International Trade Committee on April 22nd, 2015

[Devinder Shory, Conservative, Calgary Northeast, AB]

Ms. Bak, in your experience with the clean tech industry, did you use CCC's services in contracting with foreign governments and, if so, can you comment on the service you received?

[Céline Bak]

I have not personally. The CCC has not announced any major contracts in this field. I do think, though, that the clean technology industry has a number of characteristics that would retain the CCC's attention, such as the size of the transactions and also the fact that in many countries we're talking about—

[The Chair, Conservative, Randy Hoback]

I have to cut you off right there. I'm sorry, but we went to five and a half minutes.

Mr. Donnelly, I'll let you go for five and a quarter.

[Fin Donnelly, NDP, New Westminster—Coquitlam, BC]

Thank you, Mr. Chair.

Thank you to our witnesses.

Ms. Materi, I was interested in your comment about targeting cities. Could you perhaps give the committee some advice on how we could combine your suggestion of targeting cities with the way federal government export promotional agencies work, and what you suggest the government might do differently?

[Ramona Materi]

One of the things was a very good point from McKinsey, which was to encourage the growth of sister-cities. These are British Columbia figures. Twenty of the sister-city agreements that British Columbia cities have are with Japan; five are with China, and one is with southeast Asia. There is none with India.

That may be different in other provinces, but is there support for those sister-city pairings? I think that would be important.

Also, your trade commissioners have limited resources. Do you say we're going to make a concerted effort to go into this second-tier Chinese city because it has a lot of opportunities for a lot of sectors in Canada? We're going to beef up our trade commissioner folks on the ground there, and we're also going to have a message across the country in those targeted sectors to say we're really making an effort; we're really trying to do a lot of on-the-ground research and work, because it can serve a broad range of Canadian sectors doing business.

[Fin Donnelly, NDP, New Westminster—Coquitlam, BC]

How important is it to work with the state or the province or the country, as well as with the city, in the target countries?

[Ramona Materi]

I think that would probably depend on the country you're dealing with. I think for this sister-city pairing, to continue with the mandate, we would do that through our target markets in emerging markets, and the country and its state of government and so forth would determine the level of involvement by other governments that you would need.

[Fin Donnelly, NDP, New Westminster—Coquitlam, BC]

Ms. Bak, Canada seems to be behind the eight ball in clean tech industry development while European and Asian countries are rapidly developing their sectors. Is there still time for Canada to recover lost ground in this sector and to build a globally competitive industry cluster here at home?

[Céline Bak]

I absolutely think there is. I think it would be on the basis of what one might call “clean tech 2.0”, which is going to be about more distributed technology, or less centralized technology.

We're going to stop spending 20% of municipal budgets pumping clean and dirty water around. We're going to treat the water where it is, rather than moving it around, because doing that involves an awful of GHGs.

We're not going to build enormous transmission lines between very large grids. I'm talking about 200 megawatt grids. Microgrids will be in the order of 30 megawatts. These are very large grids.

We actually have engineering experience and expertise in this area, and we have technical experience. We also have the financing. So we can certainly turn the ship around, but I have to say we haven't taken the first-round opportunity. It's time for us to step up.

With regard to cities and states, sometimes the procurement is done by the city and the money comes from the state. So the money conversation is about whether it's Canada's turn, and that's a diplomatic discussion, not a commercial discussion.

[Fin Donnelly, NDP, New Westminster—Coquitlam, BC]

Great.

I just have a very quick comment in the short time I have left about innovative and value-added industries, whether it's solar in China or auto technology in South Korea and Japan, and the important role played by domestic demand in underpinning the industrial buildup of immensely successful export industries. Government incentives in Canada for the clean tech sector are few and far between, unlike in other parts of the world.

Do we in Canada need to understand the relationship between the quality of today's domestic market for innovative and value-added products and services in tomorrow's export success in those sectors?

[Céline Bak]

Yes, absolutely, and electric vehicles is a good example. You may be aware that the U.S. government made a very strategic loan to a large electric vehicles company in the order of $450 million. That loan has been paid back. There are also incentives in the U.S. for electric vehicles.

Canada is not going to get electric vehicle mandates within the automotive industry unless we have a domestic market of some kind.

[The Chair, Conservative, Randy Hoback]

I'm going to have to cut you off there, I'm sorry.

All right, and we're going to go to Mrs. Grewal, then I have Mr. Allen, and then one more NDP question.

[Nina Grewal, Conservative, Fleetwood—Port Kells, BC]

Thank you, Chair, and thank you to our witnesses for coming today and for taking time out of your busy schedules to share your testimony with our committee.

My question goes to Ms. Jackowetz.

Ms. Jackowetz, as you know, our committee is considering the issue of global opportunities for Canadian small and medium-sized businesses. Cravo Equipment has had considerable success in transitioning from a manufacturer of retractable tarpaulin systems for dump trucks to a company that designs, manufactures, and distributes retractable roof greenhouses around the world.

In what countries do you do business and what type of obstacles has Cravo Equipment had to overcome in order to increase exports and establish your business in new markets? In your opinion, what is the secret to your success in expanding into new markets and what kind of opportunities do you see for Canadian businesses in international markets?

Too many questions.

[Anne Jackowetz]

I can do the summary version here.

Let's start with exporting. I think I mentioned that South Africa, Australia, and Mexico are very good markets for us. We have targeted warm climates because of the type of greenhouse. We don't do a lot of sales in Canada because we're not keeping the warmth in, but want to let the warmth out. When it gets too hot in hot climates we are able to shade and then open up again and keep the plants from stressing out too much.

Having said that, we are focusing on those kinds of climates. We had projects in Nigeria, and the U.K. is trying our house out for strawberries now. Chile is doing seeds testing there. Mongolia is doing reforestation with trees and young seedlings. The Philippines is doing rice research with our house and in Brazil a water park project was using our house.

We continue to develop. We got our first project in India. We definitely take a look at the markets where our house will do the best. That's where we target and we've been successful with that strategy.

As far as barriers are concerned, the biggest barrier is demonstration. We need to show them that they can work in their climate. Even though they see the Mexican example, where we have a demonstration house, they want to see it work in theirs. We have to incur the expense and the risk of building there and doing the whole maintenance of the project without any sales. That's our biggest obstacle I would say.

[Nina Grewal, Conservative, Fleetwood—Port Kells, BC]

Ms. Bak, Analytica Advisors has contributed tremendously to giving an identity to the clean tech industry in Canada. How would you define a clean technology company? Also, could you elaborate a little on the potential of Canada's clean technology exposed to developing countries.

[Céline Bak]

We actually have taken a very conservative definition. The definition of the industry as having 41,000 people employed today is within innovation-based firms, which doesn't include project developers, the engineering firms, or the departments of renewable energy within the utilities. It's a very small core. These are the firms that have intellectual property that they will commercialize and therefore be in a position to export. So it's a very small core definition. Therefore, the overall footprint of the industry is in the order of four or five times greater, because that's the supply chain and all of the services that go around it.

In terms of the international development, I think this government has done a wise thing, which is to bring the development department, CIDA, within the then DFAIT.

There is an opportunity to increase the awareness within the department about the solutions we have to offer that have to do with water and energy, and with stopping pollution of the air and the earth.

So that's the next step. I think we need to consider this, and it may be in the context of the mining industry, where every mine needs its own energy and its own water, and where those facilities need to be managed in a sustainable way.

[The Chair, Conservative, Randy Hoback]

We'll have to move on to Mr. Allen.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Thank you very much, Mr. Chair, and thank you to our witnesses for being here.

I'd like to start with Ms. Materi and Ms. Bak, and I want to talk about services.

Ms. Materi, you talked about the growing exports and the potential for services, and I agree. Also, when you look at the amount of money that's being invested in universities, we have a tremendous research network in Canada with the universities we have across Canada. There are also a growing number of students as a result, because there truly is a trickle-down impact on that in growing research knowledge and types of technology knowledge. So it would seem to me that the opportunities for services will continue to grow.

But also to your point, Ms. Bak, there's a tremendous demand here at home, and we're short of engineers. We hear that all the time. So given some of those constraints, I'd like to ask you how much we think that service sector can grow. I'd like to have both of your opinions on that.

Also, in testimony that was given the other day, we heard that in exporting services we run into challenges with the movement of people between countries, other blockages, and those types of things. So I'd appreciate it if you could comment on that too.

[Ramona Materi]

Céline, I think you can probably comment better on the scientific and technical aspects.

To your point, sir, I don't have the figures and I would like to support what Céline has said about really having the data. That's where some of my suggestions come in, even for having a research chair in SME export development.

I don't know if we're really taking advantage of the opportunities we have in educational services, as an example, with the brand that our universities have, the research networks, and everything else. I don't know if the figures are there. There may be figures for the number of students coming here and all that, but what about us going abroad and setting up those schools where potentially you could have a public-private partnership model and do quite well there?

I'll leave some time for you.

[Céline Bak]

I'll just take the example of South Korea. We have had some interesting success in South Korea. I had the privilege of going there, and everywhere I went I met a senior executive who had spent a year studying in Canada at some point, or who had a child studying in Canada, or had some personal tie. So those are terribly important ties.

I think we also need to be clear about what kinds of human resource capacities are needed. We know that in clean technology it's actually not about engineering, but international business development. Do we have a program in international business development? That's a really tough skill set. There's no career path. It requires apprenticeship. Is it key to exports? You bet, it's very important.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

I want to follow up on that, because you talked about data, and I'd like to ask Ms. Bak to comment about the exports by the size of firm and everything. Do you have a suggestion on the best way to pick up that information?

Depending on how quickly you answer, I'll probably have a quick follow-up question.

[Céline Bak]

Statistics Canada has been beat up a lot.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

I knew you'd say that.

[Céline Bak]

You'll take that one.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Okay, now I'll go to my next question. I have never seen small business so angry with Statistics Canada with respect to the business surveys, and small and medium-sized enterprises that are running their businesses seem to be the ones that get bombarded, right?