Industry Committee on May 17th, 2016

[Paul Lansbergen]

On the commercialization, again, continuing to help de-risk the commercialization through a granting program has been very successful. I'm happy to talk more about that going forward. Government has been helping to develop markets in China for building materials or elsewhere; keep doing it.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Give us an example of what you mean by de-risking.

[Paul Lansbergen]

Well, when we're trying to adopt a brand new, unproven technology, in taking it from demo scale to commercial scale, there's a lot of risk of failure involved, and financiers don't like that. They charge a huge premium if they're even willing to touch it, so government financial support can certainly give a lot of confidence to the other financiers to get their project off the ground.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you.

[The Chair, Liberal, Dan Ruimy]

Mr. Lobb, you have five minutes.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Thanks very much.

The one question I wanted to ask Iain was in regards to the maintenance repairs and the overhaul market. Where is that trending? Is that trending? I know it's probably been a hot commodity for you in another committee, but that's trending downward, right?

[Iain Christie]

It really depends on where you are. In western Canada it's strongly up. In the Montreal area, not so much.

[Ben Lobb, Conservative, Huron—Bruce, ON]

That would be the WestJet connection on that, or is it smaller?

[Iain Christie]

It's even smaller. In the MRO section of our industry, the average size of a company is nine people. It really is a very small industry because the thing with MROs is that you can service business jets anywhere that somebody can fly them in.

[Ben Lobb, Conservative, Huron—Bruce, ON]

That gets to a question I want to ask after I get to my next question.

The trend that we've seen, though, is obviously more work being done in countries like Singapore, in areas like Hong Kong, and maybe even Ireland or in the United States in some areas, Nashville, Tennessee, perhaps, or Buffalo, New York. When we're looking at this, each company has a standard to be certified to maintain a Boeing aircraft, or Airbus, or Embraer. I mean, you don't just build a shop and roll them in. It's an exhaustive process. Does it basically come down to exchange rates, or is it labour rates? I'm guessing a person in Singapore is going to be as qualified as a person in the United States. What are the decisions that corporations are making today?

[Iain Christie]

I am not sure that I know or have a good answer.

It is also critical mass. It is also knowing that you can find staff, so if you have peaks and valleys in your demand, you can service those. Certainly labour rates play a role. It is a complicated business.

It is true that MRO tends to be more labour-intensive than manufacturing. That has to be part of it, but it is not the whole story.

We go back to technology and training. If you have a more efficient organization.... We can still compete with low labour rate countries, but we have to be competitive. The issue is that in our business there is no point in encouraging business that can't be globally competitive. There isn't enough domestic market to provide a demand for it. There is no hiding from global competition in the aerospace sector.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Does a company such as American Airlines service any of its airplanes in this country?

[Iain Christie]

I doubt it, but I don't know that they don't service them outside of the United States. I honestly don't know.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Would Lufthansa service any of its airplanes in Canada?

[Iain Christie]

I doubt it, but maybe parts of Lufthansa aircraft, because MTU in British Columbia is owned by a subsidiary of Lufthansa. It is not that cut and dried.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Is there an international airline that services any of its planes...where you could say, “Yes, Qantas is doing business in Canada because it makes good sense for them”?

[Iain Christie]

I don't know of any that are, but I don't know for sure that they are not.

[Ben Lobb, Conservative, Huron—Bruce, ON]

All right.

The thing I have been curious about is this. We have a company in my riding called New United Goderich, formerly Goderich Aircraft. As they have grown, they have serviced different levels and sizes of airplanes. I know they are certified to service some Boeing, and maybe some Embraer and others, but the time and the cost to do that are ungodly, really, for a small company that is financing itself from cash flow.

Is there a better way? Is there something the government should be looking at?

They are in a rural area, where the costs are small. There is a world-class airport right there, and they own it. They should be as competitive as anybody.

I am wondering if there is something we should be looking at down the road, where the government and industry leaders look at it and say, “Should we be encouraging a diversification with these MROs so that we have a better diversification and help them become certified, as long as they can meet the standards?”

[Iain Christie]

Assistance in certification is something that would probably be helpful.

The other thing is that, for operations like that, I think the issue is going to be a question of scale. Size is very much a proxy in our industry for readiness to be in the supply chain.

Finding ways to combine operations amongst a bunch of.... Even if your operation ends up being distributed amongst a bunch of different locations, if you can represent yourself as a single entity with the scale to service a large customer, that may be something that would be helpful. There may be ways for the government to encourage that kind of behaviour.

[Ben Lobb, Conservative, Huron—Bruce, ON]

With their operation—

[The Chair, Liberal, Dan Ruimy]

Thank you.

[Iain Christie]

I am really interested, and I would love to take that up off-line if there is an opportunity to do that.

[The Chair, Liberal, Dan Ruimy]

Thank you very much.

Mr. Longfield, you have five minutes.

[Lloyd Longfield, Liberal, Guelph, ON]

Thank you.

Thanks for what I knew was going to be a great conversation.

Before we started, I said that you guys must represent a lot of our GDP. Just checking the Library of Parliament, you are four of the top ten sectors in manufacturing. You represent $37 billion of our economy among you, so the conversation we are having is really critical, as we try to build our manufacturing study, looking at strengths, weaknesses, opportunities, and threats.

I am going to ask if you could—not right now—provide the clerk...the strengths, weaknesses, opportunities, and threats within your industries. Frankly, if you don't do well, the country doesn't do well. It is so important that you do well.

I want to build on a little bit of what Mr. Dreeshen was leading into, in terms of sharing information between sectors. I am really interested in the wood industry and what you could do to help the mining industry. When you talk about flocculants.... There are people in Guelph who are actually working on flocculants and water recovery systems in mining, or replacing petrochemicals in mining applications.

You mentioned an association that you have, or a cluster of some sort. Would there be a similar cluster, let's say, in Sudbury, where they have an advanced mining section, so that your cluster could talk to the mining cluster?

[Paul Lansbergen]

Yes. FPInnovations, which I referred to, is our research institute.

There's the Canadian Mining Innovation Council, which is not exactly the counterpart of FPInnovations, but I know that they have been talking to each other. So those association or cluster level dialogues and discussions are happening, but they also need to happen company to company. And certainly our companies in Alberta that work right next door to the oil and gas companies share the land base. They're talking with each other all the time.