Jan. 27, 2023 Policy Hearing Takeaways January 27, 2023: Pennsylvania Made: Discussing Innovative Ways to Propel Our Manufacturing Opportunities The House Republican Policy Committee convened a public hearing in Western PA, the heart of America’s manufacturing might, to discuss innovative ways to propel our manufacturing opportunities. This hearing, hosted by Rep. Andrew Kuzma (R-Allegheny/Washington), brought together a range of Pennsylvania industries with rich histories and a combined experience that stretches centuries. The goal of the hearing was to hear directly from manufacturers to learn how the Commonwealth can better support the industries that sustain our communities and drive our economy. The testifiers who joined the Committee were as follows: Norm Candelore – Vice President of Vendor Relations, Sarris Candies Yemi Aknikugbe – Chief Excellence Officer, CNX Resources Corp. Mark Shelleby – Treasurer, Vista Metals Inc. Christopher J. Masciantonio – General Manager, State Gov. Affairs, US Steel Corp. Agenda – Bios – Testimony Norm Candelore, vice president of Vendor Relations for Sarris Candies, began the day’s hearing with tremendous chocolate-fueled energy and enthusiasm for PA manufacturing. Representatives heard the 60-year history of Sarris Candies, which started in Mr. Sarris’ home in Canonsburg and has now grown to support 400 careers throughout the state. Sarris’ manufacturing facilities, which were toured hours before the day’s hearing, supply 800 retail locations around the state with award-winning handmade chocolates and assorted candies. Norm shared that Sarris Candies does not just offer jobs; they offer CAREERS. After meeting with many of the Sarris employees earlier in the day it was clear that the health benefits, competitive pay, retirement programs, work environment, and of course the free chocolate samples have made for long-term employees that are devoted to Sarris Candies because Sarris Candies is devoted to them. Sarris Candies is also an integral part of their community, sponsoring the UPMC Kidney Transplant Center, MS Foundation, Phipps Conservatory, Pittsburgh Aviary, the Frank Sarris Library, and more. Within the question- and-answer period following Sarris Candies’ presentation Norm made clear the need for further cooperation between PA government and the manufacturers that call our state home. To businesses, the partisan divide is not nearly as important as the divide between lawmakers and the manufacturers that want to operate and work in PA. Furthermore, the Commonwealth needs to assure that we’re preparing the next generations for manufacturing careers so that we can continue to propel the State into a prosperous future. Rep. Jim Rigby (R-Cambria/Somerset), to close the Q&A period, asked, “How do we get people into the door to pursue these careers?” Norm responded candidly, “It starts at home. If an opportunity presents itself at 16 then get to work. All we can do [as manufacturers] is present the opportunity. We need to get the message to families and partner with schools to get them in the door. The start is so much harder than the finish.” “At Sarris Candies we don’t have jobs, we don’t offer the standard punch in/punch out jobs, WE OFFER CAREERS.” Norm Candelore, Vice President of Vendor Relations, Sarris Candies WATCH: Olayemi Akinkugbe (Yemi), Chief Excellence Officer with CNX Resources Corp., joined the Committee to discuss natural gas and the role it plays in sustaining, attracting and expanding manufacturing across the Commonwealth. CNX’s innovation, technologies and investments in PA enable our manufacturers to access clean-burning, abundant, inexpensive and locally sourced natural gas to use as both a fuel and manufacturing feedstock. CNX institutes an “Appalachia First” vision, which focuses on producing and using their natural gas locally. This “Appalachian First” vision guides the decision-making behind every investment, position, partnership, and MOU that CNX pursues. Chairman Kail asked Yemi the first of many questions from min attendance. “What are CNX’s, and these general industries’, largest obstacles to success and growth?” Yemi expressed that there are 3 obstacles that CNX and natural gas producers face: 1. Acceptance that natural gas is NOT a bridge fuel, but a catalyst fuel. It will be needed as a fuel and a feedstock for decades to come. Low-cost energy fuels development. 2. Clear education on what the prospect, future and potential of low-cost, low-emission natural gas can do to revitalize Western PA manufacturing. 3. Lack of clarity and certainty from within the Legislature and our regulatory climate. Natural gas extractors and manufacturers need stable business environments before making major investments and pursuing new ventures. “Uncertainty is the Kryptonite of business.” “It is undeniable how Appalachia natural gas and affordable energy has unlocked a new era of manufacturing, job-creation and growth.” Yemi Akinkugbe, Chief Excellence Officer, CNX Resources Corp. WATCH: Mark Shelleby, Treasurer of Vista Metals Inc., joined the committee to share the perspective of a family-owned manufacturing company that has been based in McKeesport for 54 years. Vista Metals Inc. produces the needed tungsten carbide preforms that are utilized by manufacturers around the world to produce aluminum food and beverage cans. Thanks to Vista’s expertise in manufacturing, they are also able to provide specialized tooling for the oil and gas industry, automobiles, roofing and piping, along with other products. Employees of Vista Metals receive a strong benefit package, 401k with employer match, profit sharing, a competitive wage and much more. Even though Vista Metals has cultivated a family-supporting career environment, they, just like many other manufacturers, struggle to hire new employees. Following Mark’s testimony Rep. Sheryl Delozier (R-Cumberland) asked for more specificity in what level of education was required to start a career with Vista Metals, and whether on-the-job training was provided. The committee learned that anyone can start on a career path within a manufacturing facility directly out of high school, and on-the-job training and in-house tests are commonly seen as equivalent to degrees or other certifications. Even though the barriers to entry are low, when Chairman Kail inquired as to what Vista’s largest obstacles to growth were the response was simply, “We need employees. We have the work, but not the labor.” “Today’s manufacturing remains as relevant to our core as it ever did and provides an exciting career opportunity for our communities.” Mark Shelleby, Treasurer, Vista Metals Inc. WATCH: The day’s final testifier was Christopher J. Masciantonio, General Manager of State Government Affairs for U.S. Steel Corp. The committee learned that immense amounts of virgin steel is still being smelted in the Monongahela Valley, and U.S. Steel employs over 4,000 people throughout the state with a majority represented by the United Steelworkers Union. The Monongahela steelworks alone receives a $3 billion investment each year, and U.S. Steel is continually looking to expand its operations. U.S. Steel utilizes 6.5 million tons of coal a year, shipped by barge to the millworks, to keep the mills running most efficiently 24/7 and generate new steel for our manufacturers. Furthermore, U.S. Steel is the largest customer of Peoples Gas as the natural gas is needed to heat furnaces, boilers, and keep the mills running. At this time, the steel being created by U.S. Steel’s PA facilities primarily makes its way into consumer appliances such as dishwashers, washer/dryers and refrigerators. Chairman Kail gave U.S. Steel an opportunity to express the top obstacles to maintaining and expanding their footprint in PA. Similar to other industries, U.S. Steel cannot always find enough skilled workers to pursue massive infrastructure projects, but the largest impediment to their continued growth stems from state agencies. State agencies and directives coming from the governor’s office have create a climate of regulatory and financial uncertainty that stymies entrepreneurial efforts due to fear of unforeseen regulations, executive orders, and extended permit wait times. The committee frequently hears these concerns from our businesses and manufacturers, with specific attention being drawn to Department of Environmental Protection (DEP) permit wait times and lack of regulatory clarity, the need for continued CNI rate reductions, and the ability to carry forward net-operating losses to enable growth even during times of financial difficulty. Rep. George Dunbar (R-Westmoreland), Republican Caucus Chair and a Certified Public Accountant, expressed that the inability to “carry forward” net operating losses in PA is of particular harm to new businesses that can’t expect significant financial gains in their first years of operation and have to both contend with startup costs and an unsympathetic tax scheme. “We need to focus on technical skills.” Christopher J. Masciantonio, General Manager, State Government Affairs, U.S. Steel Corp. WATCH: The hearing concluded with a summation of the day’s testimony by Chairman Kail. The pattern of impediments to manufacturing opportunities that was expressed throughout the day fell into three categories: 1. The need for further workforce development initiatives to empower our workforce to take on these opportunities. 2. Tax reform, namely the continued reduction of CNI tax year-over-year and the ability for businesses to “carry over” their net operating losses. 3. Regulatory stability, clarity and long-term predictability that a business can rely on to confidently invest without unwarranted risk. All of these impediments to manufacturing and business growth, when addressed, will encourage family-sustaining careers for the next generation and keep our families rooted in PA. To continue informing the Legislature on these matters, and in an effort to find real solutions, the Republican Policy Committee will continue to hear from our job-creators and workforce developers to better inform the Legislature and enact the will of the people.