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Trade Adjustment Assistance for Firms Program Fiscal Year 2009 Annual Report

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Start Preamble

AGENCY:

Economic Development Administration, Commerce.

Action:

Notice.

SUMMARY:

The Secretary of Commerce is directed by Section 1866 of the Trade and Globalization Adjustment Assistance Act of 2009 (TGAAA), which became effective May 17, 2009, to submit to Congress a report on the Trade Adjustment Assistance for Firms (TAAF) program by the 15th of December each year. The TAAF Program is one of four Trade Adjustment Assistance (TAA) programs authorized by the Trade Act of 1974 (Trade Act). The mission of the TAAF Program is to provide technical and financial assistance to U.S. firms affected by import competition. The program provides assistance in the development of business recovery plans, which are known as Adjustment Proposals under Section 252 of the Trade Act, and matching funds to implement projects outlined in the Adjustment Proposals. The TAAF Program supports a national network of 11 Trade Adjustment Assistance Centers (TAACs) to help U.S. firms apply for assistance and prepare and implement strategies to guide their economic recovery.

Overall, there has been an increase in the demand for the TAAF Program in fiscal year 2009, as demonstrated by the increase in the number of petitions for certification and Adjustment Proposals submitted to EDA for approval.

Fiscal yearPetitions receivedPetitions accepted for filingPetitions certifiedPetitions deniedAvg. days between submission and acceptanceAvg. days between acceptance and certification
200928124721212845
20081881 19018301145
Start Printed Page 2492
Change49%30%16%NA155%NA
1 Two of the petitions accepted for filing in FY 2008 were received by EDA in FY 2007.

Because of the spike in petitions and Adjustment Proposals, the Economic Development Administration (EDA) experienced challenges in meeting the 40-day processing deadline for petitions accepted for filing immediately after the new legislation was enacted. Beginning in the fourth quarter of FY 2009, the average processing time for petitions has started to decline below the 40-day requirement. Additional TAAF staff resources are expected to help improve the processing time even further for FY 2010.

TAACs effectively reached small and medium-sized firms in FY 2009. The average employment, net sales, and productivity of firms certified in FY 2009 declined in comparison to the previous fiscal year. Sixty-five percent of all firms proposed to implement a marketing/sales project or production/engineering project in their Adjustment Proposals, and 35 percent of all firms proposed support systems or management/financial projects.

FYAvg. employment at certificationAvg. annual net sales at certificationAvg. productivity at certification (net sales per employee)
200977$10,715,785$128,729
200882$13,081,993$149,565
% Change(6%)(18%)(14%)

The following table illustrates that in FY 2009 EDA approved an additional 33 Adjustment Proposals as compared to FY 2008 and proposed to spend an additional total of $2.4 million in government funds.

Approved TAAF Adjustment Proposals

FY 2003FY 2004FY 2005FY 2006FY 2007FY 2008FY 2009
Number of Plans Approved162177132137126139172
Total Government Share (millions)$8.1$8.5$5.9$6.7$7.1$7.9$10.3
Total Firm Share (millions)$7.4$8.1$5.4$6.0$5.9$7.5$9.8
Total Projected Costs (millions)$15.5$16.6$11.3$12.7$13.0$15.4$20.2
Avg. Government Assistance Per Firm$50,000$48,023$44,697$48,905$56,449$56,827$60,123

The TGAAA identifies 14 measures that should be covered by this report. EDA currently is unable to provide any information on four measures: (1) The number of firms that inquired about the program, (2) the number of petitions certified by congressional district, (3) the number of firms leaving the program and why, and (4) sales, employment, and productivity at each firm upon completion of the program and every year for the two years thereafter. EDA is taking steps to collect and report on all of the missing measures for the FY 2010 Annual Report.

ADDRESSES:

Trade Adjustment Assistance for Firms Division, Room 7106, Economic Development Administration, U.S. Department of Commerce, Washington, DC 20230.

Start Further Info

FOR FURTHER INFORMATION CONTACT:

Bryan Borlik, Director of the TAAF Program, 202-482-3901.

End Further Info End Preamble Start Supplemental Information

SUPPLEMENTARY INFORMATION:

Table of Contents

Introduction

Program Initiative

Program Description

Data for This Report

Results/Findings

(1) The number of firms that inquired about the program.

(2) The number of petitions filed under section 251.

(3) The number of petitions certified and denied.

(4) The average time for processing petitions.

(5) The number of petitions filed and firms certified for each Congressional district of the United States.

(6) The number of firms that received assistance in preparing their petitions.

(7) Sales, employment, and productivity at each firm participating in the program at the time of certification.

(8) The number of firms that received assistance developing business recovery plans (Adjustment Proposals).

(9) The number of Adjustment Proposals approved and denied by the Secretary of Commerce.

(10) The financial assistance received by each firm.

(11) The financial contribution made by each firm.

(12) The types of technical assistance included in the Adjustment Proposals of firms participating in the program.

(13) The number of firms leaving the program before completing the project or projects in their Adjustment Proposals and the reason the project was not completed.

(14) Sales, employment, and productivity at each firm upon completion of the program and each year for the two-year period following completion.

Discussion and Analysis

Conclusion

Introduction

This report is provided in compliance with Section 1866 of the Trade and Globalization Adjustment Assistance Act of 2009 (Sec. 1866, Pub. L. 111-5, 123 Stat. 115, at 367) (TGAAA). This section directs the Secretary of Commerce to provide an annual report Start Printed Page 2493on the Trade Adjustment Assistance for Firms (TAAF) program by the 15th of December each year. Section 1866 of the TGAAA states:

IN GENERAL.—Not later than December 15, 2009, and each year thereafter, the Secretary of Commerce shall prepare a report containing data regarding the trade adjustment assistance for firms program provided for in chapter 3 of title II of the Trade Act of 1974 (19 U.S.C. 2341 et seq.) for the preceding fiscal year.

This report will provide findings and results to the extent that the data is available on the following 14 measures:

1. The number of firms that inquired about the program.

2. The number of petitions filed under section 251.

3. The number of petitions certified and denied.

4. The average time for processing petitions.

5. The number of petitions filed and firms certified for each congressional district of the United States.

6. The number of firms that received assistance in preparing their petitions.

7. The number of firms that received assistance developing business recovery plans (Adjustment Proposals).

8. The number of Adjustment Proposals approved and denied by the Secretary of Commerce.

9. Sales, employment, and productivity at each firm participating in the program at the time of certification.

10. Sales, employment, and productivity at each firm upon completion of the program and each year for the two-year period following completion.

11. The financial assistance received by each firm participating in the program.

12. The financial contribution made by each firm participating in the program.

13. The types of technical assistance included in the Adjustment Proposals of firms participating in the program.

14. The number of firms leaving the program before completing the project or projects in their Adjustment Proposals and the reason the project was not completed.

The TAAF program is one of four Trade Adjustment Assistance (TAA) programs authorized under the Trade Act of 1974 (19 U.S.C. 2341 et seq) (Trade Act). The responsibility for administering the TAA for Firms program is delegated by the Secretary of Commerce to the Economic Development Administration (EDA). EDA, through a national network of 11 Trade Adjustment Assistance Centers (TAAC), provides technical assistance on a cost-shared basis to U.S. manufacturing, production, and service firms in all fifty states, the District of Columbia, and the Commonwealth of Puerto Rico.

The other TAA programs are TAA for Workers, Farmers, and Communities, which are administered by the Departments of Labor, Agriculture, and Commerce through EDA, respectively.

The TAAF Program is relatively small. Between FY 2000 and FY 2009, its appropriations have ranged from $10.5 million to $15.8 million.

Program Initiative

The mission of the program is to provide technical and financial assistance to U.S. firms affected by import competition. The program provides assistance in the development of business recovery plans, which are known as Adjustment Proposals under Section 252 of the Trade Act, and matching funds to implement projects outlined in Adjustment Proposals.

The program's premise is that some U.S. firms, in particular small businesses, lack the internal capabilities or resources necessary to effectively respond to new import competition. The Trade Adjustment Assistance Centers' goal is to help U.S. firms increase profitability and retain employees while competing successfully in the global economy.

Program Description

The TAAF Program supports a national network of 11 Trade Adjustment Assistance Centers (TAAC) to help U.S. firms apply for assistance and prepare and implement strategies to guide their economic recovery. Information about the TAACs may be found at www.taacenters.org. The current TAACs and the states they serve are listed in the table below. Please note that currently Puerto Rico has not been assigned to any particular TAAC. Firms Start Printed Page 2494in Puerto Rico receive assistance from the TAAC that received the inquiry.

Exhibit 2—TAACs and Their Respective Service Areas

TAACStates served
Great LakesIndiana, Michigan, and Ohio.
Mid-AmericaArkansas, Kansas, and Missouri.
Mid-AtlanticDelaware, District of Columbia, Maryland, New Jersey, Pennsylvania, Virginia, and West Virginia.
MidwestIllinois, Iowa, Minnesota, and Wisconsin.
New EnglandConnecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont.
New York StateNew York.
NorthwesternAlaska, Idaho, Montana, Oregon, and Washington.
Rocky MountainColorado, Nebraska, New Mexico, North Dakota, South Dakota, Utah, and Wyoming.
SoutheasternAlabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, and Tennessee.
SouthwestLouisiana, Oklahoma, and Texas.
WesternArizona, California, Hawaii, and Nevada.

The TAACs' main responsibilities are:

  • Assisting firms in preparing their petitions for TAAF. Firms are not charged for any assistance related to preparing a petition.
  • Once a petition has been approved, TAACs work closely with company management to identify the firm's strengths and weaknesses and develop a customized Adjustment Proposal designed to stimulate recovery and growth. The program pays up to 75% of the cost of developing an Adjustment Proposal and the firm must pay the rest. EDA must approve all Adjustment Proposals to ensure they conform to statutory and regulatory requirements.
  • After an Adjustment Proposal has been approved, company management and TAAC staff jointly identify consultants with the specific expertise required to assist the firm. The program pays up to $75,000 in matching funds for the cost of these consultants when implementing the Adjustment Proposal. After a competitive procurement process, the TAAC and the firm generally contract with private consultants to implement the adjustment plan.

There are three main phases to receiving technical assistance under the program. The phases are (1) Petitioning for certification, (2) recovery planning, and (3) project implementation.

Eligibility to Apply for Trade Adjustment Assistance” and any supporting documentation. Although a firm may complete a petition and submit it to EDA on its own, certification specialists within the TAACs generally work with the firm at no cost to complete and submit a petition to EDA. Once a petition has been accepted, EDA is required to make a final determination on a petition within 40 days.[2]

Certified firms may then submit an Adjustment Proposal for EDA's approval. It generally takes EDA between two weeks to one month to make a final determination on an Adjustment Proposal, depending on the workflow.

The firm works with consultants to implement projects in an approved Adjustment Proposal. As projects are implemented and if the firm is satisfied Start Printed Page 2495with the work, the firm will first pay their match to the consultant and then send a notice to the TAAC stating that they are satisfied with the work and that they have paid their matching share. The TAAC will then pay the federal matching share. Firms have up to five years from the date of an Adjustment Proposal's approval to implement it, unless they receive approval for an extension. Generally, firms complete the implementation of their Adjustment Proposals over a two-year period.

Data for This Report

Most of the data used in this report were collected from the petitions for certification and the Adjustment Proposals submitted by the TAACs on behalf of firms. Data from these sources were recorded into a central database by Eligibility Reviewers at EDA. Results for average processing times and the number of approved and denied petitions and Adjustment Proposal were derived by EDA.

All of the data available for Fiscal Years (FY) 2009 and 2008 were used for this report. One weakness to the data sets used is that a few records were incomplete. EDA has identified data collection deficiencies and plans to train EDA and TAAC staff in order to eliminate, to the extent possible, problems that result in incomplete records.

The performance measures in this report were evaluated by looking at quarterly trends and comparing results for FY 2009 and FY 2008. In addition, characteristics of the petitioning and certified firms were aggregated and reported as averages to provide a general profile for these firms.

Results/Findings

(1) The number of firms that inquired about the program.

Because of the decentralized nature of the TAAF Program, EDA currently does not collect reliable information on the number of firms that inquire about the TAA program. EDA is working with the TAACs to collect this data and will include this measure in the revised quarterly report submitted by the TAACs to EDA. EDA is expecting to start collecting this data by the end of December 2009.

(2) The number of petitions filed under section 251.

(3) The number of petitions certified and denied.

(4) The average time for processing petitions.

In FY 2009, there was a 49 percent increase in the number of petitions received by EDA, a 16 percent increase in the number of certified firms, and on average the total petition processing time increased by 17 calendar days, which period is defined as the period between actual submission of a petition by the TAAC and final determination, that is certification or rejection, by EDA.

After accepting a petition for filing, EDA has 40 calendar days to make a final determination. In order to avoid having to reject many of the petitions, EDA does not consider a petition accepted until all the necessary information is collected. When considering the duration between the time of submission and when a final determination is made, the processing time for petitions increased by 17 days in FY 2009 as compared to FY 2008. For the average petition, in both FY 2008 and FY 2009 it took 45 days to make a final determination after it had been accepted for filing under section 251 of the Trade Act.

Exhibit 4—Petitions for Certification FYs 2009 and 2008 Summary Comparison

FYNumber of petitions receivedNumber of petitions accepted for filingNumber of petitions certifiedNumber of petitions deniedAverage days between submission and acceptance for filingAverage days between acceptance and certification
200928124721212845
20081883 19018301145
% Change493016N/A155N/A
3 Two of the petitions accepted for filing in FY 2008 were received by EDA in FY 2007.

Exhibit 5—Petitions for Certification by State and TAAC

FY 2009 Petitions for Certification
TAACStateNumber of petitions receivedNumber of petitions accepted for filingNumber of petitions certifiedNumber of petitions deniedAverage days between submission and acceptanceAverage days between acceptance and certification
IN7770
MI1311100
OH8750
Great LakesTotal28252202543
AR2220
KS3220
MO131080
Mid-AmericaTotal18141203749
DC000041
DE0000
MD0000
NJ114 20
PA2218160
Start Printed Page 2496
VA1100
WV0000
Mid-Atlantic
Total242018032
IA2210
IL2827230
MN8760
WI10960
MidwestTotal48453602647
CT10990
MA2825240
ME2110
NH8860
RI8870
VT0000
New EnglandTotal56514702435
New York StateNY Total16131102846
AK1000
ID0000
MT2100
OR5650
WA6550
NorthwestTotal14121003331
CO1211110
ND1100
NE0000
NM2220
SD0000
UT4320
WY0000
Rocky MountainTotal19171502649
AL00003144
FL2220
GA4430
KY0000
MS0100
NC1311100
SC0000
TN0000
SoutheasternTotal19181503144
LA2110
OK121191
TX9870
SouthwestTotal2320171
AZ1100
CA151190
HI0000
NV0000
WesternTotal1612904437
4 One of the petitions certified from FY 2009 was received by EDA in FY 2008.
Start Printed Page 2497

(5) The number of petitions filed and firms certified for each congressional district of the United States.

EDA did not collect the number of petitions filed and certified by congressional district in FY 2009. EDA has revised Form ED-840P and is currently undergoing the required Paperwork Reduction Act (PRA) analysis. EDA has incorporated this measure into the revised Form ED-840P, which is currently being submitted to the Office of Management and Budget (OMB) for PRA clearance. In the interim, TAACs have been instructed to identify applicants' congressional districts in supporting documentation submitted with the petition.

(6) The number of firms that received assistance in preparing their petitions.

Although EDA has not previously recorded whether a petitioning firm received assistance in preparing their petition, EDA understood that all firms who submitted petitions through TAACs received assistance from the respective TAAC. EDA has revised Form ED-840P to more accurately record whether firms receive assistance and from whom. Exhibit 6 shows the number of petitions submitted by each TAAC.

(7) Sales, employment, and productivity at each firm participating in the program at the time of certification.

For those firms certified in FY 2009, average employment was by six percent below that for firms certified in FY 2008. Average net sales were 18 percent below, and average productivity was 14 percent below. For the purposes of this report, productivity is defined as net sales per employee. Since the certified firms are in various industries, which have a variety of ways to measure productivity, sales per employee was chosen as the productivity measure. This measure is used because it is simple and can be generally applied to all certified firms.

Exhibit 7—Summary Comparison of Average Employment, Net Sales, and Productivity for Firms Certified in FYs 2009 and 2008

FYAverage employment at certificationAverage annual net sales at certificationAverage productivity at certification (net sales per employee)
200977$10,715,785$128,729
200882$13,081,993$149,565
% Change(6%)(18%)(14%)

Exhibit 8—Average Employment, Net Sales, and Productivity for Firms Certified in FY 2009 Classified by State and TAAC

TAACStateMonthly average employmentAverag annual net salesAverage productivity (net sales per employee)
IN60$6,563,817$90,814
MI8813,511,133169,359
OH12121,163,407163,563
Great LakesAverage8613,039,777143,050
AR232,462,000106,279
Start Printed Page 2498
KS1147,847,50069,224
MO1595,786,38794,504
Mid-AmericaAverage1295,575,84192,253
DC000
DE000
MD000
NJ536,195,713115,674
PA779,535,754125,789
VA000
WV000
Mid-AtlanticAverage749,164,638124,665
IA291,365,68947,093
IL6611,027,769153,625
MN859,328,702121,189
WI24933,110,952158,130
MidwestAverage9914,156,731146,011
CT548,008,737116,324
MA396,070,712146,199
ME8405,91249,501
NH475,468,664121,973
RI796,903,936164,784
VT000
New EnglandAverage486,368,535138,096
New York StateAverage739,339,480108,707
AK000
ID000
MT000
OR1893,229,68361,458
WA111,500,700103,599
NorthwesternAverage1002,365,19182,529
CO9734,035,214140,439
ND000
NE000
NM744,408,31364,871
SD000
UT8011,181,050150,881
WY000
Rocky MountainAverage9227,037,738131,755
AL000
FL787,084,047138,109
GA343,183,356107,743
KY000
MS000
NC11124,225,837155,842
SC000
TN000
SoutheasternAverage9117,731,769143,858
LA453,121,25269,361
OK513,689,04567,355
TX465,504,869110,700
Average484,403,33885,321
SouthwestAZ000
Start Printed Page 2499
CA517,904,808143,021
HI000
NV000
WesternAverage517,921,301143,139

Exhibit 9 5—Average Monthly Employment, Annual Net Sales, and Productivity at Each Firm Certified for the TAAF Program in FY 2009

Project No.Average monthly employmentAnnual net salesProductivity
−214116717011$1,196,902$108,809
−2121444292674,006,46959,798
−204224725312215,791,636129,355
−20131188651153,298,00028,741
−1988436588424,101,93797,665
−1950117994191,983,347104,387
−1928548648293,379,076116,520
−19029997738410,028,851119,391
−1735872532868,007,27193,108
−1706525908243,247,216138,179
−164318258833553,848,974160,743
−16344683455442,49488,499
−15469676909314,127,000151,773
−150687853320338,116,000187,764
−1414666091488,416,445175,343
−1399657793213,327,060158,431
−1370436615526,348,965122,095
−12042931361131,312,19411,633
−1178629643513,523,85868,691
−114486438111321,591,273191,073
−1119666282272,393,55089,312
−10973818944366,26691,567
−10284003704712,071178,018
−976697335453,575,31479,451
−976135562151,693,508109,968
−8897181675310,400,385195,606
−887612628223,03614,133
−87967565315816,095,224101,656
−85460311823665,53729,579
−764521341274,282,608161,608
−739225309786,027,47077,774
−7219465078405,91249,501
−707088102235,357,515233,748
−7019728449512,076,738127,567
−641759960243,274,000136,417
−63253093510112,45111,245
−631287923351,924,22654,978
−627002970212,442,947119,168
−616871455153,975,576265,038
−594868995858,341,27798,133
−592625918586,641,978114,517
−5547567689332,349,000347,540
−534793263172,346,672136,434
−51030497421823,152,444106,409
−5023363477514,316,003190,880
−477438887314,527,483146,048
−47683306017815,320,29286,069
−44123194517416,688,00095,770
−428234294699,989,294145,405
−404256669807,044,10887,777
−363836427372,853,56677,543
−36014702061807,97613,246
−283996920789,189,018118,308
−4895833912243,293,680354,866
2323046928459,905,827210,625
Start Printed Page 2500
65254696202,463,879124,753
114629866202,074,822104,789
13710119115318,34721,223
17643461610112,903,834128,141
246147845261,935,94874,460
28041863993,207,749341,250
526891792393,514,28090,110
540241037879,939,297114,905
5879948089817,905,792182,712
631689182352,995,66185,590
639991136172,949,494173,500
67427817013836,01765,570
675284787112,494,392220,743
67558629122319,226,47186,217
7126191056405,08867,515
7171001837717,780106,338
726417873386,404,000167,425
74495967734442,310,370122,995
775553880171,020,23660,014
819813906338,930,078274,772
83859338458950,29216,384
9152630894346,90886,727
945015730739111,833151
962067466243,227,083135,024
9892342546358,00061,407
1082975273221,650,00076,142
12117374029910,494,800106,115
1218148370504,085,42881,709
122053237317425,421,539146,101
1221594278262,622,892102,457
1221842461283,202,408113,039
1221849510191,514,72381,524
122211493391408,8444,493
1222703402362,153,35059,272
1222797758201,985,10999,255
1222976955335,407,901163,876
1224271418497,677,627156,686
122487268810313,265,206128,788
1225120776284,903,000175,107
122513374113713,773,487100,720
122520127532650,549,619155,060
122528769129248,371,484165,656
122581035012749,60962,467
12270426073195,25365,084
122728929411312,397,000109,708
1227543460888103,961117
1227630320536,328,130119,399
122787701782,468,000300,976
12289256791172,826216,033
1229617894584,103,78570,270
1229708794476,561,310139,602
1230052412192,156,922115,343
1230750559283,825,907136,640
1231186429262,951,829113,532
1231426311192,475,523130,291
1232040671512,773,35854,486
12327394207126,183,448367,745
12329996374261,47065,368
12330871501678,650,17151,797
12331532588925,373,011285,090
123323962011660,12657,906
1233327674608,141,100135,685
1233338572465,741,356124,812
12336730847813,219,682169,483
12336917041477,407,61950,392
12337605618822,565,731257,306
1233842492202,408,353120,418
12342759776910,463,729151,648
1234966745163,997,722249,858
12349801256558,835101,606
Start Printed Page 2501
1235057791204,409,285220,464
123575538413349,248,961370,293
12357705489723,087,874238,019
1236954447674,297,79863,984
123722281816234,093,287210,452
1237298215615,678,66093,862
1237306159221,874,36985,199
1237408034868,978,684104,805
12374883337916,573,810211,131
1237904074184,579,750253,305
12379160531199,797,07182,676
123808490414629,64145,527
12381731951158,662,99275,330
12381774748713,279,415152,637
1238431176161,520,27893,844
1238505614291,365,68947,093
1238510711161,147,31871,707
1238520242383,749,00098,658
1238765788211,493,93769,810
12387725557611,606,000152,110
1239379144453,121,25269,361
123989777510745,53674,554
12399168451712,408,106717,232
124031675910616,656,248157,134
12404059729612,408,106129,251
124049202115313,382,18787,752
124051918914920,677,489138,682
12427405304196,39045,672
124276601339224,305,18361,956
12428473256914,182,980205,550
1242997549896,572,97973,688
12430133505216,549,376318,257
1243436999644328,918,000511,139
124352442581,389,381173,673
12436131302232,398116,199
1243957086323,546,513112,588
1243968951231,664,12571,422
1243971069574,043,12570,808
1244043572604,750,41279,174
1244055343994,731,19748,032
12440585594785,907188,467
12441274427115,427,668216,529
1244130026699,072,053131,670
1244133405798,686,480110,095
124414104317982,49957,794
1245437191181,736,06696,448
124627908712618,495,699146,443
1246304644474147,130,573310,402
124645902111747,66867,970
1246886248213,131,095151,261
1246977066435,447,176126,679
1246981790385,652,842148,759
124699460724111,004,12845,660
12471452458442,71055,339
124714751741,041,903260,476
1247150638101,684,610163,079
12471618699204,76721,947
1247238696131,965,636151,203
12477544339718,745,787194,257
1247831618508,934,942178,699
1247835180292,441,61683,332
12478364487210,851,151150,710
12481809715412,41882,484
124897783713721,887,413159,762
1249499924243,648,378152,016
124956920212936,10478,009
1249916490223,079,082138,697
125018419713830,238,000219,116
125026517893399,626,339106,781
1327553155101,402,910140,291
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144778618011190,33517,303
153186371711414,611,240128,169
15835849948364,97645,622
17155216049966,076108,304
1741163169669,039,000137,832
1745023300528,970,960172,518
18740787047454,71867,767
18842484098391,39248,924
189282355710713,779,974128,785
19627994209235,59827,080
1968260507324,751,162150,021
1978491171369,163,974254,555
2019516425101,669,942169,882
203596548710341,61434,161
2053807288663,595,71054,480
20600346202151,61869,967
2092576996354,072,919118,056
5 As reported by the petitioning firm for the most recent year of the firm's petition period (can be between 6 and 12 months).

(8) The number of firms that received assistance developing Adjustment Proposals.

Although EDA has not previously recorded whether a certified firm received assistance in preparing their Adjustment Proposals, EDA understood that all firms who submitted Adjustment Proposals through TAACs received assistance from the respective TAAC. EDA requested that TAACs include such information in the Adjustment Proposals. Exhibit 10 shows the number of plans submitted by each TAAC.

(9) The number of Adjustment Proposals approved and denied by the Secretary of Commerce.

In FY 2009, EDA did not deny any Adjustment Proposals and approved 172 plans.

Exhibit 11—Characteristics of the Adjustment Proposals Approved in FYs 2003-2009

FY 2003FY 2004FY 2005FY 2006FY 2007FY 2008FY 2009
Number of Business Recovery Plans Approved162177132137126139172
Avg. Firm Sales (millions)$7.2$11.6$8.4$10.6$11.2$15.0$16.4
Avg. Firm Employees68886491688180
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(10) The financial assistance received by each firm participating in the program.

(11) The financial contribution made by each firm participating in the program. Although the TAACs maintain records on actual government and firm expenditures for implementation of Adjustment Proposals, EDA currently does not collect or record this information in a central database. In FY 2010, EDA will include this measure in the revised quarterly reports submitted by the TAACs to EDA. Exhibit 13 shows the average government and firm cost share proposed by each firm at the time their Adjustment Proposals were approved.

Exhibit 13—Projected Costs To Implement Approved Adjustment Proposals

FY 2003FY 2004FY 2005FY 2006FY 2007FY 2008FY 2009
Total Government Share (millions)$8.1$8.5$5.9$6.7$7.1$7.9$10.3
Total Firm Share (millions)7.48.15.46.05.97.59.8
Total Projected Costs (millions)15.516.611.312.713.015.420.2
Avg. Government Assistance Per Firm 650,00048,02344,69748,90556,44956,82760,123
6 Government share of project implementation costs as proposed in the Adjustment Proposals divided by the number of approved plans.

(12) The types of technical assistance included in the Adjustment Proposals of firms participating in the program.

Firms proposed various types of projects in Adjustment Proposals. More than half of all firms proposed to implement marketing/sales or production/engineering projects. Marketing and sales projects are geared toward increasing revenue, whereas production and engineering projects tend to be geared toward cutting costs. Support system projects can provide a competitive advantage by either cutting costs or creating new sales channels. Management and financial projects are designed to improve management's decision making ability and business control. Sample projects are listed below in Exhibit 15.

Exhibit 14—The Frequency of Specific Projects Proposed in Adjustment Proposals

[Presented by TAAC]

TAACNumber of firms that included the following projects in their business recovery plans
Marketing/ salesSupport systemsManagement/ financialProduction/ engineering
Great Lakes15151115
MidAmerica7645
Mid-Atlantic15559
Midwest2616023
New England33202731
Northwest7115
New York State10629
Rocky Mountain166414
Southeastern13767
Southwest1310111
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Western5304
Total1609561133

Exhibit 15—Sample Adjustment Proposals Projects Proposed in FY 2009

Marketing/salesSupport systemsManagement/financialProduction/engineering
• sales planning/development • strategic market planning/marketing strategy • sales and marketing staff training/coaching/mentoring • market, technology, merchandising, consumer research and analysis/export feasibility study • business development/market expansion/customer diversification • brand recognition/rebranding• MRP/ERP selection and installation • IT systems upgrades • Software training • strategic information technology plan • MIS/IT evaluation and recommendation • Design software • MIS reporting systems and server • CRM and PM software• succession planning, strategic business plan, financial planning, investment planning, supply chain management strategy, pricing strategy • JV and management project • cost accounting/pricing system/cost studies/quoting/cost estimating • cost tracking/control improvement • financial restructuring• Quality assurance/efficiency sys- tems • production evaluation, integration, analysis, and efficiency • 5S, lean manufacturing, Siemens, MRP, phase-gate system • Industry certifications • Employee training • supply chain management program/improvements • bar coding • PLCM improvement
• new product design and development, production line evaluation • web site update/unitronix/Design Online Web site improvements • kiosk ordering system/e-commerce • trade show design/model kit package/travel exhibit design • visual imaging for marketing/advertising tools • Industry certification promotion campaign • sales pricing and sales channel • lead generation • after-market service plan • install new computer network • automate kin controllers• product identification software • CAD software upgrade • Vantage shop floor management system • Tele-conferencing capabilities • implement QuickBooks MIS modules and financial reports • customer communication software upgrade • CRM system • production and inventory control modules/software • MIS system integration quality controls• human resources training, employee training • management-leadership development, managerial capacity building, management training and coaching • interim leadership • company fair market valuation • government procurement assistance• Green manufacturing and certification • site evaluation • Job Boss Shop scheduling system implementation • Value stream map for the manufacturing process • patent requirements • materials test program • enhance testing and analytical capabilities • program • facility expansion and design • prototype research, design, and testing • develop capabilities for new production line/business • production tooling design • vendor stocking program • FSC chain of custody plan • calibrate equipment, equipment installation and start-up, facility/equipment design
• warehouse automation

(13) The number of firms leaving the program before completing the project or projects in their Adjustment Proposals and the reason the project was not completed.

EDA currently does not collect or record this information. In FY 2010, EDA will include this measure in the revised quarterly TAAC report.

(14) Sales, employment, and productivity at each firm upon completion of the program and each year for the two-year period following completion.

Most, if not all, TAACs record the sales, employment and productivity of firms after completing the TAAF Program. However, EDA currently does not collect or record this information for the 2-year period following completion. In FY 2010, EDA will include this measure in the revised quarterly TAAC report.

Discussion and Analysis

FY 2009 Performance

In FY 2009 as compared to FY 2008, the number of petitions submitted to EDA increased by 49 percent. Due to current economic conditions and the expansion of eligibility to service sector firms, increases in the number of petitions are expected to continue in FY 2010. As the TAACs continue to strengthen their marketing channels to more effectively reach service firms, it is expected that the number of petitions will increase. If petitions continue to increase at the same rate, EDA can expect approximately 400 petitions in FY 2010.

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The average total processing time of petitions increased by approximately 17 days, a 30 percent overall increase. A spike in the number of petitions submitted and a recent decline in the number of eligibility reviewers have made it challenging for EDA to meet the 40-day review deadline to provide a final determination on petitions. As of May 17, 2009, EDA is required to make a final determination within 40 calendar days of a petition being accepted for filing under Section 251 of the Trade Act. Before May 17, 2009 EDA had to make a determination within 60 calendar days. The average processing time has improved as of the fourth quarter of FY 2009. The addition of two new EDA Program Analysts (expected start dates between December 2009 and February 2010) and a new TAAF Program Director (start date August 30, 2009) is expected to improve EDA's processing time for petitions for the remainder of FY 2010. For the average petition, Exhibit 18 shows that, EDA missed the 40 day deadline in the third quarter of FY 2009, but was able to meet the deadline in the fourth quarter of FY 2009.

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EDA must approve all petitions for certification and Adjustment Proposals for firms to receive financial assistance. Although EDA has not previously recorded whether a petitioning or certified firm received assistance in preparing their petition or Adjustment Proposals, EDA understood that all firms who submitted petitions and Adjustment Proposals through TAACs received assistance from the respective TAAC. EDA has revised Form ED-840P to more accurately record whether and from whom firms receive assistance. Also, EDA requested that TAACs include such information in the Adjustment Proposals.

EDA has assumed that eligible firms either do not have the capacity to submit petitions and Adjustment Proposals without assistance, or that doing so would cause unnecessary burden to small and medium-sized firms. EDA therefore understands that all firms receive assistance.

As compared to FY 2008, average net sales of certified firms declined by 20 percent and average employment declined by six percent. The National Bureau of Economic Research (NBER) determined that a recession began in December 2007. It is likely that the recession has contributed to the decline in sales and employment of certified firms in FY 2009. Firm productivity, defined as net sales per employee, in certified firms has declined as well.

The TAAF program strongly targets small and medium-sized businesses in the provision of assistance. In order to classify small and medium-sized firms EDA used the Small Business Administration's (SBA's) size standards. Medium-sized firms are classified as those with less than 500 employees for most manufacturing and mining industries, or less than $7 million in average annual receipts for most nonmanufacturing industries. Ninety eight percent of the firms certified in FY 2009 had fewer than 500 employees, and 58 percent had less than $7 million in annual net sales. This indicates that the TAAF program is mostly reaching small and medium-sized businesses.

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EDA experienced a 15 percent increase in the number of Adjustment Proposals it received for approval in FY 2009. In comparison, there was a 49 percent increase in the number of petitions in the same year. It is expected that the number of Adjustment Proposals submitted will be fewer than the number of petitions, since Adjustment Proposals often take more time to create and require firms to contribute funds for their development and implementation. Firms with limited working capital and limited access to credit will tend to develop and implement the Adjustment Proposals more gradually.

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The number of approved Adjustment Proposals and the proposed financial assistance to be received from EDA and contributed by each firm increased in FY 2009. EDA approved an additional 28 Adjustment Proposals as compared to FY 2008 and proposed to spend an additional total of $2.4 million in government funds. The TAAF Program received an increase of approximately $1.7 million in Omnibus appropriations for FY 2009.

Approximately 65 percent of firms included marketing/sales projects or production/engineering projects in their Adjustment Proposals. Approximately 35 percent of firms included support system projects or management/financial projects in their Adjustment Proposals. This mix of project types proposed in the Adjustment Proposals indicates that firms are focusing on both revenue growth and cost reduction in order to improve their profit margin.

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Looking Forward: Data Collection

The TGAAA identifies 14 measures to be included in each year's TAAF Annual Report. Of the 14 measures, EDA currently does not collect data on four. These measures are: (1) The number of firms that inquired about the program, (2) the number of petitions certified by congressional district, (3) the number of firms leaving the program and why, and (4) sales, employment, and productivity at each firm upon completion of the program and every year for the two years thereafter. There are another four measures that EDA does not collect data on directly, but has access to relevant information: These measures are: (1) The number of firms that received assistance in preparing their petition, (2) the number of firms that received assistance in preparing their Adjustment Proposal, (3) the actual government outlays for each firm implementing their Adjustment Proposal, and (4) the actual firm outlays for implementing the Adjustment Proposal. Most of these measures are recorded by the TAACs, but EDA has not required TAACs to report on them to EDA.

Exhibit 23—FY 2010 Data Collection Plan for the 14 Measurements Required for the Annual Report to Congress

MeasurementCollected by EDA?Recordkeeping systemProcedure/policy changes required
1. Number of Firm InquiriesNoNew Management Information system (MIS)TAACs should have a written record of their response to firm inquiries and submit a copy of this notice along with the firm's DUNS number to EDA in the TAAC's quarterly report. A new information system will need to be designed to record the information collected from the TAAC quarterly reports.
2. Number of PetitionsYesMISNone.
3. Number of Petitions Certified and DeniedYesMISNone.
4. Average Petition Processing TimeYesDerived from MISNone.
5. Number of Petitions and Certifications by Congressional DistrictNoMISForm ED-840P will be revised so that a firm's congressional district will be recorded. The MIS has been modified to include this information.
6. Number of Firms that Received Assistance in Preparing their PetitionsTo some extentMISCurrently, EDA receives all petitions directly from the TAACs. Form ED-840P will be revised so that firms can indicate whether they received assistance. The MIS will be modified to include this information.
7. Number of Firms that Received Assistance in Developing Their Adjustment ProposalTo some extentMISCurrently, EDA receives all Adjustment Proposals directly from the TAACs. TAACs have been advised to indicate the type of assistance received by the firms in the adjustment proposals submitted to EDA. The MIS will be modified to include this information.
8. Number of Adjustment Proposals Approved and DeniedYesMISNone
9. Sales, Employment, and Productivity at Time of CertificationYesMISFor the large number of firms in varying industries being measured, few employ or track the same productivity measures. EDA chose to use the simplest and most universal metric for productivity: sales per employee.
10. Sales, Employment, and productivity at Each Firm Upon Completion of the Program and Each Year for the Two-Year Period ThereafterNoNew MISEDA will request this information from TAACs in their quarterly reports. Also, EDA may continue to track firms through the Dun and Bradstreet database to collect sales and employment figures.
11. Financial Assistance Received by Each Firm Participating in the ProgramTo some extentNew MISEDA records the proposed government expenditures on each project, but does not request information on actual outlays for each firm. EDA will request this information from TAACs in their quarterly reports.
12. Financial Contribution Made by Each Firm Participating in the ProgramTo some extentNew MISEDA records firms' proposed expenditures on each project, but does not request information on actual outlays for each firm. EDA will request this information from TAACs in their quarterly reports.
13. Types of Technical Assistance Included in the Adjustment Proposals of FirmsYesMISThis information is now recorded by EDA. Previously this information was submitted to EDA, but not recorded in any MIS.
14. Number of Firms Leaving the Program Before Completing the Project(s) in their AP and the ReasonNoNew MISTAACs will be advised to include this measure in their quarterly activity reports.
Classification of Data by TAAC, State, and National TotalsYesMISNone.
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EDA is considering several steps to address the collection of the remaining measures.

Following is a list of the steps EDA will take to address the current data collection gaps.

(1) TAACs were instructed to upgrade their Adobe software to facilitate data collection. TAACs that only have Adobe Reader can use the Adobe fillable forms, but they cannot save the information on their computers. Upgrading the Adobe software will allow the remaining TAACs to save electronic records of the forms, and will allow EDA to automatically upload information into its management information system and no longer require EDA to re-type all of the information into the system.

(2) EDA will issue several new procedures and guidelines to simplify data collection through a revised template for the quarterly TAAC activity reports.

(3) As resources become available, the management information system (MIS) will be expanded to facilitate reporting.

(4) EDA is in the process of seeking OMB clearance for a revised Form ED-840P to collect all required data.

Conclusion

Overall, there has been an increase in the demand for the TAAF Program in FY 2009, as demonstrated by the increase in the number of petitions for certification and Adjustment Proposals submitted to EDA.

Due to the spike in petitions and Adjustment Proposals, EDA experienced challenges in meeting the new 40-day processing deadline for petitions accepted for filing immediately after the new rule's implementation. However, since the fourth quarter of FY 2009, the average processing time for petitions declined below the 40-day requirement. New TAAF program staff members are expected to help improve processing time even further for FY 2010.

TAACs effectively targeted small and medium-sized firms in FY 2009. The average employment, net sales, and productivity of firms certified in FY 2009 declined in comparison to the previous fiscal year. More than half of all firms proposed to implement a marketing/sales project or production/engineering project in their Adjustment Proposals.

Of the 14 measures required for reporting, EDA was unable to provide any information on four measures, and provided limited information on another four measures. EDA is taking steps to collect and report on all of the missing measures for the FY 2010 Annual Report.

Start Signature

Dated: January 7, 2010.

Bryan Borlik,

Director, Trade Adjustment Assistance for Firms Program.

End Signature End Supplemental Information

Footnotes

2.  As of May 17, 2009, the deadline for making a final determination is 40 days. Before May 17, 2009 EDA had 60 days to make a determination.

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[FR Doc. 2010-561 Filed 1-14-10; 8:45 am]

BILLING CODE 3510-24-P