Thank you very much, Mr. Chairman. Bonjour tout le monde.
I represent a company called Maxtech. It's an automotive parts manufacturer...[Inaudible--Editor]...over the last 31 years in the country. We have interests in Ontario and Quebec.
I want to make three fundamental points, if I may, to this august committee. Thank you very much for this opportunity.
The first is that there are two major acquisitions one makes in life, as you all know--a home and a car. When you build a home, the wealth typically remains within the community. That is commonly understood, it's logical. When you buy a car that is not made in the country or you buy parts for a car that are not made in the country, a lot of money is being thrown out of the country. It is very important, therefore, that this industry be protected, because otherwise a lot of wealth will leave our Canadian shores.
The second point I want to make is please appreciate, as Gerry was pointing out, that the real innovation and value-added in our country lies with the parts manufacturers more than with the assemblers of cars. It is a very important point.
In a technology park in Quebec, there is a company that pioneered the stainless steel exhaust systems used in cars worldwide today. In a small town, Waterloo, Ontario, is a company that pioneered a yearly saving of $50 million in the exhaust systems for leakage of greenhouse gases, which are used in cars today. Our country, through the University of Waterloo and the University of Laval in Quebec, has really pioneered innovation in the automotive sector. So protecting the parts suppliers who are innovative and have demonstrated innovation comes from two areas: their SR and ED credits, and the number of utility patents they have to their credit. These are vitally important.
The third and last point I'd like to make to the point you just made, sir, is the following. Yes, Linamar has diversified. Linamar can afford to diversify. We know them very well; they're our neighbours. The more important point is, can these smaller tier two suppliers manage to diversify? Do they have the engineering beachhead? They sure want to diversify, but there are two things holding them back. One is having engineering services provided. They don't have a beachhead left anymore, with the erosion of equity in these companies. The second is market access for new products that will be marketed with diversification.
We were very honoured that Minister Clement gave us time during a breakfast meeting. We showed the Honourable Minister Clement, the Honourable Minister Flaherty, Alison Tait, and Deputy Minister Louis Lévesque in the Department of International Trade a very interesting innovation that we've created for the APMA. It's called the facility of redeploying assets to fundamentally reduce the dependence on one sector.
If you consider February, ladies and gentlemen, you will see that North America produced fewer than 700,000 cars. China produced nearly 800,000 cars. The installed capacity, as Gerry points out, is 16.5 million cars. You have 9 million cars chasing 16 million capacity, so the critical mass doesn't exist to sustain the parts manufacturers anymore.
I'd just like to say that there are three very practical suggestions we've made. There is a $5 million pilot that we want to get funded. It will help the smaller companies, the innovative companies, to remain alive by redeploying their assets. It's called FRAES, the facility to redeploy assets, engineering, and market service. We request that you look at the number of utility patents that the automotive parts manufacturers have and give dollars, holding patents as security—it could be about $250,000 per patent—as bridge capital or patient capital to take care of the 2009 and 2010 distressed times.
The last point we'd like to make is to think about how to consider the whole idea of using patient capital if a company is viable. And BDC, which is our own national bank, actually has made a template available, through working with the APMA, that understands the viability and the feasibility of parts manufacturers. If they declare a company to be viable based on their diversification plans for reducing dependence on the automotive sector, give them bridge capital of $1 million for every $10 million of sales, for example, as patient capital to overcome their immediate tooling needs, etc.
These would be our three suggestions.
Thank you.