Have you obtained any of these things from the Small Business Administration or have you sought their help in these areas?

Mr. CRAIG. Well, at one time we did. We did attend some sessions. As a matter of fact, in this building we attended some sessions of the Small Business Administration and they were quite helpful.

Mr. ROE. Have you been back to them since that time?

Mr. CRAIG. I haven't had an opportunity to get back to these sessions recently. I will put it that way.

Mr. ROE. Did you let them know that you thought it was quite beneficial?

Mr. CRAIG. Yes, I did.

Mr. ROE. And to get some feedback about that type of thing.

Mr. CRAIG. Yes, that was pointed out to them.

Mr. ROE. What type of contracting work do you do?

Mr. CRAIG. General contracting.

Mr. ROE. Just general type work?

Mr. CRAIG. Right.

Mr. ROE. Mr. Chairman, Mr. Craig submitted a written statement here. If we could have this included at this point in the recordMr. KLUCZYNSKI. Without objection, it is so ordered. (Statement follows:)

STATEMENT OF BUSH E. CRAIG, JR., CONTRACTORS UNLIMITED, INC., CHICAGO, ILL.

The problem of obtaining a performance bond is a common factor among minority contractors. In many cases a contractor will be awarded a contract only to find out that even though the job is his he cannot begin because no company is willing to grant a performance bond. This has happened to our company and because of it we had to rescind a $693,000.00 contract.

What can be done about this? At several Bread Basket Commercial Association meetings the problem has been discussed and there are three suggestions that stand out in my mind:

1. In certain instances to waive the bond completely.

2. A program could be started by the Small Business Administration to guarantee or insure performance bonds in much the same way as F.H.A. now insures home mortgages.

3. A number of bonding companies could pool their resources to execute a bond thereby not allowing all the liability to be borne by one company.

I would like to point out that there are many other items that a minority contractor must have access to in order to be successful, such as. (1) legal counseling (2) bidding and estimating (3) engineering (4) accounting etc. but most of the minority contractors are not able to purchase these services because of the lack of capital.

I think that the ideal solution would be to have an organization that the contractor could come to and receive help in all the areas necessary. The Bread Basket Commercial Association has recognized this need and has made available to the contractor some services, such as record keeping, accounting, and counseling but because of the Association's limited funds all of the areas have not been covered.

Mr. KLUCZYNSKI. Mr. Craig, you are secretary to Contractors Unlimited, Inc.; is that right?

Mr. CRAIG. Right.

Mr. KLUCZYNSKI. How many members do you have?

Mr. CRAIG. There are four, four general contractors. When we got started, we were all working on our own. We had our own individual companies and roughly, let's say about March of last year, we got together in order to form a single company.

We figured that this way we could use the expertise of all the members involved and also be able to handle larger jobs.

Mr. KLUCZYNSKI. I notice you bid on some big contracts.

What is the largest you ever bid on?

Mr. CRAIG. The largest was the $693,000 contract.

Mr. KLUCZYNSKI. You had to get a performance bond for that one? Mr. CRAIG. Right.

Mr. KLUCZYNSKI. Were you able to perform it?

Mr. CRAIG. No, we were not able to get that performance bond. We tried, I imagine, nine or 10 sources and weren't able to get it.

Mr. ROE. Do you know what the cost would have been for it if you had been able to get it?

Mr. CRAIG. I believe the cost would have gone to the three percentage points. It had been indicated that it could have been brought down to a lower price, but it had gone as high as 3 percent.

Mr. KLUCZYNSKI. We have a problem here, we are trying to help the black contractors, as we said before.

I don't know if you were here this morning when the director of insurance of the State of Illinois testified, and I asked him then if they couldn't help you, your contractors now, what they could do later on because it will be the same situation 20 years from now otherwise.

I asked him about his statement on page 3, the bottom of the page, he says, "The small minority contractor generally does not have adequate working capital or previous experience to qualify for a bond on a large project."

Well, we must help that fellow out now. If we can't do it now, what can we do 15 or 20 years from now?

I think now is the time to try to help small businessmen that need help. And I am going to follow this up with Mr. Baylor, the director of insurance, and take it up with the people in Washington.

I travel all over the country. In New York City where they had 250 papa and mama stores, and when the Federal bulldozers came in for either urban renewal or for construction of roads, 250 papa and mama stores were forced to close.

We have to relocate them somewhere. And that was a tough job. Of course, 33 percent of them wanted to quit business. Others had to start life all over again, had to go to the big shopping centers where they paid $400, $500, $600 a month rent, something they weren't used to because they used to pay $65 or $70 a month.

And our big problem is to relocate the people after the Federal bulldozers come in. So I think we have done a marvelous job there. And the Congress just passed the bill the other day for our new highway program, highway construction, which included a model section for relocation. And I am sure that every Federal agency is going to follow up on that. So I am very much interested in the small businessman.

I have been working hard on it, and I hope that some day we will be able to take care of you. I don't want to put any of these insurance people on the spot; I never did that in my life, or any of these bankers, but I am wondering whether the Federal Government should get into the business of direct insurance or whether they should subsidize so that the small businessman can be taken care of.

And that is our big problem. When I get back to Washington next week, we will have executive sessions and recommend legislation. Of course, our committee cannot legislate because we are not a standing committee.

I want to bring to the proper committees the results of our hearings from all over the country. We have completed hearings in Rochester, N.Y.; also Albany and Schenectady, N.Y., and we are here in Chicago this week.

I am very much interested in the small businessman. I want to do everything possible and in fact, our whole committee and staff is working toward that goal.

I appreciate your testimony here today. It came from the heart and you are sincere in all your remarks, and I want you to know this. We appreciate your testimony today.

So if there are no further questions I want to thank you.

Mr. CRAIG. Thank you for having me testify.

Mr. KLUCZYNSKI. We have some unfinished business. This part of the hearing is concerned with the subject of a series of hearings that we scheduled in Washington in January of this year.

The committee has been receiving reports of possible attempts by the Department of Housing and Urban Development to implement a systematic exclusion of small businessmen by forcing local communities to adopt a so-called model code.

I am deeply concerned with small business. When we erected this building we are sitting in right now, I remember the GSA, General Services Administration, drew up the plans and by erecting this building in Chicago they had to come under what they call the Chicago Code. That is the plumbers code, the Chicago code is a lot stricter than the national code, and we had a difficult time convincing GSA that they would have to spend about $80,000 or $90,000 more on this building to conform with the city code. It is absolutely the best code in the country. And any building put up in the city of Chicago has to come under the Chicago code.

The next witnesses will testify about some of the code problems experienced throughout the country. So the first witness I will call on this afternoon will be Mr. Tobin.

Mr. Tobin, it is a pleasure to have you in this great city of Chicago. TESTIMONY OF JAMES J. TOBIN, PRESIDENT, PEORIA TOBIN BROS. PLUMBING & HEATING CO., INC., PEORIA, ILL.

Mr. TOBIN. Here are some pictures and cost breakdowns of what I am going to talk about.

Mr. Chairman, my name is James J. Tobin. I am president of Peoria Tobin Bros. Plumbing & Heating Co., Inc., Peoria, Ill. I am also president of the Illinois State Association of Plumbing-Heating-Cooling Contractors, but I am not acting in that capacity today.

I want to praise the Chicago mayor and his people for fighting for what is right on this building, and many other projects in this town that are affecting what I am about to talk about. And also for your help on the resolution of our national association concerning the BOCA Basic Plumbing Code that you entered in the Congressional Record, Mr. Chairman.

We, in Peoria, have had a good plumbing code and we modified it to help reduce some of the costs, but not take away the quality.

So HUD, as the agency is called, came into our city and threatened us that, if we didn't conform to a very low quality of plumbing and

materials, our city would not participate in any funds. They seem to have a big thing about plastic pipe. We heard a very great deal about plastic pipe.

Now, I do not represent the city of Peoria; I represent our small businessmen. Naturally the city fathers got very excited, very worried, and demanded that the plumbing industry move right now. So we moved, and we still haven't had our modified code accepted yet because we have not accepted the idea of using this one product-plastic pipe.

We feel that it has no merit, as the testimony I turned in there will show, and we don't know of any reason why we should have to downgrade our code and our workmanship.

So with all this, and labor included with us, we set up two sample identical pieces of property and we built these buildings with these two types of materials. And as my breakdown shows, there was very little, if any, savings over a first quality job rather than experimental type of material job.

So we realize that this product that they are forcing on us is not really our biggest fear. Our biggest fear is this model housing that will take away from our community if they should exercise what they have in mind now at the present time, 300 units. It will undoubtedly take out of our city about $4 million worth of work, because when these houses come in a plumber has something like an hour and a half work on these assemblyline houses.

This house comes from a factory. It is put together by people of the factory and then brought into our city and the money is taken out of our city for that house, and all the parts and labor for that house, leaving all the small business people, including the plumbing contractor and the sheet metal contractor, with nothing but a few peanuts of labor. Well, you gentlemen, I am sure, realize that a small businessman, a contractor, cannot make any money on labor only. He also has to have something else there. He has to have some material to sell. He has to have an overall contract to make up.

So today I am here in hopes that there is some way that we can get HUD to quit trying to destroy our local codes so that these factorybuilt houses can come into our small areas, like Peoria, Champaign, and Springfield. We have only so much work every year and we have a certain number of men we have to maintain, and we have a certain number of small businessmen we want to keep in business. And the type of work that they are capable of doing is this type of housing. The housing that we feel that we need in Peoria is not owner housing, one and two units, it is multiunit Federal housing. And we have some of that going. We, at the present time are doing housing for the elderly, people 65 years of age living their last days out in total respect. And this we feel that our town needs.

But we don't feel that we should destroy all our codes for ownerbuilt small houses and destroy all our 80 years of hard work just to qualify for some cubicle-built houses that will be built in another State and brought into our own and dumped.

We feel that HUD is overstepping its bounds and we feel it doesn't have any right to come in and demand that we destroy our local life. Now, we are well away of this type of housing in mobile homes. We have calls to go out on these mobile homes to try to repair them, et cetera.

What we feel and hope might be worked out, Mr. Chairman, maybe on this special type HUD housing, these cubicle houses, these temporary houses, whatever you want to call them, maybe HUD or the national should try to work out some kind of code that would affect only this type of construction, this one- and two-type cubicle construction but leave all the rest of our codes in our cities alone as they

are.

And if they want to build these rapid slums, let them build them. with a special code. And when they decay and deteriorate in a matter of a few years, the bulldozer can wipe them out and we can go back to the conventional building.

Mr. KLUCZYNSKI. Mr. Tobin, I get your point there.

I have a two-part question. I am pretty sure you have answered the first part.

What is your real fear about this HUD promotion, and No. 2, have you had any experience with plastic pipe in the mobile homes?

Mr. TOBIN. Mr. Chairman, I have had the experience with the plastic pipe, and as I say, we have had it in the mobile home industry, as we have not got into the cubical home yet.

We watched the erection of those module units in Pontiac, Ill.; in those 100 units they built there. We saw all their problems they had there with the housing itself and the plumbing. We saw how much plumbing work was left for the contractor, which was nothing.

So in that town of Pontiac-I think it is about 5,000 populationsome plumbing contractor or two plumbing contractors or maybe three, lost out on approximately a hundred thousand dollars worth of plumbing that had a total outlay of something like five or six thousand dollars.

Mr. ROE. These are small businessmen ?

Mr. TOBIN. Right. When these companies brought it in from Champaign, Ill., all pipe, most of it had been done by women in the factory, which is all right, but it is still not according to our State laws here. in Illinois, that you have to be a licensed plumber which has a lot of qualifications when you figure health is at stake.

We watched that show, which was disastrous for small business. And our other great fear is that we will have a General Motors or a Chrysler in the housing business and the only construction that will be left is what the mechanical giants of the industry can do, like your Great Lakes Plumbing Co. in Chicago, which is a giant in the industry.

He is doing McCormack Place, the First National Bank Building; he doesn't have to worry about making a living off of housing. He is not that kind of a contractor. But we outside the city of Chicago are not that kind of mechanical giant; we have to make our money in all facets and all phases of the industry.

Mr. ROE. Regarding the Pontiac situation with respect to mobile homes, how is it they were able to use this particular type of

Mr. TOBIN. Well, by using this product for plumbing, known as plastic plumbing, it can be transferred and moved because it is very light.

Mr. ROE. Is this allowed by this code?

Mr. TOBIN. Well, in Pontiac, they don't have any code. There this was an open city so they could bring it in these and do it without any inspection.