There is a potential of a third vote now, we will not know whether that is happening, but maybe we can work it so we can tagteam the chairmanship. Senator blumenthal i think is back with us. I will make certain he and i can trade positions so we can both vote. If that happens. The committee is reconvened. Mr. Gilman, if you are available , you have about a minute and a half left. We heard your testimony to that last point and we would love to hear your concluding remarks. Can you hear me . Mr. Gilman . Can you hear me . Yes sir. Myi am going to pick up testimony from where i left off . Yes, sir. Ok. I was determined to make isolation gowns because we had the equipment to cut and sew them. I quickly got a sample from a local hospital, design my own pattern, research the materials the gowns were made up, and built a prototype. I sent it to yell new haven hospital, they evaluated it and awarded me an order. There was a surge demand. Hospitals needed more gowns than they could buy from their normal supply chain and they turned to me to bridge the gap. Twofold. Em was the hospitals wanted the gowns fast and they wanted them cheap. To keep the aggressive supply schedule, i had to invest in new machinery and hire more employees. We went from making 200 gowns a week to making more than 12,000 gowns per week. Pricing was an even more difficult hurdle. Hospitals were reluctant to pay more than the price they paid for the product exported from china. I could not match that price unless i moved my factory to china. My gowns are 100 american made. I am at a competitive disadvantage. My labor costs are higher, my material costs are higher. I am able to mitigate some of the cost with technology. At the end of the day, my americanmade gown is two to three times more expensive than those made in china. However, my americanmade gown is of a Higher Quality and meets a higher level of protection. Market and isolation gowns considered a commodity item, buyers in the medical community are just looking for the cheapest price. Plea toe with an urgent the federal government to do more to help with private sector to sustain the ppe business of the United States. Market forates the ppe. The Chinese Government has made manufacturing ppe a priority. Not only from a National Security standpoint, but also with a view to creating a globallyover critical marketplace. The Chinese Government has implemented this strategy by taking following measures. Get factory owners from the Chinese Government. Second, they get subsidies. Third, chinese hospitals are giving chinaocal, suppliers a vast and captive market. Can playal government a vital role in sustaining the United States companies that if itivoted to making ppe will do the following. Americanplement a buy preference across all federal agencies that purpose purchase ppe. Second, create a subsidy for companies that manufacture ppe. Creditestablish a tax for every job created to manufacture ppe. I am not looking for a handout. To use a football term, we want a level Playing Field so we can compete with china. What is at stake is the future of manufacturing ppe in connecticut and across the United States. If we let china dominate the market, if we let them control the supply chain for ppe, doesnt that compromise our ability to cope with this pandemic . Do we want to be at the mercy of china when and if there is a pandemic in the future . What is at stake here is jobs. The 50 jobs we support at gilman gear are precious. If they go to china they are not coming back. What is at stake is our ingenuity and ability to pivot on a dime from a mature business making football equipment to making ppe to serve the medical community. We evolved and we reinvented ourselves during a national emergency. Jobs during the worst economic downturn in our history. Thank you. Testimonyou for your and the response it describes that you provided to covid19. Kraska is our next witness. You are recognized for five minutes. Ok. Located in kansas. I would like to thank senator moran and senator blumenthal for the opportunity to hear my testimony. We started in 1992 in the basement of arkansas home. Our kansas home. We started a business which remains focused on principles. Leadership,servant two, serving our leadership with in aquality products business that impacts people and strive to create economic development. Myself are and involved in the production of for making weapons. At the end of the cold war, the demand declined and we found ourselves looking for a job. Purpose. A sense of we all had a deep love for manufacturing. Employment to people. We experience what happens when a Large Employer has to downsize. In 1992 we launched a business. We became one of the largest toner cartridge manufacturers in the usa. Become fourth of 500 companies and we began to expand. Had become the largest inkjet manufacturer in the world, employing 800 people. The demand was being fueled by skyrocketing growth of inkjet savings, consumer versus namebrand, and the emptyation millions of namebrand cartridges were ending up in landfills. For remanufactured products continued to increase, the components were starting to be developed in china. The dominantecome source of remanufactured components and then five to 10 short years later, the largest of compatible aftermarket cartridges in the world. They were knockoffs of original cartridges exported to the usa with no respect for intellectual property and patent law. China began to flood the market to make it impossible for the u. S. Remanufacturing to compete. Used the china infringing product sound such a scale they would be impossible to compete with. Chinese manufacturers develop their own intellectual property. By that time they had so much scale it was unbelievable. A chinese product was available in china for five dollars. The same product we manufactured would cost 20. U. S. 15, 90 of the 5000 remanufacturing companies were gone. The number of companies that are viable is estimated to be no more than 100 in the u. S. That are still left. Although we continue to manufacture we were forced to choose between buying and selling a line of chinese products or going out of business. Years, twost five thirds of the products continued to be remanufactured in our factory, but we do supplement them with chinese products. We just cannot compete. Chinabased Companies Control 80 of all aftermarket cartridges, the technology barrier. Is those Chip Companies in china do things that are against the law in the United States. Chinabased companies are the largest producers of aftermarket cartridges and chips in the world. Our. Manufacturing local manufacturing has never wavered. We were frustrated with chinas chokehold on the industry but continue to produce while also buying products in china. Late january,eturning from a sourcing trip we witnessed firsthand the beginning of the covid pandemic which inspired us to begin manufacturing ppe supplies. Ofhad hundreds of millions plastic objects. Of the ppefound most products came from china. The first product we launched in our factory was hand sanitizer. We used much of our equipment here to bottle this in kansas. Buyound we would need to materials from china once again. The u. S. Has no small bottle manufacturing companies. Continue to create opportunities for manufacturing with theare engaged production and bottling of a safe surface disinfectant known as hlcl. 80 times more powerful than bleach against viruses and all the pandemic bugs out there including covid19. We are partnered with another kansas company, using our operations background in making preparations to produce and hlcl in our factory. Our goal is to grow the company and make more production jobs. We are still facing pressure from china with production still located in china. They are smart and ambitious people. One cannot blame them for taking advantage of the political realities. It has been my experience and observation from spending time in china the Top Manufacturing companies are supported by the government. Supports to bring manufacturing to the u. S. It will require policy from u. S. From washington. We welcome further discussions about how to bring manufacturing back to the u. S. Our team consists of experienced manufacturing and labor. We would love to be of service however we can. Thank you for your time. Thank you for your passion for what you do and for kansas. Stovall is the chief executive offer of officer of Kansas Manufacturing Solutions. You are recognized for five minutes. Good afternoon, chairman moran and members of the subcommittee. Thank you for this opportunity to appear before you to discuss the manufacturing for the covid19 pandemic. We are the epicenter for kansas. The manufacturing extension partnership. We are the nations only Program Providing handson direct support to small and mediumsized manufacturing to help them compete more effectively in the Global Market space. We have a center in every state plus puerto rico. We have 1500 manufacturing experts on staff and nearly 2103rd Party Service providers 2100 thirds Service Providers and partners. It is because of this history that Kansas Manufacturing Solutions is uniquely positioned to help support u. S. In the exceptional challenge that was presented during the covid19 pandemic. Manufacturers have had to respond to covid19 challenges within their own facilities, but they are also helping our nation withgh the pandemic personal protective equipment, theilators, essential to Public Health efforts. Manufacturers are shifting their capabilities to meet u. S. Need. Stories we have heard are similar to what is happening across kansas and the United States. Manufacturers across the country had to close their doors. Customers could not buy from them. Threats. D mortal kms and the National Network have been here for them. Manufacturing continues toward economic recovery. The temporary costsharing has provided muchneeded services to manufacturers during unprecedented times. Months, caresal act funding and costsharing help them retool, modify processes and procedures, and adapt to new health and safety protocols. Many remain working remotely to. Rotect staff they are trying to protect their own stuff as well. Congress, for the temporary costsharing. Issues have been heightened because of the pandemic. Organizations are squandering to materials and ppe. Worked aroundtheclock in the early days, matching companies to suppliers. Databasesupply chain particularly around ppe as we went. Statebystate, through our National Supplier system. Disinfectant, henson ties hers, hand sanitizers, other products. These had previously been sourced overseas. Delivered to client along with medical centers. We were able to quickly match not with a manufacturer only in the United States but in house. Able to keep this supply chain going. We have heard from rick about the issues hes battling. That is another thing across the that have expanded their capabilities as manufacturers. Workplace safety is a huge concern for manufacturers. It is heightened during the covid pandemic. Workforceof the u. S. Could shift to remote work. Manufacturers could not. To help manufacturers understand safety protocols in facilities and beyond, and helping manufacturers respond to covid19, helping them build resiliency. Manufacturers are driving economic recovery while also facing uncertainty themselves. The goal of the entire National Network is to help get manufacturers back on their feet, to deliver tools to them asaddress the uncertainty the country continues to get back on its feet by providing critical equipment. Supply to the manufacturers of the United States. There is so much economic uncertainty. E really have worked hard one of the services developed by manufacturerselp look forward throughout the pandemic. Consultancy,tra manufacturing assessment, in a strategic way to ensure the facilities as well as the future for their employees. I hope what i have shared today has given some insight on how kms has responded to unprecedented conditions for the United States and how the has respondedrk across the United States. Together we are partnering with certainlyers and i appreciate the opportunity to appear before the subcommittee today. Thank you. We appreciate your testimony, your willingness to appear. Our final witnesses mr. Michael was so. Wessell. Ell Ranking Member blumenthal, members of the subcommittee, thank you for the opportunity to appear. And ie is Michael Wessel am appearing as a commissioner on the u. S. China Economic Security review commission. I am only speaking for myself. The stress on supply chains and , theanufacturing base availability of Public Resources , and policy responses. We need to address todays needs and prepare for a future pandemic. By manufacturers wanting to contribute to the crisis. Match withasier to state and Hospital Systems to the their needs including hospital in senator blumenthals home. Our nation owes a debt of gratitude to our manufacturers and workforce who have come to the aid of our country to meet the critical needs of our health care workers, first responders, we all entire population know well supplies are so available, there are still shortages. America must do better to help them protect our citizens. The Chinese Communist partys industrial policies and our shortsightedness have led to a dangerous reliance on china for pharmaceuticals, active ingredients, medical devices and. Quipment including ppe the impact of the coronavirus was unexpected. Our increasing dependency on china is not news. Theiris willing to use manufacturing power. The ccp leadership was willing mask diplomacy by using shipments of ppe to foster diplomatic gains. The ccp has been willing to rep a nice weaponize supply chains. You cannot allow health and safety to be held hostage to economic, or military confrontation. We no longer have the capacity in the u. S. To make penicillin and are completely dependent on foreign sources. Apis we use come from abroad, a substantial proportion coming from china. Remdesivirent in comes from china. Products we are partially or entirely dependent on china. That,ficial testified quote, the National Security ks of increased dominance chinese dominance on the global api market cannot be overstated. ,ince china joined the wto operations have expanded dramatically. Chinas policies were designed to promote that. What is troubling is the expansion of r d. National firms increased r d spending in china at nearly twice the rate of domestic spending. China d expenditures in on the chemicals including Pharmaceuticals Surge between 2000 and 2017. Chinese state directed and controlled entities have engaged in the u. S. With many focused on the health or health care sector. Actors in china have used illegal means to obtain the health data of u. S. Citizens that may allow their firms to dominate the increasingly important biosynthetic sector. The focus today is on medical supplies, but our dependence on china for many products, some of them critical, is broad and deep. Areas, this reduces our potential resilience. We should examine supply chain risks and determine the potential impact on our national and state Economic Security. Again, thank you for the opportunity to testify today. Making sure we never face these challenges again. Wessel, thank you. You speak for yourself and not the commission, but i understand that in a short period of time there will be a first of all i agree with your assessment that china is predatory and protectionist in economic policy, undermining u. S. Economic health and National Security interests. I appreciate you saying that and i agree with you. Your commission is expected to release this years report in the next few weeks. Can you describe any formal recommendations you would expect to be included in terms of assessing and improving production either in the united producing medical supplies or even pharmaceuticals . What do you expect them to be . Thank you for your question. Fact we haveout in already a public report on this matter. Missourir senator of and i cochaired a hearing on this in 2019. Six democrats and six republicans released this report. We are unanimous behind a number of recommendations regarding this sector. Review those if i could. Ability to dive deep as you are doing today. We have all been forced to as we look to address this pandemic, we can harness procurement policy through medicare, medicaid, veterans affairs, to buy american products, to use our existing authorities and leverage those to bring supply chains back to the u. S. Second, we have to do a better protectingng the fda americans in terms of their safety for these products. Products that caused a number of deaths in the u. S. Coming from china. Found a bloodwe pressure medicine was actually tainted with rocket fuel because both the apis and the rocket fuel were being produced at the same facility. That product made its way to u. S. Consumers. To a should be allowed a company in china sending products to the u. S. We need to make sure that happens, those products are unable to come here. , we need to disclose where essential drugs and products are coming from. We can do that through federal procurement standards so that nowizens and officials k where the products are coming from and how we can best prepare and protect. Much foryou very explaining that to me. , your companies have worked to create ppe Manufacturing Capabilities in the u. S. In response to covid19 with a goal of creating a homegrown american product. Not only does china dominate global ppe production, they dominate ppe component 10 manufacturing equipment sectors. You have described some of those circumstances or at least those facts in your testimony. I wondered if you could go into more detail describing the challenges in finding ppe components and manufacturing equipment. Bottles that the cannot be sourced in the United States. I want to hear more about the challenges you faced. We had numerous kansas counties, hospitals, nursing homes, and others, call our office and ask for help locating ppe, often when it was discovered that what they had purchased it was sitting in a port in california waiting to be approved by the fda which was in many instances denied based upon quality. I also would give you the chance to tell me or tell our committee about quality of your competitors and their products from china. One of the stories i had in my testimony, but my testimony was too long already, i cut it looking forted bottles in the u. S. And we couldnt find manufacturers of it. They were all sold out for three or four months. Having a lot of experience in china, we started looking, narrowing down the field. To give you an idea the situation we ran into, we found a bottle manufacturer that could produce for us. The samples were fine. We started buying the bottles. We were purchasing the label from a kansas label manufacturer for . 15. The chinese bottle manufacturer offered to plan printed the label and apply the label for one penny. We have to change the game in source and buye these products. I think it is going to take government involvement. As mr. Gilman talked about, it is all down to one penny. Help fromsome type of our politicians that help us with those, they could change that. That was an example i wanted to share earlier. Buying with ae label we have sourced in the u. S. , here is a Chinese Company that offered to print the label, apply the label for one penny compared to . 15. Those are the pressures you run into. What you would tell me is they would be more expensive . Yes. Mr. Gilman what i was saying earlier, noty, was the bottles were in the United States at all. It was an extension of that process of buying the bottles and the process of buying the labor and the extra process to apply the label, the chinese supplier of the bottle was willing to do it for one pending one penny. Thank you. You may need to turn on your mic. Sorry. I will answer. First, the most critical aspect anecdotally, what i some offrom our the best testing facilities, the testing lines are really clogged up right now. , anothere a product testing cycle is six months and that slows us down. Why is thereeason is so much product being tested which is not manufactured in america. Hear not a very good quality. The net loser is the american consumer. The american product is not going to get them faster. Whatever product they get is going to continue to be of inferior value. This is not good. The second aspect i want to touch on is the abuse of dominant position. When we started, about 67 months back six to seven months back, the machines we were trying to procure were available at five to 10 times the precovid price. A typical machine that would was 70,000 precovid china to 150,000. 00 we still went ahead. The other thing, the raw material. Precovid was being if i remember right, i might have seen 135,000 on it. That is 67,000 times more. Really claim to i watchedger on it, these prices go up day after day, week after week. We did not want to be priced out. Every day these prices went up, no matter whether we spoke to one vendor or half a dozen. Are these guys marching to a beet . I do not know. They were synchronized. Will Market Forces alone achieve kind of synchronization . I do not know. That is an open question i have not been able to figure out. These are the kind of things we have to brave. We continue to believe the while theynsumer, know what a bargain is, still prefers value. Let me turn to senator blumenthal for his questions, and im on my way to the senate floor to vote. Ok, i willmenthal be shortly, as well. Senator sullivan is here if we need him to chair the hearing while we are both gone. Ok, i will bel brief with my questions. I want to make a quick point gilman and gilman gear to impress some of my colleagues including my friend from nation inthe cam,oping the pylon developed with espn, which is now an independent indispensable part of every game in 2015, theyand brought to market the world tackle ring which revolutionized balls are caught, preventing concussions from being as prevalent as they have been, so he is a talented of sportsn that area equipment, but then had to pivot using what we know in connecticut as good old yankee ingenuity. Certainly innovative and inventive spirit and began making isolation and surgical caps, isolation hoods, and other ppe now serving to protect Countless Health care workers across connecticut and the country. I want to thank him for being othernd to ask him and members of the panel whether they think the defense production act would be useful in developing the supply chain and providing the kind of have madeat you reference to, because it would, to develop and make more robust that supply chain and perhaps even reduce the cost of the Raw Materials and equipment that you need to produce the equipment you do. Yes, senator. I dont see mr. Miracle mr. Gilman responding so thank you for your question. A critical part of what the solution needs to be. I think we saw in this pandemic it was not utilized quickly andgh, effectively enough, there has been a lack of transparency and accountability. Businesses the small all the way up to the big businesses, but Small Businesses are in need of Quick Capital that can be effectively deployed to meet many of the gaps that exist in the supply chains to retool and do what they need to do. Thats a critical tool needs to be enhanced for the future. Sen. Blumenthal thanks for that comment, mr. Wessel. Mr. Gilman is on . Probably not. I apologize. Technical difficulties prevented him from connecting. I dont know if you have any comment on the dpa . I personally like the idea. I think when you are starting a new industry and you are competing with the chinese, very established businesses with a lot of leverage, a lot of volume, having purchased items in china a long time, it is hard to figure out the pricing even. How can it be so cheap, right . When i first started going there, the cost of labor was around . 80 an hour. Sevene areas, it is dollars an hour but the pricing is so low, you cant make sense of it. If we were to have some environment, some part of the economy that was satisfied to allow us to achieve momentum and get leverage, right . Parts of the supply chain, it would go a long way to restarting Many Industries to get them going. Thats my impression. Sen. Blumenthal those comments are very pertinent and timely, weve beenou know use thethe president to specific effort senator baldwin, who you will be heard from shortly, that would compel the president to which for reasons difficult to comprehend, he hasnt done but the point you veryand others are very, powerful. They link to unfair competition from china. Some of us have been complaining about it for years. It affects every state in the country. We hear the same kind of complaints and using the defense production act is an essential part of the picture and also developing the skill labor that is needed to provide the Human Resources you need. Component thatnd is in the supply chain, it is very much the women and men who do these jobs and often learn those new skills. When you convert, when you reengineer your assembly line, that is an important part of the picture. All for being a part of this panel. I have to go vote. You, senators multitask. Overoing to turn the gavel two, i guess, im being told we are going to have to take a short recess. That is the last direction from our chairman, senator moran who is now on the floor voting, but he has communicated to meet through text that i am instructed to declare a recess, so we will be in recess for i hope just a few minutes. Thank you all. Thanks for being a part of this hearing. Senator rosen
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