[Senate Hearing 110-986]
[From the U.S. Government Publishing Office]
S. Hrg. 110-986
MIDWEST JOBS PICTURE: STRATEGIES TO REBUILD COMMUNITIES (PART I)
=======================================================================
FIELD HEARING
OF THE
COMMITTEE ON HEALTH, EDUCATION,
LABOR, AND PENSIONS
UNITED STATES SENATE
ONE HUNDRED TENTH CONGRESS
SECOND SESSION
ON
EXAMINING THE MIDWEST JOBS PICTURE, FOCUSING ON STRATEGIES TO REBUILD
COMMUNITIES (PART I)
__________
OCTOBER 8, 2008 (TOLEDO, OH)
__________
Printed for the use of the Committee on Health, Education, Labor, and
Pensions
Available via the World Wide Web: http://www.gpoaccess.gov/congress/
senate
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COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS
EDWARD M. KENNEDY, Massachusetts, Chairman
CHRISTOPHER J. DODD, Connecticut MICHAEL B. ENZI, Wyoming
TOM HARKIN, Iowa JUDD GREGG, New Hampshire
BARBARA A. MIKULSKI, Maryland LAMAR ALEXANDER, Tennessee
JEFF BINGAMAN, New Mexico RICHARD BURR, North Carolina
PATTY MURRAY, Washington JOHNNY ISAKSON, Georgia
JACK REED, Rhode Island LISA MURKOWSKI, Alaska
HILLARY RODHAM CLINTON, New York ORRIN G. HATCH, Utah
BARACK OBAMA, Illinois PAT ROBERTS, Kansas
BERNARD SANDERS (I), Vermont WAYNE ALLARD, Colorado
SHERROD BROWN, Ohio TOM COBURN, M.D., Oklahoma
J. Michael Myers, Staff Director and Chief Counsel
Ilyse Schuman, Minority Staff Director and Chief Counsel
(ii)
C O N T E N T S
__________
STATEMENTS
WEDNESDAY, OCTOBER 8, 2008
Page
Jacobs, Lloyd A., M.D., President, The University of Toledo,
Toledo, OH..................................................... 1
Brown, Hon. Sherrod, a U.S. Senator from the State of Ohio,
opening statement.............................................. 2
Goshe, Craig, Former Employee, American Standard, Tiffin, OH..... 4
Price, Tieshetta, Worker, Toledo, OH............................. 6
Walker, Eric, Director, Lucas County Jobs Center, Toledo, OH..... 7
Prepared statement........................................... 9
Helper, Susan, Ph.D., Professor, Weatherhead School of
Management, Case Western Reserve University, Cleveland, OH..... 19
Prepared statement........................................... 21
Kildee, Dan, Treasurer of Genessee County, Flint, MI............. 23
Prepared statement........................................... 24
Dmytryka, David, President, Dmytryka Jacobs Engineers, Inc.,
Toledo, OH..................................................... 27
Calzonetti, Frank, Ph.D., Vice President, Research & Development,
University of Toledo Business Incubator, Toledo, OH............ 28
Prepared statement........................................... 31
ADDITIONAL MATERIAL
Statements, articles, publications, letters, etc.:
Enzi, Hon. Michael B., a U.S. Senator from the State of
Wyoming, prepared statement................................ 44
Vaughn K. Buntain, Executive Vice President, IBC Solar, Inc.. 45
(iii)
MIDWEST JOBS PICTURE: STRATEGIES TO REBUILD COMMUNITIES (PART I)
----------
WEDNESDAY, OCTOBER 8, 2008
U.S. Senate,
Committee on Health, Education, Labor, and Pensions,
Toledo, OH.
The committee met, pursuant to notice, at 10:08 a.m. at the
Clean Energy Incubator at University of Toledo, 2600 Door
Street, Toledo, OH, Hon. Sherrod Brown presiding.
Present: Senator Brown.
STATEMENT OF LLOYD A. JACOBS, M.D., PRESIDENT, UNIVERSITY OF
TOLEDO
Dr. Jacobs. We would like to welcome all of our guests from
Washington and elsewhere. We are delighted to see all of you
this morning.
The occasion to which you are welcomed so warmly, I hope,
is the first-ever Senate hearing on the campus of the
University of Toledo on subjects that are so terribly important
today--rejuvenation of the economy, the economy in general, and
particularly the strategy to rebuild our communities, led, of
course, by Senator Sherrod Brown. We are delighted you are
here.
It is entirely fitting to me, that hearings of this nature
take place on a university campus, a university that is engaged
in our community and in our economy and in our world, as we
aspire to be at the University of Toledo. We see work like
this, the undertaking of the day, to be integral to what it is
to be an engaged university. That is part of our mission. We
are really pleased that all of you are here.
It is, of course, my pleasure to extend a particularly warm
welcome to Senator Sherrod Brown and to his staff. Having
Sherrod Brown here again is an honor for us.
Let me just read a couple of brief sentences from
biographic material for Senator Brown. In Ohio and in
Washington, Senator Sherrod Brown has earned a reputation as a
public official who looks to the future. I think we would agree
with that.
Beginning with his opposition to the North American Free
Trade Agreement in 1993 and to Most Favored Nation Status for
the People's Republic of China, to his book ``Myths of Free
Trade,'' Sherrod is building a bipartisan coalition for a new
trade policy to strengthen America's middle class, to provide
opportunities for American manufacturing, and to protect
workers rights, the environment, and product and food safety. I
think that those comments are integral to what it is that we
are gathered here for today.
His amendments 5 years ago launched our Government's effort
to combat antibiotic resistance threat to our public health
system, which effort earned Sherrod the National Public Health
Legislator of the Year Award from the American Public Health
Association in 2003. He has worked to strengthen the Centers
for Disease Control to guard against public health threats from
terrorism, bird flu, tuberculosis, and methicillin-resistant
staphylococcus aureus.
Sherrod's interest in making Ohio the ``Silicon Valley of
alternative energy''--we share that interest, Senator.
[Laughter.]
Sherrod's interest in making Ohio the ``Silicon Valley of
alternative energy'' began when he wrote Ohio's first solar
energy law in 1977. As a U.S. Senator, Sherrod is working with
the area's universities, entrepreneurs, labor unions, and
community leaders to help utilize this State's natural
resources--wind and solar power, corn for ethanol--and to
develop an alternative energy industry in this State.
We are delighted you are here. Thank you so very much for
choosing this site. You are wonderfully welcome. Thanks for
being here.
Opening Statement of Senator Brown
Senator Brown. Thank you very much.
Thank you, President Jacobs, and I appreciate the
attendance of all of you today in this, as he said, first-ever
Senate hearing at the University of Toledo campus. I chose this
campus as the first of two field hearings by the Health,
Education, Labor, and Pensions Committee. We will do one at
Sinclair Community College in Dayton also.
I just look at what this university has done in the last
few years, and I am so appreciative of Dr. Jacobs' work and
Diane Miller and Bill McMillan for helping to arrange this
today.
I was in Perrysburg just the day before yesterday, and we
were celebrating the groundbreaking, the expansion of First
Solar. This university obviously has much to do with all of
that, with alternative energy. I think since I have been in the
Senate in the last 20 months or so, this is, I don't know, my
seventh or eighth visit probably to this campus. There is
always something going on here.
We had one of our first roundtable discussions here. I have
done about 120 of those around the State. Not hearings like
this, but roundtables, where we will gather 15 or 20 people
together and discuss a whole host of issues. We did one that
really taught me a lot about and really helped to broadcast
around Ohio the work that this campus has done, this university
has done in wind turbine research and solar.
Ohio, as you may know, Ohio is in the top five in
investment both in solar and wind, and we are going to continue
that. Dr. Jacobs' comments about the Silicon Valley of
alternative energy proves that we are on our way.
Congress passed 2 weeks ago--10 days ago, I guess--the tax
extender so that investors have a more predictable long-term
tax policy, and hey are much more likely to invest in something
as capital intensive as alternative energy and to get these
industries going in this country. The University of Toledo has
played no small part in that.
I would like to also recognize some of the local elected
officials with us today. Commissioner Pete Gerken is here.
Councilman Mark Sobczak and Senator Teresa Fedor are here.
Thank you for joining us.
I also want to thank Senator Kennedy, the Chairman of the
Health, Education, Labor, and Pensions Committee. I am one of
two freshmen he put on that committee back in December 2006. It
is a terrific opportunity--this committee--to look at all kinds
of workforce issues, education issues, health issues, pension
issues, all the kind of things that matter perhaps more than
any other committee in Congress in the daily lives of people
here.
Special thanks to Kelly Hastings of Senator Enzi's staff.
Thanks to Senator Enzi, in addition to Senator Kennedy. Senator
Enzi has been very cooperative in this committee doing this
field hearing. He is the Ranking Republican from Wyoming and is
a very bipartisan, forward-looking guy. We don't agree
ultimately on a lot of issues, but we find ways to work
together, and he is terrific at that.
This is Kelly's first trip to Toledo, thank you for being
here.
Thanks to the witnesses for coming. The first panel I will
introduce in a moment, then the second panel. After the first
panel's comments and then questions, I will introduce the
second panel. We will hear from both of these panels. I am
asking each witness to keep their comments to about 5 minutes.
I will then question each of you. We will do the same with the
second panel.
The hearing should take somewhere up to an hour and a half,
2 hours, and we are not going to hurry through it. Certainly,
we want the witnesses to say what they think that both I want
to hear and need to hear, but this also is in the official
record. That is why this is an official Health, Education,
Labor, and Pensions Committee hearing. Your comments will be
helpful to us as we figure out particularly what we do next
year with the new President, which ever of the candidates wins
and with some number of new members of the Senate.
A strong middle class, as we know, is an essential
foundation of prosperity and stability. Middle class families
across the country are in a moment of great challenge and of
great potential. Challenges that have been forced upon them by
deregulation, unfair trade deals, and tax policies. Potential
on account of our Nation's ingenuity and work ethic.
And indeed, this is perhaps the most crucial time for the
middle class in the lifetimes of most of us here. This past
Friday, the Labor Department reported for the 9th consecutive
month the country has lost jobs. In September, 159,000 jobs
were eliminated from payrolls, the highest number in 5 years.
Ohio's 7.4 percent unemployment figure hit a 15-year high
this summer. Even prior to this steep downturn, Ohio still had
hundreds of thousands fewer jobs than it had prior to the last
recession. Across the country, some 9.5 million workers are
unemployed and looking for work, more than 2 million more than
a year ago, the highest figure recorded since December 1992.
Two million people have been jobless for more than 6
months. Nearly 6.1 million people are working part-time because
they can't find full-time work or because business conditions
have led to fewer hours and, obviously, less pay.
This week, it is estimated that more than 800,000 Americans
will exhaust their unemployment insurance, including 22,000
people in our State. Last week, many of us in Congress fought
to extend unemployment insurance for these workers. The House
passed an extension overwhelmingly bipartisan vote of 368-28.
Unfortunately, Senate Republicans blocked a vote in the Senate.
Because Congress couldn't finish the bill, more than
800,000 unemployed people will stop getting their much-needed
checks when their time runs out. That number will grow to more
than a million by the end of the year.
Whether the country is officially in a recession or not, we
can say with certainty that Ohio's middle class is in a
recession. But Toledo and the Midwest is also ripe for
survival, as evidenced by all the things going on here, what
happened with First Solar recently, all the kinds of things
that are happening.
A strong workforce in Lucas County, northwest Ohio, its
access to transportation lines, and location are all assets for
new manufacturing and industries. This incubator is a symbol of
the energy and hard work that can make Ohio a home to
alternative energy manufacturers.
How can Federal Government play a role to help reposition
Ohio for a new era of prosperity? What role can rapid response
networks play in getting workers and communities one step ahead
of the curve? What skills and training can be enhanced to meet
the demands of new industries? What investments in
infrastructure and manufacturing could help communities
rebuild?
These are the questions that our witnesses are helping us
answer today. I look forward to their remarks and to our
discussion.
Let me turn to the first panel. On the first panel, we will
have Craig Goshe of Tiffin. Mr. Goshe worked at American
Standard in Tiffin for some 31 years. He and I have worked
together and talked several times over the last 18 months. I am
very appreciative of what he has done. He worked there for 31
years until being laid off last year.
On the first panel we will also have Tieshetta Price of
Toledo. Ms. Price is a dislocated worker currently working on a
degree in medical coding and billing at Mercy College. Ms.
Price, welcome to you. Thank you for being here.
Eric Walker of the Lucas County Workforce Development
Agency--as Commissioner Gerken says, the best of the State--
where he has been director for nearly 5 years, is a Toledo
native of St. Francis High School, and has a B.A. in political
science from Hampton University in Virginia.
Thank you all for joining us. Mr. Goshe, we would love to
hear your statement. Thank you.
STATEMENT OF CRAIG GOSHE, FORMER EMPLOYEE, AMERICAN STANDARD,
TIFFIN, OH
Mr. Goshe. Good morning. I would like to take a moment to
thank Senator Brown for holding this hearing and inviting me to
be a part of it.
My name is Craig Goshe from Tiffin, OH. I have been a
resident of Tiffin and Seneca County all my life. I have been
happily married for 28 years and have 3 children who all now
have successful careers in different fields.
Until the fall of 2007, I had planned to finish my career
at American Standard, where I had been employed for 31 years.
In 2000, I was elected to the executive board of GMP Local 7A,
representing the workforce.
American Standard provided a very good place to work for
over 750 people up until 2003. At that time, American Standard
moved much of its operations to Mexico and overseas. The
layoffs continued over the next several years until the
workforce was at 165 hourly employees, all of whom were ranged
in age from 40 to 60 years. This was a very senior workforce,
all hard workers who had given all their adult life to American
Standard.
In the 2004 negotiations, realizing the competition with
global markets, we gave concessions in wages and in healthcare.
Early in 2007, American Standard said it was trying to sell its
bath and kitchen division, which we were a part of. During the
2007 negotiations, we were told that with our facility being
one that American Standard was trying to sell that we needed to
give the company relief to make us more attractive to a new
buyer.
Hearing this from a company that was rewarding its CEO with
millions of dollars in stock options every year was not easy.
But again, we gave concessions in wages, healthcare, and
pension benefits. In September, the bath and kitchen division
was sold to Bain Capital. In late October, Bain Capital sold us
to Sun Capital.
Then in November, myself, along with three other members of
the executive committee, were called into a meeting with
executives of Sun Capital to tell us that they were considering
closing our facility due to excessive inventory, high labor
costs, and a slow housing economy.
The company presented us with a total labor and benefit in
Mexico at $3.77 per hour, compared to Tiffin at $27 an hour.
Even though we were the most productive and highest quality
plant in all of the division, we knew we could not compete.
Our local government got involved, offering the company $6
million in tax incentives over the next 10 years. Our committee
asked, ``What will it take to keep the plant open?'' Sun
Capital never responded.
On December 3rd, we were given the WARN notice, and the Sun
Capital stated that they were prepared to enter into severance
negotiations. During these so-called negotiations, the company
refused to move on any of our proposals and only provided the
employees what was only required under the WARN notice.
For 165 hourly workers, along with almost 30 salaried
employees, this closing was devastating. Workers were faced
with many questions, such as where will we find a job in our
area that already has lost over 1,000 manufacturing jobs over
the last 15 years? How will I be able to provide healthcare for
my family? Many of my workers have developed health issues
because of the environment that we have worked in over the last
30 to 40 years.
Immediately following the announcement of the plant
closing, our Local 7A applied for trade adjustment relief. We
contacted Senator Brown, and with his assistance, the employees
of American Standard were granted TAA and ATAA benefits.
Of the 194 total employees that lost their jobs, 147
attended the informational meetings provided by the Job and
Family Services. Sixteen employees enrolled in training, and 47
applied for the wage supplement.
Approximately 50 percent of the workers were eligible to
retire at a full pension or a slightly reduced pension.
However, the other 50 percent was left with finding a new job
in an area that the unemployment rate is at 7.2 percent and
trying to find affordable healthcare. Also, for these hourly
employees, their pensions being frozen until age 65 or taking
an early retirement at nearly 50 percent reduction.
Good-paying jobs in Tiffin and the surrounding area are few
and far between. The benefits that were provided through TAA
were essential to many of my past co-workers, whether it was
wage supplement for being forced to take a job at half the pay
that you were accustomed to or extended unemployment and
training to provide you an opportunity for a better job.
A plant closing such as American Standard affects much more
than just the workers and their families. It also affects the
entire community, such as tax revenue. Our small town of Tiffin
lost almost $150,000 per year in city tax alone. This affects
many things from our schools to city projects and other
programs.
It affects retailers, charitable organizations, such as
United Way, Hospice, American Red Cross, all of which our
members of our local union were major contributors of. It
affects local restaurants, taverns, and other manufacturers
that supplied American Standard.
I have been fortunate that I was able to find a position in
management at a facility in Fostoria. However, this past week,
I was forced to lay off 15 percent of my workforce due to the
economic crisis that this country now faces. This was extremely
difficult for me, considering I know what these workers must
now face.
In closing, I cannot express enough to our elected
representatives the importance of continuing trade assistance
for displaced workers. I also hope that our Government realizes
that NAFTA must be changed to provide the American worker an
even playing field in the future.
Millions of jobs have been lost to Mexico, China, South
America, and other countries. This trend must not continue.
Over the past 2 weeks, our Government has asked us that Main
Street bail out Wall Street. Now our Government and Wall Street
must provide the opportunity of employment to the workers of
America. If Main Street is not working, it is not buying.
Again, I would like to take this opportunity to say, I
express the feelings of myself and many of my co-workers.
Thank you, sir.
Senator Brown. Thank you, Mr. Goshe, very much for your
comments.
Ms. Price.
STATEMENT OF TIESHETTA PRICE, WORKER, TOLEDO, OH
Ms. Price. Thank you for holding this meeting, Senator
Brown.
My name is Tieshetta Price, and I grew up in Toledo, and I
graduated from Rogers High School. My mom and dad both live
here in Toledo. I have one brother and one sister.
I was terminated in February 2008 as a data entry clerk and
receive unemployment, and it will end in October of this year.
I have been seeking employment during this time, and I have had
only one interview. Right now, it is pretty scary because I
have bills, and I don't know where I am going to find help in
meeting my needs.
The week that I lost my job, I had just purchased a car. So
now I have a car note that is due. I have a disconnection
notice from Columbia Gas and right now can't afford car
insurance.
I am a single parent, and I have two sons. And I am not
able to afford any additional school costs, such as school
pictures. I use my car to get to school and search for jobs,
and gas prices are very high. It is eating away at any extra
money that I have.
I am currently enrolled at Mercy College of northwest Ohio
in medical billing and transcription. I found out about WIA
because I attended an unemployment session at The Source and
was informed about the WIA CAA program. I wanted to take this
opportunity for more training, which I believe will lead to a
career.
It is very difficult to raise two teenage sons in this
economy. I have to provide food, shelter, clothes, and other
personal needs. And by not having a job, it is very hard. What
the Federal Government can do is not limit funding to specific
occupations and increase money for training and extend
unemployment for at least a year.
Thank you.
Senator Brown. Thank you, Ms. Price. Thank you for sharing
your story.
Mr. Walker.
STATEMENT OF ERIC WALKER, DIRECTOR, LUCAS COUNTY JOBS CENTER,
TOLEDO, OH
Mr. Walker. Thank you, Senator Brown, for this hearing and
for taking the time to listen to everyday citizens from the
city of Toledo, Lucas County in northwest Ohio.
Second, I would like to thank the Board of County
Commissioners--President Tina Skeldon Wozniak, Pete Gerken, and
Ben Konop--for their commitment, innovation, and leadership on
the issues of employment, jobs, and training.
My name is Eric Walker, and I am the Lucas County workforce
director at The Source. My job duties there are the
distribution of $5 million to $7 million from the funds
allocated from the Workforce Investment Act from the Department
of Labor to educate, employ, and train youth, adults, and
dislocated workers for the employers and businesses of Lucas
County in northwest Ohio.
In addition, I am the building operator of a 60,000-square
foot facility with 20 various education, employment, and social
service agencies and a staff of 120. I supervise 20 of those
directly and work to provide outreach program services to all
the citizens of the city of Toledo in Lucas County, northwest
Ohio.
Today's dislocated workers face a much larger challenge to
employment than their predecessors. High unemployment,
continued downsizing in the manufacturing sector, low levels of
academic achievement, and other factors make returning to work
a challenge for many people. While the numbers of available
workers active in the workforce has stayed consistent over the
past 10 years, employment figures have consistently declined.
July's preliminary figures show that there are currently
227,808 workers in the current labor pool compared to 232,741
in July 1998. Over the past 10 years, the number of unemployed
workers has ballooned to 21,000, or more than 9.2 percent in
Lucas County. Comparative figures for 1998 show that only 5.9
percent of individuals, or 13,487, were unemployed at that
time.
As a result, this means higher levels of competition for a
shrinking pool of available positions. Manufacturing alone has
shed almost 300,000 jobs between July 1998 and July 2008, with
a drop of locally 20,000 workers here in Lucas County. For
these workers, many who left for the workforce leaving high
school, the challenges in technology make them less skilled to
do their old jobs than younger, more educated counterparts.
In the Toledo metropolitan area, where only 14 percent of
those over the age of 25 have a bachelor's degree or higher,
significant barriers to unemployment arise for those facing
unexpected job challenge. The level of education and training
means that the workers will be unlikely to adapt to a high-tech
environment in today's newer manufacturing plants and that
older plants plagued with lower productivity are more unable to
compete in the global markets that face uncertain futures.
Attracting new businesses is difficult as well when
education levels are low. And in the Toledo area, with a
population of postsecondary degrees, being able to compete with
other Ohio cities such as Cincinnati with 17.1 percent of
education in postsecondary; Columbus, 20.3 percent; and
powerhouses like San Francisco at 26 percent; Raleigh, NC, 26
percent; Charlotte, NC, 30 percent; and obviously, trying to
compare Toledo with Silicon Valley, Research Triangle, and the
financial heavyweight of Charlotte are very unfair.
It is a clear indication of the challenges workers face
here obviously in today's economy. As you listened to Ms.
Price's testimony, we have obviously several other workers. We
had over 8,000 people register in the last 3 months alone in
Lucas County. Of those, 2,500 are currently receiving
unemployment benefits.
We don't know how many of those will be cut off and how
soon they will be cut off. But obviously, without the
additional unemployment insurance that was recently voted on by
Congress, we will know that there is going to be difficulty in
trying to pay for gas prices, food, healthcare costs, and other
services.
The staggering prices in basic necessities such as gas,
food, and healthcare have placed an additional burden on
today's workers. The expected increase of food and gasoline
outpace the estimated 1.2 percent increase in the average wages
for the region.
Food prices are expected to climb between 5 and 6 percent
in 2008, according to Department of Agriculture data. The
Bureau of Labor Statistics shows that healthcare costs have
been growing at about 4 percent annually for the past 10 years,
and gasoline prices obviously have leaped a staggering 28.6
percent alone this year, via energy information.
More people are finding themselves out of work or are now
the working poor and at lower level paying jobs, often limited
with no healthcare, much additional stress, and obviously
pressures on their lifestyles. It is extremely important that
unemployment insurance be available to these workers.
Economic recovery is going to take time and a luxury that
many in northwest Ohio are without. While the automotive
industry, a major driver of the regional economy, regroups and
repositions itself, workers are still required to pay their
mortgages, put food on the table, gas in the car, and seek
treatment for illnesses and injuries.
While it is true that unemployment benefits are a temporary
support for dislocated workers, in many cases this is the only
support they have. If the primary source of unemployed or
underemployed workers disappears, these individuals will find
themselves in a downward spiral that cannot only impact
themselves, but their families and the community as a whole.
As we head into the winter months, heating costs alone are
expected to rise 17 percent, along with facing additional
burdens. Protecting the unemployment safety net that many of
these workers rely upon will become even more important.
Unemployment benefits are the only thing sometimes keeping
workers in their warm houses and helping them to pay their
mortgages or to feed their families.
Last week, as we talked about the $700 billion bailout for
Wall Street, there was a report just yesterday that AIG
received or spent $440,000 for a week-long resort for its
executives at a California retreat. That $440,000 in Lucas
County, northwest Ohio, could have trained an additional 100
workers. This is staggering. And we want to thank you, Senator,
for the time on the hearing, but when will Toledo, northwest
Ohio, be bailed out as well?
[The prepared statement of Mr. Walker follows:]
Prepared Statement of Eric Walker
Thank you Senator Brown for this hearing and taking the time to
listen to everyday citizens from the city of Toledo/Lucas County,
northwest Ohio. Secondly, I'd like to thank the Board of County
Commissioners, President Tina Skeldon Wozniak, Pete Gerken, and Ben
Konop for their commitment, innovation, and leadership on the issues of
employment, jobs, and training.
My name is Eric Walker, I am the Lucas County Workforce Development
Agency Director at The Source NOW, The Lucas County One-stop
representing WIA funds for Area #9. My duties are the distribution of
the $5-$7M in funds that are allocated from the Department of Labor
through the State of Ohio to the Board of County Commissioners to
educate, employ, and train adults, youth, and dislocated workers for
the businesses and employers of Lucas County, northwest Ohio. In
addition, I am a building operator of a 60,000 sq. ft. facility with 20
various education, employment, social service agencies with a staff of
120. I supervise 20 staff directly and work to provide outreach program
and services to all the citizens of the city of Toledo, Lucas County,
northwest Ohio.
Today's dislocated workers face much larger obstacles to employment
than their predecessors. High unemployment, continued contraction in
the manufacturing sector, low levels of academic achievement and other
factors make returning to work a challenge for many people.
While the number of available workers active in the workforce has
stayed fairly constant over the past 10 years, employment figures have
consistently declined. July's preliminary figures show that there are
currently 227,808 workers in the current labor pool compared to 232,741
in July 1998. Meanwhile, the number of unemployed workers has ballooned
to 21,061 or 9.2 percent. Comparative figures for 1998 show that only
5.9 percent faced unemployment or 13,487 individuals.
As a result, this means higher levels of competition for a
shrinking pool of available positions. Manufacturing alone shed nearly
300,000 jobs between July 1998 and July 2008 with a drop locally of
nearly 20,000 workers. For these workers, many who have been in the
workforce since leaving high school, the changes in technology make
them less skilled to do their old jobs than their younger, more
educated counterparts.
In the Toledo metropolitan statistical area where only 14.4 percent
of those over 25 have a bachelor degree or higher, significant barriers
to employment arise for those facing an unexpected job change. A lack
of education and training means that workers will be unlikely to adapt
to the high-tech environment in today's newer manufacturing plants and
that older plants, plagued with lower productivity, are unable to
compete in the global markets and face uncertain futures.
Attracting new businesses is difficult as well when education
levels are low. How can the Toledo area, with only 14.4 percent of the
population holding post-secondary degrees, ever hope to compete with
other Ohio cities such as Cincinnati (17.1 percent) and Columbus (20.3
percent) much less with powerhouses like San Francisco (26 percent),
Raleigh, NC (26.2 percent) or Charlotte, NC (30.5 percent). While
comparing northwest Ohio to regions like Silicon Valley, Research
Triangle Park and financial heavyweight Charlotte may seem unfair, it
is a clear indication of the challenges workers face in today's
economy.
Ms. Price testimony, recap/expand.
Lisa Mayberry, mother of two, DW: driver 2 years for 1st
Transit, attending Trainco for Class A CDL utilizing a CAA.
Leslie Caputo, mother of three, DW: assembler 11 years for
JAC Products, attending OCC for RN utilizing an ITA.
The staggering rise in prices for basic necessities such as gas,
food and healthcare place an added burden on today's workers. The
expected increase in the costs of food at home, gasoline and health
care greatly outpace the estimated 1.2 percent increase in average
wages for the region. Food prices are expected to climb between 5 and 6
percent in 2008 according to Department of Agriculture data, the Bureau
of Labor Statistics reports that Health Care costs have been growing at
about 4 percent annually for the past 10 years and gasoline prices have
leaped a staggering 28.6 percent this year alone according to data
published by the Energy Information Administration. Meanwhile, more
people are finding themselves out of work or working at lower paying
jobs--often with limited or no healthcare benefits--adding to the
stress and pressure felt by workers.
Economic recovery will take time and time is a luxury many in
northwest Ohio are without. While the automotive industry, a major
driver of the regional economy, regroups and repositions itself,
workers are still required to pay their mortgage, put food on the
table, gas in the car and seek treatment for illnesses and injuries.
While it is true that unemployment benefits are a temporary support for
dislocated workers, in many cases it is the only support they have. If
the primary source of unemployed or under-employed workers disappears,
these individuals will find themselves in a downward spiral that will
not only impact themselves but their families and the community as a
whole as well.
As we head into the winter months when heating costs are expected
to climb along with everything else, dislocated workers will be facing
an additional burden. Protecting the unemployment safety net that many
of these workers rely upon becomes even more important. Unemployment
benefits may be the only thing keeping workers in their warm homes this
winter and not in the cold or on the streets.
Last week the Senate approved a bailout for Wall Street of up to
$700 billion and the Iraq War has been costing $10 billion a month.
When will main street, Toledo, OH, Lucas County, northwest Ohio receive
that same consideration for re-tooling our local area workforce!
Thank you again for your consideration on these issues for all of
us.
Senator Brown. Thank you. Thank you, Mr. Walker. I heard
that report, too, yesterday. That is just outrageous, and it is
one of the reasons people obviously are so angry.
Mr. Goshe, you said half of American Standard workers
received full pensions. Where is the cutoff? What requirements
are there?
Mr. Goshe. There were full pensions or slightly reduced.
Any worker who had achieved the age, at the age of 55 was
granted a full pension. Workers such as myself----
Senator Brown. Fifty-five with how many years of service
necessary? Just 55, period?
Mr. Goshe. Well, everybody there had at least 20 years.
Senator Brown. Had at least 20, OK.
Mr. Goshe. They did--the age was the defining, or it was
the factor of 55 years of age. The second group was what we
called the ``80-point club,'' which I fell into. Age and years
of service totaling at least 80.
Senator Brown. So if somebody--you had 31 years, you could
be 49 and could still get it?
Mr. Goshe. Yes, 50 and 31. Right, yes. That provided a
worker with a slightly reduced pension.
Senator Brown. OK. That group was both in the half that got
decent pensions?
Mr. Goshe. Yes.
Senator Brown. OK, and what is the range of pensions that
you or others in those two categories get? What kind of monthly
pension do they get?
Mr. Goshe. Ranging probably, based on how much money you
made during your career, I would say somewhere in the
neighborhood of $1,200 to possibly $3,000 a month. It was a
pretty broad range. It was based on your years of service and
your income during your----
Senator Brown. So the other half of employees were either
under 55, they were under 55 and their service plus time didn't
add up to 80? That was the other half?
Mr. Goshe. Right. And their pensions are vested, but they
are not allowed to draw their pensions, full pension until age
65, or they can take a reduced pension starting at age 55. But
it is going to be a 50 percent reduction, and that reduction
will continue through their life.
Senator Brown. The rest of you get your pensions from the
day you left?
Mr. Goshe. Yes, sir.
Senator Brown. Those workers that wait until 65--if
somebody was 54 years old and had 25 years of service, say they
were just under 55 and their years didn't add up to 80--they
would get a pretty good pension, but it wouldn't be for 11 more
years, until they turned 65, or they discounted it half?
Mr. Goshe. No, if you are, say, at age 54, and you had
enough years of service to achieve the 80----
Senator Brown. I am saying if you didn't achieve it. If you
were 54 and didn't----
Mr. Goshe. Oh, if you didn't achieve the 80? You could draw
the pension----
Senator Brown. You would be vested?
Mr. Goshe. You are vested and you could draw it at age 55,
but at almost a 50 percent reduction, and once you reach 65, it
would not escalate. That is what your pension would be for your
life.
Senator Brown. Considering the job situation in Tiffin and
Fostoria and sort of all of Seneca County, that area, did you
see a good many people take their pensions earlier, even though
it was discounted by so much? Did you have a lot of co-workers
that made that choice?
Mr. Goshe. Oh, absolutely. I believe every employee that
was eligible for pension right away took it, OK? Nobody waited
because a lot of workers didn't know----
Senator Brown. Even though it was 50 percent discounted,
they still took it?
Mr. Goshe. No, sir.
Senator Brown. OK. I am sorry. Could you explain that?
Mr. Goshe. Those employees that were not eligible have not
drawn their pension as of yet. OK, the ones that are not
eligible are not. They have got to wait until they are 55. Now,
if they were 55 and they didn't have the 80 points or if they
were age 54 and didn't have enough points, I don't know if any
of them started drawing at age 55 or not yet. That I don't
know.
Senator Brown. OK. Did American Standard, then Bain
Capital, then Sun Capital, have they lived up to their
obligations?
Mr. Goshe. They lived up to their obligations as far as our
pensions. They did not live--during preliminary talks, they
told us that they realized their obligation to us workers over
30, 40 years of service, that they had an obligation for
severance packages, which was somewhat hopeful.
But when we went into severance negotiations, they told us
basically, ``We only owned you guys for the 2 months. How much
do you think we owe you?'' Discrediting our years of service
with American Standard.
Senator Brown. The 2 months that Sun owned them?
Mr. Goshe. The 2 months that Sun Capital owned us, they
told us in negotiation, ``We only owned you guys for 2 months.
How much do we owe you?''
Senator Brown. So someone that was at American Standard,
then Bain, then Sun for 20 years and was, say, in his early
50s, late 40s, just got 2 months' severance?
Mr. Goshe. All that they were allowed was what was due us
through the WARN notice--60 days of pay and any vacation pay
that they might have accrued through 2007 for 2008. So there
might have been a month of vacation pay involved.
They provided us healthcare coverage until February 29,
until the end of February. That is because we were technically
still during a vacation period there, if you took your vacation
pay. So after February 29, you were done. There was no
healthcare. There was no severance pay. Everybody was done.
Senator Brown. So tell me what, Mr. Goshe, most are not--
and I hesitate to use this word--as fortunate as you in that
you had a good pension and you have good employment now. People
that fell short of the pension, that didn't have the time or
the age, what are--tell me some stories of what your co-workers
are doing now?
What are they doing for healthcare? What are they doing for
work? Are they employed at significantly lower wages? Are they
working at all? Have they moved out of Seneca County? Tell me
what has happened.
Mr. Goshe. To my knowledge, none of us have moved out of
Seneca County, simply because of the fact that most of the guys
own homes, and to try to sell a home in Seneca County right now
is pretty slim pickings.
A lot of them accepted jobs at neighboring little plants
around the community that pay maybe $8 to $10 an hour. Probably
the top industrial employer right now may be at $12.50 an hour.
Senator Brown. What company is that?
Mr. Goshe. Toledo Molding & Die. They are probably at
around $12.50 an hour. But a lot of the workers ended up at
Cooper Tire in Findlay, OH, where they went under a two-tier
wage system. There is no pension there for them. They are
working 12-hour shifts, every other weekend, if they are
lucky--that was if they were fortunate enough to get in there.
There were some employees that got into Toledo Molding &
Die. There were some that got into the education that was being
provided. But for the most part, I would say a lot of them
accepted substantially lower-paying jobs throughout our
community.
Senator Brown. And you say that the average, the age range
is 40 to 60. Not a lot of people went back to school, like Ms.
Price is doing, did they?
Mr. Goshe. No. I believe 14 of our past members that
pursued the trade assistance as far as education.
Senator Brown. OK. Thank you. Thank you for advocating for
your fellow workers and congratulations on your new job now.
Ms. Price, your unemployment runs out this month?
Ms. Price. Yes.
Senator Brown. How much is your unemployment, if I could
ask?
Ms. Price. One hundred fifty-seven dollars a week.
Senator Brown. Tell me about the job you were laid off from
and tell me about that company, if you would?
Ms. Price. The name of the company is Pro Quo Books. I was
a data entry clerk, and we just inputted the ISBN numbers off
the back of the books for storage and sales in the warehouse.
Senator Brown. And they laid off a number of people?
Ms. Price. I basically got fired because the place was like
moldy and dirty. I kept getting sinus infections and medicine,
and it just didn't work out for me. But the way they fired me,
that is how I ended up getting unemployment because it was
unjust. So that is how I got unemployment.
Senator Brown. OK. You are in school now at Mercy College.
Ms. Price. Yes.
Senator Brown. How much school have you had, and how much
do you still need?
Ms. Price. I just started school last month. So this is the
third week.
Senator Brown. It is a 1-year program, 2-year program?
Ms. Price. I think 6 months. I will be finished in February
with the medical billing and coding. Then I am going back for
medical transcription.
Senator Brown. OK. What do you hear from other students and
your teachers about the job placement after you finish at
Mercy?
Ms. Price. There are lots of people in my class that are
laid off, can't find jobs. Just basically everybody is going
through the same thing.
Senator Brown. They are laid off from other jobs. My
question is, your chances of finding a job after you finish
your education? Those jobs are relatively plentiful?
Ms. Price. Yes, they are in demand right now.
Senator Brown. So your teachers tell you that after you
finish this course, your chances of getting a job are really
good?
Ms. Price. Yes.
Senator Brown. What do those pay typically? Do you know
what the range is there?
Ms. Price. I think between $45,000 and $50,000.
Senator Brown. OK. And you would work for, what, doctors,
hospitals, various clinics, various kind of medical facilities?
Ms. Price. Clinics, yes.
Senator Brown. And that would be--that is not the first
training? That would be the second tier of training to get that
$45,000 job?
Ms. Price. If I am not mistaken, I think the medical
billing and coding may make between $30,000 and $40,000, and
then the medical transcription, that--I am not sure how much
that makes. I was going to do that on the side for extra money.
Senator Brown. OK. Medical transcription is working with
medical records on----
Ms. Price. When the doctor dictates in the tape recorder,
and then you type the paperwork up for the records, for the
patient's record.
Senator Brown. Are you getting help elsewhere besides
unemployment, and what kinds of help can you expect or can we
help you get after your unemployment expires?
Ms. Price. Well, I currently receive child support. I have
two sons, and my unemployment is going to run out this month.
So I get a little bit of food stamps from the welfare office
and medical for my kids and myself. But as far as cash--
Senator Brown. You get Medicaid?
Ms. Price. Yes. As far as cash, all I receive is from child
support.
Senator Brown. So child support, unemployment, and food
stamps?
Ms. Price. Yes.
Senator Brown. Anything else through the Ohio Benefit Bank?
Do you know about that?
Ms. Price. No.
Senator Brown. If there is anything there? OK.
Mr. Walker, what do we do to help people like Ms. Price?
She is obviously working hard and trying to do everything
right.
Mr. Walker. With Ms. Price, we are going to be able to co-
enroll her with the Workforce Investment Act supportive
services. So, currently, the policy is there will be an
additional $1,000 worth of benefits. She will have to bring in
bills to us, and we will be able to reimburse her for some of
her out-of-pocket costs--gasoline, transportation, as well as
anything that she is faced with, uniforms and other supportive
services.
Senator Brown. I was told that 8,000 people coming into
your center in the last 3 months, fewer than half, about a
third are receiving unemployment insurance. What happens to the
other 5,000 or so?
Mr. Walker. The other 5,000, Senator, we can't tell you
with certainty. Many of those are dislocated workers as well
that have already exhausted their unemployment benefits. Those
are the ones that we are tracking because we know that they are
currently receiving.
Now, that is one of the problems, unfortunately, of the
unemployment system. Once people fall off the system, we have
no way of knowing, unless they tell us, that they are still
dislocated, unemployed, or that they actually receive the
unemployment insurance.
Senator Brown. Of the 8,000, 2,500 are receiving
unemployment insurance?
Mr. Walker. Correct.
Senator Brown. The others all used to receive it? Almost
all of the others at one point received unemployment?
Mr. Walker. It is very possible. As I said before, we don't
have a tracking system or mechanism unless they tell us that
they are currently dislocated workers or they were receiving.
We know that we have currently 8,000 people registered that are
seeking jobs or looking for employment in the city or Lucas
County at The Source.
Senator Brown. You have 8,000 people, many of whom had work
and are looking for work. Are you able to estimate how many
people are out there that don't know about you that have
exhausted their unemployment benefits and have sort of nowhere
to turn? They haven't found out about the Workforce Development
Agency. Is that a significant number of people in Lucas County?
Mr. Walker. We hope not, but obviously, there is always a
hidden population. You know, one of the things, unfortunately,
that happens is that many tier one or, should I say, tier two
or tier three auxiliary people fall off.
Just like last year with Ford Maumee, there were 700
workers. When 92 percent of those were able to receive a full
pension or, more importantly, a buyout offer, we had a worker
that worked across the street in the union hall who was an
auxiliary worker. She did not know about the rapid response.
She did not know about the WARN Act. But yet she was an
auxiliary or a second-tier worker.
Many times people that work in small businesses that run
lunch stands or run newspaper agencies or have carryout
businesses, they are what we call the auxiliary or the second
or third tier. Because once that primary employer, just like
Mr. Goshe, has lost his job, the places where he used to go,
the places that he shopped at, the places that he stopped at,
those mom and pop businesses just simply dry up and go out of
business because, all of a sudden, those 400 or 500 or 600
people that used to stop there on a daily basis are no longer
there.
Many times, those are the ones that we never get to or that
we never see because, unfortunately, they just simply go out of
business literally overnight.
Senator Brown. And they aren't eligible for unemployment?
Mr. Walker. It depends if they paid into the system or not.
If they have--if they pay into the taxes for the State of Ohio,
then they are eligible. Now that is an individual situation, on
a case-by-case basis.
Senator Brown. So when you say tier one and tier two, tier
two is workers that often own their own businesses and are
affected by the losses of the larger businesses of tier one?
Mr. Walker. Correct.
Senator Brown. Is that the term you use?
Mr. Walker. Yes, sir.
Senator Brown. OK. Tell me more about the rapid response
system and how it is working, where it is working, and where
its shortcomings are.
Mr. Walker. We provide rapid response services to any
business that we receive a WARN notice. So any business that
has 50 or more employees that files a rapid response notice
with the State of Ohio, we go out to provide rapid response
services.
What we try to do is to get inside of the business before
it closes or before the employees are laid off so that they
know, first, about unemployment benefits. Second, they know
about education, employment, and training services that are
offered in the local areas. And then, more importantly, any
other services such as job and family services, which provides
food stamps, cash benefits, or other insurance, especially if
they have minor children.
We try to meet with the employers or the management of each
of those businesses and employers to let them know of those
benefits. Second, what happens, obviously, is that we try to
get those people pre-registered so that they understand that
they can come to The Source or any one-stop in their local area
and to become registered.
We want to provide them with a resume and let them know how
we can provide hopefully adequate referrals to any available
employment there might be and the transferable skills that they
have with their current occupation.
Senator Brown. Senator Fedor and I have talked a lot about
veterans benefits, and she has worked very hard on that in the
State legislature. How do veterans benefit?
If you have a laid off worker come to you that is or isn't
receiving unemployment insurance, and--I assume you ask if they
are veterans--you guide them maybe to the veterans service
organization. Or what do you do when people come in that are
veterans?
Mr. Walker. Two things. We have the Ohio Veterans Programs
Services inside of the one-stop. They are part of the rapid
response team that goes out to do the orientation. We also have
the Lucas County Veterans Commission, which is inside The
Source, that provides cash benefits, medical assistance, and
sometime vouchers for other services such as housing. So what
we try to do there in those cases is to make the direct
referral.
Now one of the other questions that you asked me, what is
the shortcoming in the system? Unfortunately, unemployment in
Ohio is a call-in system. Once we go out to do the rapid
response, and people then, the employee then calls in to the
State of Ohio to give their Social Security number and place of
employment, they are now eligible to receive unemployment
benefits.
The only problem with that is that they are no longer
engaged actively in working or job seeking. Until they are
called in or for UCRS, which is an Unemployment Re-employment
Session or Service, they are sitting at home collecting a
check. And many times, that lures people into a false sense of
security or it leaves them not engaged.
Right now, it probably takes at least 6 months to find re-
employment if people are able. And unfortunately, the system is
not designed like back in the old days when we had unemployment
offices, where people had to come in every 2 weeks to file
their claims and see someone physically face-to-face. So many
times now after the person has engaged or is receiving that
check, they won't re-engage until all of a sudden the check is
about to run out or, more importantly, the benefits are no
longer there.
So the first chance that we get hopefully to work with an
employee or to get them to re-engage, as in Ms. Price's case,
the
better off they are. Because the sooner that we can get them
into retraining, which provides them with additional programs
and services, the better off we are able to hopefully get them
re-employed.
Senator Brown. Let me ask, in closing--and then I will
bring the next panel up--one question, the same question of all
three of you. What is the most important thing, the single most
important thing or the most important couple of things that you
would like to see the Federal Government do to answer some of
the personal or professional or society problems that you bring
out?
And I will start, Mr. Goshe, with you.
Mr. Goshe. The two issues that Government has to address,
No. 1, is the NAFTA. The American worker is really at a
disadvantage. As I said earlier, we can't compete with $3.77 an
hour in wages and benefits. The American worker cannot compete
against that.
And another important issue is extending the TRA and TAA
benefits, continue that to allow workers a chance for
retraining. I think those are the two major issues that we have
to address, along with affordable healthcare.
Senator Brown. OK. Ms. Price, do you have one or two or
three things specifically you think we should do?
Ms. Price. I just feel that with the way unemployment and
everything is going that with situations like this,
unemployment should have some type of emergency funding to help
people that are in school and trying to do the right thing. And
just what do we do? That is all.
Senator Brown. That is more than all. That is a very good
question.
Mr. Walker.
Mr. Walker. Probably three things, Senator. No. 1,
obviously, I would advocate for retraining and re-education for
the American workforce and retooling.
More importantly, more in additional funds either for the
Workforce Investment Act, the one-stop centers that we
currently work in, summer jobs for our youth. You know, 16
years ago, I used to run the PIC summer youth program. That
year, there was $2 million alone. We were able to employ 2,000
youth in the summer to provide them with an education and, more
importantly, work experience. This last year, we were able just
barely to place 2,000 adults back into re-employment.
And obviously, the most important thing I would say is that
we need to take care of America. Stop bailing out,
unfortunately, a nonpopular war that is leading us nowhere. We
have to take care of the citizens here to rebuild a strong
middle class obviously for the betterment of all of us.
Senator Brown. Thank you. Mr. Walker, thank you. Ms. Price,
thank you very much. Mr. Goshe, thanks for coming up here from
Tiffin.
Good to see you all. Thank you. All your comments will be
part of the public record, and thanks for your contributions
and all you are doing.
And good luck in school, Ms. Price.
Ms. Price. Thank you.
Senator Brown. We will take a couple of minutes break.
[Recessed.]
Senator Brown. Thank you.
Susan Helper is AT&T Professor of Economics at Weatherhead
School of Management at Case Western Reserve University in
Cleveland. She is a research associate of the National Bureau
of Economic Research and the MIT International Motor Vehicle
Program. She has her B.A. from Oberlin College just east of
here and her Ph.D. from Harvard.
Daniel Kildee has been Genessee County treasurer for the
last 12 years. Because some regions most exposed to foreclosure
are also hardest to make attractive to employers, we asked him
to come talk with us today.
He founded the Genessee Land Bank, Michigan's first land
bank, something Ohio is looking seriously into. Kildee's land
bank program was named winner last year of the Harvard
University Fannie Mae Foundation Innovations in American
Government Award for Affordable Housing.
Thank you for your contribution in all of this.
Mr. Kildee. Thank you.
Senator Brown. David Dmytryka is the president of Dmytryka
Jacobs Engineers in Toledo. He is a member of the Toledo
Chamber of Commerce, member of the Toledo Area Small Business
Association, and also a member of the Lucas County Workforce
Investment Board.
Mr. Dmytryka, thank you. Did I say that right? Dmytryka?
Mr. Dmytryka. Yes, sir.
Senator Brown. And Frank Calzonetti, you come to Toledo--
you really get names like Calzonetti and Dmytryka. Kildee is
not from Toledo and Helper is not from Toledo, is it?
[Laughter.]
Dr. Calzonetti is a professor of geography and vice
president for research and development at the University of
Toledo. He is responsible for the promotion of research,
technology transfer, and technology incubation at the
University of Toledo. He got his B.A. from Wayne State
University, an M.A. in geography from Wayne State, and a Ph.D.
in geography from the University of Oklahoma.
Thank you, all of you, for joining us. And Dr. Helper, why
don't you begin?
STATEMENT OF SUSAN HELPER, PH.D., PROFESSOR, WEATHERHEAD SCHOOL
OF MANAGEMENT, CASE WESTERN RESERVE UNIVERSITY, CLEVELAND, OH
Ms. Helper. Great. Well, thanks a lot for inviting me to
testify on these really important issues. And I also have a
supplemental document for the record.
Today----
Senator Brown. If I could interrupt you? Anyone that wants
additional submissions for the record can do that. Just give
them to Chris today or submit them--if you get them to us
within a week or so, it will be in the official record. So
anyone that is on one of the panels can certainly submit
anything in addition.
I apologize, Dr. Helper, continue.
Ms. Helper [continuing]. So, today, I would like to briefly
discuss some solutions to the employment issue that also create
community, improve competitiveness, and provide clean energy.
So we have seen the short-term problems. I want to think kind
of about the long-term and think about how soon can we get to
the long-term, and what kind of jobs will be created?
And recent trends don't paint a positive picture. Over the
last 7 years, the income of the median working age household
fell $2,000. This is the first economic expansion in U.S.
history in which the typical worker's income actually fell.
We could do a lot better than this. We could create good
jobs while helping to achieve other national goals. In
particular, both manufacturing and service firms can use a
``high-road'' production process that harnesses everyone's
knowledge--that of front-line workers as well as top executives
and investors--to achieve innovation, quality, and quick
responses to unexpected situations.
This high-road model of production provides an alternative
to the all too common low-road model, in which most employees
are treated as disposable drones who merely follow orders from
``stars'' at the top, who need to go on luxury retreats to
California.
Here is an example of how the high road works. A
firefighter in Solon, OH, had an idea based on his own
experience--a compass to guide firefighters when they are
inside burning buildings. You can get disoriented. I have
brought an example of it.
Much of the design for this was provided by a federally
funded manufacturing extension program, and the tooling for the
molding that makes this was built by Colonial Machine in Kent.
Colonial Machine is actually successful because they made
several investments at once.
They adopted advanced information technology while also
changing their production strategy so they could produce more
customized products; their operations strategy, using some IT
capabilities to reduce setup times; and they also changed their
human resource strategy. So they employed workers with more
problem-
solving skills that use more training. But the success of
changes in one area actually depended on investments in other
areas.
For example, customizing the products wouldn't have been
profitable without being able to change over more quickly. And
the reduction in setup time was made possible both by this
information technology, but also by the ability to use the
information that the trained and empowered workers had.
So just training workers by itself, that is important, but
just by itself it would have had little impact without re-
designing their jobs so the workers could pool knowledge and
have the power to recommend changes.
The high road's linked information flow is powerful because
real production rarely takes place exactly according to plan.
This is particularly true when firms are producing products
that aren't yet mature, like green products, or there is a big
need to change production conditions, such as a desire to
reduce a firm's carbon footprint.
And in these cases especially, the understanding that
direct workers have is really crucial to running and improving
the process. We can wait around for the managers and the
engineers to issue directives, but that takes a lot longer and
costs a lot more. So, thus, high-road practices increase
competitiveness.
High-road production also empowers workers by involving
them integrally in designing and improving their own jobs.
Workers interact more closely with their customers, suppliers,
and co-workers, and that makes the jobs harder to offshore. So,
thus, the high-road practices can help communities, providing
fairly paid and stable jobs.
These high-road practices aren't new. But markets alone
fail to provide the proper incentives for firms to adopt these
policies. First, many of the benefits of the high road accrue
to workers, suppliers, and communities in the form of higher
wages and more stable employment. And so, firms usually invest
too little in training because they worry that they are not
going to get the full benefit of their training expenditures
since the trained employees might be hired away by other firms.
And second, the high road works only if a company adopts
several practices at the same time, as I talked about in that
Kent example. Thus, direct services to workers and firms are
necessary to develop interdependent high-road capabilities.
Because of these market failures, low-road options remain
attractive to firms, even though they impose costs on society.
So to pave the high road, we need more Government investment in
education, training, research, and development. But we also
need to block the low road by doing such things as protecting
labor, environmental rights, and trade agreements, and
strengthening safety regulations for both workers and
consumers.
But we still need more than that. Education alone won't
allow firms to overcome the market failures that block the
adoption of efficient high-road practices. Nor will it re-
invigorate income growth, which for the median college-educated
man has risen only 0.5 percent annually since 1973.
Increased R&D spending by itself won't get innovative
products to market. Even with fair trade agreements, American
workers will still face foreign competition, and a key way to
respond to this challenge is providing direct services to firms
to build capabilities.
The Federal Manufacturing Extension Partnership (MEP) is an
important example of a program that helps firms move toward the
high road by helping companies make complementary investments
to develop new products, find new markets, and operate more
efficiently. With the help of programs like MEP, U.S.
manufacturing firms can compete with low-wage nations.
A study by the Michigan Manufacturing Technology Center
suggests that most small manufacturers have costs within 20
percent of their Chinese competitors. And this is a gap that
MEP programs can often eliminate. In fact, the MEP program pays
for itself in increased tax revenue from the firms it helps.
Yet the Bush administration wants to end the program, and
instead, I would argue we should triple the program's funding,
and that would cost only $300 million a year. We should also
extend this program to the service sector.
An important adjunct to this technical assistance program
is the Strengthening Employment Clusters to Organize Regional
Success, or the SECTORS Act that was recently introduced by
you, Senator Brown, and Senator Snowe. This legislation
provides for grants of up to $2.5 million each for cross-firm
partnerships for planning and training within an industry
cluster.
High-road production can also help meet national goals,
such as moving toward a clean energy economy. Green stimulus
programs, such as that proposed by the Political Economy
Research Institute, can create good jobs in the short-term
while providing the foundation for a sustainable economy. So
these public dollars can actually do double duty, both the
short-term and the long-term.
This institute proposes spending $100 billion over the next
2 years to employ 2 million people in building a green energy
infrastructure. These investments are really productive.
Investments that are increasing residential energy efficiency
can pay for themselves in 3 years.
The programs can also be structured to create a career
ladder, as the Green Energy Academy at Cuyahoga Community
College is beginning to do. Workers can start with entry-level
activities, such as demolition, and then move on to higher-
skilled activities, like energy-efficient interior design.
In conclusion, high-road practices offer a way of providing
family-supporting employment while meeting the challenges of
increasing competitiveness, community, and clean energy.
Policies such as those discussed above would be a really useful
start.
[The prepared statement of Ms. Helper follows:]
Prepared Statement of Susan Helper, Ph.D.
Senator Brown, thank you very much for inviting me to testify on
these important issues. I will also submit a supplemental document for
the record.
Today I would like to briefly discuss some solutions to the
employment issue that also create community, improve competitiveness,
and provide clean energy. The current high levels of unemployment will
eventually recede. But--how soon? What kind of jobs will be created?
Recent trends don't paint a positive picture. Over the last 7 years
the income of the median working-age household fell $2,000--the first
economic expansion in U.S. history in which the typical worker's income
decreased.\1\
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\1\ http://www.cbpp.org/8-29-06pov.htm.
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We can do better than this. We can create good jobs while helping
to achieve other national goals. In particular, both manufacturing and
service firms can use a ``high-road'' production process that harnesses
everyone's knowledge--that of front-line workers as well as top
executives and investors--to achieve innovation, quality and quick
responses to unexpected situations. This high-road model of production
provides an alternative to the all-too-common ``low-road'' model, in
which most employees are treated as disposable drones who merely follow
orders from ``stars'' at the top.
Here's an example of how the high road works. A firefighter in
Solon, OH had an idea, based on his own experience: a compass to guide
firefighters when they are inside burning buildings. Much of the design
was provided by the federally funded Manufacturing Extension Program,
and the tooling for the plastic molding was built by Colonial Machine
in Kent, OH. Colonial Machine is successful because the firm made
several investments at once: they adopted advanced information
technology, while also changing their product strategy (to produce more
customized products), their operations strategy (using their new IT
capability to reduce setup times), and human resource policies
(employing workers with more problem-solving skills, and using more
teamwork). The success of the changes in one area depended on
investments in other areas. For example, customizing products would not
have been profitable without the reduced time required to change over
to making a new product; this reduction was made possible both by the
improved information from the IT and the improved use of the
information by the more-empowered workers. Just training workers by
itself would have had little impact without re-designing their jobs so
that workers could pool knowledge and have power to recommend changes.
The high road's linked information flow is powerful because real
production rarely takes place exactly according to plan. This is
particularly true when firms are producing products that aren't yet
mature (such as ``green'' products), or there is a major change in
production conditions (such as a desire to reduce a firm's carbon
footprint). In these cases especially, the understanding that direct
workers have is crucial to running and improving the process--waiting
for managers and engineers to issue directives takes much longer and
costs much more. Thus, high road practices increase competitiveness.
High road production also empowers workers by involving them
integrally in designing and improving their own jobs. Workers interact
more closely with their customers, suppliers and co-workers, making
jobs harder to offshore. Their increased value to their employer also
enables them to be paid more. These practices can greatly help
manufacturing, which has been hammered with the loss of 3.7 million
jobs over the last 7 years--and these were good jobs that paid 20
percent more than the national average. They can also improve service
jobs whose numbers have been growing--but many of which are low wage.
Thus, high road practices help communities, by providing fairly paid,
stable jobs.
High-road practices are not new. But, markets alone fail to provide
the proper incentives for firms to adopt high-road policies. First,
many of the benefits of the high road accrue to workers, suppliers, and
communities, in the form of higher wages and more stable employment.
Thus, firms usually invest too little in training; they fear that they
will not get the full benefit of their training expenditure since the
trained employees might be hired away by other firms. Second, the high
road works only if a company adopts several practices at the same time.
Thus, direct services to workers and firms are necessary to develop
interdependent high-road capabilities.
Because of these market failures, low-road options remain
attractive to firms, even though they impose costs on society. To
``pave the high road,'' we need more government investment in
education, training, research, and development. But we also need to
``block the low road,'' by doing such things as protecting labor and
environmental rights in trade agreements, and strengthening safety
regulations for workplaces and consumer products.
But more is needed. Education alone will not allow firms to
overcome the market failures that block adoption of efficient, high-
road practices. Nor will it re-invigorate income growth, which for the
median college-educated man has risen only half a percent annually
since 1973. Similarly, increased R&D spending by itself won't get
innovative products to market. Fortunately, high-road producers excel
at overcoming the obstacles that have hampered American firms' ability
to move from lab to production.
And, even with fair trade agreements, American workers will still
face foreign competition. A key way to respond to this challenge is by
providing direct services to firms to build capabilities. The Federal
Manufacturing Extension Partnership is an important example of a
program that helps firms move toward the high road by helping companies
make complementary investments to develop new products, find new
markets and operate more efficiently. With the help of programs like
MEP, U.S. manufacturing firms can compete with low-wage nations. The
Michigan Manufacturing Technology Center suggests that most small
manufacturers have costs within 20 percent of their Chinese
competitors'--a gap that MEP programs can often eliminate. In fact, the
MEP pays for itself in increased tax revenue from the firms it helps.
Yet the Bush administration wants to end this program. Instead, we
should triple the program's funding--a step that would cost only $300
million per year. We should also extend the program to the service
sector.
An important adjunct to this technical assistance program is the
``Strengthening Employment Clusters to Organize Regional Success
(SECTORS) Act.'' Recently introduced by Senators Brown and Snowe, this
legislation provides for grants of up to $2.5 million each for cross-
firm partnerships for planning and training within an industry cluster.
High road production can also help meet important national goals,
such as moving toward a clean energy economy. Green stimulus programs
such as that proposed by the Political Economy Research Institute can
create good jobs in the short term while providing the foundation for a
sustainable economy. They propose spending $100 billion over the next 2
years to employ 2 million people in building a green energy
infrastructure. These investments are quite productive; for example,
investments in increasing residential energy efficiency pay for
themselves in 3 years. These programs can also be structured to create
a career ladder, as the Green Academy at Cuyahoga Community College is
beginning to do. Workers can start with entry-level activities such as
demolition, and then move on to higher-skilled tasks like energy-
efficient interior design.\2\
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\2\ http://shop.cleveland.com/SS/
Page.aspx?sstarg=&facing=false&secid=51643&artid=904229.
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In conclusion, high road production practices offer a way of
providing family-supporting employment, while meeting the challenges of
increasing competitiveness, community, and clean energy. Policies such
as those discussed above would be a useful start.
Senator Brown. Thank you. Thanks very much, Dr. Helper.
Mr. Kildee.
STATEMENT OF DANIEL T. KILDEE, TREASURER OF GENESSEE COUNTY,
FLINT, MI
Mr. Kildee. Thank you, Senator, for inviting me to be here.
It is good to be back in Ohio. I have spent a good deal of
time here in Toledo, also in Youngstown, in Dayton, in
Cleveland, Cincinnati, other places, working on urban land
issues, which is my calling, I suppose.
Obviously, a lot of what has been addressed is critical to
restoring our economy. I want to focus on just one specific
piece of that, and that has to do with the condition of
America's cities, particularly America's older industrial
cities.
I am sitting here with a geographer, so I can probably
defer to him on some of these subjects. But cities evolved,
obviously, historically because they were efficient. Cities
were an efficient way to manage the human condition, but also
to support an economy.
The problem that we have had is in places like Toledo,
Flint, other places--certainly Toledo not to the extent of many
communities. But I will take my own city of Flint, MI, as the
example. Flint was one of those winners in the manufacturing
era. We once had 79,000 people drawing a salary from the same
company. Not just in the same industry, but in a city of
197,000, we had 79,000 people working for General Motors
Corporation.
Well, things have changed a bit. We now have 8,000 people.
In just 30 years, we have gone from 79,000 employees for one
company to 8,000 working for that company. The population of
the city of Flint has gone from 197,000 to under 120,000 during
that same period.
While our situation may be extreme, it is not unique at
all. You see that happening all over the country. Youngstown,
OH, is a very good example of a city that is shrinking.
What we have seen is that there are lots of negative
elements that accrue to a city that has had this kind of loss
of jobs and loss of population. One critical one, critical to
this discussion is that those cities have a very difficult time
competing for the knowledge economy jobs.
There is a difference in terms of the way jobs go these
days. Many jobs that are going to be important in the 21st
century are jobs that are very mobile and can locate in places
that are attractive. What we see now, places like Flint and
other places around the country, is that we are simply not an
attractive place for knowledge employers, knowledge workers.
As we have lost all this population, we have left behind
cities that have spent literally billions of dollars in
developing public assets, public infrastructure, schools,
parks, streets, water and sewer systems. We don't have the
population to support them. And we have huge abandonment of
residential and commercial structures left behind.
What we have been working on in Flint and in other places
around the country is to try to rationalize the management of
urban land to not engage and support a system of public
investment that continues to increase the cost of government,
which decreases our competitiveness, by building new schools,
new infrastructure out on farm fields when we have developed
significant public infrastructure in cities that have land that
is available, but land that is not easily put into the market
because of the governmental systems that essentially treat
urban land as if it is a disposable commodity and that can be
thrown away once used. We challenge that notion.
My work has been at the local level to try to come up with
a process of presenting vacant and abandoned, underutilized
urban land to the real estate market in a way that the market
can absorb as one contribution to making America's cities and
my own hometown of Flint a more competitive place, to reduce
the cost of government, to increase the efficiency of the
workplace. And particularly now, when we see fuel prices going
where they are, cities--more than ever before in recent
history, I think, cities are going to be important to our
competitiveness.
If we don't rationalize the use of urban land and present
urban land to the market in a way that the market can truly
absorb, I think it is going to be very difficult, despite great
workforce development efforts, hopefully increasing the access
to post-secondary education--all the things that we have heard
about--it is going to be very difficult for these older
industrial cities to compete in the new economy unless we fix
those cities and make them attractive places again.
And that is the work that I am here to address. Thank you.
[The prepared statement of Mr. Kildee follows:]
Prepared Statement of Daniel T. Kildee
For America's older industrial cities, the last 30 years have been
the most difficult time in their history. As the economy has shifted to
one of global competition, and as manufacturing jobs have been either
replaced by new technology, moved across our border, or been eliminated
due to increased worldwide competition, our cities are in trouble. Many
of the communities that led the way in the manufacturing era have been
left behind in the new economy--with greater demand for public services
and the loss of population from the urban center. As the jobs left the
cities, the people left with them, or at least those people who could
afford to follow the work or find a new way of life.
America's oldest cities, at one time the economic engine of the
economy, now struggle to manage the combined effects of dramatic
population loss, a deteriorating landscape, aging infrastructure and a
shrinking tax base. For the workers of the next generation of jobs,
America's older cities are not high on the list of desirable places to
live.
My hometown of Flint, Michigan is a typical case.
Flint is the birthplace of General Motors. From the 1920's to the
later 1970's, Flint was the center of the auto industry. The population
of Flint grew fast during those decades, and by 1970 Flint's population
was just under 200,000. At one point 79,000 people worked for GM in
Flint alone--not just in the same industry, but for the same company.
We exported cars and imported wages. It was not unusual for a young man
to leave high school, walk over to one of a dozen factories and go to
work that same day--working on the same assembly line with his father
and grandfather. Flint was the place to be. Workers from all over the
country made Flint their home.
But things have changed. Many of those jobs have simply
disappeared. Just over 8,000 GM jobs are left in Flint. Flint's future
will not be built on a revived auto industry alone, even if the
industry is able to regain stability. And while many agree that the
next generation of jobs will require America to offer clean, vibrant,
and attractive cities to the knowledge workers and creative
entrepreneurs who will drive the new economy, those same cities will
simply not be able to compete for those workers unless the landscape of
the older industrial cities can be made attractive once again. To do
that, this country need to adopt policies that recognize that if we
fail to rebuild our cities, we will not be able to fully rebuild our
economy.
Neighborhoods that are in decline, littered with abandoned
properties will not attract the workers nor attract those new employers
that will be the foundation of a diversified economy.
But for decades, cities across the Nation have struggled with the
daunting problem of abandoned houses and vacant land. Particularly in
Michigan, where the cities of Detroit, Flint, Saginaw, and others have
experienced significant population loss, the problem has been
exacerbated by the absence of a coherent governmental approach to urban
land.
As cities compete for the knowledge jobs of the 21st century, older
cities have been hampered by the conditions of neighborhoods and
downtown. For decades, people traveled to the cities where the jobs
were plentiful. Companies made huge capital investments in factories
and equipment, and the people followed.
The new economy is different. To a great extent, jobs are more
mobile in the information age, and employers locate the jobs where the
creative, entrepreneurial workers live. Those workers want to live in
vibrant and energized cities.
So we have a disconnect: the abandoned cities--the ones that need
the jobs most--have a difficult task attracting the workers that
attract the jobs.
For the most part, this legacy of abandonment is the result of
years of decline associated with the migration of population from the
city to suburban communities. Recently, however, the abandonment of the
urban landscape has been magnified by the dramatic increase in
mortgage-foreclosed homes flooding this already weakened real estate
market. While this problem is already having an impact on my community,
the fact that there are between 5,000 and 6,000 mortgage foreclosures
pending in my community is a matter of great concern, particularly in
light of the weak real estate market in Flint and the presence of
thousands of previously abandoned homes already littering once thriving
neighborhoods.
Abandoned property is a source of blight, crime, and disease.
Vacant urban land reduces the very resource available to address the
problems it creates. Local property taxes are made less available due
to devaluation of land values. For example, abandoned houses account
for 75 to 90 percent of fires in the city of Flint, yet the city has
reduced fire service due to a significant financial crisis. Given the
enormous financial pressure for basic city services, it is clear that
reform of urban land is fundamental to revitalization of our cities.
Vacant land is both a cause and result of urban dis-investment. As
cities have experienced population loss and housing market declines,
the result is the decline of property values. Blight spreads as empty
houses sit vacant, infecting adjacent properties and ruining entire
neighborhoods in a matter of just a few years. An abandoned house is a
``Typhoid Mary'' to a neighborhood struggling to sustain itself.
Sadly, for the past several decades, one of the governmental
systems intended to address the problem actually contributed to the
downward spiral of land values and neighborhood stability. Under the
former system of tax foreclosure, abandoned properties were either
transferred to private speculators through tax lien sales or became
State-owned property through foreclosure. Under either scenario, local
leaders had little power to interrupt the incremental decline in the
re-utilization of tax-
reverted land. In fact, the former system encouraged low-end reuse of
tax reverted land due to the length of time between abandonment and
reuse--often more than 5 years. The lack of clear title to these
properties under the tax lien system also made reinvestment almost
impossible.
The former system was decidedly non-strategic.
The changes to Michigan's tax foreclosure law are a significant
step in the right direction. Since the passage of PA 123 of 1999, the
State of Michigan and county governments have greater authority in
gaining control of vacant abandoned land. PA 123 of 1999 accelerated
the process of tax foreclosure, which previously took as long as 7
years to complete. The new system of county or State tax foreclosure is
completed within a 2-year period, and abandoned property is taken after
only 1 year.
While the new system is significantly more efficient, we need to go
further in order to optimize the reuse of vacant urban land with long-
term neighborhood stability in mind. Michigan needs a systemic approach
to urban land that affords local government the tools necessary to
manage the ``downsizing'' of cities more effectively. It is only
through smart ``downsizing'' that cities can ultimately seek to grow
again. For communities with significant numbers of abandoned property,
a land re-utilization plan that delivers tax-foreclosed property to its
best and highest use is needed.
Faster and more efficient demolition of existing structures is the
earliest and most tangible benefit of such a system. Over time however,
land assembly for development and long- and short-term green space
development is made possible by ``land banking'' tax-reverted property,
rather than simply selling land at public auction. Replacing one
irresponsible landlord with another is no solution to the problems of
sub-standard housing and neighborhood blight. Quickly auctioning tax-
reverted property, while somewhat more desirable than the former
system, does not provide urban communities the control of land
essential to a coherent revitalization plan. Encouraging and supporting
locally derived land re-utilization planning is essential to urban land
reform.
Adoption of legislation that authorizes a foreclosing county to
create a ``land bank'' is one key step in any comprehensive urban land
reform initiative. Such legislation was introduced in the previous
session of the legislature. While there may be some changes needed to
the previously introduced legislation, a land bank is an important
component of Genesee County's vision for revitalization of our urban
center.
Another policy initiative receiving serious State government
attention involves the ``smart growth'' concept, a popular phrase in
current land use lexicon. A commitment to including urban land reform
issues as a central subject of the ``smart growth'' discussion is
essential to the development of meaningful policy.
To fully realize the goal of preserving farmland, open green space,
and undeveloped land for future generations, we must unlock the
unrealized value that urban land presents.
Such reform will benefit cities, suburbs, and rural communities as
well. As we struggle to address two serious challenges--maintaining our
precious natural resources and preserving and revitalizing our urban
centers, we must create public policy which ensures urban land is not
overlooked. Such an approach will allow us to support our cities and at
the same time preserve the precious resources that have made Michigan
such a beautiful place to live.
In Flint, we have made tremendous progress in just a few years by
re-engineering the tax foreclosure system. The overriding philosophy of
our initiative is that the land itself has value that is far more
important than the liquidated value of the property sold at a
distressed sale.
If there is not a similar approach to the disposition of mortgage-
foreclosed properties, all the good work being done around the State of
Michigan in reforming the tax foreclosure system will be overwhelmed
with speculative purchasers mismanaging the real estate within our
communities and driving down home prices--robbing responsible
homeowners of their hard-earned equity.
The remainder of my written testimony is a description of the work
of the Genesee County Land Bank. I submit this report to provide
additional background on our work and its potential application in
restoring the urban landscape, and in particular to explain how a
locally controlled land bank authority may be a viable mechanism for
disposition of mortgage-foreclosed properties.
Thank you for the opportunity to provide my thoughts to you and the
committee as you deliberate this important and growing issue facing the
Nation.
Senator Brown. Thank you for your public service.
Mr. Dmytryka.
STATEMENT OF DAVID DMYTRYKA, PRESIDENT, DMYTRYKA JACOBS
ENGINEERS, INC., TOLEDO, OH
Mr. Dmytryka. Thank you, Senator, for allowing me to offer
my opinions on the local workforce here in Toledo and how my
company deals with finding and hiring quality engineers.
As you have mentioned, I am president of Dmytryka Jacobs
Engineers (DJE). We specialize in electrical and controls
engineering and control system integration. The majority of our
work is providing automation systems for municipal water and
wastewater facilities.
Our market area is Ohio, Michigan, including Genessee
County, and Indiana. We are probably one of four or five
companies in Ohio that provide these services in this
particular industry. Based on our current workload and backlog,
I believe we are the largest water and wastewater systems
integrator in Ohio.
My partner and I formed DJE in June 1994, some 14\1/2\
years ago. It started as just the two of us. We came within
about 3 weeks that first 6 months of closing the doors because
of lack of work when, the last day of the year, we landed two
large jobs, large by our standards at the time. That got us
going for good.
If I remember correctly, our first 6 months, we may have
grossed $18,000 as a company, and at first full year, we were
up to about $240,000.
Today, we are 18 employees strong, 11 of them degreed
engineers all from the University of Toledo. Six of those are
registered professional engineers in the State of Ohio.
Through our first 5 or 6 years, we hired about 8 new
employees--mostly degreed engineers--to meet our needs. All of
these hires were people we previously knew, either from having
worked with them in past lives or through personal friendships.
This method of recruiting is not uncommon among small
businesses.
I was at a meeting last night with five other small
business owners discussing issues that we, as small business
owners, face every day. When the issue of recruiting potential
new hires came up, I was and wasn't surprised in their method
of recruiting. That being the same as ours--known
acquaintances.
Somewhere around 2001, we developed an informal
relationship with the University of Toledo's College of
Engineering. I happen to have gone to high school, college, and
did graduate work with one of the engineering technology
department's professors. When we needed some help, I would give
him a call, let him know the kind of student we were looking to
hire as an intern, and then he would talk to a couple of the
professors and give our name out to the students.
After a positive interview, we would make the student an
offer and a duration commitment, with the understanding that
the commitment could be extended if things continued to work in
both favors. Our plan was to grow from within, training these
students in the way we needed to use their skills and then
continue to keep them as ongoing engineers.
Our plan has been successful. Six of the seven students we
hired in this manner are still with us today, four as degreed
engineers, two are due to graduate this December. The lone
exception decided to switch from engineering to business.
We have made offers to both of the soon-to-be graduates.
One has accepted. The other is still considering his options.
Our hiring of college students as interns has been made
easier by the use of our Ohio's Third Frontier Internship
Program. This program reimburses us a portion of the salary we
pay these college student interns. With our practice of keeping
these students on staff as young engineers, the Third Frontier
Internship Program has helped both us and the students.
Three and a half years ago, we were at a crossroads. We had
about 12 or 13 employees. And because of the type of business
we are in, things were starting to get tough. We felt we either
needed to expand, maybe up to about 20 employees, or contract
to about 8. My partner and I decided that we would expand.
We began the process of finding a larger facility, bidding
larger projects, and hiring more technical people. We built a
new facility adjacent to UT's health science campus, which we
moved into a year ago April; bid projects more aggressively and
received the work; and hired several more people, bringing our
current total to the 18, as I mentioned before.
Our plan for growth has succeeded maybe too well. We
currently have an 18-month backlog of work and need to hire two
or three engineers to help us with this load. Our supply of
known acquaintances appears to be exhausted.
[Laughter.]
Can't steal anymore. The interns, soon-to-be engineers will
help, but we now need experienced people that can hit the floor
running. My partner and I are currently discussing the options
available to us, one of which includes the possible use of The
Source, the Lucas County's one-stop.
From the news reports about the economy, we may appear to
be an exception. However, several engineering friends of mine
say they are also in the same position we are. Many people I
mention this to say that what we are experiencing is a great
problem to have. To me, it is still a problem. However, I am
confident that with what we are doing, we will be able to get
through it.
Thank you.
Senator Brown. Thank you, Mr. Dmytryka.
Dr. Calzonetti.
STATEMENT OF FRANK J. CALZONETTI, PH.D., VICE PRESIDENT,
RESEARCH & DEVELOPMENT, UNIVERSITY OF TOLEDO BUSINESS
INCUBATOR, TOLEDO, OH
Mr. Calzonetti. Thank you, Senator Brown, for having the
hearing here at the UT Clean and Alternative Energy Incubator.
I would also like to thank the support that Jessie and
Chris provided to us in smoothing out this, and also to Diane
Miller, who did a lot of work here. I would also like to thank
all of you elected officials and others who have come here to
participate in this very important event.
Decades ago, Midwestern U.S. cities led the world in
innovation and industrial might. Automobiles, steel, glass, and
other manufactured goods were sold throughout the world, and
our cities attracted new workers eager to join the growing
middle class.
This comparative advantage once held by these cities was
largely lost as businesses moved or expanded operations first
in the South and then overseas. Automation replaced some jobs,
and new entrants into the marketplace, such as Asian automobile
manufacturers, offered products in demand by American
consumers.
In recent decades, these Midwestern cities, along with
their State governments, have been struggling to identify new
pathways to rejuvenate their economies. For instance, according
to the Milken Institute findings of top-performing cities of
2007, not one Midwestern city was among the top 25 ranked
performing cities in the Nation. And according to the Brookings
Institution's Metropolitan Policy Program 2007 study on the
economic conditions of cities, only one Ohio city, Columbus,
was ranked among the top 200. It was ranked 122. Toledo was
ranked 261.
Why can't the economies of these cities be revitalized? It
has been shown in studies that changing a development
trajectory into a future economy is often a difficult task. The
tendency for people in these communities is to focus on
restoring the previous industry that brought jobs and
prosperity in the past.
But Toledo and other Midwestern cities are working to move
in a different direction and to utilize the talents, skills,
and infrastructure that built our earlier economy into a new
economy that is directed to rapidly expanding industries that
are steeped in science and technology and grounded by our
research universities.
Our view is not ``rust to bust,'' as some of you may have
seen in Richard Longworth's 2008 book on the U.S. Midwest, but
rather ``rust to renewables'' is a phrase coined by Solar
Fields CEO Norm Johnston, who graduated from this Clean and
Alternative Energy Incubator and now has his company located in
nearby Perrysburg.
Toledo is in the early stages of building a new advanced
renewable energy economy that is extending in a new direction
the economy of our recent past. Toledo is still known by many
as the ``glass city'' that once led the world in innovations
and manufacturing in glass.
Driven by the energy of talented entrepreneurs and creative
inventors, Toledo brought forth many new inventions that made
Toledo glass companies world leaders. For instance, the
automated glass bottling machine was invented here in Toledo by
Michael Owens, and this has been called the most significant
invention in glass for over 2,000 years.
We have taken a good, hard look at what is driving new
economies and are putting it into practice in Toledo. The
driver is research and development, which is translated into
innovations. Entrepreneurship, cluster development, and leading
positions in growing markets are also of vital importance.
We understand the important role of the universities in
this process as a primary source of discoveries, talent, and
opportunities that can support innovation-based economies. Our
university has focused our attention in areas where it has
particular faculty strengths that supplement regional assets
that are also likely to emerge as important in our global
economy. Thus, we have focused resources on building world-
class programs in advanced renewable energy and in the
environment. In particular, we have focused on building pre-
eminent programs in solar energy.
Entrepreneurship is needed to transition discoveries into
the marketplace, either through the establishment of new
enterprises or through the development of new initiatives
within existing firms. Toledo has a history of entrepreneurship
in glass, which continues today in our contemporary solar
energy entrepreneurs.
Research does show that knowledge is still localized and
grows through various mechanisms of knowledge transfer, despite
the availability of information being transferred throughout
the globe on the Internet. Thus, a clustering of sources of
innovation--such as research university, Government labs,
industry labs--along with entrepreneurs, existing business
enterprises, supporting government organizations and agencies,
providers of services help to provide a region with leadership
in technological areas that drive competitive advantage and
workforce development around clusters needs.
Toledo has been well positioned to take leadership in solar
energy. One of the first entrepreneurs to act upon the business
opportunities in solar energy came from Toledo, Dr. Harold
McMaster. In 1984, McMaster formed Glasstech Solar to produce
solar cells by coating glass with thin layers of chemicals.
This research led to thin films based upon cadmium telluride in
Toledo as a new company, Solar Cells, Inc., was formed.
In 1999, True North Partners renamed the company First
Solar as they purchased the controlling interest, You were just
at First Solar day before yesterday.
The University of Toledo also took early steps to support
the development of this new industry. As McMaster and his
colleagues at Glasstech advanced their technology, they sought
out the assistance from the University of Toledo.
In 1987, the University of Toledo hired Dr. Al Compaan,
back there in the third row, to come in and work on advancing
this technology. Under his direction, the university, with
McMaster's company as collaborator, won State of Ohio grants
and also some Federal grants to address processing issues in
thin film solar cell development. In 2001, the university made
a conscious decision to put major resources into building
programs of excellence in solar energy.
Also, in 2002, the university took a leadership position to
develop a cluster around this technology with the help of the
National Science Foundation's Partnership for Innovation
program. We called this the Northwest Ohio Partnership on
Alternative Energy Systems. This project provided funding to
northwest Ohio to become a leader in alternative research,
manufacturing, and use.
We determined that there would be tremendous growth in the
renewable energy industry in the future, and we wanted to be
out in front of this wave. Our choice turned out to be a good
one, and solar energy is booming throughout the world.
According to McKinsey & Company, just this past summer, global
installed solar capacity is to be 20 to 40 times its current
level in 2020.
The University of Toledo's Clean and Alternative Energy
Incubator was opened in January 2005, and this facility is now
a focal point for linking university research to the formation
of new companies, as well as providing a place for meetings and
workshops in solar energy and other renewable energy
technologies.
Northwest Ohio has a strong foothold as a leader in solar
energy. At UT, we won a State Wright Center for Photovoltaics
Innovation and Commercialization award for $18.6 million, and
we were just awarded another $8.5 million from the State of
Ohio for the Ohio Research Scholars program to attract four new
faculty members here. Both of those proposals were led by
Professor Robert Collins.
In addition, our local industry sector is rapidly expanding
and diversifying. First Solar, the company that grew from
Harold McMaster's Solar Cells, Inc., and was actually developed
in the laboratories at the University of Toledo, now has an
employment of 700, and it will be increased by about another
134 new jobs as this expansion takes place.
Solar Fields, again, they came out of this incubator,
formed a joint venture agreement with Q-Cells, the world's
largest solar cell manufacturer, to form Calypso USA.
Xunlight, another company that graduated from our
incubator--and the CEO, Xunming Den, is there in the third
row--has more than 70 employees now at its Nebraska Avenue
location right here in Toledo.
So we are making progress in positioning Toledo as the
place to go for advanced research and manufacturing on solar
cells. We have more to do to build this economy.
Our task ahead is to build a new workforce for this new
economy. Toledo has much talent and expertise to offer, and we
see opportunities for solar installers, solar cell
manufacturing plant workers, technicians, scientists,
engineers, and a host of other opportunities upstream and
downstream in this industry.
Toledo has faced problems as its economy is moving through
this transition, but we are optimistic that we have the
talented entrepreneurs, the research universities, the
supporting infrastructure to make Toledo the national leader in
solar and other advanced renewable technologies.
[The prepared statement of Mr. Calzonetti follows:]
Prepared Statement of Frank J. Calzonetti, Ph.D.
Decades ago, Midwestern U.S. cities led the world in innovation and
industrial might. Automobiles, glass, steel, and other manufactured
goods were sold throughout the world and the cities attracted new
workers eager to join a growing middle class. The comparative advantage
once held by these cities was largely lost as businesses moved or
expanded operations in lower cost, or less unionized, locations first
in the south then overseas. In addition, new entrants into the
marketplace, such as Asian automotive companies, offered products in
demand by American consumers, such as inexpensive and fuel efficient
vehicles, resulting in a loss of market share and related employment.
Job losses also occurred as manufacturing plants automated in order to
increase efficiency and enhance quality. These factors, among others,
mean that high paying, secure jobs in manufacturing could no longer be
the primary pathway to support families in most Midwestern cities. This
led people to abandon their Midwestern roots to follow jobs to lower
cost positions in other States, resulting in a significant population
decline across the Midwest.
In recent decades, these cities, along with their State
governments, have been struggling to identify new pathways to provide
renewed job growth, firm formation, investment, and a reversal of
population decline. For instance, in the Milken Institute's listing of
the top performing cities of 2007, not one Midwestern city was among
the top 25 ranked performing cities in the Nation. According to the
Brooking Institution's Metropolitan Policy Program (2007) study of the
economic conditions of 302 U.S. cities, only one Ohio city, Columbus,
was ranked among the top 200 (#122). Other Ohio cities were ranked in
the following order: Akron (#217); Canton (#246); Cincinnati (#263);
Dayton (#283); Mansfield (#257); Springfield (#262); Toledo (#261);
Youngstown (#282); and Warren (#294).
Despite efforts by State and city governments, most Midwest cities
are still in a state of distress. Why can't the economies of these
cities be revitalized? It has been shown that changing a development
trajectory into a future economy is a difficult task. The tendency is
to work to restore and retain the previous industry that brought jobs
and prosperity in the past. As noted by many students of this
phenomenon (e.g., Boschma and Lambooy; Ashein and Isaken), leaders in
``declining'' manufacturing regions must redirect thinking away from
the view that competing on the basis of low-cost manufacturing or
attracting new manufacturing operations will return the area to
previous greatness. Toledo and other Midwestern cities are working to
move in a different direction to utilize the talents, skills, and
infrastructure that built our earlier economy into a new economy that
is directed to rapidly expanding industries that are steeped in science
and technology grounded by our research universities. Our view is not
``rust to bust,'' as noted in Richard Longworth's 2008 book on the U.S.
Midwest Caught in the Middle, but rather ``rust to renewables,'' a
phrase coined by Solar Fields CEO Norm Johnston, a Perrysburg Ohio
company which graduated from the University of Toledo Clean and
Alternative Energy Incubator.
Toledo is in the early stages of building a new advanced renewable
energy economy that is extending in a new direction the economy of our
recent past. Toledo, still known by many as the ``glass city,'' once
led the world in innovations and manufacturing in glass. Driven by the
energy of talented entrepreneurs and creative inventors, Toledo brought
forth many new inventions that made Toledo's glass companies world
leaders. For instance, the automated glass bottling machine, created in
Toledo by Michael Owens, has been called the most significant invention
in glass for over 2,000 years.
We have taken a hard look at what is driving new economies and are
putting it into practice in Toledo. The driver is research and
development which is translated into innovations, entrepreneurship,
cluster development, and leading positions in growing markets. First,
innovation is driving many regional economies throughout the world. We
understand the important role of university research as a primary
source of discoveries, talent, and opportunities that can support
innovation-based economies. The University of Toledo is still emerging
as a major research university so it is unrealistic for a research
budget of $60 million a year to transform a $24 billion Toledo economy.
The University has focused its attention in areas where it has
particular faculty strengths that supplement regional assets that are
also likely to emerge as important to our global economy. Thus, we have
focused resources on building world-class programs in advanced
renewable energy and the environment. In particular, we have focused on
building preeminent programs in solar energy.
Entrepreneurship is needed to transition discoveries into the
marketplace either through the establishment of new enterprises or
through the development of new initiatives within existing firms.
Toledo has a history of entrepreneurship in glass which continues today
with contemporary solar energy entrepreneurs. Although
telecommunication technology provides a free flow of information
throughout the globe, research shows that knowledge is still localized
and grows through various mechanisms of knowledge transfer. Thus, a
clustering of sources of innovation (e.g., research universities,
governmental and industry R&D laboratories), along with entrepreneurs,
existing business enterprises, supportive government organizations and
agencies, service providers, and other supportive organizations help to
provide a region with leadership in technological areas that drive
competitive advantage and workforce development around the clusters'
needs.
Toledo was well positioned for leadership in solar energy. Solar
energy, particularly thin-film photovoltaics (light and electricity),
builds upon Toledo's glass industry and early entrepreneurial moves
into solar energy made over 20 years ago. Photovoltaic (PV) cells, or
solar cells are devices that are capable of generating electrical
energy under exposure to light. It was not until the mid-twentieth
century that the first solar cell was patented at Bell Labs in New
Jersey and not long after, commercial activity began and solar cells
found use in space applications. As PV became a critical source of
power for satellites and other space craft, the first oil shock of the
early 1970s spurred interest in the development of terrestrial
applications of PV technology. One of the first entrepreneurs to
identify and act upon this opportunity was Toledoan Dr. Harold
McMaster. McMaster, with his partner Norman Nitschke (another prolific
Toledo inventor) formed Glasstech, Inc. in the Toledo neighboring city
of Perrysburg. They constructed a new machine for ``tempering'' glass
that increased its strength and crumbled instead of breaking into
shards and Glasstech grew into a leader in the manufacture of furnaces
for tempered glass. In 1984, McMaster formed Glasstech Solar, Inc to
produce efficient solar cells by coating glass with thin layers of
chemicals. Glasstech initially worked on thin film silicon technology
at its Wheatridge, Colorado location. Their research led to thin films
based on cadmium telluride in Toledo as the new company Solar Cells
Inc. was formed. In 1999, True North Partners LLC, renamed the company
First Solar after they purchased a controlling interest.
The University of Toledo also took early steps for support of the
development of this new industry. As McMaster and his colleagues at
Glasstech advanced their technology, they sought out assistance from
The University of Toledo. In 1987, The University of Toledo hired Dr.
Alvin Compaan into the Department of Physics and Astronomy. Under
Compaan's direction, the University, with McMaster's company as a
collaborator, won two State of Ohio Edison awards to address processing
issues in thin film solar cell development. These awards were the first
of a long series of continuous funding from State and Federal agencies
to support solar energy research and development in Toledo. In 2001,
the University made a decision to place solar energy research as a top
institutional priority by placing additional positions, supporting new
laboratories, and seeking congressional assistance for projects in this
area.
The University, in 2002, took a leadership position to develop a
cluster around this technology with the National Science Foundation
funded ``Northwest Ohio Partnership on Alternative Energy Systems.''
This project provided support to seed new research projects, explored
the opening of an alternative energy incubator, and established new
partnerships with industry and other organizations to make northwest
Ohio a leader in alternative energy research, manufacturing, and use.
We determined that there would be a tremendous growth in the renewable
energy industry in the future and we wanted to be in front of this
wave. Our choice turned out to be a good one and solar energy is
booming throughout the world, and according to McKinsey & Company (June
2008) global installed solar capacity is to be 20 to 40 times its
current level. The University of Toledo's Clean and Alternative Energy
Incubator was opened in January 2005, and this facility is now a focal
point for linking university research to the formation of new
companies, as well as providing a place for meetings and workshops on
solar and other renewable energy technologies.
Northwest Ohio has a strong foothold as a leader in solar energy.
At UT, we have the $18.6 million Wright Center for Photovoltaics
Innovation and Commercialization, we have just been awarded another
$8.5 million from the State of Ohio (both proposals led by Professor
Robert Collins) to hire four additional solar energy faculty members.
In addition, our local industry sector is rapidly expanding and
diversifying. First Solar, the company that grew from Harold McMaster's
Solar Cells Inc. and was developed in laboratories at The University of
Toledo, is now the largest solar cell producing company in the United
States with an output of 307 MW in 2007 and employment of 700, which
will be increased by another 134 new jobs with a new expansion at its
Perrysburg location. Two additional solar cell companies recently
graduated from the Clean and Alternative Energy Incubator. Solar Fields
formed a joint venture agreement with Q-Cells, the world's largest
solar cell manufacturer, to form Calyxo USA; Xunlight, which only
graduated from the incubator in August 2007, now has more than 70
employees at its new Toledo location.
We are making progress positioning Toledo as the place to go for
advanced research and manufacturing on solar cells. We have more to do
to build our economy. One task ahead is to build a new workforce for
our new economy. Toledo has much talent and expertise to offer and we
see opportunities for solar installers, solar cell manufacturing plant
workers, technicians, scientists, engineers, and a host of other
opportunities in upstream and downstream industries. Toledo has faced
problems as its economy is moving through this transition, but we are
optimistic that we have the talented entrepreneurs, the research
universities, the supporting infrastructure, and indeed the workforce
to make Toledo the national leader in solar and other advanced
renewable technologies.
Senator Brown. Thank you, Dr. Calzonetti.
Thank you all for both your realism and your optimism and I
appreciate that from all four of you in the challenges you
bring.
Dr. Helper, talk to us more about MEP, about the
Manufacturing Extension Partnership. You talked about how that
Government investment, which you would like to triple, how
every year it is cut and we restore the cuts but try to move
forward on it, how it pays for itself.
Ms. Helper. For a typical MEP program, you come in and
increase the program's productivity by 20 percent. It can do
that by maybe training some workers. In the case of this
Colonial Machine, we were able to help it provide some work.
There was some idle capacity. They were able to fill it with
work.
You can get programs where workers, these workers, for
instance, at American Standard have 20 years of experience.
Management typically today doesn't tap into that, they are so
busy trying to keep wages low that they don't understand either
what their workers are doing or what the workers can do to make
things better.
One of the things that the MEP has done a little bit and I
think can do a lot more of is encouraging employee involvement,
encouraging a kind of longer term perspective. Similarly, there
are a lot of these big firms who have small suppliers.
Increasingly, they are outsourcing to small suppliers.
But the small suppliers don't have the capability to think
about, ``I need to be planning long-term for investments that
will improve my quality, will get me into new lines of
business, will help me develop new products.''
All of these things can have a really important impact on
the bottom line not just for the firms, but also for the
workers. And so, by providing these firms, allowing them to
continue in business and allowing their workers to continue to
have jobs, they pay taxes more than paying for the MEP
services.
I think one of the things that people often say is, ``well,
we should just have tax breaks.'' But one of the things that
the MEP does or the theory behind the tax break is, OK, we are
going to lower the price of getting manufacturing if they do
something we want them to do. But in the case particularly of
these small businesses, it is really tough to run a small
business. You have got to do a lot of stuff.
You are the R&D manager. You are the marketing manager. You
are changing light bulbs, fixing toilets, all this kind of
stuff. It could be really hard to keep up with what is the
latest innovation in production techniques. It can be hard for
you to even know what the improvement path is, what consultants
to hire.
MEP can--and the Michigan Manufacturing Technology Center
actually does a great job of this, of kind of laying out an
improvement path for companies as for making the integrated
changes that are necessary to really bring a company into this
knowledge economy.
Senator Brown. Is there sort of an upper limit or a limit
on the size of a company that MEP works with? If it is more
than 200 or 300 employees, MEP is much less likely to be
involved? Are there any rules that way, or can anybody ask them
to come in, any manufacturer in Cleveland or Toledo or Tiffin
or anywhere?
Ms. Helper. It is interesting. And this, I think, is some
of the problem with the program as currently structured. The
mandate is to help small business. But because the subsidy has
been cut so much, the small business often has trouble meeting,
in some sense, the co-pays. And so, increasingly, the MEPs have
been looking, providing training for large companies because
they can actually keep the budget of the MEP balanced.
The mission is supposedly to help the smaller companies,
but in practice, to keep themselves afloat, they have been
looking at larger companies as well.
Senator Brown. If MEP comes to a company that is looking
for assistance on more energy efficiency in the production
process or something with employee training, implicit in MEP
coming in, the company will have to spend significant dollars
to--even though it might save money--significant dollars to
comply with that.
Smaller companies are just less likely, less able to do
that. Is that what you are talking about when you said the co-
pay?
Ms. Helper. Yes. There are two issues with small companies
using MEP as currently structured. The first one is that MEP
basically gets a subsidy that covers their space and covers
their marketing expenses. But the company that came up with
this paid the actual hourly salary of the workers, the
engineers at MEP that designed this thing.
You have got to come up with the capital to actually pay
for the expenses of delivering your product. So that is the
first issue--just coming up with that money up front often.
The second issue is figuring out what you need, and that
one of the things in some of my research that I have seen and
some of the MEPs, both the strength and the weakness of the MEP
program is quite decentralized. And so, some of them have
responded to the continuing uncertainty about the budget by
scaling back and having shorter programs, more kind of 1-day
things.
But, it takes an overview of where you are going to be able
to tap into that. A big company that knows, ``We have some
needs. Here is something that can train my workers in the
latest C&CE'' or ``here is how you do a supplier development
program.'' They can tap into that more easily than a small
business owner that is trying to figure out ``how do I make my
payroll tomorrow?''
This is really, I think, an area where the MMTC excels in
offering these 2-day kind of overview diagnostic that they
subsidize, is my understanding. I think they scramble to find
the money to fund it, but I think it is really important to be
able to get small business to tap in.
Senator Brown. So it is your recommendation that MEP
funding be tripled in order to obviate the need for the co-pay
or to extend the reach of MEP into more businesses or both?
Ms. Helper. Both. I mean, I think some co-pay is important.
You need to have some skin in the game, but I think the level
of the co-pay now is a barrier.
That is the first problem, and then it also means that MEP
has trouble or many of the individual centers have trouble
coming up with the ability to fund a kind of overview or
diagnostic for the firm. But then the firm could figure out and
could see, ``These courses would actually be valuable to me.''
It may seem like there is free training out there. Of
course, it would be overprescribed. There are a lot of MEPs
that have trouble actually finding firms that know how to take
advantage of the services. So there is a kind of a market
making that the MEP budget and a kind of national attention to
some of these issues can help with.
Senator Brown. Thank you, Dr. Helper.
Mr. Kildee, you mentioned Youngstown. Not that I am more
interested in Youngstown than I am Flint, but I am more
interested in Youngstown than I am Flint, for many reasons. But
we appreciate the work that you have done in a real challenging
situation in Genessee County.
In Youngstown's population, you said Flint went from
197,000 to 120,000. Youngstown only got up to 160,000, and it
is down to half its size. It actually had a bigger population
percentage drop, as Detroit has, as Cleveland has, than even
Flint has.
But Youngstown, there is an incubator project very
different from this one. It is not aimed at alternative energy.
It is not university based. But it is high-tech based. It is 4
or 5 years old. Do you guys know that? Not much older than
that.
They now have a whole bunch of different small businesses,
about 250 employees. The average age is 28, and the average
salary is $58,000. They just brought, and I bring that up
partly to brag about them, but mostly to ask you a question
about sort of where they may be going on this and where we
might be able to go on this.
They have just got a new business that is coming from San
Francisco that they think has real potential job growth. The
movement from San Francisco to Youngstown is mostly--they had
an Ohio connection somehow. But the movement is not somebody
coming back to be near family. It is nothing like that. It is
because the time of commute and the cost of housing and the
cost of living generally, but particularly housing is so
starkly different, obviously, between Youngstown and San
Francisco.
Is that a model that we can pursue? I mean, in some sense,
it sounds like a race to the bottom, but it really isn't
because it is still good wages here. It is just our homes cost
less and property and all that. Is there a way to use that
model in places like Flint and places like Toledo that we begin
to bring businesses back here because of lifestyle, because of
an easier place to live than many of these cities that have had
explosive growth that Dr. Calzonetti talked about?
Mr. Kildee. I think it can be. Cities like Youngstown,
Flint, other places that are similarly situated do have some
natural advantages. The size, at least the historical
efficiency of those cities is still in place. Those cities were
built and worked very well for a long time.
I think the challenge--as I mentioned earlier, in order to
attract the kind of employers that you mentioned coming from
the West or the South or new startups, in order to attract
entrepreneurs, we really have to build the cities that people
want to live in. They don't have to be big cities.
Flint, for example. We are now seeing a rebirth in the
downtown of Flint because we are building a different kind of
downtown, relying on the fact that we have a branch of the
University of Michigan, which, by the way, is an actual
university----
[Laughter.]
In Ohio, people sometimes challenge you about that. We have
a branch of the University of Michigan right in our downtown.
Youngstown has, of course, the University----
Senator Brown. Does U of M have several branches? I didn't
know that.
Mr. Kildee. Three.
Senator Brown. Three. Where else?
Mr. Kildee. Ann Arbor, which we call the south campus--the
University of Michigan-Flint, and Dearborn.
Senator Brown. Dearborn.
Mr. Kildee. Which is in----
Senator Brown. That is really the south campus.
Mr. Kildee. Right, right. I think, to answer your question
specifically, yes, there is great opportunity for medium-sized
cities, but we have to rethink public investment in these
cities. The Federal Government has a stake in this, and money
that comes from the Federal Government to the States or from
the States to the local communities ought not be neutral on the
question of cities.
We ought not treat public infrastructure development that
expands the size, the footprint, and then the cost of
government with a more rational use of public investment to
rebuild streets or parking decks or rebuild historic structures
in our downtowns, in our cities where we have already spent,
like I said before, literally billions of dollars. Investment
ought not be neutral.
Interestingly enough, and I know it will probably never get
to a point where public policy would support this, but the cost
of developing new public infrastructure in a suburban or
currently rural community, in order to attract jobs and to
build an economy, is far greater than the cost that it would
take to underwrite the operating loss for a short period of
time for a pharmacy, a grocery store, and the little amenities
that these downtowns need in order to complete their
attractiveness to new, young, thoughtful, and not-so-young,
knowledge-oriented workers.
The kind of public investment that requires us to build a
multimillion dollar exchange in suburbia is actually costing us
a lot of money because we have to maintain that. We have to
also maintain the public infrastructure that we built 50 years
ago and left behind.
To me, it is not just a matter of better use or better
stewardship of public dollars when we invest, but actually
thinking about the implications for those investments. In order
to make cities like Youngstown, Flint, Gary, IN, attractive
again, we really do need to rethink our public investment
strategy. And I think urban land is an opportunity that can't
be overlooked.
Senator Brown. In a sort of a macro-political sense, how do
we do that?
Mr. Kildee. There is a lot of State policy that needs to be
changed. That is what we did in Michigan, and I really didn't
get into the detail of this because if we start talking about
tax collection systems, we will clear the room.
[Laughter.]
But we changed our tax collection system in Michigan based
on our model. We re-engineered that system from a liquidation
approach, which meant that when we had uncollected taxes, we
would just simply sell tax liens to private investors and
auction urban property to people on the Internet. That
liquidation model is what many mortgage lenders are using right
now in clearing their books of foreclosed assets. I worry about
that as well.
We decided to approach urban land, particularly tax
foreclosed urban land, with an investment strategy, treating
this land as if it has real value. It is only by engaging that
kind of a system and appreciating the property that we can get
for very little money can actually be made valuable again if we
treat it that way, that is going to require some State policy
changes.
Finally, for the first time ever, Federal law, since July,
now actually uses the term ``land bank.'' The $3.92 billion
that is being distributed throughout the United States right
now for communities to purchase mortgage-foreclosed properties
supports the creation of land banks. And I have been working
with your county treasurer, Wade Kapszukiewicz, right here in
Lucas County to pursue the creation of a land bank right here.
Toledo is in a much better condition than Flint. This is
the time to do this. You might not feel like it is. But come to
Flint, and I will show you. This is the time when a community
really should embrace its urban land assets, not when you get
to a point when you are in a Flint, MI, or a Youngstown
condition, when you are really in the emergency room.
It might not feel like it for some of you that are doing
the hard work here in Toledo, but you are in a much, much
better position to minimize any negative effects of what has
been a failed American urban land strategy for the last 30 or
40 years, if you act now.
Senator Brown. Thank you.
Wade has been working with Cuyahoga County, Jim Rokakis,
also on land bank. I spoke with him a few days ago, and the
governor is starting to focus on this, too. I mean, I think
there is a real movement in Ohio to in part mimic what you are
doing, in part to strike up in some new directions, too.
Mr. Dmytryka, thank you. You have obviously thought a lot
about attracting people into science, technology, engineering,
especially math. I am sure that you are focused on your own
business, and your involvement with the chamber has given you
and the Workforce Investment Agency generally has given you
also a broader picture, too.
What do we do in this country to attract particularly
minority and women engineers, but just engineers generally?
Where are we falling down? What can society do? What can the
Federal Government do? What can State governments do to make it
easier for your business to be able to find those engineers
outside of people that you know who know people?
Mr. Dmytryka. I think that planning for the future, our
company is to the point where the people that we are looking
for aren't necessarily today the ones coming out of school.
Yes, we are still taking them because we still want to grow
from within. But our model of growth that we implemented back
several years ago, we now need some of those middle and upper
level people.
To me, one of the things that I have been involved in, and
I think anybody in my position could rather easily be involved
in, is I go back to the grade school that my kids went to and
do a project with the 7th grade. And it takes me an hour once a
week for the second semester, and it is a hands-on project
offered by the Society of Automotive Engineers.
One year, we will do gliders, and one year, we will do
gears on a little electric model car. And we put them in teams
of three or four. Because now I don't know any of them--my
boys, my youngest one has been out of that school for 6 years
now. I still go back because I enjoy it, but I don't know them.
So we just put them in groups and make them work together,
whether they like their partners or not. That doesn't become my
problem. It becomes their problem.
But the idea of working together in a team environment, it
is the first time they have probably ever done that, trying to
learn something about a glider and why it flies. You know,
doing some research, even if it is getting on the Internet and
finding machines that fly or machines with gears and how one
big gear is going to turn smaller than a little gear. But the
one has more power than the other, trying to get them to that
idea.
That is something I think anybody can do to that point. Now
I don't know if it is necessarily anything that can come from
Washington or Columbus or downtown Toledo. It is on the
individual basis. And by giving that time back, I am hoping
that out of 28 kids, if one of them gets into engineering, then
30 years from now, somebody sitting in my position is going to
have somebody who is going to be able to help them out.
Senator Brown. So are engineers around the country doing
things like that in the schools? Electrical engineers,
mechanical engineers, industrial engineers, do you know if that
is going on much?
Mr. Dmytryka. I can't believe I am the only one, OK? I
might be good, but I ain't that good.
[Laughter.]
I can't believe I am the only one. The program comes out
from SAE, which is a national organization.
Senator Brown. So likely they are promoting that in other
places in the country and the State?
Mr. Dmytryka. Yes. Yes, sir.
Senator Brown. That is an interesting thought. Because I
know that Chancellor Fingerhut and the governor are really
tuned into what we do. And one of the things I mentioned
earlier, I do these roundtables around the State where I have
done probably 120 of them, sitting around with 15 or 20 people
and asking questions about their communities.
What has astounded me is how many business people, whether
they are employers, whether their business is social service,
hospitals, whatever, saying they can't find enough employees
that either can pass the drug test or qualify to--and sometimes
it is engineering. Sometimes it is way less skilled than that,
and it is sort of all across the board in a lot of ways.
A lot of it is the building trades, that we don't have
enough people we are training in the building trades. And very
good jobs with managing your own pension so they are going to
have pensions when they retire and all that those middle class
jobs mean.
So thank you for your thoughts on that.
Mr. Dmytryka. Thank you, sir.
Senator Brown. Dr. Calzonetti, thank you for introducing
two great entrepreneurs that are providing jobs in this
community. It all started at University of Toledo. We
particularly like that.
This is a story that the governor and I were talking about
in Perrysburg how we tell this story about Xunlight and First
Solar and wind turbine research and solar, all the things that
you are doing here. We are telling the story. He tells it
around the State. I tell it around the country, and it is
pretty exciting.
As a geographer, what role do you think that the Great
Lakes can play in--I am going to go a little far afield from
alternative energy, which is your real focus, I understand. But
what role can the Great Lakes play in the kind of resurgence of
Michigan and Ohio and other States that have been so productive
and built this country and could build this country again?
Mr. Calzonetti. Well, the Great Lakes obviously a
tremendous resource, not just the largest fresh water source in
the world, but----
Senator Brown. I am not even a geographer, and I knew that.
[Laughter.]
Mr. Calzonetti. [continuing.] As a source of energy. You
may have seen the article in yesterday's Washington Post about
the wind potential in the Great Lakes. I mean, as a source of
energy from wind, it can be enormous. And so, there is the
energy potential for producing wind energy.
Senator Brown. Someone at the University of Toledo told me
that one of the advantages the Great Lakes has in wind is that
the blades, the most efficient blades are now 250, 300 feet
long and you can really only move them on water?
Mr. Calzonetti. That is right.
Senator Brown. That is another advantage we have.
Mr. Calzonetti. Exactly right. So, when you move to larger
systems, obviously, offshore makes a lot of sense. Cleveland is
making a big push, as you know, in moving forward with offshore
wind development.
If you look at the load centers, where the load centers are
throughout the country, you will find that the load centers are
mostly next to coastal areas. The Great Lakes have a lot of
resource there.
We, at the University of Toledo, have the Lake Erie
Research Center. We are very interested in the health of the
Great Lakes, what it means for drinking, bathing, and
recreation and fishing, and concerned about the dead zone
issues and other issues that affect the health of the Great
Lakes. Of course, there is a lot of fresh water there that
people are looking at throughout the country, and so it is good
for us to protect that as well.
But it is a key resource that also supports transportation.
If you go back to the history of Toledo, it was really built
around its transportation assets, and it was a place where
people can come in from the Erie Canal, go across Lake Erie,
and then they would have easy access to the West. And the lakes
still are very important for transportation, as you mentioned,
with the wind turbine blades, and also the potential to bring
in freight from throughout the world and also taking advantage
of multimodal opportunities.
Senator Brown. Thank you.
Let me ask a general question and any one of you can
answer, you all don't have to answer this. I am going to ask
you the question that I asked the other panel. What one or two
things can Government do?
You heard the first panel, and you heard Ms. Price's story
and Mr. Goshe's story. Any one of you have an opinion on what
Government can do for people who walk into the Lucas County
one-stop agency and what role Government can play to help
people more immediately?
Do you have any thoughts on that? It is not an easy
question.
Mr. Kildee.
Mr. Kildee. I can offer one thing. It doesn't relate
directly to what they are addressing when they walk in, but I
deal with a whole lot of folks--I have a foreclosure prevention
program, and it is the same population that I am sure that are
concerned about their job, they are concerned about losing
their house.
I find one common theme, and this is a huge one. It is the
fact that many people are being bankrupted by the lack of
access to affordable healthcare. I have prevented 2,300
foreclosures in my county. And with very few exceptions, people
that are coming in to see me have one of two conditions. First,
they either do not have healthcare and that some awful
condition has caused them to have to forego paying their
mortgage or their taxes in order to take care of their health
of their family, No. 1.
Second, and this is sadly the case, that there is a level
of illiteracy, functional illiteracy among a percentage of our
population. The sad thing is, here, I am the county treasurer.
I am the tax collector, looking to try to figure out a way to
not foreclose on a family because they failed to pay their
taxes, and in my view, the very government that is asking them
for taxes failed to educate them properly in the first place
and can't make a priority of healthcare the way we have made
the priority of other things in this country.
It is a big answer to a very direct question. But it is
pretty hard, for me anyway, to avoid that glaring failure that
I see affecting so many families.
Senator Brown. Thank you.
What is the one or two things that you would recommend that
I can do, my office can do, the Senate, the House and the White
House can do, that you would like to see? Do you want to start,
Dr. Helper?
Ms. Helper. I guess what I want to think about is a
strategy that should underlie every Government policy and a
couple questions to ask. One is, is it sustainable? Does it
reduce the carbon footprint, or does it make things worse in
terms of environment?
The second thing is, is it going to promote operating or an
economy that is based on cultivating the talents of all
workers? So it would create a stable middle class that knows
how to innovate, as opposed to competing on can we bribe rich
people to bring their plant here at some great cost?
So it seems like there are a bunch of policies that come
under that, but for every bill that comes forward, think about
those problems, those programs. Healthcare is obviously really
important. I keep coming back to the MEP. It is a tiny program,
but what it does is it links together.
I think one of the problems with a lot of the programs we
have is if you know how to do it, there is all kinds of stuff
you can access to. There is training. There is this. There is
that. But MEP has the possibility of being kind of a one-stop
for business, and unite all that, so workers can actually
advance, contribute, et cetera.
Senator Brown. Mr. Kildee, anything you want to add?
Mr. Kildee. Just actually to reiterate an earlier point,
and that is to rethink the Federal role in public investment.
The devolution of authority to the States and local communities
to determine how to use Federal dollars I think in some ways
has allowed the Federal Government to abdicate its
responsibility for having priorities for the use of its money.
Cities really do matter. Cities ought to be a Federal
responsibility to a much greater extent than they have been in
the recent period. And so, when it comes to transportation
dollars, when it comes to support for higher education, for
example, or K-12 education, recognizing that cities, but
especially America's older, weak market cities have special
challenges that ought to be recognized. And not out of the
largess of the Federal Government should that become a
priority, but in the self-interest of this Nation we have to
reinvest in those cities.
To prioritize Federal support in those old cities that
built this country in the first place I think would be a step
in the right direction.
Senator Brown. Thank you.
Mr. Dmytryka.
Mr. Dmytryka. I would follow up on that. I think reading,
writing, arithmetic, down at the bottom levels and working your
way up. Definitely. Functional illiterates, they are there, and
they don't really--they get in the workforce, and I don't
know--in my industry, they wouldn't help.
The other thing is to the difference between someone with a
high-tech background and someone who wants to work in high
tech, which is a distinct difference because not everybody is
going to go to college, get a bachelor's, master's, or Ph.D.
But an awful lot more people could be trained to work in the
high-tech industries with some knowledge, but they are not
going to get that knowledge unless they know how to read,
write, and do arithmetic.
So it is going back to that.
Senator Brown. Dr. Calzonetti.
Mr. Calzonetti. Yes, I would say that the world is rushing
into clean energy, tremendous opportunities. Countries
throughout the world and companies in those countries are
making investments supported by their governments.
The United States has been a leader in the development of
the technology. For instance, solar cells came out of Bell Labs
in 1954 first patented. Wind turbine technology, a lot of it
was developed at NASA Glenn in the 1970s.
Senator Brown. And in Sandusky, too.
Mr. Calzonetti. And Sandusky, yes. At the Plum Brook
facility.
However, who picked up on this technology? We need to have
a government that is going to make advanced energy a high
priority, invest in this, and to keep the companies that are
growing very well here, here.
I just returned from China. I went over there, talked to
them about what we are doing here. I was invited back. They
want us to come back. They have 10 companies that want to meet
with us about our technology to set up facilities in China. We
need a government that is going to take a full assessment of
the full cost of energy systems, the environmental cost of
energy systems, as well as the cost of energy security.
If you go back to, for instance, President Carter days,
that was the first time that it was acknowledged that
maintaining the supply lines from the Persian Gulf was a matter
of U.S. economic security, and there are enormous costs for
doing that. We have a lot of potential that would build
technology right here in this country, and we need to have a
new commitment to develop that technology.
Senator Brown. Thank you. Thank you all. Dr. Calzonetti,
Mr. Dmytryka, Mr. Kildee, and Dr. Helper, thank you.
Anyone, including the first panel, that wants to submit any
additional testimony, get it to us within 10 days. Thank you
again.
Thank you for being here, Ms. Hastings, and thank you
again, Chris, very much for your work and, Jessie, for your
work.
John Ryan, my State director, is also here. Thank you,
John, and all of you that joined us, thank you. Stay in touch
with us. If you have thoughts or ideas that you want to share
with us, certainly feel free to come forward and do that.
The hearing is adjourned. I thank you very much for being
here.
[Additional material follows.]
ADDITIONAL MATERIAL
Prepared Statement of Senator Enzi
Thank you Senator Brown for holding this important field
hearing today to address the needs of American workers and the
role job training can play in strengthening and rebuilding our
communities.
I believe job training is critical to the success of our
communities and Nation. Job training is important both to
provide a skilled workforce to avoid closings and to assist
workers who have become dislocated. That is why I helped author
the reauthorization of the Workforce Investment Act (WIA) which
creates a streamlined job training and employment system for
our employers and workers. Unfortunately, the Workforce
Investment Act (WIA) is 5 years overdue for reauthorization.
The Senate passed a bipartisan WIA reauthorization bill in both
the 108th and 109th Congress by unanimous consent. However, in
this Congress a Senate reauthorization bill was not even
introduced. Such inaction is unacceptable.
Congress must renew and improve the Workforce Investment
Act by building on its successes so that all Americans have
access to education and training opportunities. The structure
is already in place, we just need to refine the system to
prepare our workers for the new careers of the 21st century.
The fact is that we don't even know what the high wage, high
demand, high skill careers will be in the next decade. The
skills for today's jobs are not the skills needed for
tomorrow's jobs--everyone must have the opportunity and access
to training and education that will keep them successful in a
rapidly changing work environment.
We face many challenges today. Today, an estimated 85
percent of jobs are classified as ``skilled'' jobs, compared to
only 15 percent of jobs classified as ``skilled'' jobs in 1950.
From 2004 to 2014 the numbers of jobs in the U.S. economy is
expected to grow by 13 percent, those jobs requiring at least
some college will grow the fastest. By some estimates, nearly
four out of every five new jobs being created will require some
education or training beyond high school which is why it was
critical that Congress passed the Higher Education Opportunity
Act which we had been working on for 5 years!
In order to meet these challenges head on, we must work
with our businesses--big and small--to make sure they have the
highly skilled workforce they need to be successful in the 21st
century global economy. Additionally, our workers need more
opportunities to grow their skills and our businesses deserve a
high quality, highly skilled workforce.
Over the past 4 years we have been able to reauthorize Head
Start, career and technical education programs and higher
education. We are working on high school reform to make sure
that more of our students graduate on time with the knowledge
and skills they need to be successful in college and the
workforce without remediation. We need to get the
reauthorization of the Workforce Investment Act done so that
everyone throughout life has access to the education and
training opportunities they need to be successful. Once again I
urge the Senate leadership to take up reauthorization of the
Workforce Investment Act (WIA), it is past time for the Senate
to get serious about workforce development and job training and
take action on this important legislation.
Prepared Statement of Vaughn K. Buntain, Executive Vice President,
IBC Solar, Inc.
The State of Ohio can create jobs and an industry very easily:
follow the example of Germany. The former eastern Germany was a
devastated waste land of high unemployment, low productivity, and empty
factories. To reintegrate those eastern States, Western Germany did two
things:
1. Created a new industrial base--in their case: renewable
energy.
2. Fueled that base with regulations to inspire companies to
invest.
Today, Germany is the leading country in the world for solar energy
with 14 percent of their energy supplied by renewable energy and their
goal is 20 percent by 2020. Thousands of jobs, hundreds of new
companies--most of them in the former east Germany. No other country
comes close.
This example demonstrates three things for Ohio:
(A) Create tax incentives that pull companies to Ohio. Right now,
in a recent report, Ohio ranks near the bottom of States with favorable
tax climate (read how independent reports classify the State's tax
climate and don't be side-tracked by programs that Ohio is offering . .
. other States are also doing things--and they leave Ohio ranked near
the bottom).
(B) implement a 20 year feed-in tariff for solar energy--this
will create thousands of jobs, pull dozens of companies to Ohio,
enlarge the tax base and put Ohio on the leading edge of solar energy
initiatives--far out in front of CA. The 20 year period is what pulls
investors to the area . . . banks are willing to make loans for
purchasing solar photovoltaic systems because they have a long window
of opportunity . . . make it attractive for individuals and companies
to invest in solar energy . . . if people can save money and make
money, they will invest . . . unfortunately, few people in U.S.
politics today understand that. Give the utilities the ability to
recover feed-in tariffs using well-known, SBC mechanisms. I'm happy to
provide details of Germany's success with the feed-in tariff, if
necessary.
(C) Decouple utility earnings from revenues so that utilities can
start promoting energy efficiency and solar adoption. A simple fact: As
long as utilities earn more when their customer base uses more energy,
they will never encourage energy conservation . . . give them the
tools.
Bottom line: Take the lead, show leadership--do what no other
States are doing and you can make Ohio the leading State in the union
for solar energy. There are plenty of people willing and able to
assist, including IBC Solar, Inc.
Thank you.
[Whereupon, at 11:59 a.m., the hearing was adjourned.]