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.
Conservative
Kathy Borrelli Conservative Windsor—Tecumseh—Lakeshore, ON
Are you seeing customers delay, cancel or redirect orders? If so, where are they going instead?
International Business Manager, Cavalier Tool & Manufacturing Ltd.
They are delaying, for sure. Our industry last year—again, Nicole might know exact numbers—was down 15%, 20% or 30% in sales in mould building. Where are they going? Again, they're going offshore. The section 232 tariffs that have been put in place really support a low-cost country outside of Canada.
Conservative
Kathy Borrelli Conservative Windsor—Tecumseh—Lakeshore, ON
Can those countries provide the level of quality that you do in your shop?
International Business Manager, Cavalier Tool & Manufacturing Ltd.
I'm going to say no, but every day they get more competitive.
I'll put it this way: I travel the world constantly. We reinvent our finish line every day. We do it with technology. We do it with automation. We do it with RFID chips. We do it with smart people doing smart things.
We reinvent our finish line, and when I go to a low-cost country and I tour a shop, I know what their finish line will look like, because we've already built it. Every day they're chasing what we do, and every time there is a negative impact on our industry or something like section 232 that causes our steel prices to go up, their steel prices are a fraction of what we pay.
Liberal
The Chair Liberal Ben Carr
Thank you, Ms. Borrelli.
You have the floor, Mr. Ste‑Marie.
No, I apologize, I skipped too far down my list.
Mr. Ma, the floor is yours for six minutes.
Liberal
Michael Ma Liberal Markham—Unionville, ON
Thank you, Mr. Chair.
Welcome to all the witnesses. My questions will be open to all of you, so feel free to jump in to respond.
This series of questions is for us to evaluate the immediate economic impacts you may face. The first one is this: Can you quantify the direct financial impact these tariff changes have had on your operations, whether in terms of input costs, lost contracts or margin compression?
Ms. Woodiwiss, you can go first.
Diane Ricci Woodiwiss Chartered Professional Accountant, Cavalier Tool & Manufacturing Ltd.
We cannot accept a 15% additional cost on any of our jobs. Our margins are very tight. We are in a very competitive industry, and because of that, absorbing 15% is just not feasible.
What happens here is that when the tool ships to the U.S., within 10 days we have to pay that tariff. Then I have to invoice our customers. I'm waiting for that, so it puts a lot of strain on us financially, because we have to monitor our cash flow.
President, Cap-Thin Molds
Aside from the cash flow, from my perspective, I cannot quantify losing a customer with whom I established a relationship over 20 years for something that had nothing to do with me, my team or my company. I cannot quantify that. I cannot tell you what the dollar value is, because once they go, they're gone.
Vice-President, Business Development, PREXOR
I’ll echo what my colleagues have said: 15% is higher than our usual profit margin—it’s actually even higher than that. Once a customer has left, winning them back takes 100 times more effort than acquiring them in the first place.
Liberal
Michael Ma Liberal Markham—Unionville, ON
Thank you.
Here is my follow-up question.
What operational adjustments have you been forced to make, such as delaying capital investments, reducing shifts or reallocating production?
I'll start with either Mr. Vander Park or Ms. Woodiwiss.
Chartered Professional Accountant, Cavalier Tool & Manufacturing Ltd.
We were originally looking at a $4-million expansion this year. We had to pause that. We were looking at purchasing additional equipment, and we stopped that as well.
As for our employees, we are moderating our shifts, but we are not hiring new employees right now. That has stopped as well. We have to make sure.... We need such skilled trades that it's difficult to find employees. We're trying to keep them on as long as we can, but it's going to be difficult if this continues.
President, Cap-Thin Molds
That's a very tough question, because as business owners or entrepreneurs, we are constantly trying to better our services and products. When there are such uncertainties that, like I said, have nothing to do with our operation, making decisions for next year when we have no idea where next year is going to take us is very difficult. We are in that sad reality of not knowing what to do for the future because we haven't been told what the future will be.
Liberal
Michael Ma Liberal Markham—Unionville, ON
Thank you.
Madame Blanchet, I'll put the same question to you.
Vice-President, Business Development, PREXOR
We, too, had already made investments—even last fall, despite the uncertainty—to ensure we always remained at the cutting edge of technology. That’s our strategy for survival: always having the best possible employees, the best-trained ones. We did that, but it still dates back to April 1. It came very suddenly for all of us, but we didn’t cancel those orders.
What an entrepreneur loves in life is investing and improving. Now, for the first time in our lives, we’re unable to do that, unable to have a vision for the business. We don’t have one anymore. That’s never happened before.
Liberal
Michael Ma Liberal Markham—Unionville, ON
I understand. Thank you.
I would like to follow up on what Ms. Woodiwiss said about the workforce.
Can you speak to any workforce impacts you're already seeing or anticipating, including layoffs, hiring freezes or reduced hours?
The question applies to everybody, but I will start with you.
Chartered Professional Accountant, Cavalier Tool & Manufacturing Ltd.
Right now, we're more at the hiring freeze level. We have not done any layoffs. Like I said, it's very difficult because it's hard to find good skilled employees in our trade, so we never want to have to resort to that. Unfortunately, if this were to continue, it would be very difficult to....
International Business Manager, Cavalier Tool & Manufacturing Ltd.
If I can add to that, on the immediate impact right now, we don't have it because it just came out. We have work in progress. We have to finish our contracts. We have to build the tools we have.
What we're afraid of is that we don't know what's beyond it. Our salespeople right now call me every day to ask what we are doing: What's next? What are we telling our customers? How do we quote a job?
The immediate impact is that we have work. We don't want to lay the people off, but we have three or four months' worth of work. Beyond that, we don't know.
Liberal
The Chair Liberal Ben Carr
Mr. Ma, unfortunately, we're out of time, but there will be plenty more time to circle back to witnesses for additional commentary.
Mr. Ste‑Marie, finally, you have the floor for six minutes.
Bloc
Gabriel Ste-Marie Bloc Joliette—Manawan, QC
Yes, finally. Thank you very much, Mr. Chair.
I welcome all our distinguished witnesses. Thank you for being here and for sharing your experiences with us. This is truly concerning. Let’s hope we can find a solution so that your industry can continue to do business successfully, with certainty.
Ms. Blanchet, I would like to know what percentage of your revenue comes from exports to U.S. customers.