Industry Committee on Nov. 22nd, 2006

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

I want to go back and carry through a bit, because you also talked about research and development, how significant that is.

[The Chair, Conservative, James Rajotte]

Last question.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Okay.

We're hearing there's a disconnect between research and development that is needed by industry and what is being supplied by academia, whether it's the universities or colleges. Can you respond to that, please?

[David Paterson]

Very quickly, I think we do as much collaborative research with universities right across the country as any company in Canada. We know the kinds of products we need to build. We have to have the wisdom as well to open our ears and listen to people with better ideas. And that's the give and take. So we may know we need widget A and we want it to be lighter, faster, whatever. We'll put out a call for that. If you provide something excellent you'll make millions of dollars, because we'll source it.

However, at the same time we need to listen to that. What has not happened is the joining of the dots between people who purchase and people who develop and that type of free-thinking research that's taking place in our universities. So the networks and clusters we're trying to develop in this Beacon Project we think is part of the answer to that, and that's supported by a lot of research by people like Porter and right here in Ontario, other professors as well.

[The Chair, Conservative, James Rajotte]

Thank you.

Now we're way over time.

We'll go to Monsieur Vincent.

[Robert Vincent, Bloc, Shefford, QC]

Thank you, Mr. Chairman.

I will be sharing my five minutes with Mr. Crête.

First of all, thank you for joining us today. My question is for Mr. Gray, but the other witnesses should feel free to answer it as well.

I know for a fact that small businesses in Ontario are facing the same challenges as their Quebec counterparts. Have small businesses been in touch with you to discuss some of the problems created by competition from China and from other countries?

[John Gray]

Thank you very much.

As I mentioned in my notes, we just had a Durham economic summit on October 12. It represented small businesses through to large businesses. They're all feeling the pressures, of course, in this day and age. That's how we came up with the recommendations I've presented to you today. Obviously everybody is concerned about their bottom lines, making sure they remain competitive and that there are no unnecessary hurdles put in their way to succeed. I think everybody has to be concerned, especially the smaller manufacturers, with the advent of low-cost labour from China. Those are the types of issues they all face.

We realize that at the local level there's not a lot we can do. That's why we have to rely on the federal government and the work of this committee to make sure those small manufacturers can continue to be viable on into the future.

[Robert Vincent, Bloc, Shefford, QC]

I see.

Yesterday, in another riding, industry representatives recounted how they were having problems with intellectual property. They said that even in their own region where the same process or product was being copied, the cost of challenging intellectual property rights in court was so prohibitive that they were abandoning their fight. Innovative products are being copied in Canada as well as in China. We always hear about innovation and the money invested in innovation, but if our products are being constantly copied, then I don't think we're on the right track.

What steps should be taken to make intellectual property more accessible?

[John Gray]

To whom is the question asked?

[Robert Vincent, Bloc, Shefford, QC]

To all of the witnesses.

[The Chair, Conservative, James Rajotte]

Mr. Gray or Mr. Paterson.

[John Gray]

It's always more difficult to create new ideas and bring them to market. Somebody can always copy you. I guess that's where our own Canadian laws have to be strong. The federal government also has a role with other countries to make sure there are stiffer penalties when somebody steals an idea or product, replicates it in their own country, and markets it right back into our country. That's where we need to have stronger laws. You're right that you channel all your energy to develop these things, and somebody can, at virtually no cost, take it from you.

[David Paterson]

It's a bit of a two-way street, in that we are concerned about foreign jurisdictions copying our products, intellectual property theft, etc., and it is a very severe problem. I think we have to focus on what we can control, and enforcement of the types of regulations we have here in Canada is incredibly important. Sadly, we are developing an international reputation for being very lax on our own enforcement of intellectual property. We see this in the automotive sector. Parts are coming into the auto sector that are almost exact replicas, with our own packaging. People are putting them in their cars and their cars don't work. You have safety issues starting to pop up as well.

It's a very severe problem right here in Canada, so I would certainly encourage you to look further into aspects of enforcement and more protections that might be needed. I would recommend two aspects of the Canadian Chamber of Commerce. You mentioned China, and they have an excellent paper that has come out on China. The committee clerk and your analysts may want to take a look at that. Included in that is some reflection on the issue of intellectual property.

[The Chair, Conservative, James Rajotte]

You have time for a short question.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I've turned over a copy of the US proposal to levy an additional $5 tax on all trucks crossing the border, effective November 24. They may have decided to hold off on this measure, but I can't be certain of that. Therefore, it would be important to issue a notice, if you think it advisable. Any additional information that you may need can be found in this document.

That's all I wanted to say.

[The Chair, Conservative, James Rajotte]

Mr. Gray.

[John Gray]

Yes, I made sure that my EA contacted you to get this information.

We'll put together a resolution. We'll send it to our Durham region colleagues for endorsement, and we'll make sure it goes to all municipalities.

[The Chair, Conservative, James Rajotte]

Thank you.

We'll go to Mr. Van Kesteren.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Thank you, Mr. Chair.

Thank you, gentlemen, for showing up.

Mr. Paterson, we hear a lot about the environment. The push is on, obviously, when we talk about having conformity with the United States. I think it's a very good idea.

Could you elaborate on that a little more? How did we do in 1987 compared to the 2000s? Over the last 20 years, how have we done on cars?

[David Paterson]

In a nutshell, there are two forms of emissions that are particularly relevant for automobiles. There are smog-causing emissions, and there are greenhouse gas emissions. On smog-causing emissions, since the removal of lead from gasoline, we've seen new automobiles remove smog-causing emissions by over 99%.

To put it in human terms, if you burn a cord of wood in your fireplace, it will produce more smog than driving a full-size SUV around the circumference of the earth 36.5 times. To put it another way, if we painted that wall with a gallon of water-based paint, it would create more smog than driving an SUV to Vancouver and back again. We are down to very small emissions of smog from vehicles today.

The fastest way to accelerate the reduction of smog from automobiles is to get older vehicles off the road. A vehicle that's 20 years old emits some 35 times more smog than a new vehicle today. If we have a production of one million new vehicles into the marketplace in any one year, we also have one million old vehicles that are a 35 times greater problem than the new ones, if you will, on the streets.

One thing our company is doing is giving our customers an incentive. If they turn in a vehicle that's ten years old or older, they will get an incentive of $1,000 towards purchasing a new car. It's an industry-based incentive that's in the market, and it's working. We retired 17,000 old vehicles last year through the car heaven program that we do at the Clean Air Foundation.

The next challenge is clearly also the reduction of greenhouse gases. Greenhouse gases are simply a byproduct of the burning of carbon-based fuel. We wish there was a filter like a catalytic converter that could remove it.

We need strategies to reduce our reliance on carbon fuels. It means the electrification of our cars to hybrid fuel cells and other technologies or switching the fuel.

We are constrained. We can't make huge advances because there are no fuel standards in Canada. There are voluntary standards, but there are no regulations right now on the quality of fuel or the production of alternate fuels in the marketplace. It's a huge aspect. However, we are all bringing forward new technologies that allow us to do what our customers want, which is to spend less money on fuel.

On my last quick point, since we're time constrained, right now we have a national fuel standard for fuel economy in the United States. We follow it voluntarily in Canada. It's called CAFE. I won't describe it, but it's going through reform right at the moment.

The standard is becoming approximately 14% more stringent, as we speak, than it has been before. It is again continuing to raise the bar in terms of the fuel economy of vehicles that are out there. We expect it will continue to become more stringent as the reform continues.

Ironically, if Canada were to adopt by regulation the CAFE standard in the United States, we would do even better than the United States. We would lock in some of the advantages we would get in Canada by virtue of the fact that we tend to have smaller cars.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

You've done an excellent job at General Motors, and you should be commended for that. I like your “take a car to heaven” program.

You'd then be in favour of, and we would certainly suggest to our government, possibly doing the same thing with a tax incentive. If it's a ten-year-old car, you'd get $500.

[David Paterson]

We would love a matching incentive in the marketplace, and it would make a great difference.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

I have a question for Mr. Malcolmson too. We need to do something with the bridges. It's a real concern. It's easy to clean up your neighbour's backyard, but what about our backyard? How are our roads? Have we as a government done a proper job to maintain our roads? I drive through Toronto and I go through this town every Friday and every Sunday and it's a challenge, to say the least. How have we done as a government?

[Bob Malcolmsen]

Well, don't get me going on Highway 407 or Highway 401. We certainly have a problem in the GTA in regard to gridlock and traffic on the highways. The problem right now is that we have one route across Toronto, and that's Highway 401. In the gridlock, we have a problem of moving goods and services, not only for businesses in Ontario, but that route across Toronto going to Niagara Falls, Fort Erie, Sarnia, and Windsor is also used by Quebec industries moving their goods and services. We need another pathway.

Highway 407 has been on the books.... Actually, I was joking the other day that I was a teenager when I went on the committee five years ago. That road is having problems getting developed. I understand the committee is now working in concert on the EA process with not only the federal but the provincial government. If the federal government can do anything on transportation to moving goods and services—

It's also a safety issue. You have a distinct safety issue with cars and trucks getting together on a highway. We must make a safer route. Highway 407 is the answer. It will bypass Toronto, but it's not going to solve the entire problem. Also, that Detroit--Windsor border crossing has been outdated for I don't know how long; it has to be fixed to get these goods moving faster.

The governments know they haven't done enough on transportation and infrastructure in regard to the major highways around the GTA. The bulk of the population in Canada is in southern Ontario, and that's where the manufacturing sector is. If we lose the manufacturing sector because we can't get our goods to market properly.... You know, it's great to say that's only one industry, that it's 200 jobs, and they'll go somewhere else, but those 200 jobs, you have to keep in mind.... I told a panel this years ago from the perspective of a chamber of commerce: if those jobs in manufacturing are gone, they're gone forever.

It also impacts on the fellow who does the haircuts for those people, the restaurants, the insurance company, people who buy computers, it's a ripple effect through the process. If you start thinking you can move manufacturing jobs, they can go somewhere else, once you start that, it also implodes on the rest of the economy, on the small businesses that rely on the employees to buy the products, the men's wear, the ladies' wear, you name it. If all those jobs are gone, you can have all the service jobs you want in the world, but who's going to buy the products?

So you have to fix the highways.

[The Chair, Conservative, James Rajotte]

We're way over time here. Sorry.

I'll go to Mr. Masse now.