Jacky Rosen Leads Senate Commerce Committee Hearing On Enabling Rural Businesses To Grow

3 months ago

Sen. Jacky Rosen (D-NV) leads a Senate Commerce Committee hearing on rural business.

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Transcript

00:00:00to today's hearing of the Subcommittee on Tourism, Trade, and Export Promotion.

00:00:05Today, we will turn our attention specifically to the important topic of exports.

00:00:11This morning's hearing, Enabling Rural Businesses to Grow at Home While Competing Abroad,

00:00:16will examine the current landscape for rural export businesses,

00:00:19including the challenges they face when accessing international markets

00:00:24and the federal resources available to rural business owners

00:00:27as they expand or start their export activities.

00:00:32You know, exports, they're vital to our nation's economic prosperity.

00:00:36In 2021, exports of goods and services made up over 10%

00:00:41of the U.S. GDP and supported about 9 million American jobs.

00:00:46International trade has similarly become an increasingly important part,

00:00:50well, of Nevada's economy, my home state,

00:00:53with the state exporting $10 billion worth of goods in 2022,

00:00:58along with supporting over 400,000 jobs.

00:01:02That's a lot of jobs in a state of 3 million people, I'll tell you that.

00:01:05And so, in Nevada, we export everything from the gold we mine, to the alfalfa we grow,

00:01:10to the lithium batteries for which Nevada is fast becoming a world leader.

00:01:15While exporting is a key driver of our national and state economies,

00:01:19it can also serve as a catalyst for growth for many businesses.

00:01:23Access to international markets enables businesses to grow faster,

00:01:27create more jobs, pay higher wages.

00:01:31Pay more higher wages, more than non-exporting companies.

00:01:34It's really important.

00:01:35And additionally, exporting can provide a buffer

00:01:38for businesses during the fluctuations in the U.S. economy,

00:01:42providing access to diverse revenue streams,

00:01:45reducing dependence on the domestic market,

00:01:48and enabling them to stay in business.

00:01:52Small businesses, in particular, play a critical role in our export ecosystem,

00:01:57as they represent over 97% of all exporters nationwide,

00:02:03produce nearly a third of our export value,

00:02:06and employ almost half of the country's private sector workforce.

00:02:11And they also make up over 99% of all businesses in Nevada.

00:02:1599.2%, to be exact.

00:02:19Despite numerous benefits,

00:02:21many companies have not yet fully capitalized on the opportunities provided by exporting.

00:02:27Only 1% of American companies export,

00:02:30despite over 95% of the world's customers living outside our nation's borders.

00:02:35The good news is, the number of small and mid-sized exporters is growing fast

00:02:40and has risen three-fold over the last 20 years.

00:02:43These numbers are encouraging,

00:02:45especially considering the high-cost environment facing our small businesses today.

00:02:50However, we must ensure that businesses in our rural communities are not left behind

00:02:56when policymakers consider ways to expand export opportunities for small businesses.

00:03:03Our rural businesses are a hub for export potential,

00:03:06with small businesses, farmers, ranchers, manufacturers,

00:03:10and others exporting billions of goods every year

00:03:13across the agriculture, energy, and manufacturing sector.

00:03:19There are clear benefits and growing opportunities for businesses to begin exporting.

00:03:24Rural businesses often face unique challenges

00:03:27when looking to start or expand their export operations.

00:03:31Access to capital is a primary obstacle for many rural businesses,

00:03:34as there are often far fewer banking institutions

00:03:38and financial resources available to them in rural areas compared to larger cities.

00:03:44Given that adequate financing for export businesses

00:03:47is particularly critical due to the high cost of exporting,

00:03:51these capital challenges are compounded for our rural export businesses.

00:03:58Additionally, rural businesses often lack access to the tools and resources

00:04:03that could help them navigate the foreign markets,

00:04:06either due to insufficient broadband access or difficulty,

00:04:10again, finding resources that are located close to home.

00:04:14Due to these challenges, some rural businesses

00:04:17may need additional support just to get started.

00:04:21In recent years, agencies across the federal government

00:04:24have invested in resources for rural export businesses

00:04:27with the Department of Commerce, the Office of the United States Trade Representative,

00:04:32and the Department of Agriculture, and so many others,

00:04:35providing financing options and technical assistance

00:04:38to help businesses tap into those international markets.

00:04:43These resources include rural export centers,

00:04:46which provide customized research tools and analysis

00:04:49to help rural businesses take advantage of new investment opportunities

00:04:54and access new customers and markets abroad.

00:04:56And I'm thrilled to say that Nevada is home to the West Rural Export Center,

00:05:00which is empowering businesses in Nevada's rural communities

00:05:03to innovate and to grow through exporting.

00:05:07Nonetheless, we know that far more work is needed

00:05:10to support rural businesses to take full advantage of our global markets.

00:05:15Today's hearing is going to help us understand how Congress

00:05:18and the federal agencies,

00:05:20including the International Trade Administration's U.S. Commercial Service,

00:05:24which this subcommittee oversees,

00:05:26can better empower rural export businesses.

00:05:30That's why I'm so glad we have an excellent panel of witnesses here today

00:05:33to help us do just that.

00:05:35We're privileged to have joining us Mr. Reid Westcott,

00:05:38the Executive Director of the Small Business Export Association,

00:05:43Mr. Dylan Davidson, Vice Chair of the Nevada District Export Council,

00:05:48and Mr. Gary Salamino, President and CEO of the North Carolina Chamber of Commerce.

00:05:55Thank you to all of our witnesses for being here today,

00:05:58especially those who have traveled from out of state to participate in person.

00:06:02I look forward to hearing each of you share your experiences and expertise with us

00:06:06as we discuss ways to support our rural export businesses,

00:06:09and I'm going to turn it over to Ranking Member Budd

00:06:12for his opening statement.

00:06:13Senator Budd.

00:06:14Thank you, Chair Rosen, and thank you to the witnesses for being here.

00:06:17You know, as someone who grew up and still lives in rural North Carolina,

00:06:22I deeply appreciate the focus of this hearing.

00:06:24Rural communities across our country

00:06:26are the primary drivers of economic growth,

00:06:28and we rely on these hardworking folks each and every day.

00:06:32It's the farmers, growers, and producers who put food on America's tables.

00:06:36It's the small businesses who employ millions of our workers.

00:06:40And it's the main street shops and storefronts that enrich local communities

00:06:43by building trust and reliability over the course of generations.

00:06:48Bottom line, for America to succeed, we need rural America to succeed.

00:06:55When it comes to government policy,

00:06:56my view has always been that deregulation,

00:06:59coupled with a competitive tax system, holds the key for economic growth.

00:07:04That approach empowers people and gives them the freedom

00:07:08to take chances, to innovate, and to live the American dream.

00:07:12I'm proud to say that my state of North Carolina has led the way

00:07:16in pursuing this agenda for years.

00:07:17Our state has been recognized nationally

00:07:20as one of the best in the country to do business in.

00:07:23Now, I'm sure our friend Mr. Salamito will go into more detail on this

00:07:26and brag on the old North State, but I don't want to steal any of his thunder.

00:07:31But I'll also say that without collaboration between public officials,

00:07:35particularly the state legislature, which we're so proud of,

00:07:38and private sector job creators,

00:07:40North Carolina's success story would not be possible.

00:07:43I believe that other states would do well to copy North Carolina's policy victories

00:07:47so that they can achieve a similar level of success.

00:07:50So again, thank you to you all for being here.

00:07:53Thank you, Chair Rosen.

00:07:54I look forward to a thoughtful conversation.

00:07:57Well, thank you, Senator Budd.

00:07:59And I'd like to introduce our first witness today, Mr. Reed Westcott.

00:08:03Mr. Westcott is the Executive Director of the Small Business Exporters Association,

00:08:09which is the international trade arm of the National Small Business Association

00:08:13and the nation's oldest and largest non-profit association

00:08:17representing small business exporters.

00:08:20In his position, Mr. Westcott is responsible for leading the development

00:08:24and implementation of the advocacy strategy for the SBEA and the NSBA.

00:08:30Mr. Westcott, thank you so much for being here today.

00:08:33And thank you for your work on advocating for small export businesses.

00:08:37I recognize you now for your opening statement.

00:08:41Thank you, Madam Chair.

00:08:42Chair Rosen, Ranking Member Budd, members of the committee,

00:08:45thank you for holding today's hearing on the experience of small and rural exporters.

00:08:49And for your ongoing commitment to pursuing policies

00:08:51which ensure these businesses can compete and thrive in the global marketplace.

00:08:55My name is Reed Westcott.

00:08:56And as you mentioned, I'm the Senior Director of Government Affairs and Federal Policy

00:08:59for the National Small Business Association,

00:09:00as well as Executive Director for the Small Business Exporters Association,

00:09:03which is a council of NSBA.

00:09:05Founded in 1937, NSBA is the oldest non-profit association

00:09:08representing small businesses, including small exporters.

00:09:11At NSBA, we believe strongly in the role of American small and mid-sized export,

00:09:15or SME, businesses in the international marketplace.

00:09:18These companies expand the reach of American products and services to global markets,

00:09:21increasing their sales and revenue while supporting the economic growth of the nation.

00:09:25Small exporters also play a vital role in their communities.

00:09:28They often source materials locally,

00:09:29support regional supply chains,

00:09:31and contribute to the development of ancillary industries.

00:09:34By engaging in international trade,

00:09:35these businesses bring innovative and diverse cultural and business practices

00:09:38back to their communities,

00:09:39fostering innovation and broadening local perspectives.

00:09:42According to estimates from the SBA,

00:09:43over 1.3 million small businesses are exporters,

00:09:46representing 97% of all U.S. exporters.

00:09:48These small businesses are directly responsible for over one-third of all U.S. exports

00:09:52and believe to be indirectly responsible for even more.

00:09:54That amounts to $542 billion in known exports from small businesses alone.

00:09:59Small businesses also represent approximately 85% of all businesses in rural areas

00:10:03and provide more than half of all rural jobs.

00:10:05Small businesses are a central thread weaving the fabric of small-town American main streets

00:10:09from Nevada to North Carolina and from Michigan to Alabama.

00:10:12One example is a company called Air Tractor,

00:10:14which manufactures aircraft in only Texas.

00:10:16Air Tractor provides 400 high-quality jobs in this rural area

00:10:20that are largely dependent on international sales.

00:10:22Their former CFO put it to me recently,

00:10:24I would certainly tout the advantages of exporting.

00:10:26The process is not fast, but it pays huge dividends.

00:10:29There are certainly impediments for rural small businesses to do exports,

00:10:32but if one is persistent and seeks help, the payoff is big.

00:10:35He notes that jobs have quadrupled since Air Tractor leaned into exports

00:10:38and that exports now make up 60% of their overall business.

00:10:41Importantly, this excitement over the potential benefits of exporting

00:10:44is not simply anecdotal, but is also borne out in the data.

00:10:46In 2022, NSBA conducted a survey which showed that more than half

00:10:50of currently non-exporting SMEs would be interested in selling goods

00:10:53and or services to foreign customers if barriers to entry could be addressed.

00:10:5845% of non-exporting small businesses surveyed cite a lack of information

00:11:01and understanding of where to begin as a primary barrier

00:11:04to selling goods and services internationally,

00:11:05making it far and away the number one obstacle.

00:11:08I frequently hear stories about difficulties

00:11:10accessing the wealth of resources EXIM and others provide.

00:11:13There's a valuable opportunity here for the federal government

00:11:15to increase its outreach to SMEs by highlighting resources available

00:11:18through ITA's rural export centers,

00:11:20possibly by utilizing existing community-based help centers such as SBDCs.

00:11:24Interagency partnerships are also an ideal starting point

00:11:26to increase the distribution of information and the uptake of resources.

00:11:29A great example of this is S4764,

00:11:31the Bipartisan Coordinated Support for Rural Small Businesses Act,

00:11:34introduced by Senators Shaheen and Kennedy late last week.

00:11:37This bill elevates the significance of the Office of Rural Affairs at SBA

00:11:40by creating an assistant administrator

00:11:42and codifying the 2023 SBA and USDA MOU

00:11:46that helps ensure that entrepreneurs who have a greater familiarity with one agency

00:11:49are able to access the resources provided by both.

00:11:52Especially in rural areas,

00:11:53where the varying market penetration of different federal agencies

00:11:56can create information gaps, this goes a long way.

00:12:00Strengthening the dormant Office of Rural Affairs

00:12:01would give the government a robust tool

00:12:03to better match federal programs with rural entrepreneurs.

00:12:05This underutilized office has the capacity to become air traffic control

00:12:09for federal resources in rural areas,

00:12:10serving as a vital central hub for a dizzying array of programs.

00:12:14There are also significant hurdles in navigating complex trade regimes,

00:12:17which often impose a heavy administrative and financial burden.

00:12:20To take a first step towards tackling these issues,

00:12:22it is imperative that we work towards the harmonization of trade rules.

00:12:25SMEs lack the resources to comply with complex trade regulations,

00:12:28a burden borne far more easily by their large counterparts.

00:12:32An effective harmonization regime can significantly lower compliance costs,

00:12:35democratizing the export space.

00:12:37Looking beyond harmonization,

00:12:38small businesses would also greatly benefit from trade deals

00:12:40that establish clear rules of the road.

00:12:42These rules should be, one, transparent and accessible,

00:12:45offering clear guidelines on regulations, tariffs, and procedures.

00:12:48Two, consistent and predictable to help businesses

00:12:50plan their operations and investments.

00:12:52And three, include support mechanisms

00:12:54such as training, resources, and assistance programs.

00:12:58Additionally, financing is frequently a challenge,

00:13:00particularly with traditional lenders who may view SMEs as higher risk ventures,

00:13:03even for small companies who have secured

00:13:05guaranteed Ex-Im financing for their products.

00:13:07It can be a challenge to find downstream buyers for those guaranteed loans.

00:13:10It is vital that as Congress examines potential legislation

00:13:13governing financial institutions, markets, and products,

00:13:15lawmakers consider the impacts on small companies' ability

00:13:18to access the capital they need.

00:13:20In conclusion, while small and rural exporters

00:13:22face numerous challenges in entering global markets,

00:13:24we believe that by streamlining the distribution of information

00:13:26on existing federal resources,

00:13:28simplifying and harmonizing trade rules,

00:13:30and protecting access to capital,

00:13:32the federal government can ensure these companies thrive.

00:13:34On behalf of NSBA and SBEA,

00:13:36I'd like to reiterate the small business community's

00:13:38thanks to the committee for its attention to these issues,

00:13:39and I look forward to answering your questions.

00:13:43Thank you, Mr. Westcott.

00:13:44I'd now like to introduce our next witness, Mr. Dylan Davidson.

00:13:49Mr. Davidson is a senior trade officer for the Nevada Department of Agriculture,

00:13:54where he leads the department's domestic

00:13:56and international trade programs and economic data services.

00:14:00Mr. Davidson also serves as the vice chair

00:14:03of the Nevada District Export Council,

00:14:05which offers resources and assistance to Nevada businesses

00:14:09looking to start or expand their export operations.

00:14:13Thank you for traveling all the way from Reno, Nevada,

00:14:17to be here with us today,

00:14:18and Mr. Davidson, I recognize you now for your opening remarks.

00:14:23Good morning, Chairwoman Rosen,

00:14:25Ranking Member Budd, and members of the subcommittee.

00:14:27I am Dylan Davidson,

00:14:28and while I serve as the vice chair for the Nevada District Export Council

00:14:32and president of the North American Agricultural Marketing Officials,

00:14:35I am here in my capacity as senior trade officer

00:14:37for the Nevada Department of Agriculture.

00:14:39From growing up on a tractor,

00:14:41to teaching advanced American farming techniques

00:14:43to rural farmers in Africa while in college,

00:14:46to now striving daily to expand Nevada's agricultural reach

00:14:50into domestic and international markets.

00:14:52For over five years, I have overseen food and agricultural marketing,

00:14:56trade, and economic development in the state of Nevada.

00:14:58I am here today to share my knowledge and experience

00:15:01on the impacts and challenges of rural exporters.

00:15:04Although Nevada is most known for its tourism, gaming, and mining,

00:15:08Nevada's agriculture industries are important

00:15:10to the state's overall economic culture.

00:15:13Outside of Nevada's three urban counties,

00:15:15the remaining 14 counties make up approximately 87% of Nevada's land

00:15:20and have an average population of 2.5 people per square mile.

00:15:24This makes up the majority of the geographical region of Nevada rural.

00:15:28Agricultural land production dominates these rural areas.

00:15:32In the state's desert climate and topography,

00:15:34the production of onion, hay, and alfalfa flourish.

00:15:3761% of the high-value alfalfa is exported outside of the United States,

00:15:42but these companies' successes do not come without hardship.

00:15:45In 2023, Nevada exported a total of $9.53 billion worth of goods to foreign markets,

00:15:52with major trade partners being Canada, Mexico, Western Europe, and South Korea.

00:15:57Although agriculture makes up a significant portion of Nevada's rural export economy,

00:16:01mining and manufacturing sectors are also significant contributors,

00:16:05with Nevada being a leader in the lithium loop.

00:16:08By opening one of nine U.S. commercial service rural export centers

00:16:12in the United States in Las Vegas,

00:16:14Nevada has prioritized rural exporters in all areas

00:16:17through partnerships between key federal and state agencies,

00:16:21including the governor's office, economic development, agriculture, and business and industry.

00:16:26As of December 2023, there are approximately 310,000 small businesses,

00:16:31making up 99.2% of all businesses in the state.

00:16:35These businesses employ 540,000 people, comprising 42.8% of Nevada's workforce.

00:16:41Of those 310,000 small businesses, there are roughly 3,100 currently exporting.

00:16:47In recent years, we have seen many rural producers face significant challenges

00:16:51outside of the general financial constraints,

00:16:53including lack of expertise and resources, transportation logistics,

00:16:58general foreign tariff and trade barriers, broadband connectivity issues,

00:17:02and most pressing in Nevada, the decline of rural land due to continued growth of urban populations.

00:17:08The combination of these obstructions is impacting the ability for rural exports

00:17:12to enter or expand in new and existing foreign markets.

00:17:15Senator Rosen's support in 2021 on pursuing the Infrastructure Investment and Jobs Act,

00:17:20which has passed and signed into law, is a step in the right direction

00:17:24to ensuring that issues like broadband, airports, and roads,

00:17:27which are all key components to rural producers,

00:17:29are maintained, repaired, and expanded as needed.

00:17:32Through federal and state partnerships,

00:17:34we can address the biggest challenges and concerns for rural Nevada exporters.

00:17:38Through the state's participation in trade missions and trade shows,

00:17:41we are promoting Nevada rural businesses

00:17:43and placing them in front of international stakeholders

00:17:46with a minimal impact to their operational costs.

00:17:49Just recently, Nevada represented five food manufacturers

00:17:52at the Seoul Food and Hotel Trade Show in Seoul, South Korea,

00:17:55and had recent delegation visits to Nevada from Vietnam and Japan,

00:17:59where international stakeholders had business meetings

00:18:01with various Nevada rural producers.

00:18:03Funding programs like this are what embodies the growth of American economy

00:18:08through the export of agricultural products to address the trade imbalance

00:18:12and ensure the American competitiveness

00:18:14and the current and future economic landscape across all sectors of rural America.

00:18:19Opportunities like the State Trade Expansion Program, Market Access Program,

00:18:23the Nevada Craft Beverage Passport,

00:18:25or the Women's Farm-to-Food Accelerator Program

00:18:27on both state and federal levels

00:18:29allow us to tackle another concern of many rural producers,

00:18:32which is the lack of infrastructure in these regions.

00:18:35The Nevada District Export Council also plays a major role

00:18:38in assisting all Nevada exporters, especially rural exporters,

00:18:42as they face continued challenges.

00:18:44The Nevada DEC has the capacity to facilitate the development

00:18:48of an effective export assistance network

00:18:50and can assist in coordinating the implementation of trade assistance partners

00:18:54to leverage the available resources necessary.

00:18:56When companies partner with organizations

00:18:58like state and federal agencies and the DEC,

00:19:01they are better prepared to enter new markets

00:19:03or expand their existing markets around the world.

00:19:05Thank you for your time, and I look forward to your questions.

00:19:09Thank you, Mr. Davidson.

00:19:10I'd now like to turn it over to Ranking Member Bugg

00:19:13to introduce our last witness.

00:19:15Thank you, Chair.

00:19:16I'm pleased to introduce our witness, Mr. Gary Salamito.

00:19:18Mr. Salamito serves as the President and CEO

00:19:21of the North Carolina Chamber,

00:19:22where he's been a steadfast advocate for business growth

00:19:25and economic development throughout our state.

00:19:28His extensive experience and deep understanding

00:19:30of the issues rural businesses face

00:19:32make him a valuable asset to today's discussion.

00:19:35Mr. Salamito, thank you for being here today,

00:19:37for your ongoing commitment to support

00:19:39rural communities in their export efforts.

00:19:42We look forward to your testimony

00:19:43and to a productive discussion about how to strengthen

00:19:46our support for rural export businesses.

00:19:50Thank you, Chair Rosen, Ranking Member Budd,

00:19:53and members of the committee.

00:19:54Thank you for the opportunity to offer testimony today

00:19:57on behalf of the North Carolina business community.

00:19:59We're a manufacturing-heavy state

00:20:01with affordable, reliable energy,

00:20:03right-to-work status, and a competitive tax climate.

00:20:07While we see growth in our urban counties daily,

00:20:09we are seeing jobs announcements

00:20:11in the rural and suburban areas

00:20:12surrounding our major population centers

00:20:14as business looks for land

00:20:16required to build significant operations.

00:20:19North Carolina's business community and policymakers

00:20:21have worked hard to cement our position

00:20:23as a competitive state for business,

00:20:25nationally and globally.

00:20:27We take great pride in our diverse economy

00:20:29and our private sector job growth.

00:20:32Reaching this competitive position for North Carolina

00:20:34was intentional.

00:20:35The leadership of North Carolina's

00:20:37dynamic business community

00:20:38charged the N.C. Chamber

00:20:40with creating and executing a plan for North Carolina

00:20:43that is focused on education and talent supply,

00:20:45a competitive business climate,

00:20:47and infrastructure and growth investment.

00:20:50The plans worked, but we cannot be complacent

00:20:54if we want to remain competitive and on top,

00:20:56both nationally and globally.

00:20:58To help our rural businesses

00:21:00access international markets,

00:21:02they need an available and qualified workforce.

00:21:05Unfortunately, many rural areas in our state

00:21:07are experiencing population decline

00:21:09and birth rates aren't keeping up.

00:21:11Our members have ranked workforce availability

00:21:14as the number one issue impacting business

00:21:16for nine years in a row.

00:21:18Federal, state, and local policies

00:21:20that alleviate the cost of living,

00:21:22enable workforce participation,

00:21:24improve quality of life,

00:21:26and grow talent pools are crucial.

00:21:29Key issues holding our workforce back

00:21:30include housing, child care,

00:21:34transportation,

00:21:35and thoughtful criminal justice reform.

00:21:38Forward-looking investments in rural areas

00:21:40that reinforce a sense of place

00:21:42and belonging are essential,

00:21:44and employment-based immigration

00:21:46is a necessary tool.

00:21:48Aligning our education systems and business needs

00:21:51is a critical opportunity for North Carolinians.

00:21:54One of the best ways to achieve this

00:21:55is by creating a demand-driven workforce system

00:21:58that is genuinely employer-led,

00:22:01leveraging the U.S. Chamber

00:22:02Talent Pipeline Management Framework.

00:22:05In many of North Carolina's rural communities,

00:22:08agriculture plays a foundational role in the economy,

00:22:11in addition to the essential role

00:22:12that North Carolina plays

00:22:14in the national food security.

00:22:16With that in mind,

00:22:17the Golden Leaf Foundation

00:22:19and the North Carolina Chamber Foundation,

00:22:21in partnership with the North Carolina Farm Bureau,

00:22:24are championing NCAG LEADS,

00:22:26a strategic planning effort

00:22:27for North Carolina agriculture,

00:22:29an over $110 billion industry in North Carolina.

00:22:34Over the last six months,

00:22:35NCAG LEADS team traveled the state

00:22:37to facilitate 23 focus groups,

00:22:40reaching 68 counties,

00:22:41and more than 340 members

00:22:43of North Carolina's agriculture industry.

00:22:46This discernment phase identified opportunities

00:22:48and threats to the talent pipeline,

00:22:51land competition,

00:22:53market access,

00:22:54generational concerns,

00:22:56and farm support systems.

00:22:58Today, the biggest challenge

00:22:59to rural business growth

00:23:01is adequate infrastructure.

00:23:03The message is echoed

00:23:04across North Carolina's business community,

00:23:06no matter the size,

00:23:07location,

00:23:08or industry of the business.

00:23:10Coal chain has been a focus

00:23:11for the North Carolina ports,

00:23:13and they're working to make

00:23:14transporting refrigerated cargo faster

00:23:17and more efficient than ever.

00:23:19These capabilities

00:23:20have broad reaching significance.

00:23:22Given North Carolina's

00:23:23significant grocery sector footprint

00:23:25and the perishable

00:23:26import distribution systems

00:23:28that service this growing demand,

00:23:30NC ports, North Carolina's ports,

00:23:32serves as an ideal gateway

00:23:34for the U.S. and East Coast locations.

00:23:37This saves businesses time,

00:23:39money, and distance

00:23:40in reaching consumers.

00:23:42It also creates an opportunity

00:23:43for rural small businesses

00:23:45to serve these critical supply chains.

00:23:48Many North Carolina farmers

00:23:49had figured out that we cannot have

00:23:51exports without imports.

00:23:53The family farms and multinationals

00:23:55that are producing traditional

00:23:56seasonal crops

00:23:58have been able to leverage

00:23:59their infrastructure

00:23:59to partner with other companies

00:24:01to bring in produce, package it,

00:24:03and sustain a 12-month operation

00:24:05that keeps workers attached.

00:24:07Coal chain capabilities

00:24:09have implications beyond food.

00:24:11The life sciences industry

00:24:12sees opportunities to increase volume

00:24:14by shifting from air to sea transport.

00:24:16This could be a key piece

00:24:18of expanding our pharmaceutical footprint.

00:24:20For our state's businesses

00:24:21to be competitive trading partners,

00:24:23we must provide them

00:24:24with a level playing field,

00:24:26which includes combating bad actors

00:24:28that circumvent fair trade

00:24:29and U.S. trade restrictions.

00:24:32The success of North Carolina's

00:24:33infrastructure and workforce systems,

00:24:35poised for growth,

00:24:36can be attributed

00:24:37to the strong business climate

00:24:38on which they are built.

00:24:40North Carolina's success

00:24:41has been made possible

00:24:42and will continue to grow

00:24:44through the commitment

00:24:44of our statewide business community

00:24:46with a clear vision,

00:24:48state and federal leaders

00:24:49willing to act on it.

00:24:51Thank you for your time today

00:24:52and for your leadership,

00:24:53and we look forward to the discussion.

00:24:56Well, thank you so much,

00:24:57all three of our witnesses,

00:24:58for their opening statements.

00:25:00I just want to say

00:25:01I also sit on the Small Business

00:25:03and Entrepreneurship Committee,

00:25:04so that's a good intersection

00:25:06for this subcommittee

00:25:07and the testimony

00:25:08and things that you're going to tell us

00:25:11about the opportunities

00:25:12and the challenge

00:25:14that you've all alluded to today

00:25:16really will help us improve,

00:25:17help me improve the legislation

00:25:19that we can put forward

00:25:20for both committees.

00:25:21So, thank you.

00:25:23And we're going to talk about

00:25:24the export barriers to entry first

00:25:26because exporting

00:25:28can be hugely beneficial

00:25:29to a small business's bottom line,

00:25:31overall success.

00:25:33On average, companies that export

00:25:35earn higher revenues,

00:25:37which can be used

00:25:37to reinvest in their employees,

00:25:39create new jobs, pay higher wages.

00:25:41And given the important role

00:25:42that rural small businesses play

00:25:44as the economic backbone

00:25:46of our local communities,

00:25:48including in Nevada,

00:25:49it's critical that businesses

00:25:51in our rural areas

00:25:52are able to benefit

00:25:53from robust export operation.

00:25:56Unfortunately, only 1%

00:25:58of American businesses export,

00:26:01small businesses export.

00:26:02And this is really create

00:26:03missed opportunities

00:26:05for small businesses

00:26:06to generate those jobs

00:26:07and economic growth

00:26:08in communities

00:26:08that really would rely on them.

00:26:11So, to all three witnesses,

00:26:13if you want to say

00:26:14what you think the biggest barriers

00:26:16to entry for exporting

00:26:17our rural small businesses are

00:26:19and what federal resources exist

00:26:21to help overcome the challenges

00:26:23or what resources do you need

00:26:25to help overcome the challenges,

00:26:28we want to be sure

00:26:29that our rural businesses

00:26:31have the tools

00:26:31they need to get there.

00:26:32So, let's begin with Mr. Davidson

00:26:35and then we'll go to Mr. Salamito

00:26:37and then to Mr. Westcott.

00:26:38Mr. Davidson, please.

00:26:40Thank you, Chairwoman.

00:26:41For Nevada rural producers,

00:26:43the biggest barrier

00:26:43to entry of export

00:26:45is the regulatory uncertainty.

00:26:47Many rural producers

00:26:48don't have the understanding

00:26:50or the knowledge of complying

00:26:51with the complex export regulations,

00:26:54navigating export controls

00:26:56and custom procedures

00:26:57for country specific requirements.

00:26:59Things that are currently in place

00:27:01that can assist these exporters

00:27:03is using the step grant funds

00:27:05or the market access program funds

00:27:07that can allow them

00:27:08to get that export education.

00:27:10So, utilizing the state

00:27:11and federal agencies are key

00:27:13to make sure that they're getting

00:27:14that knowledge and that expertise

00:27:15so that when they're ready

00:27:16to enter the export market,

00:27:18they're ready.

00:27:18Perfect.

00:27:19Thank you, Mr. Salamito.

00:27:21Yeah, I echo what Mr. Davidson said.

00:27:23And in addition,

00:27:24it's really about three things.

00:27:26First, about talent.

00:27:27It's about making sure

00:27:28that the talent in our rural areas

00:27:31is aligned with the needs

00:27:32in the businesses that are there.

00:27:33And so, programs that support that

00:27:36like the Employer Directed Skills Act,

00:27:38the Pell Act.

00:27:39Thank you, Senator Budd for that.

00:27:41The chamber fully supports

00:27:42those initiatives

00:27:43and what they do for North Carolinians

00:27:45and particularly North Carolinians

00:27:46in small business.

00:27:47So, talent is at the forefront.

00:27:49And the other barrier is infrastructure.

00:27:52The roads, rails, ports, water, sewer,

00:27:54all the things that are necessary

00:27:56to do a couple of things.

00:27:57One is to make sure

00:27:58we can get raw materials in

00:28:00and products to market.

00:28:01That particularly favors

00:28:02our small businesses

00:28:04that are three, four, five

00:28:06indirect job multipliers

00:28:08to our larger businesses

00:28:09in our non-urban areas.

00:28:11So, that infrastructure,

00:28:12the certainty of making sure

00:28:14that they can get to markets.

00:28:15And third, a good resource

00:28:16is making sure

00:28:17that there are export services

00:28:19and teaching opportunities

00:28:21available to small rural businesses.

00:28:23In North Carolina,

00:28:24our Small Business Technology

00:28:26Development Center there,

00:28:27which is our armor,

00:28:28the Small Business Administration,

00:28:30has incredible programs

00:28:32that are available to small businesses

00:28:34that demystify

00:28:35and help them understand

00:28:36and manage those issues.

00:28:38And access to capital

00:28:40also exists through SBTDC.

00:28:42We did a partnership with SBTDC,

00:28:44the North Carolina Bankers Association,

00:28:46the Rural Center.

00:28:47It's called Capital Opportunities,

00:28:49and it allows small businesses

00:28:51to go onto a website,

00:28:52onto an app,

00:28:54plug in their information

00:28:55and align them with banks

00:28:56and financial institutions

00:28:57willing to assist them.

00:28:59So, it's about talent.

00:29:00It's about infrastructure,

00:29:01access to capital,

00:29:02and removing some of the barriers

00:29:04that Mr. Davidson discussed.

00:29:07Mr. Westcott.

00:29:08Yeah, I couldn't echo that

00:29:09strongly enough.

00:29:10Pretty much everything

00:29:11that's been mentioned so far comes up.

00:29:12So, in 2022, NSBA,

00:29:13as I mentioned in my testimony,

00:29:14did a survey.

00:29:15And one of the main questions

00:29:16for folks who are not

00:29:17currently exporting is,

00:29:18what are the barriers that you're seeing?

00:29:19What's preventing you from doing this?

00:29:21The number one thing was

00:29:22education, awareness.

00:29:24I don't know enough.

00:29:24I need to know more

00:29:25about how this process works.

00:29:27But regulation,

00:29:29all these other things

00:29:30have been mentioned

00:29:30throughout the course of this.

00:29:31So, I think the number one thing

00:29:32that we see is really just

00:29:34understanding of and awareness

00:29:35of the benefits of exporting.

00:29:38And we think that the simplest way

00:29:40to address this would be

00:29:41to really centralize resources,

00:29:42as I mentioned earlier,

00:29:44creating a position within SBA,

00:29:49because that's generally

00:29:50the de facto resource

00:29:51for most small businesses,

00:29:52and especially rural small businesses,

00:29:54that can really elucidate

00:29:56for folks that the full roster

00:29:58of resources available to them.

00:29:59We think that's probably

00:29:59the single largest barrier

00:30:01to folks participating

00:30:03is just being able to overcome

00:30:04that information gap.

00:30:04So, maybe a one-stop shop dashboard.

00:30:07And I would add broadband

00:30:08to that infrastructure need there.

00:30:11I'm going to ask one more question

00:30:12before I turn it over to Senator Budd,

00:30:14because it's so important

00:30:16that we do have

00:30:16these rural export centers.

00:30:18And across the country,

00:30:19our rural export centers

00:30:20provide invaluable services

00:30:22to small rural businesses

00:30:24interested, like you said,

00:30:25they've got to grow their operations.

00:30:26It really matters and it's fantastic.

00:30:29And so, but due to their location,

00:30:30rural businesses have historically faced

00:30:33barriers accessing the counseling

00:30:35and guidance,

00:30:36just like you've spoken about

00:30:37to reach international markets.

00:30:39Rural export centers successfully

00:30:41do bridge this gap

00:30:42by meeting rural businesses

00:30:43where they are.

00:30:44And we're proud to have

00:30:45the West Rural Export Center in Nevada.

00:30:48And it has empowered

00:30:49rural businesses in Nevada

00:30:51to leverage those federal resources

00:30:53and take full advantage

00:30:54of the benefits of exporting.

00:30:56So, Mr. Davidson,

00:30:58can you talk a little bit

00:30:59about the importance

00:31:00of having the federal resources,

00:31:01our rural exports,

00:31:02our West Export Center,

00:31:04specifically dedicated

00:31:06to the rural export business?

00:31:08And how do you really

00:31:09address the unique needs?

00:31:11Every exporter and every small business

00:31:15has their own needs and expertise

00:31:19and having the ability

00:31:20to have the rural export center

00:31:22in Las Vegas is a crucial component

00:31:25and resource for our Nevada,

00:31:27small businesses,

00:31:28especially in the rural areas of Nevada.

00:31:31It's really important to make sure

00:31:33that we're getting there

00:31:34in front of them, like you mentioned,

00:31:36coming to them

00:31:37and showing them the steps

00:31:38of how to get to

00:31:39those federal resources.

00:31:41I think exports are a scary word

00:31:44to a lot of small businesses.

00:31:45They think that they have to be

00:31:47this big multibillion dollar company

00:31:49in order to export.

00:31:50And that's not true.

00:31:51A lot of Nevada small businesses

00:31:53that export only export

00:31:55a small percentage,

00:31:56but they are considered an exporter.

00:31:58So really showing them

00:31:59that they can make

00:32:00that significant change

00:32:01and getting them in front

00:32:02of the resources necessary

00:32:04through partnerships,

00:32:04through state and federal level.

00:32:06So we have the governor's

00:32:07Office of Economic Development

00:32:08and the Small Business

00:32:09Development Center

00:32:10in connection

00:32:11with the U.S. Commerce.

00:32:12All of us together can work

00:32:14to support all rural exporters in Nevada.

00:32:17Wonderful.

00:32:18I'm going to turn it over

00:32:19to Senator Budd

00:32:19for your five minutes.

00:32:21Thank you, Chair.

00:32:22And, you know, perhaps

00:32:23this is a holdover

00:32:23from my time in the House

00:32:24on financial services,

00:32:25but you mentioned

00:32:26a bank matching tool,

00:32:28I believe was one of the features.

00:32:29Could you describe that a little bit?

00:32:32Yeah, it's called Capital Opportunities,

00:32:34and it's a program

00:32:35that the NC Chamber,

00:32:36the North Carolina Bankers Association

00:32:38of Carolina Rural Center

00:32:39came together with

00:32:41Small Business Technology

00:32:42Development Center,

00:32:43and it's an app.

00:32:44What we were able to do

00:32:45is work together

00:32:46through our common memberships

00:32:48and common interests

00:32:49to get banks to put on

00:32:52their lending requirements

00:32:53and access to those dollars online.

00:32:57A small business,

00:32:57a rural area business,

00:32:59small business from anywhere

00:33:00can go on and plug in

00:33:01what they're looking for

00:33:02and what their needs are,

00:33:04and they'll be connected

00:33:05with an institution

00:33:06that is most likely

00:33:07to be able to help

00:33:08coach them through it,

00:33:08help them become bankable,

00:33:10and also give them access to capital.

00:33:12So it's been there

00:33:14for almost a year now.

00:33:15It's not as well known

00:33:16as we would like it to be.

00:33:17We've tried to push it out

00:33:18in numerous ways.

00:33:19So it's a great vehicle

00:33:21to get access to capital

00:33:22for small and rural businesses.

00:33:24Yeah, thanks for clarifying on that.

00:33:27Can you talk a little bit about

00:33:29how successful rural exporters

00:33:30have positively impacted

00:33:32communities in North Carolina?

00:33:33I know it's sort of an outsized

00:33:35effect of small businesses

00:33:36in North Carolina,

00:33:37but if you would talk about

00:33:39their impact on small communities.

00:33:41Yeah, it's significant

00:33:43because you need a whole lot

00:33:45of small businesses to support

00:33:47getting products to and from market.

00:33:49So there's all different types

00:33:50of small businesses.

00:33:51There's trucking companies that do that.

00:33:54There's companies that produce

00:33:55and distribute the boxes

00:33:56that things need to go into.

00:33:58The whole food processing piece.

00:34:01I think one of the most

00:34:02interesting pieces recently

00:34:04has been the evolution

00:34:06and the investment in cold chain

00:34:08support in North Carolina.

00:34:10It allows our farmers

00:34:11and our smaller businesses

00:34:12to get products to export

00:34:14and they're fresher

00:34:16because we have cold storage lined up.

00:34:18The interesting part too

00:34:19is other countries,

00:34:20particularly countries

00:34:21around the equator,

00:34:23have figured out

00:34:24how to make sure

00:34:25that when we're not in season,

00:34:26they're growing stuff in season

00:34:28and that import is coming in.

00:34:30And that's helping

00:34:30our small businesses

00:34:32package that information

00:34:33while the cold chain comes in

00:34:34and allows them to be fresher

00:34:36and get to markets quicker.

00:34:37So there are more small businesses

00:34:39that are packaging, processing,

00:34:42holding onto their workers

00:34:43and throughout the year,

00:34:45which allows them to be more productive

00:34:47when the North Carolina season is in place.

00:34:50So a lot of connectivity there

00:34:53and a lot of economic development

00:34:55comes when you have the tech space

00:34:56of those small businesses

00:34:58in those communities

00:34:58that allow the infrastructure investment

00:35:00to take place in our water

00:35:02and in our sewer

00:35:03and in our broadband with it.

00:35:06So the connectivity of being able

00:35:08to have imports and exports

00:35:10and what that generates

00:35:11and allows our farmers to,

00:35:13particularly our farmers,

00:35:14but everybody that supports them,

00:35:15to have seat around a year opportunities

00:35:19to continue to connect workers

00:35:20allows them to grow.

00:35:22So it's that cold chain.

00:35:24We haven't even seen fully

00:35:26what impact that's going to have,

00:35:28but that cold chain capability,

00:35:29the only cold chain

00:35:30between Philadelphia and Miami

00:35:33in the middle of the country,

00:35:35our NC ports investment

00:35:36that is very strategic

00:35:37is going to help a lot of people.

00:35:38I really look forward to that.

00:35:40So what, you know,

00:35:43you talked a little bit

00:35:43about in your opening statement,

00:35:44my opening statement

00:35:45about some of the uniquenesses

00:35:47of North Carolina,

00:35:48hoping that some other state legislatures

00:35:50could replicate that.

00:35:52But if you would talk

00:35:53about some of the things

00:35:54we've done uniquely

00:35:55and some of the things

00:35:56that perhaps other states could do.

00:36:01Yeah, thank you.

00:36:02I mean, it was 14 years

00:36:04of hard and disciplined

00:36:05and focused work

00:36:06to get North Carolina

00:36:07to be number one

00:36:08two years in a row

00:36:09and to only miss to Virginia

00:36:10by a couple of points

00:36:12this last session.

00:36:13And we kind of look at it as,

00:36:17well, we don't look at it as we lost.

00:36:18We look at it as Virginia caught up for us.

00:36:21And I think what we did

00:36:23is we took a large,

00:36:25really good, hard look in the mirror

00:36:27a good number of years ago

00:36:28and said, where are things working

00:36:30for North Carolina?

00:36:31Where are they not?

00:36:32And three pillars were developed

00:36:34upon which to build policies

00:36:35to get us competitive.

00:36:37The first is education and talent supply,

00:36:39making sure that our education

00:36:42and workforce systems,

00:36:44K-12, community colleges,

00:36:46public and private universities

00:36:47are aligning not only

00:36:49with what business needs

00:36:50in their workers today,

00:36:51but what they need for tomorrow.

00:36:53And how are we making sure

00:36:54adult learners can access those systems?

00:36:57Because the rate and pace

00:36:58of innovation today

00:37:00is incredible,

00:37:01and people are gonna have to change

00:37:02quite frequently.

00:37:03Then we looked at our business climate,

00:37:05tax, tort, civil liability reform,

00:37:08regulatory reform,

00:37:09and said, where do we get balanced

00:37:10and fair regulations

00:37:12that are predictable?

00:37:13And that'll allow businesses

00:37:14the predictability need to invest.

00:37:16And the last is infrastructure and growth,

00:37:18which we've talked about,

00:37:19and making those strategic investments,

00:37:21not only when people are in your state,

00:37:23but before they're coming

00:37:24in order to facilitate the movement

00:37:26of goods and services in people.

00:37:28And you have to do it all together.

00:37:30And it takes a plan,

00:37:31and it takes people of like mind,

00:37:33the business community,

00:37:35and business-minded public servants,

00:37:37and those in public service,

00:37:38and our politicians to say,

00:37:39we're gonna make a difference.

00:37:40So North Carolina worked really hard

00:37:42starting about 14 years ago,

00:37:44and now we just have to stay there

00:37:46because the hardest thing

00:37:46is to stay on top

00:37:48is when you're on top.

00:37:49Absolutely, thank you.

00:37:52Thank you, Senator Blackburn.

00:37:54I'd like to recognize you

00:37:56for your questions, please.

00:37:58Thank you so much, Madam Chairman,

00:38:00and thank you to you all

00:38:02for being here today.

00:38:04Tennesseans are very active

00:38:06in the export marketplace.

00:38:08We've got 6,000 companies

00:38:11that were exporters last year.

00:38:14This is a good thing for us.

00:38:16We know that 82% of these companies

00:38:20were small businesses.

00:38:22Now, most people think

00:38:24of electronic products,

00:38:26cars, transportation,

00:38:30sector equipment,

00:38:31those things as coming from Tennessee,

00:38:34but there's also an area of interest

00:38:38that we have,

00:38:39and Senator Hickenlooper and I

00:38:41have the American Music Tourism Act,

00:38:43and this is about exporting our culture

00:38:47and encouraging both domestic

00:38:49and international travel

00:38:52to our historic music sites.

00:38:55So, Mr. Salamito,

00:38:57I'd love for you to talk a little bit.

00:39:00You were just talking about farm products

00:39:02and some other things,

00:39:03which, of course, that is important

00:39:04to us in Tennessee,

00:39:06but let's talk just a touch

00:39:08about the importance of promoting

00:39:11and exporting some

00:39:13of our cultural treasures,

00:39:15like our music.

00:39:19Well, thank you, Senator.

00:39:20All comes together in terms of a package

00:39:24that makes your state,

00:39:25our state's the best place to live,

00:39:27work, and raise your family.

00:39:28So being able to make sure

00:39:30that we have the balance

00:39:33and the support

00:39:34and the prioritization

00:39:36of our music and our culture

00:39:38is critically important

00:39:39as we look to develop our young people,

00:39:42as we look to make sure

00:39:43that the businesses

00:39:44that are locating through all our state

00:39:46have the ability to access

00:39:48all those different cultural opportunities

00:39:51for the growth of their children

00:39:52and for the development

00:39:53of their own interests.

00:39:55And it's a critical part of it.

00:39:57It goes together, right?

00:40:02I think it does go together.

00:40:04Mr. Westcott,

00:40:05I wanted to talk with you

00:40:06a little bit about logistics

00:40:09and some of the work

00:40:11that is being there.

00:40:14Tennessee, as you know,

00:40:16is really America's distribution center

00:40:18when you talk about Memphis,

00:40:20and you have all five

00:40:22Class A railroads that are there.

00:40:24You have FedEx that is there.

00:40:26You've got the river.

00:40:27And so what are you doing

00:40:30to put the focus

00:40:31to secure supply chains,

00:40:34to have efficient logistics systems in place,

00:40:39especially when you're talking

00:40:41about small and rural areas?

00:40:45Yeah, thank you, Senator.

00:40:46I appreciate the opportunity

00:40:47to talk about that a little bit.

00:40:49So I think we all understand

00:40:50that our supply chains,

00:40:52especially after the pandemic,

00:40:53are significantly more fragile

00:40:54than we initially imagined that they were.

00:40:56We try to work frequently

00:40:57with our folks to kind of get

00:40:58a real understanding

00:40:59of what the barriers

00:41:00that they're facing are

00:41:00to making sure that their supply chains

00:41:02are sustainable.

00:41:04There's no silver bullet,

00:41:05as much as we wish there was.

00:41:06Every industry is unique,

00:41:07has a different series of suppliers,

00:41:09different macro and microeconomic concerns

00:41:11that they're worried about.

00:41:12But we are looking very, very actively

00:41:14at what our membership is telling us

00:41:16and trying to bring that to the Hill

00:41:17and talk to folks about

00:41:19what solutions there might be

00:41:20to make sure that supply chains

00:41:22are more secure going forward

00:41:23than they were pre

00:41:25and during the pandemic.

00:41:27And let me ask you this,

00:41:29with the ITA,

00:41:31what are you doing

00:41:32with small business exporters

00:41:34in the ITA to increase opportunities

00:41:38for some of these small

00:41:39and midsize businesses?

00:41:41We've got a company in Tennessee,

00:41:44Ace Pump Company,

00:41:46which is a smaller business

00:41:49and they recently won

00:41:51their second ITA E-Star Award.

00:41:55And so what is being done there

00:41:59to coordinate and open

00:42:00some of these doors of opportunity?

00:42:04Yeah, thank you.

00:42:06So what we try to do

00:42:07is obviously as an association,

00:42:09we have a limited ability

00:42:10to specifically act in those spaces,

00:42:13but we do try to push our members

00:42:15as much as possible

00:42:16to take advantage of the programs

00:42:17that ITA and the Rural Export Center

00:42:19specifically provide,

00:42:20whether it's RAISE,

00:42:21whether it's EMC,

00:42:23whether it's the WGR,

00:42:25there's a lot of phenomenal resources

00:42:26there for folks to take advantage of.

00:42:28And so we try as often as possible

00:42:30to kind of educate our folks

00:42:31about what resources are available to them

00:42:33and see how they can get more involved

00:42:34in the process and work more closely

00:42:35with the folks at the RECs from ITA.

00:42:39Awesome, thank you.

00:42:40Thanks, Madam Chairman.

00:42:44Well, I'll give you a second.

00:42:45Senator Hickenlooper is here.

00:42:47And as soon as he's ready to go,

00:42:48we'll recognize Senator Hickenlooper.

00:42:53Thank you, Madam Chair.

00:42:54Thank you all for coming

00:42:57and for your service, for all your work.

00:42:59This is obviously a key issue.

00:43:04Mr. Salamito, you mentioned

00:43:07that in North Carolina,

00:43:08a key theme concerning small businesses

00:43:12and including the agricultural sector

00:43:15is the talent pipeline.

00:43:18We're seeing across the board

00:43:19a need for skilled workers,

00:43:20particularly in repair shops, labs,

00:43:23mechanical roles, as you highlight.

00:43:27While technology, as you say,

00:43:29is being leveraged to address the problem,

00:43:31the reality is even more people

00:43:32are needed to work

00:43:34on the development, deployment,

00:43:35and maintenance of technology

00:43:36and agriculture.

00:43:38So, Mr. Salamito,

00:43:40how might work-based learning programs

00:43:42or apprenticeships address this need

00:43:44in small businesses?

00:43:47Thank you, Senator.

00:43:48It's critical.

00:43:49The rate and pace of innovation

00:43:51is like nothing we've ever seen before.

00:43:53And I was going to have one or two careers,

00:43:55but my children and grandchildren

00:43:56may have four or five before it's over

00:43:59because of the rate and pace of innovation.

00:44:01So work-based learning,

00:44:03critically important apprenticeships

00:44:04in our high schools,

00:44:05getting into our middle schools earlier

00:44:07with programs that set up

00:44:09career planning for them

00:44:10and show them the opportunities

00:44:12that are available to them,

00:44:13making sure that our high schools

00:44:15support apprenticeship programs

00:44:17in a variety of different fields,

00:44:19critically important to that,

00:44:21and creating a culture of adult learning

00:44:24in our young people

00:44:25and within our workforce today.

00:44:27So supporting our businesses

00:44:29that are investing in those folks,

00:44:31they're investing in them,

00:44:32they want to invest in them.

00:44:34It also helps them to be working

00:44:36while they're doing that.

00:44:37And businesses support

00:44:39the advanced education

00:44:40for those young people.

00:44:41So I think it's critically important.

00:44:44Four-year degrees are important,

00:44:46but there's also opportunities,

00:44:47really good opportunities

00:44:48for people without four-year degrees

00:44:50that can help work their way

00:44:51to a four-year degree.

00:44:52And certainly creating that flexibility

00:44:54so you can start out

00:44:55not intending to have a four-year degree,

00:44:57but then once you get into the field,

00:44:58if you decide to make that switch,

00:45:02there's no reason why you can't

00:45:03continue on and get a degree.

00:45:06Mr. Davidson, in your testimony,

00:45:07you highlight a lack of expertise

00:45:10and knowledge of logistics.

00:45:12This is a significant barrier

00:45:14for small businesses

00:45:15looking to sell products internationally.

00:45:18You also pointed out

00:45:19that the lack of infrastructure,

00:45:22many different types of infrastructure

00:45:23in rural areas,

00:45:25whether you're talking about

00:45:26the modern shipping corridors

00:45:28or high-speed internet,

00:45:30this is a barrier for small companies

00:45:32as they seek to expand

00:45:34or transport goods,

00:45:36compete with larger companies

00:45:37in many cases.

00:45:40What types of infrastructure

00:45:42you believe are the most essential

00:45:44in terms of supporting small businesses

00:45:47to grow their businesses?

00:45:50Thank you, Senator.

00:45:51I think there's two big ones in Nevada

00:45:53that really impact our rural producers,

00:45:55and that's going to be broadband connectivity.

00:45:5882% of rural Nevadans

00:46:00have access to broadband,

00:46:03but there's still a significant portion

00:46:04that don't,

00:46:05and the 82% that might have access to it

00:46:07might not have good access to it.

00:46:10So it's really important

00:46:11that they have that ability

00:46:13to be connected.

00:46:15Governor Lombardo has outlined

00:46:17a focus on connectivity in Nevada,

00:46:19and we want to make sure

00:46:20that every producer, rural or urban,

00:46:22has access to it.

00:46:24Even as a state agency,

00:46:25we have an ELCO office,

00:46:26and we experience the repercussions

00:46:29of lack of broadband connectivity,

00:46:32and funds like the Infrastructure Act

00:46:36is allowing us to provide funds

00:46:38to those rural areas

00:46:39to get them connected

00:46:40to be part of the rest

00:46:42of the exporting community.

00:46:45Second would be transportation.

00:46:47Nevada has access to three major ports,

00:46:50Oakland, Long Beach, and L.A.,

00:46:53and a lot of northern Nevada's producers

00:46:56and exporters go to the port of Oakland,

00:46:59and that requires getting over the I-80 pass

00:47:02and winter times there

00:47:04is not an easy task to do.

00:47:06So making sure that all producers

00:47:08and all exporters have that ability

00:47:09to be able to get to the ports or rails

00:47:12or however else they intend to export.

00:47:16I agree with that completely.

00:47:18Mr. Westcott, for small businesses,

00:47:23securing the necessary financing

00:47:26to support export activities

00:47:27is often given as a challenge,

00:47:31something that's an obstacle

00:47:32that's got to be overcome,

00:47:33especially true for small

00:47:34and medium-sized businesses

00:47:36that can't front

00:47:38a lot of those costs themselves.

00:47:41Transportation costs,

00:47:42overseas logistics,

00:47:45distribution networks and such

00:47:48also involve upfront costs

00:47:49for a business initiating a supply chain.

00:47:53We introduced

00:47:56Investing in All of America Act

00:47:59to try and increase available capital

00:48:00for small businesses

00:48:03in the SBIC program,

00:48:05the Small Business Investment Company program,

00:48:09to include rural inflation adjustments.

00:48:12Can you comment on how domestic inflation

00:48:15affected many aspects

00:48:17of small businesses' access to capital

00:48:20and impeding their joining the global market?

00:48:23Yeah, I'm happy to address that.

00:48:25Thank you, Senator.

00:48:25Appreciate the question.

00:48:27So inflationary pressures

00:48:28and other financial obstacles

00:48:31they disproportionately harm small businesses.

00:48:33I think it's pretty obvious for folks to see that.

00:48:37The access to capital

00:48:38that small businesses have

00:48:39is highly dependent

00:48:40on broader market fluctuations.

00:48:42Often the most vulnerable products

00:48:44in a bank's portfolio

00:48:47to be changed, to be altered,

00:48:48are these small business products,

00:48:50which makes it significantly more difficult

00:48:52for small businesses to obtain financing.

00:48:54I've spoken specifically

00:48:55with some of my members

00:48:56and one common practice

00:48:58with a lot of the guaranteed Ex-Im loans

00:49:02that folks get for their products

00:49:04when they sell internationally

00:49:05is to then sell that loan down

00:49:07on the secondary market

00:49:08to another financial institution,

00:49:09like you would any commoditized financial product.

00:49:12And they have found that

00:49:14because of inflationary pressures,

00:49:16broader market conditions, what have you,

00:49:19financial institutions

00:49:20with which they've had

00:49:2120-, 30-year working relationships

00:49:22are much less willing

00:49:23to buy that paper down the road.

00:49:26So they're facing it

00:49:27on a couple different sides there.

00:49:28I appreciate that.

00:49:30Madam Chair, if I could leave one.

00:49:34Okay, go ahead.

00:49:36No, I was going to hand it back,

00:49:39Chairman, to Senator Hickenlooper.

00:49:42I'm at the Secret Service hearing

00:49:43and I think I'm up next.

00:49:44So I'll put my questions on the record

00:49:46and thank you very much to our witnesses.

00:49:49I care a lot about this

00:49:50because in Minnesota,

00:49:53we are fourth in the country for ag exports.

00:49:56We just do a lot of rural exports

00:49:57and this is a great topic

00:49:59and I thank our witnesses.

00:50:03Ah, I get a second chance.

00:50:05Now I'm just in the way of Senator Welch.

00:50:07Just a yes or no quick.

00:50:09Colorado passed a Right to Repair Act.

00:50:12This is really a little bit off the topic,

00:50:14but I think it's relevant

00:50:16from each of your expertise.

00:50:17Do you see that as something

00:50:18that's important to let

00:50:19these small rural businesses

00:50:20be able to operate

00:50:22and repair the things

00:50:23that often they purchase

00:50:24from large corporations?

00:50:26Yes, absolutely.

00:50:29Yes, Senator.

00:50:33We do not.

00:50:34We think that the innovation

00:50:35needs to exist and allow

00:50:37the companies to work together

00:50:39because some of the information

00:50:40is proprietary.

00:50:41So we think a balanced approach is possible,

00:50:44but we don't support a flat out

00:50:45right to repair.

00:50:47Now I know who I have to come talk to.

00:50:49Anyway, thank you.

00:50:50Thank you, Madam Chair.

00:50:53Thank you, Senator Hickenlooper.

00:50:54Thank you, Senator Klobuchar as well.

00:50:56And we will go now to Senator Welch.

00:51:00Thank you very much.

00:51:04The incredible opportunity

00:51:05of the export is great,

00:51:07especially rural areas.

00:51:08But in Vermont, last 10 years,

00:51:10we've gone from 4 billion

00:51:11exports to 2 billion.

00:51:13So I want to talk a little bit

00:51:14about how to address that.

00:51:16Some of that is a strong dollar, I know,

00:51:18but others are just practical

00:51:21implementation questions.

00:51:22But before I get to that,

00:51:25the Ex-Im Bank has done

00:51:28something terrific for Vermont,

00:51:29a $169 million loan

00:51:32to Beta Technologies,

00:51:34which is producing,

00:51:36beginning to manufacture

00:51:38electric planes.

00:51:41And that is an extraordinary benefit

00:51:45to get us to net zero

00:51:46and also huge jobs

00:51:48that are being created.

00:51:50So the initiatives, Mr. Westcott,

00:51:53like Make More in America,

00:51:55really have an impact for us

00:51:57in rural businesses

00:51:58and about 400 jobs

00:51:59in the state of Vermont at Beta.

00:52:02What should Congress do

00:52:03to continue to promote initiatives

00:52:05that help those small rural businesses

00:52:07compete at a global scale?

00:52:11Thank you, Senator.

00:52:11I appreciate that.

00:52:12I think continuing to invest

00:52:14in opportunities

00:52:16to support communities like that

00:52:17is crucial whenever Congress

00:52:18has an opportunity to expand

00:52:20the number of opportunities

00:52:22available to small businesses.

00:52:23I think they should certainly

00:52:25be looking to take that,

00:52:27regardless of what sector

00:52:30you're looking in

00:52:31or what piece of legislation

00:52:32you have in front of you.

00:52:32I think there's generally ways

00:52:34to expand opportunities

00:52:36for small business

00:52:36and specifically

00:52:39to increase jobs

00:52:40in the export space.

00:52:42There's a number of programs

00:52:44that are just tough

00:52:45on a practical level

00:52:46if you're a small business

00:52:47to figure out how to get access to it,

00:52:50even with the best of efforts

00:52:51and outreach.

00:52:52I mean, some of those programs

00:52:54include the International Trade Commission,

00:52:57SBA's State Trade Expansion Program,

00:53:00the Small Business Development Centers,

00:53:03and opportunities through XM

00:53:04that we talked about.

00:53:06But there's real challenges.

00:53:08If you're a small business

00:53:09in Randolph, Vermont,

00:53:10you're a small business in Bennington.

00:53:13What I'm wondering about,

00:53:14is there anything that Congress can do

00:53:16or anything probably

00:53:18on a more practical level

00:53:19that the administration can do

00:53:21to increase awareness

00:53:23of what those current programs are

00:53:26and make them in a practical,

00:53:29real-world way accessible

00:53:30to some of these small businesses

00:53:33that would significantly benefit

00:53:35if it could be an easy process

00:53:37to get access to that help?

00:53:40Yeah, absolutely.

00:53:41Thank you, Senator.

00:53:43There are a dizzying array,

00:53:44as I mentioned in my testimony,

00:53:45of federal programs

00:53:46available to small business owners

00:53:47across the country.

00:53:49That's the emphasis on dizzying.

00:53:54Many of them are housed at agencies

00:53:55that small business owners

00:53:56would least expect.

00:53:57So, USDA has, I believe,

00:53:59it's over 50 financial assistance programs

00:54:01for rural applications.

00:54:02And a number of those,

00:54:0319 that I have in front of me here,

00:54:04are for rural businesses specifically.

00:54:06And I think a lot of small business owners

00:54:08wouldn't go to USDA

00:54:09as kind of their first resource for this.

00:54:11So, as I mentioned in my testimony,

00:54:13if the Office of Rural Affairs at SBA

00:54:15could be empowered

00:54:17to become a central access point for information,

00:54:19if they could really take on...

00:54:21So, I know that the Rural Partners Network

00:54:22is out there.

00:54:23That's something that the administration has done.

00:54:24To implement what you just said,

00:54:26that sounded like a very practical suggestion,

00:54:29what do we need to do?

00:54:31We need to make sure

00:54:33that that office is empowered.

00:54:34So, in S4764,

00:54:37that bill specifically calls

00:54:39for the creation of an assistant administrator

00:54:40for that specific office,

00:54:42which has been dormant for a while.

00:54:43I think revitalizing that office

00:54:45and just giving it the mandate to pull...

00:54:46Hold on, let's go.

00:54:48How do you empower them?

00:54:49That's like making decisions, right?

00:54:50So, they can act.

00:54:51What you just said

00:54:52is giving them another administrator,

00:54:54which may be a good idea,

00:54:55but that is not about empowering it.

00:54:57What do you mean by empower?

00:54:59I think I mean empower

00:55:00in terms of just to give them the base ability,

00:55:03because right now the office has been dormant.

00:55:04So, it was originally authorized in, I think, 1990

00:55:06and has been largely dormant since.

00:55:08And so, by empower,

00:55:08I truly just mean give this extant office

00:55:11that does not have a current mandate,

00:55:12the ability to go and pull that together.

00:55:15Give them maybe a congressional mandate

00:55:16to pull that information together

00:55:17and act as an operations center.

00:55:20Okay, and how would you see that rolling out?

00:55:25I think the...

00:55:26I want to leave the specific implementation

00:55:29to the true professionals here.

00:55:30I think I have a limited ability

00:55:33to see exactly how they would operationalize

00:55:35that inside SBA,

00:55:36but I think the rollout of that

00:55:38would be something along the lines of SBA

00:55:40could work with SBDCs

00:55:41and the other community partners they have

00:55:43to advertise the resources that are available.

00:55:45They could mention to folks as they come in

00:55:47that this is a new program

00:55:48that they could take advantage of

00:55:49where they could come and talk

00:55:50to specific points of contact

00:55:52at the Office of Rural Affairs

00:55:53who would have access

00:55:54to all of the information

00:55:55they need to start a business.

00:55:56I think starting a central web portfolio is great

00:55:58because so many rural small businesses

00:56:01can access government resources

00:56:03better through online portals

00:56:05than they can through...

00:56:06It's got to be made really simple, right?

00:56:09What about just giving information

00:56:12about what markets may be available

00:56:15to some of our rural enterprises?

00:56:19Oh, and that's fantastic.

00:56:20So there is a little bit of work

00:56:22already going on in that space.

00:56:23So RAISE,

00:56:24the Rural America's Intelligence Service

00:56:26for Exports Research,

00:56:28that's part of what the rural export centers

00:56:30and ITA is providing.

00:56:31And I think more people

00:56:33would take advantage of that,

00:56:33more small exporters specifically,

00:56:35if we could just point them in that direction.

00:56:37So I think there are a lot

00:56:39of existing resources like that

00:56:40that provide a lot of the services

00:56:42that I think we would want

00:56:43folks to have access to.

00:56:45It's more about just making sure

00:56:46they know where they live.

00:56:47Okay, thank you.

00:56:48I yield back.

00:56:49Thank you, Madam Chair.

00:56:51Well, I'm going to kind of continue

00:56:53on this topic

00:56:54because we all need to do more online.

00:56:56And as a person who used

00:56:57to write application software,

00:56:59now known as apps,

00:57:00I think using some of the dashboard

00:57:02and apps that you've all talked about

00:57:04are really important.

00:57:05And I was pleased to say

00:57:06that my Middle Mile Broadband Deployment Bill

00:57:09became the base bill

00:57:11for the infrastructure bill

00:57:12that is getting rural broadband out there.

00:57:16We're getting it out to everywhere

00:57:18because no one can function anymore without it,

00:57:21as everybody has stated.

00:57:22And this is going to help us expand broadband

00:57:25in every community in this country,

00:57:27and particularly in our deep frontier

00:57:29rural communities in Nevada,

00:57:31very important.

00:57:32And so I'm going to talk about

00:57:34emerging export industries.

00:57:36And when we think about

00:57:38rural export industries,

00:57:40of course, agriculture comes to mind,

00:57:42thinking about the cold chain storage,

00:57:43of course, as hot as it's been this summer,

00:57:45cold chain, that doesn't sound too bad.

00:57:48But the United States is a leading exporter

00:57:51of agricultural products,

00:57:52exporting goods from grains to livestock

00:57:55across the globe.

00:57:56And as Mr. Davidson knows in Nevada,

00:57:58we export alfalfa all over the world every year.

00:58:03Advanced manufacturing and clean energy

00:58:06also provide critical export opportunities

00:58:08for rural Nevada and rural America.

00:58:11Manufacturing is a key economic contributor

00:58:14for our rural communities,

00:58:15often supporting more jobs,

00:58:17higher earnings in rural areas

00:58:18than in urban areas.

00:58:20And so with surging investment

00:58:22in clean energy technologies,

00:58:24supporting clean energy related

00:58:25advanced manufacturing in rural areas

00:58:28can provide export opportunities

00:58:29to both current and potential exporters.

00:58:33As the only state that is home

00:58:35to lithium mine deposits,

00:58:37Nevada has become a hub for electric vehicle

00:58:40and battery manufacturing.

00:58:42And that's why earlier this year,

00:58:43I was proud to help secure

00:58:44a federal tech hub designation

00:58:47and funding for the University of Nevada's

00:58:49lithium loop project,

00:58:51which will create an even more robust,

00:58:54more economic opportunities

00:58:56for us up in northern Nevada.

00:58:58So I'm going to ask you first, Mr. Davidson,

00:59:00can you speak to the importance

00:59:02of directing federal investment

00:59:03to emerging industries like clean energy,

00:59:06but it could be others

00:59:07and the ways that small exporters

00:59:09can benefit from that.

00:59:11And then I'm going to ask Mr. Westcott,

00:59:12Mr. Salamino, any comments to add to that

00:59:16as we build into some of these

00:59:18new emerging technologies,

00:59:20what you might have for that as well.

00:59:21But we'll start with you.

00:59:23Thank you, Chairwoman.

00:59:24Investing our federal investment

00:59:27to clean energy and to other technologies

00:59:31as a dry state, as a hot state,

00:59:33we're always looking for the latest

00:59:35water conservation technology

00:59:36that we can use for traditional agriculture.

00:59:40Nevada stands ready to be the leader

00:59:42for the full lithium loop in the United States.

00:59:44We're really excited for that.

00:59:46And also solar with the hot, the sun,

00:59:49I think we can be a leading state

00:59:50in terms of the solar energy.

00:59:53So I think moving all of these federal investments

00:59:56to other opportunities like this are key,

00:59:59especially for Nevada rural exporters and producers.

01:00:02We have more solar jobs per capita

01:00:04than any other state in the nation.

01:00:05So we're on our way there.

01:00:07So Mr. Westcott, can you talk about

01:00:09emerging technologies and what you think

01:00:12some of these investments we're making

01:00:13will help our small businesses

01:00:15and rural communities?

01:00:16Happy to.

01:00:17So small businesses are among

01:00:18the most innovative in the country.

01:00:19We really, we have a fantastic economy

01:00:22that allows these entrepreneurs

01:00:24to really roll their sleeves up

01:00:25and get involved in emerging technologies

01:00:26from the ground level.

01:00:27So anything we can do to support that

01:00:28is fantastic.

01:00:29I think one of the things,

01:00:32going back to what we were talking about before,

01:00:34with online resources,

01:00:35that is one of the greatest things

01:00:36that we can do to support small businesses

01:00:38in these high innovative spaces

01:00:41is just to make sure that they have access

01:00:43to the resources that they need.

01:00:45So any issues that they have

01:00:49are kind of exacerbated

01:00:50by a lack of access to resources.

01:00:52So that digital divide

01:00:53that you were mentioning before

01:00:54is really crucial for us

01:00:56to overcome in that space.

01:00:57Yeah.

01:01:00Mr. Salmino.

01:01:02Thank you, Senator.

01:01:04North Carolina enjoys right now

01:01:05reliable, affordable energy.

01:01:07And an all of the above energy strategy

01:01:09is one of the things that makes it work.

01:01:11And I think as we look to expand

01:01:13into other technologies,

01:01:15more and more energy will be required.

01:01:17So looking at advanced nuclear energy

01:01:19and facilitating the development

01:01:21of clean advanced nuclear energy

01:01:23will help our manufacturers

01:01:25and help our businesses

01:01:26and help those small businesses

01:01:28that are multiplier effect of those.

01:01:30It'll create more energy.

01:01:31It'll be cleaner energy.

01:01:33And it'll also free up energy

01:01:35that's currently on the grid

01:01:36for our smaller businesses

01:01:37and keep it affordable for our consumers.

01:01:39So an all of the above energy strategy

01:01:42that takes the clean energies

01:01:43and takes the energy we have to transition

01:01:45to our clean energies

01:01:46makes a whole lot of sense.

01:01:48And keeping everything on the table

01:01:49will keep it affordable and reliable.

01:01:51And that's key for small businesses

01:01:53that are innovating.

01:01:54Yeah, I would add

01:01:55water smart technology to that too.

01:01:58As we think about places

01:01:59that have too much

01:02:00and places that don't have enough.

01:02:03Senator Budd.

01:02:05Thank you, Chair.

01:02:07Just to carry on,

01:02:08continue on with something

01:02:10you were speaking about

01:02:11with Senator Hickenlooper

01:02:12a few minutes ago.

01:02:14You mentioned workforce availability

01:02:17being a very critical issue,

01:02:18not just for North Carolina.

01:02:20I imagine the other states

01:02:21and territories as well.

01:02:23So I've been actively

01:02:24working on this issue

01:02:25and have introduced

01:02:25several pieces of legislation

01:02:27to deal with this.

01:02:28One is, and I think you mentioned this

01:02:30in your opening comments,

01:02:32the Pell Act,

01:02:33but also the Employer Directed Skills Act.

01:02:36Could you talk, Mr. Salamito,

01:02:39about how these bills

01:02:40could specifically help

01:02:41solve the workforce shortage,

01:02:43particularly in rural areas?

01:02:46Thank you, Senator.

01:02:46And again, thank you

01:02:47for both of those bills.

01:02:50It's about workforce,

01:02:50workforce and workforce.

01:02:52So they ask us the top three issues

01:02:53are talent, talent and talent.

01:02:55And by looking to make available resources,

01:02:58particularly to our adult learners,

01:03:00but to all of our learners,

01:03:01our veterans.

01:03:03For example, 20,000 veterans

01:03:05get discharged from North Carolina

01:03:07bases every year.

01:03:08So making resources available to them

01:03:10to get the skills they need

01:03:11to stay in North Carolina

01:03:13or wherever they're going to

01:03:14are critically important for that.

01:03:16The transparency in those bills

01:03:18is critically important to helping

01:03:22make it simpler for those folks

01:03:23that want to get reeducated,

01:03:24retrained for the jobs of today

01:03:27and tomorrow are critically important.

01:03:29Also for thoughtful,

01:03:32in the area of criminal justice reform,

01:03:34thoughtful criminal justice reform,

01:03:36there's a whole bunch of folks out there

01:03:37that are nonviolent folks

01:03:40that have got caught into the system.

01:03:41So getting thoughtful

01:03:43criminal justice reform

01:03:44combined with workforce systems

01:03:46and the support for those systems

01:03:47that the two pieces of legislation

01:03:49that you've put forward provide

01:03:51are incredibly important.

01:03:53We have more jobs than we do people

01:03:55and our birth rates are down.

01:03:56So we have to look at our existing communities

01:03:59and what people are there

01:04:00and then make sure

01:04:01that they can get trained and retrained

01:04:03to have long, viable careers

01:04:05until our birth rate

01:04:06catches up one day again.

01:04:08But it's just we have so much opportunity

01:04:11and it's just not enough people to fill them.

01:04:13So with the people that we have,

01:04:14the programs that you put forward,

01:04:16the bills you put forward

01:04:17combined with the workforce initiatives

01:04:19that Senator Higginlooper talked about

01:04:21are critically important

01:04:22not only for the people

01:04:23that are in our state

01:04:24but for the way we attract talent to our state

01:04:28to help stay competitive.

01:04:32If I may continue on,

01:04:35you mentioned something of 14 years ago,

01:04:37a market shift in our state around 2010

01:04:42and I was able to thank Senator Tillis

01:04:45when he was in the state legislature

01:04:47and he was the Speaker of the House then

01:04:50and some other leaders

01:04:51had come to Washington last night

01:04:53and they were in the room

01:04:54and he had done a good job of passing the baton

01:04:56before he came here to Washington.

01:05:00But if you would talk a little bit

01:05:02about that shift

01:05:03where we became business and opportunity friendly

01:05:06and now we can see the results

01:05:08multiple years in a row

01:05:09being the best place in the nation to do business

01:05:11and now we're competing with Virginia it seems.

01:05:14But if you could talk about that shift

01:05:16and sort of talk about

01:05:17where those ideas come from

01:05:20and how it's not government solving

01:05:22but it's government working in collaboration

01:05:24with great private industry leaders.

01:05:26How do we take good ideas,

01:05:28bring them to the surface and carry on?

01:05:30I'm sure in other states

01:05:32they've got great ideas as well

01:05:33but how do we allow those to surface

01:05:35and not extinguish these good ideas

01:05:37so that we can continue to innovate

01:05:39and grow in different states?

01:05:41Thank you, Senator.

01:05:42The first step is to hold up a mirror to yourself

01:05:44and have the courage to know

01:05:46what you're not good at

01:05:47and to look at the economy

01:05:48and to look at why

01:05:49or ask the hard questions early on.

01:05:51So that's what we did.

01:05:52What the business community came together

01:05:54with business-minded public officials

01:05:57and said, okay, what are we not good at?

01:05:59And got really courageous and thoughtful about that

01:06:02and then we put them into buckets

01:06:05that I talked about earlier,

01:06:06education and talent,

01:06:07competitive business climate and infrastructure

01:06:10and then made the conscious decision

01:06:11that we have to do them all, right?

01:06:13And how do we do them?

01:06:15Well, let's take bites out of,

01:06:16let's take one-year bites out of each of those things

01:06:19because we know where we want to be.

01:06:20Back then they were saying three million people

01:06:22were going to come to North Carolina by 2030.

01:06:25We surpassed that about five years ago, right?

01:06:27And they're continuing to come for our quality of life.

01:06:30They're continuing to come for a good job

01:06:32and a good place to raise their family.

01:06:34So you have to look in the mirror.

01:06:36You have to make the hard decisions.

01:06:38You have to realize you have to do it year after year

01:06:40and never be complacent

01:06:41and that's why North Carolina has been so good.

01:06:44It was really courageous back in 2010, 2012

01:06:48because a lot of folks were indicating

01:06:50that that's too much too fast, but we didn't.

01:06:52We did it at a good and a balanced pace,

01:06:54whether it was tax reform,

01:06:56whether it was regulatory reform

01:06:58or whether it was infrastructure investment

01:07:00and diversifying how we pay for things.

01:07:03So it takes courage up front

01:07:04and then just a steady one-year plan to execute on that

01:07:08and then the best time to change your game

01:07:10is when you're on top of your game.

01:07:11Continue to make those hard investments

01:07:13in our education systems now,

01:07:15in our infrastructure systems

01:07:17and protect the paper on the good policies that we've passed.

01:07:20I know you talk with a lot of your other colleagues

01:07:22around the country.

01:07:23What is something that discourages

01:07:26the surfacing of these good ideas and leadership?

01:07:28I'm sure you see it done poorly

01:07:32without naming names.

01:07:34Who's done it wrong and what discourages growth?

01:07:38A lack of predictability

01:07:40and not having, I mean, businesses,

01:07:43as you know, being a business owner,

01:07:44you just want a steady, predictable,

01:07:46you want to know what the rules are

01:07:48and you want a judicial system

01:07:49and a legal system that calls balls and strikes.

01:07:52So not having that predictability

01:07:54keeps investment on the sideline

01:07:56because you want to know

01:07:56if you're going to put your investment in

01:07:58not only what it's worth today,

01:07:59but is it worth tomorrow?

01:08:00Am I going to be able to generate more jobs tomorrow

01:08:03because I'm certain of what I'm going to be facing?

01:08:06So I think when you look around,

01:08:07wherever there's uncertainty,

01:08:09wherever there's volatility,

01:08:10wherever there's lack of predictability

01:08:13in a legal climate,

01:08:15unbalanced regulations that go too far

01:08:18in either direction,

01:08:19I think those are the things that businesses say,

01:08:21hold on, let me wait a little bit

01:08:23and see before I invest.

01:08:24So to the extent that our state

01:08:26and other states can balance that out,

01:08:28have a clear plan,

01:08:29that helps businesses invest.

01:08:31Thank you, Chair.

01:08:33I'd like you to recognize Senator Klobuchar.

01:08:35She's remote.

01:08:36Thank you, Senator Klobuchar.

01:08:38I've returned

01:08:41and appreciate letting me say that minute,

01:08:44but I wanted to,

01:08:44I got my questions done

01:08:46in a very important hearing here.

01:08:48And this really matters to,

01:08:50as I noted, our state a lot.

01:08:53And I just don't think there's enough emphasis

01:08:56on rural export

01:08:58when over 95% of the world's consumers

01:09:02live outside the US

01:09:04and there's literally a world of opportunity.

01:09:06So I really appreciate the chair

01:09:08and the ranking members focused.

01:09:10One of the things that US exporters

01:09:12in my state have,

01:09:14were very concerned about,

01:09:16continue to be concerned,

01:09:17is just the cost of shipping.

01:09:19And that's why Senator Thune and I

01:09:22teamed up several years ago

01:09:23to pass that bipartisan shipping reform bill

01:09:28that the president signed into law.

01:09:30And that was a major effort

01:09:32out of the Commerce Committee.

01:09:34And it actually, the rates went down

01:09:37for quite a while

01:09:38and they're still not where they were

01:09:40at the peak of the pandemic,

01:09:42which is good

01:09:42and affects manufacturers and farmers.

01:09:45There's still some issues

01:09:46that I've been hearing

01:09:48about the effect of terrorism

01:09:51and other things on shipping rates.

01:09:53But Mr. Davidson,

01:09:55can you talk to the importance

01:09:56of having a reliable,

01:09:57resilient supply chain

01:09:59when it comes to exporting?

01:10:02Thank you, Senator.

01:10:03Yes, supply chain is a huge factor,

01:10:06especially for agriculture

01:10:07and food production.

01:10:09With Nevada exports primarily utilizing

01:10:11the three key ports of Oakland,

01:10:14LA and Long Beach,

01:10:15the likelihood of exports

01:10:16being taken advantage of

01:10:17at the port is likely.

01:10:19But thanks to the bill

01:10:21that you and your colleagues passed

01:10:23has helped protect those producers

01:10:25from being declined at the port.

01:10:27Although that part is taken care of,

01:10:30we do see some struggles

01:10:31with our southern border

01:10:32and getting our fresh onions

01:10:34into the Mexico markets.

01:10:37They passed all of the USDA

01:10:38and U.S. regulations.

01:10:40And then when they get into the market,

01:10:42they get denied and then sent back.

01:10:44And then that producer

01:10:44is no longer allowed to import

01:10:46into the Mexican market.

01:10:48So I think there's still work to be done

01:10:50on getting exports out there.

01:10:52I think the Ocean Shipping Reform Act

01:10:55is one step,

01:10:56but to continue those efforts.

01:10:59Very good.

01:11:00Mr. Salamito,

01:11:02Brand USA, as Senator Rosen is well aware

01:11:05with her work on tourism

01:11:07and her leadership,

01:11:08is a public-private partnership

01:11:10that promotes international tourism

01:11:12in the U.S.,

01:11:13doesn't use taxpayer dollars,

01:11:16uses fees on visas

01:11:18on visitors from foreign countries.

01:11:20It's generated 56 billion

01:11:23to our economy.

01:11:25This foreign travel since 2013

01:11:28supports about 40,000 jobs each year.

01:11:31Senator Blunt and Moran and I

01:11:33have worked on this for years.

01:11:35Blunt, when he was here,

01:11:37talked about how the Congress

01:11:39can support tourism in rural areas.

01:11:42Again, this is one of those exports.

01:11:44It's a little bit,

01:11:45you don't think of it as an export

01:11:46because it's not like a sugar beet.

01:11:49But could you talk about

01:11:51how you can actually make money

01:11:54off of tourism in rural?

01:11:56Thank you, Senator.

01:11:57And thank you for your work on Brand USA

01:11:59because tourism is a critical component

01:12:01of North Carolina's economy

01:12:04from the mountains to the coast.

01:12:06For us, it's a total direct spending,

01:12:08it's about 35 billion a year.

01:12:10We employ over 227,000 folks

01:12:13in the tourism industry throughout there.

01:12:15Those areas are in non-urban and rural areas.

01:12:18So it's critically important.

01:12:19We appreciate the work

01:12:21you've done on Brand USA.

01:12:23We have a public-private partnership

01:12:25in North Carolina for economic development also,

01:12:28who a key arm of that is tourism

01:12:31and making sure that those jobs

01:12:34that are in rural areas

01:12:35that allow people to explore mountains

01:12:38and rivers and our coast

01:12:39and everything in between.

01:12:41So critically important to what we do.

01:12:43Our visitor spending per day

01:12:45is almost $100 million in North Carolina

01:12:48for tourism-related activities.

01:12:50So that's a lot of small business,

01:12:52a lot of rural business

01:12:53who can feed their families

01:12:54and invest in their communities

01:12:56because of the importance of tourism

01:12:58to our rural community.

01:12:59Okay.

01:13:00Mr. Westcott, the Rural Export Center

01:13:03in Fargo, North Dakota,

01:13:05which also helps that part nearby of my state,

01:13:09provides data analytics and resources

01:13:11to support small businesses in rural areas.

01:13:15Senator Hoeven and I have long led

01:13:17the Promoting Rural Export Act

01:13:19to authorize this center permanently.

01:13:22Can you talk about the role

01:13:24that data analytics plays

01:13:25in supporting small businesses?

01:13:29So it's basically so they know

01:13:30where to go with their product

01:13:32when they don't have an entire arm

01:13:34of a small business of 20 people

01:13:36maybe devoted to exporting in Kazakhstan

01:13:39or other places like some of our big businesses

01:13:44have trade experts in regions of the country

01:13:46that small businesses just wouldn't be able

01:13:49to have the funding to hire.

01:13:51Yeah, thank you, Senator.

01:13:52I appreciate the question.

01:13:53I think you hit the nail on the head there.

01:13:54The big thing is these centers

01:13:56and the resources and the research

01:13:58that they provide are allowing small companies

01:14:00to compete on the global stage

01:14:02in areas where they wouldn't be able to otherwise.

01:14:04It provides them with insights, tools,

01:14:06and data that was previously reserved

01:14:08only for the biggest corporations

01:14:09who are able to operate in multiple markets

01:14:11all over the world and finance folks

01:14:13in the most far-flung of destinations.

01:14:14So these centers are crucial.

01:14:16They provide folks with much-needed data

01:14:18to understand the size of the potential market

01:14:19they're working with,

01:14:20who their potential partners might be,

01:14:22give them just generally a 30,000-foot look

01:14:24into the potential market

01:14:25they're exploring internationally.

01:14:26So they're fantastic,

01:14:27and we're very, very happy to see them

01:14:29continue to support small businesses.

01:14:32And I'll do my last question on the record

01:14:34because everyone's been so patient,

01:14:36but it is about the importance

01:14:37of the Farm Bill passing, Mr. Davidson,

01:14:40and the ag export piece of this

01:14:43with both the Market Access Program

01:14:45and the Regional Agricultural Promotion Program,

01:14:48which play a key role in rural

01:14:51as well as some of the other things

01:14:52we've talked about today.

01:14:53So hopefully we can get that Farm Bill done this year.

01:15:01Thank you, Senator.

01:15:03Appreciate it.

01:15:05I have one final question,

01:15:06and so does Senator Budd.

01:15:07So I want to talk about,

01:15:09just make a comment about workforce,

01:15:10and I'm just going to ask everybody yes or no,

01:15:13because we need workforce

01:15:14and we need capital, right?

01:15:16They have to exist together.

01:15:17So does everyone here support

01:15:19expanding apprenticeships,

01:15:21internships, and incentives?

01:15:23Would that be a good thing

01:15:24to help our rural businesses?

01:15:27You can just...

01:15:29Emphatic yes.

01:15:30Emphatic yes, Mr. Davidson.

01:15:32Absolutely, Senator.

01:15:33Mr. Westcott.

01:15:34Couldn't agree more.

01:15:35Yeah, I know many of us have bills.

01:15:37I have a bill you talked about,

01:15:38adult education works for returnships,

01:15:41people who have stepped away from the workforce,

01:15:43maybe for child care or elder care

01:15:47or other kinds of issues in their life,

01:15:50so they want to upskill or reskill.

01:15:52And so these are really important.

01:15:53But I'm going to move on

01:15:54to the second piece of this,

01:15:55which is access to capital,

01:15:57because you need people

01:15:58and the finances to do things, right?

01:16:01So small businesses,

01:16:03we know they often cite a lack of access to capital

01:16:07and obstacles.

01:16:08One of the main obstacles

01:16:09they have reaching their foreign markets.

01:16:11And so it's really vital.

01:16:13And exporting activity

01:16:15can actually just be more costly

01:16:17than domestic business

01:16:18due to its complicated,

01:16:21excuse me, regulatory hurdles and logistics,

01:16:23as you've all alluded to.

01:16:25And so despite its importance to their operation,

01:16:28rural export businesses

01:16:29face significant barriers accessing capital,

01:16:32with many relying on a dwindling number

01:16:34of small banks, local banks for financing.

01:16:37You've spoken about this too, Mr. Westcott.

01:16:39I'm going to ask each of you

01:16:41a little bit a different question.

01:16:44Mr. Westcott,

01:16:46what specific characteristics of export businesses

01:16:49make financing particularly difficult?

01:16:53And how can we exacerbate these challenges

01:16:55in rural communities?

01:16:56And then I'll have a separate question

01:16:58for each of you.

01:17:00Thank you so much, Senator.

01:17:00Appreciate that.

01:17:01So the number one thing

01:17:02that I heard in talking to my members

01:17:03about this exact issue was

01:17:05they've noted that a lot of banks

01:17:06have an issue with the specific sizes of loans

01:17:08that they're looking for.

01:17:09So given economic headwinds,

01:17:12inflationary pressures,

01:17:14other financial uncertainty,

01:17:15banks in some of my members' experience

01:17:18tend to prefer giving a single larger loan

01:17:21to a larger business or a larger operation

01:17:24that has that guarantee tied to it

01:17:25as opposed to the corresponding 10, 15, 20

01:17:28smaller loans that would kind of feed into that.

01:17:30So I think it's really a size issue as well

01:17:34as much as anything else.

01:17:37And so Mr. Davidson,

01:17:40how can Congress expand

01:17:41and strengthen existing

01:17:43federal export finance program

01:17:44to better reach rural businesses?

01:17:46And if you could talk to us

01:17:49about the structural barriers

01:17:51or the requirements

01:17:52that make these programs difficult

01:17:55for our small businesses to access.

01:17:56Maybe they want large loans,

01:17:59not the micro loans, right?

01:18:01Absolutely.

01:18:02Thank you, Senator.

01:18:02I think just being able to expand

01:18:04on the existing programs that we have

01:18:07and really looking at the federal export

01:18:10finance programs and SBA lending programs.

01:18:13I mean, every, especially in the food

01:18:14and ag sector requires a lot of loans.

01:18:17We actually have a 24-year-old farmer

01:18:20in Fallon, Nevada,

01:18:21who is currently $2 million in debt

01:18:23because he needs to purchase land

01:18:25and equipment to be able to have

01:18:26a livable production facility.

01:18:29It's not sustainable for younger producers

01:18:33or frankly, anybody.

01:18:34So by looking at these lending programs

01:18:38and the financial constraints

01:18:39to be able to kind of relief some of these,

01:18:42maybe it's a lower interest rate

01:18:44on some of the loans

01:18:45or more access to be able

01:18:47to get into these loans.

01:18:49Because where is a 24-year-old

01:18:52going to find $2 million

01:18:53to be able to build their business?

01:18:55And we have a lot of wonderful young folks

01:18:58in Nevada that do want to do these things.

01:19:00And so, Mr. Salamito,

01:19:01I'm going to finish my last bit

01:19:02of question with you

01:19:04about the private sector,

01:19:05what private sector financing options

01:19:08are available to the small

01:19:09rural export businesses

01:19:11and how might we partner better?

01:19:14Yeah, a real hidden gem

01:19:16that we all need to do a better job

01:19:18of getting the information

01:19:19at our small business administration

01:19:22groups, units within our states.

01:19:25Our SBTDC has about 7,000 clients right now.

01:19:29And that's money

01:19:30that the federal government

01:19:31has put forward

01:19:31and North Carolina government

01:19:32has put forward

01:19:33to give small businesses

01:19:35of all sizes and shapes

01:19:36understanding on how to get

01:19:37into the export market,

01:19:39how to access capital.

01:19:40And it's there at no cost

01:19:42to the small business.

01:19:44It's been paid for

01:19:45with their tax dollars already.

01:19:46And the SBTDC sits there

01:19:48and brings people in

01:19:50and helps them become bankable.

01:19:52And that's why we created

01:19:53the Capital Opportunities app.

01:19:56Let's use the small business experience.

01:19:58Let's create an access to the capital.

01:20:00The capital is there.

01:20:02We have to help small businesses

01:20:04understand how to get bankable

01:20:06and that there are resources

01:20:07that are available to them

01:20:08on our 17 campuses

01:20:10of our university system.

01:20:11They're all right there.

01:20:12Fantastic.

01:20:13I'm going to turn it over

01:20:13to you, Senator Budd.

01:20:16Thank you, Mr. Salamito.

01:20:18You know, banking deregulation

01:20:20has been huge for North Carolina

01:20:21over recent decades.

01:20:23But kind of using that as an example,

01:20:26are there other areas,

01:20:27specifically if policy was

01:20:30or if there was deregulation

01:20:31or if there was regulation reform

01:20:33or outright removal,

01:20:35is there any area specifically

01:20:38that would help

01:20:40North Carolina's economy

01:20:41and it would specifically

01:20:43help rural economies

01:20:44if there was deregulation reform

01:20:46or outright removal

01:20:48of regulatory constraints?

01:20:51Yeah, I think there's two specific areas

01:20:53related to workforce

01:20:54where regulatory reform,

01:20:56modernization, elimination

01:20:58really would be helpful.

01:20:59One is in child care.

01:21:02In child care right now,

01:21:04if two people are working,

01:21:05it's really difficult to get child care

01:21:07that facilitates work, right?

01:21:09Because they have to make,

01:21:11it's very expensive.

01:21:12So there are ways to modernize

01:21:14and look at our child care regulations,

01:21:16keep our children safe

01:21:17by all measures, right?

01:21:19But let's look at

01:21:20how we use innovation,

01:21:21how we use our young people,

01:21:22how we use our education

01:21:24and what are educational requirements

01:21:26for child care workers,

01:21:27making sure they're aligned

01:21:28with today's economy

01:21:29and what the needs are in those areas.

01:21:31I think child care is an area.

01:21:33Housing is a significant area

01:21:35as we look at permitting reform.

01:21:37How do we make sure

01:21:38that we modernize our permits?

01:21:40I think it affects two things.

01:21:41It affects our urban areas

01:21:43and it affects our,

01:21:45excuse me, our rural areas

01:21:46because of the competition for land, right?

01:21:49So if we allow and free our urban areas up

01:21:52to appropriately modernize their permits

01:21:55to allow for different ways,

01:21:57that also keeps their urban areas

01:21:59from expanding into the rural areas

01:22:02for housing and land.

01:22:03It becomes really complicated

01:22:05when there's this generational shift going on

01:22:07in our agriculture community now.

01:22:08There's just not as many young people

01:22:11and big families as there were before.

01:22:13So a farmer who's had a farm

01:22:15for a long time

01:22:16has to be able to get something out of that.

01:22:18And if there's no one to give it to,

01:22:20then the land competition

01:22:21for land goes up significantly.

01:22:23If we can do permitting reform

01:22:25to allow our urban areas

01:22:27not to necessarily need

01:22:29to expand out into our rural areas as much,

01:22:31I think it'll be significant.

01:22:33So housing and child care

01:22:35are two particular areas

01:22:36that should never take us longer

01:22:38to permit something

01:22:38than it does to build it.

01:22:40That's often the case.

01:22:41Thank you so much for coming up

01:22:42and thank the panel.

01:22:44Well, I want to thank all the witnesses.

01:22:47We have a lot of notes

01:22:48and a lot of work to do.

01:22:49I sit on both committees of jurisdiction.

01:22:52I do want to say, Mr. Salamito,

01:22:53that Senator Ernst and I

01:22:55have a great bipartisan bill

01:22:56we've been working on

01:22:58called the Small Business

01:22:59Child Care Investment Act

01:23:00that allows the SBA,

01:23:01if you're a nonprofit,

01:23:02if you're a church, a synagogue,

01:23:04a Boys and Girls Club, a YMCA,

01:23:06any other nonprofit,

01:23:08it allows you suddenly access

01:23:10to SBA resources to put up child care

01:23:12because there's child care deserts

01:23:14all across this country,

01:23:15urban and rural,

01:23:16affordability, availability.

01:23:18We've even had senior centers

01:23:20who say, look, we have the land,

01:23:21we have commercial kitchens.

01:23:23We could, they're nonprofit,

01:23:25we could put up child care

01:23:26right on our campus,

01:23:27which would be very helpful

01:23:28in some of our rural communities.

01:23:30So we're trying hard to get that passed.

01:23:32And like I said,

01:23:33just removes the guardrails

01:23:34for nonprofits to be able to do that

01:23:36and address this very issue

01:23:38you're talking about.

01:23:40But I want to thank all of you so much

01:23:42for participating in today's hearing,

01:23:44for the hard work you're doing,

01:23:46for the thoughtfulness and care

01:23:48that you're putting behind

01:23:50what you're thinking about,

01:23:51how you're planning for the future,

01:23:53how you're reaching out

01:23:54to our communities,

01:23:56reaching out to our small businesses,

01:23:58whether they're young as 24 years old,

01:24:01people who want to start out,

01:24:02or we don't want to say going up

01:24:03and maybe the family farmer

01:24:06who wants to give it

01:24:07to their grandchildren.

01:24:09And so it's really important.

01:24:11We really appreciate examining

01:24:14the rural export businesses,

01:24:16the landscape for that.

01:24:18And your testimony

01:24:19has just been terrific.

01:24:21So the hearing record

01:24:23will remain open for two weeks

01:24:25until Tuesday, August 12th, 2024.

01:24:28Any senators who would like

01:24:29to submit questions for the record

01:24:31should do so by Tuesday,

01:24:32August 12th, 2024.

01:24:34And for those of you

01:24:35who testified today,

01:24:37we ask if you get those questions

01:24:38for the record,

01:24:39that your responses be returned

01:24:41to the committee as quickly as possible

01:24:43and in no case later

01:24:44than two weeks after receipt.

01:24:46That concludes today's hearing.

01:24:48Thank you again.

Jacky Rosen Leads Senate Commerce Committee Hearing On Enabling Rural Businesses To Grow

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