▶ 0:14:55[gavel] >> I would like to call the committee on small business and are tripping or ship to order. I'm john q stead -- husted and I think chair ernst for the chance to chair the hearing today on the committee on small business and entrepreneurship.
▶ 0:15:17It is a special year, 250th year of our nation, 250th anniversary , and it is not possible to overstate the importance and critical role small businesses, in particular american manufacturing have played in transforming america into the economic envy of the world and the underlying principles of the free markets, competition, which
▶ 0:15:47Are so important to our prosperity, that our system of government has enabled over that period of time. Put simply, manufacturing matters, growth in manufacturing disproportionately drives new investment in research and development. That drives innovation in productivity. Two words that I use a lot, innovation and productivity.
▶ 0:16:15Despite accounting for 12% of the total economy, 55% of the total american r&d spending is financed by manufacturers. This productivity can be seen not just in the manufacturing sector where employers earn 13% more than the rest of the private sector, but in the economy as a whole.
▶ 0:16:36Manufacturing has one of the largest multipliers of any industry in the united states with every dollar invested in manufacturing leading to $2.69 of growth in the broader economy. Every dollar of wages produces four dollars 30 -- $.33 in income for the overall economy. Put in simple terms, manufacturing drives new capital investment which raises take-home pay for all americans.
▶ 0:17:06It's not a coincidence that manufacturing has thrived in america. Our foundation of free markets, private property rights, rule of law, and entrepreneurship have fueled our continual industrial dominance. These values have facilitated the free flow of capital essential for capital investment, invasion productivity that raise american wages and the standard of living.
▶ 0:17:33Importantly, our system of free markets has allowed small manufacturers to thrive. As of 2025, 90 8% of all manufacturing firms in the united states are small businesses with fewer than 500 employees. The american system of freedom and limited government and sure all small manufacturers can compete on a level playing field.
▶ 0:17:54That is what we aspire to, with large incumbents, compete on a level playing field with large incumbents in the spirit of innovation that raises american wages. Throughout our history, ohio has led the way in american manufacturing. I often say you can't be made in america without made in ohio. I firmly believe that one of our guests today, Dr.
▶ 0:18:18Edward hill, ned hill, as I know him from the ohio manufacturing institute can confirm that fact. As Dr. hill will detail in his testimony, ohio strengthen manufacturing to a virtuous cycle of entrepreneurship and innovation with new generations of manufacturers to boost productivity with growth driven
▶ 0:18:50By small manufacturers, that kind of system is only civil -- possible in a system that encourages innovation and the results are clear in this respect. Ohio has the largest -- fifth largest manufacturing base in the nation.
▶ 0:19:25The third highest manufacturing jobs overall with a 96% of this, 96% of this growth driven by small manufacturers and the ohio manufacturing workers paid on average $76,493, which is above, far above the average wage of most workers in our state.
▶ 0:19:49As with the broader economy, the success of the manufacturing economy shows that the boost wages and the standard of living in our state who make up the middle class of america. Enacting progrowth policies that will make it easier for the american manufacturer to expand.
▶ 0:20:18Through the bonus depreciation full and immediate expensing for interest in full expensing of new factories as well, as well as Mr. zoeller will note in his testimony will be rocket fuel for the economy and boost take-home pay for americans. I firmly agree with that.
▶ 0:20:45I'm grateful that we are joined by all of you on the panel today and I want to again think chair ernst for giving me an opportunity to chair this hearing. With that, I will recognize the ranking member, senator markey.
▶ 0:20:58Sen. Markey: Thank you so much, Mr. chairman, think you for this hearing. Massachusetts is very proud because the industrial revolution was born in lowell and lawrence massachusetts, in new hampshire, all along the merrimack river. If -- they figured out how to capture renewable energy.
▶ 0:21:24Sen. Markey: They put a dam across the river and the word went to some village in ireland and thomas markey had, maybe there is a job there. Let me know, I'm taking off, see you, mom and dad, I'm heading for the industrial revolution. And that's why I'm here. It's just a product of that job creation, that opportunity. They did swipe the technology from england, but that's another story.
▶ 0:21:54Sen. Markey: They signed a nondisclosure agreement, but they did violated, but nonetheless, we are here and lowell is still known as the mill city and the spindle city and many massachusetts towns carry nicknames from their 19th century industrial era. The toy town. The paper city. Tool town. Silver city. The watch city. The chair city.
▶ 0:22:24Sen. Markey: To each of these cities then became amongst the wealthiest communities in the history of the united states. They became the center for this incredible economic growth. And we proudly wear our industrial roots. My relatives came here and in 1912 my grandfather was in lawrence in the mills 120,000 textile workers walked out of the mills.
▶ 0:22:56Sen. Markey: It was called the red roses strike. My grandfather as they are trying to figure what is going on. The rights of workers who are being exploited. By the way, we have to make sure ai doesn't turn workers into robots. We've got to put protections in place for that and they were brutal working conditions.
▶ 0:23:21Sen. Markey: Like those workers at the time and that part of the century to secure what we now consider basic, fundamental rights for the people who build things in this country. Child labor standards, eight hour workday, today weekend. My grandfather got off one day a week and one week offer year. Those are hard jobs and I know it. They had hard lives working in these factories.
▶ 0:23:51Sen. Markey: The lesson for every generation is you got to fight if you're going to take your rights. And trump is taking a one-two punch approach to tearing down america's manufacturing. He is rolling back worker protections, driving up costs for manufacturers, and even after the supreme court ruled his tariff taxes illegal, this administration doubled down, implementing new tariff taxes that make it more expenses to
▶ 0:24:21Sen. Markey: Build things in the united states and creating a refund system that benefits big corporations, not the small businesses, not the workers, not the families, not the consumers. Despite the president's outlandish promises, we have lost 80,000 manufacturing jobs since january 20 of 2025.
▶ 0:24:45Sen. Markey: Job openings with manufacturers are down and for too many small manufacturers, maga stands firm manufacturers are going abroad. M-a-g-a. The president's terror policies and his war of choice with iran has made life more expensive.
▶ 0:25:18Sen. Markey: Skyrocketing electricity rates, score -- soaring costs with nothing to show for it. Trumponomics have turned main street into payne street across the country. He is getting the small business administration. His budget proposes an unbelievably 67% cut for the entire small business administration.
▶ 0:25:46Sen. Markey: Cutting resources that help small businesses navigate financially difficult teams. Destroying the federal science programs and eliminating investment in scientific research, forcing innovative small businesses to lay off workers and scramble to find new work.
▶ 0:26:05Sen. Markey: He's eliminated the national institutes of standards and technologies, manufacturing extension program, which is vital to so many small manufacturers across the country and we will try to work on a bipartisan basis to make sure that stays intact for our witnesses. Trump's policy is small have not brought a new golden age, instead he has brought about an industrial era of political corruption.
▶ 0:26:37Sen. Markey: I'm glad we have an opportunity to celebrate this american revolution. I'm here because of it. Thank you for being here. Thank you for what you do every single day.
▶ 0:26:51Chair Husted: We are indeed celebrating america 250, the industrialization and the rise of small manufacturers today and I want to thank all of you for being here and being present to share your stories and traveling to our nations capital on this historic year to share your insights. I'm going to introduce the three witnesses and we will give you a chance to each offer your testimony.
▶ 0:27:20Chair Husted: First, I'm going to introduce Mr. edward or ned hill as I know him, a faculty emeritus at the ohio state university, where he taught economic development policy, public policy, and public finance. He also serves as a senior research associate at the ohio manufacturing institute, where he has published academic research on ohio economic history and manufacturing policy.
▶ 0:27:47Chair Husted: He holds a doctoral degree in economics, urban and regional planning at a masters degree in city planning from the institute of technical -- massachusetts institute of technology. I know senator justice couldn't be here. He was going to introduce our next witness, so I will do that. We have second, Ms.
▶ 0:28:09Chair Husted: Danielle pet rak from morgantown, west virginia, the curator of the watts museum at west virginia university, the museum is committed to sharing and interpreting the history of west virginia's mineral resource industries. Ms.
▶ 0:28:29Chair Husted: Petrak earned her phd in history from west virginia university with research focusing on the interpretation and exhibition of coal mining history in central appalachia. One thing you have in common is the work for universities for which president mcgee was the president of. Now I will introduce senator paul to introduce our final witness.
▶ 0:28:58Senator Paul: I'm honored to introduce our witness from kentucky, Mr. bill zoeller, the fourth generation of -- owner of zoeller, company. The zoeller pump company was founded in louisville and for over 85 years that has grown into one of north america's leading manufacturers of submersible pumps with products distributed across the world.
▶ 0:29:22Senator Paul: For the past 15 years, his leadership has significantly contributed to the company's success including navigating the coronavirus pandemic. Today, their products are known to be the industry standard and a renowned for their reliability and durability. Prior to his time at the zoeller pump company, he spent over a decade in public accounting and energy sector. He started his career at kpmg as a senior auditor, while earning his credentials as a cpa.
▶ 0:29:50Senator Paul: He also earned his bachelors degree in accounting from beller men university -- bellarmine university and an mba. Thank you for coming before the committee today. I look forward to hearing your testimony.
▶ 0:30:01Chair Husted: Thank you, senator paul. To our witnesses, your written testimony has been made part of the record in the committee asks that you limit your oral remarks to five minutes. That, Mr. hill, you are recognized for five minutes.
▶ 0:30:17Mr. Hill: Thank you very much, senator husted. Chair ernst, member marquis, members of the committee, thank you for the privilege of allowing me to appear before you in america's 250th year. Today's hearing is fitting. The republic was barely a-year-old in 1791 president washington in his first annual address to congress called for establishing an industrial policy as a foundation for national defense.
▶ 0:30:45Mr. Hill: The same year, samuel slater brought the industrial revolution to pawtucket, rhode island. Today, I draw on my research and my experience working with manufacturers to the ohio manufacturers association. I note for the record that wyatt newman of the company I will discuss shortly is a close friend.
▶ 0:31:09Mr. Hill: Additionally, my testimony does not reflect the views of the ohio manufacturers association or the ohio state university or the ohio manufacturing institute. Ohio is not a manufacturing, farm, or services state. Instead, ohio is a portfolio state that competes globally with goods and services produced across eight regional labor markets in numerous rural communities.
▶ 0:31:36Mr. Hill: With that portfolio, within the portfolio, manufacturing leads and exports to the nation in the world. Manufacturing accounts for more than 16% of the state's gdp. Ohio ranked fifth in manufacturing gdp in a near dead heat with illinois and indiana.
▶ 0:31:58Mr. Hill: Ohio manufacturing workers earned an average annual rate -- wage of 76,000 $500 and 2023 supporting families and their communities. More recent data shows ohio has 600 77,500 manufacturing jobs in 2025. While honda, ge aerospace, whirlpool, lincoln electric goodyear and many others are the economies anchors, anchors need chance to hold her boats fast.
▶ 0:32:27Mr. Hill: Ohio supply are disproportionately composed of smaller manufacturers. The machining firms, plastics, rubber plastics, specialty suppliers that fill ohio supply chains make those anchor businesses viable. When a large ohio plant thrives, dozens of smaller suppliers thrive with it. When one closes the supply chain feels at first. One statistic is particularly relevant to the committee's purpose.
▶ 0:32:57Mr. Hill: 88 percent of ohio's manufacturers establish men's employ fewer than 100 workers. These establishments populate main streets and business parks and sustain rural communities. Ohio's industrial story begins with president washington's first address to congress in january, 1790, which contains a sentence most americans don't know.
▶ 0:33:19Mr. Hill: President washington referred to a free people, writing their safety and interests require they should support factories to support military supplies. President washington's first policy proposal to congress was to build american industry. It was the nation's first industrial policy.
▶ 0:33:43Mr. Hill: Coincidentally as I mentioned earlier, 1790 was also the year samuel slater built his mill in pawtucket, launching the industrial revolution in the united states. The president's proposal led to the establishment of armories in springfield, massachusetts and in harpers ferry virginia in 1798 his logic was vindicated in 1814 when british forces burned the capital and the white house, the torching of our capital city ignited a 40 year commitment to
▶ 0:34:15Mr. Hill: Manufacturing rifles with interchangeable parts, shifting defense policy into industrial policy. By 1851, british observers named at the american system of manufacturers and the american system of interchangeable parts. That system crossed the appalachian mountains becoming visible in ohio's springfield and thomas white sewing machines in cleveland.
▶ 0:34:46Mr. Hill: Ohio's early machine tool makers gave at the stamp scale at stale. -- scale. Ohio's manufacturers were positioned to supply. Today, ohio's entrepreneurs are building companies to join the next manufacturing wave. I will give you two examples, there are others in my written testimony submitted. One founded in 2017, the other turnaround founded 99 years earlier.
▶ 0:35:17Mr. Hill: Rhoda prince killed an operator driven truckmounted robotic road making system that was founded in 2017 by case western reserve university robotics professor and sam bell, a master mechanic who closed his auto repair shop, the infamously named rusty ranch to open the business.
▶ 0:35:41Mr. Hill: The fabrication support from a family owned truck up-fedor and today road prince has five full-time employees, five patents, paying customers from missouri's department of transportation and its founding and early growth were supported by the small business innovation research grants. The founders thought they were selling road striping efficiency and precision. They were wrong.
▶ 0:36:13Mr. Hill: A public works employee said he liked it when he was inside the cab painting instead of walking next to traffic because she knew he would be coming home that night. Road prince built a worker safety device. The founders learned the value of their invention from someone who used it. Mike garvey, the ceo of youngstown technologies, describes his factory as the place for the flintstones meet the jetsons. Garvey's grandfather started a bronze factory serving in the steel mills.
▶ 0:36:42Mr. Hill: After the mills collapsed and the fire destroyed the fire destroyed facility, he rebuilt around measurement, science, and digital manufacturing. Today, he operates one of the world's largest 3d printers and produces parts with micron level tolerances for aerospace and defense. It grew from three employees to 50, three employees from 1985 to 50. These companies represent what the next wave of manufacturing looks like.
▶ 0:37:17Mr. Hill: Solving problems that matter to american industry and american workers. The product is a digital production system while, seven uses one. Both are ohio born a century apart. These companies exist in part because of federal investments in the nsf, patient capital from public grants and technology assistance -- technical assistance.
▶ 0:37:44Mr. Hill: As president washington's armories demonstrated, technology without appropriate management is expensive and ineffective. The springfield armory sea did first industrial cluster and housed the extension partnership. Springfield ohio reaped the reward. The federal government shaped the industrial revolution and entrepreneurs and engineers created the products that build the competitive economy. Now, their descendants are forging their futures. Thank you.
▶ 0:38:14Chair Husted: Thank you, Mr. hill. Ms. petrak? You are recognized for five minutes. Just hit your button there.
▶ 0:38:23Ms. Petrak: Thank you, chair ernst, ranking member markey, senator husted, and members of the committee. I'm the curator of the watts museum at west virginia university. Our museum is named after roy swats who retired in 2017 after more than 60 years at the university.
▶ 0:38:47Ms. Petrak: Like many west virginians he was born into a mining family and did not pursue a career in mining but as a child who made money chopping logs and selling them to minors -- miners. Sadly when he was 13, his father, a coal miner, was killed . The west virginia mining industry was booming, as coal production revved up to meet the nation's needs during world war ii.
▶ 0:39:17Ms. Petrak: The industrialization of west virginia has nearly always associated with coal, in particular the start of large-scale coal mining at the late 19th century. It is important to note that west virginia had a strong, diverse, industrial economy well before the birth of its commercial coal industry. In popular culture, the media, and other narratives, west virginia past and present is always portrayed as a remote place, a place of isolation.
▶ 0:39:46Ms. Petrak: The vitality of its antebellum industry shows that its estates rugged and rural were well-connected too much of the united states via trade networks and regional economies long before king cole boomed onto the scene.
▶ 0:40:01Ms. Petrak: West virginia is known for the abundant natural resources before the arrival of railroads, west virginia was also home to the important transportation networks. They link the potomac river in cumberland maryland to the ohio river in wheeling.
▶ 0:40:30Ms. Petrak: A 22-year-old sold handrolled tobacco stogie's that he sold two wagon drivers as they approached the banks of the ohio river. Later owning a company that made up to 3 billion cigars per week, he launched a cigar industry in wheeling that grew to nearly 100 manufacturers in the city.
▶ 0:40:55Ms. Petrak: The location and access to fuel sources also helped to sustain multiple nail making factories. In industrial legacy that inspired the name of the city's minor-league hockey team, the nailers. Thanks to extensive high-quality clay deposits, commercial pottery manufacturers popped up through the state in the late 1700s. Thompson's pottery in morgantown spearheaded the transition from earthenware to more durable nonporous stoneware in the 1850's.
▶ 0:41:25Ms. Petrak: The techniques and designs trickled over the state line. A west virginia native recognize the significance of the work and collected most of the surviving work of their pottery and tools which are now in the national museum of american history.
▶ 0:41:44Ms. Petrak: Fathers bothers other natural resources fueled the states glass industry with its first-class manufacturer opening in 1813 followed by roughly 14 more. A story made the longest produced class in american history, the american line for 71 years.
▶ 0:42:09Ms. Petrak: These businesses were not small per se, but they also were not comparable in scale to the energy and west virginia. These companies were founded by west virginia natives and employed skilled union workers and created products with safe natural resources to inject wealth into the local economy.
▶ 0:42:32Ms. Petrak: As we think about re-industrializing america and appalachia, we should look back to west virginia's early industrial history, investing in today's smaller scale, diverse, and local industries and businesses. Senator justice, as governor, you made manufacturing a cornerstone, and your work in the senate continues that.
▶ 0:42:56Ms. Petrak: For your advocacy for domestic manufacturing, pipeline development, and federal investments that help west virginia employers hire, train, and growth. West virginia and marshall university support small and medium-sized manufacturers through the extension partnership at w vu and marshall's advanced manufacturing program strengthening competitiveness across the state.
▶ 0:43:21Ms. Petrak: I look forward to share with you the history of west virginia which I care about very deeply.
▶ 0:43:34Chair Husted: Thank you very much. I would now like to recognize Mr. zoeller for five minutes and thank you for being here.
▶ 0:43:41Mr. Zoeller: Thank you chair ernst, senator markey, and senator husted. It is an honor to testify at today's hearing celebrating america's 250th birthday. Zoeller is a family of manufactured water solutions.
▶ 0:44:08Mr. Zoeller: It brings clean water to a facility, it moves that water around a facility, collects the dirty water, and removes it from the facility. These products support the infrastructure of our great country. Many of which are multigenerational family businesses as well.
▶ 0:44:41Mr. Zoeller: We are honored to be part of the plumbing industry. Our story is one of humble beginnings that grew by faith and grit. We are founded in our great-grandparents basement. Requiring other companies to expand our product offerings. It is based in canada ville indiana.
▶ 0:45:05Mr. Zoeller: We also operate in boonville, indiana, abernathy, texas, and in philadelphia, pennsylvania. It has a unique history of its own. These pumps provided irrigation and crops. These help support america's westward expansion in the late 1800s.
▶ 0:45:41Mr. Zoeller: Regardless of location, our forward values of equality, innovation, and integrity have served us well over the past 87 years. Our team members understand these values and demonstrate them every day. I'm so proud of the work they do and the quality products they manufacturer. The zoeller brand is well known in the industry, our core product was awarded two trademarks. One owner its unique shape and one on its color.
▶ 0:46:14Mr. Zoeller: These prevented offshore knockoffs from tarnishing our brand. We are proud to have the made in usa label on our mainline products. Our supplier moved production to mexico and we lost are made in the usa mark so we invested in our people, decided to manufacture those motors internally, creating 35 jobs in indiana and we could put made in usa back on several products.
▶ 0:46:42Mr. Zoeller: America's story is a manufacturing story. Congress and the trump administration are doing their part to drive policies which reduce the cost of doing business in the united states. This congress preserved the 21% corporate tax rate which provided immediate expensing of r&d activities, paving the way for continued expansion.
▶ 0:47:04Mr. Zoeller: Beyond the tax bill, zoeller has benefited from the trump administration reforms to reduce the cost of federal regulations and ensure rules are practical and workable. As a leader I fully believe you will never get anything 100% right, but you get close and you keep fine-tuning. So here comes some opportunity for fine tuning to ensure the next 250 years are even stronger for manufacturing in america.
▶ 0:47:31Mr. Zoeller: First, congress and the administration should keep up the work to right size the burden of federal regulations, manufacturers spend on regulatory compliance every year. Congress should double down on the infrastructure bill which is set to expire later this year. Manufacturers need robust highways, bridges, waterways to make and move products across the country. Third, manufacturers need reform that cuts red tape and clears out roadblocks.
▶ 0:48:01Mr. Zoeller: Fourth, we need strategic trade policies that ensure manufacturers have access to inputs and machinery we need to make things in america and finally, we need policies that support our industry efforts to upskill and train the manufacturing workforce. Currently, we have more than 400,000 jobs open across the sector.
▶ 0:48:22Mr. Zoeller: The 2025 tax bill is the foundation and a fact by the right policies, manufacturers will be ready and proud to drive the next 250 years of american manufacturing. Thank you for your time.
▶ 0:48:32Chair Husted: Thank you very much, Mr. zoeller, and thinkable for being here today to celebrate america 250 and the industrial -- industrialization and the rise of manufacturers in our country. Let me start with some questions and then let me turn to our chair of the committee, senator ernst. I will give you the chance to lead us off.
▶ 0:48:56Senator Ernst: I appreciate that and thank you, senator husted, for chairing today's activities. This is great to be able to celebrate our nation's 250th in regards to our small businesses, which really are the backbone of the united states. So, Mr. hill, your testimony discussed the new businesses that are leading the re-industrialization of ohio and america.
▶ 0:49:23Senator Ernst: Alongside senator coons, I'm leading the made in america manufacturing finance act and this will raise the loan up to $10 million? How will greater capital access support investment in america's industrial capacity?
▶ 0:49:48Mr. Hill: Thank you very much for the question and I appreciate the attention the staff is given. Capital intensity is increasing. We look at the number of jobs per dollar invested in manufacturing and it has been going up.
▶ 0:50:24Mr. Hill: One is the capital constraints. Raising the lending limits, especially the way in which you do it where the banks make certain it is a good credit is fiscally responsible and I think economically necessary.
▶ 0:50:39Mr. Hill: The largest challenge I've seen with small manufacturers is the ability to integrate it and that is where another barrier exists because most of the system integrators because of industry 4.0, ai, and cyber, have brutal rates, minimum contract amounts that contractors cannot afford to pay.
▶ 0:51:09Mr. Hill: That is one of the reasons why with our historical research we have seen that operations technologies, they stuff they used to make stuff, has a long lag if the management systems can't keep up. One of the large challenges are small firms have is to afford the capital, but also to afford the advising around how to deploy that capital so that costs go down rather than up.
▶ 0:51:37Mr. Hill: So I applaud you for your thoughtfulness, your strategy, and I think that making it possible for firms, small firms to invest in their future is essential for the economy. Not [laughter] that I have an opinion.
▶ 0:51:49Sen. Ernst: At all, but thank you. I think many do share your thoughts on that as well and we really appreciate the input, so thank you for being here. Mr. zoeller, the working families tax cuts act passed by congress last year is encouraging a lot of our small businesses to invest in their operations and allowing american workers to keep more of their hard earned dollars in their own pocket. That is really important.
▶ 0:52:19Sen. Ernst: How have you in particular been able to take advantage of this act that was passed last year and what impact have you seen through your employees?
▶ 0:52:29Mr. Zoeller: Thanks for the question. [indiscernible] we have mandatory overtime, we have spikes in demand. [indiscernible] we are currently expanding. Additional equipment to fix our U.S. 90 factoring in production.
▶ 0:53:01Mr. Zoeller: This appreciation is beneficial today and into the future. Those things are critical to make sure we have the capital. We don't take up that so we need to kind of manager cash flow appropriately and by having a little bit more tax savings in the pocket to invest, that's a good thing for us.
▶ 0:53:24Sen. Ernst: Thank you so much into to our small business owners, thank you so much. And thank you for telling the history, Ms. petrak, behind the history of so many of so many west virginia small businesses. We are so glad to celebrate our 200 50th year here in the united states of america and you are part of this incredible journey, so thank you for participating today. Thank, senator husted.
▶ 0:53:50Chair Husted: Thank you. I will start with a question for you, Mr. hill. I love economics because it's like a puzzle. You are trying to figure it out all the time like what are the best ways, what is the right incentive?
▶ 0:54:09Chair Husted: There wasn't a central planner for the american economy over these 200 50 years we created this environment where there was freedom to achieve that. The structure of the rule of law , protect people, encourage investment, those things are protected. That has been the underpinning of the driving of our success.
▶ 0:54:38Chair Husted: Also being an ohioan, we have seen up and downs, we have seen creative destruction, we had seen government getting it wrong , we have seen the manufacturing economy, it's ironic that we are here when president trump is in china because we saw a lot of manufacturing head to china over the years and now we are trying to get it back, we are trying to do made in america and re-industrialize and we have had some success with that, so as we
▶ 0:55:09Chair Husted: Look forward, what policies, we think about this, what policies, we want the manufacturing economy to take root in america, what policies should we put in place going forward to ensure that happens?
▶ 0:55:27Mr. Hill: [indiscernible] going back to president washington, you are right, there is no central planner, no central planning works. But the industrial revolution started with those three armories.
▶ 0:55:56Mr. Hill: Senator markey and I can decide what is -- which side of massachusetts was the most central to the industrial revolution, but it was a bureaucrat continuing to show the technological hurdles.
▶ 0:56:26Mr. Hill: The machines and the accounting systems which came out of west point that made america's factories in the 1850's and beyond the most productive in the world for a product investing federal money into creating public goods that were transferable into industry and created the management systems along with operations technologies.
▶ 0:56:47Mr. Hill: So, the secret sauce in this is to invest in public goods so that businesses could take them to make goods and services that respond to customers. It has happened in springfield, massachusetts, that stretched in the connecticut valley into hartford and north in vermont, wendover to connecticut, where it powered the watch industry.
▶ 0:57:19Mr. Hill: The bicycle industry. That was the same production system that was invented in springfield across the appalachians and created ohio's economy. So let's fast-forward in history.
▶ 0:57:33Mr. Hill: We know how that planning works with the arsenal of democracy one american industry responded during world war ii, but then we also had this experience starting I would call it in the 1960's and 1970's and certainly into the 1980's and 1990's, workplaces in ohio we saw the manufacturing economy collapse.
▶ 0:57:53Mr. Hill: Correct.
▶ 0:57:55Chair Husted: What are the factors that you learn from that history that can teach us about how we preserve that going forward?
▶ 0:58:03Mr. Hill: Senator, I'm delighted to have Dr. fran stewart with me, one of the co-authors of the book and we are rustling without as we look at ohio's economic history.
▶ 0:58:18Mr. Hill: And in that book what we found out is that we were subject to something called the product cycle one a new product is born, a new technology enlivens a product and you go through a period of very rapid growth and then once the market has been saturated, the number of competitors shrink, growth rates stay aloft and once demand disappears or slackens or gets
▶ 0:58:49Mr. Hill: Closer, than the growth rates drop. What happens to ohio from 1968 to 1969, 1968 through the 1970's is that all of our core industries at the exact same product cycle age and they all went into decline together. What do we learn about this?
▶ 0:59:11Mr. Hill: What we have learned as public policies that when you were speaker of the house you were endorsing and you still endorse and that is we had to take a state that grew out of 1913 in and what happened is entrepreneurship in our state died.
▶ 0:59:34Mr. Hill: We spent from the 1990's and 2000s in the traditional manufacturing towns of ohio to re-create the experience of large-scale entrepreneurship. One of the things we have to do is always be humble. When your products or at the top of the world, understand that they are going to age, make certain you always have those entrepreneurs trying to figure out the new ways of doing things.
▶ 1:00:04Mr. Hill: That's the reason why my testimony I highlight four firms, two of them turnarounds, one of them a turnaround, three of them start ups. Leading the way for inventing new products out of the public, intellectual property creating new products.
▶ 1:00:23Chair Husted: I'm going to come back to you later and I will let my colleagues ask their questions now, but we will put a pin and entrepreneurship and we will come back to you and talk to and a second. Senator paul.
▶ 1:00:35Senator Paul: Mr. zoeller, thank you for coming. It is great to have someone from louisville up here. We need more people from kentucky up here so I can feel home when I'm away from home. It sounded like virtually every asset of the -- facet of the tax bill impacted your business.
▶ 1:01:01Senator Paul: From the death tax to the corporate tax to the expensing to the pass-through, everything seemed to be set up perfectly for you guys. I was intrigued by your testimony. Trying to bring things home, let's build in america, you are proud you make things in america and so am I, that's great.
▶ 1:01:23Senator Paul: To make things in america, we are not an island and often we need stuff that comes from other countries and what you are saying is about sometimes needing equipment from germany and japan is what I hear from so many people, we want to make things in america but if you tariff the machinery we need, we are going to have a problem. So the really does need to be somebody looking at the tariffs and saying should we really be tariffing equipment that helps us build things here?
▶ 1:01:50Senator Paul: Can you tell us a little bit about the equipment you are needing and how it will help bring manufacturing here but you have to buy the putman somewhere else?
▶ 1:01:58Mr. Zoeller: [indiscernible] we are made in the usa. We come from the standpoint of keeping the knockoffs out. Specifically to the equipment we need, most of that equipment is specialized outside of the U.S. our current situation to try to increase capacity, we have three machines on order from germany, one has landed.
▶ 1:02:28Mr. Zoeller: That first one. We did have to pay a tariff on that, we have two more that are coming this summer from germany as well, hopefully those will be online in october so we can increase our capacity, but both of those are currently scheduled to be hit with the tariffs as well. In order to increase capacity in the U.S., I believe we need equipment to do that and some of that equipment is just not made here, that's just the fact.
▶ 1:02:54Sen. Paul: Is any of the knockoff equipment concerned with illegal because they are infringing into your trademark or patent?
▶ 1:03:01Mr. Zoeller: Yes, these are specific to our finished goods. And as I've talked about, we have professional plumbers at one point that would put the knockoff zoeller pumps inside our boxes and return them to us because professional plumbers could not tell the difference between what we made and what the offshore product wasn't till we could open them up and no--
▶ 1:03:36Mr. Zoeller: Know that it was not our pumps.
▶ 1:03:37Sen. Paul: Who's so law-enforcement that you complain to?
▶ 1:03:40Mr. Zoeller: The trade compliance.
▶ 1:03:42Sen. Paul: Part of the ftc?
▶ 1:03:44Mr. Zoeller: Ftc is who we dealt with in the early 20 20's, lake 2019.
▶ 1:03:50Sen. Paul: Have they been helpful?
▶ 1:03:52Mr. Zoeller: They are very helpful on those two pieces. Yes.
▶ 1:03:56Sen. Paul: That something that I would offer because if you have problems we are more than happy to engage and tried to say, let's enforce the law. Because that is absolutely against the law to steal someone's intellectual property.
▶ 1:04:11Mr. Zoeller: Yes.
▶ 1:04:12Sen. Paul: Thank you for coming, thank you for what you're doing, and let us know how we can help.
▶ 1:04:17Mr. Zoeller: Thank you, senator. >> what country, where do you see most of the knockoffs coming from?
▶ 1:04:25Mr. Zoeller: They come from china.
▶ 1:04:27Chair Husted: Senator justice?
▶ 1:04:31Senator Justice: First of all, danielle, I'm sorry I wasn't here to introduce you. A big-time pleasure for me to introduce, but I've known you forever and I've known the good stuff you do and I thank you for being great witnesses and being here for one purpose and that is you want things to be better, you want things to be remembered, and all of that is
▶ 1:05:03Senator Justice: So, absolutely genuine to me. If I could just say a couple of things about danielle petrak, she naturally is a curator of the watts museum at west virginia university. West virginia university does all kinds of wonderful stuff, but the thing that is really unique about her is how much she cares, she cares about west virginia's industries and all of that and the acknowledgment.
▶ 1:05:36Senator Justice: She absolutely deeply cares about what the fabric of west virginia is all about. That is about faith-based people, it is about the real thing this country has been made of. West virginia has stepped up, stepped up forevermore. We should be very proud.
▶ 1:06:00Senator Justice: I know right now when we are honestly right on the cusp, it is amazing what west virginia did and what west virginia contributed but now I want to switch channels with you and I want to -- you to stay with me for one second. Today, china is an unbelievable competitor or an unbelievable country that is doing so much stuff.
▶ 1:06:30Senator Justice: We would like it to be so much better. We want to build more stuff in america, I get that. But it's harder than just saying we want to build more stuff. It is harder than saying that's what we want to do. And then it just happens. Let me tell you this, though. Here is how silly we are in so many different ways.
▶ 1:06:55Senator Justice: In the state of west virginia, and many states whether it be pennsylvania or vermont or wherever it may be, kentucky, whatever, we have hardwoods that are second to none. It's phenomenal beyond belief. When we think about natural resources, we think about coal and oil and gas, but we have water and we have unbelievable timber.
▶ 1:07:23Senator Justice: Just think what we do, what we do when we cut a log. Here's what we do. We put it in a truck. Instead of making something right there in america, we put it in a truck and drive it to newport news. Then we put it on a boat, same thing, and it goes to vietnam or china or mexico. And then something is made out of it there.
▶ 1:07:54Senator Justice: And then we put it back on the boat, back on the truck, and bring it back to the U.S., it is the silliest thing in the history of the world. In someway, somehow, we have migrated completely out of our flooring and cabinetry and all of the different things that are so available to us in these great states and it has just gone away. And ohio is another great stage.
▶ 1:08:24Senator Justice: Now, why can't we do something about it? At the end of the day, that's where I really salute all of y'all. And all of this great committee. Because the fabric of all of us -- a lot of us is the small businesses.
▶ 1:08:50Senator Justice: Danielle, you really bring to life our history and all the goodness we have done. Listen, I will tell you we've got challenges. We can't flip our fingers and all of a sudden we are going to have all kinds of stuff made in the U.S. but we can do it. We can solve the riddle if we will just work at it.
▶ 1:09:21Senator Justice: There could be all kinds of different ways to solve just the riddle that I just said today. We've got to do it and now is our chance. We've got to do it now, we've got to not just talk about it. This place drives me completely crazy. The frustrating just talking about stuff. It is almost like we just want to going.
▶ 1:09:54Senator Justice: It just keeps going around around around. It is so important. The thing we forget at the end of every single thing, there is a family. That is what we are supposed to be doing. I didn't come here with white hair to just sit around. I didn't come here to keep it going.
▶ 1:10:25Senator Justice: Let's solve the riddle. Thank you. Thank you also much. Danielle, sorry I wasn't here. I'm going 15 different directions all at the same time. Thank you, chair.
▶ 1:10:35Chair Husted: Thank you, senator justice. I know senator hawley will be back to ask questions. I'm going to take the chance here to come back to you, Mr. hill. We put a pin in entrepreneurism.
▶ 1:10:58Chair Husted: We were competing on price and we couldn't do that anymore because lower wage nations, things that senator justice talked about, so our mature industries soto died.
▶ 1:11:13Chair Husted: And then we have that innovation and entrepreneurship and the creative destruction in the nest -- next cycle of businesses to come around, which we want to create that environment, which in my world, the more capital will flow where it is most appreciated. And it will succeed.
▶ 1:11:40Chair Husted: So now, I think the dilemma senator justice is talking about is we want to do made in america for our economic and national security because we have realized that, hey, we have 700 drugs right now that we could make in this country because the pharmaceutical supply chain is in china or rare earth materials that we could make a bomb or a battery if we didn't have access to.
▶ 1:12:10Chair Husted: The chip supply chain. We are learning that our economy, our national security is vulnerable because the manufacturing supply chain for the things that are essential have left their country, that we need to nearshore, friend-shore, onshore them. We want to have that security back. We are also fighting this other issue of affordability. Where we like the less expensive product.
▶ 1:12:43Chair Husted: Why, Mr. zoeller, do they pie a pump from china instead of yours? Because they probably make it cheaper, so how if we approach these dual goals of making more things in america and wanting to keep prices under control, what are the solutions?
▶ 1:13:04Chair Husted: And I'm going to give you all a chance to address this, but I will offer something and you can build on this, it is productivity gains, it's the innovations, it's the technology that we can do things better and more effective and a higher quality than they can in their countries if we have those productivity and innovation gains and I'm interested in what you think about that as being the thread that can weave these two goals of on shoring and affordability together and please share your thoughts.
▶ 1:13:36Mr. Hill: Well, thank you for another interesting question, senator husted, you are on a roll. Productivity is the sword that cuts the gordian knot. We have to understand where productivity comes from.
▶ 1:13:58Mr. Hill: I will invoke the words of senator going to veg, who if you looked at him cross eyed, he would say better, faster, cheaper, smarter. If we look at how productivity is defined it is less what happens on the chop -- shop floor and more what happens in the company itself.
▶ 1:14:22Mr. Hill: Productivity is value addedwhere at? It comes from the top line of the income statement. Meanwhile, when we talk about productivity, we start thinking how to squeeze those middle lines. The way to get a company more productive more quickly is to invent new products for services that generate higher operating revenue. That is part one step one.
▶ 1:14:50Mr. Hill: Part two is the middle lines and that is where the faster, smarter, cheaper exists. We have an opportunity with the spread of digitally integrated operations technologies on shop floors being tied into the rest of management to realize that is where the second step in productivity improvement is going to come from.
▶ 1:15:19Mr. Hill: For the smaller employers, those from 100 to 10 or lower, they cannot afford the management help to get them to do it. Because the hurdle rates are too high. That is the reason why the manufacturing extension partnership is so important as being part of the solution.
▶ 1:15:47Mr. Hill: Because what we have to do is just what george washington's armories did was to make those management solutions public goods. Not that you pay for the consultants, but you make certain that people know how to manage these new technologies. We have data from 2016 showing the industry 4.0, two thirds of all companies that invested in industry 4.0 in 2016 lost money. Why?
▶ 1:16:19Mr. Hill: Because the management systems were not there. It was an engineering toy they were trying to figure out. What we do consistently wrong is we believe there is going to be a machine based silver bullet that will increase productivity. That is only in one chamber. The other is, how do you manage it?
▶ 1:16:44Mr. Hill: How do we get rid of noncompete clauses so that that knowledge can flow freely throughout the rest of the economy? How can we make certain or smaller employers are engaged in sharing knowledge across each other to figure out how this stuff works? The barrier to acquiring technology and using it effectively is real.
▶ 1:17:06Chair Husted: Thank you. Ms. petrak, want to share some thoughts on that particular topic? If you don't, that is fine. I just want to give you the opportunity.
▶ 1:17:16Ms. Petrak: No, I think I would just prepare just prefer to show the history with you.
▶ 1:17:26Mr. Zoeller: I can specifically talk about our company. As a family owned business, we operate in decades rid we don't play in quarters. This recent investment I talked about earlier was a big investment for us.
▶ 1:17:49Mr. Zoeller: Our management team talked and a lot of the reasons why we did the investment was because we were going to have productivity gains created we are going to increase capacity. The productivity gains mean we can get pumps faster but also reducing the scrap on the shop floor. All of that stuff comes into play. Our cells team -- our sales team knows his capacity is coming.
▶ 1:18:15Mr. Zoeller: They need to get out and sell it because you have to be able to make more inside our footprint to reduce the overall cost and there will also increase our sales. It is a cycle. Like I said, you have got to have the productivity, one, and the capacity probably up to be able to sell it. Whether that is domestically or internationally. Trade policies we may need to look at as well.
▶ 1:18:38Chair Husted: I'm going to follow up on your point about the pumps coming from china. How much are they undercutting you on price?
▶ 1:18:48Mr. Zoeller: Probably about 40%.
▶ 1:18:51Chair Husted: And there violating all kinds of staining agreements that we have.
▶ 1:18:58Mr. Zoeller: I can't speak to the ftc laws and stuff like that, but, obviously, when we find out about them, the fact we were able to get the two trademarks with the trademark office, able to shut them down relatively fast with the help of the government and ftc and stuff like that. But they are out there. Our customers are the ones that most of the time make us aware of something like that.
▶ 1:19:26Chair Husted: Ok. I will be interested -- you mentioned in your testimony, Mr. zoeller, the working family tax-cut plan has no tax on overtime, you work your folks overtime a lot.
▶ 1:19:49Chair Husted: How is it affecting -- I visited a manufacturing facility and was talking to a young man who had decided he was going to work is 55 hours a week of overtime and take the whole year in the amount of money he would save was going to be enough to put a down payment on a house. Are some of your employees thinking like that? Do they realize this or is it not a factor?
▶ 1:20:18Mr. Zoeller: I love to talk about our employees. A couple of things to give a little background. We work two shifts, both are 10 hour shifts. We don't work on fridays historically. We have a lot of lakes in kentucky and our employees like to go out and enjoy those lakes on the weekends and especially nice days like today. We do have over time, they work on friday. They are able to do that.
▶ 1:20:48Mr. Zoeller: On top of that, we also try to do education with our employees from a standpoint of whether it is financial education, wellness, mental health education -- all of those pieces to make them a better individual so they can take that home to their families as well. I can't say any individuals is getting up overtime to buy house because we don't like to work them that hard, but they are may be able to do something nice with the family. We do communicate that.
▶ 1:21:16Mr. Zoeller: We have a relationship with the credit union bank that is right around the corner from us. They come in and do those financial literacy things and we have pretty good participation.
▶ 1:21:26Chair Husted: I want to thank all of you for being here today and serving as witnesses and offering her perspective on american manufacturing. Do you think the 250th anniversary of our nation is a very special occasion. It is also an occasion to look back and understand what made us successful.
▶ 1:21:49Chair Husted: And use those lessons to determine a path forward so we can support small businesses in our nation for the future and certainly does in manufacturing because we know manufacturing jobs just are so important not only because they pad our wages but the trickle-down, trickle through throughput of they have and the whole supply chain and the jobs they create in addition.
▶ 1:22:19Chair Husted: With that, I ask unanimous consent the record of today's hearing remain open for two weeks for members to submit questions and revise and extend remarks and to submit additional information to the record. Without objection, so ordered. With that, the committee on small business and entrepreneurship stands adjourned. Thank you.