comprehensive blueprint for enhancing the security of the supply chain especially given the enormity of the task and the number of stake holders involved. nevertheless, i expect to hear testimony today from dhs witnesses about how successful the department has been at creating programs to ensure that shippers can be trusted, manifest or analyzed, and ports are protected. these programs play an important role in maritime security; however, they do not take the place of having an active partnership where cbp personnel work with overseas counterparts in ports to examine high risk cargo containers before they arrive in u.s. ports. after all, what good is identifying a high risk container if it does not get examined until it's arrived in

the ports of new york, houston, los angeles, new orleans, or any of the other hundreds of ports across america? by then, it very well may be too late. i hope to hear from our witnesses today, not only about the successes, but also about what remains to be done to secure maritime cargo and how we can get there. meaningful homeland security will only be achieved when we know who and what is coming into this country, not only by air and land, but also by sea. i thank the witnesses for joining us today. madam chair, i look forward to their testimony. >> i thank the gentleman. i remind all the other committee members as well that opens statements you may have can be submitted for the record, and we're pleased to have two distinguished panel, but first a congressman jerry nadler who represents the 8th district of

new york including the west side of manhattan, financial district, and neighborhoods in southwestern brooklyn. began the political career serving for 16 years, and then in 1992, elected to the u.s. house of representatives in a special election, and he's been here ever since. with that, the floor is yours, sir, and, again, we appreciate you taking time to give us your testimony and up sight on this issue today. >> thank you very much, chairwoman miller, ranking members, members of the cube committee. thank you for inviting me to testify today on the issue of maritime security and trade facilitation. i speak today not as a cargo security expert, but as a member of whong long advocated we, as a nation, have to do a better job of ensuring cargo arrives safely every day. i have the honor of representing manhattan and brooklyn. the world trade center site is in my district is as of many of

the ports in new york and new jersey. i believe my district is an example of why we have to secure our nation including our ports and waterways while also ensuring the flow of legitimate commerce. as you might recall, i was the author of many of the port provisions of the implementing recommendations of the 9/11 commission act of 2007. i worked closely with chairman thompson and representatives to push for inclusion of the 100% scanning provision into the measure, and we were successful. section 17.01 of that act states by july 12, 2012, all cargoes have to be scanned by detection technology before being loaded on a vessel bound for the u.s. unless the secretary of homeland security extends the deadline by certifying it is not currently feasible. in short, this requires scanning up all maritime cargo containers before they arrive in this country. we understood we must not wait to impose security measures

until containers reach the united states. scanning containers in the u.s. port is not sufficient. if there is a nuclear bomb inside a container, and it is detected by radiation port monitors in newark or miami or los angeles, it may very well be too late. leading the cargo manifest is not enough. trusting shippers is not enough. we've to verify the contents in the containers at the point of origin before bound on a ship to america. the law is designed to do just that. when i sphwro deuced the free -- introduced the bill on this topic pushing for inclusion on the 9/11 act, i understood achieving the 100% scanning mandate would be neither easy nor cheap. i was told of a potential terrorist attack on our soil. the area is home to approximately 19 million people and the effects of a weapon of mass destruction or dirty bomb would be catastrophic. similarly, several of the

nation's other major ports are located -- in fact, all of them located near population centers that could make attractive targets for terrorists. the threat is not exclusive to major city areas however. there's approximately 160 sea and river ports throughout the u.s. making the issue of concern to communities across the country. aside from the potential human cost, the economic cost of maritime terrorist attack would be devastating. ports are a vital component of the supply chain moving the overwhelming majority of cargo into and out of the u.s.. 99.4% by weight and 64% by value, and a value of $3.8 billion each day. in 2010, the dollar value of cargo that moved through the port of new york and new jersey alone is worth more than $175 billion. anything that threatens this commerce would not just affect the ports themselves but disrupt the supply chain with widespread effects across the country and around the world. i might adhere that when i first

introduced this legislation, someone said to me that demanding 100% scanning might slow the flow of commerce. i replied that one nuclear bomb going off in an american port would eliminate the flow of commerce for a good long time. given the very serious nature of the threat we face, i'm dismayed that the department of homeland security has not made a realistic effort to implement the 100% scanning mandate, nor offered alternative proposal to achieve the same ends. i'm aware that department opposed the original legislation has never thought this was a good idea, but it must make a realistic attempt to implement the will of congress. i urge dhs to aggressively move forward on implementing the 100% cargo scanning mandate. it's one thing to say we can't achieve it this year, but another to say it's not worth pursuing, which is something i heard said. that would be a huge mistake. we have to continue to take

steps towards 100% scanning as the ultimate goal and not relent in the pursuit of security. we must not allow gaping holes in the system to be unaddressed. remember what's at stake here. it seems absurd we would entertain the notion we'd allow a nuclear weapon to be smuggled into the country in a container that's never been scanned and if detonated in o city, it would kill millions of people in a flash. however, we can and must make progress to ultimately get us to the 100% standard while making cargo, ports, and waterways more secure. we owe the american people no less. i thank the subcommittee for inviting the people to participate in today's hearing and i look forward to continue to work with the colleague, the department of homeland security and other state and local agencies and private stake holders on this very important issue. >> thank you very much, congressman. we appreciate, again, you taking the time, and we're going to dismiss you and ask for the next

panel to come, but i talked to you before we started, and i recognize your passion on the issue, and that's going to be -- that was the imptous and crux of the questions here today of how we can either achieve the mandate of congress or if not, as you say, a realistic way to implement and where we go with all of this as well. it will be an interesting hearing. >> well, thank you very much. >> thank you. >> also, mr. nadler -- >> certainly. >> just want to have no questions, but i know you worked hard with mr. thompson on this, and i appreciate the hard work you put in on this. i appreciate your good work. >> thank you too. >> thank you. we'll ask the second panel to come forward. [inaudible conversations]

[inaudible conversations]

[inaudible conversations] >> okay. we're going to -- all suited up, ready to go here. i think what i'll do for the panel, looking forward to the testimony, i'll introduce you all sort of at once, and then we'll start with mr. hayman, but i'll read your bios a bit here. first, delighted to have david hayman, the assistant secretary for policy at the united states department of homeland security. previously, he served as the senior fellow and director at the csis, homeland security program, leading the research and program activity and homeland security focusing on developing strategy and policies to help build and transform federal, state, private, and local sector institutions. kevin -- how do you pronounce

that? >> [inaudible] >> got it. the acting assistant commissioner at the office of field administrations, customs and border protection. he's responsible for overseeing kbp's antiterrorism, immigration, anti-smuggling, trade compliance, and agricultural protection operations at 20 major field officers, 331 ports of entry, and over 70 locations in over 40 countries internationally with the a staff of 28,000 employees and an operationing budget of $28 million. responsible for developing national marine safety, security, and environmental protection doctrine and policy and regulations as well as ensuring policy alignment through the federal government and with international maritime partners recently serving as the federal on-scene coordinator for the deepwater horizon incident in the gulf, and we appreciate your service for that horrific incident in our nation as well.

while there, he directed federal, state, local agencies in their response efforts as well. mr. steve caldwell is the director and maritime security coast guard government accountability office, the gao, with recent reports and testimony covering issues relating to protecting critical infrastructure, the implementation of the maritime security transportation act and the safe port act, port security exercises, maritime threat information sharing, maritime domain awareness, container programs, and risk management for critical maritime infrastructure as well. the chair would now recognize mr. heyman for his testimony. >> thank you, chairwoman miller, ranking members, and other distinguished members of the subcommittee, thank you for the opportunity to appear here today. i'm pleased to highlight the department's work in the area of supply chain security in maritime security. this is an issue of great importance to us. international trade is the

engine that has now has the power of economies all around the world, billions of dollars of commodities and merchandises move between trading partners every month by land, sea, and air, and the modern international trading system, or the global supply chain that undergirds the exchange of goods between countries is a system that's evolved over decades, and we experienced a dramatic transformation over the past import of a century with the interconnection of buyers, sellers, supplier, and manufacturers all over the world. information and communication technologies enabled this transformation creating jobs, wealth, and opportunity. today, that supply chain provides food, medicine, energy, and a myriad of other products that sustain our daily lives. this is true around the world. it is a model of economic efficiency enabling just in time deliverly, but it also means the economies are more interdependent. the expansive nature of the global supply chain system leads it vulnerable to disruption.

we saw this in terrorist acts, a volcano in iceland and recent tsunami in japan. disruptions impact our national economies, and as such, governments and businesses around the world have a vital interest in transforming the old model of efficiency adopting a new model on the integrity and relittle of supply chain. that is precisely what we seek to achieve with the administration's new national strategy for global supply chain security. two weeks ago, secretary napolitano announced the strategy to have the resilience global supply chain seeing the importance to the economy and the security for the approach to foster a transformation from just in time to just in case. this country's safety and security will always remain paramount concern of the department and the supply chain is an integral component.

we strengthened the chain that we talked about today and specifically on the administration strategy incorporates and builds upon prior to efforts. there's two goals promoting the flow of legitimate commerce with protecting the supply chain from exploitation and two, fostering the global supply chain system prepared for and can withstand evolving threats and hazards and recover rapidly. the strategy aligns international security resilience efforts to foster systems to resolve threats early, improve verification and detection and reduce as a rule inerts. we do this by having a all of nation approach in managing risk by utilizing layered defenses. we'd like to especially thank the congress for its foresight in this committee in particular for the need of the work that form the basis of a strategy under the safe port act of 2006. again, safety and security of the american people paramount

importance to the department, the strategy is a significant step forward in the process and evolution. over the next six months, significant outreach will be conducted to foreign and domestic stake holders as part of the implementation efforts building on ongoing efforts. in particular, worth noting that as a result of secretary napolitano's supply chain security initiative last year, we made progress in implementing the strategy through new efforts and in some cases new partnerships such as with the world customs organization, the international maritime organization, international civil and aviation organization, and the universal postal union. we are leading efforts to help improve the security of operations across the global supply chain, to raise international standards, and foster systems for trade recovery globally. the written testimony outlines these efforts in greater detail. let me close with the final thought. the global supply chain system is an interconnected multisystem

highly complex. it encompasses foreign and domestic ports, transportation systems, conveyances, and infrastructure. its stength is its ability to deliver goods and sustain our daily lives on a near realtime basis. that system continues to grow in scale and importance, and so we must recognize today that without a doubt disruptions to this system will happen, and we must think anew on how to best build in not just efficiency, but security and resilience as well. our new national strategy for global supply chain security presents a blueprint for change while building on efforts and infrastructure that's been in place for some time. we encourage other countries and organizations to adopt similar efforts. we thank you again for the opportunity to testify and look forward to answering the questions you may have. >> thank you very much, appreciate that testimony. the chair now recognizes for his

testimony. >> rnging member, members of the subcommittee, it's a privilege and honor to appear before you today to discuss border protections work to balance maritime facility and trade facilitation to protect the country from dangerous shipments and enhance the global supply chain. customs and border protection or cbp is charged with managing the physical access to our economy and our nation at ports of entry. at the core of the responsibility, we're on the front lines to protect threats including those that could be in cargo shipments. just as importantly, cbp is on the front line to protect the economic future by facilitating trade through the ports by the use of better information, technology, partnerships, we've been able to form the most effective supply chain security structure in the world helping to reduce transaction costs for u.s. business and provide an environment where u.s. security and vision interests can work together towards our common

mission. to meet our responsibilities, we work to identify and address potential threats before they arrive at our ports. this requires we secure the flow of cargo at each stage of the supply chain, the point of origin, while in transit, and when it arrives in the united states. to accomplish this, the cbp pursues a multilayered approach to security. segments cargo by potential risk and examining it as early as possible in the process. although often presented as being intention or conflict, the security and trade missions are supporting. by utilizing risk based strait jis, we focus time on resources on the small percentage of goods that are higher risk that we can expedite trade about which we know a great deal. the multilayered approach is based on the following core elements, retaining information about cargo shipments as early in the process as possible, using sophisticated targeting techniques to assess each

shipment for risk, partnering with the private sector, working with foreign governments and international organizations like the world customs organization to harmonize and enhance approaches to supply chain security, and maintains a robust inspection regime including nonintrusive inspection of equipment and radiation detection technology at the ports of entry. the elements are familiar to the subcommittee and especially in lite how they are fundamental to the approach of the new strategy. dhs and cbp works closely with you and the staff achieved advances on cargo security and trade afghanistan. with your support, we implemented the filing or ten-plus-two. we can identifying these to identifying these in the

processes. we have the unique capability advanced cargo information with the targeting system allowing us to take action before shipments are loaded on to vessels and aircraft destined to the united states -- >> your microphone is off. >> the shipper program, the customs trade partnership or cp pat is recognized as the model for government and business. there's over 10,000 members representing over 55% of the importing value into this country. while terrorism remains the primary focus, we will explore ways to collaboratively address other threats vane the potential to compromise the supply chain including drug smuggling, weapons trafficking, and trade and import safety violations. under the container initiative, cbp works with the partnerrings to mitigate the threat before it

leaves the foreign ports and operated 58 ports in 32 countries screening approximately 80% of the cargo being shipped to the united states. we are continuing the deployment and use of advanced images systems and radiation detection equipment. this nonintrusive technology allows us to work first timely in recognizing the -- efficiently in recognizing potential threat. we remain at the fore front of supply chain management and confident the approach laid out in the national strategy represents an effective way forward building on the existing programs. thank you, again, for lay lowing me to -- allowing me to testify on trade resilience, and we look forward to working with the subcommittee on these issues, and i'm happy to tyke -- take your questions. >> thank you very much. >> good morning, madam chair and ranking members of the

subcommittee. i'm here to talk about the approach of protecting our ports, maritime commerce, and securing the global maritime supply chain. from up acception, the united states has been a maritime nation considering that high concentrations of our population live in and around port areas and 95% of the international trade is done via the sea. the consequences of any attack or disruption on maritime transportation system are potentially severe. backed by the national transportation security act of 2002 and the security and accountability for every port act of 2006, the coast guard led a joint federal state, local, tribal, private sector and international charge to implement a robust layered security approach that starts in ports abroad, carries across the high seas, and culminates in the waterways designed to identify any threat long before it reaches our shores.

our oaforts start abroad under the os miss of the overseas assessments of over 900 port facilities and 153 of the 157 countries that can potentially conduct maritime commerce with the united states. for example, in 2010, two companies commenced the shipment of liquid gas from yemen to the united states, due to the increased risk of the origin, the coast guard conducted additional assessments in yemen and use technologies to screen arriving crude members before they depart yemen. the vessels are inspected with an undersea investigation well in advance in the mediterranean sea before they make arrival in the u.s. ports. offshore a cutter fleet maintains a vigilant presence conducting fishery enforcement

armed with the authorities of 41 bilateral agreements and simultaneously maintaining an agile posture to respond to humanitarian disasters and threats 20 maritime security and the global supply chain. the coast guard's planned fleet of the national security cutters and offshore patrol cutters august -- augmented by border patrol are essential to maintaining the offshore response capability. the coast guard in cooperation with border protection ensures that u.s. bound vessels pose a potential risk are identified and inspected before they reach u.s. shores. specifically, the coast guard and cbp share and jointly screen manifest 96 hours prior to the apriefl in the u.s. to identify crew, cargo, vessel documentation, and route anomalies providing an appropriate lead time to mar shall a response to any threat

well offshore. in 2011, the coast watch program run by coast guards intelligence coordination center screened 28.5 million people and more than 121,000 ship arrivals as well as their business practices and associations and generated 120 advanced warnings on arriving ships, cargoes, and persons posing a potential security or criminal threat. the coast guard leads the international maritime organizations work group three focusing on combating piracy on the high seas. this effort resulted in several best practices like the use of private armed security teams on board commercial vessels transiting the high risk waters. in 2011, the teams repelled over 120 attacks that would have otherwise impacted the global supply chain. a final level of security resides in the waterways and we have have security plans for

more than 11,000 u.s. vessels, 3200 port facilities, and through the use of area maritime security committees fostered an extensive inner agency collaboration to bolster security of layers infrastructure. this was highlight the in 2010 when the motor vessel carried 500 illegal migrant smugglers tied to sri i lanka and intelligence sources. this was our capability to track and intercept a potential threat on the high seas and mitigate risk to the home lan. it was also a prime unitlyization of the operational threat response plan, a presidential directed inner agency process establishing protocols for realtime, communication, coordination, and decision making among inner agency principles. thank you for the opportunity to appear before you today and for

your continued support of the coast guard. i'll be pleased to answer your questions. >> thank you very much, admiral, and the chair now recognizes mr. caldwell. >> thank you very much for having us up here to talk about supply chain security. it's important to recognize that the issues and programs we're talking about today didn't start with secretary -- or the president's strategy from last week. these things go back ten years, they go back to 9/11, and they go back to the maritime transportation security act passed in november about ten years ago. the maritime transportation security act among other things called for a secure system of international, intermodal transportation with systems to screen cargo while in transit. since 9/11, go conducted about two dozen reports on some aspects of supply chain security everything from the programs discussed to the technologies

that have been used some successfully and some attempts not adds successful. many of the programs jump started right after 9/11, so i think it was important to understand some of the warts they had initially. go made a number of recommendations through the years for dhs to improve strategic planning, work force management, internal controls, cost estimates, and performance measures. as the programs developed, a lot of go's recommendations were implemented and to that in the programs, they have improved over the years. i'll be happy to discuss any of the individual programs during the q&a session. regarding the 100% scanning, the new strategy itself does not mention the existing statutory requirement. we completed a thorough review back in 2009, and we cited a number of challenges bringing into question the feasibility of whether we can do that as called for in the law. in the report, we made a number of recommendations. for example, recommended that

dhs develop more accurate cost estimates, conduct a cost benefit analysis, conduct a former feasibility analysis, and after all of these, provide specific alternatives to congress including special legislation. unfortunately and despite the issue of the recent strategy, little has changed in terms of our recommendations in the last two or three years. while dhs partially concurred with the recommendations at that time, they have not implemented most of those, and they now indicate these recommendations are largely overcome by events. we think that if dhs implemented these recommendations awhile back, the department would be in a stronger position to talk what those alternatives to be with 100% scanning and have specific legislative things, and they would be in a stronger position to justify the waivers that the department will obviously have to be providing and notifying congress about relatively soon. in fact, i think if these

recommendations had been implemented two to three years ago, we might already have legislative compromise and be quite a bit ahead from where we are right now. here we are. we are still at an impasse in terms of the legislation of the 100% scanning. our industry and trade partners are concerned about the uncertainty this creates for them, domestic and international industries. dhs will soon have to implement their chosen path in terms of doing a blanket waiver for all ports providing congress with advanced notification of that. there are substantial reporting requirements to that waiver, and those will continue as long as dhs uses the waivers as preferred tools 20 meet the requirements of the 9/11 act. in closing, gao provides analysis to congress on the issues, and i thank you, and i'm happy to answer questions along

with the rest of the panel. >> thank you very much, mr. caldwell. that was an interesting testimony, and leads to the obvious question, i guess, and the reason for this entire hearing as we listened to the first three witnesses talk about all of the various things that have been ongoing in the efforts to make sure that we secure the global supply chain giving us statistics, ect., which are very impressive based on the workload and the resources available to be able to accommodate 100% mandate that this congress has passed. i guess i would just start by -- you were mentioning, mr. cladwell, saying you made recommendations to do cost benefits and analysis and perhaps if they had taken those recommendations and done some of those kinds of things we would be further ahead, but overtaken by events, and believe me, we

all understand that. totally understand that. the purpose of this hearing is just to have a belter idea of what kinds of events have overtaken us, but whether or not we have any realistic expectation of ever getting to the 100% or even -- if it's even that is not achievable as the secretary has made testimony to this subcommittee on a number of occasions. where do we actually go from here? i guess i'm, first of all, just trying to understand from a cost -- let's just -- well, recognize optimal, but perhaps not realistic from a cost perspective. we have 55 ports in our country of which there are, i think about 700 ports of origin, countries of origin, goods coming into our country. do we have any idea at all what kind of costs we may be looking at? a ballpark figure in order to -- i don't know who i'm directing the question to -- gentlemen, do

we have any idea, at all, what kind of costs we're actually looking at understanding the budgetary constraints that our nation is facing, but the goal of secures our nation, being our priority as well. who might answer that -- start with answering that question? >> let me start by just talking about what the costs are that we have to include in that and then go to specific operations. there are a number of things that we've looked at in terms of the entirety from end to end questions about security and resilience. the implementation of going back to the supply chain to the manufacturer and things like ct pat require auditing of facilities and partners to ensure that they are adhering to the security requirements of ct pat. the ports require coast guard to

go and ensure that the code, the international codes, have been adhered to, that safety and security procedures are in place. the counterterrorism programs are in place. the actual scanning of material and cargo and containers that cbp has and other programs within the federal government requires that partnerships in foreign countries, with foreign governments, requires advanced targeting capability, and then also we have the capability at home for screening, so there's technology costs, there's operational costs, and all of those things are -- have -- are so broad and so large that estimates have been in the as cargo accurate as people would like. >> i'm not looking for an accurate estimate, just a ballpark.

>> so this is in the billions and billions of dollars, but i'll turn to the cbp colleague who has the operational arm of that to go into the operational costs. >> from an operational perspective, we have significant experience in terms of the costs of these programs. from the pilots that we've ran. over the course of the two and a half to three years those pilots were active, and, of course, we still have one additional active location in pakistan. the dhs, alone, spent about $68 million on the scanning equipment, on the deployment of it, on software upgrades, and all the relevant costs associated with that. at the same time, the partners at doe, responsible for the radiation and nuclear detection capability aspects of the sfi program, they spent over $50 million. the total government expenditures was almost $120 million on those six ports for the short time it was in

operation. based on our estimates from that experience, we estimate about $8 million per lane to establish the sfi type 100% screening sweep of technology. now, that technology might be improving over time, and we're still studies that, but if you multiply that by the 2100 lanes at the 700 ports globally that ship directly to the united states, that is quite cost prohibitive, up to the $20 billion range. the other aspect -- >> $20 billion? >> correct. >> $16.8. the other aspect of that mentioned is the cost to the trade, and to estimates have been very high both in studies from the private sector partners and the european union and others. >> okay. i guess i would also ask you, you were mentioning, i was taking notes when you talked about the risk assessments and

the modeling that you're doing, and one of the things you mentioned if you could brush off for me a little a how you gather the information, and then you look at technology from the port of origin, ect.. can you talk a little bit more about what kinds of things targeting technologies you utilize to make the risk assessments? >> yes. i'd be happy to cover that. that's an area of excellence we think that cbp has in coordination with the intelligence community and other dhs and law enforcement partners. we take information on cargo shipments as early as possible in the process, both through the 24-hour rule established after the trade act of 2002 as well as the isf, the importer security filing, the ten-plus-two, and the have that information with shipments combined with the information we know from the supply chain, the ct pat as well

as historical data on shipments from certain routes and countries, and manipulate that data using the automatic telling system in sophisticated ways. one of the most common talked about is the intelligence based rules. these are specific rule sets designed to address each mode. we have different rule set, for instance, for maritime sprier sus land, air, and -- veer sis land, air, and rail to identify potential security risks. we're using advanced analytic technology techniques and it's called machine learning in the field to help us model risk more effectively beyond the base process. we use what we know about the supply chain with the trusted partners to help reduce potential for risk on those shipments as well as the procedures used at the foreign port, so all 6 that is factored in in an automated fashion to give us a sense of the risk of individual shipments, and we do that both international targeting center for cargo and

with other csi teams deployed abroad. >> thank you. my time expired, but i appreciate the candid response want best estimate on cost. it's our job as congress to ask you how much it costs for you to implement mandates we pass. we have to have a clear understanding of what it is and understanding the budget constraints we deal with here and it's for us to determine from a priority standpoint where we go with the budget from here with national securities perspective as well. with that, i recognize the ranking member. >> thank you, madam chair. mr. caldwell, you're with the gao; correct? okay. you have been with the issue for some time and know the legislative requirement and challenges of scanning 100% of containers, but in hindsight what different courses could have been taken to comply with

the law? >> i think in terms of actually setting up the pilot, there could have been more metric setup to measure how long it was taking, the cost, what impact it had on trade at the individual ports. in addition to this, there could have been better and validated data on cost, still an issue as we discussed, and i think again, feasibility analysis, cost benefit analysis had been done earlier in the process, and it's unclear if it will be done at this appointment. i think that would have had given them position to engage with congress perhaps earlier and perhaps, you know, very awkward, obviously to do this before the deadline approaches in july 2012. >> the two -- did you -- the gao communicate those recommendations to the department of homeland to cbp coast guard? >> yes, we did. particularly they went to dhs

geared towards cbp with the leads in terms of the container program, and they were recommended in october 2009 report, and we tacked to dhs earlier, perhaps spring of 2009 about the need for these. >> okay. ..

and i agree there is a deadline that's coming up in july of this year and we are coming out to that. what did you all actually do with those recommendations? and keep in mind as we are going through this discussion on a former businessman. certainty is important and in the international business community, not knowing what cbp is going to do, what is going to happen it affects the certainty and that affects our economy. what did you will do specifically with the recommendations? >> let me answer the general question first which is what we do with the gao report at the process of adhering to them or not. we actually have instituted about two and a half, three years ago a very synchronized effect with gao we are trying to get in early to understand the problem, so we are working very

closely together. there's a whole process where we are working with them to get as much data as possible. on the back and when you are implementing, when the gao is finishing its recommendations we've given an opportunity to concur and not concur. we do that in every report with all the things recommend but we usually provide what kind of corrective action were steps that will be taken into gao then follows up with what we've done that or not so there's a process that we do and the cost estimates for how we can do better. the time that report cannot most of the pilot project have been completed either government said they were not going to continue to implement it or they actually included for other reasons and so getting books cost estimates that's the best we have right now from that original data. spearman out of the

recommendations that you all made on the one to 100 scale, what percentage do you think they implemented? i know there's give-and-take they are not going to accept everything 100%. but the way the gao or the inspector general, somebody could that comes up with ideas i see it as a way to improve so how do we make it better not accepting everything 100% what would you say on the one to 100 scale? >> i will say our goal engaging in the executive branch and this is true with the dhs as well with 80% of our recommendations implemented. >> what do they get roughly? >> this year we are not doing very well. we have five recommendations. we maybe have two of them partial and the other three. i think also one of the recommendations we made that they do a feasibility study was a statutory requirement in the

cord act it wasn't just the gao recommendations. >> so you are saying on that recommendation of the recommendation from you all a statutory requirement and they haven't done it yet? >> that's correct. >> there's pieces of it but they need to put together and i think the important thing is for some of that analysis that feeds that will be important even if we do the blanket wafers because under the waiver procedure there's still the reporting requirement dhs talk about how they plan to achieve what they are doing still trying to achieve the scanning and if not why not so bad as some of the justification they're going to need in that analysis. >> and i think madam chair and members this is a difficulty when there's a recommendation is a statutory requirement. how do we get your body and into this? one more question that you don't remind in regard to the interim final supply chain strategy by

the statutory act emphasized the 2007 strategy the interim is 128 pages long on the topics such as finding the problem, strategic objectives, the role of technology, the responsibilities, implementation of a scheduled prayer these milestones, recovery and training exercise requirements but the report we just got last month and only six pages which means there was little discussion. i don't understand, usually when you do an interim report to build on it and this one you build and took away and i just don't understand and i give my time of but how do you explain discrepancy or not discrepancy but how do you go from details

to now a six page executive summary how do you explain that and build down instead of sort of building up? >> it's a good question, and i would just no to -- >> this is the interim report and then the interim report, 127, 128 pages you build on the other one and again i'm not saying maybe this is a perfect example of streamlining how do you go for men and from that report and then come up with this report here? >> i made to get a lot more time on the answer. there's a couple of things that we've done differently here than the interim report that should be noted. first of all, the scale of the report goes beyond the maritime and goes into all modes of

transportation to and it includes resilience as a critical element and it also looks to international engagement on a wave that has frankly unprecedented. what we've done in the strategy document is to talk about building on these previous documents. so rather than regurgitate all of them we've tried to make it a simple and straightforward as possible. that doesn't mean that there isn't behind, there are implementation things we are working on. we have a report to the president and i hope we wouldn't get lost in the length of it and i think eisenhower's strategy for world war ii was two words which was europe's first and we have a lot of things that go beyond that. we are in fact actually and plunging down things like the supply chain security initiative the circuitry put forth that sits in to the global strategy

the president puts forward and all these things come together. >> i can summarize to words into one, wind. but this is something that should be a guideline to what we are doing. and i am disturbed by what i'm seeing here especially recommendations from mr. caldwell and not meeting a lot of them, but madame chair, think you for indulging me on this important issue. thank you. >> the chair will now recognize the ranking member of the full committee mr. thompson. >> thank you very much, madame chair. mr. mcaleenan, the goal of this congressional law was to give us within a reasonable period of time 100% scans on the container

shipments coming into the u.s. at 100%. >> in terms of the total percentage, sir? >> yes. >> our csis program covers 80% of the global trade to the u.s. in terms of the actual scanning. we do about 45,000 inspections last year through our ports prior on the vessels. that is a little bit less than 1% of the total cargo headed to the u.s. and then we scan an additional 4% upon of rival domestically in the united states. >> all right. in layman's terms, what% of cargo that's coming to the u.s. right now is not stand?

>> in terms of physical scanning that would be the vast majority come over 95%. >> why not? >> well, we've been discussing with you and your committee for several years the complexity to this process and the test that we've undertaken with ssi to examine the feasibility of the physical scanning in particular. at the same time, we've been aggressively pursuing the lawyer approach focused on the coordination at the csis with our former partners on the high risk working with the international community on the standards. >> taking whatever you are doing to the high risk shipments or anything like that at this point in this hearing today, is there

any shipment using your pravachol that's come into the u.s. that we don't know what's in it? >> it's not as complex as what you are saying was the leader approach whether you're scanning are taking high-risk. i didn't want to know what the number is. >> we have stated content on all shipments to the united states and through the isf we also have the carrier explaining the location on the vessel of the container as well as the container status message where it is in the process. the combination of the two data element allows us to identify any and manifested identity eight containers and address those upon arrival. >> so your testimony to this committee is no container

shipment come into the u.s. that we don't know what's a in it? >> that is too strong a statement. we have requirements -- >> i anderson and requirements. i just -- are you doing 90% or doing 85 for several you are doing 95%? i want to know where we are towards the 100% standard and whatever protocol you are using, that's fine, but i want to know where right now. >> there are very little gaps on information. we have very high compliance. >> give me a little. some of the 24 compliance is over 99%. isf compliance is a relatively new program that 92% but that is where we get the information on the cargo shipment in the environment. so very high compliance on both

those. >> mr. heyman, do you agree? stila almost 100% of things coming to the united states are known to us in terms of what's -- what is in the manifest, what is relating, and we then use that information to our risk analysis. stomachs we are at 99% at the container shipment that come to the u.s. is your testimony before this committee meets the requirement at least in and the 07 wall? >> that's not what i was saying. when i was answering the question is whether we knew about all of this stuff that was coming to the united states, and the answer is generally yes. >> when you say new about -- >> i'm not saying all this stuff. >> you know what is in the containment? >> yes. >> you do? at 99%? >> yes. the question the law puts ford

is whether that information -- the information that we've received is accurate, and whether in fact somebody has tried to fraudulently put material into a container or misrepresent what in the container, and that's what we try to identify, and in fact we've done it to great success to read about 11,200 narcotics seizures last year. >> i'm not asking for that kind of data. i'm just trying to give the public confidence that the law that congress passed saying we want 100%, that you tell this committee from what i understand that you are 99% there to risk in terms of the 100% scanning mandate,,, that mandate as the testified over one a number of times poses significant operational financially and difficult challenges. >> that's fine. where are you to do the 100%?

what percentage along the way are you? >> my colleague just testified that we are doing approximately 5% -- >> you are 5%? >> approximately. >> so, what are we doing for the other 95%? >> so, those are what we've done -- the go through the advanced targeting system to get to be identified as not part of the high risk containers that require additional inspections. the inspection process, remember, is first to look at whether the manifest is accurate and second to look at whether there is any threat information and third, to look at the opportunity for the non-intrusive inspection and ultimately we may have to open that up. that is the most difficult of course. >> but that is the process that dhs put together. that was not the process that converts to elected. >> actually that was the process that was put in place for the

pilot projects the congress asked us to do. estimates and so you have now taken that and made that the policy based on where you just said to the >> i'm not sure i understand, sir to the estimate mr. caldwell, let me ask the question of the gao. are you comfortable with the responses that you heard that 99% of the cargo on the container shipments come into the u.s., you know what it is coming you know what is in its? >> let me interpret the line hearing here. >> no, don't interpret. just stick with the facts. >> you're not -- why are you not cracks >> for the majority of the containers, we have the manifest the it doesn't look suspicious. that's where the scrutiny stops.

and in many cases this may be a standard shipments of manufactured overseas and to a target store here in the united states, towels, textiles, anything else. but as far as assurance of what is in there we have a manifest and the manifest only. >> so other than the manifest we don't know? >> that's correct unless there is a scam. estimates before. at this time the gentleman will recognize the gentleman from south carolina, mr. duncan. >> thank you, madam chairman. let me pause to say thank you for arranging a tour of the port of baltimore with the coast guard to read recently where i and you had the opportunity to witness some of the things the ranking member is talking about. the scrutiny of manifest, looking at the country of origin, scoffs of the shift that's carrying the containers, possible interdiction to read multiple places along the way,

and then the active screening in the port for the radioactive material chemical and biological issues. and so when you think about the number of ports in this country and the number of containers that come in and i am amazed that we are able to do as well of each other as we did. and i commend the gentleman that are doing that implementing the policy of this country every day to keep us safe. so thank you and thanks for educating me. i guess the question i have is mcaleenan -- >> mcaleenan, sir tristram thank you pittard i wasn't here for the introductions, madam chairman, so i apologize. kim cdp effectively screen high risk shipments in a way that expedite a legitimate commerce? because from what i saw there's a stop and go process, and i know that we targeted certain containers and certain countries of origin when we are trying to do a very good job there but i am very concerned at the speed

of commerce and expedition on that. so can you screen high-risk shipment in a way to expedite legitimate commerce while at the same time ensuring the security of the united states if he will touch on that? >> yes, i believe we can come congressman. and it is to do precisely that. for the vast majority of cargo that we determined to be low risk based on our analysis of intelligence and information provided on the cargo shipments are to the supply chain and the knowledge of the parties involved in that transaction, those are released instead to their destination in our economy right away. usually for a rifle. for those very small percentages of cargo that we think might be risky or we don't have enough information on them and we wanted to give further look at we do try to address the potential risk of the earliest possible time in the supply chain. 45,000 times last year that was done before the cargo was on the

vessel in the foreign port. another 5% of cargo ase examine the the u.s. port of a rival, and we try to those examinations of the most efficient way possible. we use the non-intrusive technology which is again an imaging device that you probably saw the part of baltimore. to do the initial exams on the cargo that we determine might be high risk that is a very quick process that we can scan the cargo e efficiently. if we don't see any anomaly, the picture looks consistent with the commodity that we expect to be in that container we are able to allow that to proceeded to the commerce and is only a very small percentage to read a very small percentage that remains of concern that we actually do a full examination and what we call emptying the container and looking at all the content. so that leader approaches designed to do precisely what you asked about,, this time, in terms of facilitating that trade while securing it to get stomach and i appreciate those efforts and you clarifying that. it seems like there was went be

a gotcha moment a moment ago asking for the 99%, and there is no way that any country in the nation were in the world can fill the screen every container based on the number coming in this country. sliding scrutinizing the manifest, understanding the country of origin, understanding the history of that particular ship or that particular manufacturer, that particular in porter is critical. so watching you all implement those different steps and saying this container came from xyz country but stops at the country ze and why before it came to the u.s. and maybe it was offloaded there and held for a while and put on another container shipping and trucking at the whole way and understanding we need to pull that out of the line and scrutinize it a little bit further even to the point of possibly on packing it is an amazing undertaking. and so, trying to see the gotcha

moment of the containers and we know everything that's in there that's ridiculous. we don't know how many are in their other than with the manifest says. but you do a tremendous job and madame chair, we saw looking for threats, assessing those threats -- the question that i have for mr. caldwell is in your estimate what do you think it would cost the government to implement the 100% cargo screening? what is the dollar figure on that, sir? >> we talked earlier of a figure of 20 million dollars and that is the same vigor that we reported in 2009. some 20 billion? >> 20 billion to get it's a little unclear who would pay this in the 9/11 act not specify who would pay it which is a large issue of course. as to the consumer is right to be because the import/export is going to pass the cost on and that is obvious to most folks in and out of time and i yield back.

>> thank you gentlemen and at this time i recognize the gentle lady from california ms. sanchez. >> thank you, madame chair. and again, you've done a good job. >> thank you. so have you. [laughter] >> i have had the privilege of being able to go and look at having chaired the committee before the subcommittee before to many of the points abroad to see what conditions they were under and i would just say that i think as i from trying to take a look at some of the major ports that we have here, this committee might think about taking a look at the major ports that actually export to us to see what conditions there are. there's a difference between mumbai for example and singapore and that allows us to understand how is a difficult to get into this 100% scanning issue and

that is 5% or so that peace can. and we understand the approached the evidence that is one of the people who pushed the past for example. but there is the uneasiness at least for me for what is going on for the abnormal patterns with the risk analysis and then taking a look at that. so i think that we are -- i think it is very difficult to get to 100% screens, but at the same time there is still a lot out there that we are missing. for example, it is my understanding that of the cargo containers security initiative port determined high risk the customs and border protection scans or otherwise the result of 96% of the shipment that goes overseas. that means 4% of those in fiscal

year 2011, a little under 2,000 shipments were high risk cargo that were not examined before they arrived to the u.s. 20 minutes away from long beach. that is a big concern if there is a dirty bomb or something else in there. i really do want to push it out and have that happen out there. so, that's one of the questions i have is can you please discuss that particular issue and then my second question would be secateurs in a public, has testified that the requirement of h.r. one recommended by the 9/11 commission could not be met for several reasons including that the technology does not exist for 100% effective and efficient cargo screening. so is that the department's position today but we don't have the technology to do an efficient and effective fast

100% screening? and it's also my understanding that the domestic nuclear detection office is developing a plan for evaluating and testing the new one tomography as part of the advanced technology demonstration program. this program is being installed in the street part, but, to demonstrate as the private public project in the operational environment, so it has the department taken a look to see if they want to participate in this test to see if in fact that technology works and whether we can get it put in here to the u.s. cracks so those would be my questions, madam chair. i will give you a chance at those. >> okay. i will take your first, congressman. your numbers are correct on the 96% of exams are accepted in the see if i ports of examination.

the 4% as there are challenges sometimes in the timing of the request. some of our partners are not able to respond during the hours that we need them to be for the container is laden. >> it does mean it gets lead in without an expression even though we've asked for it. >> the rise in long beach let's say could stomach correct that happened about 1780 times out of 10.5 million total cargo shipments to the u.s., so it is a very tiny percentage that we've targeted with sesir to foreign governments are not able to respond. >> but it's still 2000 and if it happens to be one of those that get put on a truck that goes through the freeway in my neighborhood -- >> understood to be the definition of high risk doesn't necessarily mean that it is a risky shipment. in fact, we have not found a terrorist weapon in all the shipments that are targeted. these are based on all these in the chain based on intelligence

factors and most of all the vast majority of no concern. so, you know, to your point, we would like to get to 100% of the response, the 96 level is our highest historic plea that we've achieved. we continue to work with our partners to try to get to that 100% level on the part. >> to get to the other two questions first let me just agree. i think that i would recommend to the ports of you seen one part you have seen one port. they are so different and one of the things that's been challenging to us is that the diversity of a terminal operation and the one part can be different from another operation on the same quarter, and so in terms of the cost of the technology and things like that, it's not just that but it's also how you configure your operations on the terminal is the footprint, all of those things may be affected and they are all problematic. >> report was made in a different way, you have a different footprint and you can't put the same

standardization and. stomach and they were not -- they were not designed for screening. >> the challenge that we were looking to do this in foreign countries and the diplomatic challenges we have to think in the pilots if you look at them we had labor issues, we had what i just described the operations from the terminal operations challenging in the other parts of the u.k., so there are foreign diplomatic challenges, not just the technical ones. and i really don't want to belabor the point and i will get the second question about the technology really have to look at technology as a possible solution down the road. we always want to look at that as a possible long-term solution that helps drive down cost and increase efficiency and may increase also the speed at which we have a good flows through our ports. so we are looking for that and we are partnering with other

agencies and within their own strategy looking to do additional investments in technology and technology development and we will see where that goes in the long term. >> is it still the department's official position that the technology does not exist to do the 100% screening? >> the technology that we have -- well, no, there's technology that exists today that has challenges come all the ones i just described, and including july descendant described such as false positives. >> could you answer for the record and in writing the third question that i have about the shreveport situation and what you know about it and whether you think you're going to get involved in that. thank you, madame chair. islamic thank the gentlelady and now recognize mr. brown from georgia. >> thank you, chairman. this hearing as well as many as a point about something i've long said here in this committee that is that the department of

homeland security has a totally wrong. we are spending billions of dollars and wasting billions of dollars looking for object instead of looking for those who want to harm us. we would be much better off as a nation from a much more secure as a nation if we would spend the money and human intelligence focusing on those who want to harm us. we have to stop patting down by ground ma and children and start looking at airports for those who want to do us harm through the sector. we need to stop looking at all the technology to try to get to 100% when we can only get 5%. i really focusing on those entities throughout the world that want to harm us and we are not doing that. we are wasting billions of taxpayer dollars. we've given them a false sense of security. we are giving them a message that this country is going to be free from having dirty bombs as ms. sanchez was talking about.

wasting the tax payer money and it is actually a posture is to continue looking for objects. we need to totally change our focus on whether it is with shipping and ports across the country around the world will need to start focusing on those who want to harm us. having said that, the questions, just a couple of questions. why is there such a lack of specifics in the administration's the five new national strategy? global supply chain security cracks anybody? >> the strategy represents the highest level of fidelity for what we need to do to accomplish our interests in ensuring the security and resilience of the supply chains. there's obviously a much richer and deeper problematic implementation that goes underneath that and what the strategy tries to convey is the idea of all of the proceeding

programmatic and strategic efforts that have gone before but the strategy builds upon. it might have been bea labor and oftentimes in the strategies to talk about all of the authorities and everything that goes before that we tried want to do that because we wanted people to read it. that said, we would be happy to give you a more detailed brief at some point of all of the things we are doing and have been accomplishing in the last year. >> please, do. there's been a great difficulty dealing with your lack of specifics. why is the administration going against the 100% scanning and in some cases have even played the mandate but hasn't requested that congress repeal the mandate? >> at this point, we are looking -- one of the things we've done in the last several years which i think is important for people to recognize is put in place programs that actually allow us to do much better

risk-management, and if you look at the atf that my colleague of eskridge, the advanced jargon center and the information, the ten plus two that allows us to do much better analysis, we are probably -- i don't know they yawn but much further, the road in terms of our ability to identify high-risk and interdict high risk cargo than we were five years ago. and so in many regards, we are moving in that direction which allows us to be practical and responsible of the implementation of the law. >> in the kennedy we've looked at a number of the technologies that have been developed. you've utilized some just sitting in warehouses. i would like to have from the department a rundown of how much money has been spent on technologies that have been used and discarded as being affected and how much money has been even

spent not even to utilized and houses. if you please provide those the data i would be interested to see those because i know from the science committee perspective there been a lot of technological proposals that the department as purchased and have never been deployed. but i encourage the department to change tracks to but we have to focus on terrorism instead of focusing on objects. tsa takes great pleasure in talking about how many weapons have been found in airports and talking about the success that we have had the effect of service on their plans. we are not doing our job to keep america's a. the department is looking the wrong direction and we're

looking at objects. we need to look at people. those people and groups that want to destroy us and i'm not talking and looking at every muslim and at every person from miller eastern descent to me to get terrorists instead of looking for the objects that the department of homeland security is doing now. we are wasting billions of taxpayers' dollars in doing so. as a, i encourage the department to change the tracks. i told the secretary that she is wasting money and whole philosophy of the department is totally wrong. we need to look at terrorists and the people who want to harm us instead of trying to look at objects and people in this country are getting on airplanes and ships and we aren't even looking at those other things from just the aircraft. i you back. >> the chair now recognizes the

gentle lady from texas ms. jackson lee. >> thank the chairman and the ranking member. and to the witnesses at me ask this first question of every one. i was trying to catch the gentleman from georgia's comments of wasting money but i know that you can't put a price on the loss of life. obviously the issue of property can sometimes generate enormous catastrophic impact on communities. so let me ask the members of this panel representing a number of entities that are involved in the believe requirement of the mandate of the 100% cargo screening that was supposed to

take place january of 2012. secretary heyman, do you have the resources, and please don't tell me this is not in my area you are here to talk about the cargo screening etc., and it is your impression that the department has the resources, the money right now to make good on the mandate of the 100% screening. >> no, ma'am. >> we are always getting this, mr. mcaleenan? >> thank you. >> my good friend >> that works, congressman. a distinguished name and your answer to that, please, sir. ischemic my answer would be the same. >> admiral? >> we are not in the container

screening and i don't think that was introduced was the for an assessment system of 153 nations but we don't to trade with and another piece of it and then we are in that it with the cbp and screen 28.5 million people last year getting back to the congressman from georgia's question is looking at those people one or their holes in the fence to say in the form where there are not good access control point where someone can enter the facility and then introduced an object into a container that isn't in the manifest. and then screaming people on the vessel that me to the same looking at history and then impose history on the vessels that may enter the u.s. port. and that will only comes down to what stopped the threat before it enters the u.s. parts and what isn't stopping at term. so we currently have the resources to do these assessments.

we have roughly 60 individuals that are dedicated to do the and formed part assessment to read our to alleges the resources that would take to actually stop the threat before it enters the u.s. water. so that is where as you heard our comment time again that is where the rubber meets the road. >> so you have the personnel right now and the resources. is there a time when you expect those resources to run out? >> we've been able to advance those objectives working with foreign partners, particularly in the european union to the estimate and this is under the coast guard funding? >> it is. >> mr. caldwell, you are likewise with the government accountability to read to you think dhs may need an assessment of the resources they have to meet the mandate that was given to them? >> not 100%, no, ma'am. >> is anyone in your shop looking at that issue? that is part of what may be the

potential problem treat stomach every year we do analyze the budget provided by congress and the committee such as this. islamic the most recent budget that you've analyzed. what is your guess on that? nicoe recent, the most recent one we may have cut because we don't have a budget as we speak. >> can i be very specific? >> yes you can, sir. >> the 2012 budget versus 2011 was a 50% reduction in the international progress requested in the administration. >> thank you very much. what we've requested from the administration and then ultimately what occurred paid do you have a next step on what they actually received? >> part of this was a shifting of the funds from the people like d.c. yes i back to the national targeting center and

from our perspective the gao. some people need to stay in the parts to have relationships with those countries that in general for the targeting purposes it would be cheaper and more sufficient becerra the national targeting center. >> if you would indulge me for one last question i would appreciate it, madam chair. the study produced by the panel's indicated authority day closure of the part of the jersey would result in the economic impact of the u.s. gdp of over almost $5 billion loss of 50,000 jobs. whether in new york, in my home town of the port of houston, houston port or any of the other major ports across the country and the terrorist incident that closes the nation's port would have a devastating economic effect in the u.s. and around the world. understanding these potential economic growth impacts, potential economic impact can we afford not to increase the security of the maritime cause on the shores, and i want to

point that to the assistant secretary of the commissioner. >> thank you for that, congressman. that's right. this is one of the reasons the strategy is being put forward. the disruptions to the ports, the disruption to commerce and the supply chain is going to happen at some point. we've seen it recently with the tsunami and we've seen it recently with the volcano last year and terrorism to read one of the things we tried to the strategy that is different and is important to recognize is the international solution that is to say we've gone around and are going to multi level organizations, world customs organization like the universal union. we are working bilaterally and saying we need to raise the standards. no one government, no private sector, nobody's going to be able to solve it on its own credit has to be a community effort and that is why one of the things we are going to be working on and have been working on is the international deutsch

>> have you given up on the 100% screening? >> we are continuing to operate on the wall. >> can the commission finish the answer to those? >> i would say we must maintain a robust approach as to enhance the cargo security and you to continue to improve and we take the gao very seriously and as testified to improve the program over the course of the past five or six years and deduct the scsi recommendation that they remain $35 million a year without the security with the program so that is maintaining our structure and expanding and improving it is absolute essentials. >> i thank the chair and the ranking member and the witnesses and yelled back. >> the chair now recognizes the gentle lady from california ms. richardson. >> thank you. first i would like to start my comments by thinking ranking member for supporting my participation today in the

hearing. second of all, for the record i would like to note that the representative rohrabacher this the one that represents the port of los angeles and long beach which is known as the complex and it is the largest port in the united states of which i will be focusing my comments today. i also want to know for the record that out of the full homeland security committee hearing on february 25th, 2010, i questioned secretary napolitano on the progress of the 100% container screen buhle june 16th, 2011 as the chairman of the subcommittee on the emergency communications prepared this response, myself and committee members submitted a letter to the secretary regarding the impending deadline of the screening and then again on march 3rd of 2011i asked secretary napolitano about the 100% cargo screening. so this has been a concern of mine for quite some time and with all due respect to some of the folks here who are testifying for those of us that live in these communities, the

port complex itself is in mr. were looker's district however all of the land portion and all of the impact of the port meaning trucks and activity for the simple the port of long beach is in my district. so i take it pretty seriously. madam chairman, for the record i would also like to point out not speculating ideas, but according to the university of southern california homeland security center the preliminary economic report was performed back in 2003 due to the strikes we had, the labor strikes in 2003, and it was recorded at that time that $1 billion a day was lost based upon the closure of the port. so, with respect to the people who are testifying when we say a number of 16, 20 billion, what ever it is, when you keep in mind that we lost 11 billion in 2003, and that was a labor issue, that wasn't even if there were infrastructure damages, so i'm not putting aside the cost

that we need to consider these costs which leads me to my first question and if you can do yes or no as much as possible as i would appreciate it. mr. heyman come to your knowledge, has the department conducted a feasibility analysis based upon cost as mr. caldwell has referenced? have you guys dennett? yes or no? >> we haven't done the full capability study. >> okay. thank you. my next question would be mr. heyman, to your knowledge of any steps been taken or are any steps being taken at this time to achieve the act of the 9/11 recommendations of the 100% scanning in the department? >> yes. we have submitted the report to make sure you get a copy on that. >> let me make sure you're clear on the question asking. this will directly reflect what steps you are taking to achieve the 9/11 recommendations of 100%

scanning. >> this report reflects all of the sea port requirements and how we are implementing it. >> and how you are working to achieve 100% scanning? >> the report talks about what we've done to achieve the 100% scanning to this point. >> okay. commissioner, is it true cbp relies upon the host governments with their customs personnel in relevant from countries to resolve issues of containers that are deemed high risk? >> yes, we work with authorities that are sovereign in those parts and often times observe the anticipation. >> is it true the cbp doesn't require scanning of the parts? >> is it true that you do not require scanning of the high risk containers out of these areas? >> our csis folks are operating

with request as opposed to the requirement authorities. >> so it is correct as my question that you do not require scanning at the ports; is that correct? >> we do not have the authority to take action on our behalf. >> okay. again, building upon ms. sanchez, it's true 4% of the cargo identified the parts have been identified as high risk and have a right in the u.s. without being scanned; that's correct? >> that's correct, 750 shipments last year. >> mr. heyman, you testified about these wonderful international relationships. however, when i asked the secretary, when i also asked ambassador kirk in these trade agreements that we've recently approved, was there any effort to work with these foreign countries to establish a scanning process and the answer in both of those was no, it didn't, no, would get back to us. do you know anything on that? >> i do not, but i could get back to you if you like.

>> finally, madam chairman, i would like to build upon mr. brown's request of not only requesting the information of the cost of some of the technology of what is being done, but to supply the request of the folks here who are testifying to supply to us details on what steps have been taken, what technology is currently being considered, when has that last been reviewed, and what future technologies are they considering to meet this request which may require a classified briefing? >> thank you, chairlady -- >> did you accept -- >> without al-awja action d'aspin okwu concluding? okay, without objection from certainly. the chair now recognizes. >> thank you, madame chair and ranking member really am appreciative of this hearing as i mentioned to you yesterday on the floor. my friend, congress member and i

have found the report caucus and we actually sent a letter to the chair of the homeland security committee asking for a hearing such as this. and i am very pleased that we are holding of a spirited and i've been very interested in the testimony. but i think sitting here this full-time and listening to the question and answer i'm not feeling any better about where we are in this country in terms of the port security. and i echo many of the comments that my colleague ms. richardson just made, and while either one of us actually represents the port of long beach los angeles, those ports we call them america's the five ports because it's about 44% of the trade that comes into this country comes through those port complex, and both of our districts border ports. many of our constituents live

minutes from the ports, and any attack and natural or man-made would be devastating, and to the national economy has ms. richardson said in 2002, we had a labor dispute. everyone knew it was happening. there was already efforts under way to divert cargo from the west coast ports and yet we were able to determine that it was to 2 billion-dollar a day hit to our national economy. so, and it lasted ten days. do the math, and we know what i did. also, not to the national economy, but the global economy. we heard that many businesses throughout asia actually were extremely impacted by the loss of cargo moving in attendees. some of the businesses we even heard never recovered from that.

so i think the threat to our national economy, the global economy is severe, and i have real concerns. i've always felt like the most vulnerable entryway into this country is through our seaports. and after 9/11, i feel we've focused in this country rightly so on securing our airports. you know, and we didn't really take into account the cost. we didn't really take into account the inconvenience of i think the traveling public knew exactly what it was going to entail to make it through security. they would have probably balked at what we were recommending that it was important to the safety and security of the travelling public as well to our commerce to it i don't feel like we've done the same our ports, and i know there's a lot of vulnerability still. i'm one of those the would like to see us get to the greater percentage of scanning.

that's also imperative. also a lot of what you are seen on is a lawyer approach, knowing what is in the manifest, be leaving with the manifest, and the bleeding when it reaches our shores nothing has happened across the ocean to have tampered with any of that cargo recently if implemented design a to the port of los angeles there has been twice on the anniversary of 9/11 the national media company actually shipped deflated uranium through the port, and it was discovered in los angeles. also now since we've implemented this there has been a couple of containers that have come in that harbour folks from other countries. one was the 19 chinese in a container that was discovered by the choreman in los angeles, not any of these efforts that are

under way. and in terms of cost, you know, the cost that would impact a recall me if something were happening at one of these major ports is significant. but, you know, we were sending a lot of money on our war per month it was 12 billion per month for both of the wars in iraq and afghanistan. so, and we believe that was worth it. we believe it was worth it for the national security. l.i.e. really think this is at that level to read and i feel like we are vulnerable. i think we've all talked about how much we want a greater percentage of screening, and i think you've answered where we are at. and i think that you've heard this morning from a lot of members of this committee that we really are interested in seeing you get a higher percentage of scanning. let's talk about not -- if something might happen, let's talk about when something happens and the port disruption. it was touched on in terms of

recovering. and i know that i am going to be introducing legislation that talks about all of the ports in the country having a recovery plan because i think i would make the ports less attractive to an attack if we knew that they could get up and running to get in the port caucus we are going to talk about the recovery plan for all of the parts. what would you suggest that we look at in terms of what would be important for our major ports to get back up in business after a major disruption? >> thank you, congressman, for your thoughts on this very important subject. we take this very seriously and appreciate your seriousness as well. on the resilience and recovery site, it is something that is not -- it hasn't been embraced or has thought through as the prevention side. that is because largely we are very concerned about prevention,

and we have done less on the resilience site. in the united states, that is why we are taking an initiative and building in the resilience internationally on the strategy. in fact we have led the way partly through the apec forum ensuring that the trade recovery procedures are put in place. and one of the main things people will do, and frankly the port should consider is having the appropriate information to know where and when things can opens of the businesses can rely on the real understanding of the timing and the recovery and the disruption. the sharing of reformation as one of the things we can do a lot more on as it retains to the resilience of the courts. >> let me ask about the point of origin where we've got the manifest a right to the point of

destination where we are hoping for the best but nothing has happened on our wide open seas. can any of you speak to that issue? are you 100% sure that when these containers leave the point of origin and when the right to the point of destination nothing has happened and what are we doing to ensure that? >> we try to make it as certain as possible, and to that that is part of the ten plus two filing. it includes information on where the containers reside on the vessel. it allows us to see if they might be accessible while on the high seas and to determine whether they could be compromised during a lot of under way. so we do the checks when they arrive and are able to compare the seals submitted by the importer and the shipper to this because those? >> u.s. borders and protection of a point of entry. so, in other words, this is a

concern and something we take seriously. we work with our partners on the coast guard at the dessel's approach of the u.s. parts, but -- >> do you do checks on all the containers? >> nope. we do targeted field checks and also random operations to ensure the integrity. >> and that is what makes me nervous, too to read again, keeps me a bad night -- keeps me up at night. you're kind of best guess and it's more and more of the ports are going to go automated. i am concerned that the loading and unloading of the cargo by automation as opposed to real folks is also i think presents a bit of a rest. >> thank you. >> i want to thank -- term my microphone on. i certainly want to thank all the participation from the members today.

it has been i think one of our -- well we've got a great hearings but this has certainly been a good one. i think a lively one. a good discussion. i certainly want to thank all the witnesses for your testimony and thank you all for your service to the nation and i know i speak on behalf of all the members as we are obviously working in very extremely bipartisan fashion about the national security. and my staff get sick of me saying this but i say all the time and try to remind certainly myself that the first, with all the issues the congress faced first and foremost responsibility of the federal government to provide the common defense that is actually in the preamble of our constitution. ..

>> this subcommittee is very, very interested in assisting you with the resources that you all need to do your jobs and the mission that we have tasked you with, and you're out there every single day, and it really is, for us, as i say to prioritize our spending here, and i say that from a bipartisan stand point because it's interesting the administration is proposing a 50% reduction, but yet i understand the makeup of all of that was, expensive to have officers oversea, ect., so we have to -- we're not looking for a sound bite here. we're really trying to understand how we prioritize our spending and do what we need to do to keep the nation safe,

particularly to the points. again, i appreciate all the witness, their testimony, and with that, i would mention also that the hearing record will be open for 10 days. if there's additional questions, we'll get those as well, and without objection, the subcommittee stands a-- adjourned. thank you very much. [inaudible conversations]

next three years and i would have to say that is in contrast to what i see. and i would go beyond that to say i think on the relevant basis american competitiveness is as strong today as i have seen in generations. soboleva going to go through this morning is bring some of the things that are working and that we have a series of workshops and panels over the next few days to discuss the best practices and what is

working. if you look at the next slide, please, if you look at just the major headlines and the things that we think are important, i think it's about confidence, and like i said, if you look inside a lot of the big american companies like boeing and caterpillar, gee, people have more confidence in the ability to compete and win on a global basis. there is a lot of this practice is. i would say that many and most of american business came through the crisis in better shape. a lot of the growth is outside of the united states, so you've got to have the confidence to take your game to every corner of the world and then i think another thing that you'll see as you go through this week is the fact that business works together, that small business and big business works together and various companies work together in one would call and extended enterprise and so these are some of the hallmarks of some of the things the we will

talk about as the weeks go by. if you go to the next slide, the day is split or the week is split into segments. today we are going to talk about american content of news and tomorrow is the discussion on innovation, the next day is on the global competitiveness and we will talk a lot about what are the regions around the world and what do you have to do in order to export and that we will put the but the work force veterans that we service and what it takes to create jobs and ordered the big statements of job creation of a global basis. i'm going to talk about ten ied is on things we have seen work and things we've learned out how to drive competitiveness inside our economy to read the first three are what i would call business strategy, about innovation, american manufacturing and focus on

exports. the next things i think are about systems of competitiveness, the importance of energy and making every company competitive on a global basis. the next two or how to work with customers large and small and how to focus on the mid-market compared to the customers and value of taking some of the tools that have come from the social media and the ve and analytics and helping the customer is be more productive and did last talk about the skills, talk about in powering the work forces and the public-private partnership has ways to try competitiveness and each are just our ideas and you are going to hear a lot more as the week goes on we had the opportunity to learn from each other and share best practices, so take that with that spirit. first, on innovation technology,

this is what the u.s. has always stood for this technology and innovation. i would say most companies to say to be cut today are spending more on the research development in the previous generations in the u.s.. they are spending this technique of between two to 3%. we think that needs to go up. various research groups have said that investments in technology innovation have about a 30% return comes of the case for technology and the case for innovation is without dispute one of the questions i asked when i travel all around the world is how many graduate in the country each year this is the biggest symbol of the long-term competitiveness of those countries more than just about anything else you can study and tracked. so science and technology is an absolutely critical. over the last decade we've gone

from 2% of the industrial revenue to 6% of our industrial revenue into the r&d. in 2012 we will launch more new products than in the year in history roughly twice our historical average. and so, regardless of the company, regardless of the region, we think for the resurgence and focus on science, technology, innovation has got to be the cornerstone of any successful company and the cornerstone of job creation and something that we think winning the companies and countries will do. second coming in the factoring. there is a lot written today about manufacturing. i worked for ge in 1982 for roughly 20 years if you look at the global cost the materials for an expensive and the largest piece in the structure tended to be labor.

we lived in a deflationary time period and now we are in more of an inflationary cost period where they are the largest on anybody's income statement. so as a result i think it makes manufacturing, opening your own supply chain different today and that's the way strategically we look at our business. she has always been good at manufacturing and we have made a strong focus to control the supply chain. we have seen good growth in the monthly jobs numbers and manufacturing. and g. e. we have created 11,000 factory jobs since 2009. we have 16 sites that are new or are being refurbished so we have a strong focus on american manufacturing. i thought i would tell even yet

and that we have some of the local guys the will be here this week but you're basically moving or appliance manufacturing from mexico and china back to louisville, and when we look at it on the cost basis the labor is still higher but it's closer than it spent in the past with both materials and distributions are less than in the united states than in port. so we see the opportunity to bring jobs come certain jobs, not every job back and we think this will take place in areas like software as well. so there is a good case to be made for the competitiveness of american manufacturing versus the previous decades and we think some of this will go on in the future. the next slide experts are key. if you are in the infrastructure business the way that we are, our markets are going to be predominantly elsewhere, the and we see the need to focus on the global markets. there will be a billion

consumers in the middle class in the emerging markets alone. so there's no country that's off limits fundamentally in terms of the opportunities for growth and we look forward in the futures the exports are the key. we will make 140 -- this is the staple product 140 gas turbines this year mainly in greenville south carolina, thousands of employees. we have roughly 50 present market share globally. less than five in the united states. if we are not selling in every corner of the world you're going to fall behind. incite gb exports really drive 30,000 jobs. there is a five to six multiplier on a free export so this creates more than 100,000 jobs in the supply chain. if you are going to be an exporter you also have to create jobs in other countries and on just the united states, so we are doing that as well, you we are building very strong

customer relationships. if you look for the factories in the united states, they know the global airlines and utilities so exporting and competing means winning in every corner of the world and it's harder. it's infinitely harder in turkey and it is in chicago but that's the transition american companies have made to be more competitive to compete more in line with any other country anywhere in the world. so switch gears. those are the strategies. i think that there's to places where every business faces the same challenges when it comes to the long-term competitiveness and yet one is health care and one is energy to the of health care even though it's extremely important for the employees and retirees to have great access,

high quality health care and an affordable cost and this is something we all have to work on together, our health care costs have come down over the last few years. our cost per employee is lower than it was in 2008 and it's driven by an employee he directed health care plan and a very focused wellness program. ge has different sites in the united states. we treat health care the same way that we treat safety, the same way that we treat the program over the last decades so we are extremely focused on the 20 parameters of health care inside those sites and that helps drive how we make the decisions in the long-term competitiveness, so we've really manage this very intensely to make sure that employees get great health care and affordable costs. and when you learn is that there is no such thing as national

health care. every city in this country is different and there's 15 cities that matter the most because they are the biggest concentrations of ge employees and retirees. so in 2009 we work with local employers in cincinnati because that is where a lot of our employees and retirees live, and we work with the providers, we work for p&g and kroger to focus on driving the common information standards of care and creating 100 plus what is called patient centered medical homes and the results are pretty remarkable in terms of the visits, fewer of missions, if you are avoidable conditions, and we think that this company should of having a smarter and we when it comes to health care, plus working in the consortiums around individual city with

other manufacturers and providers in town our goal is to keep this growth in line with inflation so for the past 25 years basically health care cost for companies have grown two to three times the cpi. we think by doing these we can keep the growth of the cost incited cpi and that is with the goal is but we can't do it as an individual company. this takes a consortium of companies in order to do it and going city by city driving best practices and informations of health care costs, and this helps the small businesses and big businesses alike so this is extremely important the private sector get actively involved driving and lowering health care costs and improving wellness, quality and access at the same time. similarly in energy i think that this approach -- and people say it more and more being on the energy is extremely important

for the u.s. today. when i think about energy, i think about a resources endowment. if you have natural resources at your disposal and a creative endowment you have intellectual capability that can drive energy innovation, and i think that to a large extent the u.s. has both. we have a resource endowment does measured by a boomer in the natural gas with shale gas and other times the u.s. has an incredible abundance if you look to the corridor in the west we have the best when to do power generation of anyplace in the world and we have some of the cleanest coal and access to oil and a restart as with other countries look at as a natural resource powerhouse and add the

technical innovation that surrounds energy efficiencies and some of the innovations around renewables, some of the cleaned and environmentally friendly systems around the gas, advanced technologies and things like nuclear reactors, batteries, gas turbines systems, efficient engines and jet engines and automotive engines and in the great university in alaska that we've got, we can actually put this together as a country and achieve multiple goals over the next decade. i never think that complete energy self-sufficiency is necessarily a good thing because you want to be a part of the global network but i think between now and the end of the decade this country can have great control over its energy and can do it in an environmentally friendly way and create jobs and competitiveness the challenges we have are

twofold. one is we have a very old agreed, so we get the week howard infrastructure, weak energy infrastructure and believe it or not on the a relative basis the u.s. market is relatively small. so we have lots of global competition and lots of demand outside of the united states. but if we can find a way to solve a couple of the problems, have a more expansive view of energy, i think this is a place where the u.s. over the next decade can really prosper. so to go through so far, technology, manufacturing exports, those are things i think are working in the united states. and then if you look at affordable health care, access to energy, these are the two pillars of every productive society when i travel around the world, so those are the things i think so far we need to be working on.

next just think about what is our responsibility working with our customers, and i think that all of us in the business cycle, we have to be focused externally to work with customers and how to work with suppliers and i break into groups. with customers in the capitol we have a big focus on what we call the middle market and the middle market or companies between $10 million to a billion dollars of revenue and it turns of this is a huge segment and the two identified themselves as middle-market customers. there's too wondered thousand companies 80% expected growth. it is one-third of the u.s. workers and this is a segment of the economy that fares pretty well during the downturn and we do downside the company is take down any barriers between she and this group of companies in what we call access ge so if you

are one of our middle-market customers and what say you are running a steel plant and you want to learn how to do the manufacturing we have found ways over the internet and in person to about customers access to ge team with it comes to how to do the manufacturing and if you to know how to do employee training we open the doors to ge to this group of customers to say how do you do training? acquisition integration, same way and we think burying the qtr and down the company's hopes the entire enterprise work more effectively and this is one of the things we can do in this segment which is a real system of growth and i think one of the things that maybe sometimes we draw an artificial delineation between the companies, big companies and small companies

when the reality really is the extended enterprise works altogether, suppliers, companies and customers. so this is another pillar of competitiveness and the things that work. i thank the other aspect and this seems to offer promise in the way the big companies work together with other big companies is the role that analytics and the internet is going to play on how our assets move. if you look at the revolution over the last ten years and for the media as the whole aspect of man to machine or machine to machine technology over the coming decade it's going to be one of the big trends. we the but to moderate 50,000 units in the base of the jet engines, gas turbines, scanners and we take these through sensor technologies may be ten terabytes of the data and we have the ability to monitor the

usage data with our customers the has the chance to drive significant productivity and performance for the customers and we are focused on doing that. one point of the firm is worth 5 billion of profitability to the airline industry, one extra mile of velocity for the locomotive customers is the billions of profit. if we can get ct scanners to have 100% of time and that is the capacity in the radiology and every hospital around the country. focus on using technology to drive the productivity is important for customers. so these things in terms of what works are ways the company's need to focus on the customers to help their customers become more productive, yet we think this again is a big pillar of opportunity in terms of what's working in the united states

today. if you than a shift gears and talk about people, because i think again human-resources are key if we want to try it progress in the future and what i call high skills training this is one of the first place is that the jobs council looks in terms of ways to try to employment and ways to drive long-term productivity in the country it is a fact that maybe the most grateful way to create jobs is to fill the jobs that are open today. i think sometimes we want to have grandiose programs and grandiose ideas it's somewhere between the two and 3 million open jobs today and the reason a lot of the jobs go unfilled as people don't have the right skills. if you look at the left-hand side this is a program called right skills now and this is the brainchild of darlene miller who runs a small business in

minnesota, she was a member of the jobs council and this is a focus on that fence and manufacturing jobs using community colleges as ways to get people trained in six weeks up and going to have great skills, advanced skills. it's got a tremendous small business focus, and it's literally hundreds of different ideas on how to leverage community colleges can drive jobs. i travel the world and spend a lot of time outside of the united states and friday of the world has an implant issue. very few people just work nowhere near their open jobs are and know how to get people trained for those jobs. so, the left-hand side i think championed by the small business, embraced by big companies focused on the community colleges as the way to get people with the right skills now in place and in the job area from paul of intel the idea is how to get 10,000 more engineers

graduating in this country. so the drug debate about 135,000 engineers to the united states every year. china and india together graduate a million every year. so, we have a large opportunity, and if you look by 2020 what most economists would forecast is there will be to million-dollar job deficit in engineering in the united states. so we have got eight years to get a tremendous increase and the issue is there's a 75% dropout rate for people who go to study engineering as freshmen, 75% of them don't make it to graduate and that is mainly because of her subjects are easier. let's face it. it's hard to graduate with an engineering degree. so paul's idea is to work with a bunch of universities, big engineering schools to make them

better at what is called retention and having financial awards for students to study engineering and make sure the private sector of the source internships so that if you are a senior in high school and you decide to be an engineer you basically do it with the point of view that you are going to get a summer job ahead of your colleagues that are not working quite as hard and so we have doubled as a company and we have 60 other countries retired 2500 engineers every summer and internship programs we are going to basically double that this year as our many other companies in the united states. so, human-resources or key to read these are just to ideas from the standpoint of what is possible going forward in the future. the reason why people are important and skills are important is because increasingly, we want people to run the show and so in many of

the facilities we now have stuffed the cause of directed teams to the durham north carolina is where we assemble a lot of the engines you probably flew on your last flight or that he will fly on your next flight, and this site has just over 400 people with one manager, and basically the work force, the work teams decide the schedule, put in place metrics and training and hiring and we have well-trained and well-educated highly productive, high-quality teams. so this is not some kind of theoretical exercise to i think we company's work today is the people closest to the action on the floor or the people who are

dictating the knowledge and driving schedules and driving quality and we think this is the way the productive assets work. so think about it again, strategy come innovation from a manufacturing exports, two pillars of competitiveness and health care and energy, focus on customers seeking customers more productive, both small and big, dedication to training both engineering and advanced manufacturing, putting training people in teams where they can try faction and pace we think these are the ideas that are working and these are the ideas we can share and you are going to see these across a number of successful companies to read the last thing i will talk about is the importance of public-private partnerships. the private sector drives jobs in the united states and the will always be true with the government can provide a catalyst and it can happen in a

couple of different ways. one of the values in the united states is 50 different experiments that have been in 50 different states and the governors can be entrepreneurial and helped create the right environment and we think that's been very effective, a place for ge is invested in the last couple of years and haley barbour will be here today as mississippi one of the great things that the governor did this focus on the work force training and not just creating a training fund to get people and going but also linking the company's to the universities and colleges and some state of mississippi of which we capitalize on that and as a result, we have the high-tech aviation plants going in the mississippi, one is already completed and together will be finished this year and these manufacturing plants will do high technical materials and go into the jet engines and we've linked up with the mississippi

state, some of the big engineering schools in the state, and this and let's say five years the point would be roughly a thousand jobs in mississippi so very effective and entrepreneurial, quick, productive, good jobs created in the state. the president set for the goal of doubling exports in five years which we think is achievable but the trade agencies are extremely important. people like xm are important partners as companies like ge around the world. i was just in africa for a week last week. the chinese government is everywhere in africa and we need to level the playing field in order to allow our companies to compete. we don't need the same advantages quite honestly. but i think it is -- it does give a sense when people like xm

and other organization are in that we are kind all in as a country and we are trying to compete and trying to win and i think it just a little bit of support and focus on small businesses and big businesses alike it goes a long way. and so we think with the state level and at the federal level agencies like xm it's extremely important and both of these create jobs which is what the end result is and that is what creates the win win. so, business and government working together helps create competitiveness and so again to recap the ideas we would have, technology, manufacturing, exports. we do business in more than 120 countries, every country thinks about health care and energy as being the two pillars of competitiveness, so those are extremely important. help your customers to make them

more productive. train people, educate people and then unleash the power of every brain inside the factories and make people more competitiveness and increase the sense that while the private sector creates jobs, the government can create important catalyst in the right environment in which people want to compete and want to create jobs. the last thing i would say for the week is competition creates -- requires confidence as a free year executive i can tell you that i am probably more confident today than any other time i can remember in in the ability of factories and businesses in this country to be competitive. there are many good things happening in american business today. i think companies are competitive. they want to win. there is a strong desire to want

to drive not just competitiveness of their own companies but more broadly that in order to measure success we have to win in every corner of the world. 60 present of the revenue outside of the united states and 70% of the backlog in the united states. we have to sell e and chia elaina monreal the ehud in nigeria and in poland, we have to sell in peru and brazil, we've got to sell in mexico, we've got to sell everywhere and we've got to be hungry and the altar of reporting for the companies. i think in general business works together. there's an extended enterprise. there is a supply chain. there's a customer chain. there's teamwork in the companies that are very powerful and i think it is this notion of enterprise and team work is essential to american business that helps us compete so that's

the way i want to frame. you have discussions on various items throughout this week to be we have made a few announcements this morning including the hiring of the 5,000 veterans over the next five years, roughly a thousand a year to get some investments in the aviation business, ways to take the health care program for extensively, ways to use i would say things like the idea shops for people in the towns to be able to access manufacturing and learn from each other and participate for a certain extent in the enterprise comes some various announcements this week. ..

because i want to pick up on we are in washington about some of the government questions, public/private partnership questions. but let me start with the broader economy. we were talking backstage about what you see, what we all see over the next six months in a political context but just for americans who are going through such a time of slow growth and high joblessness. jim, why don't i start with you and ask you, what you're

seeing out there and how it looks? >> i see a normal recovery except for real estate and construction. which is, often times two or three points on unemployment. point and a half on gdp growth. but i see pretty moderately strong global demand with the exception of europe, particularly asia and the middle east. u.s. recover. so finish where i started. pretty normal recovery, except for construction, real estate which for a variety of reasons you understand just hasn't bottomed out yet and may not for a while. >> we talk about economic growth even more important indicator than jobs, and drew. how dizzy it impact what you're seeing? >> now is the time to get us the confidence we all need to keep it going in the

right direction. 8.3, 8%, maybe lower than that what jeff was talking about. i heard of some of what you were saying, jeff. it is jobless recovery but we have jobs out there. it is skills discussion i'm sure we'll get to. a really tough europe what i see. we think europe will be fine at the end of the day. i was making a point with jeff europe has been around a long time. they have resiliency if nothing else. this will definitely be a testing time for europe. emerging world, normal issues. inflation. but emerging world is doing very well. >> jeff, you've been spending the last several minutes going through the macroeconomic picture. one of the things we talk about a lot in washington, fiscal imbalance and leadership vacuums and what that ultimately does to chill business in america the can you provide more than just shorthand on that? as you look at a budget outline president today not likely to be acted on, huge budget deficit and leadership deficit continues

here because they're so polarized. what does it mean to you and the job you're doing around here? >> it just adds to uncertainty because everybody knows somebody has to happen. over the holidays, i read it before and i read it again the deficit commission. i think that is the framework of what has to happen. i don't love everything and none of the three of us are going to love everything but you look at both who was on the commission. their recommendations are sensible. that is the outline of what ultimately has to happen. i just think the sooner we can see that take place it just, i think what makes businesses effective that we can adjust more easily than other institutions, right? and so we'll adjust. >> you just want to know, something will happen. what is going to happen that will affect your business? >> exactly, david. i think, you can go through, you know, entitlement reform. a tax, a business tax that is no loopholes.

rate mid 20s, high 20s, wherever goes. you go down the deficit commission recommendations and you say look, in some way shape or form. in the back of my mind all of us are planning for that eventuality. let's do it. none of us can tell you when it will happen. we can tell you what it will look like. >> let's talk more specifically about manufacturing. the president during his state of the union address said the following i want to speak how we move forward and lay out a blueprint for economy built to last and economy built on american manufacturing, american energy skills for american workers and renewal of american values. the blueprint begins with american manufacturing. that speaks to, andrew, a public, private partnership where government is a player here. first what is the outlook for manufacturing and what is the role of government postively and negatively? >> i'm very hopeful that we've actually now got the national conversation getting down to specifics.

i would say a few years ago there wasn't even a national conversation. today we do have one. jeff in his presentation talked about our cost structures coming down for the right reasons, not least being competitive energy in the country finally. competitive labor costs et cetera. so i think the prospect from here is has to be a public/private partnership model along the line of the simpson-bowles. i think we need government and business to work together on the possible future of the country laid-back to specifics. on what? regulatory reform. tax reform. these are partnership models that the brt and other parts of the business community is working on. we've got specific ideas but we don't see much action. what i worry about is the political animal takes over. the next six to nine months next to nothing is going to happen. so we'll have to wait for another year or two. >> let me break that down a little bit. let's talk more specifics the president says in the state of the union begins with american manufacture suggesting that the

government plays a role. as a manufacturer what can government do for you? >> first of all it is the right focus. manufacturing has a multiflick tiff effect. jeff, you point the that out in your talk. three quarters of the technology in this country emanates services and then, use it in providing services in the full life cycle of products. you get to the next innovation quickly after you've gone down a learning curve making something so it's the right focus to start with. i'm a little bit more of a on the partnership side i'm a little bit more on the regulate us properly and get out of the way kind of guy, okay? i think we know how to design and build things if there's not too much getting in the way of us doing that. and i think right now there's a little bit of tension that is not productive on the regulatory side. whether it is energy and andrew can talk a lot about

it and so can jeff, or on the labor side where i have a big speech. and fda, there is another speech. and don't see the same kind of regulatory partnership that is all about protecting the population from what we do, but letting us do what we do within a known framework. >> let me pick up on that. there is number of issues there we could get into. >> yeah. >> back to you, jeff, part of this discussion and part of the state of the union was saying to business, you've got some responsibilities. we want to incentivize but we also want to hold your feet to the fire. use some sticks against you as well. what role, what responsibility do american manufacturers have to bring jobs back home, to try to get involved in a weir all in it together conversation with government? >> you know, look, david, i could give you a classic laissez-faire capitalist answer it say on one hand i could say, we follow the

laws, leave us alone. >> right. >> i don't think that word fits today. it doesn't fit the zeitgeist of the age. it doesn't fit overall. first and foremost what we owe everybody to compete and win in every corner of the world. first and foremost invest in technology, invest in people. take our products. gain market share. fight hard against, you know all of our global competitors and probably all three of us, i don't really have american competitors anymore. all my competitors are german, japanese, chinese. we're kind of like after 100 years the last man standing in the world we're in. so, you know, i'm kind of love us or hate us, i'm your guy, you know. and that's, you know, so win, number one. but i think look, i just think there's got to be a cagney sans how important jobs are. all three of us, none of us were born in our job.

we all worked our way up, you know, through our various companies and the pride people have when they have a job, the respect they have for each other when they have a job and the notion that jobs are precious. and it is not that every ge job will go in the u.s. but i think to a certain extent at points in time there is too much callousness around it and i just think we have to know that -- >> is that a way of saying insourcing, initiative where there would be greater demands on businesses and the government does play a role. andrew is that appropriate is that something you can live with? you he except the idea that old laissez-faire arguments have to be put aside. >> i think like jeff, i'm sure jim will agree i think the context of the question is really wrong. i have open border competition and this is the most open border out there and ideals of free trade jim can speak a lot about have

to stand. why are you making markets based on false intervention. i'm competing like jeff said, people subsidized around the world. companies are competing like companies. they're creating incentives. thailand, mexico all the emerging companies want when we have but germany do it too. my open country of australia does it too. look at r&d tax credits. it is not a level playing field. if you like, ge is unique in america. dow is unique in america. boeing is unique in america. we need to compete globally. we don't need a government one answer that bring us back to the country. everywhere we create in the world we create jobs back here is another myth. jobs back here is what we all should be striving for without impairing american competitiveness of creating structural intervention of wrong kind. we need partnership model of right kind. health care energy, how

which implement regulation. we need emquality of people regulating our management policies. i switch over to jim and i really think this insourcing discussion as single pillar makes no sense. >> it wasn't me who raised. it was the president of the united states raised insourcing discussion. before i get to regulatory reform i want to ask a basic question as a layperson which is, jeff, you and i talked about this in the past where is the demand coming from whether for an airplane? i get on airplanes seems like they're all bankrupt. are they buying new aircraft or only dubai they're buying aircraft? what about nuclear reactors. >> 95%, sorry about jumping in, 95% of the world's consumers live outside the united states and 70% of the gdp is outside the united states so that's, used to be, when jeff and i grew up if you won in the nights you would win globally. today it's the opposite. you need to win globally and

then because you're facing the same global competitors in the united states. it is a different deal. >> jimmy, the last decade, david, the last decade from boeing and fe, we sell a lot of engines to boeing. without emirates, all the chinese airlines, all the latin american airlines, you know our companies would be a fraction of the size. i think to andrew's point, i just don't feel un-american when i'm selling ge engines around the world, i'm sorry. and, you know what i try to explain to people, it's like, selling a product globally is only like 1,000 times harder than the u.s., right? you're facing subsidized competition. your brand doesn't mean as much. and frequently it is the guy's first experience with a product, right? it's the chinese airlines, basically was their first experience buying aircraft. so i don't it is just one of

those when i think you talk to guys like us, we just don't apologize for having a to globalize our companies. i understand the complexity and i understand what about the high unemployment, jimmy is the most, biggest exporter by far. >> but i would say that i think we, lemming-like over the last 15 years extended our supply chains a little too far globally in the name of low cost. we lost control in some cases over quality and service when we did that. we underestimated in some cases the value of our workers back here in so doing that. so i think there's a recalibration because, even though you've got to be globally competitive there is a jump ball 10 to 15% of your jobs, where, and i think you're going to see more come back to the u.s. in part for business reasons and in part because we want to be good citizens. >> look, when people like me, we scrutinize the president of the united states, part of it does have to do not

just with policy, it has to do with messaging. leadership through communication. how much of the work has to be done by business leaders to yourself to say to american audiences as you did jeff when you spoke to that other network recently in a profile that you know, you should want me to win, if i win america wins? how do you do what, you know, clint eastwood did in that ad which is to say it is half-time in america. chrysler is doing better and we should all be cheering for that whether we're selling cars in detroit or selling them in sri lanka? >> look, i agree with the nuanced points that jim and andrew made. i think beyond that is globalization is a, it's a 20-minute discussion in a world that wants one sentence answers, right? so i think the trick to globalization, look, we have to be vocal and we have to defend ourselves and our companies and say where we've been right and where

we've been wrong. there are places on both. it is a nuanced discussion on, you know, ge's a net exporter to china. so in other words we export more to china than we import from china but that is a nuanced discussions where you're creating jobs in both places as you do that that i think we have to keep chipping away at it. >> i state the obvious i'm no clint eastwood, right? however we -- [laughter] >> you dough have a griz i willed appeal to you. >> you like made in america the way he did? >> that was the point you wanted to get to, we at dow decided to put a book out there making it in america with australian accent. brand and perception, the four words or the one sentence, our articulation of the value proposition here in washington but out there, our workers who actually can have a labels on their products saying made in america. that is an american thing to

do. we have to change the conversation. >> i want to get back to regulation. go through some individual elements what makes manufacturing better, how the economy gets better in this area. again the shorthand in washington for all of us who cover the issues and when we talk to business leaders we need common sense regulation. 21st century regulation for the business community. what exactly does that mean and what's not happening in that regard now? >> my view is that the financial crisis, 2008, promulgated a political backlash that produced a lot of regulation in the financial services area. the discussion broaded from there and splattered over every regulatory agency in d.c. tone from the legislative branches and from the top was combative and was confrontational and so i think the first thing you've got to do get over, get

through the financial services discussion which is a separate issue. a lot of risk came into our economy needs to be addressed. and then like the president's doing focus on manufacturing which i think is a little bit of a different animal. and i think the fact it is looked at separately now gives us a chance to get into a more constructive dialogue because the dialogue with our regulators now tenz to be -- tends to be more confrontational than it should be and more confrontational than it was designed to be. the nlrb case against us in south carolina was a sham, okay? it was a sham. and it was something that an unconfirmed person in that agency promulgated on his own and it was something that eventually they with drew which was the right thing to do but it had a chilling effect. i mean we can afford to spend a billion dollars in south carolina and get told we can't do it, okay?

we didn't stop investing for a second however. other companies the small, medium-sized companies that the administration wants to encourage, they can't afford to take that kind of a chance if there is example after example of that kind of heavy-handed as opposed to cooperative. i think regulatory model in this country is meant to be cooperative. let's find a way. let's keep growing our economy. let's keep driving jobs but let's contain what we do so we don't inadvertently harm other constituencies. we're not there in my view. >> something like shell shale gas. if the studies are true, right? i think there would be people could articulate better than i could, we have a let bode of gas. we have a bunch. that could dramatically change the future of the country. we actually could be a energy exporter in our lifetime yet everybody is waiting for world war 3 to

erupt between the epa on one side and somebody else on another versus saying look, this is the standard we have to meet. we have to reclaim all the water, 100% of the water. we have to do it environmentally friendly way. there is no sense there will be overarching strategy versus yard by yard of fight and warfare. it is just not the way, you know, other countries necessarily approach stuff like this. >> that's a great example of what other countries do. they say i have this amazing new entrepreneural to discovery. it could be a new chip. here i have discovery of the energy kind. now how do i approach it as a nation, okay? what do i worry about? what should i, who should i consult with on regulatory side? who knows anything about hydrofracking actually? it took a long time before they came to the chemical companies where they said what is going on in there, which has been going on 30 or 40 years. there is consultative

process. working on regulatory side to get responsible production so citizens benefit holistically. society doesn't see a negative. society sees a positive. all the energy add, because of shale gas, become a net ex-ever exporter only second to aerospace. companies like mine were having to leave the united states because of energy costs. we're coming back. i'm putting $5 billion in texas and louisiana based on these discoveries and value adding them. that should be viewed as country value add. how do we put responsible regulation to get the jobs in the america at the same time protecting our citizens? >> then a related question i think what has become a more mainstream example. jobs, president obama discussion, why don't you make the iphones in america? well there is not enough engineers here. i have need to go to china. you need to have doctors but you have to have a certain level of advanced education

to have enough engineers who are overseeing the work and i can only do that in china. i can't do that in the u.s. jim, for all of your industries or your particular areas of the economy, you know, how do you make more, make more product in the united states, employ more people in the united states? what has to happen from your point of view? >> well, i think the, you touched on the educational issue, the s.t.e.m., science, technology, engineering and math. we're falling behind in this country. when you get to the root cause it is k-12. kids don't turn on. they don't get excited. quality of teaching is not there. there is whole emphasis there. the president actually is focused on this area. he should do more. but that that is a long-term, frustrating answer because that sorts it out 15 years from now. i think there is, there's a lot of investments, there's a lot of cash that big companies like ours have available to invest and it's, i think we need some degree

of certainty on tax incentives, regulatory. i think once we, as i totally agree with jeff. let's take simpson-bowles, let's sit down, figure it out and everybody gives a little, we move on. even if the answer is half bad we'll understand the environment you're in. you will see a lot of investment happen. >> do you fear a whipsaw because of political leadership? in other words you fear there is enough distinction between the parties that if, you know, mitt romney becomes the president that you could have such change that you want to keep some of that cash rather than invest it? >> no. well, i don't fear a whipsaw. i think that there will be, in all likelihood something after the election, it is ridiculous we have to wait that long, but after the election, they, president obama, republican controlled house and senate. i think at that point some reasonable solutions will be promulgated.

that's my hope and my belief. and it just takes that time. and it's too bad with the gerrymandered districts fox news, cnn, no one stays in wash on the weekend and talks about anything. you're penalized if you compromise. you lose in your home district. that dynamic is just killing us right now as a country. we've got to have a cathartic experience that gets us to the other side. >> what does it take, i'm asking for more of a political leadership question, both of you, what does it take for leaders to lead and actually use that leverage, that leadership leverage on the country to move washington a little bit more? you're taubing to leaders not only here but around the world. what are you not seeing out of this president or congressional leaders with whom you're doing business? >> jim and andrew we've been all active on the brt. business kind of sad, let's take the deficit on. let's solve it. we've spoken more with one

voice on this more than anything else. >> you're showing a a lot more initiative and courage than leadership in congress, rank-and-file in congress or even the president who said repeatedly through aides and so forth, we don't want to put something up on the hill that will be designed to fail. >> in the end the world function best if my job is to go sell gas turbines and engines. there are certain things. we should make our companies competitive. business kind of spoken, reducing the deficit is really probably job one. none of us are going to like everything as we come through it. it has got to happen sooner than later. i would add in the arithmetic point, david, roughly 65% of the u.s. economy has been consumer driven. it has grown dramatically over last 25 or 30 years basically because of credit. this economy needs to be powered by investment. that's got to be, that's why certainty is in some ways more important today because that has got to be the engine that helps power this

economy back to three, 3 1/2% gdp growth. >> i think the two, four, six year election cycles speak against certainty. if you're living in volatile world, how do you answer the question you asked? you answer by saying okay, i believe in a system. you've got to believe in the american system. that's why we're all here. so you've got to say we can sustain ourselves on the big ideas. they may take some time to get there. let's take the baby steps that the jobs council recommended. there was first tranche of ideas, specifically proposals out of jeff's report. the advanced manufacturing partnership which i'm co-chairing has specific proposals in and around job reskilling and retraining and worker outreach and communication you asked about. the president's export council that jim and co-chaired, specific out comes on trade. not the least of them being signing of korean free trade and colombian and panama one. so there are good baby steps that suggest that the american democracy still has

a vitality around business but there's a big gap that exists on the specific big steps, okay, the ones that jim talked about. how do i get to a bigger goal? i always think it comes down to what we do. we face up to the short-term issues of credibility. we have to do the tough stuff, we do the tough stuff. out there we give a picture of the future. as we do the tough stuff we'll be a better company in our case. we have it easier as a company very as you country. that is sort of gap that exists today. >> for any and all of you, people think of technology's impact on the economy and see it in their lives and based on the devices they're using and how it makes their individual lives and less complicated and more dependent on the technology but we know technology's impact on our economy structurally and, and jobs is huge. so what role does technology play in making our manufacturing more competitive around the world? >> well, i mean, is it

depend on the industry. depend on the company. i would use the dreamliner, 787 as an example. a huge job creator. i mean it's going to, it is an innovative product with innovative engines. >> very innovative. >> very innovative engines but what drags, the long-term investment is probably 10,000 jobs to build the infrastructure in seattle and in south carolina. the ongoing employment is somewhere in the neighborhood of 8,000 people. the ongoing investment in r&d as we go down the learning curve of production and try to find the next set of composites that will keep us competitive is probably another two or 3000 people. then the service, as i pointed out earlier, life cycle service of this product over the next 20 or 30 years will probably be in our company and in jeff's, because the engine is the disproportionate service intensity is probably

another 6 or 6,000 people. this innovation produces huge employment and produces profits for our company. allows us to reinvest and i was at a breakfast where i was listening to alan greenspan the other morning and he said i've analyzed the investment in this country and our companies are doing everything except making long-term investments with fundamental innovation. and that is the chilling effect of not knowing what the playing field is going to look like taxwise, regulatory. you have to fight, what battle are we going to fight if we announce some big investment? and it's, but it's, therein is where the jobs are. therein where the success for the company is. that is the thing for success. we have a lot of ideas. >> can i deviate from that slightly? >> sure. >> teach us about operating in a different country where

the playing feegd is -- field is, level is -- you can identify it. >> jeff gave the best speech on that one. >> you feel like you know what the future is. you can invest in more long-term way. the regulatory environment is more welcoming and allows you to do things in a way you like to do it in a little more -- >> david, look at a place like germany. has got well-established investment rules. they modernized labor systems a past couple years. there is reason why germany was one of the few countries in the world that came out of the recession better than it went in. that is -- the u.s. isn't going to be china. there are lots of differences but germany is not a bad, just not a bad place to think about, you know. i think it's not a long list. i think it's, well-trained people. it's investment tax certainty. and then i would say the

third piece is, you know, some form of export. you know, everything today gets cast as like corporate welfare and stuff like that. right? but if you're, you know, if you're trying to sell a boeing 738 -- 737 max with ge engines in africa, you've got fully subsidized european super structure around chinese bank financing you know, and us. so i think, things like xm are away that we can level of the playing field. we will never have a better package than those two entities have but it's not really, it's not really corporate welfare to put us on the same playing field that our global competitors are on. and that's, i would say, labor, investment tax, and some form of export. >> support. >> in my world, energy.

so energy policy which we all talked about and the absence of it here is really a killer in my world. energy intensive industries go to the germanies. they have a energy policy. you may not like aspects of it. you know what the prices versus alternative. views on nuclear in this case. they changed it obviously. clearly there is certainty i get on major imports whether labor or capital. they have tax credits on tax side. germany is great example. there are democracies and opaque systems you don't want to compare yourself to but compete against them. germany addressed three times ago, that is the human talent. they celebrate engineers. they celebrate apprentices. they have these training programs, vocational tripping programs. they pay a lot of attention to the tall lant pipeline at the factory level, for not smokestack industry but stacks of chips. in other words, understanding that it is advanced manufacturing they're geared to.

i think that is probably the sine qua non of examples. countries with know natural resources but their people. they're investing in the people pipeline. it gets back to the education question and shortage of skills we have in this country. >> is part of what we're dealing with here in the political debates and in the debate about competition that we're in the middle of american decline? do you believe that? >> no. >> no. >> not at all. >> not in the -- we're going through a phase where our government and and industry are uneasy with each other. each think they're doing the right thing. knot connecting. we need to figure it out. both sides have their arguments and they frame it politically.

we frame it economically. we think but absolutely not. do i feel that ge or dow or boeing are more or less competitive now than we were 10 years ago? i think without question we're more competitive than we were 10 years ago because we have kept the investment. could we be making more progress if the partnership was characterized by some of the things we talked about as opposed to the way we find isn't i think so but you know. i mean the dreamliner it had its own developmental issues but one of them was labor issues and slowdowns and investment in south carolina because of the government, you know, keystone. eric cantor, and there is plenty of blame on both sides, decide within a month, i'm not going to decide within a month on keystone. that is the president's response. so the whole thing was politicized as opposed what is the right thing for our country and let the

regulatory process work. >> but you don't think it is in decline? >> no. i also think you have got to get away from this one sentence answer we're all victim too whether headline. solyndra does not define the solar industry. we're launching powerhouse solar shingles as we speak from invention commercialization, three years, going on roofs in colorado, nevada and california. shingle invented in america, made in america, by american ingenuity. solar of the future. not solar panels commodity style you subsidize in china. that is great industry and maybe an industry we should have had. we're working on next generation electrical storage device materials. batteries, cathodes. coming out of american labs. innovation is alive and well here. we have to get the pieces together again. >> you're okay with government funding a role in that innovation? that is one of the recommendations. >> we're have spectacular

failures and spectacular successes. it took a while to get the dreamliner. >> yeah. like a fine wine. >> like a fine wine. we have lots of fine wine in this country. >> takes a while. >> david, i wouldn't listen to us. i talk to people who work in our factories and such. they feel like they can compete and win with anybody in the world. i actually see as a guy that travels the world our relative competitive position has improved in the last decade. it hasn't gone down, number one. number two, when you think about something like the dreamliner, turns out this country is still good at doing hard things. and that is a competitive advantage over the, over the long term that is a, that is a competitive advantage. >> can you remember a time, you know, i'm fairly familiar with ge. and you know, some of the messages some of the market,

we bring good things to life. more recently, hey, we don't get budweiser if not for you guys? does that speak to the fact that we're in a new era where political climate, a level of pop youism in the country has reached a level where you need to make a point like that? is that, how much does that hurt? >> you know, companies don't, we don't stand on our own. you know. again, i think jim said it. andrew said it. none of us feel like we're above it all. we are part of this system. you know, we really are. i think we've got to reflect era at time. our slogan is imagination at work. guess what, nobody gives a dam about imagination right now. they only care about work. now we talk about ge works. that is, david, it is just it is just, today people want solutions. they want basics. they want resiliency. they want, you know, and i think basically people kind

of say, if i have to read another op-ed piece i'm going to kill myself [laughing] i want to see somebody do something about something. and i think companies have to be a part of that ecosystem. and, we want to be. so we. >> so we just got a few minutes left and take a minute and talk to a washington audience here about what you're looking for on the whole playing field as you think about the future of manufacturing and american competitiveness. what do you want to see in the next six months to a year, what you are looking out for in the next six months to a year? >> i would say exports, focusing on manufacturing. there is a whole series of things relating to free-trade agreements. export control law reform. sensible immigration. visa. there is a whole list and administration is being responsive there. so we've got to keep pushing that. i would think, get to a tax policy that is competitive globally right now. we're not competitive

globally. a strong statement on education. then i think there is industrial base issue. you look at where there is a lot of innovation in this country came from. not only defense industrial base but other industrial bases have produced as by-products everything from gps to microprocessors to the internet. sorry, al, the internet. and so there's an industrial base issue which is about some tax incentives on innovation and r&d. it is not a new list but get focused on it and use the president's tone from the top on manufacturing to actually get some of these things done. >> i'm very similar. advanced manufacturer agenda that adds value to our new energy base. we can build a specific plan around energy like we could have never done five years ago. address to infrastructure. a national infrastructure

plan. we need series of bites on that. i think the jobs council got that. short-term stuff on tourism done. there is whole lot of jobs reskilling, training programs in place. great practices out there. leverage them. put them into legislative work. get them out there in terms of best practices. one-stop shop to investment. the president started on that with the department of commerce reorganization, those subsume good things like u.s. bank which is powerful, powerful agency for u.s. job creation. look at one-stop in terms of regulatory approvals. 60 federal agencies approving investment in some state and then have state approval. really streamline things. work on efficiency side if you can't get big picture stuff taken care of. >> david, i would say three things. i would recommend everybody go back and reread the deficit commission. i'm hard-pressed to see a better group of people with more common sense solutions. there in does lie one of the

answers. number two, education. this country is just not going to win having math and science ranked 25th or 26th in the world. we all can do better as citizens there. and the third thing is, i think if the world really thought that the u.s. was going to bring its a game, every place around the world to compete and win business in every corner of the world, by having great companies small and large, by having, you know, xm or other trade, you know agreements, we would shock people in terms of how well i think we could do. those three things. >> thank you all very much. >> david, thank you. >> thank you. [applause] >> thanks, david, well-done. well-done.tle preface.

i think everything we talked about this morning whether it is technology, whether it is trade, whether it is taxes, whether it is regulation, skilled workers, all the elements that are critical to recharging american manufacturing is a federalist act. so the it federal government, critical, obviously. we had senator portman here. states, remember we're a union of states, broad powers over market-shaping areas. cities and metros are where it all comes together. and business. networks and manufacturing firms are the ecosystem that supports them. we've got a great panel here to have one of the few federalist conversations we actually have in washington. senator portman, senator

from ohio, but as critical to this panel, former u.s. trade representative. former head of omb. and coming from a state that is a major global manufacturing presence. governor john hickenlooper, governor of colorado. former mayor of denver. also former founder of a small manufacturing firm. okay, now it was a micro brew but over the weekend i actually looked at the north american industrial classification system. and microbrews are there as part of food production. so, -- greg fisher, mayor of louisville. the 16th largest city in the united states. obviously large manufacturing presence. and mayor fischer also was the owner of a small manufacturing firm earlier in his career. both of these folks lived

this and can talk from that experience as well as from their governmental experience. last but not least, jay timmons, national association of manufacturers. this is really the critical constituency group representing manufacturers large and small in the united states on a wide range of issues. so i'm going to start and, go with the hierarchy of the system here. i usually start from the bottom up with the mayors but i will start with senator portman. >> that would be the bottom. [laughter] and ohio obviously, when you think about the united states, and our manufacturing platform, it's a very substantial platform, not generally recognized. 11% of the gdp. 9% of all jobs. ohio's more manufacturing. 16% of your gdp. 12 percent of your jobs. since coming to the senate you've been a major advocate of manufacturing.

both with regard to some of the comprehensive job efforts put forward by the senate republicans. you joined up with jeanne shaheen on a very interesting energy efficiency and industrial competitiveness act also your budgets and services, energy and natural resources, you basically oversee many of the issues at the federal level that have enormous effect on manufacturing competitiveness? as you think about a national manufacturing policy what do you think are essential elements and what is the national government do to move the ball forward? >> thanks for having this conference today and it is great to be joined here with colleagues. at the state and local level and also wit jay who has a global perspective on this. . .

i'm sure you hear about a lot on the tax side of course we have both an individual tax

system that is uncertain at the end of the year you may see a huge increase in taxes and on the corporate side of course we are dealing with antiquated tax code we haven't touched in the last two decades. each competitor has reformed there is making it more competitive so we are at the top and in terms of the rate and the complexities of the top which makes it less competitive in the global marketplace is so that issue and then the regulatory side depending on the business terms almost always a regulation of the federal level people talk about and this is why i introduced legislation that's bipartisan that forces the regulators to look across benefit analysis and the impact on jobs and how to use the last bird and some opportunity. health care cost, so it's with the federal government can do to create the environment for job creation that on here constantly. and look, we have little increased debt right now in our

employment in ohio in the first years that's good news. we have a structural problem keeping up with the thrust of the world. that's why we need to redo all the systems and i mentioned trade taxes and regulation, healthcare and energy. a worker training is another i hear about constantly yet we need to be more aggressive. some say that washington can do less. i think washington should do more. it doesn't create jobs but in terms of creating that climate force this requires in my view a much more aggressive and bold reform effort. >> that is a helpful introduction. we are going to come back to three or five or six as you mentioned. i want to move down here. colorado is not as manufacturing intensive at the starting play

is ohio about 7% of gdp, 6% of the jobs but it's moving up and it's moving up rapidly in many sectors. i thought what was interesting about your approach to the industry and advanced manufacturing is how it's started with the bottom-up. you've been around the state to all the counties. there is a colorado innovation network that is emerging and the disconnecting the dots between advanced are devotee, technology, prototype and production and i thought it would be interesting if you could talk about that network that is emerging and how you think the state policy plays under the federal system. what are the key areas you need to work on for the leveraged potential? >> certainly when i came into office about a year ago we recognized there was a vacuum. the needed to do something about

jobs so they did the economic process we went to all 64 counties and said what you want in the next 20 years, 30 years and how do we get there? of course less regulation, less taxes, we also heard that we want the state to be more pro-business and an environment that's more pro-business and access to capital, we want to have stronger innovation technology and make sure we have training for the work force and in the 64 counties people want to brand colorado as pro-business. colorado obviously i would argue is the most beautiful state in america. my friends and neighbors that means we have to hold ourselves to the highest standards of environmental protection a we have a huge amount of natural gas if we want to be pro-business we've reduced the time for the drilling permits and a sure if somebody's bills the ground water or pond we increase and make sure that doesn't happen. the bottom-up planning is what

helps create a network which is taking all of the research in the departments of the various universities, the school of mines and colorado state university and university of denver and then blending them with the 24 federal laboratories and usually the work in the purposes of the innovation that were putting them together with the business schools and then the big infusion of the business community to make sure we take the ideas and to the entrepreneurship. innovation is a great. they sit on the shelf. jim has written a book about this that talks about how the innovation collaboration is critical but in the and you need that entrepreneurship to create the jobs and that is part of what they will focus on is getting the idea is to have the business schools connected with all of the resources labs and tied into the support with

internships etc., and the idea accelerate job creation. >> if the governor is an orchestrator of all the t's disparate systems and institutions -- >> i get is good for each one of our states is free to compete and try to become the most pro-business state but that will begin to transform the whole country to get to the six states that are sufficiently pro-business and recognize they will start seeing success. you will solve the transportation or education without a strong business community, so as they do better other states will follow and that helps the whole country. >> let's go down to the place things actually happened. [laughter] >> ouch. >> federal government, state government, the world exists in the places to cities in the areas particularly in the united

states. the colleges and devotee as research institutions and importantly the firm's, large, small, so forth, you've been the major for a short period of time coming out of the business sector but one of the first things you did this start a collaboration with a sister city, lexington about how long the by in our? an hour away. but a place that you had been highly competitive with in the past, and you have a whole new initiative with lexington that is primarily of build making this part of northern kentucky that goes into ohio, the platform for the advanced manufacturing. what are you doing, what are you thinking about? this is a very interesting kind of multi city collaboration not generally something that happens in the united states. so is the impetus and where do you think it is heading? >> i've been in a year for

gistel looker ury like most cities we need jobs and the obvious question is how are we going to get these jobs. the strategy or less was to recognize jobs were in the cities. kentucky is 55% of our cities in the metropolitan areas so most people think of kentucky as a more rural state but we are a natural state. the mayor of lexington kentucky if a low entrepreneur they just happen to be fierce. if there's a problem with work together it makes sense. they say there's not enough of that going on in the political world, so we've had our competitive edge and edge compared to the rest of the country appears to be advanced manufacturing. we have the ford motor company plants, ge appliance, toyota, north american headquarters is in this cluster in the blue cross economic movement. so we are in the process of

identifying what our weaknesses are. how do we along in the business strategy with a government strategy of education, foundation and nonprofits, and develop that type of alignment so that we can drive excellence and advanced manufacturing. lots of support in the interest you can imagine from the private sector kind of feels, which i am a part of, kind of feels like you are hanging out there and despite the government help or despite the well intentioned alignment, so learning a lot of things in the project has been under way especially when it comes to the work force preparation there has been a lot of talk but not enough action. >> we are going to come back and start working through the issues raised. the trade national organization advocating on behalf of the american manufacturers. i learned over the weekend at your manufacturing renaissance planned there were critical

goals. the best place of the world, the manufacturer and attract the foreign direct investment. you must expand access to the global markets to reach the 95% of consumers outside of the united states. we have a work force that's the 21st century and we are the world's leading innovators. what is your sense of the federalist conversation? we are in washington in everyone is obsessed with washington, very self referential. how do you think about the federal, state local engagement and the circuitry? >> you took mine in tire set away because you talked about the manufacturing renaissance really focus on those four goals. they are based on the fact that its 20 present more expensive to manufacture in the united states than among the major trading partners around the world and that is when you take into account several factors before leading factors are indicators

of the tax policy, senator portman is a great leader on trying to resolve the problem. april 1st we will have the highest corporate tax rate in the world. it's also based on our energy policy. it's based on our regulatory policy and the tort policy and it doesn't take into account the differences in the labor cost. so the 20% is really a number that we have imposed on ourselves in this country and we have an obligation we think to fix. the partnership between the federal government and state government and local government is critical to be worked for governor in the 1990's and virginia and at that time we have been -- its not that long ago. states have the luxury of competing against each other. every governor has more in their state than existing and before they became governor but today

as we have heard several times today we are a worldwide competition for jobs, so the federal government has to be a partner and one of the ways the federal government can be a partner is reduced structural cost disadvantage that we are experiencing or reduced by 20% to allow us to be able to compete and succeed with our international competitors. >> let me go through and take each of these issues because i think with this panel is to begin with the prior payable is doing is describing what the pillars for the new manufacturing renaissance there's a host of issues. there is no one committee that basically deals with all this stuff, it is a very fragmented by the committee and agency in this town of comer legislature only of the city level. >> i run a metropolitan period of brookings. >> when your on the simpson bowles let's take this issue

first, what has to happen in the tax system with rate and structure so they are beginning to provide that platform from the of its manufacturing. >> i was not honest and symbols. i was running the campaign when that was going on but i was on the super committee. the successor to some symbols of the less successful across the not so super committee but the tax system is antiquated that we are not keeping it in the global economy and competitive fast-moving. we need to reformat epi mengin the corporate tax code is in exceed love that since ronald reagan 86 and 45 the tax code in a substantial way and during that time every one of our oecd meeting the other developed countries in the world trading partners reform to the map and

it's not just about, it's once it is the word in april but it's about the complexity. so if we are going to compete globally, and you mentioned 95% of the consumers outside of the united states interesting statistic is 80% of the purchasing powers of the company that makes most of its money overseas the same with the fortune as it grew we are competing with one hand tied behind our back. the fact we have a different global tax system, we tax on the worldwide system that means other companies have an advantage that are headquartered in japan or germany or china and on the individual site it's gotten to the point is this so complex and difficult to work through that is a disadvantage to the company's the subject risk. i am still the order of the subject risk company and that's the way that 85% of the

businesses operate in the individuals because they've probably been through that, too. the knees to be supplied as well. there is a growing consensus on how to do which is to lower the rate and broaden the base basically meeting getting rid of a lot of the so-called tax breaks, some call the loopholes and preferences which is a nicer way to say it but the bottom line is it has been riddled with more and more exceptions which means the effective tax rate might be lower than the statutory rate but in fact there's a lot of insufficiency so that economists love to look at it and say we want to allocate resources more efficiently and to do that you have to broaden the base so we have a good opportunity to do that on the corporate side mentioned 35% rate taking that to 25% it can be that we have a score of the joint committee that can be bipartisan. this certainly wasn't a super kennedy worked on this and with regard to the individual rate.

controversy for the 2001, 2003 tax code is ending at the end of this year, so the so-called boesh tax cuts or indian. that is the 5 trillion-dollar tax increase most of which no one wants to see happen. my view would be what's not only not let that happen but let's reform the coasts of that is almost irrelevant issue to what expires and what doesn't but that's more pro-growth and they did factoring and gives us the ability not just for the cost to is that represent but also to be more competitive in the marketplace. >> let me bring the two of you into this conversation and brought it also put the tax reform includes not just a broad base but also what investments we need to make and i apologize i have since and rules on my mind these days because as

mentioned again. speed by the way, some symbols, domenici, they're very similar on the three brackett. >> what was interesting about all of those efforts of the addition of cut and invest. but as we are reforming the tax code so that we can be more competitive in the general proposition, we are also selecting those kind of investments with the more advanced or nt, skilled workers, 10,000 engineers, you know of a particular period of time. so if you think about tax reform from the statement local level and listening to the national conversation, is about the tax code itself or does it also included the investment in paris this we need to make tall levels? who wants to take that? >> our key for growth when you take a look over the last 18

months between ford motor company and ge, we have over $2 billion of investment in the community and 4500 new jobs. so that is anywhere in the world. how that came about is the partnership between obviously the company tried to get, number one, but the state and local level coming together with incentives, tax incentives to make the transition much easier for them coming and then a wonderful partnership between the companies and their organized labor as well it's basically a result in to the two-tiered labor system compensation system which some people are critical for the bottom line for the system is you are not talking about having a 25-dollar our job or 15, you're talking about having $15 or zero and our job to lead its this recognition of the global standard for productivity

quality and safety so the state of local governments come together in the partnership to make it happen. >> i would echo that to a large extent, rather as you mentioned doesn't start from the high level of manufacturing experience but when general electric was looking to the manufacturing facility to compete with a number of other states, and you know, you put your incentives on the table but i think to a certain extent that fits the ante. that isn't the root of the game. with the businesses are looking for is a partnership in the predictability that comes from that partnership and i don't think the incentives were the highest but we were hard to convince eg we would be the best partners they ever had even the and connected -- >> it's all in that niche at the level to be this committee and i think the same thing our electronics of the global headquarters from new york to

colorado next year and again it wasn't the incentive we went out of our way to say here is an advanced manufacturing company, large company no one has heard of, the fortune close to the $20 billion a year and they are going to bring a whole string and cluster of electronic manufacturing with them at want to be close to them. those kinds of opportunities and when you talk about taxes, these are the things we haven't gotten to be in business what gets rewarded gets done and yet we don't reward the companies for creating jobs in any real way and that is if you sit back and look at it that is probably the single most important thing that most of our citizens care about right now is jobs, quality-of-life starts with a good job and yet we have to find our way in addition to taxing the profits or other measures finding a way to provide incentives and some sort of reward for those businesses to create jobs in this country because we know in many cases they have a disadvantage to do

that. >> if i could add anybody can put incentives on the table and feel like okay, what's next. there comes back that time and time is what is your work force? do you have the defense manufacturing, is your powerpoint from the high school to ph.d. one that is supporting it is in a factory? how we partner to get on that? some of the things you for today are being done better in the foreign countries than are being done here said that as a whole culture we are trying to for now with our economic advancement movement. >> ken listed on this point for one second and then come back? work force. it seems, senator, you mentioned this while you talked to the solid the large manufacturers. it keeps coming back to we have the skilled workers. it strikes me that we have got several issues here. one is what is the perception of been factoring in the united states? people think these are the old character manufacturing jobs,

dirty, not technologically sophisticated. there are still these perceptions about manufacturing particularly in a culture that is sort of celebrated by some other sectors so there's both of the perception issue. do you on the ground level and to you at the national level find this is an issue and secondly can you deliver the predictable continuously workers even out of high school or community college and helping the engineers of the offense to institutions and how that gets wired? as you talked to the firm's, what seems to be the central barrier and how much does this cultural issue or perception come up as something we need to tackle at the national scale. >> with b.c. briefly i mentioned a visit of 100 factories in know how you the last few years and winter time and time again is even as the time of relatively high unemployment, and again,

lower now than a was a couple years ago, but people can't find the skills they are looking for and j has done a study on this and i think 82% of the manufacturers say they can't find the fuel they are looking for from some of the skills or not there because there isn't the community college and there isn't the connection with the universities and so on but some of philip think is perception. there's the small in effect mean that's working on this to convince the next generation of workers working in the manufacturing is a cruel thing to do it in ohio the average manufacturing is $67,000 a year, so these are high-paying jobs and as you know, these gentlemen who tour the and all the time are increasingly high-tech jobs so even a few years ago i go to the main factor in where there was one operator for a million-dollar piece of equipment in the they thought that was pretty efficient and now that operator has three or

four different machines that he's operating all through a monitor and computerized and all require not just the ability to work but to understand the software to fix the problems and these are high tech jobs that require a lot of training and therefore, you know, higher salaries and so part of our challenge i think is to change the roughly produce to streamline and consolidate and make it more efficient and this is this frustrating hearing or to these guys are doing it the state and local ally don't think the federal government is digging its part but even when you get to that we have to change the image of a factory and make it something that is more attractive for the next generation coming up? >> to the senator's point we are working on exactly that. when we talk about the perception of the modern manufacturing 60% of americans understand and believe that in the factoring is critical to the economic growth and job creation of this country and the

perception of the doctrine has the mission overtime. when my grandfather stood in line to get a job in manufacturing coming effective and that iran 80 years ago was very different than today. it's cool, use that word all the time talking to young people is technologically driven and its efficient. we are working in the states that have implemented the program called dream it and do it and it helps young people experience modern manufacturing and understand its potential but i want to rewind a little bit to your initial question right before this. it's not just trade association or covers and mayors and certainly businesses that can change the perception. it needs to start of the top and

there has to be the commitment from the federal level from the president from congress to increase manufacturing to understand its potential and it has as mentioned earlier the high used multiplier effect of any dollar invested or job that is created, and we have to have that commitment from the top to this president's credit he's outlined a commitment to manufacturing in his state of the union speech. there are many members of congress that are talking about manufacturing and there are certainly governors and mayors in raising the promise that there is no coordinated effort. when i worked for a governor on day one he had his cabinet down and said he will be my competitive in this cabinet. everyday you will try to think about things that are going to create jobs in this state and enhancement factory that are going to enhance attracting business to our state and if you are doing anything else, quit doing it. and we have to have that commitment from the top down the

of the president whoever that is has to work with congress on a daily basis to talk not just about tax reform which is incredibly critical but triet, workforce issues where 5% of the manufacturing jobs go unfilled as the senator mentioned. research and development all of those critical components that are outlined in the manufacturing renaissance document that you read me to be part of a comprehensive package to at its manufacturing in this country and to ensure that we increase it for many generations to come. >> the one thing that i would add on to that, it is an important topic we also have to figure out how to translate that into the culture. the books described again and again they would rather be a hair stylist than two advanced manufacturing even though they know they are going to make a third or half the money they like the validity of the culture. somehow we have to brand that to be in the schools.

kids don't believe they will be able to go to college and they want people to get advanced manufacturing jobs so how do we get more incentives? the talk about double the number of internships and beginning to connect those to scholarship incentives. that is the kind of stuff that somehow even how the media of the social media we have to be thinking and be very intentional about how we make this appealing and attractive to lead to a certain extent even the toughest neighborhoods the sitter around reading us magazine and people magazine and they don't believe, they don't push themselves like the code. to cut off the record and pretend i didn't say that part of that is our job, right? as the trade association of manufacturers making sure people have the opportunity to see what happens in the manufacturing facility. when i visit a manufacturers of the country all three of you probably experience the same thing the work force oftentimes has been there 15, 20, 25 years because they love with the

deutsch. they are working with their hands, they are innovating new methods of ways of doing this and they are competing in the global market to this but they love that challenge and take it all in. >> every time i could in manufactured large or small, you mentioned flexibility on the labor rules. increasingly workers feel like they have a stake in the acid that is critical to our success read a lot of that has been that the state and local level aide that's important. earlier you said states are competing with one another and work to get local level helps because it is a rising tide to lift. i think that's true, the competition is good because you are competing now not with indiana but you are competing with indiana and ohio and winning but if you have to go over to louisville. but that is really exciting and that's good and my only point is i think there's a federal overly

that isn't keeping up with that and there has to be an intentional focus and a concerted effort to put competitiveness number one in manufacturing has to be the top of the list given the multiplier effect to this pathetic as a cultural overlay as well. >> people look at work or education as tuille reverses this is a churning of lifelong learning. i'm learning how to operate in the broader society. when you go to the companies invested in the world. the self directed teams, people are learning how to operate in the problem solvers as the leaders and followers so when you look at the workplace is a place i go into engage and i'm always cui to be learning new things that are giving me the new capability and theoretical

to provide for my family. that's great for the work place but its huge for our country and they still translate into the churches and the neighborhoods and the way we look at our nation working together for something bigger than ourselves and i and interpol part of that and that is so polar from the toy and i have to do this in the magazine or whatever it might be i think we have to celebrate that type of culture and say here who is br as the folks from denver this is our country and we will emphasize that i don't think enough as the journey of working together the disparate you are starting to see that if you look to the super bowl and see the ads that were being played and you are starting to see that happen.

>> this is very interesting trajectory because again in d.c. eight in the state capitols and city hall the conversation ceased to be very programmatic. what are we going to do on tax or work force or etc and what we are describing here is a cultural shift where we begin to dignify where it began and talk about craftsmanship. one of the most interesting things i see the country is high schools that are beginning to bring down what we used to call the vocational services, so some inner-city high schools where we are teaching them in the factory because of the jobs. >> one of the things john mentioned that working in some parts of ohio is where business partners with a high school so

at the high school level bringing the kids and internships and co-ops there is a company doing this in the cleveland area and the indicate that it's working with to get these kids were excited about the disciplines but also to develop a work force so they do go on and get a degree and in the coming back to the school and they are working in the summer and so on so i did there is an opportunity for the companies to be engaged in a relatively low-level in for the kids to see what a job is. our country and our communities that have been connected and don't have educational support and are disconnected and this is getting bigger every day and they may not even the way job is. so some of the mentoring aspect that we've introduced to people to the young kids that may not have been called the radius where they lived before to see

what an office looks like and what the social skills are required to get a job. we have agreed with the society that doesn't understand. >> i think the adding of the culture shift is critical or else will mccaul the policy reforms of the world and we will still have the perception of manufacturing which is not accurate but is deeply held in the country. a couple other issues raised i thought would be good to air since we have a lot of work going on. energy. so the notion that the united states can have predictable energy as a platform is an enormous shift but we have some

issues to deal with. how we do this and get beyond the polarization? but the concerns people have about the environment in ohio. >> ohio is exciting as you know because we have these kinds and in the west they are used to having these natural gas finds periodically in ohio we are becoming a producer of natural gas and oil and we will be a net exporter in the next decade and it's a huge opportunity for jobs. the specific manufacturing jobs doesn't pay a lot it needs to be a steel capital. the u.s. steel has expanded as well. we also make the other structural steel for the platforms so there's a huge opportunity here, and i do think the entire middle issues can be handled among the committees that said we work with us

because we are so interested to ensure the hydraulic tracking can be successfully done and it is properly regulated so it doesn't get into the groundwater and so on. the companies that have been doing this for 50 or 60 years are good at it and they felt a lot of these issues and to have good regulations in place. some states need to work on that, but i think there's an enormous opportunity here and i don't see that there is a huge disconnect here between what the kennedys want and what the industry wants to indian fighter the requires them to do so i think it is a great opportunity for the effect of not just the extraction of the resources but it's great for us to this but i couldn't agree more it's a great opportunity. we talked about the competition being valuable but also the

collaboration and putting in the time spent with people to create the relationship, deepening the relationship creates trust and the issue there, in colorado they say that the collaboration is the new competition, but the environmental community and the oil industry to become more transparent. there has been a level of almost hysteria of people worrying a lot of fluids and so some terrible misleading stories of the media it ultimately about a month and a half ago we got the head of the leadership of the environmental defense fund side-by-side with the senior vice president of halliburton and they agreed to the regulations that would allow halliburton to protect trade secrets and yet get the environmental community full trust in the chemicals they will reveal what the competition of the chemicals are like coke. coke is the most valuable how

can we not get there and i think that challenge is how we get to that level of trust so now we are asking our oil and gas companies to do in the water wells close to where they are going to dwell. take a water test a sample it. we know, greta we can't find an example of flagging. we've been doing it since the early 80's. we can never find an example of getting the ground water in colorado. the jobs over the last several decades we know there's been a couple of places on the east coast where that has happened for the operators but having to give the public more assurance will be more chemical industries and create all kinds of jobs in different levels, but there is a disconnect their. >> the president said we need a strategy and he's right. the 20% differential that i mentioned earlier has actually won the interesting facts in the

first time. we have a cost advantage on energy right now, but we need to drive the number up because the will help in all other areas and the senator, the governor talked about tracking. we have to get the policy right and get all of the regulatory policies right. we have to get it done because the potential in the gas is an enormous. we've done a study with pwc that shows that it will create 1 million manufacturing jobs in the next few years and did you think that the spinoff that occurred from that there is enormous potential and that doesn't even take into account all of the benefits that businesses will derived from the lower cost energy so we need to focus on that and we also need to take the politics out and congratulations on that great achievement. a lot of times we take the

politics with energy policy, the keystone pipeline is a great example. we need to make sure that we are trying to encourage every type of energy supply and development we can because it does mean jobs in the future. there is no question about that. in the meantime the private industry is as dry and innovation. ge appliance, the water heater introduced friday, agreed reduction in the whole energy cost goes to the show, 40, 45 miles per gallon as well so while we are dealing with all of this the businesses are listening to the consumers saying we want to spend less on energy at the same time. >> this is about a global competition. you mentioned the legislation in new hampshire is helping them to be able to have the tools they need to move towards the efficiency technologies and

people are making -- fewer people and more efficiency and this is the energy side of how we are going to get more competitive and be able to not just expand exports but also be more competitive in this country in those markets to the way the market shares cause of the energy efficiency is something with the united states lags not just japan but also the european competitors at the emerging markets so we have a great opportunity there to do more. sprigg we might as well talk about the politics. there seems to be more on this panel and whenever we get federal officials of the governors and mayors we seem to move towards the pragmatics base as opposed to the partisan space so if we took the manufacturing

and the prior payable it basically just went through the core set of recommendations for the national policy of also frankly for the state and local. can we think about a place a year from now beginning in the newer administration whoever is elected where there is a small set of system it changes that can occur in the national scale on the manufacturing potential is that outside of the realm of possibility or are we in the three to five year cycle where the states in the cities have to innovate and eventually washington will be able to scale up in harlem the division is this one of those issues where we can get beyond partisanship because it seems like the way that we are talking about here it is going to be against these

kind of practical almost non-radiological. >> i said at the outset there's a huge opportunity with the challenges we have in the economic structures and i mentioned energy there's no reason this can't be bipartisan. the president's own jobs and competitiveness council has made recommendations as has the evidence in manufacturing group if you look at its regulatory relief which includes some of the things we talked about earlier. the other ministration the hoped they would, the corporate tax reform they will recommend they are going to the territorial system and it's looked at overseas the administration is talking about doing it and as a

result of all of us ought to be working towards a consensus. there is a growing consensus on the tax reform side and other regulatory side so my hope is we will be able to make progress if not this year than right after that election regardless who is elected. estimate for the state and the city perspectives taking that as a 2012 not on what happens at this level what are you all pushing towards it and are year from now what do you want on the priority list? >> when you have a company if you have these competitors and are dysfunctional as a company you think if you or china or germany and watching this as a country right now bickering over all these things, they love it especially when it comes to

manufacturing and manufacturing policies. so the have the industrial policies the are not playing the rules we have and are not fair to be so how does our capitalism and laissez-faire economy evolves as well if we feel we can learn something from germany's's alignment from education, universities, are in the and with china is doing and infrastructure as well so i would like to see what we learn and how we have to resist as a result to get on stock with american manufacturing? >> i would echo that and say i think in the short term the innovation is going to happen in the cities and a lesser extent as the former mayor i can take some credit but it is why do we get more business people like greg to run the office and how we get more of the risky reward thoughts that go through the decision making and get that extend to need lifetime public service as well but we are going

to see the innovation short term in the cities and to a lesser extent the states and the big changes have to happen and the federal level. >> a year from now we need to have said the table, all of us here. any business that may affect treynor this fonts' can occur after the next election so that's the final word. >> i want everyone to think the nd has been have some

focused on the work force training as a way to make mississippi competitive pc fantastic leader of the national stage and around the republican national committee and things like that, so a great job in mississippi. the one story i would like to tell as i was responsible for the business council in 2005 and this is kind of an association

of the 125 biggest companies in the united states and we happened to have a meeting two weeks after hurricane katrina and i invited the governor of louisiana at the time and governor barbara to come and speak to this group, the governor of louisiana didn't come. governor of mississippi came and with no notes for an hour described to the ceo in the room the crisis management by that time is only two weeks after the disaster. the leadership lessons with that but looked everybody in the alladi and so i'm going to make mississippi a pro-business state and he lived up to everything that he said he was going to do and then some so it is my pleasure to introduce governor haley barbour. [applause]

to respect to mention the business council it proved to be the case it's going to be the private sector that we have in the area here after a mega disaster and that is why two weeks after the storm i talked to the 125 biggest companies of the united states because despite the help we needed it received from the federal government for the sister states and the charities and everything else of the end of the day if you are going to rebuild your community that is what has happened general electric and to tell the police were to be i'm going to talk to you about manufacturing, about america being a competitive in manufacturing has from the perspective of a governor come

in and if i don't get but one thing across i went to get across the tell a great story. some of you here are old enough to remember ed sullivan. remember the ed sullivan show on monday night half of the tv sets would be tune did to it sullivan he had conrad held in on his show and created the hotel chain, the kind of business icon and he will walk down the stage and you can't tell the american people but one thing what would you tell them? he hesitated and said your shower curtain inside of the tub.

>> if i can't get but one that saying across to you we in america need to emulate what we tried to do in mississippi and that is don't give up on in this factoring because we don't have to. i come from the poorest state in the country. a small state a state where when i was a young lawyer 40 years ago the companies that came to mississippi came looking for strong backing low wages and general electric is a great example of that because we can compete of the governor for different times when i was governor one of the company's clothes and plants in mexico and move the work to mississippi in and we do that all over the united states. before getting into that deeply i want to comment on what a

great partner general electric is to say that our state is a good partner we like to think that we are. but it's easy to be a good partner like general electric. they have the facilities in the state one of which when it was announced i think those of you that recognized mississippi's image, and i understand mississippi suffered with a negative image most of my life. but they decided to open this plant and general electric for the engines and they make the fan blades lot that i had any idea what that was when we were trying to get the company to the vice chairman of the word came down with the announced that they were going to open this and he said this is the most sophisticated manufacturing general electric does anywhere

in the world but i can assure you 20 years before that people would have been flabbergasted when they heard the second half, yet we are going to do it in north mississippi. but in fact we do in the factoring in blades and assemblies and about 60 miles south of memphis let's just leave it at this: they've doubled plant size in the four or five years that it's been open. i remember when the head of the aviation came for the opening and this very significant facility somebody said on the team we put twice as many lockers here as we were supposed to. that is for the employees who work there to have. we spent a couple of hours of the plate and the manager spent

some time each day and as we walked out he said we are going to feel all of the lockers and only filled all of the lockers having that many employees, the expanded since then the importantly for us to build another sister plant. since then in south mississippi. analysts bill is about 20 miles from the university of southern mississippi, and part of i think success for manufacturing in the united states is a strong tie with higher education. i talking a little bit about work-force training and our community colleges but let me mention first hour universities. the university of southern mississippi which is a few miles for more than 30 years has the power institute. now, those of you that don't know what