Evidence of meeting #28 for Industry, Science and Technology in the 39th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was mda.
A recording is available from Parliament.
Conservative
Bruce Stanton Conservative Simcoe North, ON
What were the redeeming qualities of ATK? I think we have a witness coming from ATK at some point. From your perspective, what was the redeeming quality that allowed the decision to go their way?
President and Chief Executive Officer, MacDonald Dettwiler and Associates Ltd.
Our number one issue was to find a company that did not have our capability in any shape or form, because if it did, it would, over time, just looking at what happens in the world, build that capability. It's just natural.
We had been through this before with Orbital Sciences. We have watched the world--we've done it ourselves--and ATK does not have this capability. It is therefore fully committed. It's making a huge investment in building that capability in Canada. That was the number one issue.
Now, I have a fiduciary duty as the president of the company to get value for my shareholders, so I couldn't do that with ATK if somebody that had the capability was willing to pay twice as much. Fortunately, the price was not an issue.
Conservative
Bloc
Robert Vincent Bloc Shefford, QC
Thank you, Mr. Chairman.
I believe you said earlier that if MDA were bought by an American company you would be awarded more contracts with the U.S. Is that correct?
President and Chief Executive Officer, MacDonald Dettwiler and Associates Ltd.
That's correct.
Bloc
President and Chief Executive Officer, MacDonald Dettwiler and Associates Ltd.
Yes.
Bloc
President and Chief Executive Officer, MacDonald Dettwiler and Associates Ltd.
It is possible that they could work on American contracts--30% of the contracts we work on today are American--provided that the Canadian government approved the export of that work. So it would have to be Canadian government-approved contracts. It couldn't be just any contract.
Bloc
Robert Vincent Bloc Shefford, QC
Mr. Thompson, an MDA engineer, appeared before the committee on March, 5. When MDA was under U.S. ownership, ITAR regulations prevented Canadian employees from working on projects, even those that were not classified. It even prevented them from working on certain aspects of RADARSAT-2. Mr. Thompson warned the committee that, even in the context of a non-classified program, ITAR regulations make it very difficult for Canadians to work for U.S. companies in the aerospace industry.
Why are you saying that these Canadian jobs will be safe, even protected, when U.S. legislations states the contrary?
President and Chief Executive Officer, MacDonald Dettwiler and Associates Ltd.
As I said, I have been in the marketing field to the United States. I've been under a U.S. owner. Mr. Thompson is a very capable engineer, but he's not in this field of marketing.
When we were owned by a U.S. company, our U.S. work went up. Not only did it go up, but we became the number one company in the world to build ground stations for high resolution satellites for the U.S. government, and we are that today. That employs over 100 people in Canada today. All of the work, except for some very small amount, is done in Canada.
What he was referring to about RADARSAT-2 was that we were trying to import U.S. technology into Canada to build RADARSAT-2. We were trying to buy a satellite bus from our own parent company, and the U.S. government blocked that export permit, just as Canada can block the export permit of Canadian technology to the U.S.
When they block that export permit, we have to go buy from another country. There is no block going the other way.
Now, having said all that, the ITAR regulations are bureaucratic. They're slow. They're there to protect a whole pile of interests, and they do get in the way, but they're workable. We work with them today. You need to facilitate some people on both sides of the border. If you have that, it's very workable.
We did it for five years, and under Orbital Sciences, our company doubled its employment in Canada. It was the highest growth we've had in our history, and you can't blame it on the president or give the credit to the president, because I've been the president for a long time in both scenarios.
President and Chief Executive Officer, MacDonald Dettwiler and Associates Ltd.
I think we were founded in 1969. I'm not good at math.
President and Chief Executive Officer, MacDonald Dettwiler and Associates Ltd.
It was just recently, in December 2007.
President and Chief Executive Officer, MacDonald Dettwiler and Associates Ltd.
Ten years.
Bloc
Robert Vincent Bloc Shefford, QC
Ten years? You said earlier that your profits were not very significant in Canada, and that there was no real market here. However, given that you have invested $200 million in RADARSAT-2 over the past ten years, yet are commanding a $1.3 billion selling price, I would say that the Canadian market is in fact fairly profitable.
President and Chief Executive Officer, MacDonald Dettwiler and Associates Ltd.
I don't understand the math. I didn't say there is no Canadian market; I said there is a Canadian market, but it isn't enough to sustain our company. Our $200 million has been invested in return for the future data sales we hope to make on RADARSAT-2 that was just launched.
Bloc
Robert Vincent Bloc Shefford, QC
Okay. If I understand you correctly, you are saying that, if MDA were sold to ATK, it would cease to exist or would become an American subsidiary. Is that correct?
President and Chief Executive Officer, MacDonald Dettwiler and Associates Ltd.
The company will exist exactly as it does now. You will not be able to notice. You'll be able to take a tour of Brampton and it'll be the same facility with the same people, manager, and everything. The owner will be a U.S. company. We've been through this before, and that's all that will change.
By having that owner we will have access to work in the United States; therefore, that facility will be state-of-the-art. Without that, the facility will not be state-of-the-art.
Bloc
Robert Vincent Bloc Shefford, QC
That is the problem. ITAR prevents you from working in the U.S. How can you say that you are going to access work in the U.S. from Canada? You cannot do that. How do you plan on doing it?
President and Chief Executive Officer, MacDonald Dettwiler and Associates Ltd.
ITAR restricts technology transfers from the United States to other countries. It does not restrict anything going from Canada to the United States. By restricting technology transfers to Canada, we can't see some documents, which makes it difficult to bid on programs. But if there are U.S. citizens who'd like to see those documents and they convert that to something that's not of importance to the U.S. government, we can do the work. We do 30% of our work in the U.S. today from Canada.
Conservative
The Chair Conservative James Rajotte
Thank you.
Merci, Monsieur Vincent.
We'll go to Mr. Van Kesteren.
Conservative
Dave Van Kesteren Conservative Chatham-Kent—Essex, ON
Thank you, Chair.
Thank you, Mr. Friedmann, for coming.
In your opening statement you made reference to the fact that the majority shareholder is the teachers' federation.