Thank you, honourable members of the committee, for taking time today to listen to one business person's story.
As policy-makers, one of the most important things you can do is consult with stakeholders and make decisions based on their input. I know of many instances where stakeholders weren't consulted and policies ended up not working out. I think of the story of the butternut tree in Ontario and more recently the federal government's rapid housing initiative.
The WoodSource has grown from two employees and two owners in 1998, to 70 employees today. That growth has come at a cost, as you can see by looking at my grey hair. Running a small business in Canada today is very complex. The WoodSource Inc. went through a major expansion in 2004 and again in 2014. After each expansion, I said, never again. The journey from concept to completion of an expansion will be at a minimum four years—often longer. The soft costs are typically half the cost of the total project, which makes our products more expensive and makes us less competitive on the international scene. We discussed a further expansion in 2018, but after meeting with a consultant decided our energy level was not high enough to tackle the expansion.
We are currently considering a further expansion, buoyed by a friend, who said, “Tim, the problem is, you're always using your own money to expand. Why don't you use government money?” We have always used our own money to expand. However, he introduced me to a consultant who makes a living accessing government money for people. Apparently I may be able to access resources from up to 18 different provincial and federal programs. I have a list of them, but I don't want to go through them. It would take too long.
This kind of makes my head spin. The consultant just takes a cut of what they access for you. I always thought I had to do it alone. I am not completely comfortable with this approach. My business sense smells a rat. I've always thought if a business sees an opportunity, it should be able to capture it on its own. I believe that if government helps provide a level playing field and sets the parameters, businesses will operate efficiently and invest where investments need to be made. I'm still trying to process the information and decide what to do with it.
Our business exports wood to both the United States and Europe. All of our European exports travel through the port of Montreal. As a business, anything that affects our supply chain affects us, and our supply chain is quite fragile. We've come to realize this through labour unrest in Montreal at the port and the almost complete shutdown of our nation's railway system in early 2020 because of protests in the Belleville area. These are major concerns.
In order to operate our business, we need to be competitive in the various areas where our business supplies product. If we hope to sell into the U.S. or Europe, we have to operate in a way that allows us to compete with Americans and Europeans. We have two disadvantages before we even start producing: one, our electricity rates are much higher than our peers in Europe and the U.S.; two, we have much higher cost of real estate here. Our cost per square foot of production facility is almost 40% higher than similar U.S. facilities, and 18% higher than European facilities.
Domestically, we're very involved in the supply to the home building industry with various products. This industry is, generally speaking, archaic. We still build homes the way we did 60 and 70 years ago. Because of the high costs and difficulties of building businesses, most homes are still built by a number of carpenters, a few saws and a pickup truck. The number of skilled trades is shrinking, and the cost of construction is going through the roof. Unfortunately, most home building companies consider employees to be a liability. They hire as few as possible and subcontract as much as possible, and that is true for many businesses.
There are a few things the federal government can do to help Canada innovate and compete. First, make it easier and less burdensome to hire people. If that occurs, businesses will do that. Two, there are many small businesses attempting to transfer businesses from one generation to the next. Succession planning is complicated and expensive. The changes to the dividend rules for family businesses make this more difficult. Members of the next generation are heavily invested in technology and innovation and need the hope of achievable ownership to motivate them.
In keeping with number two, support SR and ED tax incentives with more emphasis on small business in such a way that new ideas being brought forward by the next generation can be nurtured with less financial risk to others. Business owners like certainty. The ongoing, never-ending softwood dispute needs to be resolved for the long term.
Ensure that CFIA and European counterparts are on the same page for export documents. Ensure that we have good supply channels within Canada. Support Canadian manufacturing. We should be proud of making stuff in Canada.
Thank you very much.