Hello, ladies and gentlemen. My name is Éric Ducharme and I am the vice-president of sales for the ADF Group Inc.
The ADF Group is a key player in the manufacturing of steel structures in Canada. The company's products and services are used primarily in non-residential construction, which means office towers, recreational complexes, airport facilities, industrial complexes, and transportation infrastructure.
The company has a 630,000-square foot plant in Terrebonne, Quebec, and more than 350 employees. The ADF Group is known for its expertise in engineering and project management, and for its major manufacturing capacity.
It must be said that, since the 2008 recession, our industry has witnessed an unprecedented increase in the major contracts awarded to companies located in China and Korea, and also in European countries such as England and Spain. This might seem normal in view of the globalization of markets. Yet the manufacturing of large steel parts to be used in our infrastructure and industrial complexes is threatened by these newcomers, primarily from countries that can produce parts for metal structures at 40% to 50% below market prices.
Despite the investment of over $75 million over the past 15 years in cost-cutting technologies, including integrated operations management systems, excellent design software, digital equipment, and staff training, the ADF Group has suffered inexplicable, even undue, pressure in the past ten years or so, owing to the sales price of structures delivered to Canada and manufactured by foreign competitors. It is a level of competition that, in some cases, we cannot explain.
For example, for the new Champlain bridge project currently under construction, some 900,000 hours of work related to the steel structure were awarded to Spanish companies. Since the average wages in the industry in Europe are approximately 19.5 euros per hour and the environmental and health and safety standards are similar to those in Canada, the price difference cannot be explained by differences in wages, or related to environmental or health and safety factors.
What is the explanation? What competitive advantage do these foreign companies have over Canadian companies? Do they get government subsidies or tax credits? Should we do like the United States and develop a “Buy Canadian Act” for our public projects?
Recently, a clause requiring purchases to be made in the United States or Canada was added to the specifications for the construction of the Gordie Howe bridge, which will link the cities of Windsor and Detroit. This step will clearly provide for healthy competition in North America and have positive effects on our respective economies.
Finally, beware of major clients that publicly explain their decision to buy from a foreign company by saying that Canada does not have the capacity to meet their project requirements. A number of projects in western Canada, among others, have been awarded to Chinese and Korean manufacturers. I personally took part in those negotiations with those very clients and can tell you that they were talking about price, not capacity. Moreover, any medium-sized or major Canadian manufacturer can tell you that we have our factories' excess capacity forces us to export our products.
In closing, I would say that it is imperative for our industry to be protected from a new group of so-called discount international companies, and for greater consideration be given to the economic benefits that a locally manufactured major project can have for Canada, including the expertise of our engineering firms, wage benefits, subcontracting, and tax revenues.
We recommend that a study be launched to shed light on the gaps between our sales prices and those of the international companies mentioned in relation to the bridge and major structure projects.
We also believe that the current measures taken by the Canadian government are insufficient to protect our industry. We therefore recommend that these measures be strengthened.
Thank you for your attention.