Industry Committee on Nov. 20th, 2006

[Paul McEachern]

None to me.

[Don MacLeod]

I can answer that simply. I have requested that in several letters and have received no analysis, and negotiations have commenced.

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

I think you're missing my point. If negotiations have commenced, was there any indication that there would be an update or an analysis based on the ongoing negotiations, maybe?

[Don MacLeod]

No, there was no commitment.

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

Or did you ask the question?

[Don MacLeod]

I didn't ask it in that particular way. In a general sense, I said that before they negotiate, analysis should be done. If they get the analysis during the course of the negotiation, then I assume they would send that to us. But I can ask that question.

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

Okay.

To Mr. Irving, you talked about the CCA. We hear a lot about the capital cost allowance and the impact of it in terms of the industry and manufacturing, and what it actually means to be able to move ahead. You talked a lot about what it used to be. When was that changed?

[Jim Irving]

This has come and gone over the years. In the sixties we had a very aggressive policy for building ships, for example. In the eighties this policy was in place. It comes in and out of style, depending on what the economy is doing at the time. Maybe this is not forever, but somebody should say let's do this for five years and create some sparks.

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

Then I'll go back to a comment that I think you made: that industry, perhaps more the pulp and paper industry, still has equipment of 1920s vintage. If good capital cost allowance procedures and regimes have been in place, and if the capital cost allowance has a large portion to play in it, why are they still running with 1920s equipment?

[Jim Irving]

I think you could take the economic....

You're into a very specific question. Some people take advantage of it. Why do some people do certain things and other people don't? There is no--

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

I only raised it because you raised it. I don't disagree with you in terms of the capital cost allowance. I'm not disagreeing; I'm just sort of wondering.

[Jim Irving]

It's like everything else: you create the environment, and then some people will move and other people won't. And things evolve.

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

I don't know who this question actually goes to, but I'm wondering about the skilled labour. We've talked to the academics, and we've talked to the colleges in terms of developing a link between academics and skilled labour trades and matching that with what is actually needed in the field. I'm wondering if you can comment on that. First of all, are we meeting that, and is there that link? Secondly, is the skilled labour a part of the concern that you have about being able to move ahead and provide the product that is needed to be competitive in the world market?

[Jim Irving]

I can comment from our own perspective. We've had a cadet program at our company, through which we coordinate with the community college, which has a marine program. There is a similar program in Newfoundland, and at colleges in British Columbia and in Ontario as well. I think the company has to take the initiative to work with the existing institutions and programs and implement an apprentice or a cadet program. We call it cadets because it's sort of the marine language. That way you coordinate the initial technical introduction with practical experience, and then throughout the course of a person's career in the marine sector, you start off as a deckhand or an oiler, and you work up, and you get tickets. It's based on number of hours worked. There are specialized tickets for dynamic positioning, which is a computerized system for propulsion and navigation, and so on. You have to have the technology, and you have to have the commitment long-term to see people start at the beginning and work their way through to the end.

From our own perspective, we have found that if you do that, the investment pays huge dividends. You get a person who's young, who's moulded, and who's given experience. They work in the fashion that you want and develop the culture of the company. You develop loyalty. We have a 97% retention rate at our company.

So I think it can work. That's a very narrow industry sector. We have the institutions that have the basic introductory courses, and then the companies have to make the contributions over the life of a person's career.

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

Are you able to--

[The Chair, Conservative, James Rajotte]

Mr. Shipley, we're two minutes over.

We will go to Monsieur Vincent.

[Robert Vincent, Bloc, Shefford, QC]

Thank you, Mr. Chairman.

Thank you for being here today.

I'm just as surprised as the two other political parties here to learn that we have a free trade agreement with Norway. It is unfathomable that we were not aware of such an agreement. In light of the problem that you have just described, we must be made aware of what is going on with this free trade agreement.

Earlier, you talked about the hazards of the European industrial free trade agreement on the gas industry and the marine industry.

Can you elaborate on what those hazards are?

[Don MacLeod]

From an Atlantic Canadian perspective, the danger from a vessel ownership standpoint in a company such as ours, but also in the broader industry.... For example, we have a whole host of suppliers that have been developed here in Atlantic Canada that support our company. There is everything from fabricators to suppliers of electronic equipment, technicians, etc. If we are hurt in the process of having unfair competition allowed into our marketplace, all of the people who support us will also be hurt.

I talked about Norway Inc. before and the mentality. The mentality will be that if the Norwegians come in, they will bring all of their suppliers and the work will be generated back in Norway. There may be some branch plants or whatever, or local storefronts, but in terms of local home-grown expertise and development, which can then in turn be exported around the world.... If you look at our company, that's what we've done. We started here in eastern Canada and we developed expertise. We grew, we prospered, and then we started to export to other markets and employ Canadians on Canadian vessels in other marketplaces.

So I guess through this unfair approach, if they come here, and we are not able to get into the Norwegian market, we could be hurt. And there will be broader ramifications for the rest of the sector in the offshore, which is just in its beginning stages. You have a very strong, mature industry in Norway that sees an opportunity here, whereas we're just at the very beginning, in a nascent sort of fashion, ready to grow and bloom. If we're unfairly hurt by a very large, strong competitor, then the consequences could be very serious.

[Robert Vincent, Bloc, Shefford, QC]

If I understand correctly, there was a free trade agreement, but it goes only one way, and Canada is not part of it. I don't quite understanding. I don't know how the negotiators work. Recently, we have surprises every week regarding Korea. We do not know what stage of the negotiations we are at and we don't know which agreement we are going to sign. We are selling Canada to the other countries. The bottom line is that we are trying to outwit them, but we have a bit of difficulty competing with them.

Mr. Irving and Mr. Mc Leod, earlier you talked about training. What should the government do? Should it enter into partnerships with industries to help finance in part the much needed training for skilled workers?

[Jim Irving]

I think in terms of the training, it's all-encompassing. Number one, you have to have a reason to train people. If you have a competitive business and sound business model, you will invest in training people. Our company invests a lot in the community colleges, and we have a lot of programs to develop workers. It's absolutely essential. With the new technology, we need to have better skilled people. That's basic, fundamental.

Today if you want to qualify for training dollars from the government, it's very complicated. You have to be on unemployment insurance to upgrade your skills in a lot of these cases. It's very bureaucratic. It's terrible. It's not efficient. It's not smart.

So we'd encourage a much more modern version of what we need to do to keep up today. It's too tiresome. We give up trying to apply to deal with the government on it because it's so bureaucratic. I come back to what was said a little bit earlier about talking about employees, and I think it's about more than just training people. We have to have a mindset that says we need to be more productive. We have to be able to say unionized or non-unionized doesn't matter, if you give some incentive pay. I personally think it should be encouraged.

The health system is killing the province of New Brunswick. It's killing us. It's taking all the free dollars. That's not unique to New Brunswick. We have to be more proactive. We have to get the employees to take better care of themselves. We need employers to encourage the employees to do that, and invest some of their own money. Maybe the federal government will help in that by allowing a tax rebate for the employer who says yes, I've committed x dollars per employee per year to encourage my employees to better health participation in certified programs.

I think those things are all part of training employees today for a modern country.

[The Chair, Conservative, James Rajotte]

Thank you.

I have two members left for questions. We have about five minutes. I have Mr. Carrie and Mr. Masse. We will try to fit you both in the five minutes.

Mr. Carrie.

[Colin Carrie, Conservative, Oshawa, ON]

I'll ask a couple of questions fairly quickly, and you can choose which ones you'd like to respond to.

I am encouraged to see that there are still shipping companies that are registered in Canada. Is it economically feasible for shipping companies to still be registered here? There have been some famous ones that have gone offshore. Do you have any demographics of jobs that have been lost in the shipping industry over the last few years?

I really like what you're saying about the tax cuts and depreciation, but could you expand a little bit more on the how and the details? You mentioned this health and wellness thing. I'm a chiropractor by background, and I think it's very important for employees to maintain their health. If you could expand on the skills building, on how we could help with that, and on the health and wellness, I would really appreciate some more details.

[Don MacLeod]

I'll deal with the first one very briefly.

You're looking at almost an extinct species, in the sense that Mr. Irving's company and our company are probably among the few vessel-owning companies that work both internationally and domestically with Canadian flag vessels.

[Colin Carrie, Conservative, Oshawa, ON]

Congratulations, by the way. Thank you very much.

[Don MacLeod]

You could write a book on this, so I won't bore you. There's a whole series of policies in place, but if you work in Canada, you have to have Canadian flag vessels, and you have to have Canadian crews. But I'll tell you this: the thing that separates us from our competitors are our people and our crews. They're maritimers, and they've got a tradition. They're men of steel who used to go to sea in boats of wood. That mentality has been maintained and carried forward, and it makes the difference in the international marketplace. If you work off the Atlantic coast here in February, when you go to west Africa or the Gulf of Mexico, it's easy, and it makes a big difference.