Thank you very much, Mr. Chair, and thank you, members of the committee, for inviting us here today to speak on such an important issue.
As Avrim was saying, we're representing a sector of the economy that is really the most productive, the most innovative, the sector that is at the edge of international competition and may be today paying the price for that because of the impact of the Canadian dollar.
This is the manufacturing sector in Canada, the forestry sector. This is the source of high-paying jobs within the sector, and across manufacturing there are two million people still employed. But we often forget how dependent the high-value and high-paying services jobs are on manufacturing--whether it's transportation, communications, financial services, business services, you name it--and in the resource sector, how much that depends on adding value to our resources, to our skills, to the R and D that we do in this country.
This sector is at risk. We all know we're facing tremendous challenges from newly industrializing markets. We all know we have to specialize. We all know we have to become much more customized, much more responsive, much more innovative. Canadian companies are being forced to do all of that at a time when the value of the Canadian dollar has risen 66% against that of its major trading partner. It's the only manufacturing sector anywhere in the world that is putting up with these currency fluctuations at the same time as it has to respond to the longer-term competitiveness issue in the economy, at a time when commodity and energy prices are coming up and both of those factors are constraining profitability.
In an average eight-hour production shift at the end of last year, it took manufacturers seven hours and fifty-four minutes on average across the country to cover operating costs, pay their taxes, cover depreciation costs, and then pay their financial charges. They had six minutes to make money--six minutes out of every eight-hour production shift--and that's the money that goes into the new product, the new market, the new training, the new organization that everybody knows they have to invest in in order to continue to grow. The biggest problem right now is cashflow in the industry. It's the cashflow that's constraining investment in research, that's constraining investment in new productive assets, that's constraining investment in R and D.
The recommendations that were put forward by the industry committee of the House of Commons and were unanimously accepted by that committee and unanimously supported by this committee went some way in offsetting those cashflow constraints. That's why they were so necessary. We have made the point that the corporate tax rate reductions that the government has introduced have been very important. This gets you in the game. But right now, given the condition of the cashflow, the condition of our key value-adding sectors, you need much more in order to compete in a game where countries around the world are subsidizing; providing tax incentives; investing directly in skills, in innovation, and in productive assets--assets that actually produce things of greater value.
So the recommendations--the five-year extension of the window of eligibility for a two-year CCA, the tax credit for employer training, the refundability of R and D credits--were important because they were incentives to encourage manufacturers to invest in innovation, in productive assets, in skills. And I think that is still essential if we're going to remain in the game. As Avrim was saying, the five-year window of eligibility for the two-year writeoff was particularly needed, just in order to give companies the time required to make a decision about investing in new technology--getting the technology, customizing it, having it delivered, and putting it in place. All of this has to be done before a company can take advantage of the streamlined writeoff. These were important issues.
To conclude, I agree with Avrim that government can't solve the economic problems that the manufacturing sector is facing. They can't do anything about China. They can't do anything about the faltering U.S. economy. They can't do anything to bolster the U.S. dollar. The onus falls on manufacturers and businesses themselves to make these decisions on competitive adjustment. But governments can do a lot to create the business environment that encourages investment in productive assets, innovation, and skills. That's essential if we're going to continue to build the world-class competitive manufacturing sector that we need to build in this country.
Thank you.