Industry Committee on Sept. 21st, 2016

[The Chair, Liberal, Dan Ruimy]

That's right, you have enough time to say thank you.

Mr. Masse, welcome back. You have two minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair. It's good to be back.

The first thing, real quick to our researchers, is that it would be interesting to see if you could get a summary of some of the previous telecommunication investments that governments have made over the last number of years. There have been several programs. I think that getting a capture of those things and their results would be good for the committee. There have been several programs, and seeing if there's been any analysis of what those programs resulted in.... Ending this broadband blackout has been a fixation for over a decade now, so it would be nice to see what works and what doesn't.

Ms. Olson, I think you raise a very interesting point with regard to Rx and D, for example, and big pharma. They could change the colour and shape or sugar in a pill, or lessen it, and that's considered innovation.

What type of innovation are you referring to that takes place that maybe sometimes will get overlooked?

[Leah Olson]

Again, I'm going to go to one of our members, who I think said it so eloquently. He said, “We're not putting a man on the moon, but we're helping to put breakfast on the table.” That, for me, is what gets me up in the morning. It's how you produce food that is going to make a difference in people's lives.

Last year when I took over as AMC's president, I toured around southern Saskatchewan, southern Manitoba, and southern Ontario. It was only in the fall that somebody said it was the driest fall they've ever had.

When I was a farm girl in the 1980s, I would watch the sand, the seed, the dog, the thistles all blow away because our land was being lost to desertification. The difference between 1980s farming and today's farming is no till. In that way, how we farm is a huge difference in how we are able to increase the yields and not have world food shortages. It's the tillage machinery, the seeding equipment. Those are the types of things that I think are key in our industry.

[Brian Masse, NDP, Windsor West, ON]

Yes, and what's interesting, to that point, the reason I referenced what you had mentioned with Rx and D and some of the drug elements is that they get exclusive patent extension beyond years by just changing the shape and colour of a pill as innovation. There's a rewarded process there.

I'm on limited time so I have to move to Mrs. Sullivan

[The Chair, Liberal, Dan Ruimy]

You're actually on expired time.

[Brian Masse, NDP, Windsor West, ON]

Okay. Well, I didn't go to Waterloo. I went to Laurier, and you used to make fun of us, so I still have the scars.

[Voices]

Oh, oh!

[The Chair, Liberal, Dan Ruimy]

Well, you'll get a chance to make it up. Here's where we stand. We can do one more round of four minutes each. So you get four, four—only four.

We're going to go to Mr. Longfield. You have four minutes. Make it count.

[Lloyd Longfield, Liberal, Guelph, ON]

Thank you both for being here. I said in our intermission that by having you in the same room for more than this, together you could solve a lot of problems in Canadian manufacturing. One of the things we do is we bring people together. That's what we do as a committee and as a government.

I was at the Outdoor Farm Show, and thanks, Leah, for getting that lined up. Geof Gray took me around. I saw the manufacturing. There are a couple of things about rural manufacturing that we haven't included in our study. There's the economic development piece of manufacturing in the rural areas. These companies are often the best employers. They're stopping people from leaving their communities and going to the big city. They're keeping families together. They're using Canadian steel. I asked every manufacturer, “Where do you get your steel?” It's all from Canada, which is great for the Soo and other steel-producing areas. They're using Canadian everything in what they're doing.

But I've said, you're already doing great. I've said that manufacturing is not dead in rural Canada. In fact, it's so alive, and nobody knows about it. Part of our study is to get that out, if you can help us.

I'm taking too much of my time, but I wanted to get to the paperwork. One of the things that everybody said at the farm show was that they have these small companies, but they don't have people to do the SR and ED applications. They don't have people to do the export documents. All of the paper that the government puts in their way is a real trouble. Particularly on SR and ED, everybody said, “That doesn't work. We've given up on it. We're too small. They ignore us. We spend money on it and we don't have successful applications. SR and ED does not work for small business.” Everybody said that.

Could you say something for our report?

[Leah Olson]

Yes, you talked with our members so you know very well that they have challenges with the paperwork.

When you're an agriculture equipment manufacturer and you're in a small town, you're often the owner, the CEO, legal counsel, HR, and sometimes even reception. You're wearing a multitude of hats. On SR and ED, I applaud the government for having the program in place, and our members do take advantage of SR and ED, and IRAP. They do appreciate the dollars that are coming, but their decision on whether or not to apply is based on very simple time management. Can they do it? Do they have the capacity to do it? For those who are spending $30,000 to $100,000 per submission, they've obviously made the decision based on what they see as the net benefit, that they will have a good return on it.

I'd be happy to pull together our members to provide feedback and input on how we could help you on SR and ED.

[Lloyd Longfield, Liberal, Guelph, ON]

Please, if you could get that to the clerk, that would be awesome.

[Leah Olson]

Mr. Chair, I'd be happy to do that.

[Lloyd Longfield, Liberal, Guelph, ON]

Thanks, Leah.

With a minute left, I'm really interested in Dr. Sullivan's comment about the reverse co-op. Waterloo has been a leader in co-op, and I've actually worked with them for over 30 years, so it was great to renew acquaintances and see the machines and know what I used to crawl on before politics. One of the things I found, talking to these people, is they don't have engineers. In fact, they are also the engineer. They have patents, and they're not using universities or colleges. There is collaboration between the University of Waterloo and Conestoga and the Centre for Smart Manufacturing.

Is there anything in the wind on how we could maybe help to augment the engineering capabilities of these fantastic companies through some type of a collaborative effort between colleges and universities?

[Dr. Pearl Sullivan]

That's something we definitely would love to explore and look at, because we have a really strong capability in advanced manufacturing. The thing is, the professors' time is always the issue. What we do need is the ground to collaborate.

I'm being given the sign to stop talking, so I will, but we can follow up.

[Lloyd Longfield, Liberal, Guelph, ON]

Thank you very much, both of you.

[The Chair, Liberal, Dan Ruimy]

I certainly enjoy hearing you talk. Thank you.

Ms. Gallant, you have four minutes.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Again we'll go back to the Internet of things. What type of power do these devices run off? Do they run off gas power? How are they fuelled?

[Dr. Pearl Sullivan]

Batteries.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Okay, so it's electricity.

[Dr. Pearl Sullivan]

As well as AC and direct plug-in, depending on the device.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

So we're talking about electricity. I want to just mention that the real challenge in improving manufacturing in Ontario is the pricing of electricity. In fact, when we compare it to Manitoba with three-phase electricity, the cost is comparable to what it is for residential. In fact, residential rates are higher in Ontario, so residents are actually paying more than commercial rates. Even with all the efforts that are being put forth, when it comes down to the input costs, we're at a disadvantage here in this part of Canada. We used to be the economic engine of Canada until these electricity prices drove us into the ground. In fact, yesterday the premier was at the plowing match and they even booed her because of it.

Okay, so take it away, Ben.

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

Pearl, thank you for coming. A great friend of mine took engineering at Waterloo and has done really well. My observation in discussions with him is that it's the co-op program, work experiences with the co-op program. I know other universities do that as well, but maybe not as well as you guys do in the engineering department. Maybe you could explain a little more about how we can spread the good word about co-op and engineering.

[Dr. Pearl Sullivan]

I think since Waterloo started the co-op 60 years ago, there are at least 30 co-op models across Canada, and they're all different. The Waterloo co-op program is unique in the sense that it is quite difficult. It's very challenging. The students in engineering, 100% of the students, must complete at least five work terms. Each work term is four months, so five times four is 20 months. Most of them complete six work terms, so they have two years of work experience before they graduate.

I do think sometimes that Waterloo makes co-op look very easy. We have to be cautious; it's more complex than just co-op. We bring in very strong students. This year we had 12,000 applicants for 1,500 seats in engineering. We had to turn away more than 2,500 students with 90% grade point average and up. It is a tremendously difficult program to get into, so we are putting in the strongest students who apply.

We also have a tremendous relationship with industry. Our co-op office is a central office manned by 150 people. Their job is to prepare the students for interviews and to make sure the jobs are truly related to the area, the discipline that they're studying. For instance, the co-op officer will go to the field to make sure that the student is not just photocopying or pouring coffee, that they really are part of the employment system. In other words, when a student in engineering goes to a company, they are treated as an employee, and the expectations are the same.

For instance, for Toyota manufacturing in Cambridge, Ontario, the former chairman was Ray Tanguay. Ray is amazing. He would spend time with each student. That's how involved they are, all the way to the top of management. They say, “Tell me what you did the last four months in exactly five minutes and one page. If your story cannot fit on the page, I don't want to hear about it.” This is amazing. Part of the education is not just about the programming. Our program is very good. It's very rigorous, but part of the education is industry teaching our students how to be a better engineer. That's the relationship. It's a commitment by the university and also industry. Our 1,700 employers seek coming back and they're extremely committed to teaching our students about their business. The business sense is fused into the student through the experience. I think that's very important.

[The Chair, Liberal, Dan Ruimy]

Thank you.

We are now going to move to Mr. Masse, for the last four minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

To my friend from Waterloo, yes, it was interesting all the tricks the engineering students there would play on us, that's for sure, but there is no doubt about the quality of the program.

I want to raise a concern though in terms of general education, getting the education and paying for it later on. I was coaching at a hockey rink the other day and a parent came up to me. He is now training a person from overseas to take his job. Where I come from automotive obviously is very important, but so is tool and die mould making. It is the best in the world. For a while a lot of our stuff was being outsourced to China and other places, South Korea even, and then we actually got the work contracted back to us to fix what they had done wrong and then shipped it back.

The interesting aspect of what this gentleman was saying to me was the fact that he was an engineer who is actually training somebody from India to take his job because when this contract is done, he'll return to India and he will be out of a job. What do you say about the future, or what can we do now at least to protect some of those things?

What I get worried about is the student debt level versus that of the window of earnings being lopsided now and that being an occupational education that won't meet the market past of what you pay for it.

Are there plans for Waterloo and other places to deal with this just yet? I was surprised to some degree by India, although I've seen this for other countries as well, but I'm not surprised overall because it seems to be the next wave.