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SUBCOMMITTEE HEARING ON 

THE UPCOMING HIGHWAY BILL 

AND ENSURING IT MEETS THE 

NEEDS OF SMALL BUSINESSES 

HEARING 

BEFORE THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

HEARING HELD 

JULY 16, 2009 

Small Business Committee Document Number 111-037 

Available via the GPO Website: http://www.access.gpo.gov/congress/house 


Congress.#13
HOUSE COMMITTEE ON SMALL BUSINESS 

NYDIA M. VELA ́ ZQUEZ, New York, Chairwoman 

DENNIS MOORE, Kansas 

HEATH SHULER, North Carolina 

KATHY DAHLKEMPER, Pennsylvania 

KURT SCHRADER, Oregon 

ANN KIRKPATRICK, Arizona 

GLENN NYE, Virginia 

MICHAEL MICHAUD, Maine 

MELISSA BEAN, Illinois 

DAN LIPINSKI, Illinois 

JASON ALTMIRE, Pennsylvania 

YVETTE CLARKE, New York 

BRAD ELLSWORTH, Indiana 

JOE SESTAK, Pennsylvania 

BOBBY BRIGHT, Alabama 

PARKER GRIFFITH, Alabama 

DEBORAH HALVORSON, Illinois 

SAM GRAVES, Missouri, Ranking Member 

ROSCOE G. BARTLETT, Maryland 

W. TODD AKIN, Missouri 

STEVE KING, Iowa 

LYNN A. WESTMORELAND, Georgia 

LOUIE GOHMERT, Texas 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida 

BLAINE LUETKEMEYER, Missouri 

AARON SCHOCK, Illinois 

GLENN THOMPSON, Pennsylvania 

MIKE COFFMAN, Colorado 

MICHAEL DAY, Majority Staff Director 

ADAM MINEHARDT, Deputy Staff Director 

TIM SLATTERY, Chief Counsel 

KAREN HAAS, Minority Staff Director 

(II) 

STANDING SUBCOMMITTEE 

Subcommittee on Investigations and Oversight 

JASON ALTMIRE, Pennsylvania, Chairman 

HEATH SHULER, North Carolina 

BRAD ELLSWORTH, Indiana 

PARKER GRIFFITH, Alabama 

MARY FALLIN, Oklahoma, Ranking 

LOUIE GOHMERT, Texas 

(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Altmire, Hon. Jason. ................................................................................................ 1 

Fallin, Hon. Mary .................................................................................................... 2 

WITNESSES 

Mills, Mr. John M., President & Treasurer, Plum Contracting, Inc. Greensburg, PA. On behalf of Associated General Contractors ................................... 5 

Kirchhoff, Mr. Tom, Executive Vice President & COO, Cleveland Brothers 

Equipment Co., Inc., Harrisburg, PA. On behalf of Associated Equipment 

Distributors ........................................................................................................... 7 

Robinson, Mr. Rob, Chairman, Urban Design Associates, Pittsburgh, PA. On 

behalf of the American Institute of Architects .................................................. 10 

Martin, Mr. Rod, Vice President, Martin Stone Quarries, Inc., Bechtelsville, 

PA. On behalf of National Stone, Sand & Gravel Association ......................... 12 

Ross, Mr. Henry A., Director of Sales and Marketing, USA-SIGN, Chairman, 

American Traffic Safety Services Association, Elmira, NY. ............................. 13 

Filipczak, Mr. Michael, President, Midasco LLC, Elkridge, MD. On behalf 

of the American Road & Transportation Builders Association ........................ 15 

APPENDIX 

Prepared Statements: 

Altmire, Hon. Jason. ................................................................................................ 27 

Fallin, Hon. Mary .................................................................................................... 29 

Mills, Mr. John M., President & Treasurer, Plum Contracting, Inc. Greensburg, PA. On behalf of Associated General Contractors ................................... 31 

Kirchhoff, Mr. Tom, Executive Vice President & COO, Cleveland Brothers 

Equipment Co., Inc., Harrisburg, PA. On behalf of Associated Equipment 

Distributors ........................................................................................................... 40 

Robinson, Mr. Rob, Chairman, Urban Design Associates, Pittsburgh, PA. On 

behalf of the American Institute of Architects .................................................. 50 

Martin, Mr. Rod, Vice President, Martin Stone Quarries, Inc., Bechtelsville, 

PA. On behalf of National Stone, Sand & Gravel Association ......................... 59 

Ross, Mr. Henry A., Director of Sales and Marketing, USA-SIGN, Chairman, 

American Traffic Safety Services Association, Elmira, NY. ............................. 66 

Filipczak, Mr. Michael, President, Midasco LLC, Elkridge, MD. On behalf 

of the American Road & Transportation Builders Association ........................ 71 

Statements for the Record: 

’Traffic Congestion Slows Down Small Business and Adds Cost’ by Arnie 

Consdorf ................................................................................................................ 83 

American Council of Engineering Companies ....................................................... 85 

(V) 

(1) 

SUBCOMMITTEE ON INVESTIGATIONS 

AND OVERSIGHT HEARING ON THE 

UPCOMING HIGHWAY BILL AND ENSURING 

IT MEETS THE NEEDS OF SMALL BUSINESSES 

Thursday, July 16, 2009 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 10:06 a.m., in Room 

2360, Rayburn House Office Building, Hon. Jason Altmire [chairman of the Subcommittee] presiding. 

Present: Representatives Altmire and Fallin. 

Also Present: Representative Shuster. 

Chairman ALTMIRE. I now call this hearing to order. 

I would like to begin by asking unanimous consent that we allow 

Congressman Shuster and any other members outside the Committee who would like to sit in. So, without objection, welcome 

back, Congressman Shuster. And thank you for being here. 

In the decades since the first interstate was poured in the 1950s, 

our highways and bridges have become crucial arteries of commerce. Much of this infrastructure was built through the ingenuity 

and hard work of our Nation’s small businesses. Given the role 

that entrepreneurs have played in the creation of our highway system, it only makes sense that as Congress begins work to reauthorize the Federal highway bill, we take small business priorities into 

account. 

Today’s hearing will examine whether our transportation system 

is meeting the needs of our entrepreneurs. We are also going to 

look for ways to ensure small businesses continue to be the cornerstones of America’s infrastructure. The reauthorization of the highway bill is not just a matter of building roads and bridges; it gives 

us an opportunity to revive our economy with new job creations. 

The benefits of this growth would be felt both immediately, but 

also for decades to come. 

There are several infrastructure challenges which, if properly addressed, will help our economy to grow and thrive. Traffic congestion, for example, is an issue which touches our lives on a daily 

basis. Easing congestion would lead to lower shipping costs and improve productivity. Every year, gridlock eats up 4.2 billion hours 

and wastes 2.8 billion gallons of fuel. These costs are taking $87.2 

billion out of our economy each year. Just think what a powerful 

boost we could give entrepreneurs if we were able to recapture 

those dollars and invest them back into small firms. 

2 

No other sector of the economy is more uniquely positioned to 

tackle infrastructure challenges than our Nation’s entrepreneurs. 

The American Recovery and Reinvestment Act, with nearly 5,500 

projects already authorized, is a big step that will go a long way 

in helping small firms grow. We need to make sure that the highway bill builds off of that important initiative and that it does so 

in a way that benefits both entrepreneurs who use our roads and 

the small contractors who construct them. 

Today, as in the era when our highway system was first created, 

it will be entrepreneurs in the fields like architecture, engineering, 

and construction who lead the charge in rebuilding and modernizing our infrastructure. But these projects are not easy solutions. 

They will require long-term planning and investment in a myriad 

of different areas. Without adequate funding and fair competition, 

small firms won’t be able to offer the innovative systems and costefficient technologies that would otherwise benefit every community in this Nation. 

A long-term surface transportation reauthorization has the potential to provide that long-term vision and foundation. It holds the 

promise of creating jobs that put people back to work improving 

our Nation’s infrastructure. In fact, the Federal Highway Administration estimates that every $1 billion in highway capital leads to 

30,000 jobs and $1.1 billion in employment and wages. This multiplies the benefit of each Federal dollar spent, growing our economy 

and leaving our country with lasting economic gains. We need a 

transportation system that increases both our economic strength 

and our competitive edge in the global marketplace. 

In my district in western Pennsylvania, and all across the country, we have roads and bridges that are in critical need of repair. 

Going forward, the highway reauthorization bill will be a critical 

vehicle for our entrepreneurs as they work to improve our infrastructure and rebuild our economy. 

[The statement of Chairman Altmire is included in the appendix.] 

Chairman ALTMIRE. I would like to thank all of our witnesses 

today in advance for their informed testimony. And, with that, I 

yield to Ranking Member Fallin from Oklahoma for her opening 

statement. 

Ms. FALLIN. Thank you, Mr. Chairman. And may I just say 

thank you for holding this hearing today. We appreciate all of our 

witnesses that have joined us. Thank you for taking time away 

from your busy schedules to be with us to share your knowledge 

and interests and solutions and even concerns about our highway 

infrastructure and how we are going to pay for this highway reauthorization bill. 

And as has been mentioned already, a Federal requirement for 

all modern economies is a safe and efficient transportation system. 

Many businesses depend upon a transportation system to obtain 

needed materials and labor to send goods and services to market 

and to consumers. Every household depends upon transportation 

systems for access to work, shopping, medical care, food, family, 

and entertainment. According to the Bureau of Transportation Statistics, the average household spends more on transportation-related expenses than health care and food. 

3 

The Federal Highway Administration, when we look at the delivery of products and services, also estimates the volume of freight 

shipments will triple by 2035 to almost $42 million in constant dollars, with 24 trillion of that carried by truck, and 9 billion intermodal combinations that include trucks. That growth will put an 

enormous pressure on every element of our transportation system. 

And I want to just address real quickly, knowing that all of you 

are small business owners, that I think there is great concern here 

in Congress about how are we going to pay for our next highway 

reauthorization bill. What impact will it have upon small businesses, upon your profits, upon your margins, upon just the cost of 

delivering your products and your services? 

And I think all of you are aware that this year we face some economic challenges within our economy. We have been talking about 

how to best address our recession. How can we best jump-start our 

national economy? How can we work with putting our money wisely where it needs to go here in Congress? We have had several different types of initiatives that we have taken here in Congress. 

There has been the bailout package which cost the taxpayers more 

than $7 billion. We passed the stimulus package which pumped in 

another $780 billion. We have had an omnibus appropriation bill 

which cost our taxpayers $410 billion. And, of course, now we are 

talking about a national climate change bill and also health care 

reform. 

So when you take all of this spending that has been going on 

here in Washington, D.C., and now we are talking about infrastructure and its importance to our economy and to small businesses, 

the question is: How are we going to fund that? And of course we 

know that our highway reauthorization trust fund has run into 

deficits, and we have had to take general revenue funds to shore 

up that money so that when the money goes back to the States 

they can pay their contractors and suppliers. 

So I guess the question we want to hear from you today is: What 

are your concerns as we look forth in our economy, as we look forth 

in small businesses, to help you be successful? And how can we 

best use our taxpayer dollars to build upon an infrastructure system that is so critical to our small businesses and so critical to our 

economy? 

The Chairman mentioned some of the concerns that affect our 

small businesses, whether it is congestion, whether it is looking at 

ways of funding our next highway reauthorization bill, and how are 

we going to do that. The draft highway bill that we are going to 

be seeing soon does have different ways of paying for the next highway reauthorization package, but it also expands into several different areas that I personally have concern about. It creates a National Infrastructure Bank, an Office of Public Benefit, an Office of 

Livability, just to name a few. 

And when we are talking about new elements that we are adding 

into our highway reauthorization bill at a time when money is 

scarce and when we need to invest in our infrastructure—which I 

am all for—I think we have the obligation as Members of Congress 

to be very good stewards with our taxpayer dollars to put that 

money exactly where it needs to go, where it will benefit our economy first and foremost so we can get this economy moving again 

4 

and create those jobs and create an atmosphere to where you want 

to invest your money back into your businesses and create those 

jobs. 

So I am looking forward to hearing your testimony. I will tell you 

that as we consider our next highway reauthorization bill—and 

Chairman Altmire and I are both on the Transportation Committee—that I am concerned about the effect of any type of taxes 

that may be increased, especially on small businesses with fuel 

charges. It would affect your delivery of products and services, because those costs have to be passed on down to the consumers and 

to the other suppliers that you work with. 

We have talked about raising the gas tax, the mileage tax. We 

have talked about Davis-Bacon, prevailing wages. All those things 

have been mentioned as we talk about how are we going to fund 

our next highway transportation bill and what will be in the bill 

itself. 

So thank you all for coming today. I hope that we can all work 

together here in Congress to build a responsible and cost-efficient 

way to sustain our national transportation needs and promote 

measures that will allow our transportation projects to be completed and, hopefully, in a way that doesn’t overburden the construction of those services with too much red tape from our government. So I appreciate you coming here today. 

Mr. Chairman, I yield back my time. 

[The statement of Ranking Member Fallin is included in the appendix.] 

Chairman ALTMIRE. Congressman Shuster. 

Mr. SHUSTER. Thank you, Mr. Chairman, for allowing me to sit 

in on the Committee today. I was on the Small Business Committee for four terms. This is the first term I haven’t been. They 

were able to find my old name tag so they didn’t have to make one 

up. I appreciate that. I am sure it was in the bottom of the box 

with a little dust on it. So thank you for letting me sit in. 

I want to welcome all of the people here testifying today, especially Tom Kirchhoff, who is Executive Vice President and COO of 

Cleveland Brothers Equipment, in the Ninth District and sells a lot 

of equipment into the Ninth District. We appreciate that greatly 

and what you do. 

I want to echo what my colleagues have said about the importance of the highway authorization bill. It is important to the economy of the United States, it is important to small businesses to be 

able to get some consistency, to be able to plan over the next 6 

years what they are going to do in their businesses to expand 

them, contract. And what are you going to do with employees? I 

have heard story after story how companies in this economy don’t 

really want to lay off people, because when the economy turns or 

when we pass a highway bill we want to have the people in place, 

whether it is people in the quarries or on road crews or in places 

like Cleveland Brothers, mechanics being able to fix the equipment. 

So I know it is a struggle not knowing what is going to happen. 

I think an 18-month extension is not the best thing for the economy or businesses, especially small businesses. 

I do have to say the stimulus bill that I was not in favor of has 

not got the money out as fast as we thought it would or hoped it 

5 

would or were told it would. Although in Pennsylvania, it is the 

one shining example of where money seems to be flowing out. I 

know Secretary LaHood uses Pennsylvania. When they ask about 

the stimulus bill, he points to Pennsylvania. So we are doing something right in Pennsylvania when it comes to getting the money out 

to infrastructure jobs. 

And as my colleague from Oklahoma said, the $450 billion question is: Where are we going to get the money? And I think you have 

to look at it in all places, whether it is the public-private partnerships, tolling, looking at the user fees. Somebody has got to pay for 

it. It is not magic. Sometimes as politicians we get out there and 

say we want to do this and do that, but at the end of the day somebody has to pay. And who always pays is the American people. So 

we want to go about it in a fair and equitable way that we get the 

best bang for our buck. 

So again I thank all of you for being here and taking your time 

to come to Washington. And, again, Mr. Chairman, thank you for 

allowing me to sit in on this. Thank you. 

Chairman. ALTMIRE. We will now move into the testimony. For 

those who have not testified before, we have a light system there. 

You will each have 5 minutes to give your remarks. It is right in 

the middle of that table there. The green light means you are good. 

The yellow light means you have 1 minute remaining. And the red 

light means you are done; start to summarize and wrap up. And 

then we are going to get into the questions. 

So we are going to begin by introducing Mr. John M. Mills. Mr. 

Mills is President and Treasurer of Plum Contracting, Incorporated, located in Greensburg, Pennsylvania. Plum Contracting is 

in highway groups and a utility contractor. Mr. Mills is here to testify on behalf of Associated General Contractors of America. Founded in 1918, AGC represents more than 32,000 firms in the contracting industry. 

Chairman ALTMIRE. Welcome, Mr. Mills. 

STATEMENT OF JOHN M. MILLS 

Mr. MILLS. Good morning, Chairman Altmire, Ranking Member 

Fallin, and Congressman Shuster. Thank you for the opportunity 

to testify on a topic of great importance to the highway and bridge 

construction industry: the upcoming highway bill. My name is Jack 

Mills. I am the owner and president of Plum Contracting, located 

near Delmont in Westmoreland County, Pennsylvania. I am a resident of Plum Borough in Allegheny County. 

Plum Contracting was incorporated in 1980. We had nine employees and we did work as a subcontractor installing edge drains 

and erosion-control features on roads and highways throughout 

Pennsylvania. In 1999 Plum diversified into road and bridge building. Today we are a prime contractor for projects up to $10 million 

and annual revenues around $30 million. 

Plum is a member of the Construction Association of Western 

Pennsylvania and the Associated General Contractors of America, 

on whose behalf I am pleased to represent today. AGC is the largest and oldest national construction trade association in the United 

States, representing more than 33,000 firms engaged in construcVerDate Aug 31 2005 16:51 Oct 26, 2009 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 G:\CLERKS~1\HEARINGS\TRANSC~1\50949.TXT DARIEN
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tion of the Nation’s public works infrastructure and commercial facilities. 

Plum Contracting is a small business in the highway and bridge 

construction industry. We have built projects that have had a positive impact on economic opportunities in western Pennsylvania. We 

recently completed an 8.5 million project in New Stanton, PA, and 

are currently working on a $7.5 million project in Westmoreland 

County. We have an office staff of nine professionals and 40 fulltime field employees. Plum Contracting is a union contractor, and 

our current weekly payroll is around 100 employees. 

Plum has been affected by the downturn in the highway and 

bridge funding. Our revenues and weekly payrolls have decreased 

by around 35 percent since 2007. Nationwide, construction unemployment is still at 17.4, percent compared to the total unemployment rate of 9.7 percent. The Recovery Act is already going a long 

way towards creating and saving these jobs. And in fact, Plum Contracting is a subcontractor on a Recovery Act job in Pennsylvania. 

Last summer, to address revenues, Plum Contracting expanded 

its bridge division and was successful in being the low bidder on 

six bridge projects in Pennsylvania. Although we currently have a 

backlog, we expect our profit margins to be down this year due to 

the increased competition for the work in this industry. That is 

why we have a vested interest in the upcoming highway bill, which 

we hope will substantially increase Federal funding for highway 

and bridge work as well as the immediate crisis facing the balance 

of the Highway Trust Fund. 

First, let me address the Highway Trust Fund. The U.S. Department of Transportation and others have found that the balance of 

funds will fall below the minimum cash level necessary to make 

daily payments by the end of August. When this happens, the U.S. 

DOT will be required to drastically slow down State reimbursements for highway and bridge work. Action is needed immediately 

to fix this problem. 

The American Association of State Highway and Transportation 

Officials estimate that the additional 8 billion transfer of general 

funds into the Highway Trust Fund will be necessary to accomplish 

this. The fund also needs an additional 10 billion in fiscal year 

2010, when the program could face a 35 percent cut in funding. 

In the contracting business, contractors typically do the work and 

incur the costs and then submit payment requests to the State. 

However, in a payment slowdown or stoppage situation, your payment is delayed, meaning the contractor is the one who suffers the 

cash flow crunch. This is exceptionally problematic for small business contractors who rely more on timely repayments to stay 

afloat. 

Congress must take the steps immediately to bring short- and 

long-term certainty to the program. The construction industry 

makes decisions about investments and new equipment and in retaining and training a workforce based on its best projection about 

where the market will be over the long term. This is particularly 

true for small businesses which typically have less operating capital to invest. 

To bring long-term certainty to the program, Congress must also 

continue work towards enacting a multiyear surface transportation 

7 

authorization bill to replace SAFETEA-LU, which expires on September 30. We ask Congress to reject proposals by the administration to delay action on the critical legislation until March 2011. 

Our transportation challenges will not solve themselves and will 

only get worse over the next 18 months. 

Congress must enact a bill that establishes a national vision for 

a transportation system that meets 21st century needs. Congress 

must provide the resources to improve existing assets to expand 

system capacity, both transit and highway, and to reduce congestion and prevent highway facilities. 

To fund these national priorities, we urge Congress to increase 

the Federal motor fuels tax to recoup lost purchasing power and 

index it to inflation, while moving towards a non fuel-based financing mechanism for the future. We recognize that a fuels tax increase is a tough political decision, but this user fee, which has not 

been increased since 1993, is the most reliable and efficient method 

to finance surface transportation improvements in the short term. 

We also recommend that Congress take steps to improve workzone safety for construction workers and motorists by calling for 

greater use of barriers in highway work zones, despite the increased costs. Smaller contractors have a hard time bidding for 

projects that require these measures because of their costs and the 

difficulty including their costs in the overhead. 

Mr. Chairman, the United States has been under-investing in 

our transportation systems for far too long. The under-investing is 

costing U.S. businesses, small and large, and the traveling public 

time and money. Congress must address the immediate short-term 

shortfall facing the Highway Trust Fund before it breaks for the 

August recess, and it must continue efforts to enact a multiyear bill 

that increases investment and provides construction companies 

with the continuity that allows them to thrive and contribute to the 

Nation’s economic well-being. Thank you. 

Chairman ALTMIRE. Thank you, Mr. Mills. 

[The statement of Mr. Mills is included in the appendix.] 

Chairman ALTMIRE. For our next witness, Mr. Kirchhoff’s introduction, I am going to send it over to Congressman Shuster. 

Mr. SHUSTER. Thank you very much, Mr. Chairman. 

Tom, welcome today. Tom Kirchhoff is the Executive Vice President and Chief Operating Officer of Cleveland Brothers Equipment 

in Harrisburg, Pennsylvania. Cleveland Brothers sells, rents, and 

services Caterpillar construction equipment throughout the State of 

Pennsylvania and, as I mentioned earlier, most importantly, 

throughout the Ninth Congressional District in Pennsylvania. 

Mr. Kirchhoff is here to testify on behalf of the Associated Equipment Distributors. AED members provide construction equipment 

and supplies and services in the U.S. and in Canada. 

So again, Tom, welcome. 

STATEMENT OF TOM KIRCHHOFF 

Mr. KIRCHHOFF. Good morning, Chairman Altmire, Ranking 

Member Fallin, and Congressman Shuster. It is my pleasure to 

come before you today both in my capacity as a small business 

owner and as a spokesman for my industry, to discuss the ways in 

which highway investment affects small companies. 

8 

Cleveland Brothers is the authorized Caterpillar construction 

distributor for 59 Pennsylvania counties, in an area that stretches 

from the northeast corner of the State throughout all of central and 

western Pennsylvania, including Pennsylvania’s Fourth Congressional District and the Ninth. Our territory also includes 17 counties in northern West Virginia and two in western Maryland. Our 

family-owned company has 27 locations and 1,050 employees. 

I am also testifying on behalf of the Associated Equipment Distributors, the national trade association representing authorized 

independent distributors of construction, mining, forestry, and agricultural equipment. AED has more than 1,000 members, the overwhelming majority of which are small businesses. Approximately 

48 percent of the Association’s distributor members report revenue 

of $10 million or less. 

I would like to use my time this morning to highlight three key 

points. First, America’s surface transportation infrastructure policy 

is in a state of crisis. Numerous studies have concluded that our 

Nation’s crumbling highways threaten our economic vitality and 

public safety, and the transportation investment should be increased at all levels of government. 

The Texas Transportation Institute reported just last week that 

traffic congestion, resulting in large part from inadequate road capacity, cost the country $87.2 billion per year in wasted time and 

fuel. A study released earlier this month by the Transportation 

Construction Coalition found that more than half of all highway fatalities are related to deficient road connections, and that poor 

roads are the single-most lethal contributing factor to motor vehicle 

crashes. 

And the Surface Transportation Revenue and Study Commission, 

which was established by Congress to examine the infrastructure 

crisis, said last year that the United States should be investing at 

least $225 billion annually from all sources to upgrade our existing 

surface transportation system. We are spending less than 40 percent of that amount today. 

The current highway reauthorization presents an ideal opportunity to tackle this crisis. However, at the same time that Americans are waking up to problems with our highways, the Highway 

Trust Fund, the primary vehicle for surface transportation investment, is on the verge of bankruptcy. Congress must therefore take 

immediate action both to shore up the HTF and to enact a longterm plan to address the Nation’s infrastructure investment shortfall. 

My second point is that highway investment has a significant 

market impact on the small business-dominated equipment distribution industry, which is why my colleagues and I are so attuned to the problems facing the highway program. A study conducted by George Mason University economist Steven Fuller last 

year determined that, on average, 6.4 cents of each dollar spent on 

highway construction is spent to buy and lease new equipment and 

on major repair and maintenance outlays. Dr. Fuller also found 

that every dollar of direct spending for the purchase of heavy construction equipment generates a total of $3.19 in economic impact. 

This represents $1 of direct spending and $2.19 in indirect and induced economic activity as the money spent at equipment dealerVerDate Aug 31 2005 16:51 Oct 26, 2009 Jkt 000000 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 G:\CLERKS~1\HEARINGS\TRANSC~1\50949.TXT DARIEN
9 

ships like Cleveland Brothers is re-spent by AED members and 

their employees in other sectors of the economy. 

Dr. Fuller’s research confirms that highway spending at all levels 

of government has a major impact on equipment distributors. It 

also shows that in addition to the long-term societal benefits of infrastructure investment, the related spending on construction 

equipment and services has significant economic impact in communities throughout the Nation where AED members do business and 

their employees live and work. 

My third point is that the uncertainties surrounding the nearterm health of the Highway Trust Fund and the status of reauthorization are adding to the historic instability in construction markets and negatively affecting equipment distributors and their contractor customers. 

AED members around the country report market conditions similar to those that I face in Pennsylvania. Contractors lack confidence in the long-term demand for their services and are therefore refraining from purchasing new equipment. As a result, equipment distributors like Cleveland Brothers have seen sharp declines 

in sales. Equipment inventory is piling up and putting a strain on 

distributors who must finance the machines in their yards at a 

time when credit has tightened dramatically. 

The problems are compounded by the fact that State governments have been forced to slash their transportation budgets, and 

uncertainty about the future of the Federal program is making it 

more difficult for State transportation departments to plan. 

AED members are, like other small construction industry companies, directly affected by the uncertainties facing the Federal Highway Program. However, AED members are also affected, along 

with other businesses and the public at large, by inadequate infrastructure investment at all levels of government. In urban areas, 

our members and their employees confront traffic congestion which 

drives up costs of doing business and wastes precious time and 

fuel. In rural areas, inadequate investment means unsafe roads 

and diminished access to jobs, customers, and public services. 

Mr. Chairman, I see that my time is about to expire, and I wonder if I might have 1 minute to conclude my remarks. 

In conclusion, the United States is confronting an unparalleled 

infrastructure crisis which threatens our ability to compete globally 

in the 21st century and which threatens the safety of our citizens. 

At the same time, the uncertainty surrounding Federal infrastructure programs is contributing to historic volatility in equipment 

markets and compounding the challenges facing the construction 

industry at large. 

Congress can address these two issues simultaneously by quickly 

resolving the near-term solvency of the Highway Trust Fund and 

by enacting a long-term highway reauthorization bill that dramatically increases highway capacities and creates new revenue 

streams to support infrastructure investment. 

We look forward to working with the members of this Subcommittee and with all your House and Senate colleagues in a bipartisan manner to achieve these goals. Thank you again for the 

opportunity to participate in this hearing, and I look forward to answering any questions you may have. 

10 

Chairman ALTMIRE. Thank you. 

[The statement of Mr. Kirchhoff is included in the appendix.] 

Chairman ALTMIRE. We will turn now to Mr. Rob Robinson. Mr. 

Robinson is Chairman of Urban Design Associates based in Pittsburgh, Pennsylvania. His firm offers is urban design and architectural services. Mr. Robinson is here to testify on behalf of the 

American Institute of Architects. Founded in 1857, the AIA is the 

leading professional membership association for licensed architects. 

Welcome, Mr. Robinson. 

STATEMENT OF ROB ROBINSON 

Mr. ROBINSON. Thank you very much, Chairman Altmire, Ranking Member Fallin, and Congressman Shuster. I appreciate the opportunity to appear before you to discuss the transportation policy 

and its impact on small businesses. 

At Urban Design Associates—and we were founded in 1964—we 

have spent our lives designing cities, towns, and neighborhoods as 

vibrant places for people to live, work, and play. Through our 

projects, we see how transportation systems connect people to jobs, 

connect people to opportunities, and to each other to create 

liveable, sustainable, and prosperous places. 

I am also pleased to represent the American Institute of Architects, because the AIA is comprised of more than 83,000 licensed 

architects, architects in training, and allied professionals who are 

committed to the planning and design of safe and sustainable 

buildings and communities. Today, thousands of AIA architects are 

involved in designing transportation systems, transit facilities, 

roadway amenities, and master plans that don’t just foster mobility 

and access but also create sustainable, smart communities. Many 

of those architects work for small firms like my own and many are 

sole practitioners. 

In fact, 96 percent of U.S. architecture firms have 50 or fewer 

employees, and those firms account for nearly six in ten of the 

workers who are employed by architectural companies nationwide. 

It is small-design firms like ours that drive prosperity in our 

communities. We are in multiple places, almost always locally, 

working for communities we know well. However, the current economic crisis has devastated much of the architecture profession. 

There is no secret about that. Every architect I know has seen layoffs and cutbacks in his or her firms. Smaller firms are particularly 

harder hit. 

The challenges our Nation faces are not just confined to the economy. The fragile state of infrastructure in many of our communities 

is challenging our ability to recover and prosper. This is why we 

think it is vital for Congress to pass the comprehensive legislation 

this year rather than waiting for some in the future. 

The Surface Transportation Authorization Act couldn’t come at a 

better time. It recognizes what we know as architects so well: that 

well-planned and -designed transportation projects create prosperous, sustainable, and liveable communities. This legislation will 

rebuild our infrastructure, it will reduce congestion and lower 

greenhouse gas emissions. Most importantly, it will create jobs; 

jobs for architects and planners, engineers, builders, operators, 

11 

maintenance personnel, suppliers. It is a huge and interrelated network dependent on the transportation improvements. 

At a time when unemployment is nearing 10 percent, it makes 

no sense for us to delay legislation that will create so many wellpaying jobs across many spectrums of the economy. The impact of 

the bill on job creation is not limited to direct employment either. 

Its benefits to the small business community will be significant. 

First, well-designed transportation projects create attractive and 

accessible business districts where small businesses can flourish. 

And this is particularly true in older historic Main Streets and central business districts. And in Pennsylvania we have got many of 

those conditions all linked together to make for a stronger regional 

economy. 

Second, a 21st century transportation system will help people 

live near where they work, and that will grow the talent pool for 

small businesses and reduce dependency on fossil fuels and long 

commutes. 

Third, a 21st century transportation system will reduce congestion, pollution, and improve the safety and reliability of the transportation network. As you mentioned earlier, every minute stuck in 

traffic, every axle damaged by potholes, is money off the bottom 

line. Small businesses with thinner profit margins and tighter cash 

flows can’t really depend on an unreliable transportation system. 

For those reasons, we think that Congress simply cannot wait 

another 18 months or longer to pass a transportation bill. It must 

act now. 

In my written statement to you, I have made recommendations 

to ensure the bill will help small architecture firms plan and design 

transportation that will strengthen our country, and I will summarize those briefly. 

The legislation should provide ample opportunities for small 

businesses to take part in the design and construction of new 

transportation infrastructure, including the design of transit and 

intermodal facilities which has really a direct impact on multipliers 

within towns and cities. The legislation should ensure that small 

firms have a chance to compete for and win contracts. And the legislation should preserve provisions in current law that require 

funds to be awarded to architecture and engineering firms through 

qualifications-based selection. QBS ensures that architects and engineers who design public projects are the most qualified to do the 

work. 

We appreciate the opportunity to provide testimony on this important issue, and I am happy to answer any questions after the 

testimony here. Thanks. 

Chairman ALTMIRE. Thank you, Mr. Robinson. 

[The statement of Mr. Robinson is included in the appendix.] 

Chairman ALTMIRE. We now move to Mr. Rod Martin. Mr. Martin is the Vice President of Martin Stone Quarries, Inc., in 

Bechtelsville, Pennsylvania. Martin Stone Quarries has been serving southeastern Pennsylvania and surrounding States with stone 

and gravel since 1953. Mr. Martin is here to testify on behalf of the 

National Stone, Sand, and Gravel Association which represents the 

crushed stone, sand, and gravel industries in the U.S. Welcome, 

Mr. Martin. 

12 

STATEMENT OF ROD MARTIN 

Mr. MARTIN. Thank you, Chairman Altmire, Ranking Member 

Fallin, and Congressman Shuster for inviting me to testify today 

on behalf of the National Stone, Sand, and Gravel Association on 

the importance of the reauthorization of our Nation’s surface transportation law to the aggregates industry, particularly its small 

business members. 

The National Stone, Sand, and Gravel Association represents the 

crushed stone, sand, and gravel or construction aggregates industry. Its member companies produce more than 90 percent of 

crushed stone and 70 percent of the sand and gravel consumed annually in the United States. There are more than 10,000 aggregate 

operations nationwide, and almost every congressional district is 

home to a crushed stone, sand, or gravel operation. 

Proximity to market is critical to high transportation costs, so 70 

percent of our Nation’s counties include an aggregate operation. Of 

particular relevance, 70 percent of the NSSGA’s members are considered small businesses. 

As you said, Martin Stone Quarries was founded in 1953 by my 

grandfather, Henry Martin. We operate two granite quarries in 

Bechtelsville, Pennsylvania, and people have actually quarried at 

our one site since the late 1800s. Right now, I run the business 

with two other third-generation owners, and we currently employ 

58 people, which is down 20 percent from 2006 levels. 

In addition to providing quality materials and services to our 

customers, we are committed to being a responsible corporate member of our surrounding community. Our time, materials, and financial resources have been routinely donated to the construction and 

restoration of local parks, recreation areas, and churches. Educational field trips are offered to any interested school districts to 

inform the local students about the unique nature of the mining industry. We have also opened our gates to local fire companies, allowing them to perform mock rescue drills inside the quarry. 

Nearly two-thirds of the nonfuel minerals mined each year in the 

United States are aggregates. Construction aggregates are used 

primarily in asphalt and concrete; 94 percent of asphalt pavement 

is aggregate and 80 percent of concrete is aggregate, and every 

mile of interstate contains 38,000 tons of aggregate. 

The business of successfully building and maintaining our national surface transportation infrastructure depends in large measure on funding stability and year-over-year predictability provided 

by the Surface Transportation Act. The current law, SAFETEA-LU, 

does expire on September 30, and it is imperative that Congress 

act to reauthorize the law now or lose many of the benefits of the 

economic stimulus package that are just beginning to be felt by the 

construction sector. 

Reauthorization is critical to NSSGA’s many small aggregate 

producers. Sixty percent of our business comes directly from road 

construction and sales to asphalt plants, concrete plants, and other 

highway contractors. We are no different than the majority of the 

small business producers in the NSSGA. Multiyear reauthorization 

provides an important continuity that my company, our employees, 

and our customers rely on in order to meet significant needs of the 

local, State, and Federal transportation systems. 

13 

In the absence of a long-term plan, our customers are telling me 

that they are not sure what the next years are going to bring them; 

therefore, causing me to withhold investing in plants and new machinery for the foreseeable future. 

It is also increasingly difficult for us to do workforce planning 

due to the uncertain demand. We are looking at possibly another 

round of layoffs that will take our workforce down again if there 

is no improvement in marketing conditions and Congress fails to 

pass a multiyear reauthorization plan. 

I would like to thank you for allowing me to testify today on the 

importance of this action on a multiyear surface transportation bill. 

Martin Stone and the members of the National Stone, Sand, and 

Gravel Association look forward to working with Congress in developing a reauthorization bill that will spur economic revitalization 

by creating jobs, as small businesses generate 60 to 80 percent, 

while simultaneously building the surface transportation network 

of the 21st century. 

Thank you again for allowing me to testify today, and I will be 

happy to take any questions later. 

Chairman ALTMIRE. Thank you, Mr. Martin. 

[The information is included in the appendix.] 

Chairman ALTMIRE. And for the introduction of our final two witnesses, I will turn it over to Ranking Member Fallin. 

Ms. FALLIN. Thank you, Mr. Chairman. I would like to introduce 

Mr. Henry Ross from Elmira, New York. Mr. Ross is chairman of 

the board of the American Traffic Safety Services Association, and 

employed by the USA-SIGN, a small sign manufacturing company, 

where he serves as director of sales and marketing. And we want 

to thank you for coming to Washington, D.C. to help us with this 

Committee hearing. Mr. Ross. 

STATEMENT OF HENRY A. ROSS 

Mr. ROSS. Thank you, Congresswoman Fallin. Mr. Chairman and 

Congressman Shuster, thank you for being here. Thank you all 

very much for giving me the opportunity today to discuss the transportation authorization and its effects on small businesses and on 

the Nation as a whole. 

As the Ranking Member said, my name is Henry Ross. I am 

chairman of the board of directors of American Traffic Safety Services Association, and I am employed by USA-SIGN, a traffic sign 

manufacturing company in Elmira, New York. 

American Traffic Safety Services Association, an international 

trade association, is located in Fredericksburg, Virginia. And since 

1969 it has represented companies and individuals in the traffic 

control and roadway safety industry. 

Over 1,600 ATSSA members provide the majority of features, 

services, and devices used to make our Nation’s roadways safer. 

These include pavement markings, road signs, work-zone traffic 

control devices, guard rail, and other safety features. 

Many of ATSSA’s members who focus on roadway safety infrastructure are small business owners. For example, temporary traffic control operations are more often than not performed by small 

businesses that act as subcontractors in work zones. 

14 

Late last month, House Transportation and Infrastructure Chairman James Oberstar and Ranking Member John Mica introduced 

the Surface Transportation Authorization Act of 2009, a 775-page 

draft, for a new, comprehensive, 6-year transportation bill. This 

draft truly highlights the Nation’s needs for increased roadway 

safety. 

Last year, a little more than 37,000 men, women, and children 

perished on America’s roadways. ATSSA, through its Toward Zero 

Deaths Vision Plan, is committed to reducing these tragically high 

numbers through a targeted investment in roadway safety infrastructure. The House Transportation and Infrastructure Committee’s bill is committed to reducing these deaths through new performance measures, and ATSSA commends them for that. 

One concern of our members is timely payment. Small businesses 

rely on timely payment due to limited cash flow. While subcontractors are often first on and last off the work site, they may be the 

last to be paid. These small businesses rely on projects created 

through the transportation authorization to keep their businesses 

running, to hire and maintain existing employees, and to buy new 

equipment. 

For example, one of our California members who owns a pavement marking company mentioned his frustration to ATSSA staff 

just yesterday regarding timely payment to subcontractors. 

California prompt pay statutes require all payments to be made 

to subcontractors within ten days. The reality is that sometimes 

the payments don’t get doled out for 30 days. Sometimes it is over 

6 months. Even public agencies have been known not to pay within 

the 10-day required period. 

ATSSA would like to recommend that the Committee consider directing the Secretary of Transportation to undertake a study of 

payment practices to small businesses that are receiving funds for 

Federal aid highway projects, and report back to Congress their 

findings on these payment practices within a year of passage of the 

transportation authorization. It is unfair for small businesses to 

struggle to stay afloat due to delayed payments. The results from 

such a study could be utilized as a basis for further action. 

There truly is a ripple effect throughout the construction industry with each new authorization bill that is enacted. Unfortunately, 

without a timely new transportation authorization focused on expanding investment in our Nation’s transportation safety infrastructure, these small businesses will indeed suffer. 

Many argue that the recent passage of the American Recovery 

and Reinvestment Act, that with the passage of that there is no 

need for a reauthorized transportation bill. In our opinion, this is 

exactly the right time to continue to invest in our Nation’s transportation infrastructure. These small businesses are beginning to 

feel the positive effects of the stimulus package and have started 

to rehire previously laid off employees. To halt any forward momentum at this time would be devastating. If the transportation 

authorization is delayed past the September 30 expiration of 

SAFETEA-LU, then many of these small businesses will have to 

begin to cut back on employees, new hires, equipment, and material purchases. 

15 

Federal highway programs authorized under the transportation 

authorization account for 40 to 45 percent of the total roadway dollars spent annually in the United States. In addition, many of the 

contracts that our member companies work on stem from the Highway Safety Improvement Program, HSIP. ATSSA continues to advocate that these HSIP funds not be transferrable out of HSIP to 

other programs. According to the Federal Highway Administration, 

seven States have transferred their dollars out of their HSIP funds. 

With these transfers, funding flows away from the safety-specific 

subcontractors and our small businesses that work on these vital 

safety projects and save lives. There should be an end to transferring infrastructure safety dollars out of HSIP due to the continuing 

death toll on our Nation’s highways. 

Chairman Altmire, Ranking Member Fallin, Congressman Shuster, there is great urgency and anxiety throughout our member 

companies, especially within those which are small businesses that 

rely on the authorization projects to continue their day-to-day operations and their prosperity. 

America truly is the land of opportunity. ATSSA’s small business 

members bring needed services, safety devices, and jobs to communities throughout the country. Many of us can agree that the 

United States is still facing troubling economic times. 

Let’s all work together, small businesses, local, State, and Federal governments, the hardworking men and women, to better our 

roads and make them safer, boost our economy, and, most importantly, save lives on our roadways. ATSSA’s small business member companies are eager, willing, and capable, and with an authorized transportation bill we can all work together over the next 6 

years to do just that. There is no time for a 12-month, or an 18- 

month extension, for that matter. Our small businesses across the 

country can’t afford this kind of delay. 

Thank you very much for the opportunity to testify, and I will 

take your questions. Thank you. 

Chairman ALTMIRE. Thank you, Mr. Ross. 

[The statement of Mr. Ross is included in the appendix.] 

Chairman ALTMIRE. For our final witness, to introduce Mr. 

Filipczak, I will turn it over to Ranking Member Fallin. 

Ms. FALLIN. Thank you, Mr. Chairman. We are pleased today to 

have Michael Filipczak from Elkridge, Maryland. Mr. Filipczak is 

the president of a company called Midasco, which is a specialty infrastructure contractor. And we appreciate you coming today to 

talk about our infrastructure problems. 

STATEMENT OF MICHAEL FILIPCZAK 

Mr. FILIPCZAK. Chairman Altmire, Ranking Member Fallin, and 

Congressman Shuster, thank you very much. My name is Michael 

Filipczak, and I am the president of Midasco LLC, a specialty infrastructure contractor based in Elkridge, Maryland. It is my pleasure to appear today on behalf of the American Road and Transportation Builders Association. 

ARTBA represents the transportation construction industry that 

builds and preserves the Nation’s roads, bridges, transit systems, 

airports, railroads, and waterports. 

16 

Midasco is a signing, lighting, traffic signal, tolling and intelligent transportation system contractor. We perform both construction and maintenance services, and work both as a prime contractor for various State agencies and as a subcontractor to other 

contractors primarily on interchange and major bridge projects. We 

employ about 140 people and operate primarily in Maryland, Virginia, and North Carolina. 

According to the latest economic census conducted by the U.S. 

Bureau of the Census, there are just over 11,000 business establishments involved in transportation construction. Most of these 

are small businesses. More than 90 percent have less than 100 employees, and the average has about 40 employees. So my industry 

is largely comprised of small businesses, and the improvements we 

deliver are very important to an even broader range of smaller 

firms throughout our economy. 

Small businesses depend on the Nation’s transportation network 

to move people and products around town and throughout the 

country. Highway congestion has become a major drain on the energy and vitality of American small businesses. It negatively affects 

small businesses in three significant ways: 

First, when employees are paid by the hour, time lost waiting in 

traffic or waiting for a delivery means higher costs. 

Second, when businesses are paid by the job, by the trip, or by 

the call, traffic congestion that reduces the number per day means 

lower income for the businesses. 

Third, and most importantly, when the day is spent dealing with 

the fallout of highway congestion, scheduling, routing, late deliveries, missed appointments, or unhappy customers, this takes time 

away from planning and growing the business. 

The reauthorization of the Federal highway and public transportation programs has the potential to be a major benefit to small 

businesses. Unfortunately, virtually every State is facing budget 

shortfalls. According to the National Governors Association, 15 

States have cut transportation investment in 2009, and 19 States 

will make similar reductions in 2010. 

At the same time, revenues flowing into the Federal Highway 

Trust Fund will fall short of meeting fiscal year 2009 highway investment commitments and not be able to support current levels of 

spending beyond this year. 

The only bright spot is the transportation investment from the 

American Recovery and Reinvestment Act. Due to State budget 

challenges, however, in many cases and many areas, the stimulus 

funds are simply enabling States to maintain current activities. It 

is this confluence of challenges that makes the current push by 

some to delay the reauthorization until march of 2011 so mind-boggling. We learned the hard way from 2001 to 2005 that uncertainty 

at the Federal level at a time of economic and State budget difficulty leads to a stagnated national effort to deliver surface transportation improvements. 

Beyond the economic cost of our current system, we are paying 

too great a price in safety. Our recent study by the Pacific Institute 

for Research and Evaluation revealed that deficiencies in the Nation’s roadway environment contributed to more than 22,000 fatalities and cost the Nation more than $217 billion annually. My comVerDate Aug 31 2005 16:51 Oct 26, 2009 Jkt 000000 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 G:\CLERKS~1\HEARINGS\TRANSC~1\50949.TXT DARIEN
17 

pany specializes in safety improvements, and I agree with the report’s conclusion that making the roadway environment more protective and forgiving is essential to reducing highway fatalities and 

costs. 

Mr. Chairman, the Nation’s transportation’s challenges will not 

solve themselves, and postponing the reauthorization is not going 

to make the difficult decisions associated with that bill any easier. 

Absent major initiatives by all levels of government and the private 

sector, traffic congestion will get worse, physical conditions will deteriorate, and U.S. competitiveness in the global marketplace will 

be further impaired. 

The House Transportation and Infrastructure Committee has 

produced a robust and comprehensive reauthorization bill. The bill 

represents an excellent beginning of the reauthorization process 

and should be a call to action for all Members of Congress. We urge 

you to push for action on a multiyear reauthorization bill to address the transportation needs of our Nation and its small businesses. 

Thank you for allowing me to speak before you today, and I 

would be happy to respond to any questions. 

Chairman ALTMIRE. Thank you. 

[The statement of Mr. Filipczak is included in the appendix.] 

Chairman ALTMIRE. And thank you to all the witnesses. We realize that you have each taken a day or two off of your work from 

your business and the impact that that has. You traveled here at 

your own expense, and we really appreciate the effort that you put 

into being here today. It is helping us greatly as we work through 

this very important issue of whether or not to delay the highway 

bill, as we are talking about, which none of us support. And it 

helps us to have a face with this issue, with each one of you and 

your businesses, and how it is going to directly impact. So thanks 

to each one of you. 

We are going to do two rounds of questions. Each of us, including 

myself, will have 5 minutes each, and then we will go through 

twice, just for planning purposes. 

I am going to open it with Mr. Mills. In many respects it is advantageous for the government to contract with the smaller firms. 

Small local businesses can get to work quickly, they can access the 

labor market, and are often more innovative. What advantages do 

you feel that small business contractors offer the government? 

Mr. MILLS. First off, one is that we are a little bit more competitive. We have smaller overhead than the large corporations. If 

there is a change in the type of work that the DOTs are letting, 

we can make the change overnight where the larger corporations 

aren’t able to do that. 

Chairman ALTMIRE. Thank you. 

For Mr. Ross, deteriorating road conditions are a significant 

cause of motor vehicle accidents, as you pointed out. So in the context of what we try to accomplish with the highway bill—which 

many people think is rebuilding our roads and bridges, crumbling 

infrastructure, which is critically important, certainly in Pennsylvania and around the country—but what are the key steps the 

Congress can take in the highway bill specifically to improve road 

safety? 

18 

Mr. ROSS. Mr. Chairman, thank you for that question. As you 

may know, ATSSA has put forward a Toward Zero Deaths, what 

we call a reauthorization or an authorization policy. 

There are significant initiatives laid out in there. One of them is 

to increase funding for high-risk rural roads. An inordinate percentage of the highway deaths that occur, occur on rural roads, and 

yet the investment in low-cost safety solutions can be increased 

dramatically and can affect those fatalities. 

One of the emerging issues also is the specific funding of olderdriver programs. The SAFETEA-LU provided for the program but 

didn’t fund it. And we need to recognize that a greater and greater 

portion of the driving public is getting a little bit older and have 

needs that maybe go beyond some of the features that we are currently providing, such as sign size, the ability to see the signs as 

far as fonts and letter size and reflective materials and things of 

that sort. So those are just two right off the top of my head. 

Chairman ALTMIRE. Thank you. 

Mr. Robinson, the American Institute of Architects’ Moving Communities Forward study found that investing in transportation upgrades creates increased commercial activity. Can you elaborate 

from your testimony on the nature of the study, and what were the 

key driving factors in boosting this type of business activity? 

Mr. ROBINSON. Well, there are a number of things that are happening, both when that study was authored and continuing today, 

particularly with the investment in multimodal transit in urban regions, both in cities and in sort of the first-year suburbs. 

When you invest in the sort of multimodal platform for bringing 

buses, light rail, transit, bike, and walking together, it is all of the 

DNA you need to build a great integrated community that has 

amenities, has multiple uses, has synergy there where people are 

attracted to live and work. We are in that phase in this country 

where there is an enormous move back to urban mixed-use surface. 

I mean, the Gen Y-ers coming out of school where the opportunities 

are, it is a huge magnet. 

When you invest in the transportation infrastructure that hooks, 

connects people to jobs, as you can see in this region particularly, 

it is like a lightening rod for private sector investment around that. 

And I think it makes it easier on the funding side, because then 

you really do get private—we find you get a lot of private activity 

to complement the public investment. So that is a continuing 

theme. We see it all across the country in relatively a large variety 

of scales, from sort of small towns to large cities. 

Chairman ALTMIRE. Thank you. 

I will now conclude and recognize Ranking Member Fallin. 

Ms. FALLIN. Thank you, Mr. Chairman. And we appreciate all of 

you coming today, once again. And I appreciate your comments 

about not delaying the highway reauthorization bill and what an 

effect it would have upon your businesses and small businesses if 

we did wait 18 months. And, as the Chairman said, we are not for 

that. We want to get on with our planning and our highway reauthorization bill. We know how important it is to our infrastructure 

and safety, and, of course, the jobs. 

I have a question. I guess it is something we debate here in Congress quite a bit. With the stimulus package that was passed reVerDate Aug 31 2005 16:51 Oct 26, 2009 Jkt 000000 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 G:\CLERKS~1\HEARINGS\TRANSC~1\50949.TXT DARIEN
19 

cently, a portion of that money went to highway infrastructure, not 

as much as what I would have liked to have seen. It was a very 

small portion of that bill. But we are always debating here in Congress whether that has created jobs or whether it has sustained 

jobs within your businesses. 

So I would just like to ask each of you, with the stimulus package that was passed and the portion that went to highway infrastructure, have you been able to actually create new jobs or are you 

just sustaining the jobs that you had? Because some of you mentioned having to make layoffs with the economy. 

Mr. Mills, I will start with you. 

Mr. MILLS. Thank you for that question. In my particular business, we have one small subcontract where it is stimulus money. 

The other projects that are out for bid in Pennsylvania are smaller 

projects that I could do with a decreased workforce, and I would 

not replace or buy new equipment or lease new equipment to do 

the work on that. So what I have seen in the amount of jobs that 

are available to me, the stimulus package hasn’t helped very much 

at all. 

Mr. KIRCHHOFF. Likewise, we have seen very little benefit. There 

has been some small paving work out there and some small bridge 

work, which I think has kept some idle equipment busy. It has not 

led to any increased acquisition of products from companies like 

Cleveland Brothers. 

A larger highway construction project would solve that issue, but 

the stimulus bill to this date has done nothing to allow Cleveland 

Brothers to remain fully employed. As a matter of fact we, 18 

months ago, employed about 1,500 people; we are now down to a 

little over 1,000. So, steep declines. 

Mr. ROBINSON. I think for us in the architecture profession this 

is a little early to really evaluate how that is affecting, because it 

does—even though you say ′′shovel ready′′ and ′′things are ready,′′ 

it takes a while. And we recognize that. But on our clients’ side 

and the constituents’, I think it is very early. You might be sustaining jobs, but we don’t see any evidence on our client side of job 

creation yet. 

Mr. MARTIN. The same goes for our company. We haven’t been 

able to create any new jobs with the stimulus package. There are 

a few stimulus projects in our area that are funded by the stimulus 

package, but they were getting ready to begin anytime soon anyway. So whether the dollars are actually from the stimulus, the 

signs are up there, but there haven’t been any jobs created on our 

side because of the stimulus project. 

Mr. ROSS. Anecdotally, we are hearing of some people who are 

hiring people back. I don’t know that they are going to hire levels 

that they were, say, a year ago or a year and a half ago. We are 

also hearing, as was said I think earlier, that some of the stimulus 

money projects are just sort of replacing State programs. Some of 

the States are in such disarray funding-wise that, except for the 

stimulus money, I don’t know that they would have a program at 

all. So it is just basically treading water and trying to keep your 

nose up above a certain level in certain areas, in certain geographic 

areas. 

20 

So the stimulus money is helping that. But if not for that, it 

would be even a worse situation. But I wouldn’t say that anybody 

is really doing well. 

Mr. FILIPCZAK. Thank you, Ranking Member Fallin. It is really 

a great question that you ask, because we have not seen any job 

creation through the stimulus jobs. We have seen, really, a tremendous amount of bidding activity primarily in what we would consider maintenance, contracts for lighting or signals, or signing, 

which tend to be task order-based contracts. 

The downside of the bidding activity, though, is that there really 

has been sort of a feeding frenzy at the bid table as contractors sort 

of race to put this work into their backlogs, because they are not 

sure what is going to come beyond the stimulus money and the 

stimulus jobs without the reauthorization. And so it really has created a bit of a situation for us in that way. But in terms of job creation, we have not seen it. 

Ms. FALLIN. Thank you, gentlemen. That is all really helpful. 

My other question was because I am very pro-small business, so 

I want you guys to be able to create jobs and opportunity and have 

investment. But we have been talking about a lot of policy changes 

here in Congress, and of course you all mentioned about support 

of raising gasoline taxes to fund the next highway reauthorization 

bill. But on top of that, if that is done here in Congress, we also 

have a new piece of legislation going through called cap-and-trade 

which could raise your costs as small businesses, especially your 

utility costs, your fuel costs. And then we, of course, are debating 

health care which can also raise your costs. 

So I guess my question is: As small business people, you are talking about possibly raising gasoline taxes to help fund the next 

highway reauthorization bill. And I am not sure what the right answer is on that yet. But if your health care costs should possibly 

go up and then cap-and-trade raises your utility costs and fuel 

costs, can you all sustain those cost increases to your business and 

will you still be competitive? Anybody? Mr. Mills. 

Mr. MILLS. I think that if it is across the board, as far as being 

competitive, and all the contractors would be on the same level 

playing field, I think that that is okay. 

As far as the increased costs, ultimately it will be passed on to 

the owner, which would be in my case—consumer, which would be 

Pennsylvania, which would also be the taxpayers of Pennsylvania. 

I think for the amount of jobs that we create and the amount of 

families that we feed, I think it is well worth it. 

Mr. KIRCHHOFF. Likewise, we refer to it as a user fee at our company versus a gas tax. And I think the benefits of it—decreased 

congestion, safer roads in the rural part of our territories and so 

forth—far outweigh the increased expense that our company would 

incur. 

And as to the other topics of health care and cap-and-trade, I 

think we would be in a position with our current expense levels 

and so forth to be able to withstand—the little bit I am understanding of the new bill—be able to withstand that with our current levels of funding for that business. 

Ms. FALLIN. That is interesting. Even though you have gone from 

1,500 to 1,000 employees, you could withstand those cost increases? 

21 

Mr. KIRCHHOFF. I would have to see what the final cost increases 

are. But I think—we invest heavily in our people. We have a very 

robust health care plan for our people. And I think anything that 

we are being obligated to do, we are already doing. So I am confident that we can handle that. 

Ms. FALLIN. Okay. 

Mr. ROBINSON. I think it is always an interesting argument 

when you pose it as an increase in costs and operations, as if the 

way we are headed is not ultimately taking us to a much more expensive end gain. So this idea that you take this slice and it is 

going to cost you more for all of these things, yes. But isn’t it really 

costing us a lot more for not doing this in the long run? I mean, 

every one of these are issues that have been piling up. So we are 

at that moment in history where we are trying to take care of a 

lot of stuff, and it happens to be all at once. 

I think small businesses are exactly—as has been said, we are 

able to respond to those, and we will survive and we will achieve 

and we will prosper. As long as it is all headed to reinvestment and 

recapitalizing this country, I think we are in good shape. 

Mr. MARTIN. We look at it the same way as Tom said, as a user 

fee. I mean, if you are going to use the road, you might as well pay 

the fee to use the road. And an increase in the user fee will give 

us more transportation work, which will give our company more 

work, which in turn will help us pay for the additional costs of the 

health care and the cap-and-trade. So we strongly are in favor of 

a user fee increase. 

Mr. ROSS. Our Association agrees. We in our Toward Zero 

Deaths proposal actually have addressed an increase in the user 

fee. And I think we also have to look at it as a true investment, 

and the payoff is in creating jobs and saving lives. And we can get 

into all sorts of subsets of that, but that is the way we approach 

things. 

Mr. FILIPCZAK. We are in favor of increasing the gas tax and in 

fact indexing that to inflation. And just from a company perspective, we look at it really two ways. You know, we pay now or we 

pay later. If we pay more in gas tax and we increase our internal 

fuel costs, that is a cost that I think we can absorb. But we are 

not just building those systems, we are also using those systems. 

We dispatch 35 crews every day, and they have got to get to the 

job site on time to respond to our customers. 

And so if we don’t make the investment, then we are not going 

to be able to do the job that we have been contracted to do. So we 

are in favor of that. 

Ms. FALLIN. Thank you, Mr. Chairman. 

Chairman ALTMIRE. Mr. Shuster. 

Mr. SHUSTER. Thank you very much. 

Just to follow up on the line of questioning of my colleague from 

Oklahoma, and I would assume all of you are going to support an 

increase in the user fee at the pump. It makes sense. That is where 

the money is. And if you use it, you pay for it. I look out there, 

and everybody but probably Mr. Robinson are heavy users of the 

highways with trucks and vehicles, so you all see that increase go 

up, but you see the benefit to that. 

22 

As far as the increase in possibly health care costs, my question 

is a little different. One of the proposals is if you don’t provide 

health care to your employees, it is an 8 percent penalty to you. 

And probably many of you in your head know what you have in 

health care costs versus what your payroll is. And if you do the 

math, I had a company that came to me yesterday, a small company that employs about 50 people, $128,000 a year is what they 

pay in health care costs. Their payroll is about $900,000. So he told 

me he would rather pay the $72,000 and saving $50,000 a year. 

And I have got to believe your ratios are about the same for all of 

you; health cares costs are one-tenth or one-seventh, or something 

like that, of your payroll. 

Would that be the same outcome for you if you had that type of— 

could you respond to that and be thinking about that? 

Yes, Mr. Ross. 

Mr. ROSS. Congressman, we have to remember we are in a competitive environment for the people that we have working with us 

and for us. We have to go out and recruit, we have to train. We 

are making an investment in them every day. Part of that investment are the benefits that we provide. If we take away some of 

those benefits, we could very well lose good, trained people, and not 

get them back. 

Mr. SHUSTER. I am not saying taken away from you, I am saying 

the government can supply you with that insurance and save you, 

in this case scenario, $50,000 a year. So I am just saying, on a 

business model, if you are paying $200,000 in health care costs, 

and you are paying $2 million in wages, an 8 percent penalty on 

that, it would seem to me you would make the decision to let the 

health insurance go to a government-supplied entity instead of paying out of your pocket if there is a savings there. I am not saying 

take it away, I am saying just a different source—as a business 

person 

Mr. ROSS. Looking at absolute numbers, maybe there is an argument there, or maybe there is a substantiation for that other position. I think that you have to—certainly from a business standpoint, you have to look at what are the products you are talking 

about, and what your employees expect, what do you want to provide? I mean, we pay lots of things every day that we don’t want 

to pay, and I am not just talking about employee benefits, I am 

talking about lots of stuff. 

Mr. SHUSTER. I was a small business owner, and the case you are 

making to me is you will pay more for the same piece of equipment 

if you can get the same piece of equipment for less? Thomas, you 

are shaking your head. 

Mr. KIRCHHOFF. Yes. Going back to the logic and how you posed 

the question, when I do the quick math in my head, the 8 percent 

is an easy decision for us. I think we invest far more in our people, 

and their health plan is far more robust than 8 percent of our expense. 

So not knowing too much about the legislation and so forth, running the quick math in my head, I would certainly think that could 

be a direction we would go. 

Mr. SHUSTER. We are all waiting to see what the legislation looks 

like. 

23 

I will yield to my colleague. 

Ms. FALLIN. Yes, if you will yield for just a moment. 

I guess the question he is trying to ask—because we have been 

debating this here in Congress, too—would you drop your privatesector coverage if you could just pay an 8 percent increase than 

what you are paying right now with the government? 

Mr. KIRCHHOFF. If it could provide the same level or better benefits for our employees, sure we would consider it, if it is the same 

level of benefits. 

Mr. SHUSTER. It takes someone from Oklahoma to make sense of 

what I was trying to say. 

Mr. KIRCHHOFF. I guess the answer is yes. 

Mr. SHUSTER. And the other question I had—and I didn’t mean 

to get off on the health care tangent, but it is the issue of the day. 

But also, just to talk a little bit—I just have 30 seconds—but the 

competition that is out there, and I see it in my area where people 

are coming from all over, large companies are competing. How is 

the competitive environment out there right now for you? Like I 

said, especially with—I know most of you are smaller companies, 

but the big boys sort of coming in— 

Mr. FILIPCZAK. I can answer from our perspective, it has been extremely fierce. And it has gotten more competitive with the stimulus dollars out there. And in my mind, it is really the stimulus 

dollars flowing now, but linked with the uncertainty of the longterm funding that is causing a more competitive than normal environment. 

Mr. SHUSTER. Anyone else want to take a crack at that? 

Mr. MARTIN. From our perspective, it is definitely much more 

competitive. We sell directly to the highway contractor, the asphalt 

plants, so when they get a bid opening, there are 50 people there 

where there are usually 5 or 10. So they have got to sharpen their 

pencils and get real tight on their numbers. Their margins are 

shrinking, so therefore they are starting to hammer us to start 

shrinking our margins. And now is not the time to be shrinking the 

margins with all of our other costs that we are talking about possibly going through the roof. 

Mr. SHUSTER. If I could just ask one more question, Mr. Chairman, and I will forgo my second round. 

I think some of you touched on it, but could you be a little more 

specific? What kind of things—we are talking about the highway 

bill and doing an 18-month extension. How much of an impact is 

that going to have on your short-term and long-term planning if 

you have an 18-month versus you have a 6-year bill? 

I see, Mr. Ross, you put your finger up first. 

Mr. ROSS. The thing that concerns me about a 12- or 18-month 

extension is the fact that you don’t have any predictability. Small 

businesses need to be able to justify investments in people and in 

equipment, and you can’t do that if you don’t know what the funding is a year out or 2 years out. 

That is what has been nice about having a 6-year bill—although 

SAFETEA-LU was actually a 4-year bill. You just can’t do it. And 

that is why this whole issue of those of us who are dependent on 

State programs as well, and we see what has happened with the 

State programs, and then the normal SAFETEA-LU type of situaVerDate Aug 31 2005 16:51 Oct 26, 2009 Jkt 000000 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 G:\CLERKS~1\HEARINGS\TRANSC~1\50949.TXT DARIEN
24 

tion, their inability possibly to make their match, it throws all that 

into question. You are going to get everybody real nervous if we 

just do extensions the way we did on the last reauthorization, and 

people are not going to be making the long-term investment in 

equipment and in people. 

Mr. SHUSTER. And I am going to ask you, Tom, because I know 

we had a discussion about this, what is more difficult, the capital 

or the people, in trying to figure out which to do, what you are 

going to do? 

Mr. KIRCHHOFF. In regard to our investment in our business? 

Mr. SHUSTER. Right. In 18 months versus 6 years? 

Mr. KIRCHHOFF. Well, as you have seen, I have talked to probably 10 to 20 large contractors of ours in the last week or 2 preparing for this statement, and they have all mentioned to me their 

uncertainty about the future is refraining and restraining them 

from making any kind of a large capital outlay. They are spending 

some parts and service revenue to keep their equipment going, and 

they are keeping their idle equipment busy, but that is not moving 

the needle for our Cleveland Brothers. We are significantly impacted by that, and extending out another 18 months will just further the pain that we have been talking about here all day today. 

I think at September 30, we recognize some sort of an extension 

is going to be necessary. I would like to hope it is going to be far 

less than 18 months, maybe the order of 6 months, again, to put 

an end to that uncertainty. Our contractors just know that there 

is—something is coming, and when I buy this piece of equipment 

from you, Cleveland Brothers, I will have work for it for the next 

6 years—or there is opportunity for work for the next 6 years. And 

right now they don’t have any of that confidence. 

Mr. SHUSTER. Thank you very much. 

Thank you, Mr. Chairman. 

Chairman ALTMIRE. Just one or two more. 

Mr. Robinson, the Brooks Act, also known as qualifications-based 

selection, ensures that architects who design public buildings are 

the most qualified to perform the work. 

How does QBS ensure the highest quality of work and result in 

a leveling of the playing field for small businesses? 

Mr. ROBINSON. What happens with QBS is that you are not competing directly on price anymore. And what typically happens is 

that you will get large national and multinational firms that bring 

all their disciplines under one house, so they become huge competitors to take these projects. And they are not necessarily built for 

that particular expertise, it is included in a whole basket of services. 

So it really allows you to pull out where you have very specific 

expertise and experience and let that become kind of building a 

team to do these projects rather than just taking it as a full one 

big shop. And we have seen a lot of that happening over the last 

few years as consolidation into giant firms who go out—and we 

talk about competition—are competing for everything under the 

sun. So it really knocks the small business—it sort of knocks them 

out of a competitive platform to be able to do that both on price 

and capacity. 

Chairman ALTMIRE. Thank you. 

25 

And my final question, I think, will transition nicely into Congresswoman Fallin’s final question. 

Specifically for Mr. Martin, without a multiyear highway reauthorization, States are unlikely to initiate large transit projects, 

and contract awards for construction projects will inevitably slow. 

Can you discuss the percentage that your business revenues rely 

on transportation construction dollars, and have you seen this reduced due to the lack of a multiyear highway bill to this point? 

Mr. MARTIN. Yes, great question. Roughly 60 percent of our business is directly related to transportation spending, either building 

the roads, the asphalt for the roads, the concrete for the roads. So 

that is a large chunk of our business, and that portion has gotten 

larger as the residential side has dropped. So we are directly tied 

to the transportation spending. 

The customers that we have tell us that they know they have 

work to finish a year out, but next year, the year after, they are 

not sure. So that makes us think twice about, all right, we need 

to upgrade a piece of equipment, we need to buy a new loader from 

Tom, but we don’t know; are we going to have the work for that 

load, or is it going to sit all next year? And with the uncertainty 

that contractors are telling us, I mean, our contractors have to 

make big investments in services as well, and they are scared to 

do it, which in turn slows us down, which, like I said, we are down 

20 percent of our manpower from 2 years ago. And for a company 

my size, that is 20 percent of people that we know real well, we 

see them walking in the gate every day, saying hi to them, how is 

your family. We don’t want to lose any more of those people, so we 

definitely need a long-term plan to give that some stability so we 

can, in turn, have our company’s stability and work for our employees. 

Chairman ALTMIRE. Thank you. 

I now recognize Congresswoman Fallin. 

Ms. FALLIN. Thank you, Mr. Chairman. 

I think that goes right along, as you said, with my line of questioning. I was just concerned that if we just do an extension only 

here in Congress—which we don’t support—how would that affect 

your hiring and your maintenance of employees that you have now, 

your investment into equipment because you have to pay that off 

over years, and even the financing from your bank loans? I would 

assume that you have lines of credit that you have to draw from 

financial institutions, and you do that based upon the work that 

you may have in the future. And if you have uncertainty in the 

quantity of work that you are going to have in the future, then I 

would assume you would have to start looking at your workforce 

and planning ahead and the equipment that you buy. 

Are you even having trouble with the banks per se in getting the 

financing? That has been another big issue we have been talking 

about here is have we actually helped in Congress to release that 

investment flow of capital, or have we actually kind of caused the 

market to contract back to where the capital is not even available 

for you? 

Any of you. 

Mr. KIRCHHOFF. Two points. First on the employment front. It is 

pretty simple for us, although it is a gut-wrenching decision. When 

26 

you take a look at the revenue that were are creating or that is 

being created for us for our business, keeping our shops and our 

mechanics busy, the parts that we are selling to contractors, as 

that slows, we can only afford to keep a level of employment consistent with that level of revenue. As I mentioned earlier, we are 

down about 30 percent in our employment. Our business is off 

greater than 30 percent. Our largest expense is employee expense 

and all the things that go into that; health care, salaries, wages, 

and so forth. So as business continues to deteriorate, that is one 

of the first areas where we are forced to look. 

As far as our banking goes, we are in a fairly fortunate situation 

where we do have a source of funding. However, there are covenants that come along with that source of funding, and as our 

business underperforms, those covenants get tighter and tighter. So 

we are constantly looking at that to make sure that we don’t have 

to go back out there and reapply for more funds with our banks. 

But, again, keeping an eye on the top line and the bottom line is 

where that difference comes in. 

Ms. FALLIN. Can I ask you a question; do you do any exporting? 

Mr. KIRCHHOFF. Very little; probably less than 5 percent of our 

business is exporting. We have done more over the years, but not 

so much this year. 

Ms. FALLIN. Okay. Anybody else want to respond? 

Mr. FILIPCZAK. I would like to take it just from an equipment 

perspective. I mean, I guess we are fortunate in that, from the financial perspective, we haven’t seen any additional pressure, but 

we are also not borrowing heavily. So they would go hand in hand. 

From an employee perspective, our employee count is more 

project-based, and it is a little hard to connect the dots between an 

extension versus the full authorization. But from a capital expenditure perspective, I can say that 12 months or 18 months doesn’t do 

it for us in terms of capital expenditures. The service life of the 

equipment that we buy is between 5 and maybe 12 years, somewhere in that range, and so we are definitely not in the mode of 

buying equipment when we don’t have a long-term funding plan in 

place. 

Ms. FALLIN. Makes sense to me. 

Mr. Chairman, I also have a request, if I can. I ask unanimous 

consent to leave the record open for 5 days in order for other interested parties to have access to putting testimony into the record. 

Chairman ALTMIRE. Without objection. 

Chairman ALTMIRE. Again, thank you to each of you. You have 

made a big difference by being here. We appreciate your taking the 

time to join us today. 

Thanks to Congressman Shuster for joining us as well. 

This hearing has now adjourned. 

[Whereupon, at 11:28 a.m., the Subcommittee was adjourned.] 

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