Statement of Leon Trammell, Chairman and President,
Tramco, Inc., Wichita, Kansas

Testimony Before the Subcommittee on Trade
of the House Committee on Ways and Means

Hearing on the Importance of Trade Negotiations --
Active U.S. Involvement

March 4, 1999

Chairman Crane, Congressman Levin, members of the Subcommittee on Trade. I appreciate this opportunity to join you in this very important discussion.

The following information is provided as a written submission for the United States House of Representatives, Committee on Ways and Means, Subcommittee on Trade.

These materials will provide a record on my thoughts on the importance of expanding trade, and resisting any protectionism in trade negotiations.

As background, I am:

Leon Trammell, Chairman and President, Tramco, Inc.

We are located at 1020 East 19th Street, Wichita, Kansas 67214.

Our 160+ employees are involved in the manufacturing and sale of high-production conveyors and conveying systems. Our primary market is in the "cereal foods" business … i.e., corn, soybeans, etc. We have been active in international sales for more than 20 years, and have been most active in the China market for the last 14 years.

With your permission, it may be valuable to know of Tramco's background and introduction to "international" trade.

Almost 25 years ago Tramco embarked on its first job outside of the United States. We were fortunate to be involved in a grain import and transfer facility in Alexandria, Egypt. When the project was completed and brought on-line, we realized that this modern facility - half way around the world - had been responsible for 20% of our business.

As we said, this was "good" business.

This one factor alone can be cited as the reason Tramco's quality products are now known around the world. As a company, we made international relationships and sales one of our primary missions.

We also know that "relationships" must come before any prospect of "sales." As such, we seem to have one of our employees getting their passport stamped on a monthly basis. And, while it is not unexpected to have a $5,000 bill at the end of each trip, we continue to make this investment in pure relationship building.

I would now like to discuss the changes we have seen in the China market (specifically) since our first introduction to this international partner. (I highlight China for this example because, with our bidding, sales and installation activities currently in over 35 countries, China is among the most restrictive.)

• Ten years ago, with roughly 1.3 billion citizens, almost 80% of China's population was involved in farming. Today, after extensive industrialization, this number has dropped to between 65 and 70%. While this drop is significant, the number of farmers - 850,000,000 - is still more than three times the entire population of the United States. (As a point of reference, 100 years ago, 60% of the United States population was involved in agriculture. Today the number is 1%.)

• When we first went to China, the grain industry's idea of transporting grain was one farmer/gardener, one sack of grain and one bicycle. To be honest, there was no infrastructure. In fact, when grain was loaded on to ships (during the few years when China was an exporter) it was not unexpected for the farmer to carry sacks of grain on to a ship and dump them by hand in to the ship cargo areas.

• Ten years ago saw the beginning of the construction of a system of what we could call country elevators. Their primary purpose was to ship the grain to a centralized storage facility.

• We would like to believe that China is leaving a period of "labor intensity" and entering a period of "brain intensity." Obviously this shows great promise for a manufacturer of "high-quality, labor-saving" equipment.

Why are international markets important to Tramco? While we could "wave the flag" and talk about helping the U.S. balance of payments, the real reason China and our other international partners is important to us is that we are an entrepreneurial company - always looking for sales - and foreign projects offer the most opportunity in the world.

China is finishing up the greatest grain "system" expansion the world has ever known. It should be noted, due to peculiar aspects of the Normal Trading Relation status (NTR), no U.S. design and engineering firms have been involved in these projects. Most of the work resides in Canada, England, Australia and the Netherlands. (The major U.S. firms didn't get involved because they did not know if they would be able to operate under NTR from one year to the next.)

Let me speak honestly about our feelings toward international activities in general, and granting permanent NTR status to China specifically ...

... our business is not based upon whim and caprice. The current NTR approach sometimes seems to be based upon whim and caprice.

... Americans understand that we cannot impose our religious, political and social views on China. It would appear as if Congress does not understand this.

... Our company's short-term planning is 12 to 18 months, and our long-term planning is five years. With the current NTR requirements with China, everything ends on December 31.

... Many of our clients realize that changing specifications in the middle of a project might necessitate changes in the product delivery schedule. With the NTR requirements, it doesn't matter how many changes are requested, everything ends on December 31.

... We like to think we are always "in the ballgame" when it comes to designing and delivering equipment. With NTR we have missed jobs because we couldn't deliver materials before the end of the year. This situation is brought about because, as the U.S. Congress threatens to withhold NTR status from China, their government threatens to impose a 40% duty on all equipment delivered from the U.S. While this has never happened, the threat always exists.

... The current NTR activities take away two qualities we expect in a long-term client relationship ... continuity and consistency.

It should be obvious from my comments to this point that I am a designer and builder of conveyor equipment ... I am not a politician. While I vote every chance I get, I certainly do not understand the way our government chooses to make laws that hand-cuff our own small businesses who are trying to do businesses with China.

For instance ... why would the United States want a policy that would restrict our ability to compete? Do they think they are "punishing" China? No. The world's largest potential marketplace will buy from some other country. The people being "punished" are our own manufacturers and engineering experts.

Or, to paraphrase the general focus of this Ways and Means Subcommittee on Trade … I would urge you to do everything possible to expand trade, and resist the introduction of any form of protectionism in any trade negotiations.

Who is Leon Trammell …

… I am is the guy who signs paychecks - four times a month - for more than 160 families. I have employees who can take raw steel and turn it into the finest grain conveyors in the world. And, I am the guy who approves the expense reports on those trips to make sure my key people maintain their key relationships on four continents.

The sad thing is that Tramco is not alone. I fully expect that you will receive similar comments from others who are just as frustrated by a restriction on trade through the inclusion of protectionism in trade negotiations.

Let me thank you for the opportunity to express these thoughts and to show how passionate I am when it comes to establishing a "level" playing field. (I honestly do not want for Tramco to ever be given an unfair advantage. We have gained our reputation and success in the toughest arena of all ... the free marketplace.)

To summarize:

1. The United States Congress should do everything possible to expand the international trade marketplace.

2. Any effort to restrict trade, through protectionism, tariffs or short timetables should be rejected.

3. On the subject of Normal Trade Relations status, I would support all efforts to give permanent NTR status to China.

4. We should be able to continue our relationship-building in any country, while projecting beyond New Year's Eve.

5. While we work well with engineering firms from Europe and Australia, it would be nice once-in-a-while to deal with companies who are a "local" call away.

6. Finally, long-term relationships should not end on the last day of the year, and then restart when someone in Congress says they can recommence.

Thank you for this opportunity to share some thoughts with United States House of Representatives Committee on Ways and Means, Subcommittee on Trade.

Thank you.