Evidence of meeting #4 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 services.
A recording is available from Parliament.
Assistant Deputy Minister, Industry Sector, Department of Industry
Do you mean domestically? Do you mean in Toronto versus Vancouver?
Independent
André Arthur Independent Portneuf—Jacques-Cartier, QC
No, in what area of the service sector is Canada the best in the world and unbeatable when compared to all its competition? In what area are we the best?
Assistant Deputy Minister, Industry Sector, Department of Industry
It is difficult to say. Earlier on, I said that we had 8 of the 10 biggest companies in the service sector. Seven of those eight companies are in the financial services sector. In order to determine the best in the world, you would have to study each of the sub-sectors.
To come back to architecture, do we have the best architects for the green building services, the environmental sector? It is possible. In another sector, do we have the best health care services?
You would have to study the situation within each of the sub-sectors in order to determine if Canada is the best or the second-best.
Independent
André Arthur Independent Portneuf—Jacques-Cartier, QC
I will correct the word "best" by asking you if there is an area of the service sector where Canadians are leaders.
Assistant Deputy Minister, Industry Sector, Department of Industry
In the financial sector. The financial institutions are among the biggest and the best.
Acting Director, Financial Institutions, Financial Sector Policy Branch, Department of Finance
This is also true for the institutions in the insurance sector, because they are among the five or six biggest insurance companies in the world.
There are several ways to answer your question. Is it better to be a good place to work? That is one way in which to answer. Or is it good to be the biggest in the world? That is another way to answer.
Assistant Deputy Minister, Industry Sector, Department of Industry
If I may, Mr. Chairman, I would like to talk about the engineering sector and the projects carried out by SNC-Lavalin globally. These people are sought out by countries to carry out enormous projects. They are among the best in the world. In the area of information technology, we could talk about Research In Motion, RIM, with their BlackBerry and related services. I think if I asked officials to study each sub-sector, we could start identifying those that would be the pride of Canadians.
Independent
November 22nd, 2007 / 10:45 a.m.
Assistant Deputy Minister, Industry Sector, Department of Industry
Only because I do not have the list before me. It is not because I believe we do not have any.
Independent
André Arthur Independent Portneuf—Jacques-Cartier, QC
Since the creators of wealth in the service sector are those doing business on the international front—you explained that to us earlier—who is our competition globally in the service sector? Is it China, Switzerland? Who would be our most significant competition, the ones we fear?
Assistant Deputy Minister, Industry Sector, Department of Industry
Once again, we would have to study each of the sub-sectors and each of the components. For some services in the environmental sectors, some might suggest it would be the French, because of their performance in the heavy industries. In other sectors, for example in computer systems, some might say it would be the United States, because of what they are able to do. Yes, we have competition, and it comes from several countries. It all depends on what you are talking about exactly.
Independent
André Arthur Independent Portneuf—Jacques-Cartier, QC
Manufacturers told us about the problems they were having getting skilled workers that would allow them to grow and even just to maintain their business activities.
Is this a problem that is affecting the service sector in Canada as strongly?
Assistant Deputy Minister, Industry Sector, Department of Industry
It would have to be confirmed with them. I have not had any discussions concerning the current situation. Earlier on, I alluded to the fact that there were fears that this might happen. I used the example of the tourism industry. They have looked to the future and they are worried. They believe there will be a labour shortage—I do not remember the figure, but it was rather impressive—by 2015. If those fears exist within that industry, they certainly also exist in other sectors. Therefore, I do not know why we would not be facing a challenge.
Conservative
The Chair Conservative James Rajotte
Okay, thank you.
I'm going to take the next Conservative spot here.
My question relates to what is stated on page nine and page 11 with respect to productivity growth. As you know, productivity growth has been a challenge for the Canadian economy as a whole, and yet you state on page nine that in fact the service sector is doing well in terms of productivity growth, in terms of labour productivity.
On page 11 it says that “increased investment is helping spur productivity gains”.
Can you expand on why in this sector the productivity growth is better than it is in other sectors?
Assistant Deputy Minister, Industry Sector, Department of Industry
Again, I apologize for not having a slide on this.
They have been making investments in plant and equipment in that sector. It is a very impressive number. I don't have the specific number in my hands here, but there is a correlation between the investment they have made in technology, plant and equipment, and their resultant productivity.
We can take the example that I used earlier, the everyday example of grocery shopping and checking out your groceries yourself using the scanner technology and investment. I think one could take each of these sub-sectors and find examples of where the investment has been able to result in that increase in labour productivity.
Conservative
The Chair Conservative James Rajotte
That leads to the second question I have. It relates to page three.
I appreciate the fact that you've outlined today that the services sector has a variety of positions.You can't define it by any one particular subset within the sector, especially in terms of productivity related to adoption of new technologies. This is a very simple question, but where would you put companies like Microsoft and IBM? A company like Intuit, I assume, would be in the finance and insurance subset, but where would you put companies like Microsoft and IBM that provide ICT service support?
Assistant Deputy Minister, Industry Sector, Department of Industry
If I can consult quickly with my economist...I believe they are in professional services.
Conservative
Assistant Deputy Minister, Industry Sector, Department of Industry
Yes, and part of it could be in information and culture. As you get into the finely divided parts, we almost have to go back to Statistics Canada to understand how they've compiled the data and how the North American codes work.
I can get you that breakdown.
Conservative
The Chair Conservative James Rajotte
Okay.
Now, this is where it gets very complicated for me. Take a company like Intuit in Edmonton. It does provide tax advice, so it's a financial company, and yet it has an incredible call centre. It's one of the best employers in Canada. It has a call centre that is just state-of-the-art. It's unbelievable.
So that is in both categories, correct?
Assistant Deputy Minister, Industry Sector, Department of Industry
It should be. I would want to get my economist to confirm that's the way it would get coded, but that would be my understanding.
Conservative
The Chair Conservative James Rajotte
Okay.
My last question or point is something that perhaps you can provide further information on. There is a genuine concern about a loss of employment in the manufacturing sector and increasing employment in the service sector, but there is a concern about those who have been working in manufacturing for a number of years trying to make the transition, particularly if the median wage is lower in the service sector than in the manufacturing sector.
When you analyze that problem, is there something Industry Canada can give us to highlight the relationship between various sectors? It seems to me the more you delve into this, the more complicated it is for a company like Intuit, but even more for a sector like oil and gas. Everybody assumes it's natural resources. That's what it is, yet manufacturing is huge in that sector. Forty per cent of the contracts for the oil sands go to the province of Ontario. Yet in terms of the services sector, this is an oil field service company. Is that a service sector or is that energy? What is that?
Is there something you could provide, say a pick-up between those who perhaps lose a job in one sector and move to another sector? Is there anything you have on that, but also the relationship between the sectors, such as an OEM, an anchor that then draws in the other services? For instance, the GM plant in Oshawa, what is the impact on the related services if you go to two shifts? The economy is so dynamic. Is there a way for any information you have to help the committee understand that, as well as the fact that perhaps there is a simple way of looking? We look at energy, manufacturing, and service. I don't know if that is the perfect way of analyzing the economy.
So those are just some general thoughts. I don't know if you have any reaction or if there is any information you can provide to help the committee to better understand. That would be helpful.
Assistant Deputy Minister, Industry Sector, Department of Industry
I certainly think we can provide some information to understand the data and how it is collected. There are challenges in the data. The economy has evolved over the years. As I think we talked about earlier, what we counted 10 years ago and what we're counting today may be slightly different. So we'll try to explain some of that.
With regard to your idea of going from one shift to another shift and how that impacts on the service economy, I think we should be able to pull together a bit of information. To what extent you can extrapolate that would be questionable. But most assuredly, if you start taking a look at the oil and gas industry, there is lots of high-end engineering informatics technology. There are lots of services. It is not as most people would think at first blush; there is a whole host of things.
We could perhaps provide a primer of sorts, if that would be helpful.