Government Operations Committee on June 12th, 2020

[Ernie Philip]

We did.

[Matthew Green, NDP, Hamilton Centre, ON]

Were you ever involved in the national emergency strategic stockpile procurement?

[Ernie Philip]

I was not.

[Matthew Green, NDP, Hamilton Centre, ON]

Have there been any preliminary conversations about future procurement for the national emergency strategic stockpile?

[Ernie Philip]

It's just starting. Anita Anand hosted an industry event that I attended.

We have a PPE continuity program, and you're poking at exactly where I think industry can help. It's not as easy as just setting up a warehouse. You want to go to industry that actually turns this inventory so you don't have expired product and you don't have.... You know, you just have great product. You need big companies that can turn this inventory.

There are very preliminary discussions, but my company does it for other jurisdictions outside of Canada.

[Matthew Green, NDP, Hamilton Centre, ON]

How many units would you typically have on hand in your logistics supply chain for things like N95s? What would your running stock generally look like?

[Ernie Philip]

Whatever 3M will give us.

[Matthew Green, NDP, Hamilton Centre, ON]

Prior to this, let's say.

[Ernie Philip]

We would typically have four months' on hand, as a good rule of thumb. I couldn't tell you exactly, but four months' seems right.

[Matthew Green, NDP, Hamilton Centre, ON]

We heard the previous witness talk about expiry dates. What kinds of systems would you have in place to ensure you aren't carrying stale product?

[Ernie Philip]

We have an inventory management system that would manage it, with quality and regulatory alerts, and then we have—

[Matthew Green, NDP, Hamilton Centre, ON]

Is it a digital system that flags it?

[Ernie Philip]

It's a digital system, yes, and then you move it—

[Matthew Green, NDP, Hamilton Centre, ON]

It seems pretty simple.

[Ernie Philip]

It's simple if you can turn it, right? What you don't want to do is just have a warehouse that.... You know, governments change and people change, and all of a sudden you have a warehouse that has cobwebs and hasn't been looked at in 10 years.

We saw a bit of that going back to the days of SARS. You're poking at exactly the right thing.

[Matthew Green, NDP, Hamilton Centre, ON]

Well I've been poking at this for quite some time. After SARS, one would think we would have learned our lesson. One would think we would have fail-safes in place to alert us to the fact that when we shut down these plants, we're throwing out these critical PPE. I certainly hope—

[Ernie Philip]

We actually went to the federal government and said that we're not a supply chain company but we'll—

[Matthew Green, NDP, Hamilton Centre, ON]

We'll pick it up on the next round.

[The Chair, Conservative, Tom Lukiwski]

Unfortunately, we'll have to go the next round.

We'll start with Mr. Redekopp, for four minutes, please.

[Brad Redekopp, Conservative, Saskatoon West, SK]

Thanks.

Let's just keep going on that. You were saying, Mr. Philip, that you went to the federal government and...?

[Ernie Philip]

Thank you for letting me finish.

We had a solution where—and industry can do this—we said, “Industry's unique value proposition in this category is that we have warehousing space. We have the systems and we have the contracts to turn this inventory. Instead of spending capital, give us a management fee on a per-monthly basis and we'll manage it. Then the minute that a pandemic happens, you can declare it a pandemic and it's your inventory. You direct it where you want and you pay pre-pandemic pricing.”

We've just slowly—

[Brad Redekopp, Conservative, Saskatoon West, SK]

How did they respond?

[Ernie Philip]

Positively, and I think maybe timing is everything. At that time, it was, “We need product now. That's a great idea. Let's table it, and let's come back to this, but right now we need product desperately.”

[Brad Redekopp, Conservative, Saskatoon West, SK]

According to your websites, factories in Malaysia and Southeast Asia were or are operating at 50% capacity. What difficulties have you had with your supply chain from Asia?

[Ernie Philip]

I'd say they're evolving. At the beginning, there was panic buying from governments all over the world. They were all going to the same factories with contracts to say they'd buy their products. We were competing with each other; we were competing with other governments. It became about who was going to pay the most to get supplies into what country.

That was kind of the early shock for us. We were not expecting that behaviour to hit so quickly. That has become much better. Flow on some of the key PPE items has become better. I'd say that items are still higher than pre-COVID pricing, but much better. There are only maybe one or two categories that we're keeping a very close eye on. Capacity has become much better since March.