International Trade Committee on May 10th, 2016

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

Thank you.

What is the difference in terms of current tariff on exporting the core components to one of the member countries—for example, Japan—versus exporting actual products, meaning the biofuels?

[Marie-Hélène Labrie]

I don't have the details by country, but in some cases we can be limited in the way we can manufacture our equipment for some of those countries. In some cases, it's for the biofuels. It's not clear to me that biofuels are part of the scope of this, but it varies. I don't have the details by country yet.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

My next two questions are related to Bombardier, as well as your company. They are in regard to research and development.

With Enerkem, you had mentioned there has been an investment of $100 million in R and D. I don't remember the exact figure for Bombardier, but I'm sure it was significantly more. If we're not involved in trade in some of these agreements, how would you be able to recover your R and D costs?

[Pierre Seïn Pyun]

I'm going back to my previous comments. It's because we rely a lot on export markets. Access to export markets is critical for the success of Bombardier.

You're right: Bombardier is, according to some sources, the largest R and D investor in Canada in the last few years. On average, according to those studies we spend around $1.3 billion on an annual basis on R and D in Canada. The bulk of our R and D on the aerospace side is being done in Canada. On the rail side, we do a lot of R and D in Canada, but it's a more decentralized network. We do R and D elsewhere as well. In Europe, we have a strong presence in rail.

We do export quite a bit to Asia-Pacific. The rail business is a bit different in that it's a government procurement market. In some cases, to get access to a market, we need to invest locally, but we have exported rail products to TPP member countries and other countries in Asia.

Currently we're building light rail trains in Kingston for Kuala Lumpur's Kelana Jaya line, as I was mentioning. That's one example, but it depends on the project. It varies from project to project.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

Thank you.

My last question is for the Quebec Food Processing Council. What year were you established?

[Sylvie Cloutier]

We were established in 1999, but it was by the fusion of two older associations, one called AMPAQ, which was about 60 years old, and another that was a bakery group, which was 80 years old.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

Okay. Thank you.

I'm just counting off the list of the description regarding your council. You represent roughly eight associations?

[Sylvie Cloutier]

Yes. It's ten now.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

It's ten.

Can you share the value in Quebec as a province of having a single voice representing ten organizations that have merged together?

[Sylvie Cloutier]

The groups were small, so they could not provide themselves with staff or resources. By merging or by getting together, we became a federation of smaller associations, which provides them with more service and a stronger voice with federal and provincial governments, partners, and others. We're a model in Canada that other provinces are trying to follow.

[The Chair, Liberal, Mark Eyking]

Thank you. Your time is quite over.

We're going to move over to Mr. Hoback.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Chair.

Pierre, can I talk to you a little about your North American platform and how that competes around the world?

I'll use an example. I had the privilege of touring your facility in Mexico, where you're building the fuselages and wiring harnesses for your Learjets, I believe. This was about two years ago, with the Governor General. They explained to me that without having that facility in Mexico, you would lose x number of jobs here in Montreal.

Can you put in context why those global platforms are important, or why this North American platform is important? What would Bombardier look like if you were competing globally and you didn't have that type of platform?

[Pierre Seïn Pyun]

As I was saying briefly, for us to be able to leverage strength in different countries, I think it's important to remain there to survive, but also to enhance our competitiveness.

As I was saying, it's not a zero-sum game, because the goal is really to expand our market share and drive more revenue and be able to compete globally with our competitors.

If we succeed in doing that, then it benefits our operations here in Canada. The past has shown that we have been growing in Canada because of our successes abroad, including sometimes investing abroad as well to remain competitive. Costs can be a challenge, and it's not in all areas that a country like Canada will be able to compete.

There are areas of strength here in Canada, but I think stakeholders, including ourselves, governments, and other stakeholders, should keep investing to create this ecosystem to enable those areas of strength to develop further. Certainly R and D, engineering work, and high-end manufacturing are all areas where we're very strong here in Canada, and we have many operations focused on that.

[Randy Hoback, Conservative, Prince Albert, SK]

Again, you don't sell anything if you're not cost competitive and you won't sell anything if you're not competitive on quality and the options and features that people want. Having these international operations where assembly or some of those things are going on increases the profitability of the company so that it can compete against the Brazilians and the Chinese and other countries.

If you didn't have that platform, what would you look like today?

[Pierre Seïn Pyun]

I don't think we would be able to compete globally. It comes down to that.

I was mentioning that we have a few competitors around the world in our business segment. The competitive landscape is ruthless. It's very aggressive price-wise, technology-wise, so we have to constantly stay ahead of the curve. That means investing in R and D, in innovation, but that also means being able to be competitive from a cost structure point of view.

[Randy Hoback, Conservative, Prince Albert, SK]

You're saying that investment in R and D and infrastructure is here in Canada. Those are the jobs we want. They are the higher-paid, higher-scale jobs.

[Pierre Seïn Pyun]

The bulk of the R and D work that we're doing in aerospace is here in Canada. We can say that Canada is punching above its weight because the driver is not the Canadian market; it's important, but it's only seven percent of our revenues.

When you look at the amount of R and D being done here in manufacturing, it's sort of disproportionate compared to the size of the Canadian market.

[Randy Hoback, Conservative, Prince Albert, SK]

It comes back to the fact that you have to have the strengths of the U.S., of Mexico, in the example of the North American platform, to put together to compete against the Brazilians, against the Airbuses and other groups in the world.

Is that fair to say?

[Pierre Seïn Pyun]

Yes, indeed.

We have a vested interest in strengthening the North American platform, making sure that the value chain we have in North America can be further integrated, and that goods and services go across the border smoothly between the U.S. and Canada, between Canada and Mexico, and between Mexico and the U.S.

[Randy Hoback, Conservative, Prince Albert, SK]

You would like to see something similar, then, on a TPP platform, so that when you go to compete against the Chinese, for example, or India, you would have that same option of knowing that you have all these TPP partners using the strengths of that entire region to compete in other parts of the world.

Is that fair to say?

[Pierre Seïn Pyun]

I would say it's partly that. It's partly that we have an interest in making sure that we maintain a preferential access to the North American platform so that we're not left behind. We see this as an opportunity to actually strengthen the North American platform.

[Randy Hoback, Conservative, Prince Albert, SK]

Taking the North American platform and using it to guarantee market access—

[Pierre Seïn Pyun]

In the Asia-Pacific—

[Randy Hoback, Conservative, Prince Albert, SK]

You can refuse to answer this question.

Of course, you do have this North American platform, which all sectors—

[The Chair, Liberal, Mark Eyking]

You have a few seconds left, Mr. Hoback.