Industry Committee on Nov. 20th, 2006

[Brian Masse, NDP, Windsor West, ON]

Any official response?

[Don MacLeod]

I had one sort of...I'll call it a response, not an answer. You know how you can send a paper back that is a response but that doesn't shed any light whatsoever? I had one of those to an e-mail I waited for from an official for about six weeks or so.

[The Chair, Conservative, James Rajotte]

Can we get a copy of that?

[Don MacLeod]

Sure, yes, I can send you copies of all the correspondence.

To be fair, what we're asking for really is for the government to have...and it's difficult. When you go to meetings, one person speaks but about twenty people are in the room. I don't know what they do; they go back to wherever they go back to, make notes, and say no, basically. Or that's my impression.

It's hard to make anything happen in a coordinated fashion in the federal government. It's all overlapping. You have fiscal policy issues. You have customs and revenue on questions of vessel origins, and duty and tariff. You have questions of industrial analysis, and questions on where the international trade department can overlap on other people's toes and so on. It's difficult to get a coordinated effort.

Essentially we need a mentor to ask why we are doing it. Nobody has shown me a good reason for doing it. They didn't five years ago and they aren't now.

[Brian Masse, NDP, Windsor West, ON]

It is difficult, but Canadian jobs are at stake here. There's a responsibility for due diligence.

Please, Mr. Irving, go ahead.

[Jim Irving]

I would add that as recently as a month ago we put quite a formal presentation on for Minister Emerson. We'd be glad to send several copies to whoever you designate.

[The Chair, Conservative, James Rajotte]

I can distribute that.

[Jim Irving]

Okay.

That will give you quite a concise update. It qualifies the jobs that are at stake, the issues, and some of the problems we're having.

But this is not new. It's so old it has whiskers on it. This thing has been around a long time, and should be dealt with.

[Brian Masse, NDP, Windsor West, ON]

You briefly mentioned non-tariff barriers. I think it's important that we hear a little bit more about those.

[Don MacLeod]

You have to appreciate that if you look at the North Sea there are two distinct sectors: there's the British sector and there's the Norwegian sector. We work happily in the British sector. It's open. It's under EEC rules in terms of procurement and so on, and that eliminates protectionism. In the case of the Norwegian sector, nobody works there unless there is absolutely no Norwegian ship left to do the job.

It's very difficult to regulate a mentality. You have to understand where shipping in the offshore stands in the Norwegian mentality. There are four million people in a unitary state in a small geographic area. It's the equivalent of oil to Alberta, of the auto sector to Oshawa, of pulp and paper to certain regions of Quebec, and so on. It is extremely important, and for 30 years they have built a well-honed, highly efficient, extremely protected marketplace through the regulatory process. There is no tariff, and there's probably nothing in writing that prevents foreign operators from working there, but they never do.

They have Statoil, a government-regulated oil company, which is 80% Norwegian government-owned. They participate in the development and have the right to back in and have involvement in the procurement process and in the approval of development projects. In addition, they have a petroleum directorate, which is a government agency similar to our offshore petroleum boards, which regulates development of the offshore. So when a proponent comes forward, they put a development plan together, which includes all kinds of things like environmental considerations, the method of development drilling, job scope, content, and so on and so forth.

The Norwegians are very careful in giving approvals to projects that are in the interest of Norway. If a developer comes forward with Norwegian ships, Norwegian offshore-constructed platforms, etc., it gets the nod. Very often there will be delays in development if there is not capacity in the Norwegian sector. Let's say the shipyards are completely full. Then that project won't get approved until the next cycle, in six months or a year, when there's space in the yards. I call it Norway Inc., and it's a product of homogenous culture, mentality, and the importance of the shipbuilding sector and offshore oil and gas to that country. They don't think that anybody can do as good a job as they can, and therefore they push it.

You just have to look at the British sector and the Norwegian sector. The Norwegian sector is built, run, manned, and operated by Norway. That's it. When you go to the British North Sea sector, it's open to the world.

[Brian Masse, NDP, Windsor West, ON]

Do I still have time?

[The Chair, Conservative, James Rajotte]

We're at about seven minutes and 15 seconds now.

[Brian Masse, NDP, Windsor West, ON]

I'm okay. I can wait.

[The Chair, Conservative, James Rajotte]

We'll go now to Monsieur Lapierre.

[Jean Lapierre, Liberal, Outremont, QC]

Thank you.

I'd like to come back to jobs in the manufacturing sector. Mr. Irving, I have to tell you that I know about jobs staying here. My father was a mechanic for Irving Oil all his life in the Magdalen Islands. The importance of a job I can understand. When we hear people from the rest of the country speaking of manufacturing in Canada, they talk about 250,000 jobs being lost. In this part of the world, what are the prospects in manufacturing? Do we have the same job losses, or has it been steady as in your own company? Regarding the manufacturing aspect of your company, what are the prospects for the future?

[Jim Irving]

I can tell you, I mentioned briefly the shipyard we had in Saint John. We had 3,500 people there for 15 years. We closed it five or six years ago. It's gone. The world changes, and things happen. In some sectors, if there's the right mindset in both government and industry, you can reinvest, and you can make more value added. There might be fewer jobs in that particular plant, but the plant will go on making higher-value product and so on.

Are there going to be job losses in Atlantic Canada? There is no question about it. We're close to a 90¢ Canadian dollar, and today oil is almost $60 a barrel. Those pressures are too great for the average exporter and just an average operator. We have to do things differently.

For a lot of things in life, you can take a certain amount of pain for a certain period of time, but you can't take it for too long. People have had enough. The threshold of pain, I think, has been well passed in a lot of sectors, especially if you're competing on the global market. If you're competing with other Canadians in the marketplace, they have cost pressures that are similar to what you have. This may even be the case for all of North America, but they're not the same on a global basis. We will have more job losses, I think, under this current scenario.

[Jean Lapierre, Liberal, Outremont, QC]

Should we as the Government of Canada have some type of industrial policy by sector? Right now we're saying let's have a free market and everything, but we see jobs going. With the competition from India, Brazil, and China, obviously it's going to get worse. We don't seem to have an industrial policy at all, frankly. Do you think we should look at that sector by sector, instead of having an overall policy?

[Jim Irving]

I'm hoping that's what we're helping to do today. You're hearing today from this part of the country, and I'm sure you'll be hearing from other parts of the country. On this type of trip, you must be.

We need to have a policy. I understand it's difficult; when you have the oil sector doing so well in Alberta, it perhaps colours everybody's thinking. But there are other segments. Everything's on the average. We all understand about averages, with high numbers and low numbers, but there are some very low numbers in some sectors of this country. The unfortunate part is that when those jobs are gone in those capital-intensive businesses, it's a long time before they come back. Either that or they just don't come back.

This is not a call centre I'm talking about. When people are spending billions on automobile plants, or on pulp and paper mills and so on, these are big capital investments that are made for the long haul. When they're gone, they're gone.

So I agree; industrial policy, yes, let's get very focused on it.

[Jean Lapierre, Liberal, Outremont, QC]

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you.

We'll go to Mr. Shipley for five minutes.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Thank you, Mr. Chairman.

I have to tell you, this is really interesting. I'm glad we're doing this type of tour.

On EFTA, you raised some discourse about going back and starting to talk. Is there any indication of...?

I'll step back a bit. You were never offered any analysis. Have you been told, in the discussions you've had, that there would actually have been some analysis to determine the value--or not--of the EFTA?

[Paul McEachern]

Are you asking me if an analysis has been done?

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

No, I'm asking you if you got an indication when you met with ministers that some analysis would be forthcoming based on--

[Paul McEachern]

One would hope that you have something before you go into negotiations. There must be internal analysis, there must be, or I would pray there would be. We just have never been able to get any indication that it was done in that type of detail. I really have not been given any reason to believe that this type of articulate analysis was done and presented before ministers of current or past governments.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

I understand that. But with regard to the future, you were saying that you were concerned because they were going to bring it back to life again. Was there any indication to you that if they do, there will be some analysis coming to you?