Thank you, Mr. Chair and members of the committee.
Thank you very much for inviting us here to discuss the state of e-commerce in Canada today and how it's being utilized by our members.
CME represents about 10,000 members from across Canada. We chair the 47 member associations of the Canadian Manufacturing Coalition. About 85% of our membership are SMEs that use this type of technology on a daily basis.
Our views are probably slightly different from the first two guests', where our focus is much more heavily concentrated on the business use of technology and the B2B electronic commerce marketplace.
While the majority of the attention generally is focused on the consumer end of the transaction—because that's what impacts our daily lives—about 80% to 90% of all e-commerce transactions are actually conducted between businesses. There are several prominent examples you always hear about: Walmart's infamous inventory control system and its supply chain; automotive industry giants like GM, Ford, and Chrysler have a $500 billion marketplace with their suppliers; large food and beverage companies such as Procter & Gamble, Coca-Cola, Nestlé, and Unilever have about a $200 billion marketplace for the purchase of goods and services for their suppliers. Other organizations like B2B steel and other companies like FedEx and other major B2B service providers are areas where companies provide services and offer services on a day-to-day basis.
But e-commerce has also dramatically changed the way products are brought into the market. Today companies are able to develop, design, test, market, and sell all manner of consumer products using e-commerce tools and tie various global supply chains together virtually. For example, cars and trucks—which a decade ago took five to seven years to bring to market—are now being brought to the showroom floor in two to three years. Corporate R and D, while still centrally controlled, is now conducted throughout various portals globally. The process, including tying suppliers and sub-assembly contractors, and R and D and design with product testing, can be completed almost entirely virtually and 24/7 with offices around the globe.
Where products once were introduced globally one or two markets at a time, products can now be manufactured in multiple locations globally for sale in almost every market simultaneously.
While this change in product development has had noticeable impact on consumers, it has also fundamentally altered business relationships and the way successful companies can operate globally. From a policy-making standpoint, there are also a number of critical electronic commerce tools that are essential for Canadian businesses. Some of them are in addition to what has already been noted.
There are four, in particular, I'd like to talk about, primarily about infrastructure and business investment.
First, on infrastructure, open access policies are critical to Canada's digital competitiveness. A report from Harvard's Berkman Center for Internet & Society earlier this year ranked Canada poorly in terms of Internet prices and speeds. This has a significant direct negative impact on businesses' ability to employ e-commerce technologies and strategies in Canada.
In 2009, the CRTC ordered phone companies to make their new and expensive fibre Internet infrastructure available to smaller firms that could not afford to build their own networks. It is essential that the government implement open access rules that will force Internet network owners to share their infrastructure with smaller competitors.
Second is implementing incentives for businesses to invest in ICT technologies. ICT technologies account for approximately one-third of total investments in machinery and equipment made by Canadian businesses. But ICT is also embodied in other products and process technologies deployed across business. Despite this, Canadian companies have lagged behind U.S. business in investing in machinery and equipment since about 1992. And about 20% of the Canada-U.S. ICT investment gap is due to differences in industrial structure between the two countries. There is a higher share of output in ICT-intensive industries in the U.S. and a higher proportion of small firms in Canada, which tend to invest less in ICT.
Weaker investments in ICT is the reason explaining Canada's poor productivity levels compared to other countries. Canada should introduce a specific business ICT investment tax credit as a result.
We want to keep investment in parallel infrastructures aimed at providing academics and businesses with the ability to share mega database and prototyping services. CANARIE, Canada's Advanced Research and Innovation Network, which provides more than 19,000 kilometres of ultra high-speed fibre optic cables, is a crucial enabler of Canadian innovation.
Globalization has not only revolutionized the way businesses make products and deliver them but also radically changes the way they access worldwide resources to foster innovation. Research is becoming increasingly data intensive, which requires fast and reliable networks, allowing businesses, academics, labs, and other innovation stakeholders to work together.
CME was pleased to hear that CANARIE's mandate had been renewed for another five years; however, we'd like to see that lengthened into another five-year term as well.
Finally, on helping businesses invest in high-performance computing systems, as research is becoming increasingly data intensive, it not only requires dedicated infrastructure, but also high-performance computers to handle and process mega databases. HPCs, or supercomputers, are relatively unknown in many business sectors today in Canada, but their potential to increase productivity is enormous.
Some R and D intensive manufacturing industries, like aerospace and automotive, already use HPCs extensively to conduct complex simulations and share them with their business and research partners. The U.S. Department of Defense and some states are already developing strategies to become world leaders in the use of HPCs in the manufacturing sector. We believe that Canada has to start paying attention to the huge benefit the supercomputers can provide in all manufacturing sectors.
I'm pleased to inform you today that CME, in partnership with Canadian Advanced Technology Alliance and other stakeholders, is currently building a survey to map out the use of HPCs in Canadian manufacturing sectors.
With that, I'll conclude, Mr. Chair, and look forward to the conversation.
Thank you.