[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]
NATIONAL SMALL BUSINESS WEEK: SMALL BUSINESS SUCCESS STORIES
=======================================================================
HEARING
before the
COMMITTEE ON SMALL BUSINESS
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTH CONGRESS
SECOND SESSION
__________
WASHINGTON, DC, MAY 8, 2002
__________
Serial No. 107-56
__________
Printed for the use of the Committee on Small Business
U.S. GOVERNMENT PRINTING OFFICE
80-188 WASHINGTON : 2002
________________________________________________________________________
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COMMITTEE ON SMALL BUSINESS
DONALD MANZULLO, Illinois, Chairman
LARRY COMBEST, Texas NYDIA M. VELAZQUEZ, New York
JOEL HEFLEY, Colorado JUANITA MILLENDER-McDONALD,
ROSCOE G. BARTLETT, Maryland California
FRANK A. LoBIONDO, New Jersey DANNY K. DAVIS, Illinois
SUE W. KELLY, New York BILL PASCRELL, Jr., New Jersey
STEVE CHABOT, Ohio DONNA M. CHRISTENSEN, Virgin
PATRICK J. TOOMEY, Pennsylvania Islands
JIM DeMINT, South Carolina ROBERT A. BRADY, Pennsylvania
JOHN R. THUNE, South Dakota TOM UDALL, New Mexico
MICHAEL PENCE, Indiana STEPHANIE TUBBS JONES, Ohio
MIKE FERGUSON, New Jersey CHARLES A. GONZALEZ, Texas
DARRELL E. ISSA, California DAVID D. PHELPS, Illinois
SAM GRAVES, Missouri GRACE F. NAPOLITANO, California
EDWARD L. SCHROCK, Virginia BRIAN BAIRD, Washington
FELIX J. GRUCCI, Jr., New York MARK UDALL, Colorado
TODD W. AKIN, Missouri JAMES R. LANGEVIN, Rhode Island
SHELLEY MOORE CAPITO, West Virginia MIKE ROSS, Arkansas
BILL SHUSTER, Pennsylvania BRAD CARSON, Oklahoma
ANIBAL ACEVEDO-VILA, Puerto Rico
Doug Thomas, Staff Director
Phil Eskeland, Deputy Staff Director
Michael Day, Minority Staff Director
C O N T E N T S
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Page
Hearing held on May 8, 2002...................................... 1
Witnesses
Carroll, Richard, Digital System Resources, Inc., Falls Church,
VA............................................................. 8
Berg, Gene, Austin/Westran, Byron, IL............................ 10
Espat, Roberto, Roses Southwest Papers, Inc., Albuquerque, NM.... 12
Bartoletta, John, High Street Financial Group, Tampa, FL......... 12
Francis, John, Northern Virginia Roofing, Inc., Falls Church, VA. 14
Kuntz, Donald, Fine Print of Grand Forks, Grand Forks, ND........ 15
Shore, Billy, Community Wealth Ventures, Washington, DC.......... 17
Siccardi, Frank, Coenco, Inc. Fayetteville, AR................... 18
Guadarrama, Belinda, GC Micro Corporation, Novato, CA............ 19
Burkhartsmeier, Brenda, Mountain Mudd & Mountain Manufacturing,
Billings, MT................................................... 21
Appendix
Opening statements:
Manzullo, Hon. Donald........................................ 28
McDonald, Hon. Juanita Millender............................. 32
Christensen, Hon. Donna M.................................... 36
Ross, Hon. Mike.............................................. 39
Prepared statements:
Carroll, Richard............................................. 40
Berg, Gene................................................... 46
Espat, Roberto............................................... 47
Bartoletta, John............................................. 49
Kuntz, Donald................................................ 70
Shore, Billy................................................. 74
Siccardi, Frank.............................................. 91
Guadarrama, Belinda.......................................... 92
Burkhartsmeier, Brenda....................................... 94
Additional Information:
Submission by John Bollinger, Deputy Executive Director,
Paralyzed Veterans of America.............................. 98
NATIONAL SMALL BUSINESS WEEK: SMALL BUSINESS SUCCESS STORIES
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WEDNESDAY, MAY 8, 2002
House of Representatives,
Committee on Small Business,
Washington, DC.
The Committee met, pursuant to call, at 2:40 p.m. in room
2360, Rayburn House Office Building, Hon. Donald Manzullo
presiding.
Present: Representatives Velazquez, Millender-McDonald,
Ross, and Thune.
Chairman Manzullo. Good afternoon. This afternoon the Small
Business Committee conducts a hearing in conjunction with
National Small Business Week to recognize several small
businesses that embody the spirit of entrepreneurship.
Specifically, the Committee will receive testimony from several
small businesses who have grown their businesses with the
assistance of the Small Business Administration. Additionally,
this hearing will enable the participants to promote their
successes in the industry in which they have engaged.
Each year for the past 39 years, the President of the
United States has issued a proclamation calling for the
celebration of Small Business Week. This year, National Small
Business Week, which is sponsored by the Small Business
Administration [SBA], is being held from May 5 through 11,
2002.
Historically, small businesses have been the catalyst for
economic growth. From 1990 to 1995, one of our nation's most
impressive economic growth cycles, small businesses created
three-fourths of the new jobs. Overall, small business accounts
for 99.7 percent of the nation's employers, employing 53
percent of the private work force, contributing 47 percent of
all sales in the country, and is responsible for 50 percent of
the private gross domestic product.
Small businesses also play an integral role in helping to
solve some of the nation's most complex problems. For example,
with the onslaught of the War on Terrorism, a number of small
businesses have provided valuable technical assistance to the
Department of Defense. Additionally, because small businesses
are the heart of specific communities, they are also attuned to
the challenges facing their community. Consequently, they often
serve as the leaders to fight problems such as hunger and
homelessness.
Unfortunately, burdensome regulations, a complex tax code,
and an inaccessible health care system are stifling small
businesses. Small business owners face a tax and regulatory
scheme that overburdens and demoralizes them. Government is
meant to be the servant of the people, yet the existing federal
tax and regulatory state unfairly acts as judge, jury, and
master of honest, hard-working Americans.
Fortunately, with the assistance of the Small Business
Administration, our guests have managed to become successful in
spite of the road blocks placed in their way. However, if small
business is to continue as the nation's economic catalyst, it
is imperative that fewer regulations, simpler, lower taxes, and
a free market approach to health care are all implemented to
ensure a competitive environment for all small businesses.
While Washington has contributed to these problems in the
past, I am proud to say that, along with President Bush,
Congress has worked to repeal the 100 billion ergonomics rule
and pass the President's Economic Growth and Tax Relief
Reconciliation Act. It is my hope that in the very near future
Congress can act to make health care an affordable benefit for
all small businesses.
I look forward to the testimony of the witnesses today and
want to thank the witnesses who are testifying, especially my
constituent, Mr. Gene Berg, who through some creative thinking
was able to save over 200 jobs in Byron, Illinois.
Additionally, I want to recognize and thank SBA Administrator
Hector Baretto for his cooperation over the last year. Mr.
Baretto will join us today to discuss the role his agency has
played in helping to create and sustain successful small
businesses.
[Chairman Manzullo's statement may be found in appendix.]
Ms. Velazquez. Thank you, Mr. Chairman
We take time this week to recognize the huge contribution
that small business makes to this country. It is absolutely
incredible the work small businesses do for America. They
anchor our neighborhoods and communities. They create three-
fourths of all new jobs and employ half our workers. While
corporate America sheds jobs and shifts production overseas,
small businesses are busy hauling us out of recession.
Today it is truly an honor to have the opportunity to hear
from some of the leaders in the small business community.
Kimberly Francis and her husband, John, own Northern
Virginia Roofing in Falls Church, Virginia. When the Pentagon
was attacked and burned on September 11, they worked with other
roofers across the country to volunteer their services to
rebuild more than over an acre of destroyed slate roofing over
the Pentagon. Hard at work ever since, they aim to finish the
job along with the rest of the headquarters by September 11,
2002.
Belinda Guadarrama is president and CEO of GC Micro
Corporation in Novato, California. She started her company more
than 15 years ago with just two employees. When she tried to
get a small, $5,000 loan, the bank turned her down for lack of
collateral. A prime contractor told her, ``No company wants to
work with a little Mexican company in Novato''. But three years
later, she secured an SBA loan of $300,000 and expanded into a
business park. Today, she employs 28 workers, with sales of $34
million as one of the leading suppliers of computer hardware
and software to the defense and aerospace industries.
Congratulations, Belinda.
Ms. Guadarrama. Thank you.
Ms. Velazquez. While these small businesses do so much for
our nation, we should be doing more for them. And while this
Committee has continued to work tirelessly to help small
business, the needs still greatly outweigh the gains. On issues
like tax fairness and regulatory equity most of the change has
helped corporate America rather than small businesses. Many of
these issues remained unresolved.
It was heartening about a month ago to hear the President
outline his agenda for small businesses. I am glad to hear him
return to the issue that he raised during the campaign. It is
my hope that there is action to follow up on these promises.
Small businesses built this country. From the industrial
revolution to the information age, American enterprise has
shaped our economy and way of life. Since this is Small
Business Week, it is appropriate that during this hearing we
can learn what small businesses have done for our country and
our communities. Small enterprise is not uniquely American, but
Americans have harnessed small enterprise like no other nation.
Alexis deTocqueville remarked two centuries ago that ``boldness
of enterprise is the foremost cause of America's rapid
progress, itsstrength and its greatness.''
The history of this country and the mission of this
Committee has been the dogged pursuit of equal opportunity for
all with the dream of a better life through commerce. That is
why, Mr. Chairman, I am disappointed in the House leadership
when they decided to pull two of our bills from the floor this
week that would have strengthened small businesses. But today
is less about politics than it is about reminding ourselves why
we work for small businesses. In addition to the
entrepreneurial drive, small companies most often embody
another unique American characteristic: our patriotic
obligation to give something back to the country that rewards
talent and hard work with prosperity.
We honor this spirit today. Small businesses are constantly
giving back, just as Kimberly and John Francis envisioned
during our country's darkest hour and just as Belinda
Guadarrama in contributing to our nation's defense.
We thank you again for all that you have given us. Welcome.
Thank you, Mr. Chairman.
Chairman Manzullo. Thank you. We are going to have some
visiting members to the Small Business Committee introduce
their constituents. Representative Lynn Woolsey, would you be
kind enough to introduce us to your constituent and witness?
Ms. Woolsey. Thank you very much, Mr. Chairman, and thank
you, members of the Committee, for letting me come by here
today to introduce one of my favorite constituents, actually.
Your ranking member has mentioned Belinda Guadarrama, but I
want to say a little bit more about her because I know her
better.
Belinda, as you have learned, is the president and CEO of
GC Micro Corporation, which is based in Novato, California,
which is the very center of my district across the Golden Gate
Bridge from San Francisco. Belinda was the winner of this
year's California Small Businessperson of the Year. She is a
second-generation American and the daughter of a disabled
American veteran. Belinda earned a degree in economics from
Trinity University in San Antonio, Texas, and completed
graduate work at the University of Texas.
In 1986, investing her entire life savings, Belinda began
selling software to government contractors and created GC
Micro, a company with revenues of over $34 million last year.
Beginning GC Micro was not easy due to both racial and gender
discrimination. However, Belinda overcame the perception that
minority women did not belong in the technology field or could
be effective marketing to defense contractors. Now she is a
strong and respected voice for minority businesses in America
and has served as a small business policy adviser to the White
House over the past three presidential administrations.
I am proud to represent Belinda Guadarrama, and I know you
will enjoy her comments today. Welcome, Belinda.
Ms. Guadarrama. Thank you very much.
Chairman Manzullo. Thank you very much. Congresswoman
Woolsey, you can stick around as long as you want. If you would
like to join our Committee, let us know. We always have need of
your talent. Thank you so much.
Representative Reberg from Montana would like to introduce
a witness and a constituent.
Mr. Reberg. Thank you, Mr. Chairman. I do feel like I am
part of the Small Business Committee. Let me begin by thanking
you for traveling all the way to the State of Montana and
having a Small Business Committee hearing on the snowmobile
issue. It was very important to my constituency, and we
appreciate that.
Appropriately enough, I have a constituent sitting on the
far right of the panel. Her name is Brenda Burkhartsmeier, and
her husband, Dennis, is somewhere in the audience. I like his
name. It is easy to remember Dennis. They are a tremendous
reflection of a small business in the State of Montana. We are
a state of small business. We have not a lot of large business,
and within Montana there are two things that are important,
knowledge and capital, and the Burkhartsmeiers came up with a
concept called Mountain Mud. It is a kiosk that sells coffee.
As you can imagine, carts are not particularly popular in the
winter in Montana selling coffee, but a drive-up kiosk is. It
turned out to be a tremendous asset to the state. They now do
business in many states, as you will hear in their testimony.
They are the Small Business of the Year recipients within
the State of Montana, and we are pretty proud of them.
Unfortunately, they stole one of my good friends, moved him out
of state, who was also my insurance agent. They are a growing
entity in scooping up and creating jobs, and not only are they
working with the Small Business Administration on the capital
necessary to expand their business, but they are doing
something that is very important for all of us to remember:
They are sharing their knowledge with other small business
people that are interested in getting into something similar,
and you do not run into that when there is the proprietary
interest in business. But they are willing to share their
expertise, mentoring other small businesses, and my hat goes
off to them, and I thank you for allowing them an opportunity
to highlight their business before your Committee today. Thank
you, Mr. Chairman.
Chairman Manzullo. Thank you, Congressman Reberg. And we
have Congressman Tom Udall, a member of our Committee, who is
going to be introducing his witness, and not a constituent, but
New Mexico is big enough for Tom Udall, and Mr. Espat.
Mr. Udall. Thank you, Chairman Manzullo and Ranking Member
Velazquez for allowing me the opportunity to offer a brief
statement to welcome Roberto Espat to Washington, D.C. and to
this hearing today. Roberto is the president and CEO of Roses
Southwest Papers, Inc., located in Albuquerque, New Mexico. I
am sure that he will go into detail about his successful
business, so I will leave that to his testimony. Let me just
say that he has received many honors during his illustrious
career, including being named one of the Hispanic Business
magazine's top 500 owned businesses in the year 2000, New
Mexico Ethics in Business Award in 2001, just to name a few.
And most recently, Roberto was named New Mexico's Small
Businessperson of the Year and will be honored at a luncheon in
Albuquerque on May 13th. So congratulations, Roberto, on that
award.
Mr. Espat is truly an inspiration to entrepreneurs all over
the country but especially to individuals in New Mexico. Many
parts of New Mexico struggle to develop economically, with high
rates of unemployment, high rates of people lacking health
insurance, and high rates of poverty. In that context, what he
has achieved is all the more admirable. Not only do you employ
more than 200 people, but you also provide these employees with
a health plan, with long-term disability, tuition reimbursement
for work-related training, and a 401K plan.
I commend you, Roberto, for your success as a small
business owner and for providing quality employment
opportunities for an impoverished state such as ours. And
again, let me thank you, Mr. Chairman, and Ranking Member
Velazquez for this opportunity. Thank you.
Chairman Manzullo. Roberto, did you come in? Where is he?
Mr. Udall. I think he is arriving momentarily.
Chairman Manzullo. All right. We will squeeze everybody at
the table for one more.
Then Representative Ross from Arkansas, who is a member of
our Committee, was going to introduce Representative Boozman,
also from Arkansas, who is going to introduce your constituent,
but Mike is not here so please.
Mr. Boozman. Thank you, Mr. Chairman, and I thank the
members of your Committee forallowing me the distinct pleasure
of introducing Dr. Frank J. Siccardi and his wife, Linda.
Frank Siccardi, a resident of Fayetteville, Arkansas,
earned his doctor of veterinary medicine degree from the
University of Georgia in 1959 and served as a avian research
scientist until 1983. Perceiving a need for improved air
quality in poultry processing plants to enhance both
environmental quality and cost efficiency, Dr. Siccardi
developed the Coenco positive air system in 1983 and formed
Coenco, Inc., to manufacture and sell his new product.
Dr. Siccardi restructured his company in 1994 and expanded
his focus to include warehouses, manufacturing facilities, and
other large, open-space buildings. Since its 1994
diversification, Coenco's growth has been remarkable.
Employment has grown from four to 15, and annual sales have
risen from $300,000 to over one and a half million.
Dr. Siccardi has been a regular Small Business
Administration customer for many years. He began working with
the Arkansas SBA Development Center in 1995 and obtained SBA-
guaranteed loans in 1995 and 1997 to enhance cash flow and fund
Coenco's rapid growth. Dr. Siccardi's recent work is defining
precise ways and means of significantly reducing energy needs
in large buildings.
Mr. Chairman, Dr. Siccardi is a great example of the
American entrepreneurial spirit that is the backbone of our
nation. It is my pleasure to introduce you to a fellow
Arkansan, Frank Siccardi. Thank you.
Chairman Manzullo. Thank you, Congressman. Before we start,
I have got a resolution here that I drew up honoring the
employees of the U.S. Small Business Administration for
tireless efforts in aiding, counseling, and assisting small
businesses in preservation of the free-enterprise system and
helping the growth of personal initiative through the creation
and growth of small businesses and particularly the assistance
given on September 11th. With your indulgence, it will take me
about a couple of minutes to read it.
``Whereas, on September 11, 2001, terrorists hijacked and
destroyed four civilian aircraft, crashing two of the planes
into the towers of the World Trade Center in New York City and
a third plane into the Pentagon in Northern Virginia, and
resulting in the crash of a fourth plane in Somerset County,
Pennsylvania, and whereas these attacks destroyed both towers
of the World Trade Center as well as adjacent buildings and
seriously damaged the Pentagon, and whereas thousands of
innocent people were killed or injured, and businesses both
large and small were destroyed, closed, or suspended for
national security purposes by mandate of the federal
government, many business owners were both directly and
indirectly adversely affected by the terrorists' attack and
were finding it increasingly more difficult or impossible to
make loan payments, find access to new capital, and pay
employees and vendors, and whereas the employees of the U.S.
SBA have been working above and beyond the call of duty, in
some instances going without proper sleep and spending time
away from their families and loved ones, and have been called
upon to put in extra time to assist and serve the needs of
those directly and indirectly affected by the events of
September 11, 2001, and, therefore, be it resolved by the
chairman of the Committee on Small Business, United States
House of Representatives, that the chairman commends the
employees of the U.S. SBA for their tireless dedication in
helping those businesses and homeowners directly and indirectly
affected by the horrific terrorist attacks and helping to
restore economic well being to thousands of homemakers and
small businesses throughout this nation. Those who worked in
cooperation with the U.S. SBA to assist victims of the
terrorist attacks of September 11, 2001, particularly
Administrator Hector Baretto, who had to deal with the events
of September 11th only a short period of time after he was
confirmed by the Senate; John Whitmore, who held the agency
together during the transition between administrations; Herb
Mitchell, who went well beyond the call of duty in helping
small businesses virtually around the clock in the aftermath of
the terrorist attacks; and Gary Jackson, who resolved complex
size standards, particularly with respect to travel agencies,
to all of you are sincere thanks and gratitude.''
Administrator Baretto, do you want to come up, and John
Whitmore and Herb Mitchell and Gary Jackson? Folks, give these
people a big round of applause for the tremendous work that
they have done.
[Applause.]
Chairman Manzullo. John, do you want to come up? Please.
Mr. Baretto is going to be sitting up here at the table,
Hector. John, do you want to come on up? Let me give this to
you also.
[Applause.]
Chairman Manzullo. Okay. Well, this is unusual. We have the
administrator of the SBA sitting up here with us and for a very
special purpose because, as far as we are concerned, Hector has
always been one of us. He is a man of the people. He earned his
oats, as we say in the Midwest, when on September 11th
tirelessly he walked the streets of New York City with Ms.
Velazquez and helping people personally to come through that
tragedy. And Administrator Baretto, we are going to give you
the opportunity to make a statement, whatever you would like to
share with us, and then we can turn to the witnesses, and thank
you for being here.
Mr. Baretto. Thank you very much, Mr. Chairman, and Ranking
Member Velazquez. Thank you so much for inviting me to be here.
It truly is an honor, and today is really a day that we can
celebrate so much, so many of the achievements that are
represented today, and I am so anxious to hear the testimony
from these great men and women small business owners. I have
read some of their bios. I know how incredible they are, and
they really are representative of what we know is the best of
the best of our small business owners. We have so many of them
in town today.
I also want to acknowledge the other members that are here.
I have had an opportunity to work with them, Congresswoman
Tubbs-Jones and Congressman Chabot, and many of the others that
sit on this dais often. I have had an opportunity to go to
their districts. One of the first places I went to, as the
chairman said, was to Rockford, Illinois, and then soon after
that I went to Congresswoman Velazquez's district. And I have
learned so much by being there in their districts and working
with them and really being on the ground where the rubber meets
the road, as they often tell us. And so it is a privilege to be
here.
Just for the record, I want to unequivocally state that I
have no designs on any of the chairs that are up here on this
dais. I know the very important responsibility that the members
of this Committee have, and I feel honored to be the SBA
administrator. I do not consider it a job; I consider it a
higher purpose. I like to tell people that I was busy minding
my own business literally when the call came to serve, and it
is such an honor to serve this country and this administration
and to work with leaders like the ones that are represented on
this Committee, Chairman Manzullo and Ranking Member Velazquez.
You know, National Small Business Week gives the SBA the
opportunity to honor small business men and women who build the
products and make the sales and create the jobs that fuel our
economy, and I am so privileged to be here with all of these
winners that are representing all of the states of the union.
In fact, with the indulgence of the Committee, I would also
like to acknowledge the regional administrators who so ably
represent the SBA in all of the regions in the country. They
are so proud that so many of their constituents are being
acknowledged, and Iwould like to ask them also to stand, all
the regional administrators of the SBA that are here today. Thank you
so much.
[Applause.]
Mr. Baretto. Our winners represent a wide range of products
and services, including a mix as diverse as American society
and culture itself, from shipbuilding to outdoor furniture
manufacturing to day spa and boutique services to Web design,
advertising, wireless communication, restaurant owners,
sandwich makers, general contractors, and everything in
between. Twenty-three percent of our winning businesses are
minority-owned businesses. Three percent are African-American,
14 percent are Hispanic-Americans, six percent are Asian-
Americans, 21 percent are veterans, and women own 28 percent of
the winning businesses, 10 percent more than last year. And I
think that that is important because I think everybody in this
room knows that the fastest growing segments of small business
are women-owned and minority-owned small businesses who do such
a great job. And the general businesses that are represented
here today are really also leading the way in creating many of
the opportunities that we see.
Again, I want to thank the chairman and the ranking member
and this Committee for all of their counsel and all of their
support. It truly is a privilege to work with them, and I look
forward to working with them in partnership to do all of the
great things that we need to do for all of the small business
owners of America. Thank you very much, Mr. Chairman. I am
honored to be here with you today.
Chairman Manzullo. Thank you, Administrator. We are honored
to have you here. Thank you so much.
We have a clock here. Try to keep your testimony to three
minutes or so. I know it is a difficult thing to do. Do you
want to be in charge of the clock? These things happen, you
know. Some small businessman will be put to work fixing the
clock, so do not worry about that.
We are going to start here with Richard Carroll, the
founder and CEO of Digital System Resources. Mr. Carroll, if
you could keep your testimony to three to four minutes, we
would appreciate it very much, and you are going to have to
talk directly into that mike.
STATEMENT OF RICHARD CARROLL, DIGITAL SYSTEM RESOURCES, INC.,
FAIRFAX, VIRGINIA
Mr. Carroll. Well, thank you very much, Chairman Manzullo
and Ranking Minority Member Velazquez. Members of the
Subcommittee, I want to thank you for the opportunity to
testify before the Committee today.
My name is Richard Carroll. I am the founder and CEO of
Digital System Resources. DSR was founded in 1982 with two
employees. The company became incorporated as Digital System
Resources, Inc., in 1985, when we had eight employees. We won
our first contract, which was an SBIR contract, part of the
Small Business Innovative Research Program, at which time we
had 24 people working for the company. Today, we employ 480
scientists and engineers, and our annual sales are in excess of
$100 million a year.
D.S.R. has offices in Fairfax, Virginia; Crystal City,
Virginia; Virginia Beach, Orlando, San Diego, Anaheim, and
Kauai, Hawaii. Our success is directly attributable to the
Small Business Innovative Research Program. Since our first
SBIR contract award in 1988, we have been awarded over 80
separate Phase I, II, and III SBIR contracts.
The SBIR program opened the door for DSR to prove to
initially the Navy that a small business with just 40 people
could design, develop, test, and provide a data processing
system for a major military system. In competition with large
companies, such as Lockheed Martin and Raytheon, now the first
and fourth largest defense contractors in the world, our
company has been very successful in providing a small business
alternative.
Our product was called a multipurpose processor, which is a
computer that does data processing for the sonars on board our
nation's submarines. The MPP, as it is known, replaced legacy
sonar systems, or is to replace them, in our entire nuclear
submarine fleet. And we believe it could have only been done by
a small business, what we did. It has had nearly $300 million
of follow-on work to provide these systems for the submarine
fleet.
More important than providing a small business can do the
job, DSR proved that using a small business to provide a
competitive alternative in this case to what was longstanding,
incumbent, large businesses got innovation moving. The system
we provided is much more capable, faster, and cheaper than the
traditional process that was used. We adapted commercial, off-
the-shelf hardware with open system software that allowed the
software and the hardware to be developed independently,
something that we find in our commercial world often but not in
our military world.
Chairman Manzullo. How are you doing on time, Richard? You
have got three minutes.
Mr. Carroll. Okay. I will finish up here.
Chairman Manzullo. All right. Thank you.
Mr. Carroll. The SBIR program--I just wanted to mention a
couple of things about that. The SBIR program was recently
reauthorized, and I think that the Committee made a home run in
reauthorizing the SBIR program. The final step that is needed
is that the directive that the SBA has to issue on the SBIR
program is not issued, and I understand it is very, very close,
and we really feel like that needs to be issued. Thank you.
[Mr. Carroll's statement may be found in appendix.]
Chairman Manzullo. Thank you very much. Our next witness is
my constituent, Gene Berg. He hails from Byron, Illinois, and
Gene, at the ripe, old age of 39, decided that he needed to buy
a business, and after 19 trips to China, thank God, he got
involved in keeping that business in Byron, Illinois, which is
the nearest biggest town to my unincorporated town of Egan,
Illinois, population 39. So I look forward to your testimony,
Gene.
STATEMENT OF GENE BERG, AUSTIN/WESTRAN, BYRON, ILLINOIS
Mr. Berg. Thank you. As Don said, my name is Gene Berg, and
I thank you for the opportunity to sit before you and tell my
story, the story of what might not have happened without the
assistance of the Small Business Administration.
I am the president and owner of a small business named
Austin-Westran, located in Byron, Illinois. We are a
manufacturer of products that include trailer landing gear,
commercial vehicle components, and a line of corn-burning
stoves for residential heating. We employ 200 proud, UAW team
members in our 200,000 square-foot, modern manufacturing
facility.
My story begins early last year, when the company I was
working for as chief operating officer found itself in a
position that required it to divest of this division, called
Austin-Westran. Several suitors stepped forward, with the most
likely acquirer being a competitor headquartered in Germany. Of
note is that the selling of this plant to any of these suitors
would result in its closure, 200 jobs lost and/or dislocated,
some possibly moving outside the United States--a picture we
have all seen much too often.
Shortly after the decision to divest, I decided to attempt
to buy Austin-Westran. As Don said, I was 39. It was time to
get moving. After six months of financial wrangling, I came up
short of financing, and the deal feel through. About that time,
Mr. Manzullo's office called me and asked if there was anything
they could do to assist me. They called me. Coming from a
family of staunch conservatives, I was doubtful that the
government could assist me with much of anything, at least that
is what I had been taught, but I had no choice. The Byron plant
would be gone and my dream of owning a manufacturing company
ended, and the 200 jobs, most importantly, would not be there.
Mr. Manzullo's office put me in touch with a local
development corporation, assisted in numerous other ways, and
we began the process of qualifying for a $1.3 million SBA 504
loan. I would never have guessed that working with the
government could have been so fruitful and efficient, but in
very short order we were approved. With the SBA financing
secured, we closed the deal February 2nd of this year, 200 jobs
in our community saved, our community left intact.
We are proud of what we have been able to accomplish in our
short life as Austin-Westran. We have been awarded contracts to
manufacture corn-burning stoves for heating homes. In addition,
we have secured a $1 million contract to produce trailer
landing gear for Mexican trailer companies and have begun a
program to set up an operation to serve the China market.
No, this is not a case of outsourcing to low-wage countries
like we hear so much about. This is Austin-Westran, located in
Byron, Illinois, making products for Mexico and shipment to
China. These contracts have resulted in 17 new jobs, of which
53 percent of the team members are of minority descent.
Quickly, since Mr. SBA Administrator is here, since I owe
you money, you will be interested in knowing we are doing well
and able to pay our loan. Okay?
[Applause.]
Mr. Berg. You made me nervous when you showed up.
In conclusion, I would just add that this Committee does
important work. As it was so well stated by the Committee
members, small business is critical to the growth and vitality
of this country. The Small Business Administration helped save
Byron, Illinois, and gave me the opportunity to pursue my
dream. It is your committee that leads this country in support
of small business. For that, I would like to thank you.
[Mr. Berg's statement may be found in appendix.]
Chairman Manzullo. Thank you very much.
[Applause.]
Chairman Manzullo. Congressman Mike Ross is going to give a
second introduction to Mr. Siccardi. You did not realize that,
did you? Okay. Mike?
Mr. Ross. Thank you, Mr. Chairman. In the spirit of Small
Business Week and as a fellow Arkansan, I want to welcome Frank
Siccardi for being here and thank him for sharing his success
story with us. I want to thank my friend and colleague, John
Boozman for coming to give his introduction as well.
Let me just say that as a small business owner myself with
12 employees back home in Prescott, Arkansas, I know what it is
like to meet a payroll every Friday, and I understand the
difficulties and challenges that someone who is trying to
establish and grow a business faces. I have been there, and I
appreciate the effort that you and the other witnesses today
have put into making your business successful.
Frank Siccardi had a vision to create a cleaner, safer, and
more energy-efficient environment for poultry processing.
Arkansas is home to an awful a lot of chicken and poultry
processing plants. He has taken this vision and not only
created the air-quality system to do it, but he has worked,
even when not many people took him seriously, to turn it into a
successful business that now benefits the poultry industry as
well as many other types of large warehouses and manufacturing
facilities.
As members of Congress, we have to work to make sure that
our government provides resources and opportunities to help
small businesses have the chance to succeed. We need to be
there for them, not against them. Small businesses truly are
the engine of our nation's economy, and they create an awful a
lot of economic opportunities for people from all walks of
life. I want to commend you, as well as all of the guests here,
for your success, and I want to personally congratulate Frank
Siccardi for being Arkansas's Small Businessperson of the Year.
Thank you for being here. Thanks to all of you for being here.
We look forward to hearing your testimony today.
Chairman Manzullo. Thank you, Congressman Ross. Our next
witness is Roberto Espat. Roberto, do you want to pull that
mike up closer to you there? Can you see the colors? When it
gets to yellow, you have got one minute to go. Is it green now?
Mr. Espat. It is green now.
Chairman Manzullo. Okay.
STATEMENT OF ROBERTO E. ESPAT, ROSES SOUTHWEST PAPERS, INC.,
ALBUQUERQUE, NEW MEXICO
Mr. Espat. Thank you, Mr. Chairman. Thank you, SBA, for all
you do for small business. I happen to be one of those that did
not do any business through SBA. We were at one time a
certified 8(a), but unfortunately it was very difficult for us
to get any GSA contracts because it was difficult to penetrate
GSA--no fault of the SBA. And thank you for this honor. We are
proud to be here and proud to be part of SBA.
I am frequently asked, because I come from the little
country of Belize, am frequently asked, how did you get here? I
say I canoed up the Rio Grande.
Anyway, on a more serious note, we started the business.
After a couple of rejections from a couple of banks, we were
fortunate to find one bank that started to carry us, and we
started back in 1986 doing recycled paper to produce paper
products: toilet tissue, paper napkins, et cetera. We started
with one machine, one line, a toilet tissue line back in 1985.
The first year we had less than 12 employees, a 20,000 square-
foot building, one line, and less than half a million dollars'
sales.
Today, I am proud to say that we have 250,000 square feet.
By the end of this year we will have 17 production lines,
employ 200 people, and our sales this year should reach
somewhere around $55 million. None of this would be possible
today if it was not for our people, our staff, our employees.
We have tried to do everything we can for them. Since the
second year of business we have had a profit-sharing program,
and we give them all of the benefits that are available,
including a 401K, health plans, et cetera.
We would like to suggest that the government can help SBA
by helping deregulation. There is so much paper work, so many
things that are happening that really frustrate small business
and sometimes make it impossible for small business to exist.
Thank you for the time you have given me.
[Applause.]
[Mr. Espat's statement may be found in appendix.]
Chairman Manzullo. Okay. Our next witness is John
Bartoletta with High Street Financial Group out of Tampa,
Florida. John, I look forward to your testimony.
STATEMENT OF JOHN BARTOLETTA, HIGH STREET FINANCIAL GROUP,
TAMPA, FLORIDA
Mr. Bartoletta. Mr. Chairman, distinguished Committee
members, I am honored and delighted to have this opportunity to
directly address those who have jurisdiction over the Small
Business Administration and the ability to advise Congress on
the issues that concern small businesses. I hope my testimony
regarding the High Street Financial success story will serve as
inspiration and encouragement to help other small businesses
achieve success.
High Street Financial is an independent, registered,
investment-advisory firm headquartered in Tampa, Florida. High
Street is registered with the United States Securities and
Exchange Commission. We offer customized investment-management
services to institutions, professional associations, and high-
net-worth individuals and have earned a reputation as one of
the best quantitative money managers on Wall Street.
We feel that we are redefining traditional institutional
investment management by offering one of the most sophisticated
investment-management systems ever made available to investors.
This proprietary investment system is known as Dynamic Style
Rotation.
High Street's mission is to form a partnership with our
clients and provide them with the most complete investment-
management program available in the industry. At High Street we
understand investing and the responsibility that goes along
with prudent management. That is why all of our institutional
investment experience, breadth of capabilities, and resources
are focused on giving the client the best possible personalized
attention, professional stature, ultimate privacy, and timely
implementation of their specific investment needs, goals, and
objectives.
We believe it is significant that clients understand and
share in our firm's long-term vision. Consistent bottom line
investment success is only achieved through comprehensive
planning, a multidisciplined investment strategy, and a client
commitment to the overall process and patience. We continually
strive to uphold the highest standards of performance,
practice, and procedure in the industry.
The cornerstone of the program is our documented fiduciary
prudence, exceptional client service, responsive back office
support, and superior institutional investment management
utilizing Dynamic Style Rotation. Our mission can be
quantified, and we call it I-cubed-E: image, infrastructure,
implementation, and execution. In all aspects of the client
relationship we strive to meet and exceed the client's
expectations. High Street takes as much burden off the client
as possible. The necessary paper work is filled out for the
client, transfer of the assets is tracked and expedited by
continuous contact with the transferring firm while the client
is informed every step of the way. Communication is made to the
client when we receive the paper work, when the custodian of
the assets receives the paper work, and when the assets are
finally transferred. It is this commitment to execution that
has earned High Street the fastest-growing firm in the nation
above $200 million with the least amount of internal errors
among all asset-management firms that custody their assets with
Fidelity.
Chairman Manzullo. How are you doing on time, John?
Mr. Bartoletta. I have got 14 over.
Chairman Manzullo. All right.
Mr. Bartoletta. Everyone at High Street takes great pride
in providing our services that help to secure the financial
well being of numerous small businesses not much different than
our own. The bulk of our asset base is comprised of pension
plans, profit-sharing plans of small businesses, physicians,
dentists, and chiropractors nationwide.
America's small business community provides the
entrepreneurial engine for America's future economic growth.
The leaders of America's small businesses are people whose
motto is, ``the difficult we do immediately; the impossible
takes a little longer.''
Mr. Chairman, I would like to close by saying again how
honored I am to be invited to speak at this hearing. My entire
staff at High Street is also honored and humbled, and I would
like to congratulate you on the excellent job you are doing in
instilling and nurturing the entrepreneurial spirit for small
business. The entrepreneurial spirit embodied by small business
has played a critical role in the development of the United
States as the leading world economic power, and we commend your
efforts to deliver that message to the American public. Thank
you.
[Mr. Bartoletta's statement may be found in appendix.]
Chairman Manzullo. John, thank you very much. Another
example of a little guy that got involved in big finance and
made it successful. Thank you for your testimony.
Mr. Bartoletta. Thank you.
Chairman Manzullo. I wonder if we should show the video at
this time. We can do that. All right. John Francis is with the
Northern Virginia Roofing Association out of Falls Church, and
in lieu of his testimony you have got a video for us. Is that
right?
Mr. Francis. That is correct.
Chairman Manzullo. All right. How long is the video? Is it
four minutes?
Mr. Francis. Or so. Could I make just a brief opening
statement?
Chairman Manzullo. You bet.
Mr. Francis. Thank you. Chairman Manzullo----
Chairman Manzullo. Make it brief if you have got a video.
Okay?
STATEMENT OF JOHN FRANCIS, NORTHERN VIRGINIA ROOFING, INC.,
FALLS CHURCH, VIRGINIA
Mr. Francis. It will be very brief. My name is John
Francis, and this is my wife, Kimberly. We own and operate
Northern Virginia Roofing, a small business, and appreciate the
opportunity to testify on behalf of the National Roofing
Contractors Association, or the NRCA. Kimberly and I are here
today for reasons other than the great work done by the Small
Business Administration. We are here to discuss the NRCA's
small business volunteer effort to reroof the Pentagon and have
brought a short videotape for you to view. We would be happy to
answer any questions. Thank you.
Chairman Manzullo. Okay. If you want to turn that video so
that the folks here can see it. I think we have time for the
video. Why don't you turn it more towards the audience? We can
move over there to catch it ourselves, just a little bit there.
[The video was played.]
[Applause.]
Chairman Manzullo. This Committee will be in recess while
we go and vote, but just continue watching the video.
[Mr. Francis' statement may be found in appendix.]
[Whereupon, at 3:30 p.m., a brief recess was taken.]
Chairman Manzullo. Congressman Pomeroy, do you want to come
on up? Congressman Earl Pomeroy is from North Dakota, and we
advised him that one of his constituents was coming, and so we
asked him to come and introduce his constituent, Mr. Kuntz.
Earl?
Mr. Pomeroy. Thank you for your accommodation. I want to
briefly tell you about these folks because like all of the
representatives of small business, America's engine, testifying
today, there is really quite an extraordinary story behind
North Dakota's winners of the Small Business of the Year Award.
Five years ago, Grand Forks, North Dakota went under the
water of the Red River. Incalculable damage all across the town
and a family-owned print shop contemplating expansion found
themselves stopped dead in their tracks as the facility got
inundated, the town got decimated, and they were out of
business for a period of better than six months. They estimate
they took it on the chin to the tune of $800,000 to $1,000,000
in terms of lost opportunity--a hell of a hit for a family-
owned business. But with the small business assistance disaster
support, they were able to get the capital they needed to build
back, and build back they did.
Now, Mr. and Mrs. Kuntz, along with their son, Kevin, who
is part of the business, and their other son, who while at the
university is also part of the business, have built back to
more than double where they were before the flood. This shows,
I think, an extraordinary story of personal resilience,
business acumen, entrepreneurial spirit, but there is even
another chapter to the story I just found out about.
As they looked at the total shutdown of their business for
the foreseeable future, as they slogged through the muck of
what remained of their business, they knew that they had
employees that were suddenly without a pay check, suddenly
totally without support, and they made a decision, Mr. and Mrs.
Kuntz, that they were going to keep health insurance in place
for their work force even while they worked to get a business
up and running again. And so they did. They paid the premiums,
and they kept health insurance absolutely in force for their
work force until they could get the shop up and running. And
each of those employees, not surprising, is still with that
business today. It is an outfit that we are really proud of,
people that I am proud to know, and I just wanted you to know
that about them. Mr. Chairman, I appreciate you having them
testify today.
Chairman Manzullo. Thank you, Congressman, for taking the
time. You can stick around here as long as you like. Let us do
this. Let us skip to Mr. Kuntz, and then we will come back to
Mr. Shore while your congressman is here. I look forward to
your testimony.
Mr. Pomeroy. Thank you, Mr. Chairman.
Mr. Kuntz. Thank you, Chairman Manzullo, and thank you----
Chairman Manzullo. You want to slide the mike up closer.
STATEMENT OF DONALD KUNTZ, FINE PRINT OF GRAND FORKS, GRAND
FORKS, NORTH DAKOTA
Mr. Kuntz. Thank you, Chairman Manzullo, and thank you,
Representative Pomeroy. Your greeting was outstanding. Thank
you.
Fine Print of Grand Forks is a full-service commercial
print shop. We specialize in high-quality, four-color printing.
We produce printed products, such as posters, calendars, books,
promotional materials, brochures, along with other common
things such as business cards and envelopes. Today, we employ
23 full-time employees at our locations in both Grand Forks,
North Dakota, and Thief River Falls, Minnesota.
We had to overcome countless challenges over the years to
make Fine Print a success. Our first challenge began back in
October of 1984, when we took over a failing business form
shop. The previous owner had left bad credit, worn-out
machinery, and unqualified employees. With hard work and
determination, we made Fine Print a successful printing
company, specializing in high-end, four-color-process printing.
Our greatest challenge began on Friday, April 18, 1997,
when the dikes gave way to downtown Grand Forks, allowing the
ice-cold flood waters of the Red River to engulf the city. My
son and I had to wade through the flood waters to salvage the
company's financial records before they fell victim to the
flood. The business was a complete loss, while our home
sustained extensive damage and was unlivable until major
repairs could be completed. At that point, we joined the 50,000
other residents of Grand Forks as flood refugees.
During the flood, we visited our bank to make arrangements
for the company's payroll. They told us not to bother. They
said we are in over our heads, and we will never succeed.
Because of a business loan secured by a second mortgage on our
house, they told us the bank was going to take our home. We
were so shocked at what we had heard from our bank that we
decided to tell our story to our congressional delegation. That
afternoon their staffs made some phone calls, put us in touch
with the SBA, and by that evening our loan was verbally
confirmed. We received approximately $971,000 in disaster
assistance loans. This allowed us to pay our bills, make
payroll, and open our doors to a new building six months later.
Since that time, we have doubled our sales and added
several new full-time positions. We have a digital prepress
system on the cutting edge of technology, followed up by up-to-
date production equipment, including a brand-new, four-color
press.
Our employees are highly skilled and well motivated.
Countless overtime hours have been worked by my family and
staff to make Fine Print a success. At this point, we have
drawn up plans to add onto the building and purchase a larger,
faster press. The addition will result in further growth for
the company.
We were also very fortunate to have our loans managed by
the people in the North Dakota SBA office. Since our disaster
assistance loans were not managed by the centralized service
center in Fresno, they were not sold as part of the SBA asset
sales. Because our loans are still being managed by the SBA, we
are able to finance the upcoming additions to our building and
continue to grow. Other Grand Forks businesses are not so
fortunate as we were, as their loans have been sold to a third
party and their recovery hampered by this arrangement. These
third-party financial institutions will not subordinate to
other lenders like the SBA does, further restricting growth for
these companies.
The SBA has proven to be a beneficial partner in disaster
recovery. On behalf of all of the businesses in Grand Forks,
North Dakota, I would like to extend a thanks to the SBA for
all of their assistance after the devastating flood. Without
your help, a small business like ours would not exist today.
Thank you very much.
[Applause.]
[Mr. Kuntz's statement may be found in appendix.]
Chairman Manzullo. Our next witness will be Billy Shore. He
is chairman of Community Wealth Ventures. When I became
chairman of the Small Business Committee, we sort of expanded
the jurisdictional scope of the definition of a small business
to include municipalities, faith-based organizations, not-for-
profits, churches, and the reason we did that is that all of
these organizations have the same problems as small businesses
except they do not pay taxes. AndBilly Shore brings a very
interesting twist on what he is doing with the charities, and we look
forward to your testimony, Mr. Shore.
STATEMENT OF BILLY SHORE, COMMUNITY WEALTH VENTURES,
WASHINGTON, D.C.
Mr. Shore. Thank you, Mr. Chairman. Thank you for those
introductory remarks and for this opportunity to share
information about one of the fastest growing but least
recognized areas of small business, the increasingly successful
entrepreneurship of America's nonprofit sector. I am also
honored to have the audience of Mr. Barreto here today. Thank
you for being here.
It may surprise you to learn that I am speaking of the
nonprofit sector, the chairman's comments notwithstanding, but
this is the sector that is capitalizing on business
opportunities to create a new kind of wealth. We call it
community wealth, nonprofit organizations that are generating
profit to help them reduce or eliminate their dependence on
government and foundation funding. It is perhaps the best
untapped market for new revenues, jobs, economic growth--
everything that the SBA seeks to develop.
The responsibilities of nonprofit organizations have
increased dramatically as growth in government funding and
social services has slowed. Nonprofits have come to realize, as
government has in recent years, that redistributing wealth by
itself cannot solve our social and economic problems. Only
creating new wealth can do that. In growing numbers, nonprofit
organizations, such as rehabilitation centers, homeless
shelters, youth groups, and community development corporations,
are addressing the challenge by creating community wealth
enterprises. They are starting small businesses, such as auto
repair shops, catering businesses, printing and packaging
operations, and Web site development firms.
In addition to competing in the for-profit marketplace,
these mission-driven businesses often provide job training. One
of these, for example, is Seattle-based Pioneer Human Services,
which helps more than 5,000 ex-convicts, homeless, and drug-
addicted individuals find jobs and rebuild their lives. They
have a large business, which is a precision light-metal
fabricator, that has become the principal supplier to Boeing
Aircraft for their sheet-metal cargo bay liners.
Each year more than 700,000 501(c)(3) and 501(c)(4)
organizations deliver critical services to communities across
the United States, but they do not have the resources to get to
scale or to be sustainable.
In 1984, we started Share Our Strength, an antihunger
organization, and as a grant maker we did not want to
redistribute wealth; we wanted to create new wealth. So we
worked with corporate partners like American Express, Evian,
Calphalon, Tyson Foods and others not in philanthropic
relationships but in marketing partnerships that create new
wealth. And then we created Community Wealth Ventures four
years ago to help nonprofits improve their bottom line through
the design and implementation of business ventures.
Organizations that run a business also start to impart
business thinking in their organization, and this impacts a
nonprofit organization's accountability and program delivery.
We are proposing that Congress authorize the SBA to create
a pilot demonstration program to provide technical assistance
and consulting to nonprofit organizations that receive federal
funding and to help them establish for-profit ventures. This is
not for every organization, and for organizations that choose
to do it must compete fairly. But we believe that this
entrepreneurship is for more nonprofit organizations than are
currently doing it.
This Committee has a proud legacy, Mr. Chairman, as you
know, of helping organizations innovate and helping
organizations break through to new areas. We believe the
nonprofit sector is ripe for this now and able to create the
kind of community wealth that we have described. Thank you very
much for bringing and introducing this idea into the Congress.
[Mr. Shore's statement may be found in appendix.]
Chairman Manzullo. Thank you, Mr. Shore. You have got the
right man here, who is looking at all of you and listening to
these great ideas. Mr. Siccardi, you have had two introductions
by two members of Congress.
Mr. Siccardi. It is going to be hard to follow those
gentlemen.
Chairman Manzullo. There it is, one a Republican and one a
Democrat. You want to pull the mike close to you there. Okay. I
look forward to your testimony.
STATEMENT OF FRANK J. SICCARDI, COENCO, INC., FAYETTEVILLE,
ARKANSAS
Mr. Siccardi. Mr. Chairman, Ranking Member, and other
members of the Committee, I am happy to be here to discuss with
you today my work for the past 30 or 40 years.
My name is Frank Siccardi. I am the president of a company
called Coenco. That stands for Coordinated Environmental
Control. Forty years of university, government, private
independent research in many areas all can be generalized as
looking for the cause, not the effect. I am not interested in
the Band-Aid, and what that generally means is original
thought. So one is not going along with the crowd. That means
change, and most people do not like change or the people that
propose change. It ain't easy, in plain language.
I believe you will all agree that energy use and
conservation and the related pollution problems are of a major
concern to our society today in many, many ways. The work I am
reporting on today potentially has a really significant impact
on the total energy use of our country and the pollution
problem. Basically, big buildings are energy hogs. We have a
basketball arena at the university, and it only uses $30,000
worth of gas and electric a month, which turns out to be 350 to
$400,000 a year. That is a lot of energy for a building that is
only used about 10 times a year.
About eight years ago, my interest shifted to large
buildings from the poultry industry. Basically, I am a
veterinarian by training, but after a lot of good schooling and
exposure overseas with USAID and other programs, I have had the
opportunity to be able to look at things as basically a problem
solver. About eight years ago, my interest shifted to large
buildings: warehouses, factories, food plants, gymnasiums,
coliseums, and so forth.
Getting to the point, I have developed a totally new and
different approach to big buildings. In its simplest sense, it
is a unique air mover that shoots a bullet of air, and the net
result is a series of these units allows us to create in a big
building a uniform temperature and humidity, and now the big
thing is the building and its contents becomes a thermal bank.
For instance, there is a little company in Arkansas I work
with, and they have a number of good-sized warehouses, 1.2
million square feet, to be precise. We have a number of these
under my control, and what we have found recently, and I might
say that right now our knowledge and growth just continues to
expand. To make a long story short, a 1.2 million-square-foot
building, if it is under 80 and above 25 degrees, the energy
use for that building to maintain 70 degrees is exactly $13.52
a day at six-cent electricity.
I see my time is up, but that is a measure of what we are
talking about, and I have here a number of examples that I
could go into that are just unbelievable what the opportunity
is because we create a uniform temperature and humidity on a
pulsing basis, very preciselycontrolled, and now the building
and its contents does not want to go anywhere. Thank you.
[Applause.]
[Mr. Siccardi's statement may be found in appendix.]
Chairman Manzullo. I see Gene Berg over here definitely
wants to talk to you. His corn burner heats a 2,000 square-foot
house on a bushel of corn a day, so that is quite efficient.
Our next witness is Belinda Guadarrama from GC Micro
Corporation, and if you could pull the mike up closer to you, I
look forward to your testimony.
STATEMENT OF BELINDA GUADARRAMA, GC MICRO CORP., NOVATO,
CALIFORNIA
Ms. Guadarrama. Thank you. It is an honor to speak before
the House of Representatives Committee on Small Business today.
My name is Belinda Guadarrama, and my company is GC Micro. We
have been providing personal computer hardware and software to
the federal government and Fortune 1,000 customers across the
nation since 1986.
As a small business, GC Micro faced a number of challenges
that are common to most small businesses. The lack of capital
was a serious problem until I was able to obtain an SBA-
guaranteed loan. As a woman and a minority, it has been
difficult breaking into the established network. However, the
federal contracting goals that have been established for small
businesses have provided numerous opportunities for us.
G.C. Micro is a proud participant of the SBA 8(a) program,
and we will be graduating in August. I would like to thank the
Small Business Administration for the opportunity to
participate in Small Business Week. I am honored to be the
Businessperson of the Year for California and delighted to be
chosen as the second runner up for the national award. And, of
course, it was also very exciting to meet President Bush and
his dogs on Monday.
However, I am concerned that some of Congress' original
intentions under the Small Business Act are eroding over the
years. There are three areas of concern that I would like to
highlight. As an example, it is my understanding that the
Lockheed Joint Strike Fighter contract has been awarded with no
apparent small or minority business goals. Ten years ago, the
House investigated the Lockheed F-22 fighter contract when it
was discovered that the contract had been awarded with a one
one-hundredth of 1 percent minority business goal and a sixteen
one-hundredths small business goal. As a result of the
investigation, the Air Force and Lockheed allocated an
additional $500 million for small business.
I would pose the question, how can a DoD contract be
awarded without small and minority business goals being set in
the contract? Unfortunately, there is also no strong mechanism
to enforce small business goals. Federal law requires any
contractor failing to make a good-faith effort to achieve their
small business goals to pay liquidated damages back to the
government. However, no contractor has ever been penalized with
liquidated damages for failing to reach these easily achievable
small business goals.
And additional concern I have is the comprehensive test
program for reporting subcontracting goals. This program was
established to increase small business subcontracting by
eliminating the requirement to report small business
contracting performance on individual contracts. Eliminating
individual contract reporting is similar to trying to improve
the scholastic performance of students by eliminating report
cards. I believe this allows contractors to circumvent
accurately reporting their small business subcontracting
performance. I believe that an inquiry into this program would
show that in reality it has dramatically reduced business
opportunities for both small and small, disadvantaged
businesses.
In closing, I believe Small Business Week is a celebration
that demonstrates to major government contractors and federal
agencies that when you embrace the nation's small business
programs, you are expanding our country's economy and
stimulating the economic engine that generates a major portion
of the tax dollars that fund the government contracts.
Chairman, Administrator, members, I thank you very much for
the support and hard work that you do on behalf of small
businesses.
[Applause.]
[Ms. Guadarrama's statement may be found in appendix.]
Chairman Manzullo. Thank you.
[Applause.]
Chairman Manzullo. Our next witness comes from the State of
Montana, where we had a very interesting time out there in West
Yellowstone National Park, Brenda Burkhartsmeier. I look
forward to your testimony, Brenda.
STATEMENT OF BRENDA BURKHARTSMEIER, MOUNTAIN MUDD & MOUNTAIN
MANUFACTURING, BILLINGS, MONTANA
Ms. Burkhartsmeier. Thank you very much. Small Business
Week is a great celebration for all of us here, and small
businesses come in all shapes and sizes, and our size is
certainly one of the smaller ones. We started out in an eight-
by-eight, drive-through, coffee kiosk in Billings, Montana, of
all places.
After attending the luncheon we had previous to this
meeting, I am very proud and honored that we have someone such
as yourself, Chairman Manzullo, with such a great fighting
experience, and thank you very much for your dedication in
fighting for us and the rest of the Committee.
Like many small business owners, we had a vision back in
1994, my sister-in-law and I, of starting a little coffee
company. And probably the most frequent question I have been
asked since I have been to Washington is not about the business
but how did you come up with a name like Mountain Mudd. Well, I
have to tell you that it was between Two Dumb Blondes Espresso
or Mountain Mudd, so I am sure glad we chose the latter.
As we pursued our idea, we wanted to do something
different, and if you have been to West Yellowstone, you know
that we can have a lot of snow. If you listened to the news
this morning, we had over eight inches of snow just yesterday,
and, well, we probably get two nice days out of the year, so we
knew we could not do a sidewalk cafe like Starbucks. So we did
a drive-through coffee kiosk with an enclosed environment, and
it has really been the secret to our success.
My husband and I, Dennis, built that first coffee kiosk in
our friend's garage. It took us over four months to build it,
and we had no idea what we were doing. But now our little
company produces one building every other day, and we have a
20,000 square-foot manufacturing plant. We have sold our coffee
kiosks to 150 other individual people just like myself and my
husband, and we impact over 400 hard-working individuals.
The ideas, though, come with rules and regulations, and you
touched on that in your speech. Not only federal government red
tape and rules and regulations can hinder small businesses like
ourselves from growing and prospering. When we go into a city
or a community, we must deal with misconceptions and people not
knowing exactly what our business is. It is a small, portable,
little business on wheels. So we have to go through many local
agencies, zoning issues, signpermits, planned urban development
permits. I could go on and on and on.
So I would urge you to definitely look into the red tape in
small business because a small business can grow from a really
small little dream into a big company, and thank you.
[Applause.]
[Ms. Burkhartsmeier's statement may be found in appendix.]
Chairman Manzullo. Thank you. I am sorry. I am so tired.
Ms. Millender-McDonald. That is all right, Mr. Chairman.
Take a coffee break.
Chairman Manzullo. I need that very much. Please go ahead.
Ms. Millender-McDonald. Thank you, Mr. Chairman. Thank you
so much for bringing these outstanding small business folks to
us today. Given the National Small Business Week, we are so
grateful to all of you and the work that you have done, and
especially having the administrator sit on the dais with us, I
tell you, this is really good news and hot stuff. To have him
here, representing California and all others, and you, young
woman, is it----
Ms. Guadarrama. Guadarrama.
Ms. Millender-McDonald [continuing]. Guadarrama,
congratulations to you for California's best in small business.
But I say to you, Mr. Chairman, that this is just a
reflection of what can be done once you get a team of folks and
people like these outstanding folks with your team behind you
and your respective businesses working together and trying to
be as efficient as you can. This as a ranking member on this
Committee, and I applaud you and the young woman in the orange
dress out there, your spirit is what has been the driving
force. The energy that you brought in your presentation
certainly is indicative of why you are successful. And so I
have nothing else to say. What can you say to success but thank
you?
Thank you, Mr. Chairman. I turn it back to you with my
statement for the record.
[Ms. Millender-McDonald's statement may be found in
appendix.]
Chairman Manzullo. Thank you. Your statement will be
included in the record. Congressman Thune?
Mr. Thune. Thank you, Mr. Chairman. I cannot add anything
to that except to say thank you and congratulations to all of
you. You are what the entrepreneurial spirit is all about, and
I had the opportunity earlier--I just came from a meeting in my
office with our Small Business of the Year award winner in the
State of South Dakota. In South Dakota, I think every business
is by definition small with a couple of exceptions, but they
are really the job-creating engine, and we want to do
everything we can to make sure that you have at your disposal
the freedoms, the lack of regulatory and tax barriers in order
to succeed, and if there are things that we can do with the
programs that SBA administers, fine tune those to make those
more workable to add to your success, we certainly want to be
available to do that, and just appreciate the great job that
you are doing out there creating jobs in this economy. Thank
you very much for being here. It is wonderful to hear these
powerful testimonies and success stories. It is kind of
inspiring, actually. We might have to go try something else for
a living, huh, guys?
Ms. Millender-McDonald. Of course, you will.
Chairman Manzullo. I have got just a couple of questions. I
cannot ask a question of everybody, but I am fascinated by the
power conversion to which you referred Mr. Siccardi. Would you
explain this again?
Mr. Siccardi. Basically, in a big building you have got a
monstrous heater or air conditioner that makes cold air or hot
air, and it comes in just like a mushroom, and then it goes
out, and the air is not really distributed. In our building
what we have been able to do is distribute the air effectively.
For 30 seconds, 60 seconds our air movers are on, and then they
sit there, and this monstrous building is 70 degrees, and it
does not want to go anywhere. So consequently, the building and
all its contents becomes a stable, uniform mass.
I will give you another example. We work at a company in
Arkansas that does canning of vegetables. Here is a 100,000
square-foot warehouse full of canned goods, and we circulate
the air, and in the wintertime these canned goods, 70 degrees,
ceiling to floor. Right next door is another warehouse, 100,000
feet, full of canned goods, and heaters are in the ceiling like
in a regular building. A hundred and five on the ceiling. The
temperature is 47 on the floor. That heat as it is going
through the roof is taking all the heat of the building out.
And the difference is when we do it our way, the building and
all its stuff becomes the same temperature, and it does not go
anywhere, and it just needs pulsing, very efficient pulsing. It
is that simple.
Another point.
Chairman Manzullo. Go ahead.
Mr. Siccardi. Oftentimes, in a large building the
thermostat is over there against the wall. It has no
relationship with the air of the building. In my presentation
there is a very good demonstration of how when the system is
on, we can go from 55 to 70 degrees just like that using
100,000 BTUs, for instance. Without the circulation it takes,
like, three hours and 800,000 BTUs for that thermostat to get
satisfied. And the net result is in the regular building the
temperature is going up and down. We are plus or minus one
degree constantly. It is so simple it is ridiculous. The unique
thing is, as a friend of mine with a large, major control
company said, it is unbelievable, but what you did is about
what is up there, which we do not pay attention to in regular--
--
Chairman Manzullo. So you take and you jet--what is the
word?--jet streams of air----
Mr. Siccardi. Boulevair.
Chairman Manzullo [continuing]. Boulevair, and that breaks
up the mass.
Mr. Siccardi. And it goes to the wall and gets all the air
in the building moving.
Chairman Manzullo. So what normally would cost how much for
a regular gas bill for a building, how much would you save by
using that method?
Mr. Siccardi. Depending on the geography and the
circumstances, it can be as much as, depending on what is
really going on, it could be 50, 75 or more percent. Hopefully,
you will read my report.
Chairman Manzullo. I will. The complete statements of the
witnesses and members of Congress will be made part of the
record. Gene, would you tell us how you came across that corn
burner? I think you were looking at an ad in Forbes Junior, or
what was it?
Mr. Berg [continuing]. Fortune magazine had an
advertisement about a small company in Hutchinson, Minnesota.
Chairman Manzullo. It was an article, not an advertisement.
Mr. Berg. Article. I am sorry.
Chairman Manzullo. Go ahead.
Mr. Berg [continuing]. In Hutchinson, Minnesota, that had
developed a very efficient way to burn corn and other fuels,
but corn being the primary fuel, as an alternative to wood
burning, wood being not a very efficient fuel and also a dirty
fuel. In fact, there are cities in areas in this country that
are beginning to outlaw wood burning because of the pollution
factor.
So he developed this corn-burning technology. Literally, a
bushel of corn goes into the hopper, and as Don mentioned
earlier, that will heat a 2,000 square-foot home easily for a
day, and so abushel of corn is, I do not know, a couple of
bucks, Don knows----
Chairman Manzullo. It is a dollar eighty-one.
Mr. Berg. So it literally is that simple. There is a
thermostat so it pulses the corn in there a few kernels at a
time and keeps a very, very hot fire. I think corn burns at
1,100 degrees, wood at three or 400 degrees, and so it gives
you a feeling for being a much better fuel, and it is clean. It
does not smell. You have seen it, Don.
Chairman Manzullo. I have seen it. I asked you to bring the
machine here.
Mr. Berg. Security would not let me.
Chairman Manzullo. Security would not let you bring it in.
But this was a frustrated inventor. There was an article
written by him in Fortune magazine, and then you read about
him.
Mr. Berg. Yeah. I did not fully answer your question. I
read about him in Fortune magazine. He said he could have sold
50,000 of these in the winter of 2000 had he been able to build
them. But he had a relatively small shop, more of an inventor
than he was a manufacturer, and that is the kind of work that
we do and do well. So we went and met him, introduced
ourselves, and said that we would like to make those stoves for
you, and so he awarded us the contract late last year, and we
have been making those stoves since right around Christmas
time.
Chairman Manzullo. Now what is unique about this corn
burner is the fact that it is 100 percent corn.
Mr. Berg. Correct.
Chairman Manzullo. You do not have to integrate any other
fuels in it.
Mr. Berg. Correct.
Chairman Manzullo. And then what is it about this burner
that has very little residue, no odor, and very little smoke?
Mr. Berg. He will not tell me.
Chairman Manzullo. It is efficiency----
Mr. Berg. It is efficiency. It is the way he moves the air.
It is also the fact that in the burning pot, the burning
chamber, he stirs the corn as it burns, which does not allow a
buildup of the residue that you would get from burning corn if
it were just idle or sitting in the chamber. So it is a
combination of its design, the way he brings the air in, and
the fact that he stirs the corn with a computer algorithm that
allows him to not have the buildup and do such a great job of
heating.
Chairman Manzullo. Does this corn have to be totally dry
before it goes into the hopper?
Mr. Berg. You can go to, you know, 13, 14 percent moisture.
Standard corn. You do not have to have any special drying. One
of our employees, the team members, bought one at a substantial
discount that you can have, Don. He bought one of these, and he
literally brings his pickup truck to the farmer down the
street, dumps it into his pickup truck. He takes it home and
puts them into 55-gallon drums that we give him.
Chairman Manzullo. So this corn is dried in the field, or
does the farmer have to dry it in the elevator?
Mr. Berg. Yes.
Chairman Manzullo. It has to be in the elevator.
Mr. Berg. Correct.
Chairman Manzullo. Okay. I just want to let you know that
there is a company out there that is working on a genetically
modified, a GMO corn product that will dry in the field. I have
not told you about that yet.
Mr. Berg. No. I am interested in knowing about that.
Chairman Manzullo. I told them about that machine that you
are working with. And the goal there is if it is possible to
dry the corn in the field, then you can go directly from the
field to the hopper----
Mr. Berg. Right.
Chairman Manzullo [continuing]. Which would revolutionize
heating in this country by making it a totally renewable energy
without having to use gas in order to dry the kernel before it
goes in. Plus what I noticed when I was there in Byron is that
corn is not totally dry.
Mr. Berg. No.
Chairman Manzullo. It still had a lot of moisture content
in it. So very good. Congresswoman Velazquez.
Ms. Velazquez. Thank you, Mr. Chairman, and I want to thank
all of you again for being here. I am sorry I was not able to
stay, but I had two more meetings back in my office.
I think it is appropriate that during this week we
celebrate small business to talk about the role that the Small
Business Administration plays in helping small businesses.
Brenda, I saw that in your testimony you said that your initial
startup financing came from a cashing of a life insurance
policy and a 401K. At the time, were you aware of the SBA
financing products?
Ms. Burkhartsmeier. We certainly were aware that the
products were out there, but like a lot of entrepreneurial type
of people we were so excited about the idea and the end result
that we did not take the time to do a very good business plan,
or we did not take the time to do a well-executed strategy of
how we were going to do the business. When we went into our
local economic development company, we were a bit put off by
the approach. When we went in, we were told, well, you have got
to have a business plan. You have got to have this. You have
got to have that. We really thought naively that, gee, we were
nice and cute, and we thought we would go in and waltz in and
get the money.
Well, it does not happen in business. So really we did know
about it. The information is out there, and it really takes
other people, other business people trying to help other
business people to know where the information is. I think the
Web had certainly helped because now people, without getting
embarrassed going into that local economic development person
and being told what you need and kind of intimidated, they can
preliminarily look at that site and qualify themselves before
they go in. But still, we could not have gotten the loan
because there was no business like ours, and so we had to
establish the track record, and now our businesses that we sell
to, the 150 other people, do have a track record to follow. We
would not have gotten the loan--well, we maybe would have, but
there certainly was not anyone in our industry at that time.
Ms. Velazquez. So how do you think an SBA loan would have
benefited you when you started your business?
Ms. Burkhartsmeier. Well, we certainly would have not had
to have sold our car. We certainly would not have had to maybe
ruin your credit going along the way because you are robbing
Peter to pay Paul. All small business people do that when they
are starting out. We would have had the capital, and maybe we
would have had some more mentoring and some tutoring along the
way to teach us. But as small business people, we do need to
make mistakes, and we certainly made lots of them, and now we
teach other people how not to make those same mistakes.
Ms. Velazquez. Can any of the other members of the panel
who have used any of the SBA products talk to us about how you
benefited or how your business would have done much better if
you had the opportunity to use any of those products like
loans? Yes?
Ms. Guadarrama. When I originally started GC Micro, the
startup capital that I had to work with was from the sale of my
house back in Texas. That was $20,000, and I went throughthat
very quickly. I would not have been able to grow the company if a
number of years later I had not been able to receive a bank loan that
was SBA guaranteed, and that was a $300,000 loan, and that made all the
difference in the world to us. Once we had that first loan in place and
were able to pay it off, then at that point the other banks became
interested in working with us, and it just made a tremendous
difference.
The other part of the SBA that we have worked with is with
the 8(a) program, and while we probably only do maybe 15 to 20
percent of our business under the 8(a) program, the first large
contract that we received was through the 8(a) program. In
trying to put that contract together, we also went to the
Minority Business Development Agency to actually help us put
together the contract language because we had not worked with
it before. So working both with the MBDA and through the 8(a)
program, we were able to put our first really large contract in
place, then had the experience to start looking at other
contracts. So it made a big difference in my company.
Ms. Velazquez. Thank you, Belinda. Any other person who
would like to comment? Thank you, Mr. Chairman.
Chairman Manzullo. Could you yield for a second?
Ms. Velazquez. Sure.
Chairman Manzullo. Didn't one of the witnesses have an SBIR
loan? The SBIR program; did anybody participate in that? You
did, didn't you, Frank?
Mr. Siccardi. No. I need to in the worst way from this
point on.
Chairman Manzullo. First, I want to thank you all for
coming today. Administrator Baretto, thank you for
participating. I wanted you up here to sort of get a different
perspective. I wanted you to look at the people that have come
here especially to thank you for the great work that the Small
Business Administration has done. You know, Mr. Baretto was
sworn in--was it August?
Mr. Baretto. It was July 25th.
Chairman Manzullo. And then within what, five weeks, five
six weeks, September 11th came along and really turned this
town upside down. But to all of you people here, you represent
such a great cross-section of America. You are from everywhere.
We have got Montana and Illinois and California. But what is
important is the fact that these programs exist in the SBA only
to the extent that people know about them, and that is the
biggest problem that we have.
We still struggle with 9/11 in New York with the small
businesses up there because the SBA only has unfortunately very
limited authority with the distribution of the help, and we are
going to be having a hearing in New York City on why the big
companies are getting all the money, and the small businesses
are being hurt in a dramatic way. We would like to give the SBA
more authority over how to use that money because they are the
experts at it. They know what a disaster is, nothing like 9/11.
So, again, I want to thank you all for coming out here.
Mr. Baretto, did you want to have a closing comment?
Mr. Baretto. I just want to thank you, Mr. Chairman, and
Ranking Member Velazquez. I have appreciated the working
relationship we have had. I very much look forward to continue
working with you. You told me early on that this committee is a
bipartisan committee, and there are only business solutions,
not partisan solutions, and you have proven that, and it has
been a pleasure to work with you.
I also want to recognize a couple of the other individuals
that do great work for us. A lot of the questions were on
regulations. The chief counsel of advocacy of the SBA is here,
Tom Sullivan, and also Michael Barrera, the national ombudsman.
Any of you who are having any issues with regulations, I invite
you to get to know them. And thank you so much again for all
your leadership and everything that you do to make American
small business strong. We appreciate it very, very much. Can we
give the congressmen and the ranking member a round of
applause?
[Applause.]
Chairman Manzullo. This hearing is adjourned.
[Whereupon, at 4:30 p.m., the committee was adjourned.]
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