Industry Committee on April 1st, 2008

[Peggy Nash, NDP, Parkdale—High Park, ON]

So that's something that could happen after the fact. There's nothing that prevents them from doing it?

[Daniel Friedmann]

I don't know, but I can't imagine why they'd do it.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Okay. There's been discussion about the guarantee of work. You're saying that the purpose of the sale is to gain more work. Then you talked about Orbital and how sales increased into Orbital. Was that before or after the whole Homeland Security crackdown in the U.S.?

[Daniel Friedmann]

Orbital was before.

[Peggy Nash, NDP, Parkdale—High Park, ON]

It was before, so security has tightened up quite a bit since then.

There are the ITAR requirements, but there's also classified work that, as I understand it, can only be done in the U.S. by U.S. citizens. Is that correct?

[Daniel Friedmann]

There's a certain level of classification that can only be done in the U.S., as there is in Canada.

[Peggy Nash, NDP, Parkdale—High Park, ON]

So if ATK Canada got a contract from the U.S. and part of that was classified, that classified work would need to be done in the U.S.?

[Daniel Friedmann]

We couldn't get a contract in Canada that had a classified piece. The classified piece would have to be stripped off first--we've done this already--and the non-classified piece can be contracted back to Canada.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Whether by intent on your part--and I take you at your word that's not your intent--there's a concern that increasingly the technology, the work, could be sourced south of the border, because that's where the classified work will go, and that increasingly the subcontracts and the expertise will go south of the border.

Do you share any concerns in that regard?

[Daniel Friedmann]

First, it would have to be exported from here, so we'd have a significant amount of control.

Second, the staff who have the know-how are in Canada and want to stay in Canada. I can tell you that for a fact. We've tried to move some of them to the U.S. to grow our business and they don't want to go.

The reality is that if you look at history, our companies and other foreign-owned companies have grown in Canada because of the expertise. People are putting companies in Canada to get access to our expertise. It is a main factor.

[Peggy Nash, NDP, Parkdale—High Park, ON]

What kinds of job guarantees and commitments did you get at the three locations MDA currently operates at?

[Daniel Friedmann]

That is between the Minister of Industry and ATK. I can't make the guarantees, but I know from talking to ATK that they're completely committed to building a space business here in Canada, and I know from buying various companies over the past few years, that's what you have to do if you want your return on investment, and they must be having discussions with the Minister of Industry.

[Peggy Nash, NDP, Parkdale—High Park, ON]

In your negotiations with ATK for the sale, there was nothing in the contract you negotiated that guaranteed jobs and investment in the three facilities here in Canada.

[Daniel Friedmann]

We were told they would keep the work and the technology and export mandate in Canada. They would keep our management staff in Canada and they would keep our management in place. That's what we were told, and I am sure that's what they are telling the Canadian government in whatever contractual situation.

[Peggy Nash, NDP, Parkdale—High Park, ON]

From the point of view of the skilled workforce and the absolutely top-notch, cutting-edge engineering capacity, those folks probably are concerned about their job security. Is there anything you negotiated that assures them of their job security here in Canada?

[Daniel Friedmann]

In our industry, in our business, we have no job security. We are six months from being out of business. We have to go and win the business. The only thing that gives us job security is access to work, and the absolute vast majority of our employees understand that gives us access to work.

[The Chair, Conservative, James Rajotte]

Thank you, Ms. Nash.

We'll go now to Mr. McTeague, please.

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

Mr. Friedmann, thank you for being here today. I appreciate the adroitness of your answers. It is very helpful to the committee.

I'm trying to get my head around a few things. Your company will, in effect, become a subsidiary of a U.S. company. As I understand it, U.S. security laws do apply to subsidiaries of companies that are domiciled in the United States but that may operate elsewhere in the world. Is this your understanding as well, Mr. Friedmann?

[Daniel Friedmann]

I don't know what you mean by U.S. security laws.

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

The laws in the United States require that any particular company that is doing business must comply, must work with and be subject to, the security laws of the United States. Your company, in effect, would become a subsidiary of an American company. Is that correct?

[Daniel Friedmann]

Yes, it would be a subsidiary of an American company.

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

It is conceivable, sir, in the circumstance where your company is renowned for its work in satellite imaging, that we might find ourselves in an unenviable position of being in breach of an international treaty with respect to the weaponization of space. If the U.S. company is allowed to purchase your company and uses the information, the technology, that you have developed with the help of the Canadian taxpayer, is it conceivable that this could be used for future building of satellites that might be in contravention of the very conventions Canada has signed with the international community?

[Daniel Friedmann]

Only the Canadian government gives export permit approval for that technology. I don't see why they would.

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

The point would be moot after the fact. You would have a company now owned by the Americans, who could use the umbrella of their law to have reach beyond their own border, but, more important, you may be contributing to the building, or to the technology used for the building, of other types of super satellites. This is a concern that's been raised in the past about this particular technology.

[Daniel Friedmann]

My understanding, as president of the company, is that if I did that, it would be breaking the law. Therefore, we haven't done it and we won't do it.