Industry Committee on Nov. 22nd, 2006

[The Acting Chair, Conservative, Colin Carrie]

I'd like to welcome everybody to Oshawa. I have the real honour of bringing the committee here to hear from some of our local leaders.

It's my real pleasure to have Bob Malcolmsen here. He is the head of our chamber of commerce. As many of you know, Oshawa is growing by leaps and bounds.

We also have a special guest. Our provincial member of Parliament, Mr. Jerry Ouellette, is attending here today as well.

I'd like to leave the floor open and have Bob make a few introductions.

Thank you very much, Bob, for being here.

[Bob Malcolmsen, Chief Executive Officer, Greater Oshawa Chamber of Commerce]

Good morning, ladies and gentlemen.

Welcome to the great city of Oshawa. As the mayor would say, prepare to be amazed.

It is my pleasure to welcome you to Oshawa. My name, as you know, is Bob Malcolmson. I'm the CEO of the Greater Oshawa Chamber of Commerce. As the voice of business, the chamber is growing by leaps and bounds as well. We have over 890 businesses that represent 50,000 employees in Durham region.

The chamber is pleased that the industry, science and technology committee is taking the time to examine the challenges that the Canadian manufacturing sector, and in particular the Durham region, is currently facing.

From the perspective of our membership, it is important that the government send positive signals to investors who want to do business here in Canada, and Durham region is open for business. This includes those investors who wish to invest in the manufacturing facilities in Canada.

For the Canadian manufacturing sector and their businesses, in response to the challenges they face in the global marketplace in the future, competitiveness and growth in the manufacturing sector will depend on a number of key issues, such as productivity improvements, innovation, and skills development.

Durham region and the Durham business community completed a conference that brought together senior executives and decision-makers from business, academia, labour, and government to discuss the future opportunities to spur economic development in Durham region. The Greater Oshawa Chamber of Commerce was certainly proud to be a part of the process.

While we understand the government is focussing on its key priority issues in the short term, the chamber and its members also need to look at the economy from a long-term macro perspective and begin addressing the productivity challenges we face in Canada. The government can boost productivity by putting measures in place to promote an incentive to work, save, and invest.

During your deliberations, we ask that you consider the Canadian Chamber of Commerce recommendations that were presented to the committee: create more favourable conditions for growth that is productivity led; raise the standard of living for all Canadians for years to come; and focus the government's attention on fiscal policy, Canada-U.S. relations, and, in particular, border and security issues.

I understand you're going to the Detroit-Windsor border. It is key to this area here. We hope you will certainly have a good long look at that, as well as external and internal trade barriers, the regulatory environment, a skilled and qualified workforce, infrastructure, energy, and the environment.

As I said, on behalf of the 890 businesses, my board of directors, and president, I welcome you to Oshawa. I know your stay is short. I wish it were longer, because we'd love to show you around our great city.

Thank you very much.

[The Chair, Conservative, James Rajotte]

Thank you very much, Mr. Malcolmsen, and thank you for your welcome to the city.

It is wonderful to be here in Oshawa. We'd love to be here longer, but we're doing seven centres in five days. We're getting a little tired as we go along, and I suspect we'll be even more tired after we finish at about midnight tonight.

The City of Oshawa, and certainly the member for Oshawa, made sure we would visit here, as it is a major source of manufacturing for the country.

Thank you very much for the welcome.

We'll move right into the meeting at this point. For the information of the witnesses and the members, this is the 30th meeting of the Standing Committee on Industry, Science and Technology. Pursuant to Standing Order 108(2), we are studying the challenges facing the Canadian manufacturing sector.

We have with us today Mr. Malcolmson, obviously, who just spoke. We also have David Paterson, vice-president of corporate and environmental affairs for General Motors of Canada. We also have, from the City of Oshawa, His Worship John Gray, the mayor. We are also expecting Dr. Rosen, who we will add in when he arrives.

At this point, perhaps we'll start with Mr. Paterson, with up to a five-minute opening statement. We'll then go to Mr. Gray, and then we'll go to questions and comments from the members.

Welcome, Mr. Paterson.

[David Paterson, Vice-President, Corporate and Environmental Affairs, General Motors of Canada Ltd.]

Thank you very much.

Let me add my welcome, on behalf of Team Oshawa here. We're really pleased that the committee is focusing on challenges that are facing the manufacturing sector, because it really is so important.

I will of course speak to you from the perspective of a large automotive manufacturer in saying a couple of things. We really do need to adopt a far greater sense of urgency and to start focusing more consistently on some of the key things we can influence in Canada, particularly at the federal level, to ensure the viability of our manufacturing sector.

My message today to the committee is really three things: first, that our priorities, we feel from the manufacturing perspective, need to ensure that our investment and tax environment is competitive with that of other jurisdictions that are trying to win our major investments that come into Canada; second, to ensure that we maintain harmonized regulations with the United States; and third, that we ensure that any new trade agreements with nations that import automotive goods into Canada are fair and genuinely reciprocal, so that we can sell our goods to them too.

We've provided you with a handout, and as that handout indicates, GM Canada's investments have a fairly significant impact on the economies of Ontario and Quebec. Federal government policy in turn has a profound influence on GM's decisions as to where, when, and how we make future investments.

Let me start with the auto investment programs, as these are often at the core of many jurisdictions' manufacturing strategies.

The auto partnership funds of the federal and Ontario governments have been absolutely critical in helping us win pivotal assembly investments competing against other jurisdictions, and despite major challenges such as the Canadian dollar that have driven up our local costs.

At General Motors Canada we responded by making the largest investments in Canadian automotive history—over $3 billion announced in the last two years—including: new product mandates; plant modernization; new environmental technologies; a new auto innovation network linking General Motors' engineering capability, which is unique here in Oshawa, and Canadian suppliers and eight Canadian universities, four in Quebec and four in the rest of Canada. It will all be centred right here in Oshawa at the UOIT. I think Marc Rosen may mention that when he speaks as well.

We've celebrated those massive investments on the run, but at the same time—and this is highlighted by the Canadian Automotive Partnership Council, whose report A Call for Action I would also recommend to the committee—there are several policy areas that require urgent attention in the manufacturing area if we're to continue winning new investments for the future.

As you see in the most recent CAPC scorecard, which is in the package, these need to address border and energy infrastructure, tax measures to enhance innovation and productivity, and the need to attract young people into our sector.

But the one area that is truly flashing red is the need to maintain regulatory harmonization with the United States, and that is my key second point to you. Regulatory harmonization has been fundamental in its importance to the auto sector since the auto pact of 1965, because it has enabled us to integrate the design, development, testing, certification, sourcing, and manufacturing of automobiles right across North America, including the 10% of the automotive market in North America that's represented by Canada.

But now we're waking up to discover that our Canadian auto-related standards and regulations are starting to become increasingly unaligned. Despite the objectives of the security and prosperity partnership, which has been supported by our Prime Minister and the presidents of Mexico and the United States, we are starting to see certain evidence of decoupling in key areas of our regulations, such as those for safety emissions and fuel economy, and as a result we risk no longer being able to design consistent vehicles, parts, or systems for North American markets. That affects each one of those suppliers you see on the map that is included in our submission. As a result, costs skyrocket, and we lose economies of scale that have benefited Canada since 1965. It's profound, if we start moving in that direction.

The automobile is certainly one of the most regulated products in the world; that's a reality of our business. In North America we have no problem with strong federal, national standards and regulations, as long as they're harmonized so that we can tackle them right across our integrated system.

The third priority area is trade policy. First, there is no industry more interested than the auto sector in reduction of trade barriers and tariffs around the world. We're a global industry and we're a global company. We would love to find more export markets for our top-quality products that are made right here in Oshawa. We would love to fill up some of those massive boats that pull into Vancouver, bringing product into North America, with product that's made here. However, countries that constantly create non-tariff barriers to auto imports or artificially manipulate their currency to create unfair trading advantage simply do not deserve to have enhanced access to our Canadian market.

Let me finish by saying that Canada has decided to make its trade policy priority at the moment the negotiation of an agreement with South Korea, a country that uses non-tariff barriers to sustain the lowest percentage of auto imports of any OECD country. Less than 3% of all their vehicles are imported into Korea versus 40%, the OECD average.

Put simply, we should not be considering the reduction of Canadian tariffs unless Korea can first demonstrate that it has reversed its past practices and will now deliver meaningful reciprocal access to our products, and that it will accept meaningful penalties if its historic protectionist practices do persist.

There are many other areas I'd love to address, but I will recommend in summary that the committee focus on the need for action to ensure that we have a competitive investment and tax environment in Canada; that we have national auto regulations harmonized with the United States, so that we can continue to benefit from the economies of scale; and that we insist on a trade policy that seeks fair as well as free trade.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much, Mr. Paterson. That was a very concise opening statement.

We'll go now to Mr. Gray for a five-minute opening statement.

[John Gray, Mayor, City of Oshawa]

Thank you very much, and welcome to our city. I admire you for your deliberations going across Canada.

On behalf of the City of Oshawa council I'd like to thank you for inviting me here today to provide some insights into Oshawa's manufacturing sector.

The manufacturing sector is vital not only to the Oshawa community but to all of Durham region. Before I expand on the great importance that manufacturing plays in our community, I will first provide an economic overview of the city of Oshawa with some highlights of Durham region.

The Oshawa census metropolitan area, containing Oshawa, Whitby, and Clarington, is the fastest-growing CMA in Canada, according to Statistics Canada. Oshawa leads Canada in GDP growth, and the Conference Board of Canada predicts that Oshawa will lead Canada in economic growth through to 2010. GM's Oshawa facilities are the largest in North America and create a significant demand for feeder industries. In Durham region hundreds of businesses are directly related to the automotive sector. Recently, Pival International, a logistics firm from Quebec, broke ground for their new Oshawa Logistics Centre, representing an investment of over $40 million and 250 jobs in Oshawa.

Oshawa has a workforce of 83,000 people, with over half of our workforce trained at the community college or university level. Oshawa is home to two post-secondary institutions, Durham College and UOIT, and to a Trent University satellite campus. UOIT has established a reputation for leading-edge research and development and has created strategic industry partnerships that benefit the local and Canadian economies. Adult training, apprenticeship, and customized corporate training programs are offered through Durham College.

Some of Oshawa's recent economic projects and initiatives include the brownfields renaissance community improvement plan, the downtown Oshawa action plan, and the Beacon project. In addition, Oshawa has been identified as a priority urban centre in the province's “Places to Grow” document.

Manufacturing is a vital component of our local economy. Over 51,000 jobs in close to 800 manufacturing businesses are in Durham region. Every dollar of manufacturing output is estimated to provide more than three dollars in economic activity. In Durham region, manufacturing sectors are interdependent. The strongest two sectors, energy and automotive, are intertwined, as are the subsectors, plastics and metals machinery. In fact, 32% of Ontario's power is produced right here in Durham region at Ontario Power Generation's two nuclear plants, located in Clarington and in Pickering.

I want to emphasize that we are a team here in Durham. Durham region, the local municipal governments, and our manufacturing partners are committed to working together to support the local economy. One example is the region's elimination of the large industrial tax class effective 2007. This is to level the playing field against other Ontario jurisdictions in order to help our manufacturers compete. In October of this year, the region of Durham hosted an economic summit that brought together over 100 business leaders to discuss challenges facing the Durham business community.

One of the challenges identified by our manufacturing community today is increased global competition. Our companies are facing significant competition from low-cost, high-value jurisdictions such as China and India. We need to focus on trade agreements that provide effective market access and look at where the opportunities lie in these emerging economies. R and D needs to be elevated significantly on the national agenda and we need to focus resources on R and D in our manufacturing sectors to allow them to lead.

Recommendation: create trade agreements that provide effective market access with other jurisdictions; support increased funding for research and development within the manufacturing sector in order to help companies compete globally.

Number two is rising energy costs. Durham is an energy cluster. It's one of the most well-positioned jurisdictions in Canada and is actively pursuing these solutions in a coordinated, systematic way. Government, businesses, and the university have joined forces to create the Durham Strategic Energy Alliance in order to develop energy production and reduction solutions for today's business, but our challenge is that we need resources to develop these partnerships so that solutions can be supported and accelerated.

Recommendation: create a national energy strategy that supports a competitive business environment, provides resources to support solutions for energy research and development, and creates a framework that ensures stabilization of energy prices for manufacturing; provide incentives to support and enhance energy efficiency targets.

The third item is the skilled labour shortage. Skilled labour shortages pose a significant threat to local businesses. Looming baby boomer retirements will take significant numbers of highly skilled workers at all levels out of the workforce in the next five to ten years.

Our recommendation is to place more emphasis on continued upgrading and provision of skills, including increased funding for apprenticeships. Provide incentives to small and medium-sized businesses in order to enhance training opportunities that address skill shortages.

Fourth is regulations and financial incentives. Industry needs an environment that supports industry competitiveness and it needs the ability to operate in a fair environment. Our recommendation is to create a national incentive program that allows municipalities to compete effectively with foreign jurisdictions in attracting new investment.

Fifth is a rising Canadian dollar. Manufacturing is a vital component of our local economy. Over 50,000 jobs in Durham region are directly attributed to manufacturing. This sector, particularly, has seen high exposure to international trade. Goods produced by the manufacturing sector are often priced in U.S. dollars, and as the Canadian dollar has risen, margins and competitive capabilities have decreased significantly. Our recommendation is that interest rate policies need to be adjusted in order to reduce the upward pressure on the Canadian dollar.

In summary, the manufacturing sector is vital to our local economy. Although we will continue to work together as a team to support the manufacturing community, we require the assistance of the provincial and federal governments to help overcome the bigger picture challenges that we face.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much, Mr. Gray.

We also have with us, who just joined us, Dr. Marc Rosen—welcome, Dr. Rosen—professor and dean, from the University of Ontario Institute of Technology, Faculty of Engineering and Applied Science.

I hate to put you on the spot, but we are at the opening statements, and we've had the other three gentlemen present to us. So if you're ready, can you present your five-minute opening statement?

[Dr. Marc Rosen, Professor & Dean, Faculty of Engineering and Applied Science, University of Ontario Institute of Technology]

I'm ready. Thank you very much. Sorry for running a bit late.

I want to talk about three things. I want to tell you a little bit about where I'm speaking from, the background, the challenges that we see from an academic setting at the university level, and then talk about some recommendations relative to the academic perspective. Our take might be somewhat different from some of the others you've heard.

I am, as was mentioned, the dean of engineering and applied science at the new University of Ontario Institute of Technology, only open since 2003, in Oshawa. We have 4,300 students in undergraduate and graduate programs. We're market-driven. We're trying to make sure that we address real needs when we open programs. It's an opportunity we have and we're looking to address the major challenges facing the country. Some examples of how we've done that is focusing on manufacturing, the automotive sector, and energy.

Some of our unique features include the following. For instance, we have Ontario's only manufacturing engineering program, one of three in Canada at the undergraduate level--the other two are out west--despite the fact that manufacturing, of course, is so important to Ontario's economy. We have planned a $70 million or so automotive centre of excellence in conjunction with the Ontario government and General Motors of Canada. That's a very interesting venture. We are trying to bring together industrial problems and put academic research and educational needs together so as to help solve problems, particularly down the road. We have a chair in innovative engineering design aimed at the design aspects--how you create new things that are so important to advancing manufacturing.

On some of the challenges that we face, we have trouble getting students entering manufacturing engineering--plain and simple. It has a bad reputation, and that really threatens the future workforce. It's viewed image-wise as either dirty, dull, depressing, or in decline--the Ds you often hear mentioned. And that's a really severe problem, because if students don't want to enter the field, there's going to be no one to work down the road. Certainly competitiveness factors are one of the things that scare students away. The problems you hear of in the automotive sector scare students from manufacturing. The plastics sector is really not spoken of well in Canada at all, as another example. We also have trouble retaining students. They hear things about off-shoring of jobs and that there will be no jobs left, and they scoot to another program very quickly.

Lack of competitiveness and productivity due to inadequate investment in the higher technologies, the advanced technologies, is another area I want to mention that's a challenge. We're in trouble if we try to compete with countries that have low wages. The one advantage we have is a very strong advanced technology sector. We need research to always keep us at the leading edge. If we fall behind, we're fighting a losing battle. The advanced technology is what keeps us in the game, from my perspective. There's a bit of a problem with a lack of holistic thinking. We're dealing with automotive sector, manufacturing, and energy. Those really come together in some ways. Energy problems hurt manufacturing. Manufacturing drives the automotive sector. Energy feeds into the automotive sector. Some of the problems we face actually aren't as isolated as just manufacturing.

On the recommendation side, we need help overcoming the poor image. If we're to attract students, both industry and government have to do it. There has to be a message that it's more important to the economy than is presently felt. Some support for educational programs focused on manufacturing would be very important, both provincial and federal, because some incentives to get students into these programs can attract.

With respect to investment in R and D, we need more research in the advanced manufacturing technologies. It's critical, as I mentioned earlier, in my view for us to stay competitive. We can't compete with technology. One example I put forward is to create university-industry partnership centres like what we're doing with General Motors, where we have an automotive centre of excellence that's intended to have two views. If the academics look in, they see a research centre beyond compare, beyond their wildest dreams, where they can really create new ideas and technologies. When industry looks in from the other view, they see a world-class industrial test and development facility right up to the standards they seek. It's something that we're developing now. It will be open in a couple of years. It's meant to be a different way of academic and industry sectors working together.

That ends my opening statement. Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much, Dr. Rosen.

We will go into questions from members.

For the information of witnesses, the opening round will be six minutes each, so members have six minutes for their questions and your answers. If we can try to be as brief as possible, that would be helpful.

The second thing is members may direct a question to the entire panel or to one witness. If a member directs it to one witness and you wish to add something, please indicate it to me and I will certainly ensure that you speak.

We'll start now with Mr. McTeague, for six minutes.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Thank you, Chair.

Thank you, Mr. Carrie, for getting the committee here. I think it's extremely important.

I turned on my radio one morning about a month and a half ago—maybe not quite that long ago, but just before the municipal campaign started—and heard some interesting news from the Conference Board of Canada. Congratulations, Mayor Gray, and to the entire Durham region. I think it speaks well for the work that has been done so far by getting governments, organizations, and business to work together. Congratulations also to you, Mr. Malcolmson, in your ability, as it were, to rein all the varying, disparate horses together to make this community a much stronger place.

As you know, I'm from Pickering, and we can only envy the kind of growth that you're seeing, but given that every blade of grass is precious in Pickering, we have no growth. Hopefully that will change in the days to come, and we'll be able to resolve those problems. I'm speaking for myself, of course.

Mr. Paterson, you discussed the issue of regulatory harmony with the United States. Is there the risk of re-importation problems, if you have identical standards? In other words, from a retail perspective—I'm putting on my former cap as someone who marketed for one of the companies—if the standards are identical and there is a cost advantage to building a car in Canada, or parts of it in Canada, and sending it to the United States, it could be sold from an American dealer back into Canada. Is there any risk that might also harm the business side of marketing various car companies?

[David Paterson]

Currently there is an ability to import vehicles directly into Canada beyond the regular Canadian dealership network. In fact there is a government-supported website, which I was looking at yesterday, where they partner with Canadian Tire, which does the vehicle inspection for any vehicle that you want to source out of the United States and bring into Canada.

It is always a concern. We would like to see all vehicles sold through our dealer networks. Our biggest concern is that if our regulations get out of sync, we will no longer able to sell or produce certain types of vehicles in Canada, because our regulations become difficult. A reality is that our market here in Canada is only 10% of the overall North American marketplace. So if we end up with disharmonized regulations, what ends up happening is either we have to stop selling certain vehicles in Canada, or we have to stop producing them here.

What will happen is people simply go on those websites. If we remind ourselves that we're in a free trade zone in North America, those regulations might be trying to restrict things in Canada, but the vehicles come in anyway.

We threw our lot in with the United States in North America to have an incredible advantage with the Auto Pact. Because of that, we have thousands of jobs and huge investment that comes to Canada because of the integrated nature. One of the challenges we have is to make sure that we have good, strong standards, but they must be harmonized at the same time. As I said, we can have strong standards; we just need to make sure that they're aligned. Otherwise we end up with no advantage, and certainly a great disadvantage, in terms of the employment and the benefits we get in Canada.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Thank you, Mr. Paterson.

Dr. Rosen, I was interested in your comments about incentives to get kids into these programs. Certainly a very recent reality among those who have skilled backgrounds is that they are losing their jobs today. In manufacturing, one in nine jobs in Ontario, if I'm not mistaken, has already been lost. That's sending a message to those who might otherwise go into skilled labour and the skilled trades that in fact there is a decline in this area.

To be more specific, do you see the federal government playing a role, in terms of providing incentives to young people to get into programs? It now seems that from a provincial point of view, with the lifting of the freeze on tuitions, there is the distinct possibility that many young people will not be able to get access to higher education, whether it be in the universities or schools such as yours.

[Dr. Marc Rosen]

You've mentioned two issues that certainly are important. The first is getting students into school. Accessibility issues are a concern across the whole university sector, whether it's in manufacturing-related or other programs. We very much sympathize with student needs for help to make sure they can get in.

The other question or area on which you can focus concerns the disciplines to support them, such as manufacturing. Can the federal government get involved, given the provincial and federal jurisdictions on education? It may not be transparently easy, but I'm sure there are ways with creativity.

The scholarships at the graduate level that the federal government offers can certainly support a lot of graduate studies and the students entering into these areas where they get advanced training at the graduate level. This has spinoff effects back to the undergraduate level—a bit of a magnet to pull others in.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

I was just doing a PSA for my bill last week on RESPs that would make it tax-deductible so that more people can get access to it, but I think my colleagues may have a dispute with that in just a moment.

Perhaps I could shift gears to you, Mr. Gray, and to you, Mr. Malcolmson, in terms of the significance of the border. You alluded to it in your discussions. Currently there are a number of programs--the FAST and NEXUS programs, which I'm sure Mr. Masse will be talking about, because we're heading to Windsor tonight for meetings tomorrow--and I'm wondering if the issue of passports that is going to be implemented very soon for those who are travelling by air.... Obviously it isn't as significant a problem for those who are shipping at this point. But is there a concern you have that we're not looking at all opportunities, at other modalities of getting product to our markets, particularly to the United States, including the idea, which I think has been lost over the past little while, of providing fast boats across Lake Ontario--fast ferries, as they were referred to?

Do you have any thoughts on that in terms of infrastructure?

[John Gray]

The automotive mayors meet regularly, and this has been an issue that's front and centre. It's not just a Windsor issue or an Oakville issue. It's an issue for us as well.

So many of the trucks have to cross the borders repeatedly for us to produce a vehicle right here in Oshawa. Dave Paterson is probably better equipped to talk about these things. There might be an inner fender well coming from Ohio and something coming from Detroit. In some cases, we have parts manufacturers who are actually shipping their parts to the United States for some further enhancements before they get included as a component on vehicles right in Oshawa.

The same applies to every other municipality. So anything we can do to speed access across those borders is going to be absolutely critical. When a truck is stalled at the border because there's some issue, in some cases, with just-in-time manufacturing, if that truck is not available, we can shut down a line. The costs are huge. So that's why we all have to pull together on that particular issue.

[The Chair, Conservative, James Rajotte]

Thank you very much, Mr. McTeague.

We'll now go to Mr. Crête.

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

Good day everyone.

No doubt you're aware that on November 24, if the Americans follow through with their proposed measure, an additional $5 tax will be levied on each truck crossing the border. This additional levy is justified by the fact that fruits and vegetables shipments crossing the border now undergo additional checks. However, the tax will apply to all trucks.

Have you contacted the US government, or do you intend to do so before November 24, to consult on this point in order to have the measure postponed or overruled? Perhaps we could ask the Americans to do impact assessments and to make their findings public before the new tax takes effect.

[The Chair, Conservative, James Rajotte]

Thank you.

Mr. Gray.

[John Gray]

Thank you.

We haven't had much discussion on that particular point, and I hadn't really grasped the severity of it. By you asking the question, I understand very much how that can just really tie up the border and slow things right down. We could take that to our councils throughout Durham, and I'm sure we could circulate it to municipalities across Ontario to see if something can be done to help slow down or make them re-evaluate that draconian measure.

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

My other question is for Mr. Gray and Mr. Malcolmsen and it pertains to the manufacturing sector and the Canadian economy.

There is a tendency to say that the economy is doing very well and that unemployment rates are very low. That may be true, but the manufacturing sector is facing some important challenges. Do some organizations, for instance, the Federation of Canadian Municipalities or the Canadian Chamber Commerce, view the situation as cause for concern?

What can you tell us? Is it important for you to speak out on this issue?

[Bob Malcolmsen]

Specifically to answer your question, the Canadian Chamber of Commerce did the presentation for the industry committee and we, as our local chamber, concur with that. Directly in manufacturing we have an aging population as well. You heard from the university saying that it is more and more difficult to get individuals into the manufacturing sector. So we have to be very cognizant of the fact that we have to keep our education levels up and get people trained and into the industries in the manufacturing sector. Because of the aging population, people are moving away and new people aren't coming in. We're not only going to have that problem in manufacturing, but in transportation as well. The trucking industry that moves our goods and services across the borders and across the GTA also has an aging population.

So education and getting youth more involved into the industry sector, manufacturing base, and the trucking base is key to the survival of the Canadian economy, I believe. And the Canadian Chamber of Commerce certainly has given you comments in regard to some of the areas that are of key concern to them. I will reiterate that competition from low-cost producers like China is one of the ones that are causing rising input costs, as are key skilled labour shortages and border crossing.

A piston going into a vehicle will cross the border at Detroit-Windsor seven times before it's put into a minivan and comes off the line at the end. And you have 3,000 trucks a day going across the Ambassador Bridge. If you have one accident, it ties everybody up. Keep in mind, gentlemen, you go down the 401 and go onto a residential road to cross the Ambassador Bridge to get onto a superhighway on the other side. That is the problem we have in Ontario. If we keep the congestion blocking us up, the manufacturing sector has to look and ask, where can I do business easier, and they will take a long, hard look at that. This is a key concern.

We have been battling. Our chamber of commerce first made a resolution to the Canadian Chamber of Commerce in regard to the Windsor-Detroit border crossing in 1999 or 2000. It is now 2006, and it's still not moving forward fast enough to help the manufacturing sector in Ontario.

[The Chair, Conservative, James Rajotte]

I have Mr. Paterson as well.

[David Paterson]

I'll very quickly add something, I'll throw in my two cents.

I'm a director of the Canadian Chamber of Commerce. I know that the chamber has been very adamant on border issues, and, as Bob has mentioned, two other things, and the chamber will have spoken to you about tax measures. Particularly, for example, there is a measure in Quebec that is very helpful to manufacturing where people are able to have advance tax writedowns on manufacturing equipment. It reduces their capital tax in Quebec if they do that. Those types of measures, when we see the economic statements coming out tomorrow, will all be things we're looking for. That could be very helpful to the manufacturing sector. And I would add that the Canadian Chamber has shared in the same comments I've made with respect to trade, that if we're going to look at trade agreements, they need to be fair trade as well as free trade.

[The Chair, Conservative, James Rajotte]

One last question.

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

Mr. Patterson, you claim to have some reservations about efforts to advance innovation. Where do you feel that there is room for improvement?