Industry Committee on May 3rd, 2016

[The Chair, Liberal, Dan Ruimy]

Thank you very much.

We're going to move to Mr. Masse.

You have seven minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

Thank you to our guests for being here today. We appreciate the presentations.

My first question is for the BDC.

What were your investments last year in support of the number of companies in Windsor?

[Michael Denham]

In Windsor we have 47 clients, and a total commitment of just under $25 million.

[Brian Masse, NDP, Windsor West, ON]

I appreciate that. That's around what I thought.

I often get a lot of companies coming to me saying that access to capital is one of the most difficult challenges they have, and they ask me what the BDC does. I've met with them several times and they're nice people, but I don't get any specifics because of client issues and so forth. What should I say to that business person who comes to me and asks me what the BDC does and what they have done in Windsor?

[Michael Denham]

It's a two-part answer. First, the comment you made around the challenges in getting access to financing is accurate. You may have seen the StatsCan data on this. We always analyze the extent to which loans are being approved by segment and subsegment of the population, and we look at the differences between mid-sized businesses and smaller business. The approval rate for larger businesses by the financial sector is 96%. For smaller businesses it's 81%. For women-owned businesses it's 79%. For immigrant-owned businesses it's 77%. For young entrepreneurs it's 72%.

[Brian Masse, NDP, Windsor West, ON]

Okay, but that's not really a....

[Michael Denham]

It's just context, so the point around—

[Brian Masse, NDP, Windsor West, ON]

I have limited time, so I'd just like to know quickly what I can say the BDC does when someone in my constituency approaches me about using the BDC services. I have to give a quick answer. I can't recite a number of statistics. What should we say to those individuals? We're hearing from our constituents that access to capital is a very intensive problem.

[Michael Denham]

Our role is to make sure that clients have access to capital, so what I'd say to a company in Windsor would be to approach us. We can make start-up loans, we can make subordinated debt loans, we can provide equity if they are looking for equity investments, and we can provide standard term loans. We look through their financials, their business case, and come up with the right financial solution for them.

[Brian Masse, NDP, Windsor West, ON]

From that, is there a certain point in time when we can use examples? I meet with BDC, and no matter what, unless you decide to go public on something, it's very difficult to give specific examples from our constituency. Can we get that type of information coming in sometime? It's helpful when we refer to a local business that's willing to do this. We don't get that kind of communication.

[Michael Denham]

I agree. I mentioned two clients in my set-up, D-Wave and Louisbourg. We have permission from them to use their names publicly.

I can get you a list of clients in the Windsor area whom you can reference. One I have in front of me is Advantage Engineering. They have given us permission to talk about them and our relationship, and there's a longer list that I can get you.

[Brian Masse, NDP, Windsor West, ON]

Is this something we could do on a regular basis, just get us a quick...? It's helpful when we're communicating. It becomes the case that people—I'm sorry, I don't want to seem negative on this—when they think of the BDC think of big, giant buildings in Ottawa. They don't necessarily see it on the street corner, or when coming into our office.

That's what I'm looking for.

[Michael Denham]

That's good. We can't disclose names unless we have permission, but when we have permission, we're happy to.

[Brian Masse, NDP, Windsor West, ON]

Of course, even if we have a few examples that are modern, it just helps, because they don't feel as though they're going to some kind of faceless organization. They'll attach a local name to it.

I was interested in your statements regarding trade agreements. We've had trade agreements with Panama, Jordan, Liechtenstein, Colombia. Are those the trade agreements you're talking about, or is it future trade agreements? What are you talking about? How do you look at those trade agreements, and how do we measure how we're doing with them?

I know that often we have a trade deficit for many of our trade agreements. That seems to be the particular pattern we've had over the last decade. How do we work with that? How do we measure whether they are working or not for your organization?

[Michael Denham]

Here's what I'm hearing from our clients. These trade agreements have been signed, and for the average small business it's really hard to figure out how to take advantage of them.

We're trying—we're actually working on it as we speak—to put in place a very simple set of tools that will allow them to find out for their specific company or industry what new opportunities each trade agreement represents, both for those that have existed for a while and some of these new ones as well.

I think this is a big opportunity, because it's really difficult for these entrepreneurs to figure out how to penetrate Jordan, how to penetrate Chile and these other countries with whom we have trade agreements.

[Brian Masse, NDP, Windsor West, ON]

That's really good to hear. I think one of the reasons we have trade deficits with many of those countries is that small and medium-sized businesses can't research whether Liechtenstein is going to take their product, but maybe there are some particular elements they would exploit if they knew, because there's lots of diversity happening with regard to it.

Do I have any more time, Mr. Chair?

[The Chair, Liberal, Dan Ruimy]

You have 45 seconds.

[Brian Masse, NDP, Windsor West, ON]

Great. I'll quickly move over the Canadian Space Agency, then.

Thank you very much. I'll get back to you later.

I'll ask some more questions there, but concerning manufacturing, I was interested to see that you're six times more R and D-intensive than regular manufacturing. How do we then exploit that? Is this manufacturing happening in Canada, or is it being exported elsewhere? Are we able to do it in-house?

[Sylvain Laporte]

We were referring to what takes place here in Canada.

[Brian Masse, NDP, Windsor West, ON]

Yes, it's on page 8 of your slide.

[Sylvain Laporte]

I'm not sure I caught your question, then.

[Brian Masse, NDP, Windsor West, ON]

You claim that you're six times more R and D-intensive than total manufacturing in Canada. Is that separate? Is it inclusive of all? Is it mostly happening in Canada? Is it happening elsewhere in terms of your six times more R and D? Then, how do we exploit that in terms of increasing it?

[Sylvain Laporte]

These are Canadian facts, so it is about how companies in Canada that work in the space sector spend their money. They are more R and D-intensive than the average manufacturing sector. That is a Canadian perspective, for sure.

We've done that analysis. It's not a claim. We have facts to back it up.

[The Chair, Liberal, Dan Ruimy]

I'm sorry, Mr. Masse, we're way over.

We're going to go to Mr. Arya.

You have seven minutes.

[Chandra Arya, Liberal, Nepean, ON]

Thank you, Mr. Chair.

My first question is for BDC. My personal experience is that the new manufacturing companies in Canada have quite a bit of difficulty in accessing capital. In this same room, a couple of weeks back, we had the federal economic development agencies, and we asked them if an entrepreneur comes in with a proposal to set up a new manufacturing company, what do they do? One of them bluntly told me, “No, we don't finance them”. Tuesday morning I had discussions with two eastern Ontario development agencies: the Kingston Economic Development Corporation and the Quinte Economic Development Commission. They said the same thing, that access to capital for small manufacturing companies is quite difficult to get.

How many new small manufacturing companies have you supported during the last year?