Thank you, Mr. Chair.
Esteemed members of the committee, let me preface my presentation, if I may, by echoing complete agreement with Mr. Paton's analysis, which is truly a “forest from the trees” perspective on manufacturing in Canada and what's needed. So I won't spend much time saying similar things here, because we in the Canadian Association of Railway Suppliers agree 100% with the comments made this morning.
First off, what I'd like to do for you is give a brief overview of the association and the membership and a little bit of a scope of the railway supply community in Canada, because I think it's not a story often told. Then I'd like to give a bit of an overview of the presentation, which I believe I submitted in time to Ms. Tittley and which you all have a copy of. I believe it has been translated, so I'd really like to focus on this, if everyone has a copy.
The Canadian Association of Railway Suppliers represents about 400 companies supplying the rail industry. This is without the tier 1 folks, so we don't include steel producers or petrol companies and whatnot. These are people who build and provide software to the railway operators so they can be, of course, the most environmentally friendly mode of transportation in North America.
In the last couple of years, we have had between 50,000 and 60,000 jobs in Canada directly related to the rail industry. Domestically, on average, we do about $4 billion in sales per year, and 80% of those folks in the rail supply community generate about $5 billion in export sales, for a total output of $9 billion, so we are quite important to the economy.
I'll start with the challenge. I'd like to go over the short-term challenge that we're facing here and then go into a solution and a proposed implementation plan for our specific sector. We've even priced it out, too.
On the short-term challenge, we have been hit incredibly hard, as have most manufacturing sectors. A lot of our large OEMs have had to furlough thousands of jobs just to stay competitive. A lot of these folks are now on a part-time basis.
You may ask why that's happening when we're investing in public transit like we've never done before. However, I'd like to preface that argument by saying that transit and freight should be treated separately but in the same sector. The public dollars are going into transit systems with transit authorities in provincial dollars through federal transfer payments, but on the other side of things, on the freight rail, we're seeing a lot of our folks in really very tough shape, some in bankruptcy protection and some out of work.
These aren't small widgets that they're building. At the end of the day, these are large locomotives with some of the most state-of-the-art technology. We're developing hybrid locomotives and environmentally friendly locomotives as well, using chemicals to produce track lubrication. I don't know if you've ever seen these. They deal with friction, where you get little squirts of this non-harmful substance and the beads move across the rails. It's amazing how much efficiency you can create off that chemical.
Just as you were mentioning about the interdependence of sectors, we have developed hybrid locomotives where we're using a lot of battery technology, and dynamic braking technology as well, to regenerate power and use it more efficiently. We're not laggards here. We're environmentally innovative in the realm of transportation technology.
However, the past year has had a very chilling effect. As I mentioned, a lot of companies have been hit very hard, very profoundly, such as National Steel Car in Hamilton, Electro-Motive Diesel in London, RailPower in Brossard, near Montreal, and Brandt, the largest private company in Saskatchewan. We've estimated that we've lost close to $1.2 billion in sales to date in a year over year comparison with 2008 levels. By the time this report was written initially, we knew that on the private side CN and CP had $400 million in reduced capital expenditure plans. Now we're seeing that number growing exponentially.
It's not that they're not investing; it's that they're delaying investment. The money is there to invest, but the problem is that when our shops aren't generating orders, we have to let people go. We're seeing this in a lot of areas. However, rail typically spends about 20% of revenue on infrastructure and rolling stock. This is good news for our sector. The problem, as I said before, is that it gets delayed, so what happens to our shop in the worst-case scenario is that we have to fold and go somewhere else. But we know those orders are coming back,so we have to hold fast. We have to make sure we survive the next two years, or three years, if that's the case.
If I may, I'll talk about the international picture. We've seen an increase in international growth. This is where it's really important, because a lot of governments have nationalized rail systems for freight and transit. That's where the money's being pumped in right now across the globe. Countries like Oman and Qatar, where they have never had rail before, are starting to invest.
Whether it's for a strategic need or part of an economic stimulus, or maybe a bit of both, it doesn't matter. There is business to be had over there. We talk about jurisprudence, but it's not dominated by protectionism. Whether we call it protectionism by this name or another name, we know that when it comes to procurement, there are some markets we can enter as Canadians and some markets we have no shot at. We can bid, but there's no way in town that we are going to be able to do that.
So we really have to go after this strategically. We saw 9% growth between 2006 and 2007 and we have about $116 billion worth worldwide. These figures are from a report that just came out on the future of rail supply. Internationally, we're looking at a 2% or 2.5% annual growth. We need to be a part of this. We can't let this sector slide away from us.
Not only are we trying to help our OEMs, but we know that 55% to 80% of their sub-component suppliers are Canadian. If they're building freight cars, using hopper cars for grain, or building national steel cars and tanker cars for some of the chemical products, not only are we helping OEMs, but we're helping these sub-supplier components and the other 400 companies that are adding to the industry. There is a trickle-down effect.
This is what we're up against. What is the proposed solution? Obviously, I don't think I need to go into figures on how environmentally friendly rail is as a mode of transport. We do 75% revenue tonne kilometres and we do between 3% and 3.5% GHG emissions. That's quite astounding. How were we able to get those numbers? The railway operators will tell this great story to death, and they're right to say this, but it's our technology that has enabled this. That technology has been developed in Canada. We want to see that trend continue.
With the proposed solution, we were hoping to get not only the domestic demand that we see is going to come around, and it will, but.... I'll throw this out. There are 300 locomotives parked right now. They've been taken out of service. There are over 20,000 freight cars out of service right now. If we're ever to upgrade, this is an ideal time to do it. They're out of service so we don't have to take a hit on capacity to make these more environmentally friendly.
A lot of these locomotives and switcher locomotives are in the yards closest to the communities, and oftentimes they're 30 to 40 years old. We have the technology to retrofit these things and make them up to 60% to 70% more efficient. This is the time to do it. By doing so, we would get our production facilities back in line, and we would be able to repatriate a lot of these lost jobs.
How would we do that? To get this program going, we have put together an idea for a railway manufacturing stimulus program. It's envisioned, if you will, as a one-time funding program between Canadian OEMs and the Government of Canada to help to offset the cost of rail equipment made in Canada with a recommended two-year lifespan. The program would increase production activity in Canadian OEM facilities, resulting, obviously, in job retention and creation.
Here's a spinoff effect. I talked to all of my guys and they said if we're able to get up to capacity.... Obviously, they have a lot of union responsibilities, so they'd bring back those folks who have been furloughed or who are part-time, but if they can go above and beyond that and grow--because we know that we have a growth industry here--we can transfer the lost jobs in the auto sector with very little retraining and get them working again in key areas in Quebec, Ontario, and Alberta.
We're saying that such a program would be implemented on a per unit, price preference basis. Procurement order applications would be placed with government authorities by Canadian OEMs with a partner North American railway operator. Such a fund could be managed through Industry Canada, with a framework similar to that of the structured financing facility, SFF, for Canadian built vessels and offshore marine structures program. I won't get into that structure itself, but it's an example of what's already happening.
There's also an example that we're using to cost something. We don't want to just talk about some challenges. You talked about challenges and solutions in the 21 recommendations that you proposed in order to deal with some of these issues and we're asking you to make sure that all of those recommendations are dealt with to benefit all manufacturing sectors.
In this case, I also want to make sure that we propose a solution. The Ontario government's Canadian steel preference policy puts together 10% price preferences with Canadian structural steel products identified in bids. We believe that if we did something similar it would take $120 million and we could get our production facilities up and running. We know it's not a small amount of change, but this would put us back into the game internationally and domestically.
Thank you very much for your time.