Industry and Technology Committee on Oct. 6th, 2025

[Gabriel Ste-Marie, Bloc, Joliette—Manawan, QC]

Thank you very much.

[The Chair, Liberal, Ben Carr]

Thank you, Mr. Ste‑Marie.

Colleagues, we're running a little bit over time, and we have to transition again. I'm going to knock these next two down to two and a half minutes apiece to keep us a little more on time.

We have Mr. Falk for two and a half minutes.

[Ted Falk, Conservative, Provencher, MB]

Thank you, Mr. Chair.

Thank you to our witnesses for their presentations here at committee today.

Mr. Greer, I'd like to build on a few of the comments you've been making. When you speak to your members and you get feedback from them on why they're not expanding their businesses, why they're not making the investments in machinery and equipment that would help them move to the next level, what are their responses? Are they based on access to labour, access to markets or access to capital? Can you comment briefly on all three of those?

[Ryan Greer]

Yes, I'm happy to.

It is really all three. It depends on the business, where they are in their life cycle and where they're located. If you're in the Lower Mainland and you're looking to expand but you have to get a new facility that is now going to be two bridges away for most of your workforce, you're probably going to lose most of that workforce. The transportation infrastructure, gridlock and availability of industrial land might be what stops you in the Lower Mainland. If you are in southern Ontario and you're looking at what some of the requirements might be if you increase the size of your workforce by a certain amount, or at adopting a new piece of a technology kit, that may drop you....

Obviously, some of the uncertainty is in the tariff environment. We've had manufacturers who are looking to make major equipment purchases, but these have lead times of six to eight months. They're not certain if a piece of equipment that is not being tariffed now could be six to eight months from now.

It is significantly wide-ranging, but, ultimately, it is access to capital and access to investment that can help fix a lot of that and deal with lots of those problems. Being able to attract that kind of investment is the biggest barrier.

[Ted Falk, Conservative, Provencher, MB]

Often when the government issues tax credits as an incentive to make investments in manufacturing, they're non-refundable or refundable. Could you explain a little bit to the committee about the difference between refundable and non-refundable tax credits, why there's an environment for each one, and when it would be best used?

[Ryan Greer]

I know we're low on time.

To back up a step, when we talk to manufacturers, they look at the overall complexity of the system, including the range of credits, refundable and non-refundable. They're challenged on this. There's just more that they need to do. This is an opportunity, but who are they going to have to pay to help them do it.

Not to skip past the question, I think there's an important environment for both refundable and non-refundable credits. Part of the reason our overall tax code is so challenging is that it is a mishmash of various incentives of both kinds, when we think simplicity and lower rates would actually help drive some of the investment we're seeking.

[Ted Falk, Conservative, Provencher, MB]

Thank you.

[The Chair, Liberal, Ben Carr]

Thanks, Mr. Falk.

Ms. O'Rourke, you have two and a half minutes.

[Dominique O'Rourke, Liberal, Guelph, ON]

Thank you very much for being here, Mr. Greer.

I'm from Guelph. One in five homes relies directly on advanced manufacturing, so your testimony really hits home. I think it's important to find out what will work.

On a couple of fronts, I'll combine my questions. The year 2024 had a record foreign direct investment in Canada of $85.5 billion, which was a 36% increase from 2023, the best performance in over a decade. What was working in that context? What do we keep? We're talking about what we change, but what do we keep that is working well to attract foreign direct investment?

I'm going to tag on to my question. We have the regional tariff incentive fund now to help any tariff-affected business to retool and pivot to other things, with up to $1 billion in southwestern Ontario and up to $1 million in a non-repayable loan. How do you think that is resonating among manufacturers, and where do you think the opportunity to maximize that is?

[Ryan Greer]

In terms of what's attracting FDI, specifically in 2024, the biggest part of what makes Canada an attractive market and a good place to set up a manufacturing facility is its proximity and access to the U.S. market. We will never be able to diversify ourselves away from the U.S. market and our reliance on it.

The best way to fix our U.S. problem is to fix our U.S. problem. That's going to help us on the investment side, because outside investment is not just investing in southern Ontario, although that's where they might be going; it's investing in the Great Lakes manufacturing ecosystem that has been deeply integrated, to the benefit of communities and families on both sides of the border for decades. In terms of what works, step one is fixing our U.S. problem, and then step two is moving on to everything else we've been talking about here today.

In terms of the regional tariff supports, we're encouraged that those funds have been made available. As I mentioned earlier, our sector is the one being hit first and hit hardest by U.S. action. It's important for the government to have the flexibility to respond and support manufacturers, given the unique needs.

It is a significant investment and business decision to consider retooling, pivoting or trying to find a new customer abroad compared to somebody you've been serving maybe a few hundred kilometres south of you in the Great Lakes region. Trying to de-risk those investments as much as possible is going to be an important part of that.

Obviously, some skills retraining and support for tens of thousands of workers who have been displaced and are looking for new opportunities are important. For us, the marker for success on these programs will be if the money is moving quickly and if the red tape that's attached to it—the programmatic steps required to access funding—is reasonable and appropriate for the speed at which those funds are needed for manufacturers.

We're looking forward to hearing more as the programs roll out in the months ahead to make sure those things are happening.

[The Chair, Liberal, Ben Carr]

Ms. O'Rourke, I have to be non-partisan in my chair.

Thank you for being with us this morning, Mr. Greer, Mr. Rioux and Mr. Noël.

We appreciate your testimony.

Colleagues, we're going to suspend briefly as we transfer over.

[The Chair, Liberal, Ben Carr]

Colleagues, we're going to continue with the second hour of our questioning.

We have two new witnesses, both joining us virtually.

We have associate professor from the department of finance and economics at the Université du Québec à Trois-Rivières, Monsieur Marc Duhamel.

I know I'm supposed to be unbiased in the chair, but anytime there's a Manitoban who is willing to make themselves available to us, I have to, of course, highlight that. We have Neil Fast, who is the president and chief executive officer of Loewen Windows and Doors, a very proud Manitoban company.

Mr. Fast, welcome to you.

Mr. Duhamel, you have up to five minutes to give your presentation.

We will then go to you, Mr. Fast, for upwards of five minutes, and then we'll begin our line of questioning.

Mr. Duhamel, you have the floor.

[Marc Duhamel, Associate Professor, Department of Finance and Economics, Université du Québec à Trois-Rivières, As an Individual]

Thank you very much, Mr. Chair.

Thank you to the committee members for having me.

My name is Marc Duhamel. I have a Ph.D. in economics from the University of British Columbia. Not only am I a professor at the department of finance and economics at the Université du Québec à Trois-Rivières, or UQTR, but I am also a researcher at UQTR's Institut de recherche sur les PME, which has been recognized for the past 25 years as one of the largest research institutes on SMEs and entrepreneurship in the francophonie and the world. Since 2023, I have also been serving as the scientific director of Repreneuriat Québec's Observatoire du repreneuriat, a provincial economic development organization whose mission is to ensure the survival of Quebec businesses by promoting business succession.

To avoid any misunderstanding, I want to say that my opinions are my own. They do not represent the views of Repreneuriat Québec, the Government of Quebec, the Institut de recherche sur les PME or UQTR.

I was asked to testify regarding Canada's productivity challenges. Although I am not an expert on this issue, I am relatively familiar with it because I worked as an economist at the Competition Bureau and at Industry Canada for 15 years, including as the director of microeconomic research and market framework policy for the last four years I was there.

What brings me here today is an issue that seems to have escaped the attention of many experts and public decision-makers, even though it has been a concern for them for several years, and that is business transfers in the context of Canada's aging population.

My testimony focuses on two main points. The first has to do with the underestimated role of business transfer in Canada, commonly referred to as “repreneuriat” in Quebec, and its potential contribution to the growth of SME productivity in Canada. The second has to do with the specific support requirements for business transfers in Canada in the context of the need for business succession.

I would like to define business transfer. A business transfer is the economic transfer of a company's property titles, control and authority over the use of assets to new owners. It is often a gradual process that takes place over several months and that enables the company to continue its business activities.

In many cases, for the buyer, or the person purchasing the company from the seller or the transferor, a business transfer represents an opportunity to strategically renew an established business. In other words, it is a transformative event in the life cycle of a SME. The buyer can renew the offer of products and services, improve the business model and increase productivity through innovation and investments in new technologies.

I am here because my research using one of Statistics Canada's new experimental databases showed that 57,760 SMEs were transferred in Canada in 2022, an increase of 25.8% compared to 2015. Canada is dealing with aging entrepreneurs, a challenge that is affecting many developed economies and putting them at risk of losing their entrepreneurial legacy. For example, according to the Organisation for Economic Co-operation and Development, the OECD, Japan lost 21% of its SMEs in just 15 years. If the same thing were to happen in Canada, we would lose 285,000 active SMEs and the jobs that go along with them over the next 15 years, mainly in remote areas.

This is a very real risk in Canada. For example, according to the Institut de la statistique du Québec, the proportion of municipalities in Quebec with fewer than 1,000 inhabitants that do not have a retail building went from 14.8% in 2015 to 22.7% in 2024, even though there has not really been any change in the number of municipalities with fewer than 1,000 inhabitants.

Right now, Canada is facing a wave of transfer intentions. According to Statistics Canada, the owners of nearly 51,000 private businesses in Canada intend to sell or transfer their business in the next 12 months. According to another study conducted in 2024, in the medium term, 126,000 SME owners want to sell or transfer their business in the next 60 months. As a result, support for the development of entrepreneurial succession is needed to prevent what happened in Japan from happening here in Canada.

In order to promote business succession, Canada's economic development policies have focused primarily on supporting forces of creative destruction in business. The economic rationale behind this approach is that entrepreneurial start-ups will be able to assure the transfer of Canada's entrepreneurial legacy to a new generation of more skilled, innovative and successful entrepreneurs. However, it is clear that entrepreneurship policies and investments in developing the start-up ecosystem remain weak, with a few exceptions. Other leading researchers have also made this same observation on the ineffectiveness of entrepreneurship policies in developed countries.

However, the most important—

[The Chair, Liberal, Ben Carr]

Mr. Duhamel, unfortunately, we were running late during the first hour, and we still are. I must give the floor to Mr. Fast, but you can add to what you were saying when answering questions.

Thank you.

Mr. Fast, the floor is yours for upwards of five minutes.

[Neil Fast, President and Chief Executive Officer, Loewen Windows and Doors]

Thank you very much.

I very much appreciate the opportunity to speak with you all.

Since early 2023, I have been the president and CEO of Loewen Windows and Doors. We are a manufacturer of high-end windows and doors based in Steinbach, Manitoba, located about 40 minutes southeast of Winnipeg. Our products are positioned at the high end of the market with each unit made to custom specifications and the very highest levels of energy efficiency.

We are privately owned and have been in business since 1905. We currently employ 700 people in the southeastern Manitoba area. In any given year we export over three-quarters of our production to the United States.

In Canada, we sell our product directly to home builders and owners, or through small, specialized fenestration dealers, such as Bowen Windows in Ottawa. In the United States, we go to market exclusively through these fenestration dealers who market our products to architects and homebuilders across that country.

In our manufacturing process, we use softwood sourced from both British Columbia and Oregon state. Our glass products come from southwest Ontario and North Dakota. Hardware comes from Asia or Europe, and over one million pounds of aluminum is shaped and painted in either Ontario or Wisconsin before coming to our facilities. Much of our product is European or American in origin.

With this type of complicated supply chain, we experience impacts from trade policy, tariffs and counter-tariffs every day. While the street price of aluminum has risen, our product currently comes into Canada tariff-free despite Canada's current 25% counter-tariff because of the remission policies currently in place. However, those blanket remissions are scheduled to expire on October 16, which will drive additional cost and complexity into the industry.

Significant changes have been made to our current transportation patterns, with products that once travelled through the U.S. now coming directly from Europe and requiring extra processing. Small service parts and shipments heading to the U.S. are now burdened with additional costs and time to clear the border. With the custom broker industry currently overwhelmed, this is all more complicated than it should be and could be.

While we have significant investments under way in plant modernization and information infrastructure, Loewen finds itself in an awkward position. We are a true medium-sized company. With 700 employees, most government programs are targeted at companies smaller than us. With only 700 employees, we are too small to effectively access public debt and other large-scale financing available to larger businesses.

Over the past 35 years, Loewen has been very successful in manufacturing and exporting our product into the United States. In the past five years, we have seen significant supply chain and demand whiplash with COVID, an explosion of multi-jurisdictional rules and regulations and are now experiencing significant demand and supply side uncertainty in this new trade environment, all while trying to invest in and improve the position of our business in a very competitive market.

I am looking forward to my time here and the opportunity to tell our story and am available to answer any questions.

[The Chair, Liberal, Ben Carr]

Thank you very much, Mr. Fast.

I'll pass the floor to someone else who lives not too far from Steinbach.

Mr. Falk, the floor is yours for six minutes, sir.

[Ted Falk, Conservative, Provencher, MB]

Thank you.

Thank you very much to both of our witnesses for their attendance here at committee this morning.

Like Mr. Carr, I too would indicate I have a specific bias for anyone from Manitoba, but particularly when they come from my riding and my constituency of Provencher. We are very proud of the fact that Loewen Windows is still in our community after 120 years and that you've grown the business to the size that you have, and also that you're such a wonderful corporate citizen in the whole southeast.

Mr. Fast, building on some of the comments that you made, you talked about the remission agreement that you currently have on aluminum that you bring in from the United States. Most aluminum is mined in Canada. It's processed and extruded in the United States, and then you bring it back and you add value to it at Loewen Windows.

Can you tell us a little bit about that remission agreement and why you're so concerned about it?

[Neil Fast]

Certainly. Correctly so, all of our aluminum is extruded in either Canada or the U.S., but painted by a manufacturer in Wisconsin, and must then make its way into Canada. Our country currently has a 25% counter-tariff in place, however, with 100% remission for Canadian manufacturers. That is set to expire in just under two weeks from now. At that point in time, we would have to pay a 25% tariff but would be able to ask for a drawback from the Canadian government for any product we export.

Instead of going from a zero-cost free trade environment, we would now have to put significant working capital up front into tariffs paid to the Canadian government and then apply for drawbacks, which requires an education and a negotiation with CBSA, but would then allow us to claim back any tariffs on products exported to America.

That also leaves us in the awkward position where the cost to produce product for our Canadian customers is now higher than the cost for our U.S. customers.

[Ted Falk, Conservative, Provencher, MB]

It's very important to you that this agreement gets extended, and we hope Prime Minister Carney's visit to the United States will yield some positive results this time.

You also talked about access to capital and access to federal Government of Canada programs, in that the size of your business makes it awkward. Are there programs in particular that you're referring to and that you would really be able to take advantage of as Loewen Windows?

[Neil Fast]

SR and ED is a program where we have minor participation, but it certainly becomes challenging. Many of the tariff abatements or programs that allow our business to tool and invest are targeted at businesses smaller than our own.

[Ted Falk, Conservative, Provencher, MB]

Recently at committee—I think about two weeks ago—we had William Robson, who is the president and CEO of the C.D. Howe Institute. He talked about capital investment, about machinery and equipment, and how American manufacturers are spending the equivalent of just under $12,800 Canadian per worker, while Canadian manufacturers are spending just north of $4,000. Per worker, they spend about three times more on machinery and equipment.

You also talked about the uncertainty of the environment that we are currently finding ourselves in. How does that impact your decision to invest in machinery and equipment for your workers to continue to produce, expand your business and improve your quality even more?

[Neil Fast]

I can say that the C.D. Howe numbers certainly ring true. We are currently investing annually north of $6,000 per employee, within that range.

Much of our equipment, though, is made out of steel and aluminum and is coming from overseas, so we are experiencing uncertainty from a demand perspective. What will happen to demand for our products in the United States as the tariff regime may change from month to month? Lead time for many of the products we use can range from eight to 12 months, and that time frame certainly adds to the challenges we have in forecasting our U.S. business.

We require skilled manufacturing engineers, and those are always difficult to bring in. Our immigration policy certainly makes it challenging. Then, of course, the cost of the raw inputs has raised the cost of this machinery dramatically over the past four years.

[Ted Falk, Conservative, Provencher, MB]

I have one final question.

When I drive by your business, I think of it so proudly and fondly, but I often notice that there's a sign on the front boulevard which says, “We're hiring”. Can you talk a bit about your access to labour? Can you get the employees you need to grow your business?

[Neil Fast]

Sure. I would like to say, without expressing any bias, Mr. Falk, that our business would not.... Our product is custom made and much of it is handmade by a very talented workforce. It takes us upwards of eight to 12 months before a new employee truly becomes adept at their job, so we depend on a stable workforce and have really benefited from the community we operate in.

That being said, manufacturing is an environment where we do experience turnover. On our shop floor, we may see an average turnover of 20% a year, which I think many manufacturers would be jealous of but is impactful for our business. We always struggle to bring in technical individuals, particularly manufacturing engineers and product development people. There, we are recruiting from as far away as Winnipeg and do occasionally bring in people who work outside the country, both in the U.S. and in Mexico.

[The Chair, Liberal, Ben Carr]

Thank you very much, Mr. Falk.

Mr. Bardeesy, you have six minutes.