Blog - Touring the Capp USA plant in Clifton Heights


Date: June 8, 2010

Last week, I had the opportunity to tour Capp USA, a light manufacturing and distribution company located in Clifton Heights, Pa. A number of other local business owners and managers joined us prior to the tour to share their thoughts about the economy and the challenges facing small businesses in the Delaware Valley and nationally.

James Caplan, the President of Capp USA, offered many keen insights into federal policies and their impact on small businesses and job creation. He noted that when his father operated the company, he would call emergency meetings if their margins ever fell below 30 percent. Today, the company regularly operates on margins of just 20 percent. These declining margins are commonplace as companies fight to remain competitive in the global economy.

These margins force companies like Capp USA to do more with less. They are always looking for new opportunities to cut costs to protect these slim margins. But the low margins also make companies extremely susceptible to negative impacts by government policies. Legislative proposals like cap and trade and the huge spike in energy costs that is likely to accompany it threaten the very existence of small businesses like Capp USA. The same goes for proposals to increase a variety of taxes on small businesses or the health care overhaul and its impact on small business.

Small business owners like James Caplan are constantly analyzing the market place and attempting to plan for the future so that they can compete with overseas competitors. This is especially true in the current economic environment, where other businesses -- a major portion of Capp USA's customer base -- are reticent to invest in capital expenditures and expansion.

Rather than addressing the underlying economic and job creation challenges facing small business, Congress is focused on a legislative agenda that actually threatens jobs by creating uncertainty. When businesses owners are unable to predict the financial impacts of government policies and the extent of the negative impact that they will have on their bottom line, they are not willing to invest in hiring new employees or invest in their business. Instead, they hold money in reserve or take a defensive posture in preparation for the worst.

In the past, the toughest competition for U.S. companies was from other similar companies located in other states or regions of the country. Today, that competition is with companies located overseas, in countries like India and China. Often, these overseas companies do not abide by the same type of environmental and labor protections that we have established here in the United States. That is not to say that we should erase these protections where they are prudent and responsible, but it underscores the need to be mindful of how every new legislative proposal coming out of Washington, DC can impact small business owners.

Often, these businesses are walking a financial tight rope in an effort to stay competitive. The slightest misstep could make the difference between a business continuing to employ hundreds of Americans or moving its operations overseas where the cost of doing business is lower. That in turn impacts other small businesses -- the local restaurants or take-out places that feed those workers, the sub-contractors who supply parts, or the local mechanic who services the company's vehicles. The ripple effect goes on and on.

But as James Kaplan lamented, many legislators seem to have the mindset that taxing business is the answer to government budget deficits. The need to grow government revenues to pay for new spending often trumps rational thought. These policymakers, Kaplan notes, don't have a concept of how many business owners are already stretched to the maximum. Many small businesses are at a tipping point.

Too few policymakers understand the daily challenges facing small business owners. This is especially concerning when you consider that small businesses account for the large majority of new jobs created in the past 20 years.

In the coming weeks and months, I will continue to reach out to and meet with small business owners from a variety of industries. We need to listen to the concerns and fears of these entrepreneurs if we are to develop successful policies that grow jobs and lead to economic recovery.

I look forward to sharing these insights with voters, as well as my own proposals on what Congress can and should be doing to rebuild our economy.