Industry Committee on May 10th, 2016

[Scott Smith]

I think we have a number of strengths in this country. Although we've talked about the lack of skills here, we also have a very strong skill set here. We also have something that a lot of other jurisdictions don't have, and that is certification. Certification allows a lot more flexibility in terms of advanced manufacturing and the ability of our people to be able to deal with complexity. Those are the sorts of things we should be promoting when we're looking to attract investment here.

In terms of our educated workforce, we can look to build STEM skills. That said, it's largely about productivity, investment in new technology, the ability to compete on things that are not labour or wage related, not input related. If we have the ability to improve our engineering, our marketing, our senior management, our branding, and our sales skills, those are the parts of the manufacturing continuum that we probably have not paid enough attention to and could capitalize on.

[Michael Burt]

I guess my comment on that would be, and I'm as guilty of this as anybody, we all have a competitive advantage. We're talking about manufacturing as a sector, but it's about individual businesses, right? Competitive advantage is built at the business level. The report I mentioned earlier—that I shared with the clerk, and hopefully you can get access to it—was basically talking how Canadian businesses build global competitive advantage. It can be happening in many different ways. It can come from your supply chains. It can come from the skill set you have. How each individual business does it is different. I think we have many Canadian companies that are successful on the global stage. The issue is about trying to understand the ingredients that lead to their building that competitive advantage, and how we can help more companies grow that competitive advantage.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

In recent years, we've seen the number of temporary migrant workers skyrocket. They come here to work for six months or a year, sometimes a bit more.

A moment ago, we were talking about students and young people. It sometimes seems as though, had there been a better structure in place, people from here could have been trained in advance in order to put Canadians to work, first and foremost, in sectors with labour shortages. Instead, we seem to be taking the easy way out. Indeed, rather than investing, employers bring workers in from outside the country. They work for however long is needed and are then sent back to their countries.

How can we make use of the temporary foreign worker program in a way that fosters a better structure for training Canadians?

[Scott Smith]

I think we could start with better labour market information. Some of the challenges you've referred include: do we know who's out there, and have we connected the right people to the right jobs? In a lot of cases we haven't.

The other side of it is that it's important to be fast to market. If you're going to be competitive, you have to be the first there. If it's a challenge to bring in a person locally who is capable of doing a specific job and easy to bring in somebody else in, you're probably still better off to bring somebody else in.

[Michael Burt]

My comment on that would be that I just finished doing a very—

I'm sorry, are we out of time?

[The Chair, Liberal, Dan Ruimy]

Yes.

[Michael Burt]

Okay. That's fine.

[The Chair, Liberal, Dan Ruimy]

I tried.

Mr. Baylis, you have five minutes.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

I'd like to swing back and talk a bit...we talked about large and small companies, and focused on the 90% that are the small and medium-sized companies. Prior to being a politician, up until six months ago, I ran my own business making and developing medical devices. One thing that happened was that we got access to a very good medical lab in the University of Toronto network. That had a huge impact on us, because we could then do a lot more studies. As opposed to having to fly down somewhere in the United States, we could do it in Toronto, where we had a plant, and I could have five, six, or seven engineers come in. If something got cancelled, we'd come back the next day. It had a huge impact. I call this access to equipment. Obviously, if you're a large company, you don't have those constraints, because you can build your own labs.

Can you expand on how that may or may not help these small to medium-sized companies? Let's start with you, Mr. Smith.

[Scott Smith]

I think that goes back to what was announced in budget 2016 and the idea of developing infrastructure around a post-secondary institution. I think that's great. It's the opportunity to access labs to be able to do the kinds of things you need to do, and the testing you need, to be able to develop a product. That would be prohibitively expensive if you tried to do it on your own. It's much more efficient if you're building those communities of collaboration. I think that's a great idea.

[Michael Burt]

I think it's a great idea too, in the sense that, if you look at successful partnerships between post-secondary institutions and businesses, they take take time to build. It's a long process, but that's a key way of doing it. if you can get businesses more directly involved with post-secondary institutions in solving their day-to-day problems and can build that confidence that they are able to help them with, then that's great. I think you have long-term payoffs associated with that.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

You would agree then that the work that we might do or propose as a committee on how to help these small and medium-sized companies access these infrastructures—which may or may not exist, whether at the NRC, universities, or whatever—at a reasonable cost could have a positive impact?

[Michael Burt]

I would think so, yes.

[Scott Smith]

The only thing I would add is to make sure that when developing the plans for these infrastructure investments, you are building in the flexibility to meet the needs of a broad cross-section of needs and wants.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

I'll switch over to talk a little about innovation and IP. You mentioned that for innovation you have to own the IP, and then once you own it, you have to actually make something with it, or else you're just owning IP.

This relates to a concern that we have on two fronts: dissemination, and whether you're seeing enough of that coming out of universities; and also, I think you mentioned, Mr. Burt, priority patenting in the U.S.A. first. Do you see this as a problem or an issue?

[Scott Smith]

I'll start with the number of patents sitting on a shelf in post-secondary institutions. That's a challenge, and it's recognized pretty well, even within post-secondary institutions themselves. They recognize that there's huge value in the patents that exist there; so technology transfer, yes, is a challenge. There are probably things out there that could easily be commercialized if they were just readily available in terms that a company could access.

A patent filing is not necessarily enough to make a decision on whether or not you have a valid potential product or not. You certainly need more information than that. Often patent filings are a little limited. So the relationship between the patent filing and what the journal entries or the citations are, or how that product might be used, or the projections, is important as well.

I think that maybe an arrangement between government and post-secondary institutions—and industry, for that matter—to create some sort of index where these could be accessed easily would do a lot for technology transfer.

[Michael Burt]

I think I said this earlier: it really boils down to commercialization.

You're right. We do have patents; we do have raw research. As we move away from the researchers towards actually turning it into a product, we generally fall down as a country. As my president would say, we have a good engine, but not necessarily a good transmission to turn that into drive.

What is the cause of that? It's really hard to put a finger on it. Is it because our businesses are not looking at these opportunities that are available and figuring out how to commercialize them? Is it because our researchers are content with the research element, and not wanting to take it, commercialize it, and turn it into a revenue-generating product? It's very hard to say.

Usually when you talk about the innovation process in Canada, the key weaknesses are with taking ideas and turning them into processes and products.

[The Chair, Liberal, Dan Ruimy]

We're keeping it tight. Mr. Dreeshen, you have three minutes.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

Of course, the analogy of the engine and the drive is important. Sometimes government acts as a burnt clutch in the middle, so that can cause some issues.

I know you were talking about determining the effectiveness of different research programs. You spoke of the accelerator issue, you spoke of the SR and ED program and IRAP. I think it's critical that look at that and make sure that those dollars are being spent wisely. There was $1.5 billion put into the Canada first research excellence fund to support research commercialization, which becomes one of those areas where you want to make sure that you're seeing some results from, because a lot of dollars were put into that.

I wonder if you could talk about some of the initiatives that came from that fund that helped companies to be do research commercialization.

[Scott Smith]

I think the jury's still out on the Canada first research excellence fund. Much of the funding, again, is focused on academic research as opposed to commercialization. It's going through the same granting agencies that are disseminating funds. All I can say is that the feedback that I've had from some companies that are trying to access some of the research dollars, or partnering, or helping to fund some of these studies is that they could be interesting, but aren't necessarily solving the problems these companies need help with in the short term.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

Is that the issue, then, between the applied funding...and perhaps more of it should be going into applied?

I have two colleges in my riding, Red Deer College and Olds College. The partnerships they have with the community and taking applied funding...that's where the cohesiveness is. I'm just wondering if that's something we should be emulating.

[Scott Smith]

I certainly hear that from the applied research institutions. A lot of good could come from relationships between universities and applied research facilities in demonstrating what they can actually do with these products.

[The Chair, Liberal, Dan Ruimy]

We're going to jump to Mr. Arya.

[Chandra Arya, Liberal, Nepean, ON]

Mr. Burt, you spoke about Germany and Israel. Is there any case study that we can look at to see what we can learn from them?

[Michael Burt]

I can follow up with you on that. One of my colleagues was recently writing about the BIRD program in Israel. They identified that a key weakness of smaller Israeli firms was that they didn't have sufficient market access or marketing skills. The program suggested that they partner with an American company to complement their skill sets. This was part of getting the funding associated with the program. They were able to leverage their skill sets to become part of their global value chains. Of course, there are trade-offs. Obviously, if you're part of the global value chain, you're not necessarily capturing all the value associated with your product. Still, it was a good way to start developing some key strengths.