Industry Committee on Nov. 20th, 2006

[Charles Cirtwill]

I'd come back to the argument that if you take a look at the way R and D investment happens in other economies that are doing better than us in terms of improving their productivity or in terms of growing their GDP, what you see is a mismatch between where our dollars go and where their dollars go. You only have to look south of the border to see a really bad example.

We've basically been trying to close that productivity gap with the United States for probably ten years, and they've been widening the gap every step of the way. One of the things you see as an indicator of that is where they put their R and D money. They put it in the private sector. They encourage folks like Maritime Steel to actually start being creative themselves and doing the R and D on site.

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

How much time do I have, Mr. Chair?

[The Chair, Conservative, James Rajotte]

You have two minutes.

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

Elaborate for me. You spoke about the money that was going to the academic sector, and you felt that universities were missing the boat or something. Just elaborate on that for a second time.

[Charles Cirtwill]

Basically, if you take a look at the R and D expenditures in Canada, the vast majority of them are by either the government sector or universities. That would be research and development in chemistry departments or physics departments, or that kind of exercise. Quite honestly, that research is valuable. It delivers movements going forward. But if what we're looking for is immediate return in productive capacity and the production of products that are then saleable in the global marketplace, the universities themselves say routinely that is one of their biggest challenges to actually take all that research that's been funded and financed and find a way to turn it into commercial products.

Every now and again—for example with RIM—they have a huge success, and that's great, but they have already identified to themselves that doing so is a challenge. That is why they've gone out looking for people like Maritime Steel to work with them, because they don't have the entrepreneurial mindset. They think creatively, but they need to have someone else to help them make that into a product that is then going to be of value to you and me when we're sitting in our living rooms. That's the focus there.

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

Could somebody just quickly comment? Do we need a national road policy? Is that what we're missing? Do we need a policy?

[Charles Cirtwill]

We have to have something beyond just a national road policy. We actually have to start treating transportation as an industry in itself, and, quite honestly, if we grow that industry, we not only service our own needs but we actually facilitate servicing the needs of the Asian market, the American market, and the European market. We're ideally situated to be a trade facilitator for all of those and to take a little for ourselves along the way.

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

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you.

We'll go to Mr. Masse.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

Mr. Cirtwill, the Canadian Council of Chief Executives testified in front of this committee and said that we actually had to make sure our public service was stable because it was actually affecting their ability to access government programs and have stability in their relationships. You're saying we should tap into them and move them into the private sector. Your analysis is different from theirs. Where would you actually get these people from? Where would the cuts be to move those people out of the civil service into the private sector?

[Charles Cirtwill]

I wouldn't necessarily agree with the suggestion that we need to refocus our public service, and that downsizing it significantly would translate into a public service in disarray or a public service that is not stable and consistent. All we have to look at, for example, are some of the things that government does that it shouldn't do. For example, here in this province, we still run government liquor stores. We still have a significant portion of our private sector doing retail work.

We have all kinds of departments for policy branches and that kind of exercise, which are redundant. They repeat the same process that other agencies within other branches are going through. On the regulatory side, for example, we have a model here called Service Nova Scotia, which saw a significant refocusing of our resources and the ability to do more with fewer people, which didn't translate into any instability or confusion in the private sector. In fact, it clarified things. It made it easier for folks to access government programs, and it made the rules better.

[Brian Masse, NDP, Windsor West, ON]

What type of analysis have you done, though, on those types of workers who actually fill the gap that you're talking about in terms of the needs out there in the private sector? Privatizing liquor stores and having the cashiers and stock people.... That's not going to significantly affect what you're proposing, I don't believe. Have you done that analysis?

You're also talking about policy branches, but that's what we heard from the representative of the Canadian Council of Chief Executives, who said that they were losing these people, and they couldn't communicate any more to get access to government programs. If you take those policy people out, what do we do then in terms of trying to access government programs that are supposed to be helping business, like Picarn and a series of other operations?

[Charles Cirtwill]

In terms of matching specific skill sets within the public service to specific skill sets within the private sector, no, we haven't done that kind of analysis. What we have done is taken a look at what the needs are in the various sectors and where the current labour pool is. What we're finding is that in jurisdictions that have robust economies, that have a private sector that's not facing these kinds of immediate labour shortages, they've managed to move quite successfully many of those public servants into the private sector. As I said earlier, in most cases those skill sets are readily transferable. We have all kinds of evidence of senior and mid-level bureaucrats moving quite effectively into management and operational roles, moving into situations in which they facilitate the exercise of entrepreneurial systems.

That's not to say investment in training will not be required to move particular types of skill sets, but I think the idea that what the private sector needs and what the public sector needs are somehow fundamentally different and that those people can't move between the two economies is just not based on fact.

[Brian Masse, NDP, Windsor West, ON]

No, it's not; you're absolutely correct. In fact, this is transferable: people go in and out of both services. But it's just that what you said is a rather big departure from what we've been hearing from other delegations.

Mr. Durdan, could you expand a little bit on some of the research you've done, especially in the steel industry, and some of the advances that can be made through research and development there?

[Robert Durdan]

I'm glad you asked that question. I wanted to respond to Mr. Van Kesteren's question earlier.

Maritime Steel's division in Prince Edward Island, where we do stainless steel work, has developed a continuous cooker for the seafood industry, for example, which continuously processes shellfish and dramatically improves the productivity of a fish plant operation. We've developed that on our own; we had little or no help from a government agency. We have come to the point where we're likely to patent it. Our prototype is still in the shop. We've sold two other units and we're about to build the third. By the third one we got it right; we know how to build them now. We expect to be able to sell the product internationally. In fact, we'll be marketing it in Chile in the coming months.

We've also entered into a partnership with a British firm in developing a stunner for shellfish. When seafood is cooked these days, you'll find the market is demanding uncooked lobster tails. If you went into a processing plant and saw a lobster trying to crawl around without his legs and without his tail, you would think that might be deemed to be inhumane. What our stunner does is allow that animal to die quickly and effectively without having to go through that kind of processing. That product is under development now.

We've been working through ACOA—though we haven't got this off the ground yet—trying to rejuvenate the steel industry in Nova Scotia and working with the steel foundries association in the U.S. and the Canadian Foundry Association to do some real research and development here at Dalhousie in partnership with ourselves. They have a scanning electron microscope that we can't afford; we have a mass spectrometer that they don't have. So we're sharing that high-priced capital equipment and our expertise; we have three metallurgists on staff, two from Quebec with master's degrees, and another fellow. We're ready, willing, and able to get on with some really effective R and D. But I must admit, I don't know how to go about it; I don't know how to approach the government and take advantage of what's out there. It may be my fault for not educating myself well enough on it, but I would like some help, because we've got a real opportunity to direct our capital investment in the future into areas that are going to dramatically improve the population.

We've grown the foundry threefold in the last four years, and we've done that because we've become very efficient at what we do. We've put some capital into the process and we've educated our workforce and we've partnered with our unions to become more effective. So we're on the move and we want to continue to do that.

[The Chair, Conservative, James Rajotte]

Okay, thank you.

We'll go now to—

[Brian Masse, NDP, Windsor West, ON]

Maybe Mr. Durdan could get in touch with one of our representatives here for government services about what programs are available.

[The Chair, Conservative, James Rajotte]

Okay.

Mr. Carrie.

[Colin Carrie, Conservative, Oshawa, ON]

Thank you very much, Mr. Chair.

First of all, I'd like to thank the witnesses for your presentations. I think they're among the best we've had. I say this because what we're looking at with this manufacturing study is what government can do to help the manufacturing industry right now, not just what government shouldn't be doing.

I like the fact that we have some maritime ingenuity. We've got some thinking outside the box and we've actually had some new ideas today. I really do appreciate that, and I hope you're able to give us a written paper or something that gives us a little more detail.

I'd like to say I've heard different things from our witnesses. I don't want to contradict Mr. Masse, but I've heard that industry wants a smaller government; they want decreased regulation, decreased government intervention, and decreased paperwork, so they can get on with business without having the big bureaucracy holding them back through each stage of the game.

Mr. Cirtwill, I know you wrote a paper in 2001 about portability, in which you talked a little bit about partnering with the public and private sector. This is something that really excites me, because I've seen how other countries do it. They work together: you've got the government, industry, and academia all working together, and everybody benefits. I'm wondering if you could expand on that and tell us a little more about your ideas on that.

[Charles Cirtwill]

The portability study wasn't necessarily focused on the concept of cooperation in the way you describe it. In fact, one of the arguments we made in portability was that the approach to the way we were managing the ports, particularly the ports in Atlantic Canada, wasn't matching the way ports were being operated globally. We had to operate more on a private sector concept: there had to be a profit-driven approach or at least a cost control approach, and we had to start acting as if we were selling a product in the global marketplace, and that meant finding connections to the realities of global trade. The reality of global trade is that it's driven by large multinational organizations that control their trade either through ownership of a shipping line or ownership of a series of ports.

Our argument for Halifax is if they wanted to meet the goals and objectives they've been setting for themselves for the last one hundred years, they need to find a way to bring those partners to the table. In fact, Halterm was just purchased by one of those international players. Ceres is our second terminal, and it was already owned by one of those international players, so from that perspective we've certainly seen a movement forward.

In terms of the cooperation side of it, again using the port of Halifax as a model, what you're starting to see now is a focus of all the players, be that the academics at the various universities studying the port, be that the various employer and union groups operating the port and delivering services within the port, or even the government agencies responsible both at the provincial and at the federal level for managing the port and maximizing it as an investment asset. They're all working together now with one goal in mind, which is how do you increase trade, how do you turn it into a profitable exercise, and then how does that translate into an economic driver? This is as opposed to the way it was previously done, in which, quite honestly, there was a lot more political interference, a lot more balancing the interests of regions versus areas. For example, do we invest in Halifax versus the strait, do we invest in rail into Halifax versus rail into Montreal? It's much more focused now on the business case of each individual site.

[Colin Carrie, Conservative, Oshawa, ON]

Could you talk a little bit more, Mr. Durdan, about industrial and academic programs? We've heard from other witnesses that there seems to be a bias toward universities, and they'd like to see more college, more practical research being done. Could you expand on what you think government could do to really get...? I like this idea of partnering in the different ways. Could you expand on that, please?

[Robert Durdan]

You'd be amazed at how much research and development or product development goes on at the industrial level that you never hear about. We do it every day. We're looking at new chemistries in steel. We're looking at providing the same physical properties in a casting without using alloying material, which has become very expensive, and thus reducing the cost of our product and becoming more competitive in the marketplace.

We're doing that in a vacuum. We have talked to Dalhousie about partnering with their material science division and having our metallurgists work with the metallurgists there and sharing the facilities and doing a cooperative research study and developing a steel industry in Atlantic Canada again that will be self-sustaining.

We can't seem to get that off the ground. It may be as much my fault, because I'm so busy doing other things, but it would be great to have a liaison officer at the university who would wake me up every once in a while and say “Hey, Bob, you said you were going to do this and you haven't done it yet. Now why don't we get on with this partnership and make it work?”

Maybe that's a way of getting at it, having somebody there who would do an outreach program to industry and say this is what's available. It may be that government has done a great job of laying out those opportunities and funding, but I'm not aware of it. I know that ACOA provides opportunities in some of its programs and I know there's IRAP out there and other programs, but getting to it is what needs to happen. From my perspective, I would suggest to you that money put into that relationship, an R and D partnership between industry and the community colleges as well as the universities, would go a long way to improving our capability in doing what we do and developing new business.

[Colin Carrie, Conservative, Oshawa, ON]

Excellent. Thank you very much.

[The Chair, Conservative, James Rajotte]

Thank you.

We'll go to Monsieur Crête.

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

Thank you, Mr. Chairman.

Ms. Janega, last week I attended the Pacific NorthWest Economic Region Regional Economic Leadership Forum which brought together parliamentarians and industry heads in Whistler, British Columbia. I asked them how our manufacturing jobs in Quebec, Ontario, and the Atlantic provinces could also benefit from the economic growth experienced over there. I would like to hear you talk further about the examples you cited, such as Icosmo, I believe. There's a similar example in Quebec. Pôle Québec Chaudière-Appalaches recently opened an office in Calgary, in collaboration with the Calgary economic development, in the construction sector. I believe that there are opportunities for international development. Can you elaborate further on the Icosmo project which is somewhat similar to the project being carried out in Western Canada.