International Trade Committee on March 6th, 2012

[Jacques Bonaventure]

I guess it's almost a bit of both in the sense that I know, again in our sector, there are some local resources who are very comfortable in their job. Are you getting my meaning?

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

I understand.

[Jacques Bonaventure]

For some, it's like their job is on the line every day. They're passionate and they want to be engaged and to help. We talked about corporate memory, but maybe after six or eight years....

And I've just seen this in Spain. The case in Spain was not a case of an individual who was not performing. As a matter of fact, I was sorry to see him go. He moved from aerospace to ICT. He's locally hired and he's been there for five or six years. At the end of the day, it's good that somebody else comes in and takes over. Maybe after a number of years, some of them become too much at ease on the job and lose a bit of that fire.

I've seen this.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Easter.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you, Mr. Chair.

[The Chair, Conservative, Rob Merrifield]

Please go ahead. I'll allow you to add a quick comment if you want.

[Brent Howatt]

I agree with Jacques, and specifically to Spain, I agree with him in that situation across the board. However, I think it's just a matter of performance. There is always going to be the need to weed out some of the less productive, but I think that's something that could be done through other means. Having a longer reign in an area definitely provides value, because we find it's hard to replace that knowledge. It usually takes two years of being in a position before they understand the individuals and the companies that they're getting into, because it's not just a matter of the companies, it's the personalities that they're dealing with as well. We'd like to see longer reigns with people in those regions.

Obviously, there is some deadwood here and there, but I think that's a separate issue that a performance evaluation would separate out.

[The Chair, Conservative, Rob Merrifield]

Thank you.

Mr. Easter.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you, Mr. Chair.

I was worried for a minute, fellas, that you almost fell into the trap that the parliamentary secretary laid. They're trying to find a way to cut back in a number of areas, when there are lots of areas that we could suggest to the government that they've the wrong priorities on, and trade commissioner service is not one of them.

On the last point, that there may be deadwood, that is a personnel problem, an individual-in-the-position problem. Let's come to the positions. Are either of you saying that some trade commissioners should go?

[Brent Howatt]

To Jacques' earlier comments, I think there are priority areas, and having resources is paramount in those areas so I wouldn't change that at all because it would be a direct detriment to our business if that happened. I find them a very valuable resource, and specifically, we know the areas that are key, and that's where we focus. I'd say those trade commissioners tend to get worked harder than ones that are placed in non-priority areas. I think if we did a review of those areas, we would see in aerospace regions, which is specific to our business model, those individuals are key, and they have worked extremely hard for us.

Since actively using their service, there has been a phenomenal inflow of potential to our business. We feel the return on investment for the trade commissioners we're dealing with has been phenomenal, and we have nothing but the utmost respect for those individuals.

[Wayne Easter, Liberal, Malpeque, PE]

Do either of you do business in the U.S. market?

[Jacques Bonaventure]

In our case, very much so. Our largest customers are Lockheed Martin, Northrop Grumman on the F-35, Boeing—Boeing is our largest customer— and Gulfstream. It's extensive throughout the United States.

[Wayne Easter, Liberal, Malpeque, PE]

Are these places you do business in the United States with pretty well spread right across then?

[Jacques Bonaventure]

That's right, from the west coast to the east coast, Savannah, Georgia, to Seattle, Washington State. In some of those areas, in the case of Seattle, there's a full-time locally hired person, Mr. Sheehan, who's been nothing but very good and outstanding about supporting us at Centra and me over the years. That's a case where, indeed, it is a priority market for Canada. Boeing is obviously the largest aircraft builder in the world with Airbus.

[Wayne Easter, Liberal, Malpeque, PE]

There's a fairly substantial rumour that the government is looking at closing eight consulates in the U.S. Would you see that as a problem, or how would you get around the trade commissioner side?

[Jacques Bonaventure]

In our business, as I said, we're dealing extensively with L.A., Seattle, and Dallas-Fort Worth. These are the three principal areas we're actually dealing with.

We're an established aerospace supplier, so for us in the U.S., the need is not as great in some areas. But obviously, the fact that we're the largest Boeing supplier makes it key that this individual in Seattle is always informed of what we're doing and what our agenda is, because these are voiced locally. We don't have anybody. We don't have any agent. I'm the pretty face for the company, if I may say so. I cannot be in all places.

[Wayne Easter, Liberal, Malpeque, PE]

Mr. Howatt, what about yourself and the U.S., your company?

[Brent Howatt]

Just Like Jacques has said, there are key areas in the States. Our customer base is pretty much the same. We're at an earlier stage of development, so for us the trade commissioners are still playing an extremely vital role. I work with them extensively. Not a day goes by where I'm not having at least two or three conversations with the trade commissioners.

For a company at our stage, we would require their services a lot more than Jacques would, because as far as his plan goes, he's further along in the development process. Where he's making a couple of contacts, we'll probably be making six or eight to get the equivalent portion of work done.

As well, we consider them an extension of our team because they are our eyes and ears, they have industry knowledge, and it's a resource that we don't have to pay for internally. Until we get to that point where we can afford those resources and have them on staff ongoing, the trade commission is allowing us to be very specific and very directed, and to spend our money wisely so that we're getting a very high success rate on our sales return.

We just did our numbers within the last month. What ordinarily would have been probably a 15% to 20% success rate, we're probably hitting around 75% to 85%. Now if that translates over into the hundred million dollars of quotation and prospects we have out there, it's the difference between allowing us to grow at the rate our customers require, or not.

I feel the trade commission gives us an advantage over our competing nations because whenever you go to visit these customers, you have competing services from France, from England, from all around the world, that are trying to get the ears of these major customers. They're our first step in the door. Having them there gives us tremendous leverage. We're a huge supporter.

[Wayne Easter, Liberal, Malpeque, PE]

We will have to keep an eye on that in the budget to see what consulates are in fact closed and which trade commissioners go. You're basically saying that these folks are an extension of your marketing arm, from both a sales and a market intelligence point of view, I gather.

[Brent Howatt]

Exactly. Their credibility helps open that door. A lot of times when you're further along in the process, you've already got the relationship established, but getting that first door opened and doing that cost effectively.... On ventures where we've gone and done it ourselves, we're making seven trips. Recently, with the support of some trade commissioners, we did it in the first trip. That increases our productivity extensively. Mind you, there was three months' work leading up to that, but we had all the homework done, we knew what we were doing, and we were successful on our first trip to the customer.

So from a sales director point of view, for us, I see a huge return on investment for the trade commission.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Shipley.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Thank you very much, Mr. Chair.

Welcome to our witnesses.

I just want to follow up. Quite honestly, Brent, in terms of your discussion—also with Jacques—you're both SMEs and you both are talking pretty much the same language in terms of success. I have to tell you that's encouraging in what I would think is a very competitive business.

As we open up markets, we look at the trade commissioner service. How have you been able to stay competitive in a global market? You both talked about domestic and now your extension out into international markets. I'm wondering how small Canadian companies are being competitive to get the growth that you're talking about in international competitions.

Brent.

[Brent Howatt]

Okay, I can speak to that.

The trade commissioner service has given us the means to increase our success. Rather than having to spend extensively on resources and essentially representatives—and that sort of thing that can be extremely costly to the bottom line—we can invest in technology. We can invest in production people, which allows us to be competitive.

In aerospace, there is a high level of standards that have to be achieved. From the European side, Airbus drives the specifications; from North America, it's essentially Boeing that's driving the requirements. The requirements keep going up, so for a company our size, that's a huge expenditure in order to be competitive. Essentially what we're saving on the sale side and on the opportunities that are being created, we can put into technology to remain competitive. That's essentially what we've invested in during the last six years. It's an increase in technology so that we can be competitive.

Now, if you're not out there and you don't know what's going on in the market, it doesn't matter what technology you have. But with the trade commissioner service, they're a focal point for the international customers. Whether it's an IRB requirement that's being funnelled back, or whether they're just looking for competitiveness of a region, we're finding there's a lot of work. Canada is extremely competitive, because we've created an environment and have the exposure with those customers.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Jacques, I'd like to go to you. I won't ask you the same question.

I'm wondering if you can give us some indication, as we talk about trade agreements and opening up borders, and as you've talked about expanding from your domestic markets into more international ones, about whether this has been an advantage or a disadvantage to you? Can you just talk in short about that? I have another question.

[Jacques Bonaventure]

The aerospace sector has been trade-barrier free for 50-some years. There are a number of non-trade barriers, but trade agreements have not basically had an impact on our industry as there is no tariff on aerospace parts.