Industry and Technology Committee on Oct. 20th, 2025

[Sima Acan, Liberal, Oakville West, ON]

Thank you, Mr. Chair.

The comparison about productivity was very clear.

Ms. Hasenfratz, I had the chance to hear you on stage at Toronto Global Forum last week. I find your points on productivity very insightful. You note that Canada's productivity measurement framework may not fully capture quarterly performance of our advanced manufacturing sectors and that Canadian industries are indeed increasing in productivity compared to their global peers.

Given the number of significant roles in these sectors, could you elaborate on what specific industries are excelling and how current productivity metrics might be improved to better reflect their contributions?

[Linda Hasenfratz]

I think that the automotive sector is leading the charge in terms of productivity for a lot of the reasons I talked about earlier. The requirement for us to give price reductions to our customers every single year is something that.... We have five-, seven-, sometimes 10-year projects, and every year we have to give money back. That has trained the automotive industry to constantly be looking for ways to improve productivity, to reduce costs and create a lean culture, unlike any other industry. It's a big reason that I think it's so critical we maintain the automotive industry in Canada, both vehicle assembly and parts, because it brings this powerful, lean thinking and capability to the table. I definitely think that's a big part of it.

I really do recommend that we try to look more sectorally in terms of performance and understand what's happening underneath the data. There's no better way to make data meaningless than to aggregate it. When we put it all together into an average, you lose all the meaningful data around it. Let's understand what's underneath there. When we calculate productivity as a country, it's GDP minus inflation divided by total population. Let's understand the pieces of that a little bit instead of just concluding that productivity in Canadian business is bad.

I talked about the non-business sector. What about early retirees? A whole bunch of people retired early during COVID. They are all in the denominator too. If you are a working-age person and you are not working for a revenue-generating business, you're part of the problem, not part of the solution, to put it bluntly.

Let's understand that a little. Let's understand these other pieces that are driving the numbers. On inflation, the idea that every company could offset the dramatic inflation we've seen over the last few years in their pricing I think is also not realistic. It might make sense in certain businesses when inflation is 1% or 2% that we're taking that off the top, but when you have 7% inflation, as noted in the automotive industry, we are not putting that through.

We're making all these conclusions based on data over the last year or two that had some of these anomalies in it. Let's understand it better. Let's get underneath the data and dig into it to really understand what's happening. Try to get more information from businesses like Linamar and the port authority and other people who are doing dramatic things to improve productivity.

You brought up vehicle assembly. I know for a fact that some of the Canadian factories of the OEMs are their most productive in the world. The GM Oshawa plant is one of their most productive plants in the world, and Toyota is one of their most productive plants in the world. Nobody ever talks about that. We just talk about these aggregate numbers that look bad, when we should be focusing on the things that are going well.

[Sima Acan, Liberal, Oakville West, ON]

Thank you so much.

Mr. Jarrell and Mr. Stoddart, please feel free to add your comments to my questions.

[The Chair, Liberal, Ben Carr]

Ms. Acan, I'm sorry to cut you off, but we have seven seconds left and we've run over in a number of areas.

Mr. Ste‑Marie, you have the floor for two and a half minutes.

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

Thank you, Mr. Chair.

Ms. Hasenfratz, a few weeks ago, as part of this study, the committee heard from William Robson, the CEO of the C.D. Howe Institute. He told us that we had to look at companies' investment in machinery and equipment because, in his opinion, that's a key indicator of their ability to attract investment and productivity prospects. He also lamented the fact that, for decades, American companies have been making more investments in that area than Canadian companies have.

What do you think of those statements?

[Linda Hasenfratz]

I can only draw on our own experience. I can tell you, as I mentioned in my comments, that our investment in Canada this year is dramatically higher than in any other country we're operating in. We have 75 plants and 29 of them are in Canada. Well over half of our capital expenditures this year are based in Canada. We are heavily investing. In fact, we're getting close to record levels of investment in our Canadian operations.

Jim, did you want to jump in?

[Jim Jarrell]

Yes. I would also add that I think the uncertainty that's been talked about is part of the issue too. I would say that when we look at Linamar, we are the most productive in Canada, by far, in our own metrics.

Perception is also reality. When we're out dealing with our customers in the U.S, there's no question about the uncertainty creating longer-term issues. From our side, our view is to keep focused on our productivity side.

Our overall recommendation, I think, would be that we should really look towards a national productivity or manufacturing strategy that we can get behind. Really, regardless of where we are as Linamar, we have a whole country here.

To me, as I said earlier, the key things of partnering and creating clusters are really important, as are innovation, and R and D. Government is another massive area to look at: tax structure, incentives, regulatory, workforce and, again, improvement of workforce and the technical ability to create that. Certainly, last but not least, is advanced manufacturing around AI, robotics and analytics. It's very critical that we all focus in on that.

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

Thank you very much.

[The Chair, Liberal, Ben Carr]

Mr. Falk, you have five minutes, sir.

[Ted Falk, Conservative, Provencher, MB]

Thank you, Mr. Chair.

Thank you to our witnesses. I appreciated your testimony.

I'd like to direct my questions to Linamar. Certainly, the testimony you provided for committee here today would make you an outlier in terms of the things we've heard previously at committee. Your numbers are actually quite outstanding.

I do have a few questions, though.

We know that our Prime Minister took the headquarters of Brookfield and moved them to New York, along with 1,000 jobs. Also, we know from reports that Linamar just recently invested $300 million in Aludyne in the United States, in a market with only 4.3% unemployment, whereas you could have left it in Canada, at 7% unemployment, which would have given you access to a greater labour pool.

Can you help me square the round peg?

[Jim Jarrell]

Yes. I think that the acquisition of Aludyne is going to be beneficial for us in Canada. This is technology.

As I said, this is an entrepreneurial dream time. There's so much distressed...sitting out there, and if you have a strong balance sheet and you are a productive company focused on that, there is no end of opportunity. This Aludyne acquisition is all around structural components, casting technology that we do not have in Linamar; this was an opportunity to bring it in. This could feed up into Canada for our machining work.

[Ted Falk, Conservative, Provencher, MB]

You could have left those jobs here in Canada by building manufacturing—

[Jim Jarrell]

Actually, no. It's an acquisition.

[Linda Hasenfratz]

It was an acquisition. We acquired a business in the U.S. It wasn't a question about whether we are leaving something.... We didn't take anything from Canada.

As Jim says, we think we'll get machining work for our Canadian operations from these casting entities in the U.S. Aludyne is domiciled in the U.S. All that casting technology is there. It wasn't one or the other. It was opportunistic, as Jim says.

[Jim Jarrell]

Yes, and it's a technology we do not have in Canada. It's an opportunity to bring that technology to Canada, but there's also the offshoot of adding machining work back into Canada from that structural casting business. It's a great opportunity for us in Canada.

[Ted Falk, Conservative, Provencher, MB]

Hopefully it has some positive spinoffs here in Canada.

The other thing, Ms. Hasenfratz, that you mentioned several times was our bloated bureaucracy. What's your solution?

[Linda Hasenfratz]

I think we should cut government workers by 35% and get them into revenue-generating businesses. That would make an enormous difference in terms of productivity and generation of GDP. We've done it before when things get.... It happens in businesses as well. Things get bigger and you need to take a step back and look at what your overhead is as a business and trim back to a reasonable level.

I did send in a few charts; I'm not sure if they came to you. There's a chart in there that illustrates this idea of business productivity growing and government productivity is remarkably dead flat. From 2000, the GDP per government worker is completely flat. There's no productivity growth whatsoever. I'm just asking for productivity growth to come there as well, just as the business sector is actively doing.

[Ted Falk, Conservative, Provencher, MB]

Those are interesting comments, and we'll certainly take note of that. That's obviously a philosophy of efficiency and productivity you've employed at Linamar. Your investors would certainly agree with that. You've seen a 50% increase in your stock price in the last six months. They agree you're doing something right.

Like I said before, your productivity gains in the last 10 years are inconsistent with industry. You certainly are an outlier. I commend you for that. I wonder if you'd have any more advice for this committee that we can include in our report.

[Jim Jarrell]

Again, a national productivity manufacturing strategy, sitting down with businesses and manufacturing experts around this, would be really essential. I think that's a great place to start because we live it every single day. We're up against the U.S. companies every single day and other companies around the world. We have to be productive.

Again, as Linda said, we take 2% out of our cost every year to give back to customers. What other business does that? Everybody looks for price increases and inflationary issues. We pay labour increases every year. We pay extra to suppliers, but we have to give 2% back to our customers.

The price tag's going down with us, and other people want more. Again, relying on that or gaining some insight to that would be extremely effective.

[The Chair, Liberal, Ben Carr]

Thanks very much.

You have five minutes, Mr. Bains.

[Parm Bains, Liberal, Richmond East—Steveston, BC]

Thank you, Mr. Chair.

Thank you to our witnesses for joining us today.

Ms. Hasenfratz, you have something to add to that last exchange.

[Linda Hasenfratz]

We have a culture we've created at Linamar that is absolutely devoted to continuous improvement. We go out and look for waste in our business every single day, and every day we find something. That's not because we're fat and not lean. It's because there's always something there. Technology is always evolving. There's always something new—some new kind of tooling, some new type of processing, some new type of material—that we can incorporate. Trying to create that kind of culture is critical to creating the kinds of productivity improvements we've been able to make.

As Jim has said, trying to create a manufacturing strategy that is centred around that, and through which we can teach some of these techniques and tools to our business and our government, is a critical element.

[Parm Bains, Liberal, Richmond East—Steveston, BC]

Thank you so much.

I'm going to shift over to Ms. Young.

The port released earlier this year that 13% more cargo moved through the Port of Vancouver during the first six months of the year than during the same period in 2024.

In 2018, our government signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, mostly known as CPTPP. Can you talk a little about how important this agreement was in relation to some of those improvements and maybe even some of the other 15 different agreements signed with the Indo-Pacific, the ASEAN nations?

[Alexa Young]

First and foremost, particularly in the current context, it's important to know that we are far less exposed to the U.S. than most ports across the country. Some 80% of the goods that we export are already destined for other markets like China, Japan, South Korea, Brazil and Latin America, and the rest are destined for Asia, so any efforts to enhance those trade and diplomatic relationships across the Asia-Pacific are very welcome by the port and our customers across Canada.

Regarding those statistics that you mentioned, we had an excellent first half of this year and last year. We continue to hit record volumes. Some of that is because of the TMX pipeline coming online, but we're also seeing a very strong performance in the agricultural sector. It's a good-news story all around with more to come.

[Parm Bains, Liberal, Richmond East—Steveston, BC]

There was also an agreement with Ecuador recently. You mentioned Brazil and other Latin American nations, so could you shed some light on what more is being done there?