Hearings to examine Industrialization and the Rise of Small Manufacturers.

I would like to call this committee on small business and entrepreneurship to order. And uh I am John Husted and I wanna thank uh uh Chair Ernst for giving me a chance to chair the hearing today on the committee small business and entrepreneurship. It is a special year, two hundred and fiftieth year uh of our nation, two hundred and fiftieth anniversary, and it's uh it is not possible to overstate the importance and critical role that small businesses, but in particular American manufacturing, have played in transforming America into the economic envy of the world uh and the underlying principles of free markets com- competition, which are so important uh to our prosperity, that our system of government has enabled over that period of time. Yes, put simply, manufacturing matters. Growth in manufacturing, in the manufacturing sector disproportionately drives new investment in research and development, uh that drives innovation and productivity. Two words that I talk, I I use a lot, innovation, productivity, despite accounting for just twelve percent of the total economy, fifty-five percent of the total American R and D spending is financed by manufacturers. This productivity can be seen not just in the manufacturing sector, where employers earn thirteen percent more than the rest of the private sector, but in the economy as a whole. Manufacturing has one of the largest multipliers of any industry uh in the United States, with every dollar invested in manufacturing leading to two dollars and sixty-nine cents uh of growth in the broader economy, uh every dollar in manufacturing wages produces four dollars and thirty-three cents in income for the overall economy. Put in simple terms, manufacturing drives new capital investment and innovation which raises take-home pay for all Americans. It is not a coincidence that manufacturing has thrived in America, our foundation of free markets, limited government, private property rights, the rule of law, and entrepreneurship have fueled our continued industrial dominance. These values have facilitated the competition and free flow of capital that are essential for the capital for capital investment innovation and productivity, that raise American wages and the standard of living. Importantly, our system of free markets has allowed small manufacturers to thrive. As of two thousand twenty-five, ninety-eight percent of all manufacturing firms in United States, our small businesses with fewer than five hundred employees, uh the American system of freedom and limited government ensure that all small manufacturers can compete on a level playing field, that's what we aspire to, and with large incumbents uh or compete on a level playing field with large incumbents and spur innovation that raises American wages. Throughout our history, Ohio has led the way in American manufacturing. I often say You can't do made in America without made in Ohio. Uh, and I firmly believe that, uh, one of our, our guests today, uh, Doctor Edward Hill, Ned Hill, as I know him,

Mm-hmm.

from Ohio, the Ohio Manufacturing Institute, uh, who is here with us today can confirm that fact. Uh, as Doctor Hill, uh, will detail in his testimony, Ohio owes its strength in manufacturing to a virtuous cycle of entrepreneurship and innovation, with, uh, new generations of manufacturers adapting new production methods to boost productivity, with growth in small uh with growth driven by small manufacturers, connected through supply chains and technical expertise, uh which are so essential. Now that kind of system only is possible in a system that encourages investment and innovation and results and the results are clear in this respect. Ohio i- has the fifth largest manufacturing output uh in the nation at hundred and thirty seven dollars or hundred and thirty seven point nine billion dollars uh even though we're the seventh largest in population and the third highest amount of manufacturing jobs overall at six hundred and eighty seven thousand three hundred and forty five with a ninety six percent of this ninety six percent of this growth driven by small manufacturers and the ohio manufacturing worker is paid on average seventy six thousand four hundred and ninety three dollars which is above, uh, the, uh, far above the average wage of the worker, most workers in our state. As with the broader economy, the success of manufa- the manufacturing economy in Ohio shows how free enterprise promotes innovation and boosts wages, and the standard of living for the families, uh, in our state who make up, uh, the middle class of America. With the Working Families Tax Cut Act, uh, that Congress passed enacted pro-growth policies that will make it easier for the American manufacturer to expand full and immediate expensing of investments in machinery and equipment through the bonus depreciation and expanded limits for section one seventy-nine expensing, full and immediate expensing for research and development, expanded deductions for interest and full expensing of new factories as well uh as factories will as uh Mister Zoller will note in his testimony, be rocket fuel for the economy and boost take-home pay for hardworking Americans. And uh I firmly agree with that. Uh I am grateful for that we are uh joined by all of you on the panel today. And I want again thank Chair Ernst for giving me the chance to chair this uh hearing. And uh with that I'll recognize the ranking member, Senator Markey.

Okay. Thank you so much, Mr. Chairman. Thank you for this hearing. Um, well Massachusetts is um very proud. Because the Industrial Revolution was born in Lowell and Lawrence, Massachusetts, in Dover, New Hampshire. All along the Merrimack River they figured out how to capture renewable energy. They put a dam across the river. And somehow or other the word went to some village in Ireland. And Thomas Markey said, " Maybe there's a job there." "Um, I think I'll take off, see you mom and dad, I'm heading." By the Industrial Revolution being won in Lawrence and Lowell and Dover, New Hampshire, and that's why I'm here, right now. It's just, you know, a product of that job creation, that opportunity. Now they did swipe the technology actually from uh England, but that's another story. They did sign a nondisclosure agreement, but uh they did violate it, but nonetheless we're here. Uh, and Lowell is still known today as the Mill City and the Spindle City, and many Massachusetts cities and towns carry nicknames from their nineteenth century industrial era. Winchinton is the Toy Town. Holyoke is the Paper City. Athol is Tool Town. Taunton is Silver City. Waltham is the Watch City. Garner is the Chair City. Um, so each of these cities then became amongst the wealthiest communities in the history of the United States as they became the center for this incredible economic growth. And we proudly wear our industrial roots. My relatives, uh, came here, uh, and in fact, in nineteen twelve, uh, my grandfather was in Lawrence, in the mills, when twenty thousand textile workers walked out of the mills. It was called the Bread and Roses, uh, A strike. So my grandfather's there, trying to figure out what's going on, you know, in terms of the rights of workers, Mm-hmm. you know, who are being exploited. By the way, we have to make sure that AI doesn't turn workers into robots in factories too. We've gotta put protections in place for that. Um, and there were brutal working conditions, but it took the dedicated actions, uh, like those workers at the time and better part of a century to secure what we now Mm-hmm. um, consider basic fundamental rights for the people who build things in this country. Workplace safety protections, child labor standards, eight hour work day, two day weekend, my grandfather got off one day a week, and one week off a year, okay. And uh those are hard jobs. I know it because I never met one of my grandparents. They had all died before I got to meet them. They had hard lives working in these factories. So the lesson for every generation is You don't beg for your rights, you gotta fight and organize if you're gonna take them. And Trump is uh taking a one-two punch approach to tearing down America's manufacturing. He's rolling back uh worker protections, driving up costs for manufacturers. And even after the Supreme Court ruled President Trump's tariff taxes illegal, this administration doubled down, implementing new tariff taxes that make it more expensive to build things in the United States. and creating a refund system that benefits the big corporations, not the small businesses, uh not the workers, not the families and not the consumers. And despite the President's outlandish promises, we have lost eighty thousand manufacturing jobs since January twentieth of twenty, twenty five. Job openings with manufacturers are down ten percent. Trump's tariff taxes are making it harder and harder for small manufacturers to compete. And for too many small US manufacturers, MAGA stands for Manufacturers Are Going Abroad, MAGA. The president's chaotic terror policies and his illegal war of choice with Iran have mi made life more expensive for manufacturers and consumers. President Trump has sabotaged our economy with rising gas prices, skyrocketing electricity rates, soaring costs for raw materials, with nothing to show for it. His harmful Trumponomics have turned Main Street into Payne Street across our country. And what is the president doing to help curb these costs for small businesses? He's gutting the Small Business Administration. The president's budget proposes a unbelievably sixty seven percent cut for the entire Small Business uh administration, slashing resources that help small businesses navigate financially He's destroying the federal science programs and eliminating federal investment in scientific research, forcing innovative small businesses to lay off workers and scramble to find new work. He's eliminating the National Institutes of Standards and Technologies Manufacturing Extension program, which as two of our witnesses today point out in their testimony is vital to so many small manufacturers across the country and will try to work on a bipartisan to make sure that program stays intact for our witnesses. Trump's policies have not brought a new golden age, instead he's brought about an industrial era, gilded age of robber barons, bloated ballrooms, inequality, political corruption. So I'm glad we have an opportunity today to celebrate um uh this um American Revolution. I'm here because of it, and Lowell and Lawrence, and Dover, New Hampshire, and all of you. Thank you for being here, thank you for what you do every single day.

Thank you, Ranking Member Markey, and uh yes, we are indeed celebrating America two fifty, the industrialization and the rise of small manufacturers today. And uh I wanna thank all of you for being here and and uh being present to share your stories and traveling to our nation's capital on on this historic year uh to share your insights. So I'm gonna introduce the three wit witnesses and then we'll give you a chance to each offer your uh uh testimony. Uh first I'm gonna introduce Mister Edward or Ned Hill as I know him, and uh he is a faculty emeritus at uh the Ohio State University where he taught uh economic development policy, public policy, and public finance. Mister Hill also serves as a senior research associate at the Ohio Manufacturing Institute where he has published academic research on Ohio, economic history, and manufacturing policy. Mister Hill holds a doctoral degree in economics, urban and regional planning, and a master's degree in city planning from Massachusetts Institute of Technology. Um I know uh Senator Justice uh couldn't be here and he was g- he's gonna introduce our next wis- witness so I will do that. Uh um we have uh second, Miss Danielle Petrick from Morgantown, West Virginia. and she is the Curator of the Watts Museum at West Virginia University. The museum is committed to sharing and interpreting the history of West Virginia's mineral resource industries. Miss Petrick earned her PHD in history from West Virginia University with her research focusing on the interpretation and exhibition of coal mining history in central uh Appalachia. And one of the thing you have in common is you both worked for universities in which Gordon Gee was the president of Ohio State and New West Virginia. And now I'll introduce uh Senator Paul f- to introduce our l- final witness.

Thank you. I'm honored to introduce our witness from Kentucky, Mister Bill Zoller. Mister Zoller is a chief executive officer and fourth generation owner of Zoller Pump Company which is headquartered in Louisville, Kentucky. The Zoller Pump Company was founded in nineteen thirty nine by August and for over eighty-five years has grown into one of North America's leading manufacturers of submersible pumps with products distributed across the world. For the past past fifteen years, Mister Zoller's leadership has significantly contributed to the company's success, including navigating the coronavirus pandemic. Today their products are known to be the industry standard and are renowned for their reliability and durability. Prior to his time at the Zoller Pump Company, Mister Zoller spent over a decade in public accounting and energy sector. He started his career at KPMG as a senior auditor, while earning his credentials as a CPA. Mister Zoller also earned his bachelor's degree in accounting from Bellarmine uh university and an MBA from Indiana University Southeast. Mister Zoller, thank you for coming before the committee today. I look forward to hearing your testimony.

Thank you, Senator Paul. Um uh to our witnesses, your written testimony has made been made part of the record and the committee asks that you limit your oral remarks to five minutes. And with that, Mister Hill, you are recognized for five minutes.

Thank you very much, Senator Houston. Uh, Chair Ernst, member Markey, members of the committee, thank you for the privilege of appear for allowing me to appear before you on America's two hundred and fiftieth year. Today's hearing is fitting. The republic was barely a year old in seventeen ninety when President Washington first annual address to Congress, called for establishing an industrial policy as a foundation of national defense. The same year, Samuel Slater brought the Industrial Revolution to Pawtucket, Rhode Island. Today, I draw on my research for an upcoming book on Ohio's manufacturing economic history, and my experience working with manufacturers through the Ohio Manufacturers Association. I note for the record that Wyatt Newman, co-fou- founder of Roadprints, a company I will discuss shortly, is a close friend. Additionally, my c- testimony does not reflect the views of the Ohio Manufacturers Association, the Ohio State University, or the Ohio Manufacturing Institute. I begin by introducing you to Ohio's economy. Ohio is not a manufacturing, farm, or services state. Instead, Ohio is a portfolio state that compr- that competes globally with goods and services produced across eight regional labor markets, in numerous rural communities. With that portfolio, within that portfolio, manufacturing leads and exports to the rest of the nation and the world. Manufacturing accounts for sixteen point five percent of the state's GDP, more than any other private industry. As of twenty twenty-four, Ohio ranked fifth in manufacturing GDP, and in near dead heat with Illinois and Indiana. Ohio manufacturing workers earned an average annual wage of approximately seventy-six thousand, five hundred dollars in twenty twenty-three, supporting families and their communities. More recent data shows that Ohio has six hundred and seventy-seven thousand five hundred manufacturing jobs in twenty twenty-five. While Honda, GE Aerospace, Whirlpool, Lincoln Electric, Goodyear, among many others are the economy's anchors, anchors need chains to hold their boats fast. Ohio's supply chains are disproportionately composed of smaller manufacturers. the fabricated metal shops, precision machining firms, plastics and rubber plastics, specialty suppliers that fill Ohio's supply chains make those anchored businesses viable. When a large Ohio plant thrives, dozens of smaller suppliers thrive with it. When one closes, the supply chain feels it first. One statistic is particularly relevant to the committee's purpose. Eighty-eight percent of Ohio's thirteen thousand manufacturing establishments employ fewer than one hundred workers. These establishments populate main streets and business parks and sustain rural communities. Ohio's industrial story, however, begins with President Washington's first address to Congress in January seventeen ninety, which contains a sentence that most Americans don't know. American, President Washington refers to " a free people," writing, " their safety and interests require they should promote such manufactories," as tend to render them independent of others for essential, particularly military supplies. President Washington's first policy proposal to Congress was to build American industry it was the nation's first industrial policy. Condu- co- coincidentally, as I mentioned earlier, seventeen ninety was also the year that Samuel Slater built his mill in Pawtucket, launching the Industrial Revolution in the United States. The president's proposal led to the establishment of federal armories in Springfield Massachusetts in seventeen ninety four, and in Harpers Ferry Virginia in seventeen ninety eight. Washington's logic was vindicated in eighteen fourteen when British forces burned the Capitol and the White House, tor- the torching of our capital city also ignited a forty year commitment to manufacturing rifles with interchangeable parts, shifting defense policy into industrial policy. By eighteen fifty one, British observers named it the American system of manufactories, manufacturers, and one historian interpreted that as meaning the American system of m- of interchangeable parts. That system crossed the Appalachian Mountains in the heads and hands of mechanics, becoming visible in Whiteley's Reapers in Ohio's Springf- uh uh Springfield, and Thomas White's sewing machines in Cleveland. Ohio's early machine toolmakers gave the state's factories the capacity to cut, shape and stamp steel at scale. When Henry Ford introduced the moving assembly line in nineteen thirteen, Ohio's manufacturers were positioned to supply it. Today, Ohio's entrepreneurs are building companies to join the next manufacturing wave. I'll give you two examples. There are others in my written testimony that I've submitted. One founded in twenty seventeen, the other a turn-around that was founded ninety-nine years earlier. Roadprints, headquartered in Cleveland, builds an operator-driven, truck-mounted, robotic Road Making System. It was founded in twenty seventeen by Wyatt Newman, a Case Western Reserve University robotics professor, and Sam Bell, a master mechanic who closed his auto repair shop, the infamously named the Lusty Wrench, to join the business. Road print started with a motor motor man robot from Dayton, a fabricated sup- fabrication support from QT Equipment, a family owned truck upfitter in Akron, and its ma- and its paint comes from Excel and Mentor. Today, Roadprints has five full-time employees, five patents, paying customers from Missouri's Department of Transportation to the city of Houston and its founding and early growth were supported by NSF's, small business innovation research grants. The founders thought they were selling road striping, efficiency and precision. They were wrong. A blue-collar Cleveland Public Works employee told them his wife liked it when he was inside the cab painting instead of walking next to traffic. because she knew we would be coming home that night at night. Roadprints built a worker safety device. The founders learned the value of their invent their invention from someone who used it. Mike Garvey, CEO of Youngstown's M seven Technologies, describes his factory as a place where the Flintstones meet the Jetsons. Garvey's grandfather started a bronze factory in nineteen eighteen, serving Youngstown steel mills. But after the mills collapsed and the fire destroyed the facility, Garvey rebuilt another measure, uh, uh, built rebuilt around measurement, science, and digital manufacturing. Today he operates one of the world's largest three D printers and produces parts with micron level tolerances for aerospace and defense. M seven grew from three employees to fifty, uh, three employees in nineteen eighty five to fifty. These companies represent what the next wave of manufacturing looks like, digitally condec- connected production systems that solve problems that matter to American industry and American workers. Roadprints uh pr- a product Roadprints's product is a digital production system while M-seven uses one. Both are Ohio-born a century apart. These companies exist in part because of federal investments in the NSF, patient capital from public grants, and technical assistance from the Manufacturing Extension Partnership that made them all possible. As President Washington's armories demonstrated, Technology without appropriate management is expensive and ineffective. The Springfield armory seeded America's first industrial cluster, and it housed America's first version of the manufacturing extension partnership. Springfield, Ohio, reaped the reward. The federal government shaped Ohio's industrial revolution, and entrepreneurs and engineers created the products that built a competitive economy. Now their distin- their descendants are forging their futures. Thank you.

Thank you, Mr. Hill. Um, Miss Petrick. You are recognized for five minutes. Just hit your button there.

Thank you, Chair Ernst, Making Member Markey, Senator Hustead, and distinguished members of the committee. I am Danielle Petrak, Curator of the Watts Museum and Industrial History Museum in the Stotler College of Engineering and Mineral Resources at West Virginia University. Our museum is named after Royce Watts, who retired from WVU in twenty seventeen, after more than sixty years at the university. Like many West Virginians, Royce was born into a mining family. He did not pursue a career in mining, but as a child, Royce made money chopping logs and selling them to miners for a few cents each to use as roof supports in the mines. Sadly, in nineteen forty-two, when Royce was thirteen, his father, a coal miner, was killed in a mine roof fall in southern West Virginia. At this time, the early nineteen forties, the West Virginia mining industry was booming. as coal production revved up to meet the nation's needs during World War Two. The industrialization of West Virginia is nearly always associated with coal, in particular the start of large scale commercial coal mining in the late nineteenth century but as we commemorate America two fifty it is important to note that West Virginia had a strong diverse industrial economy well before the birth of its commercial coal industry. In popular culture, the media, and other narratives West Virginia, both past and present, is often portrayed as a remote place, a place of isolation. The vitality of its antebellum industries, however, shows that the state, although rugged and rural, was in fact well connected to much of the United States via trade networks and regional economies long before King Coal boomed onto the scene. Nicknamed the Mountain State, West Virginia is known for the abundant natural resources in its hills and valleys coal as well as natural gas salt silica sand clay limestone, oil, timber, and more. Before the arrival of railroads, West Virginia was also home to important transportation networks. The National Road, for example, completed a main travel route to the west in eighteen eighteen by linking the Potomac River in Cumberland, Maryland to the Ohio River in Wheeling. In eighteen forty, as covered wagons journeyed along the National Road, a twenty-two year old Mifflin M. Marsh carried baskets full of hand-rolled tobacco-filled Conestogas or stogies that he sold to wagon drivers as they approached the banks of the Ohio River. Later owning a company that made up to three million cigars per week, March launched a cigar industry in Wheeling that grew to nearly one hundred manufacturers in the city by the late nineteenth century. Wheeling's location and access to fuel sources also helped sustain sustain multiple nail making factories in the mid eighteen hundreds. An industrial legacy that inspired the name of the city's minor league hockey team, the Nailers. Thanks to extensive high quality clay deposits in West Virginia, commercial pottery manufacturers popped up throughout the state in the late seventeen hundreds. Thompson's pottery in Morgantown spearheaded the area's transition from earthenware to more durable non-porous stoneware in the eighteen fifties. Their techniques and designs trickled over the state line, influencing the work of Pennsylvania potters. In nineteen O one, Smithsonian curator Walter Huff, a West Virginia native, recognized the significance of the Thompson's work and collected most of the surviving examples of their pottery and tools which are now in the National Museum of American History. Abundant deposits of other natural resources, namely silica sand and natural gas, fueled the state's glass industry, with its first glass manufacturer opening in eighteen thirteen, followed by roughly four hundred more over the next one hundred fifty years. Based in Moundsville, Fosthoria glass made the longest produced pattern in US history, the American line, for seventy-one years. Marsh wheeling cigars, label cut nails, Fosdoria glass, these businesses were not small per se, but they also were not comparable in scale to the energy corporations often associated with industry in West Virginia. Importantly, these companies were founded by West Virginia natives and residents. They employed skilled union workers and they created products using their state's natural resources to inject wealth and add value into the local economy. As we think about re-industrializing America and Appalachia from a small business perspective we should look back to West Virginia's early industrial history taking inspiration from this past era and investing in today's smaller scale diverse and local industries and businesses. Senator Justice, as Governor you made manufacturing a cornerstone of West Virginia's economic growth and your work in the Senate continues that focus through your advocacy for domestic manufacturing workforce. pipeline development and federal investments that help West Virginia employers hire, train and grow. Both WVU and Marshall University play an important role in this effort, supporting small and medium-sized manufacturers through the West Virginia Manufacturing Extension Partnership at WVU and Marshall's Advanced Manufacturing Center strengthening competitiveness across the state. Thank you. I greatly appreciate this opportunity to share with you some history of West Virginia, a place whose people and natural resources I care about very deeply.

Great. Thank thank you very much uh Miss Petrick. Uh and now I would like to recognize uh Mister Zoller for five minutes and uh thank you for being here.

Thank you Chair Ernst, Ranking Member Marquis, Senator Paul for your kind open remarks. My name is Bill Zoller and I'm the CEO of Zoller Company and the proud great grandson of August Paul Zoller who founded our family business in nineteen thirty nine in Louisville, Kentucky. It is an honor to testify at today's hearing, celebrate in America's two hundred and fiftieth birthday. Zoller is a family of manufactured water solutions. Our family of water solution brings clean water to a facility, moves that water around a facility, collects the dirty water, and removes it from the facility. We manufacture pumps, containers, and controls to provide the solution. These products support the infrastructure of our great country. We manufacture quality products that are serviced by the best manufacturing reps in the business, many of which are multi-generational family businesses as well. These products are sold through our fantastic wholesale partners, and then installed by hard-working plumbers. This activity happens every day, and we are honored to be part of the plumbing industry. Our story is one of humble beginnings that grew by faith and grit. We were founded by, we were founded in my great-grandparents' basement and sold six pumps the first year. However, we have grown significantly since our founding, acquiring other companies to expand our product offerings. This includes Flint Walling, which was founded in eighteen sixty-six and is based in Kendallville, Indiana. We also operate Zoller Custom Moding in Boonville, Indiana, Wolf Pump in Abernathy, Texas, and Cincio Systems in Philadelphia, Pennsylvania. Flint Walling was founded over a hundred and sixty years ago, and has a unique history of its own. Producing windmills that powered groundwater pumps, These pumps provided irrigation and crops for water and livestock. Uh, these these products helped support America's westward expansion in the late eighteen hundreds. During World War Two, Flint Walling was called upon once again and pivoted from making pumps to producing shells and aircraft components for the US Navy. Regardless of location, our core values of quality, service, innovation and integrity have served us well over the past eighty-seven years. Our team members understand these values and demonstrate them every day. I'm so proud of the work that they do and the quality products that they manufacture. The Zoller brand is well known in the plumbing industry. In fact, our core product, the fifty-three triple O one, was awarded two trademarks, one on its unique shape and one on its color. These trademarks prevented offshore knockoffs from tarnishing our brand. At Zoller, we are proud to have made the USA label on our Zoller pump mainline products. In two thousand and twelve, our motor supplier moved production to Mexico and we lost our Made in the USA mark. So we invested in our people, decided to manufacture those motors internally. This created thirty-five jobs in Indiana, and we could put Made in the USA back on several products. But the Zoller story is just one part of manufacturing's legacy in America. America's story is a manufacturing story, from seventeen seventy-six to today. Congress and the Trump administration are doing their part to draw policies which in turn reduce the cost of doing business in the United States. For example, this Congress preserved the twenty-one percent corporate tax rate and provided immediate expensing of R and D activities. These actions prevented tax increases and paved the way for a continued expansion. Beyond the tax bill, salary has also benefited from the Trump's administration reforms to reduce the cost of federal regulations and ensure that rules are practical and workable. As a leader, I fully believe that you will never get anything one hundred percent right, but you get close and you keep fine tuning. So here comes some opportunity for fine tuning to ensure that the next two hundred fifty years are even stronger in man for manufacturing in America. First, Congress and the administration should keep up the work to right size the burden of federal regulations. Manufacturers spend three hundred fifty billion every year on regulatory compliance. Second, Congress should double down on the infrastructure bill, which is set to expire later this year. Manufacturers need robust highways, bridges, ports, waterways to make and move products across the country. Third, manufacturers need permitting reform that cuts red tape and clears out roadblocks. Fourth, we need strategic trade policies to ensure manufacturers have easy and reliable access to the inputs and machinery we need to make things in America. And finally, we need policies that support our industry efforts to upskill and train the manufacturing workforce. Currently, we have more than four hundred thousand jobs open across the sector. The twenty twenty five tax bill is the foundation, and if backed by the right policies, manufacturers like Zoller will be ready and proud to drive the next two hundred fifty years of American manufacturing. Thank you for your time.

Thank you mer- very much, Mister Zoller, and I thank you all for being here today to celebrate America two fifth.

I appreciate that, and and thank you, Senator Hustead, for chairing today's activities. Um, this is great to be able to celebrate our nation's two fiftieth in regards to our small businesses, which really are the backbone of the United States. Um, so, Mister Hill, your testimony discussed the new businesses that are leading the re-industrialization of Ohio and America. Alongside Senator Coons, I am leading the Made in America Manufacturing Finance Act, and this will raise the SBA loan limit from for manufacturers from five million dollars up to ten million dollars. And how will greater capital access uh for small manufacturers support investment in America's industrial capacity?

Senators, thank you very much for the question, and I appreciate the attention that the staff has given uh to bring this testimony along. The um reality of manufacturing over the past five years and going forward is that capital intensity is increasing. So, s- we - we've looked at the, uh, ratios of the, uh, number of jobs per dollar invested in - in, um, in manufacturing, and it's been going up. So one of the real challenges that, um, manufacturers and small manufacturers has is their capital constraints. So, lowering - I mean, raising the lo- the, um, the lending limits, especially the way in which you do it so that the banks make certain it's a good credit, um, is physically responsible and I think economically necessary. The largest challenge that I've seen with very, with small manufacturers is actually not the, is along with the cost of the equipment is the ability to integrate it in their production processes. And that's where another barrier exists because most of the system integrators now because of industry four point O, um, AI and cyber have hurdle rates, minimum contract amounts that many of our small manufacturers cannot afford to pay. And that's one of the reasons why it is with our with our historical research, we've seen that operations technologies, the stuff they use to make stuff,

Mm-hmm.

has a long lag if the management systems can't keep up. So one of the large challenges that our small firms have is to not only be able to afford the capital, but a afford the advising around how to deploy that capital so that their costs go down rather than up.

Mm-hmm.

Right.

So I I applaud you for your for your thoughtfulness, uh your strategy, and I think that uh making it possible for firms to small firms to invest in their future is essential for the economy.

Well, thank you.

Not not that I have an opinion.

Yeah at all, but thank you. I think many uh do share thoughts on that as well, and we really appreciate the input. Um, so thank you for being here. Mister Zeller, the Working Families Tax Cuts, uh, act that was passed by Congress last year is encouraging a lot of our small businesses to invest in uh their operations and allowing American workers to keep more of their hard-earned dollars in their own pockets. That's really important. So how have you in particular been able to take advantage of this act that was passed last year and And what impact have you seen for your employees?

Thank you for the question. Um, first and foremost, the uh no tax on overtime is great for our employees. Um, we run a union shop, uh we have mandatory overtime, uh we have spikes in demand, and for them to be able to take more take home pay is is great. We love to take care of our employees and that's been a big help. Uh, we're currently expanding. We're trying to bring on uh additional to increase our US manufacturing, our production. So obviously the bonus appreciation is beneficial, uh, today and into the future. And, uh, you know, those things are, are, are critical to make sure we have the capital to keep deploying those things. Uh, we're a conservative family business. We don't take out debt. So we need to, uh, kinda manage our our, uh, our cash flow appropriately and, uh, by having a little more, uh, tax savings in the pocket. to invest, that's a good thing for us.

Great, thank you. Thank you so much, and and to our small business owners, um, thank you so much, and Miss Petrick, thank you for telling the history uh bes behind so many of West Virginia's small businesses. Uh, we're so glad to celebrate our two hundred and fiftieth year here in the United States of America and you're all part of this incredible journey so thank you very much, for participating today. Thank you very much, Senator Husted.

Thank you, Chair Ernst. Uh, uh, I'll start with a, a question for you. Um, Mister Hill, I know that, I, I love economics cuz it's like a puzzle, you're trying to figure it out all the time, like what, what, what is the, what is the best way, what are the right incentives, and I, I was interested in your George Washington reference because there wasn't a central planner for the American economy over those two hundred and fifty years but there were some goals and were some things that we wanted people to achieve but we had create an environment where there was a essentially a a freedom to achieve that. And the structure of the rule of law, protect people, encourage investment, those things are protected in our nation, but you also have the freedom to expand. And that has been sort of the underpinning of the driving of our of our success. But we've also, uh, being an Ohioan, too, um, have seen ups and downs. We've seen creative destruction, we've seen government get it wrong, we've seen the manufacturing economy. You know, it's i- ironic that we're here at a moment when President Trump is in China, because we saw a lot of our our manufacturing head to China, uh, over over the years, but now we're trying to get it back. We're trying to do made in America. We're trying to, um, re-industrialize, and we've had some success with that. So as we look forward, what policies? We think about this. We really want manufacturing economy to take root in America and make things that are essential for our economic and national security, what policies should we put in place going forward as you see it to ensure that that happens?

Senator Huston, thank you for the very easy question. Um, it's going back to President Washington and the three armories, it's a wonderful thing. You're right, there is no Central planner, no self central planning works. But the American Industrial Revolution started with those three armies. And I'd, I'd, it, uh, Senator Markey and I can have a wonderful conversation about what side of Massachusetts had the largest impact, but Springfield, Massachusetts helped create Springfield, Ohio. So what was it that they took place? There was sustained investment in basic defense technology to make interchangeable parts for rifles. And that took forty years. It was a bureaucrat in the Department of Ordnance that continued issuing those contracts despite the technological hurdles. The machines and the accounting systems, which by the way came out of West Point, that made America's factories in the eighteen fifties and beyond the most productive in the world, were a product of investing federal money into creating public goods were transferable into industries and created the management systems, along with operations technologies. So the secret sauce in this is to invest in public goods so that businesses could take them to make goods that re- and services that respond to customers. So my fear is that if we hollow out the ability to crea- create that shared public knowledge as happened in Springfield, Massachusetts, that stretched down the Connecticut Valley into Hartford and north up to into Vermont, went over to the Naugatuck Valley in Connecticut where it it's powered the watch industry, the bicycle industry.

Well, and it and it

That that that was the same production system that was invented in Springfield, crossed the Appalachians, and created Ohio's economy.

Okay, so w- let's fast forward into history. You kn- we know how that planning worked with the with the arsenal of democracy where American industry responded during World War Two.

Correct.

But then we also had this experience starting, I will call it in the sixties and the seventies, certainly in the eighties into the nineties, where in places like Ohio, we saw the manufacturing economy collapse.

Correct.

And and so the what are the factors that when you you learn from that history, that can teach us about how we preserve that going forward?

Well, Senator Houston, I'm I'm delighted to have um Doctor Tran Stewart with me. She's one of my co-authors on the book, and we're wrestling with that as we look at Ohio's economic history. And um as and in that book what we found out is that we were we were subject to something called the product cycle. The product cycle is when a new product is born, a new technology uh enlivens a product, you go through a period of very rapid growth. Then, once one of the markets gets saturated, um the number of competitors shrink, growth rates tail off, and then once one demand disappears or slackens or gets closer, then the growth rates drop. What happened to Ohio from nineteen sixty-eight to about nineteen sixty-nine, I mean nineteen sixty-eight i- through the seventies is that all of our core industries had the exact same product cycle age, and they all went into decline together. What do we learn about this? Well, what we learned is public policy that when you were Speaker of the House, you were endorsing, and you still endorse. And that is we had to take a st- a state that grew complacent out of the power and the incomes and stabilities of the jobs that came out of nineteen thirteen on, And we, and what happened was entrepreneurship in our state died. We spent from the nineteen nineties and two thousands in the traditional um manufacturing towns of Ohio to recreate this period of large scale entrepreneurship. So one of the things that we have to do is al- always be humble. When your products are at the top of the world, understand that they're gonna age. Make certain that you always have those, uh, those trying to figure out the new ways of doing things. So that's the reason why in my testimony I highlight four firms, two of them turnarounds, I'm say one of them a turn around, three of them start-ups, that are really leading the way for inventing new products out of public intellectual property uh that is creating new products.

K, well, I'm gonna come back to you later. I'm gonna let my my colleagues ask their. questions now but uh we'll we'll put a pin in entrepreneurship and we'll come back and talk to you in a second uh senator paul.

mr. zeller thank you for coming it's great to have someone from louisville up here we we need more people from kentucky up here so i can feel at home when i'm away from home um i enjoyed reading through your testimony and uh it sounded like um virtually every facet of the tax bill had some advantage for your business which is great because that's what it's supposed to do uh help american businesses keep more of their income and thrive um you know from the death tax to the corporate tax to the expensing to the pass through everything seemed to be something that was just set up perfectly for you guys i was intrigued by your testimony though when we get to the idea of trying to bring things home cause everybody's like well let's build in america and you're proud you make things in america and so am i that's great um but people have to realize to make things in america we're not we are not an island and that often we need stuff that comes from other countries and what you're saying about sometimes needing equipment from Germany and Japan is what I hear from so many other people like yeah we wanna make things in America but if you tariff the things that we're you know the machinery that we need we're gonna have a problem so there really does need to be somebody looking at these tariffs and saying hey should we really be tariffing equipment that helps us build things here can you tell us a little bit about the equipment you're needing and uh how it will help you bring uh manufacturing here? That you actually have to buy the equipment somewhere else?

Yeah.

Appreciate the question, Senator. Um, as I kinda also talked to my testimony, we are made in the USA, so we we definitely appreciate the tariffs from a standpoint of keeping the knockoffs out. Specifically to the uh equipment that we need, um yeah most of that equipment is uh specialized outside of the US. Uh our current situation to try to increase capacity, uh we have uh three termac uh machines on order from Germany, ones landed, that first one uh we did have to pay a tariff on that. Uh we have two more that are coming this summer uh from Germany as well, hopefully those will be online in October uh so we can increase our capacity but both of those are currently scheduled to be hit with the uh the tariffs as well. So um in order to increase capacity in the US uh I believe that we're gonna need equipment to do that and some of that equipment's just not made here it's just Just a fact.

Is any of the knock-off equipment that you're concerned with illegal because of their infringing either on trademark or patent?

Y y uh yes, these are specific to our finished goods. Um and and as I've talked about um we had professional plumbers at one point that would put the knock-off um Zoller pumps inside our boxes and return them to us because professional plumbers couldn't tell the difference between what we made and what uh the offshore's product was until we could open them up and notice that those were our motors and components.

So who's the law enforcement though? Who do you complain to and who enforces this if it's a either trademark or patent?