Subcommittee on Canadian Industrial Sectors Committee on April 21st, 2009

[The Chair, Conservative, Dave Van Kesteren]

Thank you, Mr. Myers.

Mr. Lake.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

I didn't intend to ask a lot of questions on oil and gas specifically, but I'm interested in what you're saying, Mr. Myers, about the impact of the oil sands on other parts of the country.

One of the real joys I've had as an MP has come from talking to colleagues and people from across the country and learning a little about their parts of the world, the industries and things that are a big part of their lives, and how different they are from what's happening in Alberta and the world I live in there. For example, Mr. Thibeault comes from Sudbury. They're having a tough time there in some areas, and I think it's incumbent on us to look for opportunities that might exist.

Maybe you could elaborate a little on the opportunities that might exist for companies, industries, workers, and families in Sudbury in an industry like the oil sands. It's still relatively strong compared to most industries, but moving forward it will be an area of tremendous opportunity.

[Dr. Jayson Myers]

I'd be pleased to do that.

We often see the oil sands as an Alberta resource or a western Canadian resource, and we forget about the commercial opportunities. We also tend to forget that 60% of the taxes raised as a result of oil sands development are paid to other jurisdictions across the country, other than the Alberta government. So there are huge economic and social benefits from this too.

With particular reference to opportunities in Sudbury, every year we run a buyer-seller forum for oil sands companies, the engineering procurement companies, and their suppliers in Alberta, with the idea of partnering Canadian manufacturers and companies with them. In March 2008, 1,200 companies attended this forum in Edmonton. This year we didn't have as many--maybe about 600--but they were there for business and to understand changes in the oil sands supply chain.

The economic development group in Sudbury took a delegation from Sudbury to Edmonton. Companies in Sudbury that are used to supplying mining developments are in an extremely good position because they do the process and environmental technologies, and the types of products--pressure vessels, machining, and maintenance equipment--are particularly suited to oil sands.

I think there's tremendous opportunity across northern Ontario and the Sudbury region. As the mining activity slows down, energy development is a source. I know of a number of companies in the Sudbury region that have benefited from the oil sands development.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

In some parts of the country, there's also a sensitivity to the idea of.... There are a lot of people who moved across the country to work in Fort McMurray, but for some families that's difficult to consider, because there are a lot of ties back home.

What you're talking about here actually doesn't require anybody to move. They can work in the industries they're in in the town they're from, in a sense. Is that right?

[Dr. Jayson Myers]

That's right. That was really the reason we developed it. This was a project we began with Industry Canada and with the Alberta government and the Quebec and Ontario governments. They're all still very active partners in this.

Companies in Alberta were experiencing many problems and time delays because they couldn't get the people to install or work on product. You could expand capacity in Alberta. Alberta companies at that time couldn't keep up with demand. The idea was to build on that expansion capacity and relieve some of the labour pressure by partnering with companies across the country. There was tremendous opportunity--there still is, because there are still labour shortages--except that what we found was a good example of some of the problems in interprovincial trade. The problems, particularly with the compulsory certification of trades, meant that if you were a company in Quebec trying to install equipment in oil sands development, you were caught in the same labour crunch, because you couldn't use your welders in Quebec. They had to be certified in Quebec to install the equipment. But that just gave some room. We sort of said that what we need are modular manufacturers. You don't have to install it. Just put it in place. It spurred, I think, a lot of innovative thinking about the type of products, as well.

We know that we've developed about $1.5 billion in business as a result of this last buyer-seller forum in terms of the type of opportunity available there and the matching companies. It was a tremendous amount of opportunity.

It isn't easy. And some companies might as well go to China as go to Alberta. It's the lack of knowledge, as you said, about what's going on and coming to the market and not knowing who the companies are, not knowing who the players are, and not knowing the pricing. But that just takes education. Good companies will be in the market. They'll figure out what the problem is, and they'll come back with a solution to the problem. That's where the opportunity for doing business lies.

[The Chair, Conservative, Dave Van Kesteren]

Thank you, Mr. Myers.

We'll go to Mr. Thibeault, please. This is our final round of questioning, and then we'll have to do some committee business.

[Glenn Thibeault, NDP, Sudbury, ON]

That's perfect. Thank you, Mr. Chair.

I also want to thank Mr. Lake for bringing up Sudbury, of course. I always like talking about my hometown. I had the opportunity to visit Penguin Automated Systems. I don't know if you're aware of Dr. Greg Baiden, but the stuff he's designing is also going to be used for mining companies and also in the oil sands.

As you mentioned earlier, when we're talking about Canadian manufacturing companies, companies like this have to look to other markets besides the U.S. We've seen many SMIs--small and medium-sized enterprises--become a growing force in Canada as an export-based economy. While many of them have been successful—and Dr. Baiden is one of them we can talk about—others have tried and failed. Maybe you can talk a little bit about how SMIs are doing in global markets—I'll offer this question to both of you—and about the particular challenges they face in this current economic climate.

[Michael Burt]

Certainly SMIs don't have the same infrastructure internally to help them in terms of identifying markets and companies in these foreign markets. You see in the SMI data that they're much less trade-intensive than average, and I think that's a key reason for it. They tend to work domestically, first, before they venture into foreign markets.

That said, there are certainly organizations, such as EDC, to help SMIs enter foreign markets, whether it's through consulting services to help them get a foothold in the market or through financing for their exports and these sorts of things. Given that many of the growth opportunities in the world today are in external markets, that's certainly something we'd like to see encouraged. As of this point in time, SMIs play a smaller role in foreign markets than average.

[Dr. Jayson Myers]

I would say that one of the big problems with small companies is that they're small and that we're expecting them to be experts in trade, experts in regulatory affairs, experts in HR, experts in product, experts in everything, and they just don't have the resources to do that.

My experience is that, especially in the manufacturing and technology companies, you have innovators or owners of a company who really know their product and really know their technology, but they're not necessarily the experts on selling that technology or that product around the world. Some clearly are, but I think there is an issue, particularly as companies transition from an economy where, let's face it, it was really easy to do business in the United States. It was really easy when you were part of a supply chain and pretty much all you had to do was produce to specification.

Now companies are expected to develop new products for new markets. That requires not only good marketing, experience in international sales, and financing, of course, but you also have to realize that you don't just take a product that you sell here in Canada and easily export it to other countries, or take a product that you produce in Sudbury and think that the oil sands majors are going to find that product useful. A large part of it has to do with understanding what those customers want and making sure you can redesign and develop the product that meets those specific needs. And it's always a question there.

We don't really measure our trade very well because Canadian small companies have made use of trading houses around the world. Those trading houses have traditionally been the large multinational companies that are their customers, and they take their product everywhere around the world. Then you have a small group of companies that have their own particular product and their own technology that are developing and doing extremely well in international markets.

But it's a major problem, and it is financing, it is export support, and it's finding the opportunity there. I think a very large part of it is making sure that the people in the companies think their business isn't getting product out the door; their business is providing a solution for customers. So you have to understand what customers around the world want and how your product or technology can work into that market opportunity, and then do that better than anybody else in the world.

[The Chair, Conservative, Dave Van Kesteren]

Thank you, Mr. Myers.

Colleagues, that wraps up our time.

We could listen to you for much longer. We do have to suspend for a few minutes to give you a chance to leave. That's sounds like an unflattering way to end this session, but I do want to thank you. I repeat, this has been most informative. There were excellent presentations by both groups, and I know this is exactly the sort of information we're all looking for so that we can move forward with this report. So again, we thank you very much.

We will suspend for a few minutes, colleagues, and we will resume in camera.

[Proceedings continue in camera]