Industry Committee on April 3rd, 2008

[Paule Brunelle, Bloc, Trois-Rivières, QC]

Another concern pertains to employees and their fate. An engineer from MDA told the Committee, on March 5, that during the time that MDA was under American ownership, the law and regulations prevented Canadian staff from working even on non-secret programs. Your company does a lot of work with programs that are often tied to national security.

To what extent will the jobs be maintained in Canada? Are employees justified in their fears and in saying that it will be difficult for them to work on such programs?

[Carl Marchetto]

First of all, I would like to say that in the past couple of weeks I've had the great opportunity to visit these strong assets.

Categorically, intellectual property rests in the people; it doesn't rest in facilities. Success in growth, and with technology breakthroughs and innovation and productivity—all ending up in RADARSAT-2, -3, -4, or RapidEye—comes from people. It is our intention and my belief that you don't move these things. These are assets that have families, they have locations, and they have a sense of purpose—and we will get aligned—and a mission.

Our ability to work together as two companies will flourish based upon the two companies wanting to move forward and develop. We have no intentions of extracting or removing these key sets of resources that are there. The people I talked with, from Brampton to Richmond to Montreal, and so on and so forth, engage and are very interested in what the future will be like as we move forward with these new technologies. That is the beauty of this. There is no overlap between ATK Space currently and MDA; that's the beauty of this opportunity.

[The Chair, Conservative, James Rajotte]

Merci.

Merci, Madame Brunelle.

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

[Bruce Stanton, Conservative, Simcoe North, ON]

Thank you, Mr. Chair, and thank you to our witnesses.

I'm going to have three quick questions and then we're going to go to Mr. Hanger, with whom I will be splitting my time.

First of all, what can you tell me about the commitment or undertakings you are going to bring that will prevent any cuts to operations or facilities here in Canada?

[Carl Marchetto]

I think we've provided information back to Investment Canada on our intentions. I would say they're very powerful. Why? Because of the indication of what I just stated. These are very significant and very innovative, agile sets of work groups, led by very strong leadership. We have a lot to learn as we work together. And for us, it's an opportunity to share the best of the best.

[Bruce Stanton, Conservative, Simcoe North, ON]

Similarly, and along the same vein, what similar undertakings or guarantees would you bring to make sure that as we proceed further, this transaction will in fact strengthen Canada's space industry?

[Carl Marchetto]

I believe that the influence ATK Space has right now—and I will put this on the record so that it is known—is that 50% of our current space activities is commercial work in space, not the inverse. Some people may think that ATK Space has an inverted relationship here, but I will give you the data: we are 50% commercial, 17% defence, 17% civil, and 13% in intel. So we have a very broad reach. We plan on bringing that forward with the current workforce here.

[Bruce Stanton, Conservative, Simcoe North, ON]

Finally, when he was here on Tuesday, Mr. Friedmann stated that in Canada “You cannot export anything our company makes out of this country without a Canadian export permit approval...”. Is this your understanding of Canadian law, and what commitment would you make to uphold that?

[Carl Marchetto]

The information is that we understand how the countries work together; we understand our regulations with ITAR. We absolutely will abide by that. In fact, we will look forward to developing new technologies here in Canada, based upon the references and the resources that we see.

[Bruce Stanton, Conservative, Simcoe North, ON]

Mr. Hanger.

[Art Hanger, Conservative, Calgary Northeast, AB]

Thank you.

Thank you, gentlemen. I would like to welcome you to Canada. I understand you're both American citizens, so thank you for coming before our committee.

Along the lines of my colleague's remarks on exporting anything out of Canada's control, with or without an export permit, I gather you need approval of some kind. I will put it this way: just before the sale of MDA was announced, MDA actually purchased Alliance Spacesystems in the U.S. It is along the lines of advanced technology solutions, and it also deals with robotic mechanical structures. The statement made by the vice-president basically went like this: “This acquisition significantly enhances our U.S. presence, and will provide a capable conduit to leverage and offer our world class space robotics and space surveillance solutions into the U.S. civilian and military aerospace markets”.

How does that conduit apply, now that there is an MDA subsidiary in the U.S.? So you have your apparent company as this, and there's already this other entity that was created just before the sale was announced.

[Carl Marchetto]

It was created through an acquisition, first of all. It's a small organization, right outside of Pasadena, California, that's an offshoot from the jet propulsion lab.

In terms of the types of products that the two companies work on, I would say that for MDA Canada, it's been around large remote manipulators. The activities that have taken place in this company outside of Pasadena have been more around rovers. So they're approaching robotics solutions in different ways. I think that's where robotics will grow for us with MDA Canada. And where MDA Canada will move beyond NASA, or beyond space, is also into hazardous operations. I think there's a big opportunity for MDA Canada to think about rovers and hazardous operations such as nuclear power generation facilities, where they might have to go in and repair equipment, or mining.

So there are a lot of powerful ideas. I see them as being separate but collaborative.

[Art Hanger, Conservative, Calgary Northeast, AB]

Regarding RADARSAT-2 and ATK, you mentioned that you will implement and adhere to the contractual requirements that already exist. Of course, it was noted, too, even in the press release...and I believe Mr. Brison made a comment about what the intentions were when this satellite was launched--namely, to ensure the continuity of data services for government departments and a growing number of commercial clients in more than 60 countries worldwide.

Will that data still be in the hands of Canadians to sell and do what they want with to 60 countries worldwide?

[Carl Marchetto]

Absolutely; and I hope the number goes to 80.

[Art Hanger, Conservative, Calgary Northeast, AB]

Just quickly, going back to the contractual requirements, can the U.S. government override these requirements, to your knowledge, even if your intentions are the best?

[Carl Marchetto]

To my knowledge, no.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Hanger.

We'll go to Ms. Nash, please.

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

Thank you.

Welcome to the witnesses.

Mr. Marchetto, you said earlier, in reassuring us, that MDA, or the Canadian operation, would still manage and operate the technology it has here. But isn't it true that the ownership of the technology would be in the U.S.?

[Carl Marchetto]

The ownership of the technology would reside in a corporation in the U.S. The location of that technology and its development will be here, local.

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

Okay. So once the technology is owned in the U.S., surely then you have to agree that the Land Remote Sensing Policy Act does come into play, whether the operations of the technology are domestic or outside of the U.S.

[Carl Marchetto]

Again, I will leave it up to the legal folks to drive this. My understanding is that we have an obligation to meet all of the commitments that are currently agreed to. We will abide by those, and I see no change.

[Steven Cortese]

I might add that the ownership by ATK of the Canadian subsidiary in no way relieves us of working through Canada's intellectual property export licensing. The mere fact of U.S. ownership in no way changes the process by which MDA, now as an independent company, or as a subsidiary of ATK, would move to take products or technology outside of Canada.

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

But you would agree that the U.S. law would apply.

[Steven Cortese]

U.S. and Canadian laws would both apply to the application of technologies that would move across the border between either of our countries.

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

Thank you.

I want to go back to something that Mr. Brison raised with regard to recent comments, in February of this year, by John Shroyer, the CFO of Alliant Techsystems, who said the following: “the key for us is to be able to move that technology, transfer that technology into the ATK U.S. space and go after what we believe is a very significant growing U.S. classified market”.

My question is, who will do that work? Obviously Canadians cannot do classified U.S. work.