Transport Committee on March 15th, 2012

[The Vice-Chair, NDP, Jamie Nicholls]

Welcome to the Standing Committee on Transport, Infrastructure and Communities. This is our 28th meeting. On the agenda today, pursuant to Standing Order 108(2), is the study of innovative transportation technologies.

Today, we are hearing from Don Moore, Executive Director of the Canadian Transportation Equipment Association.

I'd like to welcome you, Mr. Moore. Without further ado, please make your presentation.

[Don Moore, Executive Director, Canadian Transportation Equipment Association]

Thank you very much. I thank the committee for the invitation to speak to you this morning.

First I want to give you a little bit of a frame of reference, so I will introduce myself and our association and tell you what we do and what our focus is.

I have been in the truck manufacturing industry as an engineer for a good part of 27 years. Seventeen of those years were spent with a tractor and chassis original equipment manufacturer here in Canada, in British Columbia. For four years after that I spent some time as a forensic engineer consultant investigating and reporting on truck-related accidents across Canada. For the last six years I have been executive director of the CTEA.

The Canadian Transportation Equipment Association is made up primarily of manufacturers of heavy vehicles. Our core group really is twofold. First we have the vocational truck up-fitters, who take a chassis manufactured by an original equipment manufacturer—such as Mack, Mack Volvo, Daimler, Freightliner, and Western Star, or the medium-duty companies such as Hino, Isuzu, etc.—and turn them into working trucks by adding dump bodies, cement mixer bodies, or various other types of bodies.

On the other side of our core group are the trailer manufacturers. We have some smaller trailer manufacturers, but many specialize in heavy trailers. We have many sizes of companies, anywhere from ones that manufacture a few trailers a year, to Manac, which is probably one of our biggest members, manufacturing thousands of trailers. Suppliers are also included in our association, as are service providers. In some respects we consider the original equipment manufacturers, the large corporations that manufacture the chassis, to be the suppliers of our core membership.

Most of our members are small and medium-sized enterprises. Many of our companies have fewer than 20 people, and a lot of them have up 500 employees. They put out any number of vehicles, from a few a year to thousands.

The focus of the association over the years has been on the obligations of our membership to federal and provincial regulations. We provide other affinity programs for members, of course, but really the focus has been on working with Transport Canada and the provinces on regulatory requirements.

When I was asked to come I saw that the focus was on innovation. I want to touch on some of the innovations we are seeing in the industry that affect us. In a lot of cases they're not things that our members are necessarily installing, but they affect the installation of the final body, the changes in designs, etc.

We're seeing a lot of electric hybrids for urban deliveries—buses and refuse vehicles. There are some hydraulic hybrids, which are a little different, mostly in the refuse industry.

Alternate fuels such as CNG and LNG are becoming very popular. There's a lot of interesting work being done, and there are definitely some challenges there, particularly related to infrastructure. We're seeing new aerodynamic features with the introduction of rules aimed at reducing greenhouse gas and increasing fuel economy in the U.S. and Canada. We foresee that although that is starting with a fairly narrow scope, it will eventually broaden and affect more of our members, particularly our trailer members.

On things like disc brakes, from a safety perspective, it's something that is seen as a positive. It's something that the volumes currently are not.... It is a fairly expensive option, but the benefits are there, and we are seeing the volumes increasing. It does change some of the design parameters to a certain extent, but really, it is something that we're seeing coming our way and is definitely a positive.

There's technology such as electronic stability control, which is now mandatory on long combination vehicles in Ontario, on transportation of dangerous goods, on tankers in Quebec....

One side note I have is that right now I believe that within the House there is a bill to push forward the latest CSA-B620 regulation. The way things are set up with that particular group is that they have a very strong working relationship amongst industry because it is done through CSA, so we have government and industry at the table.

But because of the nature of that, so that accreditation can be kept with CSA, every five years they must continue with a five-year review, so there are improvements coming constantly with that group. Unfortunately, the latest, which was in 2008, has not been introduced yet, and now we're working not only on the next phase but on the phase beyond that. When we're talking about dangerous goods transport, I think it is critical to see that particular regulation change move forward.

There are other things, such as telematics, electronic on-board recorders, and enhanced visibility, which are all issues that are being worked on and really require standards. They are being worked on by the Society of Automotive Engineers—SAE International—ISO, and other groups. Industry and OE cooperation I think is critical to that, and I think it is there. Many of these can really enhance our safety issues especially.

I just want to talk a bit about a couple of things that would really help the industry, especially our small and medium-sized entities.

One is streamlining the R and D tax credit application process. It's one area that we struggle with. We have a couple of things, which I will mention in a moment. There were programs where we had actual consortium testing, for which some companies were in a position to apply, but some, like the smaller companies, were unable to apply, more because they don't have the resources in regard to the time, the effort, and the cost involved in trying to deal with the reporting and the details that are demanded of them. Some of the rules kept some of those companies out of it.

In saying that, I just want to talk about how we do have a couple of wins pertaining to our association and from Transport Canada in particular. One not long ago was the rear impact guard for trailers. Our Canadian guards are much stronger than those of our U.S. neighbours. Transport Canada actually went ahead and did something beyond.... We had many discussions. We had an opportunity, as we always do, to have input into the introduction of the regulation.

It eventually was introduced, and one of our biggest issues was actually making sure that we could get the testing done and comply. Each company is expected to test to these regulations and of course to comply with the regulations. However, when you're talking about these small and medium-sized companies, it is a costly exercise.

The association pulled together, in a consortium, all the key trailer manufacturers within our membership and put together a $320,000 testing program, which I would have to suggest might have broken, in some cases, some of our smaller companies. But we were able to pull that together, make it reasonable for each, and pay for that program. It's been a very successful program and is one Transport Canada I think should be proud of. We are. It's worked very well.

I have a couple of final notes on some of the other players I might suggest. I understand that David Bradley from the Canadian Trucking Alliance has already testified. I might suggest that on the natural gas front, Alicia Milner, from the Canadian Natural Gas Vehicle Alliance, might be someone to contact.

I think it is difficult to move forward with anything to do with trucks or trailers without consulting also with the U.S. OEMs, which are a big portion of the manufacturing. Unfortunately, we only have two truck manufacturing facilities now in Canada. That is very unfortunate. We have Hino, in Woodstock, and PACCAR, in Sainte-Thérèse. It would be important to include those groups.

In the U.S., there is the Truck and Engine Manufacturers Association, out of Chicago. We have a good relationship with them. There is the Truck Trailer Manufacturers Association, out of Virginia. If that was something the committee was interested in, we definitely could put you in touch with the appropriate individuals in those companies.

For a lot of the technology, they are really the forerunners. I think one thing that has to be remembered about our industry, unlike the automotive industry, is that we are very strongly pushed by the customers. What the customer wants, what that fleet or municipality or the end-user essentially needs and wants on a vehicle, our members will put on the vehicle. We're driven very much from the user side. With respect to any regulatory initiatives, it's important to keep a level playing field and consider those things.

I also note one other group. Although the NRC CSTT has been invited, I think it's important that we get past the executive level and go down to the engineering folks who actually do the work and put together the reports. Actually talk to them so that we fully understand. I know there have been reports brought before this committee, and the executives have been questioned on those reports. They should be. They should understand them.

[The Vice-Chair, NDP, Jamie Nicholls]

I will have to cut you off there so that we can go to questions.

Thank you for your presentation. Now we'll go to questions.

We'll begin with Ms. Chow.

[Olivia Chow, NDP, Trinity—Spadina, ON]

Thanks for being here.

Mr. Bradley was here Tuesday, and he talked about all the equipment that is state of the art and that can reduce fuel and greenhouse gas emissions, etc.

First, are they manufactured here? It might be difficult for small and medium-sized companies to lay out that kind of money at the beginning, even though in three or four years they will get all the money back because of the fuel savings.

Has your organization thought about bulk purchasing or trying to...?

One area I keep talking about is the side guard skirt issue. A lot of them are not manufactured in Canada. They are from Europe, for example. Has there been any discussion on how to do that or on what role Transport Canada or the Canadian Standards Association would play?

[Don Moore]

I think as I was commenting, our industry is very much pushed by the user. Really, if there is demand for a lot of the technologies that have already been developed, they will come up with solutions. In many of these components, you speak of the side guards. Currently in North America the focus is more on the aerodynamic guards, which are a little different from the safety-related guards the Europeans are using. However, coming up with those solutions can be done. The key is really the demand from the end-user.

Again, this is one place to keep a level playing field with all of those manufacturers, and this is something where the association has come into play, along with Transport Canada. Regulation has a role to play because it does do that. It levels the playing field; it says all of you must have this on specific types of vehicles. There are going to be vehicles where certain solutions on certain aspects are not going to work terribly well. However, if there's regulation put forth, at least it keeps a level playing field for all of those manufacturers, especially the small and medium-sized, and then says we all have to have that.

Having been in the truck manufacturing industry for years, I was around when ABS was introduced on trucks. We actually had the technology for a number of years prior. It wasn't as developed as it is now, but it was there. We offered it as a standard. The demand throughout the industry by the end-users was that if it wasn't a regulation, they didn't want it. They wanted a deduct option, and they didn't want to spend that money. We wanted to try to make it as cost-effective as possible. But, again, until the volume increased, it was an expensive option. Once we got past that and said it had to be used by everyone, the cost of the option dropped, and all of a sudden it was a non-issue.

There is a role to be played by regulation when it comes to equipment, especially, and to the manufacturer of equipment. I'm not a huge proponent of regulation, but I realize that we could do an awful lot if the industry were willing to pay for it. I realized that during my career of 17 years in manufacturing and 12 years as a compliance engineer, compliance manager, and test manager. I worked for Western Star Trucks. At that time, it was the last fully Canadian-owned truck manufacturer, and I'm darn proud of it, but unfortunately it is now part of the Daimler family.

There were always those big guys, and if they weren't going to push forward, and they were in the U.S., and they were going to play by the U.S. rules, we were stuck. We couldn't have survived. There's always that, and especially for the small and medium, I think that's a big issue.

[Olivia Chow, NDP, Trinity—Spadina, ON]

Are there some regulations that are pretty standard, that should be done? The U.S. is beginning to do it, or they're in the process. It's clear that they're heading towards that way, and we need to synchronize ours, or maybe we're a bit ahead of them. Are there some of those areas that would help the trucking industry? You know the technology is there or is emerging; it is being used by other countries, and yet we're not using it. It would be beneficial, but it's the regulations or lack of, or barriers that are just not catching up that you can suggest to us. Maybe there's a list of them that this committee can look at.

[The Vice-Chair, NDP, Jamie Nicholls]

A brief response.

[Don Moore]

Very briefly, as far as the U.S. is concerned, we're very much a follower because of harmonization and because they're the big elephant to the south. There are regulations, but typically we are staying pretty much in lockstep. The current regulatory process to adopt their regulations is actually not bad. It's fairly streamlined; it allows for it to happen fairly quickly.

As far as other technologies advancing, yes, in Europe especially it does seem to be quite a slow process, but it's bringing it into our culture, our environment, that is a bit of a challenge. There's an awful lot that's actually being worked on in Transport Canada, and hopefully we will see things move along. I don't have a list; it's something I can think about. But I can't, off the top of my head, suggest anything.

[The Vice-Chair, NDP, Jamie Nicholls]

Thank you.

Monsieur Coderre.

[Denis Coderre, Liberal, Bourassa, QC]

Thank you, Mr. Chair.

Thank you very much for joining us, Mr. Moore.

I will keep my comments somewhat in the same vein, as you talked a lot about the regulations today. You say that you are not necessarily a fan of the regulations. What needs to be changed? Is it only a matter of approach? Does it have to do with the fact that a distinction should be made between what you are going through and what is happening in the U.S.? We have often talked about smart regulations, red tape cutting, and so on.

Given that your role also has to do with security, do you find the regulatory requirements overly stringent or not enough? Would you like to do your own thing? Where is the problem? I am just trying to understand your association's approach when it comes to the current regulatory requirements.

[Don Moore]

As far as current regulations are concerned, we really don't have any significant issues with anything that exists right now. We've solved most of those issues, gotten over many of those hurdles. And as long as it stays the focus of the governments—Transport Canada, the DOT in the U.S.—to use performance-based standards rather than prescriptive, saying you have to use this equipment, I think that's important and very good.

The only drawback there is for a small company to do performance-based means testing, and to do the testing costs. If there are ways to include that type of testing within the R and D, or maybe another type of tax credit that allows for this, that could be very helpful for these small companies. It's that load that comes out of regulation that is a burden that can be a real challenge for a smaller company.

As I say, we'll bring together, where we can, consortium testing, but you have to have a lot of companies using the same kinds of technologies, the same type of equipment to be able to do that. We actually have a few programs like that and—

[Denis Coderre, Liberal, Bourassa, QC]

We need regulation for safety. We need more efficient equipment. So in your case we're talking about the weight, we're talking about the aerodynamics, we're talking about new technology that should be used. One of your main concerns is testing, so maybe we should have a better regroupment of stakeholders so that everybody focuses and helps each other.

The first question is this. What should be the role of the Government of Canada? Our role here is to put up some recommendations about how we apply the new technology. There are two things in that: the technology itself, and what we should use, like natural gas, electric, whatever.

Secondly, how can we make it doable, which is the regulation aspect? So (a) what should be the role of the government, in your mind, and (b) what should be the process regarding that? And what kind of new technology would you favour?

[Don Moore]

Particularly when we're talking about the efficiencies, alternative fuels, emissions, etc., I think infrastructure's probably our biggest issue there, and not necessarily the government spending a bunch of money on infrastructure but at least providing for some allowance possibly on a tax basis or something to help encourage the development of some of those infrastructures. With a lot of that type of technology, of course, the infrastructure is key to it being made usable on a broad basis.

As for a lot of the safety standards that are coming down—be it visibility, for instance—to be honest, I'm not sure what the government can do at this stage. There's some great work being done at the association level, which is bringing together the right experts from across the different manufacturers and really trying to define standards that make sense. It may be that industry ends up adopting this quite nicely without any intervention because it just makes sense. It can happen.

[Denis Coderre, Liberal, Bourassa, QC]

This is the last question. We spoke a lot about harmonization. We're talking about our relationship with the Americans. There are issues there regarding the equipment. We have to diversify. There's the situation in Europe that maybe we should find a way to buy there too. What's the status regarding your own organization? Do you believe that harmonization sometimes sounds more like protectionism and we should maybe have a better way to make some deals with others, like the Europeans?

[Don Moore]

That's one area. I know there's been an awful lot of effort because our whole way of regulating is so different, between ourselves and the Europeans. It's a lot easier with the U.S. They've got a self-certification process, as do we. They use the same SAE-based regulations as we do. However, we've at least introduced and have worked toward introducing some of the European rules. The problem with the European system is that it's just such a different system and a different way of looking at things, and they started from a different ground level. Looking at how that relates to what we do is a challenge.

It's a very broad question. In some cases, it should be fairly straightforward. If you look at some of the lighting, etc., it looks pretty straightforward. On some of the things, like brake systems, there's a whole different philosophy. They use a totally different system, a totally different philosophy, and those components that make it happen aren't even available in North America, so how could you harmonize that concept?

As for other things, like guards and that, yes, possibly, or maybe there's a better way we can come up with that works for our situation, because, again, our infrastructure is a whole lot different from theirs too—the U.S. interstate, our 400 series in Ontario and across the country. There are a lot of differences there that have to be considered.

I hope that sort of answers your question.

[The Vice-Chair, NDP, Jamie Nicholls]

Thank you.

Go ahead, Monsieur Poilievre.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

Thank you.

Do you believe natural-gas-powered vehicles are a good investment for the trucking sector?

[Don Moore]

I don't know that I'm the right one to ask. Really it's the end-users who are going to be able to tell you that. From the information I know of, it does work.

Again, our members aren't the ones installing these. However, that may be changing somewhat, because, for instance, General Motors has an engine that is a marvellous natural gas engine, but it is not expert in the fuel system, be it liquid or compressed natural gas. But it does have the engine that can handle it. It would like to see an intermediate manufacturer installing that, and that falls under the realm of the multi-stage manufacturing process that all of our vocational equipment is manufactured under and recognized by Transport Canada.

That's what CTA is kind of all about, that multi-stage, because with a vocational truck you get a chassis from the OEM and then the next manufacturer may be installing a crane. They are affecting regulations. I won't get into the details, but they are.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

Do any of your members manufacture natural-gas-powered vehicles?

[Don Moore]

Do they actually manufacture the vehicle itself to use natural gas? No.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

Do they do conversions?

[Don Moore]

No. Those are people I'm going to be talking to, but no.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

So natural gas power is not something that your membership really has a strong opinion on right now.

[Don Moore]

No.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

Okay, good. Thank you.

Then the next question is, what major technologies are you promoting?