Industry Committee on June 5th, 2020

[The Chair, Liberal, Sherry Romanado]

Good afternoon, everyone. I now call this meeting to order.

Welcome to meeting number 21 of the House of Commons Standing Committee on Industry, Science and Technology. Pursuant to the order of reference of Saturday, April 11, the committee is meeting for the purpose of receiving evidence concerning matters related to the government's response to the COVID-19 pandemic.

Today's meeting is taking place by video conference, and the proceedings will be made available via the House of Commons website.

I would like to remind the members and witnesses to, before speaking, please wait until I recognize you by name. When you are ready to speak, please unmute your microphone and then return it to mute when you are finished speaking. When speaking, please speak slowly and clearly, so that the translators can do their work. As is my normal practice, I will hold up the yellow card when you have 30 seconds remaining, and I will hold up the red card when your time for questions has expired.

Now I would like to welcome our witnesses. From the Chemistry Industry Association of Canada, we have Madam Isabelle Des Chênes, executive vice-president.

From Groupe Robert Inc., we're joined by Jean-Robert Lessard, special adviser, public and government relations.

From Hoffman-La Roche Limited we have Logan Caragata, director, federal government affairs and policy, access division, and Fanny Sie, strategic healthcare partner, artificial intelligence and digital health. From the Montreal Port Authority we have Mr. Daniel Dagenais, vice-president, operations.

Each witness will present for seven minutes, followed by a round of questions.

With that, we will begin with Madam Des Chênes.

You have the floor for seven minutes.

[Isabelle Des Chênes, Executive Vice-President, Chemistry Industry Association of Canada]

Thank you very much, Madam Chair.

It's my pleasure to be with you today on behalf of Canada's chemistry and plastics manufacturers. You may be aware that Canada's chemistry sector generates nearly $60 billion a year, making us the third-largest manufacturing sector in the country. This is split almost evenly between pharmaceutical and industrial-grade chemicals, the latter of which I will speak to you about today.

Before I begin my formal remarks, however, I would like to extend our sector's appreciation to Parliament and the Government of Canada for the extraordinary and timely measures taken to support Canadians and Canadian businesses during this unprecedented time.

I have three messages to share with you today. They'll be easy to remember, as they're a bit of a take on the three Rs. The chemistry sector is resilient, responsive and well poised to lead Canada's economic recovery.

First, our sector is resilient. There have been no material impacts to our companies or their supply chains. Most of our industry continues to operate at normal levels of production. Some have seen production decreases while still maintaining operations, and others are experiencing production increases. The sector so far has not required economic supports and has experienced very limited layoffs.

Second, our sector is highly responsive. Canada's chemistry sector produces important water treatment and disinfection chemicals essential for public safety. These have been in extremely high demand to support the COVID-19 response. Plastics also play an important sanitary role for medical and food packaging purposes and are inputs into PPE, or personal protective equipment. Demand for these products has increased significantly as a result of COVID-19.

Our members have also reconfigured value chains and production activities to assist in the response. For example, Shell Canada, BASF Canada and Procter & Gamble have all reconfigured operations to make hundreds of thousands of litres of hand sanitizer, which they have donated to hospitals and community support organizations. Also, led by BASF Canada and Trimac, both CIAC members, our sector has supported the development of the rapid response platform. This platform matches PPE producers with those who have PPE needs. In its first three weeks of operation, more than 25,000 PPE matches have been successfully completed through the platform.

Finally, while being resilient and responsible, the sector is also poised to contribute to Canada's economic recovery. Over $7 billion of capital investments are currently under way and scheduled to come into production in late 2021 and early 2022, and we anticipate that a significant portion of the additional $11 billion committed or announced in capital investments that were deferred due to COVID will materialize to assist in the recovery. All of our facilities have deferred scheduled major maintenance activities, and it will be of utmost priority to get these projects under way as soon as possible. These projects can involve thousands of contractor staff and total in the hundreds of millions of dollars, injecting much-needed capital into the economy.

In addition, Alberta, Ontario, Quebec and British Columbia are all looking toward the chemistry sector for significant additional investment growth beyond that already announced.

Let me close by offering two pieces of advice on what Canada can do to support future growth in Canada's chemistry and plastics sectors.

First, it is essential that the Government of Canada embrace the investment growth potential of the chemistry sector. As the fundamental building blocks of the modern world, chemistry solutions will play a vital role as we build the post-COVID-19 economy. The Government of Canada should work collaboratively and in a coordinated manner with the provinces to deliver a team Canada approach to attracting global investment to the sector. Governments working together have benefited Canadians in the response to COVID-19. We need to see the same coordinated approach as we restart and grow our economy.

Second, while it needs to maintain its focus on addressing the challenging issue of plastic pollution in the environment, the Government of Canada must use tools other than the Canadian Environmental Protection Act and in particular its schedule 1 list of toxic substances to regulate plastic waste. Declaring plastics toxic in Canada will greatly undermine the confidence of global investors. It will deliver a message that Canada is indeed ambivalent about growing the sector, despite the resilience, responsiveness and economic opportunity demonstrated throughout the crisis.

Thank you again for providing me with the opportunity to speak with you today. I look forward to your questions.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

Our next witness is Jean-Robert Lessard.

Mr. Lessard, you have the floor for seven minutes.

[Jean-Robert Lessard, Special Adviser, Public and Government Relations, Groupe Robert Inc.]

Thank you for the opportunity to tell you what we did during the pandemic.

On March 12, Groupe Robert Inc. took its first steps. It addressed the situation by setting up a crisis management committee to ensure daily communication with all its employees. The committee implemented several measures, including the suspension of visits to its facilities, except for visits from critical suppliers. These suppliers had to fill out a self-identification form before being allowed in.

We stopped business travel and instead focused on the use of communication technologies such as Skype, Microsoft Teams and Zoom. Groupe Robert Inc. also funnelled all questions and suggestions from employees to a single address, [e-mail].

In addition, a series of hygiene measures were implemented in keeping with the recommendations made by public health authorities in Quebec and Canada. Employees enter through a single door, where there's a washing station and where their temperature is taken. Our drivers must follow a protocol for the use of disinfectants to clean their cabins. The housekeeping team has increased its cleaning rounds of all areas. The mechanical maintenance team must disinfect all required instruments before and after use. To encourage physical distancing in common areas, we've changed the break and meal times.

At the end of the school break, several employees who returned from trips needed to be quarantined. In addition, although the lockdown has eased, basic hygiene rules are part of daily life. These include physical distancing, hand washing and coughing into elbows.

We created a dedicated COVID-19 team. The team consists of three employees from the health and safety department. Its mandate is to research all relevant information on the pandemic. These three employees became the resource people to consult in order to avoid any wrongdoing or misinformation, including erroneous statements in certain press releases.

A number of employees are now teleworking. Our managers have received training on best practices for managing teleworking teams.

I must mention the establishment of various protocols for the steps required when an employee is diagnosed with COVID-19. We were fortunate, because only eight out of 3,600 employees contracted the coronavirus. I'm pleased to report that all eight employees have recovered.

The implementation of shorter hours and, above all, more timely support through online training has made it possible to reassign employees to other duties in order to limit layoffs. We also believe that the strong collaboration between the employer and the union should be noted. This collaboration led to the establishment of a forum that enabled the employer and the employees to work together to convey the same message.

At the height of the crisis, we temporarily laid off 459 people. In this period of crisis, Groupe Robert Inc. is pleased to see that its strength lies with its employees, who have tried to find solutions and accomplish great things.

We've been in business for 73 years. We've learned that the only way to overcome challenges such as this one is to work as a team.

[The Chair, Liberal, Sherry Romanado]

Thank you, Mr. Lessard.

Our next witness is from Hoffmann-La Roche Limited. You have the floor for seven minutes.

[Logan Caragata, Director, Federal Government Affairs and Policy, Access Division, Hoffmann-La Roche Limited]

Madam Chair and honourable members of the committee, on behalf of Hoffmann-La Roche, we want to thank you for the opportunity to speak today. We applaud the efforts of the federal government and of front-line health care workers to combat the spread of COVID-19 and to protect our economy.

Roche is a global pharmaceutical and diagnostics company focused on advancing in science and improving health outcomes for patients. Our combined strengths have made Roche a leader in personalized health care, a strategy that aims to tailor the right treatment to the right patient at the right time.

In 2019 we invested $284 million in research and development, with $57 million in clinical research in Canada. Most recently we announced a $500-million investment over five years to establish a global site, bringing up to 500 highly specialized jobs to Mississauga.

There are a number of initiatives Roche is working on to address some of the challenges associated with the pandemic. Phase three clinical trials are under way to study the safety and efficacy of one of our medications in hospitalized adult patients with severe COVID-19 pneumonia. On the diagnostics front, our molecular test was approved under Health Canada's special access program and contributes to a significant portion of testing across Canada. We have also submitted our antibody test for approval, which we are expecting shortly. We are very pleased about the potential of this test as we begin to move into the recovery phase and engage with the COVID-19 immunity task force to combine our efforts.

Another initiative we're very proud of is our open innovation challenge, a funding program supporting ideas, addressing some of the biggest challenges of the pandemic. After receiving more than 800 submissions from across the health sciences and technology community in Canada, we're excited to help develop and implement 11 of those ideas. One looks at testing climate conditions on COVID-19 transmission through an aerosol chamber designed by a team of virologists and engineers. Another project uses real-time artificial intelligence to track, monitor and predict symptoms among high-risk seniors.

We've also assembled the Roche data science coalition, a group of academic and private organizations with a common mission. This coalition endorses grassroots challenge identification, access to data and the development of actionable insights related to the pandemic. Our collaborators include Self Care Catalysts, ThinkData Works, Amii, the Vector Institute and experts in privacy. Over the last eight weeks we have secured five to seven years' worth of global partnerships and have developed over 100 artificial intelligence solutions, virtual dashboards, market reports and overall deeper partnerships with stakeholders across the globe.

[Fanny Sie, Strategic Healthcare Partner, Artificial Intelligence and Digital Health , Hoffmann-La Roche Limited]

This pandemic has exacerbated many existing gaps in our health care system while showing the immense value that the life sciences sector brings. Issues such as system capacity, lack of virtual care and data fragmentation across the country are igniting a pressing demand for sustainable change. We have started to see incredible flexibility and leadership in our health system's immediate response to the pandemic. However, it's important to use learnings from this crisis to catalyze meaningful long-term change.

As we shift the focus to recovery, there are great opportunities to accelerate innovation and move our country forward. The future of life sciences in Canada is extraordinarily bright. There are many actions that the government can take to promote growth at home and abroad.

First, the federal government should revive the health and biosciences economic strategy table. The announcement of the industry strategy council is a good start, but we encourage the government—with input from industry, patients and other sector stakeholders—to revitalize this work to identify specific and measurable next steps. It's also important to acknowledge the need to rethink some of the recommendations in the context of pandemic planning and of building our capacity for the next potential crisis.

Second, a strong data ecosystem is a key success factor in the response to COVID-19. The pandemic has exposed significant limitations in the ability to collect, access, integrate, share and analyze high-quality data. It has also magnified concerns that data cannot be easily compared between jurisdictions, as each province uses different data collection methodologies, standards and policies. Furthermore, most provincial data is publicly inaccessible and incomprehensive. We believe that we can win this fight through the sharing of safe and secure health care data and knowledge, abiding by local privacy laws, to better inform patient care and health system decision-making.

Lastly, there needs to be an increase in investments in programs like the Scale AI and the digital superclusters that Roche is very proud to be a part of. COVID-19 has demonstrated the catastrophic effects to both patient health and the economy as a result of a lack of constant innovation in our sector. By rewarding innovation and increasing investment into innovative technologies, such as genomic sequencing, cloud computing, digital health tools for remote patient care and monitoring, as well as medicines that deliver superior outcomes, we stand to deliver unprecedented value in both health benefits for patients and economic growth for our country. These technologies will position Canada as a leader in personalized health care and allow us to provide patients with exactly what they need from their health care systems.

Whether through diagnostics, medicines or insights, Roche is a committed partner, helping to navigate and ultimately end the COVID-19 pandemic. The life sciences sector has the amazing potential to lead the economic recovery of this country. Healthy Canadians bring a healthy economy. Through collaboration with patients, patient organizations, companies like Roche and the government, we can mobilize these ideas into action.

Thank you very much for your time today. We are happy to address any questions you may have.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

Our next witness is Mr. Dagenais from the Montreal Port Authority.

You have the floor for seven minutes.

[Daniel Dagenais, Vice-President, Operations, Montreal Port Authority]

Good afternoon.

I want to thank you for the opportunity to speak as part of the committee business. My name is Daniel Dagenais. I'm the vice-president of operations at the Montreal Port Authority.

I want to start by expressing my sincere appreciation for the port workers, seagoing personnel and all supply chain workers. They've been working tirelessly since the beginning of the pandemic to ensure that all sectors of the industry across the country can continue to operate.

I also want to thank the government for its efforts to minimize the impact of the COVID-19 pandemic on Canadians. In particular, I want to thank the officials and departmental staff with whom we're in contact. They've remained available and attentive during our many calls over the past few weeks.

Naturally, I also want to thank our clients and business partners for their trust, along with our workers, who have also demonstrated their trust over the past few weeks.

The Port of Montreal is the second largest port in Canada. It's the only container port on the St. Lawrence. Our continental markets for goods are mainly Quebec, Ontario and the American midwest.

A port is a hub for goods, where all modes of transportation come together. Every day, 2,500 trucks come to the port to pick up and deliver goods. Two thousand ships a year come to anchor in our waters. Every week, 60 or 80 trains pass through the interchange area to deliver goods.

The Port of Montreal's operations generate economic benefits of about $2.6 billion and support almost 19,000 direct and indirect jobs. Last year, in 2019, over $100 billion worth of goods crossed our docks. It was the sixth record year for the Port of Montreal. However, March 2020 will certainly go down in history for us. We had record volumes in 2019, since the amount of goods kept increasing. In the first quarter of 2020, the volumes were already 5% higher than in 2019.

In March, the Canadian and Quebec governments recognized the essential status of the movement of goods. As a result, our employees were excluded from lockdown orders and closure instructions. We had to quickly adapt our business processes to comply with safety instructions.

COVID-19 is having and will have an undeniable impact on the Canadian and Quebec economies and on supply chains. For the supply chain players, the pandemic, and the resulting health crisis, is primarily a challenge for workers and employers.

What happened at the start of the pandemic? The winning conditions for dealing with this type of disaster mainly involved risk management, which had to be embedded in our culture. We needed a business continuity plan with a pandemic component, meaning the implementation of a series of health measures such as hand washing, physical distancing, the closure of our offices, and the distribution of personal protective equipment and material. Of course, we've done just about everything that you've already heard about. I echo what Mr. Lessard said earlier about the measures taken.

In addition, we've been working hard for a very long time to diversify our markets, specifically to ensure proper crisis and risk management and to thereby better withstand economic shocks and price increases.

Early on, the Montreal Port Authority mobilized its management team and employees. It established crisis management at the strategic level, but also a tactical committee on the ground to find the right measures to implement. These groups were mobilized and these committees were created to build on the trust that we already have in our workers. This aligns with our culture of resilience.

We needed to establish our priorities, get our messages out and properly convey them to our employees. Once we had mobilized our direct contacts, we mobilized our operators. Naturally, we had to remain attentive and support their activities, but also maintain the flow and align our guidelines.

We have only one work disruption to report. It happened early on, when there was a great deal of confusion and information seeking. What has made the difference is the consistent message that employees clearly play a key role in our actions and responses. This strategy has worked well not only with our employees, but also with our tenants' employees.

The third item that I want to talk about is the collaboration among all the supply chain players. We must communicate and remain factual, responsive and sensitive to concerns. Early on, we started listening. The logistics chain players asked us to work with them to resolve anticipated issues, such as shortages of containers and storage space. We quickly took stock of available space together with the CargoM logistics and transportation cluster in the Montreal area.

We also kept track of the availability of containers to avoid running out and to ensure that Canadian exporters could export their goods. As a result, there's no crisis. Traffic continues to flow through our facilities. To date, the Port of Montreal remains fully operational and free of congestion.

In addition to the collaboration with the cluster and the logistics chain players around the Port of Montreal, work was done at the national level with the network of port authorities. We also reached out to our international partners to identify, understand and share information. We tried to identify best practices and draw inspiration from them, while establishing partnerships. A great deal of work was done with the Port of Antwerp and chainPORT, an association of ports interested in logistics and innovation.

At the same time, we worked with the Scale AI and IVADO Labs innovation supercluster to create tools to help us distinguish goods and mobilize the logistics chain to improve the flow of goods through our facilities. These goods are often critical to combatting COVID-19.

In conclusion, I want to add that our infrastructure remained open. Our infrastructure is strategic, and it must be adapted to long economic cycles. We must meet needs, which requires a business continuity plan. We must then establish priorities, communicate, and maintain our clients' trust in the logistics chain.

[The Chair, Liberal, Sherry Romanado]

Thank you, Mr. Dagenais.

For our witnesses, this is a reminder that, if you need translation services from French to English, please change the channel on your Zoom to English.

With that, we will start with our rounds of questions, and our first round of questions goes to MP Tracy Gray.

You have the floor for six minutes.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

Thank you, Madam Chair.

My first questions today are for the Chemistry Industry Association of Canada.

With COVID-19, we're seeing, for obvious health and safety reasons, a spike in the use of single-use plastics, plastic bags, PPE and other items to stop the spread of the pandemic.

With the encouraged use of these materials to stop the spread of the virus and also with the added demand for food safety, Ms. Des Chênes, do you think the government is correct in wanting to label plastics as toxic?

[Isabelle Des Chênes]

We've been working very closely with the government and support the Canadian Council of Ministers of the Environment and the federal government in their approach to managing plastic in the environment, in particular, their approach for zero plastic waste.

Our concern with the federal government's impending approach to regulating single-use plastics and plastic pollution in the environment is that they have indicated they want to use the CEPA, Canadian Environmental Protection Act, in particular, schedule 1, which is a list of toxic substances. We find that would create confusion with consumers, particularly those who today are wearing face masks and are doing their take-out in plastic packaging.

More importantly, it's the ambivalence that is a signal to Canadian industry that the government is really not interested in investments in chemistry in the plastics sector. Certainly we agree that plastics in the environment don't belong there. They need to be managed, but we feel there are other tools, including circular economy legislation, that would allow us to properly manage plastics and keep them in the economy.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

Thank you.

In your conversations you say you're having, have you seen any indication that the federal government might be changing its stance on ruling out these products as toxic?

[Isabelle Des Chênes]

We are hoping so. We feel there's a tremendous opportunity with the CEPA review process, which should be getting under way in either June or July this year.

There's an opportunity there to potentially bring about amendments, in particular to the pollution prevention section, that might be able to help the government address its concerns, while ensuring the toxic designation isn't used. That would be incredibly helpful.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

Thank you.

If plastics are labelled as toxic under the Canadian Environmental Protection Act, how much of a hit to the industry would it cause, in your opinion?

[Isabelle Des Chênes]

We're looking at the two polypropylene investments that are currently being made in Alberta and Ontario. We're also looking at CKPC, the Canada Kuwait Petrochemical Corporation, and Pembina. They have received supports and have deferred their $4-billion investment in Alberta until after the COVID crisis. That is a propane to polypropylene investment, and these two, Inter Pipeline's and CKPC's, are the first such investments in Canada. Polypropylene is a critical component of personal protective equipment: N95 masks, gowns, etc.

Given that this construction has not yet begun, that is at significant risk, as are the future $11 billion in investments that have been earmarked for Alberta and Ontario.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

What barriers are currently in place, other than COVID-19 where things are on hold? In the bigger picture, what are the barriers in place right now preventing these kinds of investments in Alberta and in Canada?

[Isabelle Des Chênes]

The biggest ones are around investment supports.

One of the things that's really critical to understand is that we're using feedstocks from Canadian natural gas and natural gas liquids, which can bring about greenhouse gas emissions reductions in intensity, up to 60% in some cases, compared to other products worldwide.

Things like a permanent accelerated capital cost allowance would be very helpful, particularly as we see this current round wrapping up. CKPC is going to start thinking about breaking ground next year, and those supports won't be available. Making the ACCA permanent would be incredibly helpful for us.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

Thank you.

I have time for one more quick question here.

I've read reports that investments in the United States for new projects in your industry can be as high as $300 billion, and that represents a huge amount of economic activity and good paying jobs. Would you say that Canada is getting its fair share of new products, relative to the size of our opportunities here?

[Isabelle Des Chênes]

We usually run about 10% of investment linked to the U.S. We've been tracking much less than that, but again, we have the potential for another $20 billion in investment and are hoping that, with the right supports in place and good, sound policy, we'll be able to get there.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

Thank you.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

Our next round of questions goes to MP Jowhari for six minutes.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you, Madam Chair.

Thank you to all the witnesses. It was quite informative.

Let me start by asking a question of the Chemistry Industry Association of Canada.

Madam Des Chênes, you mentioned the three Rs: resilience, responsiveness and recovery. Under the resilience heading, you talked about minimal impact and said that no economic incentive was needed for your industry. Under responsiveness, you specifically talked about the rapid response platform. Under recovery, you talked about the $11-billion investment that is planned to come in 2021 and 2022.

Let me start with the no impact and resilience. Was it a quick shift in the industry that helped minimize or eliminate the impact, or was it the nature of the industry that it was well suited in helping this pandemic?

[Isabelle Des Chênes]

It's a little bit of both. If you think back to 9/11 and the 2008 financial crisis, the chemistry sector weathered those fairly well, primarily because 95% of manufactured products globally include chemistry solutions in them. They're made up of chemical compounds and solutions.

In this particular case, those sectors saw a reduction in production primarily because their chemicals went into mining, forestry and the automotive sector. We saw some significant declines in those sectors as a result of COVID. There are also some more economic outliers there, too. Those that did increase production did so because they were focused on the disinfectants, the chlorines, the bleaches, etc.

[Majid Jowhari, Liberal, Richmond Hill, ON]

We had some downturn and we had some upturn.

Can you spend a little time on the rapid response platform that you developed as part of your responsiveness?