International Trade Committee on May 13th, 2016

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

Thank you.

Mr. Johns, we've heard from the auto sector, and we had an opportunity to hear from the president of Ford, as well as some of the auto parts manufacturers. What they had to say was somewhat alarming. They said there would be little chance of Canada landing another assembly plant here if the TPP were to be ratified. Can you give me your take on that?

[Sean Johns]

I'm not sure that's entirely contingent just on TPP. Going forward and at least for the foreseeable future, that looks like the probable case, but it's based on a variety of competitiveness factors that I think the government and the industry are working hard to understand. They're shifting production around the globe to support new, emerging markets. The North American market has had a lot of attention over the last several decades, and we've industrialized to support it, and our OEMs have similarly done that.

As these other markets emerge, they need to have footprints in those markets, and that has also driven our global distribution of facilities. If you look at our footprint here specifically, because we're predominantly in Ontario, the footprints have changed and the numbers of facilities have reduced, but overall our employment numbers have stayed relatively the same, so our facilities have grown in size. We've continued to maintain growth in our sales.

So our footprint has changed. Whereas historically we would have a facility that might have 200 people, today we have some that are approaching 2,000 people.

It's very critically important to our business in Ontario that we at the very least maintain the manufacturing we have here today. We incentivize it to stay and we look for successive programs to backfill the ones that we're making.

I'm not in a position to be very hopeful that we're going to attract a new investment in the near future, simply because I don't think we need the additional capacity. I'm not sure this is the optimal position from which to support that growing global market demand.

[The Chair, Liberal, Mark Eyking]

Thank you. That wraps up your time.

Ms. Ludwig.

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

Thank you.

Good morning and thank you for your excellent presentations.

I'm going to start with Ms. Nott.

Thank you for raising the significance of importing. We've heard several times throughout our panel discussions of the significance and the value of a low Canadian dollar. On the importing side, if we're importing to export, how does the Canadian dollar impact our companies, if we have a low Canadian dollar and they're importing as part of their business?

[Joy Nott]

A low Canadian dollar, I think it goes without saying, helps on the export side. On the import side of the house, as long as the dollar remains stable and is not in a free fall, as it was a few months ago—that's a very disquieting circumstance.... As long as it remains relatively stable, a low Canadian dollar doesn't actually negatively impact imports, because you can plan what your cost needs to be in your spreadsheet and you move on, and it actually enhances your export sales.

One thing that I think is important to understand, though, is that on the import side of the house, import policy in Canada over the past, I'm going to say, seven to 10 years has actually been quite hostile towards importers. There's a pending Federal Court case called Bri-Chem that is being very widely watched by all importers, because it speaks directly to that direct hostility from the Canada Border Services Agency towards all importers.

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

Thank you.

On that, Ms. De Silva, regarding importing, you have mentioned working directly with 50 businesses that export a business strategy. I really commend you for the work you've done with it and for its successes.

In the early 2000s, when I was involved in this, many people relied on and wanted to jump into the export market based on the low Canadian dollar. That was their plan. When the dollar started to fall.... In our own business, for example, we import “one side polished” slabs of marble and granite, and it's great on the exporting side. On the importing side, when the dollar falls to 64¢ you can't offset all those costs to your customers.

With your expert business strategies, most often was it a direct export, an indirect export? Were there many times when you were working with a business and they just weren't ready to export?

[Jan De Silva]

There are examples of some companies that have come through saying that at this point they're just not ready. We're continuing to work with them, and over time we'll see whether we'll navigate it.

The one thing I did want to say about the program is, please think of Toronto as a kind of pilot site. I am in discussions. I know Vancouver Board of Trade and Calgary Chamber of Commerce were looking at rolling it out there. We've also had some discussions with Deputy Minister Hogan about the potential of creating this as a national program, because quite frankly we would love to see more Canadian businesses take advantage of growth markets.

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

Mr. Johns, 98% of businesses in Canada are small to medium. We've heard a number of times across the country about the risk of currency manipulation. What advice would you, as a representative of a large company, give to a small to medium-sized enterprise to mitigate the risk regarding currency manipulation?

[Sean Johns]

You have my apologies. I don't think I'm in a position to answer that effectively and provide advice to them.

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

Is there anyone else on the panel?

[Jan De Silva]

I was just going to say that, in the way the TAP works, we have three major corporate sponsors that fund it and that identify and nominate clients in, one of which is RBC. They're quite involved in helping with currency strategies and export-related strategies as well, from a financial perspective. EDC is also quite actively involved with us.

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

Okay, thank you.

[Joy Nott]

I would just throw in there that I think many small to medium-sized companies still question and become confused about the difference between BDC and EDC. There's confusion around the two. In direct answer to your question, I think EDC can help small companies with hedging strategies and stuff for currency, but small companies often don't know that.

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

The other big concern we've heard across the country, which I've also heard from constituents, is regarding human rights and the environment. From a business perspective, how does that work? How do you rationalize comments and concerns about the risk to human rights in the host countries as well as the risk to the environment and the threat to environmental practices here?

[Joy Nott]

It's not something our members have ever brought to us as a concern. Going back to my earlier statement, the one thing they made very clear to me is that if TPP goes forward, we have to be in the game. They've never directly addressed that point. I'm sorry.

[The Chair, Liberal, Mark Eyking]

Thank you. Your time is up, and I see that we have some more visitors in our audience.

Welcome.

Now we're going to move on to Mr. Van Kesteren for five minutes, for the Conservative Party.

Go ahead.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

Thank you, Mr. Chair. Thank you all for being here.

Mr. Johns, what a story. What did I hear? Was it $32 billion in sales in 29 countries. That's not bad for an immigrant who started in his garage. I think he was getting up in years, too.

[Sean Johns]

He certainly was when he left, yes.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

Yes. It's an incredible story.

Mr. Hennessy, how many companies do you represent?

[Mark Hennessy]

I actually would not know the answer to that question. I can get it to you, though, and to the rest of the committee members.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

Do you have any idea?

[Mark Hennessy]

I'm sorry, no. The number of sectors and employers we cover is just far too numerous.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

Do you have any idea how many of them would have started like the Stronachs' enterprise?

[Mark Hennessy]

No, I don't, I'm sorry.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

I can save you the bother: every one of them. Every one of them started in the imagination of somebody who had an idea and needed the ability to take that idea to the marketplace.

I have to tell you that almost without exception every one of those companies—and many these companies are small, but many of them are absolutely huge—have told this committee that it's not only something that they want to see, but it's imperative that open markets.... It's how the system works actually. It's a free market system that has raised literally billions of people from poverty, which means that today they're able to enjoy things here in this country too. As I said, without exception these companies are telling this committee, the very companies you represent, that this is important for them.

How do you square that hole? I'm curious how you come to the conclusion that this is not a good idea.