Subcommittee on the Automotive Industry in Canada Committee on March 10th, 2009

[Mike Wallace, Conservative, Burlington, ON]

You're not familiar with that.

Thank you, Mr. Chair. That's all I had.

[The Chair, Conservative, Michael Chong]

Thank you, Mr. Wallace.

Monsieur Vincent.

[Robert Vincent, Bloc, Shefford, QC]

I have no further questions.

[The Chair, Conservative, Michael Chong]

None at all.

Do you have a question, Mr. Lake?

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

I'll just ask a quick question.

I was interested to hear you talk about something that hasn't really been touched on, when you were talking a little bit about some of the things that Honda is doing in addition to making cars. One of the questions that is always in the back of my mind is, if we're going through this process.... Everybody talks about the fact that at the end of all of the restructuring there's going to be a smaller industry here in North America. That means one of two things. It either means there are going to be people who are working who aren't going to be working in the auto industry any more for the companies that manufacture--so for the six companies, I guess, that manufacture here in Canada--or the alternative, which doesn't get talked about so much, which is that they could be working for one of those companies but not making cars. It seems to me that you've kind of touched on that, and no one else has touched on that.

Does Honda have a diversification model? Maybe you can explain that diversification model--obviously there is one--that allows you to capitalize on the investments that you've made in technology, in the expertise of your workers, and in transition into other products that might allow you to keep workers when other companies can't.

[Jerry Chenkin]

No doubt Honda is probably one of the most flexible companies in the world when it comes to diversified product lines, and the ability to make decisions very quickly and move resources very quickly. One good example is that where other companies are cutting research and development expenses, Honda is increasing dramatically right now, because we know that we need to produce the products that this whole new world that's coming at us will require. So we make tough decisions quickly and move people quickly.

In Honda, you work not for one division but for the company, so to move from auto to motorcycle to power equipment and marine can happen at any time very quickly. I myself have had that experience in 35 years with Honda. I've worked in every product line and every division in the company.

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

This just leads me to some more questions. In terms of that dramatically increasing R and D, can you quantify that compared to what happens at other companies? I know that's a challenge right now when companies at this time are cutting back in their expenditures. Can you quantify that?

[Jerry Chenkin]

It's difficult for me to quantify it, because obviously this is a worldwide activity, but Honda has always invested in R and D, independent of profitability. Our research in Honda R and D engineering is through a totally separate company that is funded by Honda Motors. They have always been fully supported, whatever the financial situation.

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

When we look at the skill sets of the Canadian worker, specifically the Canadian auto worker--and it's well known that we have a significant skills advantage here--where do you see the contribution of these skill sets in Canada if they're not in auto? For example, I had one conversation with someone from southwestern Ontario who talked about transitioning using workers who had been trained in the auto sector to build wind turbines. Can you maybe give me some examples of where you might see opportunities for some of these workers in the future economy?

[Jerry Chenkin]

It's very difficult to speculate. All I can tell you is that the quality of product coming out of our factory in Alliston is as good as, or better than, any Honda product that's developed anywhere in the world. That is because of the people.

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

Good.

Thank you.

[The Chair, Conservative, Michael Chong]

Thank you, Mr. Lake.

Thank you, Mr. Chenkin.

One last question from Mr. Masse.

[Brian Masse, NDP, Windsor West, ON]

Thank you.

I wouldn't want to be remiss by not asking you the question that I've been asking everybody with regard to the banking charges for loans. It is important to get on the record, for me anyway, the fact that the banks have interest rate loans right now at anywhere between—this one right here is from a domestic bank—8% and 14% for good credit applicants. Do you believe that this is hurting the market right now as well?

I know that some of the other loans that I've heard about from my local constituency go up to 30% in the car industry. Is this something that really needs to be fixed?

[Jerry Chenkin]

We know that under the current financial crisis the cost of borrowing has increased and the availability of credit has become much tighter, so it's kind of a perfect storm for the customer out there right now. They're paying more for their loan, if they can get it.

[Brian Masse, NDP, Windsor West, ON]

I hate that analogy, because that movie doesn't end very well.

I really want to be specific here, though. In terms of your credit financing, you don't have loans at 8% to 14%, do you?

[Jerry Chenkin]

I can't speak to our captive finance arm, what their standard rates are.

[Brian Masse, NDP, Windsor West, ON]

Okay. Could we maybe get that tabled, if it's not a secret of any sort?

[Jerry Chenkin]

No, we can, actually. You can go to Honda.ca and get the information right off there, sir.

[Brian Masse, NDP, Windsor West, ON]

Okay.

Thank you.

[The Chair, Conservative, Michael Chong]

Thank you very much, Mr. Masse.

I'd like to thank the two witnesses for talking to us tonight and providing us with your testimony.

I'd like to thank, in particular, the committee staff for these long days and evenings. The clerk, the analyst, the technical staff, and the translators, thank you very much for your efforts here.

This meeting is now adjourned.