Evidence of meeting #17 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 sector.
A recording is available from Parliament.
Conservative
Joël Godin Conservative Portneuf—Jacques-Cartier, QC
Thank you, Mr. Chair.
And thank you, gentlemen, for being here. It's always interesting. I would have liked to have met Mr. Tétrault, but Mr. Lavoie and Mr. Wilson, you will surely represent him well.
My first question relates to the end of your presentation. What are the best ways for Canada to keep its businesses, rather than sell them abroad?
Senior Vice-President, Canadian Manufacturers & Exporters
There's a very long delay, our apologies.
Director, Policy, Innovation and Productivity, Canadian Manufacturers & Exporters
We spoke about the patent box tax incentive, which is one approach.
I appeared before this same committee two years ago for a study on start-ups in Canada. Communitech in Waterloo informed us that 66% of start-ups that receive capital funding end up being sold abroad at the end of five to seven years for an amount equal to the value of their patents.
For instance, the patent box could be an alternative to convince investors to market the products here in Canada, which would allow us to stop selling these patents abroad, especially since these companies received a research-and-development tax credit over five to seven years; students and scientists were paid to work in their factories. That's one approach used in other countries that we could use here to help us to keep these businesses in Canada.
Conservative
Joël Godin Conservative Portneuf—Jacques-Cartier, QC
Is that information in your Industrie 2030 plan?
You are indicating it is. Okay.
In 2015, the manufacturing sector accounted for 9.5% of total employment in Canada and 11.9% of total employment in Quebec. It would seem that this sector is larger in Quebec than elsewhere in the country.
How should we interpret this figure? Is it positive or negative? Is Quebec lagging behind or leading the pack?
Director, Policy, Innovation and Productivity, Canadian Manufacturers & Exporters
During the great recession of 2008 to 2010, if I may call it that—
Director, Policy, Innovation and Productivity, Canadian Manufacturers & Exporters
—the auto sector which is concentrated in Ontario, was greatly weakened. Quebec was seen as being less affected by the recession, and the value of the manufacturing sector in the economy still remained a little higher.
That said, Quebec has its own challenges, as we saw recently in the aerospace industry. At this point, if we look at the automation levels in place, we can see that the number of jobs will be moved from production lines to other added values. For instance, 3D printing is leading to increased demand for 3D designers. Product design is changing the value of it. This way, the former belief that, for example, half of manufacturing employees must work on the production line is no longer representative of the sector. If you go to Bombardier Aerospace today, you'll see that there are many more designers than employees assigned to the production line.
These days, the value of many products has changed, and that's not necessarily a bad thing. We were talking earlier about food processing. It is very good that this sector is the largest manufacturing employer in Canada, but the fact remains that it is one of the least automated sectors. This is why it has peaked. If the businesses in this sector want to grow, they will have to automate. Food processing companies tend to be much smaller and less able to export because they don't have the capacity to serve larger markets.
Director, Policy, Innovation and Productivity, Canadian Manufacturers & Exporters
Absolutely.
Conservative
Joël Godin Conservative Portneuf—Jacques-Cartier, QC
The table on page 15 of your Industrie 2030 plan indicates that the only sector on the rise in research and development is the aerospace industry.
Are we not putting all our eggs in one basket?
Director, Policy, Innovation and Productivity, Canadian Manufacturers & Exporters
In terms of public policy, a lot of emphasis is put on the hi-tech sectors. In his presentation, Mr. Wilson mentioned three new technologies: 3D printing, automation and industrial robotics, and what we call the Internet of Things.
These three technologies have as much potential in the textile sector as they do in the aerospace industry. However, aerospace benefits from much more sophisticated government support than the textile sector.
There are good aerospace programs at the provincial and federal levels that work well and that ensure that research and development in aerospace is very intense. However, every year at the Consumer Electronic Show in Las Vegas, there are connected things and connected textiles.
There are sectors that were said to have died 15 years ago. We let them move to China. They are in the process of resurfacing in a much more sophisticated way. Mr. Wilson spoke about technology clusters. This does not mean that these technologies will be revolutionary in only three major areas. They will be in several sectors. Automation has as much potential in food processing as it can have in the wood processing industry, for example. These are adaptable technologies.
When a 3D printing innovation network is put in place in the United States, it is not intended solely for the aerospace industry or the auto sector. Everyone can access it because the potential is there in the 22 manufacturing sectors.
Conservative
Director, Policy, Innovation and Productivity, Canadian Manufacturers & Exporters
This kind of program doesn't currently exist at the federal level. I challenge you to find a program, even in Quebec, that will help companies buy 3D printers or connect their production plants to the Internet. There isn't really a program designed for that.
Conservative
Joël Godin Conservative Portneuf—Jacques-Cartier, QC
Does the current program run by CED help manufacturers and exporters? Does it help many of them?
Director, Policy, Innovation and Productivity, Canadian Manufacturers & Exporters
Yes. As you know, CED does not have a program specifically for the manufacturing sector. That said, manufacturing companies can get money.
Director, Policy, Innovation and Productivity, Canadian Manufacturers & Exporters
And one of our recommendations is that the assistance programs of economic development agencies across Canada be standardized. For instance, FedDev Ontario in southern Ontario has a program specifically for advanced manufacturing, but there aren't really any others—
Conservative
Joël Godin Conservative Portneuf—Jacques-Cartier, QC
I'm sorry for interrupting you, but I'm quickly running out of time.
Are regional realities important for you? You said that Ontario has an adapted program, but do you think it's important for the economic development of our manufacturers to be consistent with their regional reality?
Director, Policy, Innovation and Productivity, Canadian Manufacturers & Exporters
It's important, but our members have questions. One of them is in Saskatchewan, and he is wondering why his competitor in southern Ontario can get funding to automate his plant but he can't.
Conservative
Joël Godin Conservative Portneuf—Jacques-Cartier, QC
Right. This will help to develop centres of expertise.
Director, Policy, Innovation and Productivity, Canadian Manufacturers & Exporters
At the same time—
Conservative
Director, Policy, Innovation and Productivity, Canadian Manufacturers & Exporters
Yes, but there is a lot of food processing in the Maritimes, in Ontario and in Quebec. There are regional realities, sure, but standardization is needed in order to be fair to all businesses across Canada.
Conservative
Joël Godin Conservative Portneuf—Jacques-Cartier, QC
I have one last question.
Should we choose regionalization or globalization in Canada?
Director, Policy, Innovation and Productivity, Canadian Manufacturers & Exporters
What do you mean by globalization?