with companies that were in the 

Fortune 500 and also in the Inc. 100. The majority of them were 

family-owned. Some were traded publicly. 

There is something magical—and I’m using that word deliberately—there’s something magical about not giving somebody welfare but convincing them, and in many cases, against their own initial intuition, to make changes that they’re not used to that are not 

part of their default. And working through that exercise, almost 

emotionally in some cases, where they say, Okay, if I have a partner that will partner with me and guide me during that process, 

then it might work, because all we are is seed money. It’s just a 

seed. 

We have to get a company—in many cases, they’re in crimson 

red ink—off the edge of the table in mid-air by the time we see 

them. And all I’ve got to do is get them to the point where they 

have the confidence and they’re looking at black ink and the training wheels can be taken off and they’re own their own and doing 

their own investments. 

One of the things we do in the plans, we write these Adjustment 

Plans for the entire turnaround of the enterprise. Not for $75,000. 

Does anybody really think it takes $75,000 to turn around a $10 

million business? No. It’s closer to a million by the time you throw 

in hardware and software and equipment and robotics and a whole 

bunch of other things. We want them to get to the point where they 

willingly and can afford to invest on their own on a routine basis. 

And that’s the objective of what we do. 

Mr. TOWNS. You know, thinking about the fact that you only 

have $16 million, how are you able to reach and have such a great 

return—reach all these people and have such a great return? How 

can you do it? 

Mr. BUJALOS. It’s not universal. I don’t want you to walk away 

with the impression that they’re all successful. They’re not. We’re 

dealing with a bell curve, right. And we’re dealing with a certain 

part of the business bell curve—the extreme left-hand side of it; 

those that are injured. By the time we see them, they are injured. 

They’re not part of the normal universe of companies. 

By the time we see them, there is a higher percentage of those 

owners and chairmen and CEOs that have been mugged and 

they’re willing to listen now. This isn’t a sales pitch 

63 

anymore. This is existential discussion. And I have a sneaky feeling that that has a greater impact by that point than the same discussion a year earlier would have had. And I think that has something to do with it, too. 

You put yourself in their shoes. You’ve risked your children’s 

education. You’ve risked your ability to make your mortgage payments on your house. You’ve risked, in some cases, your marriage. 

And all of that now is in jeopardy. And somebody comes along and 

says, I want you to take even a further risk. But I’m going to be 

your partner in that effort and we’re going to measure it one step 

at a time. And that has an effect on people. It really does. And I 

suspect that that platform, the fact that they get no money, that 

they have to put their skin in the game, and that we set it up so 

we that can measure the metrics on a short time interval so they 

can see the improvements that are taking place, it changes attitudes and it changes peoples’ default behavior. And I think that’s 

applicable to business in general, not just the trade injured. But 

that’s just my opinion. 

Mr. TOWNS. Right. The uncertainty of 2011 in terms of budgetary 

and all of that, how does that play—does it play in? Because the 

point is the uncertainty around whether it’s going to be there or 

not there. 

Mr. BUJALOS. It’s a worry. See, all of our—I shouldn’t say all, but 

darn close to all of our outreach is associated with some sort of referral. Somewhere, somebody referred somebody to us as a result 

of people like me making speeches and doing presentations to trade 

organizations, banking consortia or their consultants that will send 

their clients here or clients will talk to other clients during the rubber chicken meals. When the word gets out that this possibility is 

going to go away, well, there’s—I’ve gotten many, many calls and 

emails from companies saying—I mean, it’s an investment. Put 

yourselves in their shoes. You’re going to invest the better part of 

a year. Why should you if now you figure what, I’m going to get 

a piece of paper and that’s it? 

It is the same kind of effect as uncertainty has in general. Businessmen loathe uncertainty. Business in general loathes it. Not 

just for TAA but for taxes and regulations and a whole bunch of 

things that you all know about. Uncertainty for TAA is just as injurious as uncertainty generally. 

Mr. TOWNS. Thank you very much, Mr. Chairman. 

Mr. PLATTS. Yield to the gentleman from Virginia for questions. 

Mr. CONNOLLY. Thank you, Mr. Chairman. It’s been a fascinating 

discussion. Of course, as has been the case, every time we have a 

witness from the 11th District of Virginia, there’s a certain aura 

that’s projected. And, Mr. Borlik, you certainly are keeping that 

tradition. So thank you. 

Mr. Gomez, let me just say in the GAO report, you look at, Commerce should establish more effective measures of program outcomes. It should improve its data collection. And it should allocate 

funds in a way that considers program needs and costs. Those almost sound like generic critiques of any Federal program. There’s 

nothing unique about this. And I heard Mr. Borlik say how grateful 

he was to the GAO and so forth, but it just seems to me one could 

64 

bore down a little bit more to be more helpful than these kinds of 

generic critiques. 

In those critiques, would one part of the solution be: Let’s invest 

more in technology so we can do that stuff? 

Mr. GOMEZ. Well, in regards to the first recommendation that we 

made to have Commerce look at developing more performance outcome-oriented measures and goals is that the whole purpose of our 

study was to look at the impact of the study, or to look at the impact of the program. So from the performance measures that Commerce has and the data that they have, we weren’t able to determine what’s the impact. So we put together an economics model, 

we did a regression model, where we looked to isolate the impact 

that participation in the program had while controlling for other 

factors. 

Mr. CONNOLLY. Mr. Gomez, I appreciate that. I’m just trying to 

get at a simple question: Would more investment in more technology, IT capacity, help them help this entity better comply with 

your recommendations? 

Mr. GOMEZ. We didn’t look specifically at that, but I think that’s 

something that perhaps Mr. Borlik could answer if that is a specific 

need. 

Mr. CONNOLLY. Mr. Borlik, do you think that might be part of 

the solution in terms of looking at the GAO recommendations and 

going, how are we going to implement those or better comply with 

those? 

Mr. BORLIK. I certainly do, yes. 

Mr. CONNOLLY. Mr. Bujalos, I was absolutely fascinated by your 

testimony. But as somebody who’s in the consulting business—and 

I heard you say you were a management consultant—it sounds like 

that’s what you do. You ticked off a whole bunch of stuff we don’t 

do and I’m sitting here thinking, Then what is it you do do? And 

obviously you feel passionate that there’s great value added in 

what you do. But if I’m sitting here as a layman, and I am, trying 

to understand your mission in life, I don’t understand what your 

value added is. 

Mr. BUJALOS. We don’t want our clients to think of as consultants. So we don’t use that term. A lot of what we do—— 

Mr. CONNOLLY. I don’t want my clients to think of me as a politician. We don’t use that term. But I don’t always succeed. 

Mr. BUJALOS. We bring to the table all the things that you and 

I both know about. And why do we do it? We do it because it 

works. 

Mr. CONNOLLY. But in fact, you function as a consultant? 

Mr. BUJALOS. Yeah. 

Mr. CONNOLLY. All right. So, all right. We don’t want the term, 

but. With the time that’s left me, because I was thinking about the 

bagel baskets, give us an example, if not two, walk us through a 

successful example or an unsuccessful one from soup to nuts how 

you functioned and how it made or did not make a difference. Because I think you made a very impassioned example of what’s at 

risk; what some of these small businesses risk. Just walk us 

through how it works. 

Mr. BUJALOS. I’ll give you two. One is not in MATAAC. This one 

is in northwest United States. And the company no longer exists 

65 

because it was acquired and split up and—the function still exists, 

but it’s is not there anymore. I think the owner now lives on an 

island someplace. 

The company made—and I tell this in a lot of my presentations 

because I’ve done the research to make sure it was true because 

I couldn’t believe it at first. The company was a family-owned company that made ceramic clay flower pots, the kind you buy at 

Home Depot. High tech? Not so much. Expensive? Not so much. 

They did it for like 50-plus years until a family in Taiwan realized 

they could do the same thing, ship them across the Pacific, offload 

them up and down the West Coast of the United States, and sell 

them for a price that was less than our client’s cost. 

Now flash forward 6–1/2 years. A ceramics engineering company 

was hired and a marketing firm were hired. The company was sill 

in the ceramics business, but now they were making ceramics for 

Boeing Aircraft. Not everybody survived. About 70 percent of the 

employee base decided to stay on the train, but they had to listen 

to something that modified their behavior and was not necessarily 

pleasant; i.e., you’ve got to go back to school. But I’ve got a family 

to raise, I’ve got this and I’ve got that. But that is why God made 

nighttimes and weekends. 

So now they’re making a much more sophisticated product mix. 

They’re making it for a customer mix that isn’t very tolerant of an 

occasional chip or crack. Not very forgiving at all. And they have 

to understand—and now they do—that they are in a kind of a business where somebody on this planet is going to clone it in 9 

months—and probably cheaper than you’re doing it. That means 

they had to become pretty masterful at creating new products 

quick time; knowing also that 80 percent of the time, your new 

product is going to be a miserable failure, or even mediocre, at very 

best. So you’ve got to do a lot of them and you’ve got to be prepared 

for a lot of failure. But one or two of those are going to be the 

blockbuster that are going to pay for all the other mistakes. That’s 

the kind of world they’re living in now. It’s not necessarily comfortable, but it’s quite rewarding. That’s the first example. 

Second example. This one does exist right now in your State. And 

I like it because it’s not sexy. This is the kind of a business and 

a kind of an industry that the experts and the gurus like us would 

have said 30 years ago: Give it up. Don’t mess with it. The world’s 

going away from this stuff. It’s going to Indonesia. It’s going to 

Vietnam. It’s going to China. It’s going to wherever. The company 

makes shoes. Shoes. Feet, shoes. 

The company was in mid-air, in red ink, bought by a former 

salesman from another shoe company. I think he bought it out of 

bankruptcy but I’m not sure about that fact. They were in very bad 

shape. Joined with us. The problem was we didn’t get to join with 

them until the third year. That’s why lots of time they’re burning 

their working capital like crazy, figuring they can compete by simply slashing prices. Whey they finally realize that that’s not working, it’s really dangerous. 

One of the first projects we did after they were certified and 

given the grant was we decided to hire a small software company, 

a three-man shop, and they were able to work with the company’s 

CEO and his engineers to come up with an RFID tag. If you don’t 

66 

know what that means, it’s a tiny little grain of sand that’s a radio 

frequency identification. And the company inserted one RFID tag 

in every single shoe in inventory. 

Now as a side bar, understand if you’re in the business of making shoes, it’s shocking, I know, but they tend to walk at the end 

of each shift. So you have what is called inventory shrinkage occasionally. Putting an RFID tag in each shoe eliminated that by a 

Monday morning, saving about a million dollars worth of inventory 

costs. That began to turn red ink into black ink. 

Second thing. Hired another software company. Because consider 

something, if you’re in the rag trade you have bolts of fabric and 

you use geometry to figure out what the pattern has got to be and 

use a cutter or laser to cut out maybe a thousand sheets of fabric 

to come up with the dress or the shirt or the suits of whatever 

you’re doing. But if you’re in the business of making shoes, you’re 

not dealing with a perfect rectangle. You’re dealing with an animal 

hide. Each one is unique. But you still have the same yield problems, you still have the same waste problems. So how do you deal 

with it? 

So we had another software company that took a table like this, 

but made it a light table with a camera up in the ceiling so that 

the company could take the hide, place it on the table, a picture 

was taken of it, digitalized. The software then arranged the geometry of the pattern that was unique to that piece to maximize the 

yield from that piece and a laser cut it out. And then the next one 

and on and that sort of thing. I don’t know what the savings was. 

It wasn’t as great as the millions dollars, but it was significant. 

And it also gave this particular company a niche no one else ever 

thought of. 

The third thing. And this one is still in process and it’s failed 

twice, so I don’t know if this is going to work. But in the shoe industry, traditionally, there has been an in-elastic market, a niche 

in-elastic market. The very high end. Some people have seen the 

movie called ‘‘Prada.’’ There’s a shoe called Prada, where people are 

willing to pay thousands of dollars for well-made Italian leather 

luxury shoes. Those particular customers don’t care if it costs 

$1,500 or $2,500. 

Well, our client wants to make an American Prada. One way to 

do that, aside from branding, because it’s just like with Toyota and 

Lexus, you have to use a different distribution channel, different 

names, different Web sites, different everything, but also, he has 

to have new talent. So we’ve tried so far twice to hire a retired 

Italian artist, but there was a cultural problem with south Virginia 

and Rome. So we’re trying it again this next summer to see if that 

works. Because my friend is determined to see if he cannot be successful in—it won’t be called Prada, obviously—but to create something equivalent to that and proudly put a gold USA stamp in it. 

Mr. CONNOLLY. Thank you. 

Mr. PLATTS. I thank the gentleman. Ms. Norton, did you have 

questions? I yield to the gentlelady. 

Ms. NORTON. Thank you, Mr. Chairman. 

Mr. Gomez, I was fascinated by the ratio of funding to imports 

here. According to your report, $16 million available for these 11 

centers to deal with a universe of 

67 

$1.3 trillion in imports. 

I have a couple of questions. You look at how the funds, this 

small amount, are divided to these 11 centers and the one-third allocated to the centers, according to what you call three variable factors, look like it has to do with the effectiveness of those centers: 

Approved business recovery plans, employees in approved recovery 

plans, and firms achieving expected results. That’s really an effectiveness measure, is it not? 

You indicate as what needs to be done, and I am quoting here: 

‘‘A funding allocation formula should distribute funds according to 

the needs of respective populations.’’ Now I need you to define for 

me what you mean by ‘‘needs,’’ given the diversity of the so-called 

populations that these centers deal with. The needs of firms, the 

needs of the geographic area. I’m not certain I understand. 

Mr. GOMEZ. Right. So two-thirds of each of the centers’ budget 

is—essentially, they all get the same amount of base funding. The 

one-third that you’re referring to is based on those three variables. 

The point that we were making on the funding formula is that each 

region has different firms in need. So we were asking Commerce 

to look at revising its formula allocation to look and see the number of firms that may be in need. So they may differ from one center to another. 

Ms. NORTON. So if a center had a—— 

Mr. GOMEZ. Greater need, for example, perhaps that should be 

taken into account in their funding formula. 

Ms. NORTON. Rather than this base equal. 

Mr. GOMEZ. Correct. 

Ms. NORTON. That’s very interesting. I know that when you’re in 

Congress everybody wants to make sure they get the same thing 

everyone else gets. But when you’re dealing with such a small, tiny 

amount of funds, it does seem to me the highest and best use needs 

to be taken into account. 

I have to ask you, given the small amount available to these centers and it really miniaturizes when you divide it 11 ways, are 

there case studies, is there any way to make this replicable to 

other small businesses, such as my colleague’s question, to give an 

example, to go through what a firm goes through. You help a business. That business learns. Is there any way that other businesses, 

either in that area or in the larger universe can learn from that 

experience or is that—forgive me the term—lost, because it helps 

one firm and nobody ever hears about it and can replicate it himself or herself. 

Are there case studies? Should those be done so that firms see 

what other firms have done and perhaps one can get a bigger bang 

out of this small amount of funds. Could I ask your views of the 

three of you? And if not case studies that were publishable, is there 

any other way to share whatever a firm gets from its relationship 

with one of the centers? 

Mr. BUJALOS. We do at least one every month. 

Ms. NORTON. One what? 

Mr. BUJALOS. Case study. 

Ms. NORTON. And you publish that? 

Mr. BUJALOS. Yes. Well, we send it to the head office. There is 

a book of them. We do them quite often. 

68 

Mr. BORLIK. We’ve collected a great amount of those. And the 

Trade Adjustment Assistance Centers have done a terrific job in 

sharing those with us at EDA. They’re busy as it is, and we’ve 

asked for a little bit more in collecting these case studies so that 

we can share them both within the Department of Commerce, 

across the administration, and eventually, hopefully on a Web site 

where we can promote the best practices. We do have to be careful 

about confidentiality. 

Just real quickly for an example—we don’t have to use the 

names of the companies—but there was a food processing plant operating out of Salem, Oregon, and also in Kentucky, losing sales to 

less expensive imports from both China and Chile. And the Northwest TAAC in Portland, Oregon, helped them develop a business 

recovery plan that was aimed at increasing market share, sales 

and profitability, new product development. The project started in 

2005. And since completing the projects out that were identified 

within the adjustment plan, they’ve created 231 jobs, not only saving the business, but created 231 jobs and increased sales by $37.4 

million, which for a small business is a great increase. 

I think it’s a great question about whether or not we collect examples. We do on a regular basis. We have quite of a few of them. 

And the intent is to try and share those as much as we can. 

Ms. NORTON. When you consider the small amount of money obviously is not going to be get larger in this Congress and perhaps 

in successive Congresses. It does seem to be that it is perhaps the 

most valuable thing you could do. Otherwise, this one-on-one as 

magnificent as it may be to each individual lucky enough, and I 

use that word advisedly, because with the need that may be out 

there, part of being one who gets this service may indeed be luck. 

The value of making as much information available to the larger 

universe of companies seems to me to multiply many times what 

conceivably you do for an individual firm. 

I would like to ask Mr. Gomez whether or not GAO attempted 

the gold standard of taking firms, or anyone has done this perhaps 

with the program of taking firms that did not receive the assistance and comparing them with firms that did, perhaps in the same 

business or trade or category. Has that ever been done, if not, 

should it be done? 

Mr. GOMEZ. So in our study, that other group that you’re referring to is referred to as the control group. 

Ms. NORTON. Yes. 

Mr. GOMEZ. So we had difficulty finding that control group. So 

instead, the analysis that we did is we essentially compare the firm 

to itself so we compared and gathered data for each of the firms 

before they participated in the program and then after participation. So that was the analysis that we did. We did not find the information for that control group so you know where the funds are 

that did not take advantage of the program and why perhaps. 

Ms. NORTON. Oh, thank you very much, that’s very helpful. 

Mr. PLATTS. I thank the gentlelady, will yield to myself for additional questions. 

I want to come back on the issue of how we are evaluating the 

TAACs and how it relates to the funding of the TAACs. And it’s 

my understanding that—and this was an issue raised by Mr. 

69 

Gomez’s testimony in the study about the way the funding is distributed, that in the 2010, 2011 fiscal year that there was one 

TAAC, I believe the western TAAC that received the same funds 

as New England, mid Atlantic and the western TAAC only submitted one adjustment plan petition for a single company for the 

entire year. One, is that accurate Mr. Borlik, to the best of your 

knowledge? 

Mr. BORLIK. I would have to go back and look at that, I know 

that that particular TAAC does produce many fewer petitions than 

the other TAACs, I think that’s accurate. I don’t recall whether it 

is one or not but it definitely produced fewer. 

Mr. PLATTS. That’s my understanding, that in the entire year, 

they had one adjustment plan petition submitted. And this goes to, 

again, the evaluation. If that’s accurate, and there’s other TAACs 

that have a waiting list, and it’s my understanding that mid Atlantic and New England have a backlog, I’m not sure if this is a current number, it might have been in that same fiscal year, but a 

backlog of over $6 million in unfunded projects. 

So we have some regions that have a backlog, and then we have 

another one submitted just one plan. Again, that seems like a natural to evaluate what’s that TAAC doing, or I would contend not 

doing to assist, because my guess is they’ve got companies in as 

great a need as New England does or mid Atlantic does, but they 

are, for whatever reason, not performing, yet there is no annual review of that and no consideration of making a change. And it really 

makes a point of what I asked earlier about the fact that we 

haven’t rebid in over 30 years any of these. It just doesn’t sound 

logical. And it goes to the GAO recommendation that one of the 

flaws of the program—again, we’re trying to—how can we help 

raise issues that will ultimately strengthen the program? That’s 

the goal of this as an oversight committee, the GAO’s recommendation is to change the funding formula so it’s better allocated based 

on where the need is and is being identified. And if we have certain 

regions with a waiting list, we have companies saying, hey, we 

need this help, and that TAAC is short of funds and can’t help all 

of those in need, but we have another TAAC that’s got funds 

they’re not using. It is not a question of we need more money, it 

is a better use, better distribution of the money. 

Mr. Gomez, you used a term, I think beneficiary equity is the 

term used in your testimony, that the current formula doesn’t 

achieve that. That you could have a company in California, you 

know, and a company in Pennsylvania that don’t have the same opportunity for assistance because of there’s a waiting list in Pennsylvania and there’s excess funds. Is that an accurate assessment or 

statement of what your report finding is? 

Mr. GOMEZ. That is correct, yes. 

Mr. PLATTS. Is that something you’re looking at at EDA and to 

have the TAAF division to look at a change in how you’re distributing funds? 

Mr. BORLIK. Absolutely it is. We have for the first 2 years of the 

TAAF division, we focused on operations and getting up to speed 

in terms of quicker turnaround times in petition review, and in the 

review and approval of the adjustment proposals, moving forward 

and not just moving forward from now, but over the past year, the 

70 

TAACs and I have met and talked about performance. We held— 

I think it was this past February where we held a meeting in 

Washington with all 11 TAACs, and the focus was almost entirely 

on performance, on what performance accountability should look 

like, on what the changes to allocation formula should look like. 

And the fact that we all think, I believe, I certainly do, I know that 

EDA does, and I know that many TAAC directors believe that this 

allegation formula should be focused on performance. Now that we 

with have kind of gotten through that initial phase of improving 

the operations, we are heavily focused on performance. 

And I should clarify when the 2-year point is about EDA’s overall 

development of a performance measurement system for all of its 

programs, by no means does that mean that we have to wait to 

make changes to the TAAF allocation formula. 

Mr. PLATTS. Okay. 

Mr. BORLIK. We are working on it now. 

Mr. PLATTS. Understood. In the issue of performance of the 

TAACs, for the fiscal year ended September 30th, did you have 

some TAACs turn back money while you had others that had a 

waiting list? 

Mr. BORLIK. We had TAACs turn back money, yes, we did. In 

terms of a waiting list—— 

Mr. PLATTS. Unfunded projects—— 

Mr. BORLIK. Unfunded projects in other TAACs. And EDA asked 

for that money—well, required that money to be returned and reobligated and reobligated solely to projects, not to administrative 

costs, but solely to projects. And so we did take that money back. 

Mr. PLATTS. Is that a new approach? Because again, my understanding is that, when I see in Mr. Bujalos’s testimony, 14 times 

returned for every dollar that we are investing in the program, 

there’s a $14 returns to taxpayers because of the productivity, because of economic growth that occurs. So it is not a question of we 

need more money, but just the money we reappropriating gets well 

used. 

Mr. BORLIK. Right. 

Mr. PLATTS. And my understanding in the past we had TAACs 

returning money, and other TAACs have unfunded liabilities, and 

that goes to the beneficiary equity issue. So what you’re telling me 

now for the fiscal year that just ended, we are changing that approach? 

Mr. BORLIK. That’s entirely correct. It has always been, to my 

understanding, again, I’ve been doing this for 2 years, that any 

funds that have not been spent have been returned and then equally divided per the allocation formula across all TAACs. What we 

did this past year, and again, this is part of the new approach 

under a new TAAF division, is to take those funds back, and to redistribute those to be focused solely on the not administrative 

costs, but on the backlog of services for clients of unfunded projects 

for clients. 

Mr. PLATTS. And that’s where I’m hoping to get to in a greater, 

in a more timely manner, meaning not just once a year toward the 

end, but perhaps on a quarterly basis, if you’ve got New England, 

you’ve got this waiting list of projects that have been identified, 

certified, hey, these companies need help; they have got a plan, but 

71 

we just need that seed money that would generate a $14 return for 

every dollar we spend. We have other money sitting out in western 

or wherever TAAC not being used in access, especially if there’s, 

my information is correct, one plan even submitted in that fiscal 

year, to do that on a more time sensitive, because those companies 

that are in need can’t wait, they need the help now. 

And so it sounds like you’re trying to move towards that direction and that comes back to where I started my question which is, 

performance evaluation of the TAACs, as the TAACs are looking at 

how the companies are using money, the division, and EDA, and 

ultimately the department need to look at how the TAACs are 

using the money, and to make sure that we’re getting the biggest 

bang for the buck here. And that doesn’t seem to have been the approach in the past, whether it was in the lack of any rebidding in 

30 years, whether it was in the way of distributing funds. 

And then a final question, and this goes, Mr. Bujalos, you raised 

it in your testimony when you highlighted a number of suggested 

reforms. I appreciate that you stated even if none of them were 

adopted you see the benefit of the program day in and day out. You 

listed six different suggestions, one of which was—I’m trying to 

find it here, but you talked about the qualifications of those who 

are part of TAACs and the skill set—— 

Mr. BUJALOS. Yes. 

Mr. PLATTS. —because in your own testimony, I appreciated you 

listed your background, which is obviously very, very extensive 

business background from management, project manager, project 

processing engineer, project manager engineering—you clearly 

have had a very extensive background. For your own TAACs, could 

you comment about the staff you have, what type of, I’ll say realworld experience do they have, similar to what you have? 

And then, Mr. Borlik, is there, in that evaluation process, are 

you looking at putting in place a more definitive requirements for 

the type of staff that should be manning these TAACs that they 

have real-life business experience to provide the level of expertise 

and assistance that these companies need. Mr. Bujalos, if you want 

to go first. 

Mr. BUJALOS. You know what my checkered past is, the previous 

panel mentioned that Todd Shevlin they worked with, and also Dr. 

Mercer. Dr. Mercer is a Ph.D. In management, a Bachelors in finance, he’s retired, but we see him occasionally. Todd Shevlin is a 

relatively young guy, he’s in his middle 30s, he’s got a bachelor of 

science in finance. He’s got a bachelor of science in IT, Information 

Technology, and he has an MBA with a finance subset, some from 

Villanova, some from Penn. 

We have another individual who doesn’t work too much with clients but works in the back office and takes care of the certification 

work who has a bachelor of science in accounting and finance. She 

has worked with Watson Wyatt worldwide and a few other large 

companies. Todd has also been a founder of two companies that he 

has since sold. His predecessor was a Salman Jean, who also 

founded several restaurants and has a degree in engineering. 

Mr. PLATTS. So they were out dealing with these issues? 

Mr. BUJALOS. He’s still making payroll by Thursday afternoon 

and that’s all that has to say about it. 

72 

Mr. PLATTS. That’s what came through in your testimony of your 

own experience sounds like those who are working with you 

and—— 

Mr. BUJALOS. I just want to add, we have seen, and I’m sure my 

friend from Virginia can back this up, when you’re working with 

business owners, if you can sit in front of them and prove to them 

that they are not going through anything you haven’t already gone 

through, it’s much easier for you to argue the points you want to 

argue. 

Mr. PLATTS. That, Mr. Borlik, goes to, my question to you is, my 

understanding is, currently there is no requirements or input from 

EDA or the division of what the staff training or backgrounds are 

of those staffing the TAACs. Is that something you’re looking at to 

try to, again, better ensure that these TAACs have expertise that 

really does relate to the real world to these companies that are in 

great need? 

Mr. BORLIK. We can certainly do that to the greatest extent possible. I should point out that all grants that are made to these 

trade adjustment assistance centers have both standard terms and 

conditions from the Department of Commerce and special terms 

and conditions within each award. And I’m not entirely clear as to 

the level of detail that they get into in terms of requirements and 

qualifications of staff, but it certainly—they certainly address that 

in terms of making the point that we expect there to be the highest 

quality staff available and that the TAACs should be held accountable to that. So that is, in one way or another, within the conditions of the award. 

Also mention I do conduct site visits myself. I’m not able to do 

as many as I would like because of—EDA’s travel budget isn’t exactly the highest. But I do make site visits to meet the staff myself. 

I also—and to tell you the truth, I’ve been very impressed with the 

staff that I’ve met. I have also, am responsible for reviewing the 

qualifications—I wouldn’t say approving, but reviewing and concurring with any changes or hires and key personnel, that’s part of the 

special terms and conditions of the awards. 

So I do that regularly and certainly pay very close attention to 

what those resumes look like, make sure that they are appropriate. 

And then we, the TAAF program staff and I meet on a regular 

basis and discuss program operations, certainly including how the 

interaction is going between our TAAF program staff, and the staff 

within the Trade Adjustment Assistance Center. So that is something we pay close attention to. 

Mr. PLATTS. And again, I appreciate that in taking on the role 

as director of the division and getting the division stood up, and 

as you talk about moving to the next phase, that performance evaluation is a big part of it, and what you just said was having the 

best qualified staff out there possible, and that will bring me back 

to where we started. If we’re not doing any rebidding of saying of 

these 11, these two or three are the lowest performing, so this year 

we’re going to look at those two or three in the coming year to 

rebid and see maybe there is a team of—because you said the key 

is the best qualified people doing the work that taxpayers are paying for. 

73 

So my hope is, and I will summarize, and I kind of have three 

areas I raised with you, annual review, the fact you haven’t done 

it in 30 years, to see if there is any way we can do it better. I hope 

that’s something that’s going to stop. While I’m leaving the staff on 

both sides, the committee staff will continue to work, and Mr. 

Connolly and others, returning Members can look at. The inequity, 

I’ll say the not well-thought-out funding distribution that results in 

beneficiary inequity that you have a company need, can’t get assistance, and have dollars sitting out in another region where there is 

no one asking for the assistance that we’re not addressing that, 

and then making sure that we do have the best people possible in 

these important positions. 

So you’re focused on performance, I think, in the end will take a good program and make it great, hopefully that $14 return will 

be $16 or $18, because it’s not a question of, from what I’m hearing, more money, but how we’re using that money, or better allocating it. 

Mr. BORLIK. I can assure you I will take all of that back to our 

leadership. 

Mr. PLATTS. I appreciate it. I know we’re all on the same page 

here, and we’re all after the same thing and this is good government and whatever dollars we spend result in a good return for the 

American people, and especially when we are helping save American companies that are now shipping products to China, instead 

of receiving products from China, so we’re on the same page. I’m 

going to wrap up, Mr. Connolly, do you have any closing remarks 

or final questions? 

Mr. CONNOLLY. I did, Mr. Chairman, if you don’t mind. 

Mr. PLATTS. Yes. 

Mr. CONNOLLY. Real quickly, Mr. Borlik, Mr. Bujalos, and Mr. 

Gomez, for that matter, when Mr. Greenblatt testified, one of the 

things he cited as a small businessman and a champion of the program was the paperwork requirement. It is onerous, it’s costly, and 

a lot of small companies working at thin margins, just, it’s a struggle. You concur that we could streamline the process, I think, Mr. 

Bujalos, you held up something that ultimately is something that’s 

100 pages. Can we streamline it? Can we make it more user friendly for our clients? 

Mr. BUJALOS. Absolutely. For instance, last week, I sent out to 

all of our consultants, it’s about 700 of them, but the active bunch 

is about 500, a small piece of computer code that has a graphic of 

the American flag on it, and I requested that they put that on each 

one of their Web sites with the title Federal assistance, TAAF. 

That will take whoever goes to their Web site and wants to discuss 

it, they push it, it takes it to my—our Web site in MATAAC, where 

we have added another page that begins the process of applying online. 

Now that isn’t as necessarily as cool as it might sound. There is 

a lot of paperwork, there is a lot of look-back that we have to verify 

because of the statutory requirements, but there is a silver lining 

in this effort also that I don’t want people to ignore. It’s a good 

thing to work hard for something, and if we can take a company 

through the paperwork as quickly as we possibly can, and force 

them to be in a position where they have to look back 4 years in 

74 

their finances for a company that you and I might operate that 

merely amounts to swiveling in our chair and reaching into a cabinet and pulling out some folders. 

For a lot of these companies who have shaved everything down 

but bone, that’s a task. Okay, well there’s a benefit for them learning what that task is all about, and the value of going through 

that. And that helps people like me to help people like them to 

automate what they should have automated already. So it’s not all 

bad, but there is a lot of paperwork. It probably should be looked 

at two or three more times before we’re sure of it. 

Mr. CONNOLLY. And you concur, Mr. Borlik? 

Mr. BORLIK. I do concur. I do think it is way too much paperwork. I realize, of course, that there is the statutory need to prove 

import impact, there is a statutory requirement to prove that there 

is injury, financial injury, sales losses, employment losses, the regulations, I do believe, I don’t know what my office of chief counsel 

will think about this when I get back, but I do believe the regulatory requirements coming out of the statutes are very complex 

and require a lot of paperwork. 

Mr. CONNOLLY. Sometimes up here we don’t want to admit, Mr. 

Chairman, we’re part of the problem, and the requirements we 

sometimes impose. Mr. Gomez? 

Mr. GOMEZ. Mr. Connolly, I wanted to add, many of the firms 

that we spoke with during our study did have that common complaint, it is a lot of paperwork requirements. It is, as Mr. Borlik 

noted, that it is the requirement that firms have to demonstrate 

that have been trade-impacted. So having to look back a couple of 

years to show whether the impact was on the sales or the employees, it’s that sometimes they didn’t have that information readily 

available and they have to get it. I think you heard it also from 

the three firms this morning that that was something that held 

them up also. 

Mr. CONNOLLY. Well, let me ask you a question about that, 

though. I mean, Mr. Bujalos and his colleagues, aren’t they in the 

business of certifying that someone has been negatively impacted? 

So what’s wrong with having them do the certification rather than 

the onus on the potential client having to prove it themselves? 

Come on in, and you decide whether I am eligible for help. 

Mr. BUJALOS. My suspicion however is that this requires a statutory chain. 

Mr. CONNOLLY. Okay. I have one final question, and I do want 

to echo what the chairman said, there is a certain irony in not rebidding. Our mission here is to help companies regain their competitiveness if we can, but we’re not competing. And maybe we 

found the ideal 11 who just can never be perfected and nobody can 

touch them, and they should be ad infinitum those 11. But I think 

we ought to hold ourselves to the same standards of the efficiencies 

that can be achieved through competition. And so I think we ought 

to do a little self-examination there. 

But final question, going back to you, Mr. Bujalos, you gave us 

two great examples. Help me understand what your role was. Were 

you the ones making the recommendation, put in the radio identification so you cut down on loss? Were you the ones who said, you 

know, let’s digitalize this so that we can look at that piece of leathVerDate Aug 31 2005 09:12 Dec 10, 2012 Jkt 000000 PO 00000 Frm 00078 Fmt 6633 Sfmt 6633 C:\DOCS\77041.TXT APRIL
75 

er and be more efficient in what to do with it. Were you redesigning shoes or showing competition? 

Mr. BUJALOS. No. 

Mr. CONNOLLY. What was your role that helped them with those 

two stories you told us. 

Mr. BUJALOS. Well, the first story about the flower pots, I wasn’t 

there physically, that was in the northwest United States. 

Mr. CONNOLLY. When I said ‘‘you,’’ I meant the center. 

Mr. BUJALOS. Okay. In the second one, I was physically there, 

that was one of my personal clients. I wrote the adjustment plan 

for that company and I got to know the owner quite well. The short 

answer is no. What I really did was, I think, I’m not sure about 

this, I think what I did over a period of time, because I visited with 

them physically, extensively, in one case, spent the entire day with 

them interviewing every one of their C level executives and also 

their key plant people as well as the chief executive, individually 

and collectively. 

All I think I really did was provide an environment where they 

could start thinking about something other than trying make that 

order this afternoon to get on the loading dock. Sometimes it depends on leadership, sometimes you have a problem because there 

is no leadership in a company, and I will grant you that. But in 

this particular case, the leadership happened to be there, and the 

kinds of people we picked for his particular staff were there. What 

they really needed was the time and the ability behind a door that 

was closed and phones that weren’t ringing. And it took place. I 

don’t think I did any more than that, to tell you the truth. 

Mr. CONNOLLY. Thank you, Mr. Chairman. 

Mr. PLATTS. Thank you, Mr. Connolly. And it really kind of goes 

to Ms. Britton’s testimony in the first panel that the assistance of 

the TAAC helps facilitate those internal discussions that they actually took the time to sit down and start to have that dialogue as 

opposed to just trying to get the products, the next order out the 

door. 

So a couple final comments, one on the statutory impediments to 

streamlining, Mr. Borlik and GAO and the TAACs, we certainly, as 

a body, we are always glad to have recommendations, we know 

what you intended, but the way you wrote the statute is asking for 

things that are not relevant to our assessment of whether someone 

is trade-impacted or injured. Those kind of recommendations, I 

know Mr. Connolly would welcome those for the new session as far 

as how we can strengthen this program going forward and lessen 

that statutory burden. 

When I talked about the yearly rebidding, I wasn’t suggesting 

every year you should be rebidding 11 TAACs, 

that would not be very efficient—and Gerry, thank you for great 

input, Mr. Connolly. 

Mr. CONNOLLY. Thank you, Mr. Chairman. 

Mr. PLATTS. But that probably every year maybe one or 2 should 

be being looked at for multi rebidding process, so it’s not 30 years 

since we’ve done any. 

And finally, in closing, I think goes to the really heart of this program and leveraging a small amount of money that ultimately generates a huge reinvestment in return for the companies, and ultiVerDate Aug 31 2005 09:12 Dec 10, 2012 Jkt 000000 PO 00000 Frm 00079 Fmt 6633 Sfmt 6633 C:\DOCS\77041.TXT APRIL
76 

mately taxpayers, is Mr. Bujalos, in your testimony, something 

that stuck out to me, when he says ‘‘We don’t pick up the pieces 

after catastrophic layoffs have occurred and try to create new careers out of the old cloth. Our job is to help prevent catastrophe 

in the first place. It is a lot cheaper and immensely more effective.’’ 

And I think that captures the importance of this program. This 

is trying to not help retrain workers, and my one brother, his steel 

company, his job went away, he went back to get retrained but the 

job was gone, it is to try to help that steel company stay in business in the first place. 

To each of you, I appreciate your testimony, I appreciate what 

you do day in and day out. Whether it is at the TAAC, at the division, GAO, we’re grateful for your work and your testimony. We 

will keep the hearing testimony open for 7 days for any other materials you want to submit. With that this hearing stands adjourned. 

[Whereupon, at 12:42 p.m., the subcommittee was adjourned.] 

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Insert offset folio 33 here 77041.033

"Trade Adjustment Assistance for U.S. Firms: Evaluating Program 

Effectiveness and Recommendations" 

Chairman Platts' Opening Statement 

November 14,2012 

Today's hearing will evaluate the Trade Adjustment Assistance for Firms program, or "TAAF." 

T AAF is a program administered by the United States Department of Commerce and has helped 

small and medium sized companies in the U.S. stay competitive with overseas markets for the 

past tifty years. 

TAAF operates out of the Commerce Department's Economic Development Administration 

(EDA) and has been helping firms since it was put in place in 1962. The program is currently 

authorized through 2013 at an annual spending level of$16 million.! 

TAAF support is provided to eligible firms through a network of eleven EDA-funded Trade 

Adjustment Assistance Centers, or "TAACs," located throughout the country. The Director of 

the TAAC for the Mid-Atlantic region, Mr. Bill Bujalos, is here with us today. 

Consultants at each T AAC work alongside eligible trade-impacted firms to develop business 

recovery plans, or "adjustment proposals," that are tailored to increase productivity for their 

specitic business model. Companies have five years to implement proposals once they are 

approved, with EDA typically covering up to 50 percent of implementation costs. 

According to the American Business Council, 829 firms were assisted nationally through TAAF 

from 2006 through 2010. More recently, in 2011,149 U.S. firms with average sales of$20 

million and approximately 100 employees each received a total of $12 million in financial 

assistance through TAAF. The vast majority of these small companies were in manufacturing, an 

industry that is still struggling nearly four years after the 2009 recession. 2 

Today's hearing will evaluate the extent to which TAAF has increased the productivity of 

participating firms. According to EDA's most recent annual report, tirms receiving funds in 

2009 now report that average sales have actually decreased by 1.6 percent, and average 

employment has decreased by 1.9 percent.3 This lower productivity is thought to be temporary, 

however, as companies often need time to adjust to their new business strategies. Firm 

performance must also be considered alongside broader economic indicators like the nationwide 

unemployment rate, which has remained considerably strained for the past few years. 

Mr. Bryan Borlik, Director ofTAAF at EDA, is here today to explain the operation ofTAAF 

along with some of these long term performance considerations. 

I Trade Adjustment Assistance Extension Act of2011, (Oct. 21, 2011), (P.L. 112-4) 

2 Megan M. Barker, Manufacturing Employment Hard Hit During the 2007-09 Recession, Monthly Labor Review, 

U.S. Bureau or Labor Statistics, (April 2011) 

3 Economic Development Administration, Us. Department of Commerce, Annual Report to Congress on the Trade 

Adiustmen/ Assistance for Firms Program: Fiscal Year 2011 Annual Report, (Dec. 15,2011) 
78 


Insert offset folio 34 here 77041.034

Another goal of this hearing is to detennine how Congress can improve execution ofTAAF. In 

2010, the U.S. Government Accountability Office (GAO) claimed that the impact of federal 

assistance to firms through T AAF was "unc1ear.,,4 Last month the GAO released an updated 

report arguing that the program has been useful for participating firms5 and we will hear from 

them today about their recommendations for how to make T AAF more effective. 

Finally, we will hear from companies that have participated in the TAAF Program. This 

Subcommittee is honored to have job creators from four firms that have received T AAF 

assistance testifying on today's second panel and we welcome Mrs. Patricia Britton of Topflight 

Corporation in Glen Rock, Pennsylvania (which is located in my home district), Mr. Thomas 

Zieser of JACE Systems in Cherry Hill, New Jersey, Mr. Drew Greenblatt of Marlin Steel of 

Baltimore, Maryland (which is located in the Ranking Member of the Full Committee's district) 

and Mr. Marc Rothstein of Prime Synthesis in Aston, Pennsylvania. We sincerely appreciate all 

of our witnesses being with us today and thank them for their willingness to share their 

knowledge and insights regarding the T AAF Program. 

There is no doubt that trade is critical to the prosperity of our country. The U.S. is the world's 

largest trading nation: in 20 11 alone, we exported goods and services totaling over $2.1 trillion, 

which supported nearly 10 millionjobs.6 It can therefore be easy to overlook what a devastating 

impact increased overseas competition has had on the profitability of our small businesses. 

It is a well known fact that small businesses are key engines of new job creation and that small 

U.S. companies are struggling in the face of international competitors. So today we want to 

focus on these firms, on the severe economic dislocation that businesses today often face trying 

to meet their bottom lines on a daily basis. 

We must ensure that, in doing right by our nation's trade-impacted employers, we are also 

protecting the financial interests of all American taxpayers. I look forward to hearing from our 

witnesses about how we can continue to help firms in our country survive and prosper in the 

increasingly competitive, globalized world in which we live. 

4 U.S. Government Accountability Office, Trade Adjustment Assistance: Impact o/Federal Assistance to Firms is 

Unclear, Report GAO-01-12, p. 6, (Dec. 2000) 

5 U.S. Government Accountability Office, Trade Adjustment Assistance: Commerce Program Has Helped 

Manufacturing and Services Firms. but Measures, Data, and Funding Formula Could Improve, (Sept. 13,2012) 

6 Office of the U.S. Trade Representative, Executive Office of the President, Benefits a/Trade, (accessed on Sept. 6, 

2012) 
79 


Insert offset folio 35 here 77041.035

Statement of Congressman Gerald E. Connolly (VA-H) 

Subcommittee on Government Organization, Efficiency and Financial Management 

Trade Adjustment Assistance for u.s. Firms: 

Evaluating Program Effectiveness and Recommendations 

November 14, 2012 

Chairman Platts, Ranking Member Towns, thank you for holding this oversight hearing to evaluate the 

performance and management of the Trade Adjustment Assistance (TAA) for Firms program, which is 

administered by the Department of Commerce's (Commerce) Economic Development Administration 

(EDA). I commend the Chairman and the Ranking Member for their longstanding commitment to 

holding fair and substantive oversight hearings that not only highlight deficiencies in government 

programs, but more importantly, do so in a constructive manner that allows Members to work in a 

bipartisan fashion to ensure corrective actions are developed and implemented. 

Today's hearing is representative of this Subcommittee's productive approach: employing a rigorous, 

independent U.S. Government Accountability Office (GAO) analysis examining the effectiveness of 

TAA, resulting in the development of three key recommendations for executive action to improve a 

program that GAO fowld enhances the competitiveness of our most vulnerable industries. 

Since 1962, Congress has recognized the importance of providing technical assistance to small and 

medium-sized American businesses negatively affected by trade liberalization policies and emerging 

international competitors. As a Member of Congress who spent over a decade serving on the Senate 

Foreign Relations Committee staff, I have long been advocated the necessity for the United States to 

proactively engage in developing free andfair trade agreements. 

As GAO's testimony notes, U.S. imports have nearly doubled over the past decade, reaching $2.7 

trillion in 2011. During the same period, the U.S. entered into 14 free trade agreements (FTA) with 

partner countries. Although trade liberalization has benefited certain American industries, including 

innovative firms in the 11th District of Virginia, there is no question that the proliferation ofFTAs has 

also been disruptive to many American companies, particularly those in the domestic manufacturing 

sector. 

There is no denying the challenges associated with increased trade liberalization. However, experience 

in recent decades demonstrates the difficult reality that globalization is likely the inevitable result of a 

world undergoing unprecedented technological advancements and increased interconnectedness. I 

believe it has never been a question of whether U.S. firms engage in global trade, but a question of 

when, and most importantly, how. 

While there are many reasons that the United States must lead in crafting trade agreements to best 

protect American economic and geopolitical interests, it is critical that policymakers neither overstate 

the benefits, nor overlook the needs of communities rendered uncompetitive. Analysts who fail to 

adequately and honestly address the negative and difficult tradeoffs associated with free trade do our 

Nation a great disservice, and can lead to mass disillusionment and protectionist policies. 

(OVER) 
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Insert offset folio 36 here 77041.036

Moreover, ignoring the dO\vnsides of free trade may cause policymakers to discount the importance and 

necessity of critical transitional support such as TAA. Neglecting to help American businesses compete 

in the global economy can ultimately endanger public support for agreements that open up foreign 

markets for U.S. companies. Further, refusing to reach formal agreements will allow international 

compctitors to continue to play by a different set of rules than their American counterparts. 

J supported efforts to enhance TAA under the American Recovery and Reinvestment Act, and am 

pleased that GAO found four statutory changes to the program led to improved program operation and 

greater participation. However, as GAO noted, EDA must continue to improve TAA's performance 

management by enhancing data quality through better information collection methods, guidance, and 

verification measures. 

As a champion of trade adjustment assistance in principal, and especially the T AA for Firms program in 

particular, I strongly support increasing funding to better support small and medium firms participating 

in the program, which only received $15.8 million annually for fiscal years 2009 through 2012. 

However, I also recognize that it is incumbent on TAA champions to make sure this program is 

administered efficiently and EDA is held accountable for effectively accomplishing its goals. J look 

forward to learning about what actions Commerce has taken to implement the outstanding GAO 

recommendations. 

-END-
81 


Insert offset folio 37 here 77041.037

Opening Statement 

Rep. Elijah E. Cnmmings, Ranking Member 

Committee on Oversight and Government Reform 

Subcommittee Hearing on 

"Trade Adjustment Assistance for U.S. Firms: Evaluating Program Effectiveness 

and Recommendations" 

November 14,2012 

Mr. Chairman, I want to thank you for holding today's hearing, and I want to thank you 

for your service to your country and to this Committee. I also want to thank my friend 

and colleague, Congressman Ed Towns, for your many years of service and your 

leadership on this Committee. Together, both of you have demonstrated that real 

bipartisanship and collegiality is possible by the way you have conducted yourselves and 

this Subcommittee. Your contributions will be missed after your retirement this 

Congress. 

Some people seem to believe that government should have no role in the economy. They 

say, innovation is not something government can foster. They say, all entrepreneurs need 

is for government to get out of the way. 

Today's hearing illustrates how wrong that thinking is. Today, we will hear from 

businesses that experienced very hard times, that were under crushing pressure from 

cheap imports. And thanks to a government program, the Trade Adjustment Assistance 

for Firms program administered by the Department of Commerce, these small to mid-size 

companies transformed themselves into more competitive, more productive, more 

profitable businesses. 

Marlin Steel Wire Products, located in Baltimore, MD, is a case in point. Marlin's core 

business was simple steel baskets for the food industry. But imported Chinese products 

were cheaper and they were taking away that business. With assistance from the Trade 

Adjustment Assistance for Firms program, Marlin seized on an opportunity to transform 

itself into a more sophisticated steel manufacturer for the aerospace industry. They made 

effective investments in technology, grew the new business, raised worker salaries, and 

now, they even export to China. 

Marlin is far from alone. According to the GAO, the Trade Adjustment Assistance for 

Firms program has achieved a remarkable record of providing effective assistance to 

small- and mid-size businesses. Seventy-three percent of participating companies 

became more profitable, 71 % retained their workforce, and 83% attribute success in 

kccping the doors open to the help they received through the Trade Adjustment 

Assistance for Firms program. 
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Now, our economy is growing slowly back from the deepest economic crisis since the 

Great Depression. Economic pressure caused by cheap foreign imports puts American 

manufacturers in an especially difficult position to make a comeback. 

The Trade Adjustment Assistance for Firms program makes a difference for these 

companies, and for the workers and communities that depend on them. Congress needs 

to maintain our commitment to funding the program adequately. I hope all of my 

colleagues will take note of the testimony we receive today and will support full funding 

in the coming budget. 

Thank you and I yield back. 
83 

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Insert offset folio 39 here 77041.039

Western Trade Adjustment Assistance Center 

Clarification Memorandum 

On November 14,2012 the Committee on Oversight & Government Reform held a 

hearing at 10:00 a.m. in 2247 Rayburn House Office Building. The hearing was titled 

"Trade Adjustment for U.S. Firms: Evaluating Program Effectiveness and 

Recommendations." Mr. Bryan Borlik testified at this hearing as the Director of the 

Trade Adjustment Assistant for Firms program. 

During his testimony, Mr. Borlik was asked by Rep. Todd Platts about the number of 

"adjustment plan petitions" developed by the Western T AAC in the 2010-2011 fiscal 

year. Without citing the specific source of his data, Rep. Platts asked Mr. Borlik if it was 

correct that Western TAAC only submitted a single adjustment plan petition during the 

2010-2011 fiscal year. Mr. BorEk responded that he would have to go back and confirm 

thc number. 

In an effort to clarify the record, the purpose of this memorandum is to provide Rep. 

Platts and thc Committcc with accurate information. 

There are two steps to receiving technical assistance under the TAAF program. First, 

firms must submit a Petition to EDA for certification of eligibility under the program. 

Once a firm has been certified as eligible for TAAF (approved Petition), the firm must 

obtain EDA approval of a business recovery plan (Adjustment Proposal) prior to 

recei ving T AAF -funded technical assistance. 

In fiscal year 2010, for Western T AAC, Petitions for 12 firms were certified for T AAF 

and Adjustment Proposals for 9 firms were approved. In fiscal year 2011, Petitions for 7 

firms were certified for T AAF and Adjustment Proposals for 8 firms were approved. 

We respectfully request that the record be amended to include this corrected information.