Thank you very much, Mr. Chairman.
I certainly appreciate the opportunity to come here today to provide testimony.
I'd like to give you a little background on our company, Acadian Seaplants Limited, in comparison to what Mr. Brown just talked about in terms of the big picture.
You'll hear the story of a company that was a start-up. We started in 1981. The company was started out of my old bedroom. One day I came home from university, and my mother said to me, “You don't have a place to stay here anymore; your father has started a company.”
Where is Acadian Seaplants today? Today we're manufacturers of value-added products for people, animals, and plants, all derived from marine plants. We export our products to over 80 countries around the world. We have 350 employees based in Canada, the United States, Mexico, Chile, Brazil, Colombia, Ireland, Japan, Korea, and India. Soon we will have employees in China. We operate four manufacturing facilities in Atlantic Canada, and in 2014 we bought the largest seaweed processing company in Ireland. We have an R and D centre, and our head office is based in Nova Scotia, where we have 70 people. We have over 30 researchers on staff, including ten with Ph.D.s, and we have done over 30 research collaborations with academic and research institutions in Canada and around the world.
How did we get from that bedroom that I talked about a moment ago to where we are today? We did that by focusing on four major areas.
The first one was an investment in research and development; the second one was an investment in international market development; the third was an investment in sustainability; the last was an investment in people. I'd like to give you some examples of what has worked and some of the challenges we have had throughout the years.
On the R and D side, we were able to build our company because of the SR and ED tax credit program. We commonly refer to it as “Shred”, but it stands for scientific research and experimental development. I think it's important that we all take those words very carefully out there. You can imagine that nobody believed in a start-up seaweed company in 1981. That SR and ED tax credit program was there for us to use, and we used it successfully. We were able to take our investments in research and development and then finance ourselves and our growth throughout the years.
Recently, in the last couple of years, that program has been cut back, with the tax credit going from 20% to 15%. That is certainly a step in the wrong direction, because we need more business-led research and development and we want to encourage companies to do more of that into the future.
The other thing that I think is important to note is the complexity of the SR and ED program. I have the opportunity, given the people that we have, to assign one of our Ph.D.s to do the paperwork necessary for about one month a year so that we can put through our claims. A small start-up doesn't have that kind of luxury. I believe we should be looking having a simplified process for small organizations, while companies that are as large as or larger than ours would be able to continue with the program as it is.
That was from a financing point of view. From a technology point of view, we were able to benefit from the National Research Council programs that were around a number of years ago. The National Research Council had tremendous bench-top work on marine plants, but they didn't just do that work to develop technology; they were there with us, side by side, as we ran into the commercialization struggles as we headed into the future. That was extremely important, because it gave us that background in technology to be able to go and build into the future. Recently the National Research Council has turned into more of a fee-for-service type of organization, and it is very difficult for start-up companies to be able to benefit from those types of capabilities.
I want to talk about the importance of industry research and academic partnerships. This is a major point of differentiation through which Canadian manufacturers can find ways to differentiate themselves from competitors and be able to compete globally. I believe that government funding for universities should be more associated with industry so that those collaborations can be put together and that we can find the paths by which we can be globally competitive. A great example of that is the ACOA Atlantic innovation fund.
The Atlantic innovation fund was a program that was put together to encourage industry to work with academic and research institutions to develop technologies that could be globally competitive. One of the challenges recently is that the National Research Council is no longer eligible to be part of that particular program, which is interesting if you look at it, because this is essentially a conditionally repayable loan to the company, and of course the company should be able to access and use the best technologies out there.
Another program I want to talk about is NRC's IRAP. This is an excellent program for funding research and development, and when the SR and ED program was cut back a number of years ago, it was announced at that time that IRAP would be enhanced. That said, our access to IRAP hasn't changed since that particular period in time.
I talked a little about the R and D side of the situation, but I want to talk about export assistance programs.
Generally, federal and provincial governments do not put as much effort into export development as they do into research and development, and if we truly want Canadian manufacturers to be globally competitive, we have to find ways to help them export, because exporting is far more time-consuming and expensive than domestic market development.
One of the things I would ask the committee to look at is something like an incremental export tax credit whereby, for a short period—say, one year—the incremental amount of exports would be taxed at a lower rate. This would allow companies like ours to hire people around the world and develop those value-added products and markets at a much faster pace. Very quickly it would turn into the existing tax base, and it would be only a temporary measure that would take one year.
Now, if we truly want to have globally competitive companies, it is extremely important that we find ways to attract the talent that is out there around the world and bring it to Canada. We at Acadian Seaplants have first-generation immigrants from eight countries working for our company in Atlantic Canada. We have gone around the world looking for highly qualified personnel and we have brought them to Canada to be part of our organization. However, it is far too complicated, time-consuming, and onerous to obtain work permits and landed immigrant status for these people. There is no special status that is given to these highly qualified individuals. That system is broken and needs to be fixed if we want to be globally competitive. We need a fast-track way for companies—and it can be pre-approved companies—to be able to hire highly qualified personnel, the best people in the world, and to be able to get them a work permit within 30 days.
I want to make a few comments. The Canadian Manufacturers & Exporters Association presented some information to this committee a while ago. There are two initiatives that I believe are worthwhile for me to mention in terms of supporting them.
The first was a discussion of direct investments of conditionally repayable loans for capital plant improvements, commercialization of a product or process, or export-related activities. I am certainly in favour of those types of activities.
The second point is with respect to the SR and ED program. We believe it would be important to clarify what qualifies for the SR and ED program and also to clarify what is needed to be able to make a claim.
In closing, I believe manufacturing is extremely important as an economic driver here in Canada. We can be globally competitive, and our company is a great example. It is important for everybody to understand that the manufacturing sector provides a huge diversification of jobs for unskilled to skilled to highly qualified personnel, from one end of the spectrum to the other.
I certainly appreciate this opportunity to come here and testify today. Thank you very much.