Industry Committee on June 9th, 2016

[Lloyd Longfield, Liberal, Guelph, ON]

Terrific. Thank you.

It's interesting that you've combined those two sectors. In Montreal as well we saw a business transitioning into medical devices from aerospace.

With regard to the large OEMs being favoured versus SMEs and that valley of death that we've mentioned a few times in different conversations here, I'm interested in your connections through the innovation centres, which are part of our manufacturing study, to get into the place where you can now go to market. What could happen to get you to the next level, and what's missing that we need to include in our study?

[Martin Petrak]

I think it's the sharing of that IP, that internal intellectual property, that a large OEM transfers to a smaller SME, and then there's some growth. It's not that it's going to be exploited somewhere else, but at the same time, the sharing of that intellectual property between the two is very important. Then when you get the academics involved, it's important that the SMEs are being included, because they learn and obviously are able to then contribute a lot more on the next round.

[Lloyd Longfield, Liberal, Guelph, ON]

Right. Thank you.

Going over to polytechnics and the bridges that you're building, you have ABB, Hatch, Siemens, and Festo, some of the larger manufacturers, contributing to the college and contributing expertise and product. That's another avenue for getting SMEs connected through some of the larger businesses to opportunities.

I'm going to add to that comment a question about the focus on funding for colleges. There is a 70-30 gap between universities and colleges, so I'm not going to be too surprised if you say we need to have more, but could you maybe indicate how the multiplier could help in our favour?

[Dr. Farzad Rayegani]

Lots of times I've talked about a healthy ecosystem. Why are they working with ABB and Siemens and Hatch? The reason is not that they are ABB and Siemens and Hatch; the reason is that we are trying to bring technology drivers into our technology playground. Technology drivers will drive the technology. We bring in multinational institutions like Siemens, and we bring the SMEs in, and they are technology adopters. They want to adopt the technology.

There is a platform here; we call it a risk-free environment platform for innovation. The SMEs come here. Siemens comes here. At Polytechnics Canada we are the integrator; we match people and bring everybody here to work together to innovate. It's as simple as that. Of the government grants, 97.5% goes to research, but they forget about this platform, the healthy platform that will be created at Polytechnics Canada. They give us 2.5%. If they doubled it, imagine how many SMEs we could support.

[Lloyd Longfield, Liberal, Guelph, ON]

We have that on record.

I have just one last thought and then I'm going to share the last minute with Mr. Arseneault.

Those larger companies taking on people from innovation centres or incubators are coming in one direction, but are they taking on students?

[Dr. Farzad Rayegani]

Of course. The whole thing, as I said, is an ecosystem. These large companies need continuous sustainable talent they can trust. Siemens Canada is in Sheridan. We are the only Canadian university or college licensed from Siemens Berlin to teach the mechatronics system to students in Canada.

[Lloyd Longfield, Liberal, Guelph, ON]

I want to turn my last minute over to Mr. Arsenault, but I think that's a very important back bridge for bringing talent back to those larger firms. Maybe the government can help with some of that.

[Dr. Farzad Rayegani]

We are forgetting about immigrants and refugees. You can help with that, too.

[Lloyd Longfield, Liberal, Guelph, ON]

Thank you.

[René Arseneault, Liberal, Madawaska—Restigouche, NB]

Thank you, Mr. Longfield.

Mr. Rayegani, I see that Polytechnics Canada is involved in researching and analyzing federal and provincial public policies.

Who are your 11 members, and what regions in Canada are they coming from?

[Dr. Farzad Rayegani]

I am happy to announce that the 11 members we have are Algonquin College, from Ottawa; BCIT, from Vancouver; Conestoga; George Brown; Humber and Sheridan, both from Ontario; NAIT; Red River College; SIAST; Saskatchewan Polytechnic; and Seneca.

These are 11 polytechnics in Canada that are playing a very important role in innovation. They really are the key for your skills gap. The talent is produced in such a way that it will bridge the gap between research and commercialization. You need these kinds of graduates, who understand the shop floor and can talk to management. We are missing that point—

[The Chair, Liberal, Dan Ruimy]

Thank you. Your time is up.

[Dr. Farzad Rayegani]

They are why 95% of my manufacturing is happening.

[The Chair, Liberal, Dan Ruimy]

Thank you.

Mr. Lobb, you have five minutes.

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

Thank you very much, and thank you for your time in coming here today.

Mr. Petrak, are you located in Winnipeg?

[Martin Petrak]

That's correct.

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

Of course, there's a pretty decent aerospace industry in Winnipeg.

I've asked this question before. We have a little bit of that industry, renovation of airplanes, in my riding. It's a long, expensive, and arduous process to become Boeing-certified. If there were capabilities, desire, and know-how, that might be an area where there could be some synergies.

Is that something you've come across in your time? Is it or is it not an issue, or is it even an opportunity?

[Martin Petrak]

Yes, it's an opportunity and it is an issue as well. The resources required to become part of a supply chain like that to a Boeing or to a GE are quite significant. There are definitely the opportunities in aerospace right now with additive manufacturing. Those are presented to us today.

With respect to any further issues around the supply chain, it is a long process because of the regulatory system and the costs associated with that regulatory system.

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

Taking a step back, then, in regard to government procurement and industrial benefits for projects—such as the F-35, for example, not to wade into that whole debate right now—are there members you know of or work with that have received contracts through the F-35 process?

[Martin Petrak]

I guess you would be talking about our large tier one supplier in town, which would be Magellan. I'm sure they're one of the organizations involved, but not directly with us.

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

What I'm trying to ask is whether there are opportunities through the industrial benefits for your small companies to work with large subcontractors or even a tier three supplier?

[Martin Petrak]

Yes. Obviously, those opportunities have not arisen yet for us. We are obviously after those types of opportunities. However, on the F-35, from an additive manufacturing standpoint, I'm not sure if that IP has even been released, so we wouldn't even know what we were bidding on.

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

I'm not trying to get into that debate right now on that stuff.

Generally speaking, I live in southwestern Ontario. It's the area I represent. We have a bunch of different manufacturing. It has come and gone, and come back again. I worked in manufacturing as well.

The issues I can remember eight or 10 years ago and the issues today are pretty much the same. They can make a great product. They are a tier one to the big three, or whatever you want to call them now, in the automotive sector, but the recurring themes are high cost of electricity, vulnerability on the dollar, and incentives in the United States and Mexico, and of course, China. You can make a great product, but when you add it all up, sometimes it's impossible to compete with those external factors.

We're doing a study on manufacturing. There are all sorts of manufacturers across Ontario, for example, in the automotive sector. It wouldn't be much different in yours, just in different sectors. How do you compete with that?

Then, of course, in the U.S. they are offering some pretty attractive carrots to come down there—tax-free arrangements, etc. How do we compete?

In this report, how do we compete with that section?

[Martin Petrak]

If we're talking about additive manufacturing, additive manufacturing is not for every single type of part component. We have to look at where we use it and be very careful where we use it.

What we're talking about is investing in advanced manufacturing. In our plants as well, we're investing in automation robotics where we have the ability to compete and we have the ability with advanced systems to get that price down to the point where we can compete, and that's exactly what we're doing.

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

My area is very agriculture-based as well. Robotics has come in a huge way in the processing side of it. Are the universities and colleges keeping pace with the major shift to robotics even in these agriculture sectors?

I hear from some of the companies in my riding, from skilled workers, trained workers, who know how to operate these things, and it doesn't take them a week to fix it.

Are the colleges and universities—I guess specifically the colleges—maintaining pace with the demand for these businesses, with robotics and themselves?