Industry Committee on Sept. 21st, 2016

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

Yes, thank you.

The first question I have is for Leah. Thank you for coming today.

I have a large agricultural industry in my riding, many manufacturers large and small. A few of them are members in your organization. I wondered if you could again go over how companies like Lucknow...or Helm Welding, and other companies—Smyth Welding would be another example—are able to stay ahead of the curve. Obviously, they are specialized markets, but how are they able to be more nimble, more efficient than the large manufacturers like John Deere, Case IH, etc., and provide local, rural, high-quality, high-paying jobs? How have these people done it consistently for literally decades?

[Leah Olson]

In short, if you can make a piece of agriculture equipment that is able to last in Canada, it'll last anywhere in the world. Unlike the auto industry where we're perhaps playing catch-up with other industry leaders, in the ag equipment industry, we are the leaders. I'll just use a quote from one of our members, “As shortline manufacturers, we do what mainline manufacturers can't do; we find a niche and react quickly. Our real advantage is our speed to the solution. We're innovating at the same speed as the computer, telephone technology and media industries.” That's by Paul Degelman, who is one of the owners of Degelman Industries. They do a lot of rollers and ties.

Our members know that as a short-line industry, we really do lead that innovation. They're always adapting to regional needs. In that way, with the speed at which farming is changing—the use of GPS, increasingly, the possibility of autonomous tractors, drones, etc.—it's forcing our members to stay ahead and to continue working with that. The sweet spot for our industry is that we save a farmer time and increase his yields. If we can do that, then we've hit that sweet spot. It's in that way that we're a little more nimble than the mainliners, such as John Deere, AGCO, Case IH, and CNH, and able to employ in small communities.

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

The other question I had for you is this. I think in your paper here you mention it. Is it 30 countries you export to?

[Leah Olson]

It's 154. The highest number that I have out of our membership is one member who exports to 40 countries.

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

What about trade missions? Do your members get invited to trade missions?

[Leah Olson]

They do, yes.

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

Do you get invited to trade shows as well, like international machinery trade shows?

[Leah Olson]

Yes. We attend a lot of the international farm shows on our own dime. When there are farm shows and there are big farmers attending, our members go and meet with them there. In Germany there's Agritechnica. I'm working with the government to ensure there's a good Canadian pavilion. Saskatchewan and Manitoba have done a great job of making sure there's a pavilion specific to the harvesting equipment, seeding equipment. I'm hoping that we can have an expanded spot there that manufacturers in other provinces would be able to take advantage of.

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

A recurring theme every year for me for many years now, to the surprise of many in this room maybe, is that many of the manufacturers in my riding are having a difficult time finding workers with some degree of skill, right up to engineers, etc. In the sweet spot there would be welders, machinists, electricians, and others. Is this what you're hearing among your members and what can we do to help them?

[Leah Olson]

There's definitely a lack of skilled labour, as you identified, such as welders and machinists. The differences are different by region. In Ontario, there's a good supply chain and the auto industry has some good training programs. The needs of agriculture equipment manufacturers are slightly different, so even if you get somebody who has gone to the University of Waterloo and comes into the agriculture industry and does manufacturing, there might be a bit of training that has to be done. In the west, the labour needs were exasperated significantly by the oil and gas industry. With the softening of the oil and gas industry, our members have been able to hire some very good skilled workers as a result.

In terms of what the government can do, I think it's to continue to invest in skills development, making sure that the university programs and college programs are aligned with what the private sector needs. Often you get students who will come out of university with great skill sets, but if they are not aligned with what the employers are looking for, they're going to have a tough time finding employment.

[The Chair, Liberal, Dan Ruimy]

That's perfect. Thank you very much.

Mr. Johns, for seven minutes.

[Gord Johns, NDP, Courtenay—Alberni, BC]

Mr. Chair, it's an honour to be here on behalf of the member for Windsor West.

It's important to have you here, and thank you, Dr. Sullivan and Ms. Olson. I'm learning lots, and it's important for parliamentarians to hear first-hand from entrepreneurs and those who represent entrepreneurs. I have a couple of questions.

Ms. Olson, you talked about trade. We understand the importance of global trade and the need for trade. We've seen a huge demise in the number of jobs in the manufacturing sector and the challenges manufacturers are facing. What do you want to see in terms of trade deals moving forward? We've seen that we're competing with countries, some of them with low wages, low environmental standards, and even human rights issues. What are we going to need in future trade deals to be competitive?

I'll start with you, Dr. Sullivan, if that's okay, and go from there.

[Dr. Pearl Sullivan]

First of all, I'm not an expert on trade. I think I have to be cautious in how to proceed on this answer.

I've heard from people, and there are always people who support us, as well as people who are detractors in the area of trade. I do think that in the globalized world it's absolutely necessary. We do need to be part of the world supply chain. We absolutely have to because if we can't sell and we can't buy certain things, then we cannot progress. Let me give you an example.

When you're talking about trade, you're talking about large volumes, right? Let me begin by saying that we just heard, maybe two days ago, about a company called Thalmic Labs. It's a company that was started by students who graduated in 2012 from a mechatronics engineering program. They were 23 years old when they graduated, and two days ago, they received $150 million U.S., as series B funding, to expand the manufacturing of their wearables.

What does that mean? They spent a lot of time in China and Korea trying to find suppliers for their product when they were trying to get started. What they did, and we worked with them closely, was they ended up producing all the parts in Canada. The supply chain is in Canada. After all that work, and after one year looking for suppliers, the only piece they make outside Canada is the chip from Korea. That's the intellectual piece.

This is what my point is. We have to make the intellectual piece and not just the other pieces. The fact that we are competitive enough to be supplying to Thalmic Labs is wonderful, but we have to make the chip.

Thalmic Labs is going with 100 people right now. These are three young men, all 26 years old, and they're going to hire 100 people. They're going to double up in the next year, they said. They have to find 100 people in the next year.

The manufacturing is right in a little shop half the size of this room, and they're making parts. They're selling hundreds and hundreds of these wearables.

I do think that it has to go both ways.

[Gord Johns, NDP, Courtenay—Alberni, BC]

Yes. That's why I'm hoping we can hear also what we need in the future, because we've seen a demise in terms of jobs and manufacturing. What are we going to need in future trade deals to protect Canadian jobs and to increase jobs here at home? Maybe, Ms. Olson, if you want, you could continue.

[Leah Olson]

Yes. With one of the items you talked about in terms of the number of jobs going down, in the agriculture equipment industry we are bucking that trend. Our employment figures have gone up, and the latest that came out of Statistics Canada, which was from 2012, had our numbers at a high of 11,800.

Before coming here I also surveyed our members, and overall employment numbers are up in 2016 versus 2015 on average. For us, trade is required because we're the leaders in the production of agriculture equipment. If we're selling a seeder into Australia, the things we need to get that seeder there include good transportation in Canada. We need to be able to get over there and understand the laws and the regulations to ensure that our standards and our equipment are holding up to their standards, and then we can do business.

In terms of what is required moving forward for trade relationships, in 2014, we exported 2.1 billion dollars' worth of agriculture implements. For our industry, it would require the support within Canada to ensure that infrastructure is there to get our equipment out.

[Gord Johns, NDP, Courtenay—Alberni, BC]

You talked about some of the challenges around finding skilled workers. We've talked a lot about where we're going as a nation in terms of immigration. We have the temporary foreign worker program.

As New Democrats, we've been wanting a pathway to permanency. We're hearing from industry that the temporary foreign worker program isn't really what suits the needs of business. They want an immigration program that leads to permanency.

Is that what you're hearing from your members as well?

[Leah Olson]

Yes, absolutely. I can use the example of Honey Bee. They manufacture headers on combines, and we have other members that also do, such as MacDon in Winnipeg.

If anybody needs an ag equipment manufacturing 101 after this, I'd be pleased. I'm here until Saturday.

Frontier is a village of 100, and Frontier is where Honey Bee manufactures. They've brought in more than 100 temporary foreign workers, and all of them have gone on to become permanent residents. I'm from a very small town in Saskatchewan, so I can make fun of Frontier's size. Frontier has gone from being a very farmer-based village to now being a prospering town of more than 200, half of whom are Filipino, and that's because of the temporary foreign workers becoming permanent residents.

For our members, then, it's vital that there be a pathway to permanent residency.

[The Chair, Liberal, Dan Ruimy]

You have about 20 seconds.

[Gord Johns, NDP, Courtenay—Alberni, BC]

Many small manufacturers, 95% of them, are small business people. They're wanting to grow to scale.

What kind of financing is going to help them grow to scale that they need and that is not being provided?

[Dr. Pearl Sullivan]

I think it depends on industry. In IT, I think what the government is doing on the digital side is very good. On the actual manufacturing piece, capital investment is the part they need the most, and as I said, prototyping capability.

[The Chair, Liberal, Dan Ruimy]

Thank you.

We have a technical problem. We're going to suspend for about a minute or two.

[The Chair, Liberal, Dan Ruimy]

All right folks, we're back on track. Everybody is here.

Mr. Baylis, you have seven minutes.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

First of all, as a proud graduate of University of Waterloo, I have to say a very special welcome to our renowned dean of engineering, Ms. Pearl Sullivan. I'm very proud to have Dr. Sullivan with us. Welcome.

Welcome as well to Ms. Olson. I'm very happy to have you here, too.

Dr. Sullivan, you mentioned that Canada needs manufacturing, but we're in competition for manufacturers. Can you give us an example of where you see that competition occurring and what we should be doing to hold on to our manufacturers?

[Dr. Pearl Sullivan]

Thank you for that question.

Before I came here, I had a one-hour meeting with Leslie Klein, the CEO of C-COM Satellite Systems, which is right here in Ottawa. Mr. Klein has done research with us in the area of antenna systems for the last few years. Recently, together with the NSERC program, we got together for a very large, five-year collaborative program to take this forward together.

What is this project? Think about how the world is moving, the world of mobility. Right now, we are developing a mobile antenna. Here's what it means. The antenna you think of is a nice big dome with wires sticking out, and there you collect your information and you're able to watch TV or listen to radio. We have developed a printed circuit board that will act as an antenna. The next stage is how to make sure that it can be scaled up and implemented in homes and in cars. Our plan is to put it on top of the roof of a car, so that any car that leaves an area that has Wi-Fi or Internet broadband access in the city can go to a rural area and still have Wi-Fi and Internet access. It's a tremendous opportunity in terms of changing the landscape of mobility.

What's important here is this. C-COM designs antenna systems. They don't make antenna systems. They design them, but they're built in Canada, with 7,000 sold every year to 106 companies around the world. My question to him was, what happens next? He said that if Waterloo can pull this off, we will sell millions. I asked him how he was going to make them. He said that the only people who have come to talk to him so far are the Chinese. They have found him, and they have offered their hand to manufacture millions of these antennas.

I said to him,“Leslie, do not talk to the Chinese.” I have nothing against the Chinese, but “please don't”, I said. As for what he should do, I said, when we're ready, and we will be in two or three years, let's get the government and the other supply chains together and let's work in a room to figure out how to build the new market. It's going to be a new market in making antenna systems. We'll integrate it so they can be pulled off the shelf at Canadian Tire and stuck on the top of your car. That's what we should think about. We have to bring all the players together to make it here. The technology is here. It was developed here. Bell did that right here in Canada, and now we are licensing Wi-Fi and telecommunications. We have to make sure that we get to Mr. Klein first.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

Thank you.

I have another question. We've had several meetings. Often, we hear at committee that the link between university research and industry is just not there. That's not the case with Waterloo. I think Waterloo is a world leader, in fact, and not just a leader in Canada. What could we be learning from Waterloo's example of making those connections between industry and universities?