Industry Committee on March 9th, 2021

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

One quick question. You may answer yes or no.

Do you think your industry has a major impact on SMEs, particularly in the context of a green recovery?

[David Chartrand]

Yes, absolutely. France has attached conditions to the funding they've invested to assist major businesses, which are now required to support the supply chain and small and medium-size enterprises.

If there are no small and medium enterprises in the supply chain, as there are now, other businesses won't come and set up here either. We absolutely have to…

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

Pardon me, but time is up.

The next round of questions goes to MP Garrison.

You have the floor for two and a half minutes.

[Randall Garrison, NDP, Esquimalt—Saanich—Sooke, BC]

Thank you very much, Madam Chair.

I want to return to the question of a lack of sector-specific strategy because we have a similar problem in tourism, which is very important in my riding where tourism is about to lose another summer strategy.

For me, a link between these two is one that's been emphasized by my colleague, Taylor Bachrach, who's the member for Skeena-Bulkley Valley in northern British Columbia, and that's the potential loss of small regional airlines. If these airlines are lost, they're unlikely to come back. That has big economic implications for regional economies. It has big health care implications in terms of access to services when people need to travel.

Mr. Chartrand, quite often people think about the pilots and flight attendants, but a lot of other people are involved in small regional airlines in back-of-office functions, in maintenance and supply and all those areas. Can you talk a bit about the consequences of the loss of regional airlines?

[David Chartrand]

The airport is a community. We can't forget that. We talk about the pilots and the people on the aircraft serving passengers and things like that, but there's everything that goes on around it. There are small communities within the airports. There are baggage handlers, customer service agents and representatives, concession stands inside the airports, screeners who check security for people getting on to airplanes and all that.

There's a multitude of jobs we don't talk about. We talk about the mechanics, we talk about the people who make the airplane fly, but there's all the bustle and the hustle around those communities. Regional routes are going to be very important because if large carriers decide not to serve regional routes, like what's happening right now, the prices are going to be out of control. When it goes to certain private industries, to be able to travel from point A to point B is going to cost a fortune within Canada. It's really important to support regional routes.

[Randall Garrison, NDP, Esquimalt—Saanich—Sooke, BC]

Thank you very much, Madam Chair.

[The Chair, Liberal, Sherry Romanado]

Our next round of questions goes to the Conservative Party.

Oh, MP Baldinelli, I believe you're up. You can have five minutes.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you, Madam Chair.

I just want to follow up on some of the questions that dealt with the procurement issue. I think my colleague, Mr. Garrison, raised it. It relates to how the sector goes about making its planning processes and how it needs certainty moving forward, yet we have a procurement process in Canada that is long in delay and short in results. How—from an association in the aerospace sector—to improve the procurement process and, in fact, enlarge it to include more than small and medium-sized enterprises is something that I think is vital. I'm just wondering if people have some comments on that.

[David Chartrand]

I might have a comment on that.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Sure. Go ahead, Mr. Chartrand.

[David Chartrand]

When we talk about an aerospace strategy, the reason we want a strategy like that is to also include a procurement strategy inside of that so that we have the benefit. Let's just take the example of the fighter jet. That fighter jet was supposed to be replaced over 20 years ago. We've made that plane last—and I represent the members at L3 who do the repair and overhaul of that aircraft—and we were supposed to replace that plane over 20 years ago. It's long overdue and, as you said, it's a very long process.

Economic industrial benefits are really important. We have to have a strategy where there is some Canadian content so that there's predictability and we're able to support small and medium-sized businesses.

I don't understand why the United States can do it, China can do it, France can do it—they can all put in a certain content for their country—making sure that the small and medium-sized businesses stay supported and have some work. We have leverage. We're not going to build an airplane, a fighter jet, A to Z, but we have leverage with this negotiation where there are parts for those airplanes that we can build, and we can build them for the whole fleet of airplanes, whether it be a Lockheed Martin, a Boeing or any other company. We have resources, and we are able to do that.

I think that, government-wise, we need to negotiate smarter. We need to make sure that we have the maximum benefits possible for Canada here. That goes through a procurement strategy, and it would go inside of an aerospace strategy, also, for Canada. We don't just have the fighter jets to buy. We've purchased helicopters. We have refuelling planes right now that they're looking to replace, the old Boeing model. We have the A220, which is a plane that could do that—I'm plugging Airbus right now.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you for your comments, Mr. Chartrand.

I'm just wondering about others. I think your key word is “predictability”. How does a firm make its plans going forward if it can't tell if the government's going to be able to make a decision in one year, two years, three years, and subsequently five years? We're still on the fighter aircraft procurement—

[David Chartrand]

Twenty years.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Twenty years. Well, if I remember, I think the procurement process for the CF-18s began in 1979 with Joe Clark, and then Pierre Elliott Trudeau, who started that process, and we're still flying those jets. It goes back that far.

From that standpoint again—maybe, Mr. Mueller, from your end—the whole aspect from “Vision 2025”.... You talk about procurement as being one of the sectors of priority. Could you expand on that maybe?

[Mike Mueller]

Maybe just in the context of COVID-19 we see a real opportunity to use defence procurement, space procurement, as a real driver to help lead Canada out of the economic malaise that we find ourselves in with respect to COVID-19. With respect to COVID, there's a real opportunity there on the defence procurement space, the procurement side, with respect to that longer-term predictability. I would agree with that. How do we remove the politics out of it? How do we make sure that it's predictable?

I think, just going back to how we started this conversation, that again is very key to a sector-specific strategy for the industry, and it's something that we've been calling on the government for for the past four years. We really need to see a signal with respect to that, because a lot of the issues and a lot of the challenges and opportunities that have been raised on this call would be addressed through such a strategy.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you.

Again, going back to your “Vision 2025” document, you addressed the whole issue of innovation. We've talked about green technologies and so on. What more can the government do to foster that kind of environment, so that the research and development can take place here, so that those jobs can then be created in Canada to create those green technologies?

[Mike Mueller]

You're absolutely right. At the end of the day, it's about the jobs that are here.

When people talk about the Canadian aerospace industry, you think of planes, helicopters and satellites, but it's not that. It's the people behind it and it's the high skill and high wages that we have here.

I would agree; we need that sector strategy to be in place to ensure that we retain those good paycheques that are across the country in every single region from Victoria to Newfoundland and into the north.

If there is one item or one idea I could impress upon the committee, it is the need for that sector-specific strategy that encompasses everything.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you.

[The Chair, Liberal, Sherry Romanado]

Our last round of questions goes to MP Erskine-Smith.

You have the floor for five minutes.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Thanks very much.

I want to pick up on your comments, Mr. Mueller, as they relate to the sector-specific strategy.

Do you see, because of the decline in R and D, that a sector-specific strategy would, as a top-line issue, have the federal government supporting R and D efforts?

[Mike Mueller]

I would definitely hope that R and D would be a part of a sector-specific strategy, and it absolutely has to be.

Again, just going back to that historic timeline that I talked about earlier with respect to the long-standing support for aerospace, starting from the defence industry productivity program all the way down to SADI, it's that sector-agnostic approach that's being taken now, which is very concerning to the industry.

When you have countries around the world having a strategy in place and executing against that strategy, and a big portion of those strategies is sector-specific programs, I just can't for the life of me figure out why we wouldn't want to double down on that approach when everyone else is doing it.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

When we look at the history of federal support in the sector, it hasn't always been kind to the public purse in some respects, and I take Bombardier as an example. Their shareholdings.... We have Bombardier, one of the wealthiest families in the country, and federal governments have, time after time, supported the company.

How do we ensure that the taxpayer and the public purse are respected and protected as we support the aerospace sector going forward?

[Mike Mueller]

Again, I think it's through that overarching strategy. We just keep coming back to that.

If you have the strategy in place, you can ensure that there are competitive advantages retained, which include our skilled workforce. Again, the past policy efforts of governments of all stripes have been to support the aerospace industry through strategic programs, and that would include the previous SADI. That's the approach that governments in the past used and what other countries are doing now.

Again, it's strange to me that we wouldn't double down on that approach, have a sector-specific program in place guided by a sector-specific strategy that would address the myriad of issues, challenges and opportunities that have been raised here.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Whether it's a reform to shareholdings of certain companies being a condition of federal support, or perhaps when you look at the German support for the air sector specifically where they were taking an equity stake as part of their bailout, do you see that being a significant part of the public conversation going forward?

[Mike Mueller]

I think you have to look at the whole ecosystem. You have support for airlines, which is very important for us because, at the end of the day, they are the ones that purchase the planes that we build, and we repair the planes that they fly.

That's also right down to that sector-specific funding that's absolutely needed. Why? To keep the good-paying jobs and the skills here, and that's very much our focus in everything. We would agree with Dave and Suzanne in that respect.