Industry and Technology Committee on Oct. 20th, 2025

[The Chair, Liberal, Ben Carr]

Good morning, everybody.

I hope you had a good Thanksgiving and a great week at home in your ridings.

I know how valuable those are.

Welcome to the eighth meeting of the House of Commons Standing Committee on Industry and Technology.

As a quick note, the witnesses have completed the required connection tests in advance of this meeting.

Colleagues, we're here pursuant to a motion we passed about a month ago. We've held several productive—no pun intended—meetings in relation to productivity in Canada. We're continuing that conversation today.

We have a number of witnesses with us in the first hour, and then we'll have a second hour with a different group of witnesses.

As a quick note to the witnesses and to others, if you're using your headset and it's plugged in but not on your ear, please make sure you place it down on the sticker in front of you. This is to protect the health of our interpreters.

Witnesses, I think you're probably aware of how things work: There will be up to five minutes per organization to give introductory remarks. We'll then enter into a panel conversation with a predetermined allotment of time selected for each political party represented around the table.

From Deloitte, we have Dawn Desjardins, chief economist, joining us by video conference.

From Linamar Corporation, we have Jim Jarrell, chief executive officer and president; Mark Stoddart, chief technology officer and executive vice-president; and Linda Hasenfratz, executive chair.

From the Vancouver Fraser Port Authority, we have Alexa Young, vice-president, government relations and external affairs.

Madam Desjardins, the floor is yours for up to five minutes. We'll turn it over to you.

[Dawn Desjardins, Chief Economist, Deloitte]

Thank you so much for inviting me to speak to your committee.

I know previous witnesses have presented the challenges about Canada's productivity. As an economist, I think of productivity as how much is being produced per hour worked, or how capital and labour combined with factors like technological progress, economies of scale and organizational innovation produce goods and services.

It's well known that Canada's productivity performance has deteriorated, and our country has failed to keep up with most of our trading partners. Over the past 40 years, the gap between what Canada produces per hour and what the U.S. achieves has gone from about 88% to something like 71%.

There are many reasons for this underperformance, from the relative lack of investment in machinery and equipment per worker to a mismatch between workers and jobs and slow adoption of a technology. The composition of our economy, which relies on small and medium-sized enterprises, may also have contributed to this lower productivity. High levels of taxation, a complicated system to access government incentives and regulatory hurdles are some of the often-cited impediments to business investment.

We know there's not one policy or one change that's going to transform our economy, so I wanted to speak to a couple of areas we've looked at that we think will make an impactful contribution to transitioning to a more productive economy. Of course, this is critically important as it will boost wages and living standards for all Canadians.

First, as we know, interprovincial trade barriers take many forms, including geographical obstacles, limited infrastructure, export controls, different technical standards and various regulatory and administrative burdens. While these barriers impact industries in different ways, they nonetheless pose real costs for Canadian companies, costs that make it onerous, if not completely unprofitable, to do business across our country and achieve economies of scale.

Our analysis suggests that if we could completely phase out interprovincial trade barriers over the next five years, that could generate an additional $881 billion in economic output by 2040 and create over 100,000 new jobs in the process. Clearly, the longer we wait and leave these trade barriers in place, the more money we leave on the table as a country.

Our building ambitions, from homes to national infrastructure, are a key element, we think, to improving productivity. Affordability challenges act as an impediment to attracting labour in Canada in places where we need it most. The government's plans to construct more homes and build sorely needed infrastructure are table stakes if Canada is going to become a more efficient economy and attract capital investment.

Based on our understanding of the government's plans, our modelling estimates that just with the status quo, Canada would require as many as half a million workers to join the construction industry if these ambitions are going to be realized. This will require a multipronged approach, including a nationwide hiring campaign that leans heavily on immigration targeted to the trades. We know current pathways through express entry and provincial nominee programs exist, but the scale of the challenge requires increasing intakes considerably and fixing credential recognition bottlenecks. The objective should be to get newly arrived skilled workers into work sites within weeks, not years.

In addition, women and under-represented groups should be encouraged to pursue careers in the trades. Women make up only about 13% of the construction workforce. Another option is to shorten the long lag between apprenticeship and journeyman status by funding accelerated programs at colleges that fast-track new entrants into high-demand skills.

Finally, artificial intelligence is reshaping labour markets by automating routine tasks. Even without further advancements in AI technology, our research suggests AI adoption could add almost $300 billion to Canada's real GDP cumulatively over the next 10 years.

While this would boost our economy and has the potential to improve productivity, there's also potential for some negative impact on labour markets. Automating tasks once performed by middle-skill workers, such as clerical, accounting and some customer service roles, can lead to a hollowing out of mid-income jobs. It's essential that governments design learning and development strategies that both re-skill workers displaced by the recent economic shocks and AI, and upskill workers to better leverage new technologies.

I'd be happy to take any questions you have about these topics.

[The Chair, Liberal, Ben Carr]

Thank you very much. You were right on time.

We'll now go to Madam Hasenfratz from Linamar Corporation.

The floor is yours for up to five minutes.

[Linda Hasenfratz, Executive Chair, Linamar Corporation]

Thank you so much.

I think a lot of elements of productivity are in general not well understood. I want to talk a little bit about that this morning. I think there are three things you all need to really understand about productivity in Canada.

First, business productivity in Canada is in fact growing. We are diluted in the aggregate figure by growing ranks of government and not-for-profit workers in our overall calculation. The second key point is that Canada's overall productivity is pretty much aligned with that of most other advanced economies in the G7 and countries in the EU. Finally, although Canada does lag behind the U.S. on overall productivity, partially for the reasons I've just said, we don't lag in every sector. In fact, we are growing productivity faster than the U.S. in several sectors, including, importantly, manufacturing as well as financial services and transportation.

When most people hear that Canada's productivity isn't growing, they think it's business productivity that isn't growing, but in fact business productivity has grown 50% over the last 25 years. Offsetting that is the productivity of the non-business sector, government workers and not-for-profit workers, where the GDP per worker has not changed at all in the last 20 years. I did provide a chart to your team to illustrate this.

Productivity in the not-for-profit sector is exactly the same as it was in the early 2000s, whereas business productivity has continually grown. All these folks are in the denominator of our productivity calculation and adding nothing to the numerator. It's just math. We need to drastically reduce the number of folks in the non-business sector and get them into revenue-generating businesses. That would have a big impact on productivity.

Over the past couple of decades, Canada has demonstrated, I think, a consistent trajectory in terms of productivity growth, aligning closely with a lot of other major economies in the G7 and the EU. Again, I have provided your team with a chart that illustrates this. I think we need to think about maybe not what Canada is not doing but what the U.S. is doing that we can learn from and try to emulate.

Finally, there's this idea about the sectors. Certain industries within Canada have for sure outpaced their counterparts in the U.S. in terms of productivity growth, including manufacturing. Manufacturing has embraced automation and lean production techniques. Certainly we have at Linamar. Canadian productivity has been growing at twice the pace of U.S. productivity over the last 15 years, with 13% growth since 2010 versus U.S. growth of 6% in the manufacturing sector. That's double.

In summary, Canada's business productivity is growing in some sectors faster than the U.S. Our productivity story does align with that of most developed economies outside of the U.S. Our story at Linamar completely aligns with this story. The productivity of our Canadian plants is the highest, by far the highest, of our 75 plants globally, and is growing the fastest. We have the deepest bench of talent here, and notably skilled talent. We have the strongest level of motivation around continuous improvement that I see—believe me, this is an area that I spend a lot of time in—anywhere in the world. We have 75 plants around the world, and 29 of them are in Canada. If I look at our productivity in terms of value-added sales per employee, it has increased 54% in the last 10 years.

Here's a really important point as well. In the automotive industry, which is by far the majority of our Canadian sales, we have to give 2% price reductions to our customers every single year. Every year the price is 2% down. The idea of increasing prices in line with inflation is absolutely not in existence in the automotive industry, which makes our 54% productivity growth even more impressive, because that has offset those 2% price reductions every single year.

Our teams need to find cost improvements to offset these customer givebacks as well as wage increases, of course, for our employees. No one does it better than our Canadian teams. It is why we've continued to invest in our Canadian operations to launch new programs for continued growth at Linamar. Our investment in Canada this year is by far the largest of any country we're investing in around the world. This year, in 2025, it's actually at four times the level of the next closest country. That alone is evidence of our strong support of our Canadian operations and our confidence in our amazing teams.

I'll just conclude with four recommendations of things that I think we should do as a country and as a business to help accelerate productivity further.

First, reduce government and not-for-profit sector workers and get them into revenue-generating businesses.

Second, promote continued focus on innovation, investment and advanced technologies through four things: target incentives to help companies invest in AI, robotics and data analytics; reduce corporate taxes; reduce regulations and red tape to help streamline investment; and target incentives to help folks upgrade skills and develop people for new technologies.

Third, encourage companies to expand internationally. We're already doing that, and that's a great idea.

Finally, we need to do a better job of telling Canada’s amazing story. We're too hard on ourselves. We're always out there saying how bad we are, when, in fact, I think the coming decades are the most promising decades for Canada that I've seen in many years. We're better positioned than many other countries.

Our business sector, as I've just illustrated, is highly productive. We're growing productivity faster than the U.S. in key sectors like manufacturing. We have an amazing technology sector, globally leading in many ways, that we can lean on to help drive up productivity.

We have access to critical minerals, clean water, clean electricity—more than almost any country in the world. We have free trade agreements with 56 countries around the world, representing two-thirds of the global economy. We have a great education system and some of the best health care expertise in the world.

Importantly, we live in a diverse and inclusive society that still values democracy, good governance and basic human rights of free speech and religion, which is more than I can say for a bunch of other countries in the world, including, unfortunately of late, the U.S.

In summary, Canada's competitive position today is excellent. We just need to do a better job of telling that story to attract more investment into our country.

Thank you.

[The Chair, Liberal, Ben Carr]

Thank you very much.

Ms. Young, it's over to you for upwards of five minutes.

[Alexa Young, Vice-President, Government Relations and External Affairs, Vancouver Fraser Port Authority]

Thank you, Mr. Chair, and members of the committee.

I'm pleased to be here to speak on a topic that really couldn't be more timely. Making our economy more productive is always a must-do, and with trade rules upended and Canadians concerned about their economic future, it's more critical than ever that we double down on the task at hand.

As Canada's largest and North America's most cargo-diverse port, the Port of Vancouver is uniquely poised to play a leading role, particularly as Canada increasingly looks west to unlock its trade potential, because that's what we do. Even in the face of weather, labour and geopolitical disruptions, the Port of Vancouver delivers for Canada.

In 2024, we moved a record 158 million metric tons of cargo, a 5% increase year on year. This is a trend that's continued in the first half of 2025, with trade volumes up 13%, the highest mid-year jump in 15 years.

Today, I'd like to share the ways in which the port authority continues not only to support but also to enable Canada's productivity and competitiveness. I'll also share recommendations on how the federal government can help us play an even stronger role.

How does the Port of Vancouver contribute to productivity gains?

First, the port is a major driver of regional productivity. We're talking about over 132,000 jobs Canada-wide, including the longshore, logistics, distribution, rail, trucking and other workers who make what we do possible. What's more, we contribute over $16 billion to Canada's GDP and nearly $2 billion in tax revenue to all levels of government. This all means higher incomes, greater consumption and a continuous focus on skills development in all parts of the country.

Second, Canadian businesses count on us to get the products they manufacture, mine, harvest and grow to customers. Today, we ship to and receive goods from more than 170 countries, including Japan, South Korea and China, with opportunities to expand and diversify further, particularly into Indo-Pacific markets.

To keep building those trade relationships, we know it's about making sure we're getting products to customers reliably and cost-effectively. Around 3,000 ships call to the port every year, and with demand for Canadian commodities going up, so will our volumes. That requires taking action now to innovate, optimize and adopt new tools and digital tech to help us move ships in and out of the port better and faster.

Take our active vessel traffic management program, designed with Transport Canada and first nations partners. We're adopting new tools that make vessel movement safer, more predictable and more sustainable. When fully rolled out this year, we'll see the optimization of thousands of ship transits.

One key component is a new centralized scheduling system made possible by digital twins. This is a tool that tells us what's happening with the weather, tides and currents and is shareable between terminal operators, rail and others. Already, CN's participation in the program has increased weekly train movements to and from North Vancouver by 10%. This is all proving that when we partner to innovate and optimize, productivity gains follow.

Third, together with our partners, we're getting projects built. DP World's $500-million Centerm terminal expansion project increased the movement of containers by 60% with only a 15% increase in the terminal footprint.

Efficient port approval processes of BHP's new potash export facility at Westshore unlocked the final investment decision for their Jansen mine in Saskatchewan and will see four million tonnes of potash shipped annually. Efficient permitting of the Westridge marine terminal by the port enabled a 200% increase in exports as the expanded Trans Mountain pipeline came online.

Looking ahead at Westridge, we're leading dredging works near Second Narrows bridge that will help vessels calling there to more fully load, from 70% to closer to 90% to 100% capacity.

Our Roberts Bank terminal 2 project will build new industrial land, increase container capacity by 30% and add $100 billion in annual trade capacity.

This is exciting stuff, and to further help Canada step up, here are a couple of recommendations.

The first recommendation is red tape reduction. The port authority delivers over 90% of our permitting decisions on time, with robust consideration of environmental interests and those of first nations and communities. We were pleased to see the government's 60-day red tape review deliver some initiatives, but more can be done now, including more use of substitution agreements and expanding and making greater use of the port authority's permitting powers to accelerate delivery of private sector-led projects.

Lastly, invest in trade-enabling infrastructure. Previous joint investments under the national trade corridors fund delivered more capacity and better fluidity in the Pacific gateway through things like road and rail projects and the Annacis auto terminal optimization project. We urge the government to swiftly launch the promised $5-billion trade diversification corridor fund to contribute to building up our capacity and resilience and help Canada meet this moment.

Thank you. I look forward to your questions.

[The Chair, Liberal, Ben Carr]

Thank you very much, Ms. Young.

To start our first round of questions, Mr. Guglielmin, the floor is yours for six minutes.

[Michael Guglielmin, Conservative, Vaughan—Woodbridge, ON]

Thank you, Chair. I'll be splitting my time with MP Brad Vis.

Ms. Desjardins, Canada's labour productivity has fallen behind most G7 countries, with investment per worker now roughly half of what we see in the U.S. We've heard from previous witnesses at this committee, and, basically, they're consistent in saying that domestic issues are a large burden. For instance, our regulatory burdens and our tax framework are, in some cases, more impactful than tariffs themselves on the manufacturing sector. Meanwhile, we see the U.S. has aggressively improved its competitiveness through measures, like their One Big Beautiful Bill Act, that are looking at R and D incentives and streamlining permitting. From your perspective, how much of Canada's investment weakness is being driven by the growing competitiveness gap between us and the United States? Are we at risk of falling permanently behind if we don't respond?

[Dawn Desjardins]

Well, I think that's what we're seeing, in terms of the data, when we look at any measure of dollars being put behind Canadian workers. The C.D. Howe, for example, did a quite extensive study, and what they said was that, for each dollar a U.S. company puts behind a worker, a Canadian company puts about 52¢. When we're thinking about the tools that we're using to arm our workers, increase their productivity and allow for stronger growth, it's just not materializing. When we look at investment overall, it has lagged significantly.

Now, most recently, it's a very understandable development. We are under such intense pressure with respect to demand. Where is demand going to come from? It has been a lagging trend for a considerable amount of time. When we look back to when we were investing in this, at the level in 2015, we're not back there right now. We had anticipated that, but then we had this interruption.

I would say it is a risk that, if we don't clear the decks, so to speak, for Canadian businesses to feel that they can see a return on their investment in a reasonable time frame, then I think we do risk continuing to lag and fall further behind.

[Michael Guglielmin, Conservative, Vaughan—Woodbridge, ON]

Deloitte has recent research that highlights that construction has fallen by 7% over the last decade, and capital stock per worker in Canada is also in decline. It also suggests, in this report, that productivity gains will require greater use of technology, regulatory streamlining and scaling up firms to drive investment and innovation like robotics and modular building. Given how well understood all these challenges are, and the fact that a 10% gain in productivity could reduce labour needs by 50,000 workers by 2030, what are the key factors that continue to hold back meaningful progress on this front? You'll have to be super succinct in 20 seconds.

[Dawn Desjardins]

This idea that we have all these impediments to businesses getting that return on investment quickly, so they're hesitant about putting money to work is, I think, really what we have to work on.

[Michael Guglielmin, Conservative, Vaughan—Woodbridge, ON]

Thank you.

[Brad Vis, Conservative, Mission—Matsqui—Abbotsford, BC]

Alexa, it's nice to see the port here today. In the four recommendations you made, you spoke about regional productivity, how Canadian businesses count on the port to ship reliably and about the good projects the port is building, and you emphasized the need for trade-enabling infrastructure. As you're aware, I represent and represented the regions of Canada that were most impacted by natural disasters, which also had the greatest impact on the flow of goods in Canada. We saw major trade disruptions four years ago. What recommendation would you have for the Government of Canada, in terms of supporting trade-enabling infrastructure in Abbotsford, to give investors the confidence they need that another natural disaster, like the one we saw four years ago, won't happen again?

[Alexa Young]

It all comes down to the fact that we are seeing weather incidents like this, and so, building up the resilience of infrastructure, not just in your constituency but across the board, is critical. That means having evidence-based visibility as to what's happening on the ground, where the infrastructure gaps are—whether that's road, rail or otherwise—and what we can be doing together across the supply chain to increase resilience. As you know, MP Vis, it takes everyone across the supply chain doing that work. That's port and rail, and across the board, looking at ways to improve infrastructure.

I'm happy to continue that conversation.

[Brad Vis, Conservative, Mission—Matsqui—Abbotsford, BC]

Would the port be willing to work with the City of Abbotsford when it puts forward recommendations to build and replace the pump stations, ensure that Highway 1 is built to withstand another flood and the southern railway, the CN Railway and the CP Railway, which the port is dependent upon, receive the infrastructure upgrades we require to ensure that investor confidence?

[Alexa Young]

We are always happy to share the information that we have, our data, and look at where solutions might be possible across the supply chain working with partners. I'd be happy to follow up and have those conversations with the city.

[Brad Vis, Conservative, Mission—Matsqui—Abbotsford, BC]

But the port would agree that that infrastructure is needed in Abbotsford?

[Alexa Young]

By looking at where the data shows us the infrastructure is needed, we're happy to share that information and have those conversations on an ongoing basis.

[Brad Vis, Conservative, Mission—Matsqui—Abbotsford, BC]

Thank you.

[The Chair, Liberal, Ben Carr]

Thank you.

Ms. O'Rourke, you have the floor for six minutes.

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

Thank you, Mr. Chair.

Thank you very much for your presence here today.

Linamar is a Canadian success story and a global success story. You are in 19 countries. What are the policies that work in other parts of the world, and are there any that we could adopt? Why do you think we're so focused on comparing ourselves to American manufacturing when that sector has also had job losses in the last six months and has been a sector in decline? What are the real best practices?

[Jim Jarrell, Chief Executive Officer and President, Linamar Corporation]

Sure. One of the things that Alexa said, I think, was quite interesting about red tape [Technical difficulty—Editor] around the world. I can say a lot of countries do offer more of a red carpet versus red tape on regulatory issues. I think in terms of some of the things we've seen in different areas, partnering would be an area that I would say would be very important, with companies that would be $50 million or less in our area having a big brother-big sister type of relationship. Certainly clustering of manufacturing hubs has also been a really positive support.

When you think about the global perspective, again we're talking about manufacturing productivities and getting awareness around the world.

I think Linamar's expertise would be the manufacturing efficiencies.

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

What are the best practices globally that we could adopt and why are we so fixated on comparing ourselves to the Americans when their manufacturing sector has also been in decline?

[Linda Hasenfratz]

I think that it's a little bit natural to compare ourselves to the U.S. because they're our closest neighbour and on our doorstep and we tend to think of our economies as quite integrated. It makes natural sense, but I do think we should be looking in comparison to other economies, as well. I did provide a chart that came from McKinsey that shows that Canadian productivity has tracked almost identically, in fact, to G7 and other advanced economies over the last literally 50 years. We all lag behind the U.S. a little bit and I think we need to understand why.

I think a big part of it is the technology sector. The huge revenues and very low employee base in the U.S., I think, is really skewing the numbers. That tells us something. Let's invest more in our technology sector, which is already globally leading. We have the second-highest density of technology start-ups in the world next to Silicon Valley. That's huge. We have a lot going on. We're at the epicentre of what's happening around AI. The godfathers of AI are Canadian. We have so many start-ups and companies that have sprung up from that amazing ecosystem that are helping us and many other companies invest in productivity-enhancing technologies.

Let's support that sector more so they can really grow those revenues. I think that would help on the productivity side, as well.

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

That's very helpful. Thank you.