Evidence of meeting #33 for Industry and Technology in the 45th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was products.
A video is available from Parliament.
Bloc
Gabriel Ste-Marie Bloc Joliette—Manawan, QC
Okay. I can ask my questions in another round.
Thank you very much.
Liberal
The Chair Liberal Ben Carr
Yes, there will be another round.
Ms. Borrelli, the floor is yours for five minutes.
Conservative
Kathy Borrelli Conservative Windsor—Tecumseh—Lakeshore, ON
Thank you very much to all the witnesses for being here today on such short notice. As we all know, this is a really huge problem within the mould industry, any industries dealing with metals and any industries shipping to the States.
Mr. Azzopardi, how critical is a long-term trade agreement to the survival of the mould-making industry?
Chief Executive Officer and President, Laval Tool & Mould Ltd.
It's essential. It's critical. I think we're fooling ourselves if we think there will be a manufacturing industrial sector in Canada without the United States.
Conservative
Kathy Borrelli Conservative Windsor—Tecumseh—Lakeshore, ON
What is the approximate value of the goods your company ships to the United States? What is the ratio of your products? How much do you sell to Canada and how much do you sell to the United States?
Chief Executive Officer and President, Laval Tool & Mould Ltd.
Again, I go back to what I said before. It's probably 90%.
I'll give you an example. We make jet skis. They come to Quebec, and Quebec takes those and turns them into the final product. They will probably sell one in every 10 in Canada. The other nine will go to the United States. Whether we want to admit it or not, even when we ship to Canada, those products still depend on the U.S. consumer.
Conservative
Kathy Borrelli Conservative Windsor—Tecumseh—Lakeshore, ON
What can the government do to support your business? I know you listed several things, but what is the most important thing, or the top two or three things, it can do to support you right now?
Chief Executive Officer and President, Laval Tool & Mould Ltd.
Besides the obvious—get us an agreement—if we're dealing in the short term right now, these companies are losing money every day, which means that banks will likely start to withdraw their support. These companies rely on lines of credit to run their businesses. They're going to have to be shored up immediately through EDC or BDC. That would be the first thing.
The second thing is this: If we're not going to get a trade agreement with the United States, we need to be able to reduce their bottom line so they can afford to absorb the 10% today. As I said before, these are single-digit profits. The 10% will now make them not profitable. You now have to convince them to stay in Canada, which can be through subsidies or ways to support their business outside of that. Right now, they are considering moving or closing.
Conservative
Kathy Borrelli Conservative Windsor—Tecumseh—Lakeshore, ON
Thank you.
Ms. Vlanich, the same question is for you.
How critical is a long-term trade agreement to the survival of the mould-making industry?
Executive Director, Canadian Association of Moldmakers
It's absolutely critical. There will be no mould-making industry in Canada without the trade agreement. That impacts the manufacturing supply chain. Mould-making is the first step, so not having it would be detrimental to Canada's manufacturing sector.
There are impacts on both sides of the border, so it is mutually beneficial to come to an agreement.
Conservative
Kathy Borrelli Conservative Windsor—Tecumseh—Lakeshore, ON
You have many members. Do you have an approximate value of the goods your members ship to the United States yearly?
Executive Director, Canadian Association of Moldmakers
I can get that to you. I don't have that specifically, but we know 80% of what they produce is sent to the U.S.
We also know the nature of our industry requires these goods to go back and forth multiple times. The way the tariffs are set up right now, in our current understanding, means that every time a good goes across, all the value that's been added to it is now tariffed.
Conservative
Kathy Borrelli Conservative Windsor—Tecumseh—Lakeshore, ON
What would you ask of the government in order for your members to get support for their businesses?
Executive Director, Canadian Association of Moldmakers
Come to an agreement. Go to the table with our friends in the United States. They're our partners. When it comes to manufacturing, we operate more or less as one. Go to the table and come to an agreement so we can put this past us and get back to business.
Conservative
Kathy Borrelli Conservative Windsor—Tecumseh—Lakeshore, ON
Thank you.
I'd like to ask you the same question, Ms. Liard.
How critical do you believe a long-term trade agreement is to the survival of mould-making, and thus to your business?
President, Liard Industries
A long-term agreement is obviously essential. We must negotiate with the U.S. to reduce tariffs. It's difficult for SMEs like ours that export to the U.S. to survive by selling their products only in Canada, so, yes, we need a long-term agreement with the U.S.
Liberal
The Chair Liberal Ben Carr
Thank you very much, Ms. Borrelli.
Ms. O'Rourke, the floor is yours for five minutes.
Liberal
Dominique O'Rourke Liberal Guelph, ON
Thank you very much.
We all want the same thing here. We all want a strong, advanced manufacturing sector. I'm the member of Parliament for Guelph. We are a hub of advanced manufacturing. We all want a trade deal with the Americans.
With respect to steel and aluminum, the large enterprise tariff loan facility is already available. Would that be suitable, for the short term, to create a bridge until we have some more certainty? I'm curious about whether that or the strategic response fund can respond, and about whether you're having those conversations with the minister.
Chief Executive Officer and President, Laval Tool & Mould Ltd.
I think I'm probably best placed to answer that question.
Yes, we have already accessed the strategic response fund and we are using it. I can tell you how we're using it. It is to increase our competitiveness to try to take some of that work back that we've lost to the EU. It's not really getting anything back from the United States, and I'll tell you why that is. It's because the tariff is now the problem. It's not our competitiveness and it's not our efficiencies. Now the burden is on our clients. The burden is that as soon as they buy a mould from us, either they're going to pay the 10% tariff or we're going to absorb it.
We're trying to be more competitive in a world that has nothing to do with competitiveness at this point. It's not going to solve the problem. Will it allow us to push the problem down the road a little bit? It will, maybe once we get this behind us, but right now the major problem is that clients are asking us every day to not only match the price but beat the price, and now we have this 10% or 15% tariff on top of us.
One thing that we haven't talked about during this meeting and you have to understand is that for us to get to the 10% tariff, we have to buy U.S. steel. U.S. steel comes at a premium because of all the bad decisions that our American friends have made, but we also get penalized for bringing in that U.S. steel. This government ignores the fact that this continues to put us at a disadvantage. It's punitive. They're not countertariffs; they're punitive tariffs. They only continue to erode our position in trying to be in a competitive world. Buying new machines and making our plant beautiful, we're doing that, but at some point, we have to deal with the fact that if we're not profitable, we're not profitable.
Those decisions are coming down sooner and quicker. I honestly think the decision here is that we need to start to dive into the problem. There are solutions. We need the Canadian government to fight on our behalf. It's not going to happen here in Ottawa. It's going to happen in Washington. We need a timetable. We need to start to work together.
I'm going to be honest with you. We are already looking at hiring consultants ourselves because we don't think we're getting anywhere.
Liberal
Dominique O'Rourke Liberal Guelph, ON
It's certain that everyone wants to get to a place of more certainty for all of our manufacturers and especially for the sectors that are most affected—steel, aluminum, copper, automotive and advanced manufacturing. We're all on the same page on that.
The question was around the large enterprise tariff loan that was used to support steel and aluminum and continues to do so. Then there's the strategic response fund. There's the regional tariff relief, which I suspect is the one you're talking about, and then liquidity through EDC or BDC would be possible as well.
Another tactic that I'm curious about is whether the industry is supporting businesses to look at their HS codes. It's my understanding that large organizations like Martinrea and Linamar were able to review their HS codes and put them in a marginally better position.
Is that a support that the industry can offer to the small and medium-sized businesses, understanding that it's so difficult for the small and medium-sized businesses to be able to do all of this and work on the business?
Executive Director, Canadian Association of Moldmakers
As an association that represents an industry, we have provided that information. We've done a lot of sessions. We brought in custom brokers and other experts to help our members ensure that the HS codes they're using are correct.
The issue is the additional cost when it comes to the tariffs. They need to be able to do business. Many of our member companies have 10 or fewer employees, so they don't have big offices that are able to address things like this that come up. They just need to be able to do their work. All of the supports that are available and conversations about diversifying to new markets will never touch the business that we have with the U.S., ever. There's no way, from anywhere else in the world, that we are going to match the business we get with the U.S. There's no way around it.
Our members do take advantage of the supports that are there. As an association, we help them around HS codes and stuff, but they continue to voice that they need an agreement. There has to be a CUSMA.
Liberal
Liberal
The Chair Liberal Ben Carr
Maybe one of your colleagues will be generous and give some of their time over to you.
Mr. Ste‑Marie, you're up again. You have the floor for two and a half minutes.