Industry Committee on Oct. 24th, 2006

[The Chair, Conservative, James Rajotte]

Mr. Georgetti.

[Ken Georgetti]

There's an expression in Latin, res ipsa loquitur, which means the facts speak for themselves. We're seeing record profits. Corporate salaries have never been higher. There's more money in the bank accounts of corporations. We've lost more jobs than at any time since the last recession. The productivity gap is growing. Real investment in machinery and equipment is down.

The system cannot work by itself without intervention of the representatives of the citizens of this country, and that's the government. Business only works when government works at the same time.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

The Europeans and Americans have implemented safeguards. In the U.S. and European economies, was any negative impact subsequently felt on other sectors of the economy? That possibility haunts the Canadian government.

[Lina Aristeo]

Je vais vous répondre en anglais parce que.... Look at the effect of safeguard measures on the apparel industry in the United States. For the first time in over twenty years, there was an increase in jobs. This is a time when we're talking about decreases, closures, losses.

So it has a definite positive effect. The workers of the industry cannot understand why Canada is not acting. The United States is not a country that is going to help someone else for no reason. They have put in place these safeguards. So has the European Union. We cannot afford not to act. The workers here need us to act. We're not talking about a luxury. We're talking about a need.

[The Chair, Conservative, James Rajotte]

Thank you.

We go now to Mr. Van Kesteren, for six minutes.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Thank you for joining us.

I have a question for Ms. Aristeo.

You stated that you need a little bit of time for the switchover. Am I correct in understanding that you're not so much against having trading partners, you just think we're doing it a little too quickly? Did I understand that correctly?

[Lina Aristeo]

I'm not saying it's going too quickly. I'm saying the two years that we still have at our availability should be used. There is no reason for it not to be used.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Mr. Vaudreuil, you have given us some interesting statistics as well. I hear from you a little bit more of a positive statement. Very quickly, what is your opinion of the future of manufacturing in this country? Is it as grim as some of the others? Do you think...?

[François Vaudreuil]

That's what I think. The situation and future of the manufacturing sector in Canada are really a major concern and that's why we have to act quickly. We have to improve the competitiveness of our businesses, particularly through productivity.

When I say productivity, it's always from a perspective of a kind of sectoral work reorganization that respects the people who create decent jobs.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

On that point, I understood it when you said it. You think a lot of the solution is going to be more cooperation between the manufacturing sector and labour. That's definitely a path that labour.... That's what I thought.

Mr. Garcia-Orgales, you quoted us some parallels between your country and the last. You spoke about the high dollar, but if my memory serves me correctly, the Argentine government didn't protect their dollar. Didn't they have rapid, runaway inflation that pretty much led to economic ruin?

[Jorge Garcia-Orgales]

It's exactly the contrary. During the time of crisis, the Argentinian currency was of high value. It was one to one with the Canadian dollar, and that was what destroyed the whole industrial base, to the point that after the crisis, just to start re-engaging the economy, they had to move the Argentinian currency to three pesos for one dollar, meaning the value of the Argentinian currency was reduced by 66%.

The same model--not to the same intensity, but the same model--is being followed by the Bank of Canada, meaning they are keeping the Canadian dollar a bit too high. That is affecting the opportunity for Canadian manufacturers to compete internationally.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Mr. Georgetti, I want to talk very briefly about free trade.

You're suggesting that it leads to unbalanced trade and some problems. How do you explain our low unemployment? We've heard some pretty sobering statistics from you as well, but I think the last government statistics on unemployment put us at the lowest level since 1972. Briefly, how do you explain that?

[Ken Georgetti]

I explain it, as I said, in the growth of the low-wage service sector, which doesn't support and sustain the economy. The problem is that the jobs we're creating don't pay enough to support a family. People are actually having to work two jobs, and they have to work longer and harder. Both members of families have to work, hence the reason we argue for day care centres.

The reality in Canadian life today is that the jobs we used to enjoy when we were growing up are not available any more for younger families. They have to take lower wages; hence, there is a lower standard of living, even though the economy appears to be prospering. The gap in the middle class is contracting, and we're shrinking. That's not good for our economy.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

We've had a number of witnesses here, and they tell us that our auto production in Ontario is far higher than it has ever been. How do you explain that? Those jobs pay pretty well.

[Ken Georgetti]

In the last three weeks, I don't think that's the case; we're losing jobs in the auto sector. We're losing jobs in the auto sector because we're attempting to sign free trade agreements with countries like Korea.

There is no level playing field in this notional free trade agenda. That's the problem. If we had free trade, how come we had all those duties laid on our softwood lumber? I thought we had free trade in lumber with the United States. We were promised that playing field would be level, and it's not; if it were level, we'd have a better chance.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

We shouldn't get into that. It didn't fall under the free trade....

What do you think? Do you think the future for manufacturing in this country will be a commitment from labour and from management to work together?

[Ken Georgetti]

We do now. I agree. There needs to be a third level, though. There needs to be a collaboration from all levels—from labour, from management, and from government. I think there is a bright future if we do it right, but just leaving it to the market doesn't work. There needs to be intervention on our part. If we left it to the market, we wouldn't get wage increases. We have to negotiate. They don't come for free. We were told in previous governments and this government that cutting taxes would lead to more investment. It hasn't happened. There need to be some rules attached to that. The CME agrees with us on that. There need to be targeted incentives for companies to reinvest and move things up.

The main basis of all this is in competition, frankly, as anybody can buy a piece of machinery. We have to have a highly skilled workforce, and unfortunately, we're not investing enough in Canadian citizens. Most kids who graduate from high school and who go into the blue collar jobs lose 25% of their skills in the first five years in the workplace. That means the workplace is not stimulating enough to keep those skills up to a level where they can move into new jobs. We need to do more in that regard, and I don't think we are.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Am I out of time, sir?

[The Chair, Conservative, James Rajotte]

You're out of time, Mr. Van Kesteren. Sorry.

Thank you.

We'll go to Mr. Masse, for six minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

To start, I'm going to clean up a couple of issues here.

First, southern Ontario, where I come from, has one of the highest unemployment rates in the region and across this country, even compared with the United States. Actually, we're having our manufacturing jobs literally obliterated. In fact, the only reason we had more auto production happening outside of Ontario, compared to Michigan, for the first time ever, was because Michigan was retooling their plants. They were down.

What's happened is the Ford Motor Company, for a recent example, is actually cancelling plants in Windsor, Ontario, as well as in other parts of Ontario, and it is actually putting new product in Michigan. So what happens when that new product goes to market is we will have a greater gap between the two, coupled with the border...and the issues of lack of progress on that. We have significant decisions that have already been made that are going to cripple the industry even further.

I do want to talk, though, and get a specific response about one of the issues that I think is unconscionable. The current Minister of International Trade, the former Minister of Industry here, promised me on two occasions that he would have a national auto policy, one that would be actually tabled in the House of Commons. He backed away from that completely. In fact, he has misled, I believe, this committee and also me, in the House of Commons, under questioning, and he is now pursuing a deal with Korea in terms of free trade.

How do you view that this is going to affect your industries? I'm absolutely shocked that we would continue to go this route, given the current status quo we have right now.

[The Chair, Conservative, James Rajotte]

Mr. Georgetti, do you want to start off?

[Ken Georgetti]

Thank you.

As we see with other trading agreements, they seem to be focused on some key elements but miss others. We think the lack of enforcement of regulation and the lack of enforcement in environmental and human rights legislation to be a key factor in trading advantages of countries that we signed notional free trade agreements with. In terms of the auto industry itself, we think a free trade agreement with Korea will have an 18% negative effect on the Canadian auto industry, and the parts that supply that auto industry, in the first five years of this notional free trade agreement. So it will have a huge, devastating effect, just in auto.

Mr. Masse, I'm sorry, I don't know the details of the rest of the industry. I'm sure my colleagues would be able to tell you, particularly in their own industries as well.

[Jorge Garcia-Orgales]

In our case, we represent workers in steel and manufacturing and we represent workers in auto parts. It's quite clear that cars that are coming into Canada, made in Korea, will affect our members, because they have not been able to produce the auto parts or the steel needed to make cars in Canada.

Parallel to that, I want to mention that our union in the United States is supporting the auto workers union in what they call a “Marshall Plan” for the automobile industry. That, essentially, is calling for the Government of the United States—and I think we have to do something similar here—to invest and support an investment in high technology...a new automobile industry. We are not calling to compete in cheap imports; we are calling for building an industry that will be green, recyclable, and with new technology, because we think there are even more jobs in a green industrial policy than what it is in just keeping a traditional industrial policy in place.

[The Chair, Conservative, James Rajotte]

Mr. Masse.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair. I'll move on in my questioning.

I've been here long enough to know--I don't know if I'm paranoid--when my questioning sends a parliamentary secretary out of the room with two people.... I'm sure you'll have further comments on this type of issue in the future--on the issue in Korea.

I do want to follow on my questioning, Mr. Chair. And actually, this is something that you had promoted over a number of different years--newer technology and moving innovation from the shop floor to manufacturing in our community. I think we actually have a wonderful opportunity, if we seize upon it, with some of the new, greener technologies out there. If we can move that from the classroom to the manufacturing room, it's very important. I guess to do so, though, we have to provide some patent protection, as well as some protection over knock-offs and other types of products that are abused internationally and then shipped back to Canada.

What more can we do to incentivize the move from the classroom to manufacturing? Second, once we have those manufacturing jobs, what can we do to prevent other countries' harmful practices when they use knock-offs?