Evidence of meeting #15 for Industry, Science and Technology in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was steel.
A recording is available from Parliament.
NDP
Brian Masse NDP Windsor West, ON
Excellent.
Then over to forestry.
With regard to some of the innovation you're doing, have you branched out to the universities and colleges? Have you also moved to non-traditional universities and colleges for production and distribution of some of your new products? Some of this stuff is good for the mould-making industry and others. This would include some of the products you have. Has that been taking place, and if so, how as advanced is it?
Vice-President, Regulations and Partnerships, Forest Products Association of Canada
We have been reaching out to many universities and colleges through FPInnovations, our national research institute. They've been working with some of the universities as well. One of the examples I like to use is Lakehead University. Our researcher there is looking at turning lignin into biochemicals that can be used for mining. A surfactant and a dispersant are used in refining mineral ore. In some of the early studies, it looks like this could be more efficient than what the mining companies are now using. Also, it's green.
You can also turn lignin into a flocculant that can be used in tailing ponds to accelerate the sedimentation and the cleaning of the water. This could be used for oil sands tailing ponds as well. We are reaching out to various partners to see where opportunities can be realized.
NDP
Brian Masse NDP Windsor West, ON
I want to move to aerospace and the skills gap in workforce training. We had a $30-million partnership with a company in Windsor for maintaining aircraft. Unfortunately, there wasn't the skill development there. Instead of drawing from local college and university programs, workers from outside the area had to be brought in. College was supposed to be involved, but there was nothing there.
What do we need to do to fix that? It doesn't seem right to be using public money to take positions from somewhere else into another place in Canada.
Executive Vice-President, Aerospace Industries Association of Canada
No, and there are a number of initiatives under way. We need to get the industry connected to the educational institutes and find out what jobs are needed. There was recently a very large labour market information study done, not by us but by the Council for Aviation & Aerospace.
It is something that we're concerned about. Again, there's a range of initiatives and, frankly, because skills and training are not a totally federal responsibility—
Executive Vice-President, Aerospace Industries Association of Canada
—a lot of them involve a lot of other stakeholders. It's complicated, but it is something that the industry is quite concerned about.
Liberal
Liberal
Chandra Arya Liberal Nepean, ON
I thank the witnesses for being here.
Mr. Christie, thanks a lot for the excellent presentation you have given. I was quite interested in your classifications of innovation: the entrepreneurial innovation, the process innovation, and, finally, the product and balance sheet innovation. I think that depicts a sort of frame for the advanced manufacturing that we are interested in.
Are you seeing any trends in entrepreneurial innovation? Are you seeing companies involved in that going up the value chain towards process innovation?
Executive Vice-President, Aerospace Industries Association of Canada
This is one of the abiding concerns that we have in our industry. Because of the cycle that we find the global industry in, where we really are in an execution cycle, this makes it very difficult for entrepreneurial innovators in aerospace. Airplanes have been designed and now they need to be built, and we won't be seeing new major designs again for another 15 or 20 years.
Frankly, if I'm at Airbus or Boeing and I'm a supply chain manager, probably my worst “problem children” in my supply chain are the guys who show up one day and say they can do something that nobody else can do, so some engineering vice-president lets them into the supply chain. Then it turns out that not only are they not the only guys in the world who say they can do it, they actually can't, at least not at the quality and at the pace that is required. New entrepreneurial companies that are showing up and trying to use that pitch are having a hard time, frankly, in this environment.
I'm sorry, but I really want to talk about this, because this is the existential problem in our industry. We need to find ways to help companies add scale while retaining the qualities that got them where they are. That means we need to look for inorganic ways. Companies need to be prepared to grow through partnership, consolidation, business combination, and joint venture.
Liberal
Liberal
Chandra Arya Liberal Nepean, ON
—which is quite good.
You've said that we all know that we are in the execution stage of industry, but don't you think that is the right time for those companies involved in process innovation to gradually step up their thinking to go towards product and balance sheet innovation?
Executive Vice-President, Aerospace Industries Association of Canada
Yes. The problem is that companies that started out as entrepreneurial innovators are run by guys who like to be entrepreneurial innovators. There is a psychological gap that has to be crossed to turn those guys into process innovators. Frankly, I think that's where some of the companies flounder.
It's something that our industry is adapting to. I would say that autos went through a similar transition 10 years ago. It is difficult for some people in our industry. The guys who are getting it right are writing their own cheques.
Liberal
Chandra Arya Liberal Nepean, ON
Mr. Christie, the BDC came out with a study that said the mid-sized manufacturing companies are shrinking, but I guess that is not the case in the aerospace industry.
Executive Vice-President, Aerospace Industries Association of Canada
No. There's even a slide in that report that says growth is occurring in the mid-sized....
Liberal
Chandra Arya Liberal Nepean, ON
You also mentioned that for the companies involved in the process innovation, the programs of the government should be flexible to meet their needs. Do you have any specifics? If it is a very long answer, you can always submit it to us in writing.
Executive Vice-President, Aerospace Industries Association of Canada
I don't want to appear to avoid the question, but really, I don't know the answer. It is the same question that we are asking ourselves, and we are working very hard on it to come up with coherent answers to help the government. I don't have a short answer for you, no.
Liberal
Chandra Arya Liberal Nepean, ON
In most segments here, people talk about small business. Everybody says small is beautiful, but apparently the companies employing more than 250 people are just 7% of your sector and account for 93% of the sales and 90%-plus of R and D.
Liberal
Chandra Arya Liberal Nepean, ON
Do you think we need a specific aerospace segment strategy to increase this?
Executive Vice-President, Aerospace Industries Association of Canada
We need a strategy that recognizes the business reality on the ground, which is that the engine of growth has to be the mid-sized companies, and the mid-sized companies are under a lot of different kinds of pressures that they need help to manage.
Liberal
Chandra Arya Liberal Nepean, ON
Okay. I may come back to you.
I have a question for the steel industry. There is a global capacity. In respect to what government does to try to help you guys, we cannot work on the global capacity that exists.
The World Steel Association has identified that 75% of the grades of steel that are manufactured today did not exist 20 years back, so it means that the steel industry is also investing quite a bit in innovation.
Liberal
Chandra Arya Liberal Nepean, ON
I'd like to know whether that is the case with the Canadian companies. Are your members investing or making the capital expenditure that is required for innovation?
President, Canadian Steel Producers Association
The short answer is “yes”. The longer answer is “as much as they can”.
I'll go back to the fact all of our members are international corporations that compete with their affiliates in other jurisdictions for investment. When they're looking at a plant to make an investment in, for instance the Gerdau facility in Whitby, which recycles a lot of steel and is making investments there in recycling technology, or the ArcelorMittal facility in Hamilton, where they do a lot of the automotive steel—
