Evidence of meeting #20 for Government Operations and Estimates in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was industry.
A recording is available from Parliament.
12:55 p.m.
Secretary-Treasurer and Co-owner, The AIM Group Inc.
I would like to say to Mr. Moore that the government has to realize they can't have one fix for all the sectors. Everybody has unique situations, and they have to realize there aren't going to be 10% savings in certain sectors.
As Mr. Ingle said, we're a sector with 3.8% pre-tax profit margins. We're a sector that employs people with the average hourly billing rate of $25 with a 40% burden for payroll, and there is not a lot of money in operating costs. There's not a lot of room to squeeze, so if you're going to squeeze us, if you're going to look for your 10% out of our industry, it's going to come out of the wages of the temporary worker. On average, temporary workers tend to be women and tend to be single mothers, so that's who's going to be squeezed.
Although we firmly agree there has to be procurement reform and we firmly agree there has to be accountability in how the government purchases, the government's got to realize they can't have one brush paint everything the same colour.
12:55 p.m.
Conservative
James Moore Conservative Port Moody—Westwood—Port Coquitlam, BC
Our approach will be comprehensive, and we have numerous Auditor General's reports to draw upon and consultations that we're going to do and we're going to get it right.
We appreciate the concerns, and we'll continue our conversations. The minister and the department met with many of you this week, so we are going to get this right.
Thank you.
12:55 p.m.
Bloc
Richard Nadeau Bloc Gatineau, QC
Good for me!
Thank you very much, Madam Chair.
It was said earlier that the number of partners would fall from 41 to seven in the area of hiring temporary staff in government. You received that information. I think that telling people we want to reduce the number of partners without really explaining why shows extreme arrogance. Reference was made earlier to the Kearney Report, which we didn't get wind of, even here, in the committee, which says a lot about the opaque transparent approach. Please pardon the contradiction.
One of the proposed solutions was to merge businesses, which would have made it easier for you to take part in the process. My question is for Mr. Ingle and Mr. Egan.
What do you think about forming a co-enterprise so that you can respond to federal government calls for tender? Can you tell us how realistic that solution is? How would it affect your industry?
12:55 p.m.
Chief Executive and Co-owner, SPI Consultants
There are so many problems with joint bids.
First, we're a very competitive industry, so it's totally against our nature. It's not unreasonable for somebody to turn around and say “Your nature may be so and so, but circumstances force you to go against what's natural”. That's one problem.
The other problem is that the margin in our business is so small you can't split. There isn't that to split. Splitting business in our business is not practical. You can't split it up. It's not like nuts and bolts.
One of the real problems we would all face is the question of liability. We have to carry insurance liability for the federal government. If we went into partnership with other companies, we wouldn't get it. We have a real problem getting it anyway on our own stance, but once you involve other parties--because insurance companies since 9/11 have got really, really jumpy--they wouldn't touch us with a barge pole.
12:55 p.m.
Secretary-Treasurer and Co-owner, The AIM Group Inc.
Although I'm very fond of Jeremy and my other colleagues here, they are competitors, and I don't want to work with them on a daily basis, although since June 29 I've been pretty much working on a constant basis with them.
The other issue on a joint venture is that there has to be a lead, and that lead is the only one who could end up with the corporate experience. So I can be in a situation where I'm a secondary supplier on a joint venture, do all sorts of work over a period of time, another opportunity to bid comes out, the bid documents ask me for my corporate experience, and I can't declare having had it because I wasn't the lead company on the contract. So that would block me, or potentially block me, from other opportunities.
12:55 p.m.
Bloc
Richard Nadeau Bloc Gatineau, QC
All right.
Public Works and Government Services wants to meet with you, but if it decided to go ahead with the suggested process, what impact would that have on the temporary work industry? This new process has not yet been put in place. We don't yet know where it stands, particularly now that the government has pulled back. You were given documents in June, there was a pull-back, then you were seen again in late September, with documents similar to those presented in June, and so on. The system's quite unclear.
In the Outaouais-Ottawa region, about 5,000 persons work in this industry, 80% of whom are women. Can you tell us what the economic impact of the new process would be, on both workers and the industry?
1 p.m.
Secretary-Treasurer and Co-owner, The AIM Group Inc.
Various elements within the RFP document were going to have various effects on the industry. Obviously, the potential to go from 41 companies to seven would potentially force over 100 companies out of business.
Number one, the fact they were looking at forcing the rates down was going to have a negative impact on wage earners. It would be a situation where any one of us in the industry would sit there and say, “If I were one of the seven I'd be okay for the most part, but I can't take that chance”.
Number two, do I even want that business of one of seven if they're going to force the rates down so low that I'm not going to be able to provide the quality service I'm used to providing to the federal government, and the federal government is used to receiving? The margins are going to be so small, do I even want to be in this business in this city any more?
Number three, can I afford to be one of seven suppliers? Can I even go out and get the lines of credit required for me to support my payroll? You've got to understand I provide a temporary employee to the federal government on an hourly basis and I pay that employee every week and then I invoice the federal government. Eight to ten weeks later I get paid, so I'm floating a payroll on these people for eight to ten weeks. Would my bank even look at me if I went to them and said, “I have a potential for this contract; the margins are lousy on it, but I'm one of seven suppliers to it, and I need to increase my line of credit by a multitude of 20 in order to do it”? I don't think the banks would look at me.
1 p.m.
Liberal
1 p.m.
NDP
Peggy Nash NDP Parkdale—High Park, ON
Thank you, Madam Chair.
I want to thank all of the representatives here today, and I want to thank you for your frankness, which I can only attribute to your genuine concern about the procurement proposal that was put forward. I commend you on your willingness, and I guess it's out of necessity that you want to keep engaged and hopefully get this process back on track, so that hopefully our procurement process will be improved without getting derailed.
We know that the government started off by paying $24 million to a contractor—14 times their contract—in order to come up with a plan that, as you stated today, would have the effect of squeezing out small and medium businesses. As we heard Monsieur Comtois say earlier, it could also have the effect of sourcing very large contracts outside the country.
Canadian business is obviously central to our economy. Small and medium businesses are a huge part of our economy. It's a source of innovation and a huge source of jobs. It's a sector we want to continue flourishing as successful companies in Canada. We have jobs in Canada, then people pay taxes, and this creates the services and infrastructure, so that we can continue to have a healthy economy and buy goods and services.
We've heard about the impact of the current procurement procedure that's proposed by the federal government and what that could mean for the temporary work sector.
Before we end, I would like to hear from the furniture manufacturers about the impact. What is the current number of companies, the number of jobs, and what could the impact be if there is no change to the procurement process as proposed?
1 p.m.
Director of Sales, National Capital Region, Teknion Furniture Systems, Canadian Furniture Task Group
It's not dissimilar. I guess the danger is that if you were to single-source suppliers, number one, you'd tend to gravitate to the companies large enough to be able to fulfill it—
1:05 p.m.
NDP
Peggy Nash NDP Parkdale—High Park, ON
Excuse me, Mr. Swire. How many people work in the furniture manufacturing sector today?
1:05 p.m.
Director of Sales, National Capital Region, Teknion Furniture Systems, Canadian Furniture Task Group
What is the number?
1:05 p.m.
Government Programs Manager, Haworth Limited, Canadian Furniture Task Group
We're estimating that there are approximately 10,000 employees, working either directly or indirectly in the furniture industry, and generating approximately $4 billion worth of business manufacturing in the country, of which the government purchases probably in the neighbourhood of $200 million a year.
1:05 p.m.
NDP
Peggy Nash NDP Parkdale—High Park, ON
Would the government be a mid-sized purchaser, or one of the larger purchasers?
1:05 p.m.
Director of Sales, National Capital Region, Teknion Furniture Systems, Canadian Furniture Task Group
It would probably be the largest single purchaser, if you took the group as a whole in the country.
1:05 p.m.
NDP
Peggy Nash NDP Parkdale—High Park, ON
So this change could mean fewer suppliers in the furniture sector?
1:05 p.m.
Director of Sales, National Capital Region, Teknion Furniture Systems, Canadian Furniture Task Group
As it was originally proposed, I believe on June 8, the danger was that if the winning bidders were not present or had operations or facilities in this country, this would have an even greater impact.
1:05 p.m.
NDP
Peggy Nash NDP Parkdale—High Park, ON
Thank you very much for being here. We hope that your input and concern are reflected in changes to the procurement procedure that meet your needs for continued success. Thank you.
1:05 p.m.
Liberal
The Chair Liberal Diane Marleau
Thank you very much for coming. I'm sure there'll be some changes; I'm confident. So thank you very much.
We're not going to end our meeting right away. I won't give my committee a break, so you can feel free to leave.
1:05 p.m.
Secretary-Treasurer and Co-owner, The AIM Group Inc.
We were asked to provide some information, and I'm sorry that I didn't catch what information from us you were looking for.
1:05 p.m.
Bloc
Louise Thibault Bloc Rimouski-Neigette—Témiscouata—Les Basques, QC
Mr. Ingle referred to the fact that when I said “you”, because you were talking about that type of business together, I was interested in finding out about your correspondence or phone calls or whatever that were left unanswered. I don't find that acceptable, and I want to raise that.
I'm sure the parliamentary secretary will do so—at least I imagine he will—but I want to do it personally as the spokesperson for the Bloc Québécois. I want to do it directly, both with Monsieur Fortier and Mr. Marshall, because on other matters, there are subjects I follow up with them. They always say if you hear something and you're not pleased or whatever, call me and let me know—don't hesitate. I won't hesitate once more.