Industry Committee on May 27th, 2008

[The Chair, Conservative, James Rajotte]

Thank you.

Thank you, Mr. Carrie.

We'll go to Mr. McTeague.

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

Thank you for being here. I really appreciate the opportunity we had earlier to visit your site at Smartpark.

There are winners and losers. There is always sort of an underlying assumption by analysts who say there are some things that need to go the way of the horse and buggy and other things that can evolve.

Mr. Boitson, your company is a good example of a company that's evolved over the years. It's been around for over 100 years. If I understand correctly, MacDonald Brothers went back quite some time. We know the history, the politics, etc.

Right now, I'm seeing here in Manitoba a high level of impressive coordination. I'm wondering, however, if you can use that as a template to coordinate between competing interests, say in Toronto or Quebec, and if there is a way that when it comes to things such as procurement we're all sort of speaking from the same book. The best obviously would wind up with the opportunity to do whatever it is that is out there.

More importantly, can you identify for the committee ways in which we can improve the coordination so that we don't wind up with this regional bun fight that often happens? We've seen it here before. I think we've tried to avoid it for the past 20 years, but it was about 20 years ago, around this time, that I think it's fair to say we put region against region when an entire nation's interest was at stake.

Are there any ideas, any insights, or any efforts at trying to pull these things together?

[Don Boitson]

It's an interesting comment, and if I had the solution to that one, I'm sure we'd be applying it across a few industries.

I'm still a very strong believer in programs--I'm going to use the word again--like the IRBs. However, yes, it could be on a more national scale. There are technologies that if we do get together...we do have the AIAC, the Aerospace Industry Association of Canada, and we're trying to coordinate a little more closely with all the groups within the provincial associations and the western associations with our Quebec, Ontario, and Atlantic partners, so we're certainly trying to do it from the industry sector. I think there are programs like WD and ACOA that have non-competitive clauses with Canadian industries, so that we don't have some examples where one does fund an advantage for someone in the east versus the west. We do have to be careful when we put those in place, so they are not competing across Canadian divisions.

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

I'm almost out of time, but I want to ask all of you, procurement aside, what would it take for you to continue to develop and succeed in Canada in the international sphere? All of you mentioned a couple individually, but it seems to me we always come back to what defence contracts or what kinds of things can be had domestically. I want to see if, rather than saying the opportunities exist within Canada to build the industry beyond where it is today--it's a very impressive record--what we can be doing, short of removing procurement, that would make Canada a centre of excellence, as I'm starting to see here in Manitoba.

[The Chair, Conservative, James Rajotte]

Mr. Geary.

[William Geary]

Given that the Canadian dollar is on an incline, and it's a very attractive currency at the moment, competing on the open market globally you come down to two things when you do business in aerospace: you either have the technology and innovation no one else has that you can deploy and leverage better than your competition, or you do it for a lower unit cost outlay. What is going to make our Canadian firms attractive in the future to supply Boeing Canada is a continuous improvement mindset whereby they're always going after doing better day after day, with a higher level of quality. If we can find a way whereby the government can continue to promote learning and the leverage of technology and techniques, it will make these firms more attractive to do business with, and ultimately, when they compete on the open market, it's going to come down to either technology or whether they can do it for a lower value than others.

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

Wouldn't that make us a bargain right now in Europe, given that the Canadian dollar has spiked or stuck with the U.S. dollar?

[William Geary]

Yes.

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

Mr. Boitson.

[Don Boitson]

Where else are you going to invest? In our people, and getting people up to that level of continual improvement, the technologies, the engineering, and making sure we're leaders and being the best we can be in those fields. I see education and training funding and development as very key areas.

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

I take it, then, that all of you here would support C-253 to make RESPs tax deductible for all families in Canada?

[Voices]

Oh, oh!

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

Sorry, you don't have to answer.

My time is up. Thank you.

[A witness]

Whose bill is that?

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

The one that's half dead.

[Voices]

Oh, oh!

[The Chair, Conservative, James Rajotte]

Thank you, Mr. McTeague, especially for the editorial comment.

[Voices]

Oh, oh!

[The Chair, Conservative, James Rajotte]

We'll go now to Mr. Stanton for five minutes.

[Bruce Stanton, Conservative, Simcoe North, ON]

Thank you, Mr. Chair. Thank you to our panel this afternoon.

I want to start off first, because I don't know that I'll ever have the opportunity again, but I had the chance to be with 8 Wing in Trenton last September and they had tremendous things to say. The new 429 Squadron that has the C-17s is delighted by these airplanes.

Mr. Olson, you mentioned some of the barriers you're having around IP licensing--in other words, the ability for you to provide services to aircraft companies and engine companies. Are you not able to do the work because there's greater protection from the original manufacturer? Could you expand on that thought to see what those barriers were?

[Kim Olson]

I was talking in generalities in terms of IP being a two-edged sword to a certain extent. I think from a national perspective that might be the case. If you look at some of the procurements and some of the obstacles, it's important to bundle that in terms of these long-term, life-cycle types of agreements, where we have to understand it may really restrict the type of technology and the skill levels we will have in Canada, because engineering activities will no longer be required in Canada. It's going to be held and maintained by the OEM, which is potentially foreign to Canada. It's an important aspect to think about when we're going through these defence procurements in particular, to think about the types of expectations on IRB as it kind of does circle back to that other point.

[Bruce Stanton, Conservative, Simcoe North, ON]

That's a good segue into the next point, to the question of procurement and these IRBs. Would the environment be more favourable in attracting these kinds of purchases if there weren't the regional aspects to these kinds of requirements? I mean, if you had more flexibility, for example. It's a difficult thing in Canada when we pit region against region. Would there be more flexibility, or would you be prepared to comment, perhaps Mr. Geary or Mr. Hoffman and Mr. Boitson, on that topic? Would it be better to look at it as a pan-Canadian as opposed to a regional requirement?

[William Geary]

It would definitely cause industry and those members in industry to compete for the value of the IRBs, based on their skill sets, and not be as prescriptive in terms of putting equal value or a prescribed amount in the four regions. That would then, in the case of some of the things going on here in Manitoba, make this an attractive, and potentially more attractive, area to do business because it has a development base, more so than maybe Saskatchewan or some of the other provinces, where you will find a potential for concern amongst the industry...as those areas in the east, where maybe they don't have the same base that some other parts do.

[Bruce Stanton, Conservative, Simcoe North, ON]

At the same time, would that not be an incentive to try to rally the kind of investment around a cluster of scientific and investment research to make that happen?

[William Geary]

I've always felt that competition drives greatness, and a free ride does not always drive greatness.