Subcommittee on the Automotive Industry in Canada Committee on March 11th, 2009

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

And maybe we'll come back to the CAW in a few minutes, but I think this is important.

You differentiated when you listed off the items in that list; you categorized the CAW and workers in separate categories there. I would like to touch on workers for a second, the skills of Canadian workers. We hear often about the really highly skilled Canadian workforce when it comes to the auto industry. How much of a competitive advantage do we have here in Canada because of the skill set of our workers?

[Dennis DesRosiers]

It's very hard to quantify, but it's very real.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

It is real.

[Dennis DesRosiers]

Absolutely.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

And is it real across the world? Is it real across North America? Is it real compared to the Americans?

[Dennis DesRosiers]

How can we have a $20 to $25 wage differential and still be able to maintain, for every year in the last decade, 16% to 17% of North American production? It's not wages.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

In terms of the productivity question, is there a difference in productivity between the companies in Canada? I'm talking not just the big three or the Detroit three, but also Toyota and Honda. Is there a true difference?

[Dennis DesRosiers]

It comes down to the age of the engineering of the plant. If you take the new Ford Flex plant in Oakville, it is probably pretty close to the new Toyota plant in Woodstock. If you take the new plant that General Motors is putting into place in Oshawa, it will be competitive. If you take a plant like the Bramalea plant, which they have yet to invest in--it's seven or eight years old--it would have significantly fewer competitive attributes in quality, cost per vehicle, hours per vehicle, and so on, than the modern plants.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Go ahead, Mr. Frise.

[Dr. Peter Frise]

I'll just give you a little fact. Four of the top ten plants in North America, from the standpoint of productivity and quality, are in Canada. This isn't an accident. Some of them are older plants, and some of them are newer plants. The common ingredient is the Canadian worker. They are really top notch. There are lots of examples of that around the world. It doesn't mean we can't do more, and we certainly have to, but we are very good.

[The Chair, Conservative, Michael Chong]

Thank you, Mr. Frise.

[Dennis DesRosiers]

The Canadian worker is really important, but don't discount capital. Because of the problems we've had long-term with our workforce, these companies have poured capital into their plants at an unprecedented level to substitute for labour.

[The Chair, Conservative, Michael Chong]

Thank you, Mr. DesRosiers. Thank you very much.

We'll go to Mr. Masse.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

Thanks for being here, gentlemen.

Dr. Frise, one of the reasons I suggested you as a witness was that there are a lot of value-added elements with regard to the automotive sector that don't often get noted. Can you talk a little bit about some of the additional spin-offs from changes in technology that can be applied to products other than automotive? There are products that support the auto industry in general, but there are those outside also. That needs to be talked about, because it goes beyond the investment that has been made in the research and development you're doing to transferrable elements that benefit other types of innovation and products in the market.

[Dr. Peter Frise]

Okay. There are a number of spin-offs from the technology we have helped to create. Canada's abilities in light metal casting and in metal forming are top-notch. Those, of course, have applications in the aerospace sector, in the general manufacturing sector--for appliances and what have you--in sporting goods, and so on. The example I mentioned in the brief was a new company called GreenCore Composites, which we participated in founding. It's a spin-off company for biomaterials. That brings together Canada's forest industry and Canada's agriculture industry, which provides the feedstock for biomaterials. It goes into the manufacturing sector, which then creates high-value products. Some of those products are automotive; some of them will be in the form of furniture, sporting goods, construction materials, and so on. There are lots of spin-offs.

In our health and safety work, we have done, as you may know, some of the best work in the world on vehicle safety for children. But that has also applied to general safety for children outside of vehicles. There are new seating education programs to help parents make better safety choices for children, and so on. This is just another little fact. The cost for health care over the lifetime of a child who is wheelchair-bound at a young age is well in excess of $5 million. That is totally aside from the pain and suffering and the human tragedy of it all. Basically, if AUTO21, over its 14-year life span, saves 14 or 15 young people from becoming wheelchair-bound, that's the whole bill paid right there.

Our social science work has actually been credited by the Manitoba Attorney General with cutting auto theft in Winnipeg, which had North America's worst per capita auto theft problem, by over 60%.

[Brian Masse, NDP, Windsor West, ON]

If we were to lose our automotive footprint, and it became a much more modest element of our economy, how would you characterize the effect on other parts of the Canadian economy? Would it be significant or not significant?

[Dr. Peter Frise]

I would say that it would be disastrous--devastating. The auto industry is the foundation of petrochemicals. It's the foundation of our transportation industry and our mining and metallurgical industry. I have a patent right here, which was just awarded the other day, for an AUTO21 development. It is a metallurgical analysis piece of equipment, which is unique in the world, for creating high-quality aluminum castings. That is the foundation of the light materials research industry in Quebec. It's really a foundation of Canada's economy, from the resource end right through to the product end and trade.

[Brian Masse, NDP, Windsor West, ON]

Thank you.

Mr. DesRosiers, I went through your deck, and you did note that you didn't feel the overseas market coming in was significant to cause the problems. The deck shows how a few years ago we had approximately 90% of the share and now it's down to about 80%. Would you say 10% is not significant in the industry? What I'm worried about is, if it goes from 80% to 70%, what that would do.

[Dennis DesRosiers]

First of all, the 90% was about a decade ago. The move from 90% down to 80% was the exchange rate. It's been stabilized at that 80% level about six, seven, or eight years now.

[Brian Masse, NDP, Windsor West, ON]

That's correct.

[Dennis DesRosiers]

This does not appear to be a serious offshore problem. We've attracted 28 assembly plants from the overseas investors.

[Brian Masse, NDP, Windsor West, ON]

But if we recapture that 10%, that would help?

[Dennis DesRosiers]

It would help.

[Brian Masse, NDP, Windsor West, ON]

This hasn't been touched on before--

[Dennis DesRosiers]

But you can't recapture it through protection. You have to recapture it through competitiveness.