International Trade Committee on March 6th, 2012

[The Chair, Conservative, Rob Merrifield]

The time's gone, so please conclude very quickly.

[Mathieu Ravignat, NDP, Pontiac, QC]

You stated that this can take two years. Is there anything trade commissioners could do to shorten this process?

[Jacques Bonaventure]

No, it is a matter of time.

That's the time it takes to do business.

In our field, the cycles are very long.

[Mathieu Ravignat, NDP, Pontiac, QC]

Very well. Thank you.

[The Chair, Conservative, Rob Merrifield]

Mr. Holder.

Just to let the committee know, we're going to try to reconnect with Mr. Howatt by telephone if not by video. So he may come on in the middle of this.

Go ahead.

[Ed Holder, Conservative, London West, ON]

Thank you very much, Chair, and I'd like to thank our guests for attending today to give us some insights into your role with the trade commissioner service. I think with people who have actually lived it, it's much better, frankly, than the theory of how this all works and I'm going to come to that in a couple of my questions.

I'm curious, first, about your relationship with Mr. Howatt. It's not Mr. Bonaventure and Mr. Howatt, it's Jacques and Brent. You seem to get along. Are you...?

[Jacques Bonaventure]

We're all in this together.

[Ed Holder, Conservative, London West, ON]

But are you competitors?

[Jacques Bonaventure]

This is Canada against the world.

[Ed Holder, Conservative, London West, ON]

That's a refreshing attitude. The opposition parties could learn something from that. I appreciate you sharing that with us. That was very good.

[Jacques Bonaventure]

Something we've done—and this was one of the earlier questions—is move up the food chain. We used to be a parts supplier. We went into sub-assemblies, and today we're providing larger structures. As we get bigger we can support smaller companies. We invite everybody to visit us, especially our competitors, because at the end of the day the worst we should be are friendly competitors.

[Ed Holder, Conservative, London West, ON]

That's honourable, and I salute your company and the industry for taking that approach.

It's rather interesting, because I was listening when my colleague opposite, Mr. Easter, asked a thoughtful question about the trade commissioner service in the United States, and whether that would have any potential negative impact on you. It's clear to me that we're trying to really focus our growth of the trade commissioner service in various emerging markets. We think that's positive and healthy.

You talked about the maturity of the relationship in the United States, and I was pleased to hear you say that the relationships you have in the States work well. You thought our approach—I'll interpret slightly—was working positively in the interest of your firm.

Here's my question. You're a boots-on-the-ground firm and it's not theory. So what comes first for you: the country you want to deal with in the aerospace industry, or the fact that we have a trade commissioner service somewhere and you kind of gravitate that way? Can you be practical about that?

[Jacques Bonaventure]

Is there a customer?

[Ed Holder, Conservative, London West, ON]

That's where you go.

[Jacques Bonaventure]

Exactly. In our business, if we serviced every potential customer we wanted to, there would be no more than 50 on this planet. We're very focused. For us there are two things. Is it the right customer for us, and is there growth potential with that customer?

We talked about the cost of doing this international trade activity. There has to be potential. It can't be just a one-shot deal. We're an SME, but can we grow that customer to $10 million a year in five years? If not, thanks, but no thanks.

[Ed Holder, Conservative, London West, ON]

In that case—appreciating that the role of the trade commissioner service is to help companies expand their commercial advantage around the world—what would happen if you were interested in a market and there wasn't a trade commissioner service specifically in that country? How would you approach it? Would you go through the embassy? Would you use the expertise of a TCS in a neighbouring area? How would you approach that practically?

[Jacques Bonaventure]

In our business there's a limited number of outstanding trade shows. For us it's Farnborough and the Paris Air Show, to name two. All of our potential customers attend and participate. Let's take Embraer in Brazil, and assume we don't have an aerospace presence from a TCS perspective in Brazil. I would certainly go to the Paris Air Show, go to the Embraer booth, introduce myself, and find out who was actually buying and who could be a customer for us within that company. You're talking about 5,000- to 15,000-person companies.

[Ed Holder, Conservative, London West, ON]

Thank you.

Mr. Howatt, it's nice to have you back. It's rather interesting the way you were very complimentary toward the trade commissioner service and how it was helpful to you. You said that as a result of your relationship with the trade commissioner service your business had grown by several million dollars directly, and you got a $100 million worth of quotations.

Could you have done that without the trade commissioner service?

[Brent Howatt]

We couldn't have done it in this timeframe. A lot of the opportunities are time sensitive. When you're dealing with a large organization, as Jacques has indicated, opportunities come and go. Being able to get in front of the opportunity at the right time is the difference between success and failure.

Ordinarily a cycle can take anywhere from a year-and-a-half to two years before you're in a position to do business with a customer. With Boeing, for example, within three months we were having the right conversations to have opportunities put in front of us. Ordinarily it would have taken up to two years to be involved. Having the trade commissioner service available helped us exponentially.

We don't have a large sales staff, and with a limited number of resources, we were able to accomplish this. I can't take credit away from the trade commissioner service, because it was directly responsible for assisting us and providing us with direction. That's why we're very complimentary of this service.

[Ed Holder, Conservative, London West, ON]

Thank you both.

[The Chair, Conservative, Rob Merrifield]

Thank you.

Mr. Côté, we'll allow you to finish this off. Then we'll have to suspend a few minutes early to get ready for the next session.

Go ahead.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Thank you, Mr. Chair.

My question will be for you, Mr. Howatt.

According to my research, you have been involved with Bombardier. I found it very interesting to hear Mr. Bonaventure praise, as you did, the merits of trade commissioners and talk about how exceptional our TCS is.

As far as free-trade agreement negotiations go, one can always wonder what advantages Canada gains if it does not equip itself with the assets it needs domestically in its own market. I am talking about support for businesses in order for them to be able to penetrate export markets, foreign markets.

Pierre Beaudoin, from Bombardier, reacting to the negotiations between Canada and the European Union, criticized a certain number of things. He found it unfortunate that we were not creating an environment conducive to the development of an industry in Canada, because our neighbour to the south has the Buy American Act. This obviously is less of a concern for you because it was railway equipment we were talking more about.

In short, he saw a certain competitive disadvantage in this regard. Your sector is obviously quite high-tech and specialized. Furthermore, I believe that you receive a certain amount of support from the government.

However, are you of the view that a greater amount of support could be provided to you domestically, in order to help you expand and seek out foreign markets?

I am thinking, among other things, of innovation and research and development, areas where, unfortunately, Canada does not seem to be doing very well. Could we begin with you, Mr. Howatt?

[Brent Howatt]

To remain competitive we have to expand research, development, and technology. If we hadn't gone down that path, once an opportunity was in front of us we wouldn't have been able to utilize it. Now we're doing a lot of that in-house to look at new ways of finding technology and the different avenues, as far as equipment and processes, available to us. But these companies are quite often supported by trade commissioners as well, who put them in connection with us.

It is a spider web. I agree with you that we won't remain competitive without the technology and further research. That's how we're remaining competitive. As a sales director, I feel I'm getting exceptional value on that side of the business through the trade commissioner service.

These are all important aspects, but the trade commissioner service has really helped us in that regard.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Given the fact that some countries invest heavily in their companies—in fact, foreign governments actively support their aerospace industries—are you of the view that Canada is doing enough, notwithstanding the professionalism of the Trade Commissioner Service?

[Brent Howatt]

As far as the technology and supporting that aspect is concerned, more could be done. I feel we are maybe lacking in regard to some of that. We've had to do that internally.

It is a very competitive market out there, especially with the region of low-cost manufacturing, because not only do they have the labour component, they're investing heavily in technology as well, and the large OEMs are investing in those areas as well. That does put us at a disadvantage.

Within the next five years, we're going to be okay. Long term, I think it's going to affect us to a greater extent because they are developing at a lot faster rate than we are. Not only are they piggybacking on our technologies and we're bringing them up to speed, but they're also investing heavily, bringing in the best and the brightest from around the world and the latest technology. The industry has really changed over the last decade, and long term, I think that's going to be a larger threat.