Evidence of meeting #139 for International Trade in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was businesses.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Christine Fréchette  President and Chief Executive Officer, Chambre de commerce de l'Est de Montréal
Raphaëlle Mandelbaum  Director, Export Assistance, Chambre de commerce de l'Est de Montréal
Gary Stepien  Finance Manager, Iafrate Machine Works Ltd.
Gerald Fowler  President and Owner, Manna International Inc.
Terry Sheehan  Sault Ste. Marie, Lib.

4:35 p.m.

Finance Manager, Iafrate Machine Works Ltd.

Gary Stepien

He has raised the patriotism card, I guess, if you want to call it that, and it's hard to fight that one.

4:35 p.m.

Conservative

Dean Allison Conservative Niagara West, ON

Yes. Thank you for sharing that.

Gerald, I'm going to come back to you. I want to finish on what Terry was talking about, your programming. That seems to always be the issue. In Niagara I think we have about 1,000 manufacturers, but the average size of most of them is fewer than 10 people, so I think Gary's company would be larger than most.

This always is about resources and all those things. There are many programs out there. I am encouraged to hear, even if it's informally, because I have a soft spot for business people—I think “just doing it” sometimes is better than reading a textbook, because things change.... You talk about that constantly. It depends on the market, so one program may not work.

Just talk a bit more. Are you still mentoring and still doing those things?

4:35 p.m.

President and Owner, Manna International Inc.

Gerald Fowler

No, the wheels fell off that particular program, sadly, for all sorts of reasons.

The challenge is a big challenge. To generate the potential that is latent in the marketplace, you need to engage people who are practitioners rather than, with all due respect, the theoretical ones, and the challenge is how to get them involved.

In some circumstances, if a number of people show up at a meeting, it's a success. As an entrepreneur, I need to make cash out of it. If there were incentives for some of the people who are experienced in exporting to come alongside and just say, “You should try this, but be careful about this....”

There are so many facets. How do you finance the first deal? EDC has stuff out there, but it's not cheap, and to get there, understandably so, is a very slippery process. It's a bit of a tough way to get some of the funding in place.

I think if we can marry a lot of these different entities together, we can have a lot of success in the Canadian marketplace.

4:35 p.m.

Conservative

Dean Allison Conservative Niagara West, ON

I get it. If you have a 10-person firm, there are people doing many different jobs. HR is probably shared, maybe with finance, or whatever, so it's difficult to say.... You're trying to keep your business intact. You're probably dealing with the bank, trying to figure out financing and capitalization. How on earth do you figure out another market? That's a whole other and different process that involves capital, usually, because you have to spend money to go to Europe or to whatever market. Even if it's the U.S., you have to spend money to find those markets.

4:35 p.m.

President and Owner, Manna International Inc.

Gerald Fowler

I'll tell you a sad fact. I bank in the States. They say, where we live, you can tell the Canadians, because they have a gallon of milk under one arm, a turkey under the other arm, and they smell like gasoline—

4:35 p.m.

Voices

Oh, oh!

4:35 p.m.

President and Owner, Manna International Inc.

Gerald Fowler

—because everyone goes across the river to get [Inaudible—Editor] in Sault Ste. Marie.

I bank across the river, because doing business with the Canadian banks was impossible. I mean it was incredibly difficult, not impossible. I was fighting with a Canadian bank—a couple of them, actually—and then I went across the river and they offered me 10 times what I was asking.

I just said, “Can we do it by the end of the week?” They said, “Oh, yes, for sure.”

I think application of the needs, if there were means for that end, would be huge for the exporter, because the challenge is that they have to learn about different financial models.

The challenge in international business, too, is that it's the person behind the signature, not the signature, that is important. The signature on a deal means nothing; there are no teeth in it—no practical teeth, anyway—in an international situation, so you really need to know the person behind the signature more than the actual signature itself, contrary to the situation in North America.

That, then, is another thing. How do you finance the first deal? How do you put it together? How do you make sure you're not going to be damaged in the process and lose all the collateral you have by taking that first deal?

4:40 p.m.

Conservative

Dean Allison Conservative Niagara West, ON

Thanks.

4:40 p.m.

Liberal

The Chair Liberal Mark Eyking

Thank you for that good question, Mr. Allison. That wraps up your time.

We're going to the NDP now.

Ms. Ramsey, you have the floor for three minutes.

4:40 p.m.

NDP

Tracey Ramsey NDP Essex, ON

Thank you.

All of you have mentioned barriers, and that's something we certainly hear from a lot of different groups, but from the SMEs in particular.

Can you speak to which barriers you think are unique to SMEs when it comes to trade?

I'll start with the chamber of commerce.

4:40 p.m.

President and Chief Executive Officer, Chambre de commerce de l'Est de Montréal

Christine Fréchette

One barrier unique to SMEs is the lack of resources.

Large businesses have all kinds of divisions and services, human resources, and the ability to hire consultants to fill any in-house gaps.

However, as we heard a few minutes ago, the people who work for SMEs are often called upon to wear many hats. In an SME, the positions of director of human resources, vice-president of business development and manager of operations can all be held by a single person.

This certainly makes it harder to take on the added challenges associated with exports. The external financial resources available can be a major advantage for an SME that is deciding whether or not to get into exports. Businesses must also consider that exports are part of a broad, comprehensive process. Businesses cannot simply try exporting to a new country because a new free trade agreement was signed. There must be consistency, and it is more difficult for SMEs to have comprehensive strategic plans that are reconfirmed every year or every three years. All of these aspects make the process more challenging for SMEs.

I can also talk about fact-finding missions abroad to better understand an export market. It is more difficult for SMEs to do this, because they have fewer resources and the tariffs can be higher for smalls business than for large ones.

If the tariffs could be adjusted based on the size of the business, SMEs could have greater access to fact-finding missions on an export market.

My colleague may have more to add.

4:40 p.m.

Director, Export Assistance, Chambre de commerce de l'Est de Montréal

Raphaëlle Mandelbaum

So far, our discussions have focused on SMEs, which certainly account for the large majority of businesses in Canada. When a business with 10 employees gets into the export business and the boss leaves for a week to check out the market in India, this person is away from the business for a whole week.

In the past few years, I've found that people have been giving up on fact-finding missions to focus on their everyday North American activities.

This is a barrier to exporting. I received a document from your services, in the newsletter you sent out two days ago. It was a survey asking businesses to share their main barriers. It covers everything we just talked about, such as knowledge, internal resources, financial capacity, knowledge of logistics and standards, and legal knowledge. Essentially, you have to surround yourself with the right people.

4:45 p.m.

President and Chief Executive Officer, Chambre de commerce de l'Est de Montréal

Christine Fréchette

We are hearing more and more about recruitment challenges. For the past year and a half, we have been hearing reports of how difficult it is to recruit skilled labour. As a result, many SMEs are slowing down.

If a business does not have workers, a talent pool and, especially, immigrants who want to work in Canada, it is limited in how much it can grow, especially in foreign markers.

4:45 p.m.

NDP

Tracey Ramsey NDP Essex, ON

Thank you.

4:45 p.m.

Liberal

The Chair Liberal Mark Eyking

Thank you.

We're going to Mr. Fonseca. That extra minute Ms. Ludwig had Tracey used it up—

4:45 p.m.

Some hon. members

Oh, oh!

4:45 p.m.

Liberal

The Chair Liberal Mark Eyking

—so you have five minutes. It was good dialogue.

4:45 p.m.

Liberal

Peter Fonseca Liberal Mississauga East—Cooksville, ON

I want to thank the witnesses. Your focus has been so much on the people on the ground, on the nuances, as Mr. Fowler was saying, on some of the struggles, on the barriers and on the many hats that we see that small and medium-sized businesses wear. One thing I always like to say is that people buy from people, and behind that signature is a person and an understanding of that person.

We heard from Madam Fréchette on where the government could maybe have a different approach. Maybe it's a matter of the trade commissioner service doing that groundwork, being that sales force and being the marketing arm for many of the 3,200 businesses that you represent. That way, when an opportunity presents itself—and I think Canada is in an enviable position with the trade agreements that we have now globally—we have a real opportunity to capitalize on those.

Many of the people at the trade commissioner service would have all of that knowledge. They would know if the double-digit tariffs had just come off lobster or whatever the product is. They would be able to communicate that, to get in touch with the different companies here in Canada, our SMEs, and to make those connections globally so that the business could start.

When I say “those connections” I mean those people-to-people connections. Is that the kind of direction you'd be looking for? I ask this of all the witnesses, but I'll start with Madam Fréchette and Madam Mandelbaum.

February 26th, 2019 / 4:45 p.m.

President and Chief Executive Officer, Chambre de commerce de l'Est de Montréal

Christine Fréchette

Can you repeat the question? We missed something.

4:45 p.m.

Liberal

Peter Fonseca Liberal Mississauga East—Cooksville, ON

It's for small and medium-sized enterprises to be really able to access the trade commissioner service as a sales and marketing force that has done the groundwork. They have done that work, and small and medium-sized businesses don't have the resources to be able to do it. Of course, they would be working through chambers of commerce like yourselves to facilitate that, to be able to get those connections set up and start the business dialogue so that trade can happen.

4:45 p.m.

President and Chief Executive Officer, Chambre de commerce de l'Est de Montréal

Christine Fréchette

Thank you.

On occasion, we have round tables or information sessions during which trade representatives come to the Chambre de commerce de l'Est de Montréal to talk about the opportunities and benefits of exporting to a given country. When foreign trade commissioners come to Montreal, we like to be informed in advance, because we can set up an activity for these trade commissioners to meet with business people who are partners and clients of our export assistance service. We occasionally organize this type of event throughout the year. We would be able to hold more, especially for our Canadian trade commissioners. I think we've had more events with Quebec trade commissioners, but there is a great opportunity to hold them with Canadian commissioners as well.

4:45 p.m.

Liberal

Peter Fonseca Liberal Mississauga East—Cooksville, ON

Mr. Fowler or Mr. Stepien, what are your thoughts in terms of a better connection between government and business to be able to make those people-to-people connections that you believe are the way that we can facilitate more trade?

4:45 p.m.

President and Owner, Manna International Inc.

Gerald Fowler

We've used them in the past. The challenge comes when you go into a niche market. They probably won't have the expertise for that because of the capacity they have to cover. They won't have a lot of experience or a lot of ability in small markets. In the bigger markets, they will, but it depends on the person. We get some really good ones out there, and there are others who are not quite as good, but they are great. They do a really good job, especially for your first set of inquiries to see if there are any tariffs involved, what the culture is like, what the marketplace is like and what's going on in the current scene.

We had a wonderful deal going on with Ecuador only to find out that their inflation was out of control and we couldn't actually make the deal work because of the inflation. They are great for those broad perspectives. When it comes to the practicality of exporting though, they can identify the potential, but I come back to the point that we need to convert the potential to cash, and that's where it needs a different set of resources, potentially.

4:50 p.m.

Liberal

Peter Fonseca Liberal Mississauga East—Cooksville, ON

Gary, what's your experience?

4:50 p.m.

Finance Manager, Iafrate Machine Works Ltd.

Gary Stepien

Actually, we participated in a trade commissioner event in Buffalo a couple of years ago. They called it a matchmaking thing. It was kind of like speed dating. You had half an hour with different people that they matched you up with. In our case, we didn't have exactly the type of service they wanted, but with the amount of work that went into it, it was really a quality production. It was just unfortunate that we didn't have exactly what the Americans were looking for, but we actually toured some of the facilities down in Pennsylvania. It was very good.