International Trade Committee on Dec. 5th, 2023

[The Chair (Hon. Judy A. Sgro (Humber River—Black Creek, Lib.)), Liberal, Judy Sgro]

I call the meeting to order. This is meeting number 86 of the Standing Committee on International Trade.

Today's meeting is taking place in a hybrid format pursuant to the Standing Orders and therefore members are attending in person in the room and remotely using the Zoom application.

I need to make a few comments for the benefit of witnesses and members.

Please wait until I recognize you by name before speaking. For those online, please mute yourself when you are not speaking. All comments should be addressed through the chair.

If any technical issues arise, please let me know and we will suspend in order to make sure everybody has full access to translation.

I ask that all participants be careful when handling the earpieces, in order to prevent feedback.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Tuesday, October 17, 2023, the committee is continuing its study on the 2023 strike at the port of Vancouver.

We have with us today, from the Canadian Vehicle Manufacturers' Association, Brian Kingston, president and chief executive officer.

From the Global Automakers of Canada, we have David Adams, president.

From the Government of Alberta, we have the Honourable Devin Dreeshen, Minister of Transportation and Economic Corridors, by video conference.

From the International Longshore and Warehouse Union Canada, by video conference, we have Robert Ashton.

Welcome to all the witnesses. We will start with opening remarks of up to five minutes.

Mr. Kingston, I will turn the floor over to you, sir.

[Brian Kingston, President and Chief Executive Officer, Canadian Vehicle Manufacturers' Association]

Thank you, Madam Chair and committee members. Thank you for the invitation to take part in your study of the 2023 strike at the port of Vancouver.

The Canadian Vehicle Manufacturers' Association is the industry association representing Canada's leading manufacturers of light and heavy-duty motor vehicles. Our membership includes Ford, General Motors and Stellantis.

CVMA members are at the forefront of new automotive investment in Canada. Over the past three years, Ford, GM and Stellantis have announced nearly $15 billion in new investment, most of which is focused on electric vehicle assembly and the battery supply chain. Critical infrastructure such as the port of Vancouver underpins the highly integrated automotive industry and Canada's competitiveness for new investment, including the $15 billion that I just referenced.

Supply chain disruptions are occurring with more regularity. With each incident, business is burdened with the cost of redirecting goods to maintain productivity and sales. The Vancouver and Montreal ports, Ambassador Bridge, St. Lawrence Seaway and rail and highway trade corridors are critical infrastructure that support the automotive supply chain for finished vehicles, parts and component inputs such as minerals at both Canadian and U.S. production facilities. The Vancouver port is a key transit point for parts and finished vehicles produced and sold in Canada and across North America.

In 2022 the port handled 333,000 vehicles, which represents about a quarter of Canadian vehicle sales. The Vancouver work stoppage quickly resulted in auto assembly production impacts on both sides of the border. Automotive manufacturers that depend on the port were forced to reroute shipments, which added significant costs and increased uncertainty at the worst possible time.

For Canadians, this means higher vehicle prices and delays just as the sector is rebounding from pandemic-related inventory shortages. It's also important to recognize that it can take weeks to recover from a backlog of shipments out of ports. The ripple effect on rail and transportation logistics is significant. Once the port resumes operations, there's considerable time before goods reach their destination, which can result in continued production delays and added cost.

To illustrate immediate and longer-term impacts of the Vancouver port disruption, one company incurred $5 million U.S. in premium freight costs. They have decreased the volume routed through the port of Vancouver by 22% since July and continue to move volume out of Vancouver. They now focus on U.S. west coast ports due to the ongoing port congestion issues in Vancouver.

Canada needs to improve its governance of its critical infrastructure to provide more stability for foreign direct investment, protect supply chains and be more coordinated and efficient in response to disruptions. Progress is needed on a national strategy for critical infrastructure.

CVMA has made a number of recommendations to government on this. They include the following.

Number one, we need to add trade infrastructure to the listing of national critical infrastructure definitions.

Number two, we need to work with industry to confirm priority ports of entry and trade corridors that should be designated critical infrastructure and to develop response plans including points of contact, information sharing protocols and service standards that could be launched in the event of a disruption.

Number three, we need the government to enhance its leadership role in the coordination of stakeholders and critical infrastructure owners and operators in response to disruptions like the one we witnessed at the port of Vancouver. This should include reviewing existing protocols, undertaking risk assessments, scenario planning and clarifying the respective roles of each level of government, as well as the most efficient communications channels to operate and execute in the event of a pending or occurring disruption.

With that, thanks for your time today. I look forward to any questions.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Kingston.

We'll move on to Mr. Adams.

Welcome back to the committee. You're a regular to all of us. It's always good to see you here.

[David Adams, President, Global Automakers of Canada]

Thanks, Madam Chair.

Thank you, committee members, for the opportunity to appear before the committee this afternoon on behalf of the 15 members of the Global Automakers of Canada to discuss the Vancouver port strike and its impact.

Our membership is comprised of Canada’s two largest vehicle producers, Toyota and Honda, producing vehicles for the North American market as well as 13 exclusive distributors of their brands in the Canadian market.

As you might imagine, the 13-day strike at the port of Vancouver impacted each of our members differently, depending on the level of their import exposure from Asia. Over the years, the vast majority of our members have established vehicle manufacturing facilities in North America, which have served to somewhat mitigate marine import exposure. However, over that same period of time, market share for our members has continued to grow.

Last year, as Mr. Kingston referenced, approximately 334,000 vehicles were imported into the port of Vancouver. That was down 6% from 2021 and 22% from 2018. As committee members are aware, the global automotive industry was severely impacted by a number of different supply chain disruptions, from which it has still not yet fully recovered. Imports from our Korean member companies were responsible for 45% of all vehicles imported through—

[Denis Trudel, Bloc, Longueuil—Saint-Hubert, QC]

Madam Chair, I'm sorry, but there seems to be a bit of a problem with the interpretation. It's hard to hear what is being interpreted. It sounds like it's a problem with the microphone.

[The Chair, Liberal, Judy Sgro]

Should we suspend for a minute?

[The Clerk of the Committee, Ms. Sophia Nickel]

We'll ask another interpreter to take over.

[The Chair, Liberal, Judy Sgro]

Would you mind starting again, sir, to make sure that everybody gets clear translation?

[David Adams]

I preface my comments by saying that the strike impacted each of our members differently, depending on their import exposure from Asia.

Last year, there were approximately 334,000 vehicles imported into the port, down 6% from 2021 and down 22% from 2018. The global automotive industry was severely impacted by a number of different supply chain disruptions, from which it has still not fully recovered. Imports from our Korean member companies were responsible for 45% of all vehicles imported through the port, with Japanese manufacturers representing another 45% of vehicle imports through the port.

Overall, vehicles and vehicle parts represented about 6.8% of all inbound cargo through the port of Vancouver. With that said, I want to highlight the impacts on some of our members.

One of our members reported the following. The strike added 60 days to already protracted delivery times to their dealers. The diversion of vessels to U.S. ports added approximately $700 per vehicle. The flip-flop of the union, with respect to the strike being over and then not, was another added disruption that called into question the effectiveness of the mediation program.

Another member reported that due to the longer dwell times at Vancouver, ships were diverted to U.S. ports to unload cargo there first, before returning to Vancouver. The dwell times at Vancouver were significantly higher than at other ports, even before the strike, with anchor times, in some cases, being longer than the time for the ship to travel from the home port to the port of Vancouver. Anchor times in other ports are typically one to two days as opposed to, in some cases, one to two weeks or more at the port of Vancouver.

The impact on member companies was also a bit of the luck of the draw with respect to when ships arrived at the port. Some were fortunate to have vessels docking either side of the strike, while others were caught up in the middle of it.

That said, it has become evident, throughout the strike and the aftermath, that we have a series of challenges, not only at the Port of Montreal but also elsewhere, that need to be collectively addressed. These are as follows.

The fires and atmospheric rivers of recent years have underscored the need for infrastructure resilience to climate change. Having an alternate port on the west coast that is capable of handling vehicle off-loading would provide an option to assist in instances of stoppages caused by natural disasters, or for other reasons.

The port infrastructure needs to be right-sized and optimized for increased volumes of electric vehicles from Asia, in particular China, as imports have grown from 190 vehicles in 2020 to 7,916 vehicles in 2022, which is over a 4,000% increase. With Canada's pending zero-emission vehicle targets, these imports will only rise until additional North American capacity for both electric vehicles and their constituent parts and components come online.

The port of Vancouver infrastructure must also include the installation of EV chargers to accommodate the off-loading and distribution of EVs. We are aware that efforts in this regard are under way.

The port infrastructure is only as good as the rail and trucking services that support the distribution of imported products across the country. There is currently a major shortage of railcars to service the automotive industry. The port strike exacerbated this situation, resulting in many weeks passing before full recovery from the strike occurred.

There is a growing perception that Canadian ports, and transportation infrastructure in general, lack predictability, reliability, consistency and efficiency, which is detrimental to a small, trade-reliant nation and has some shippers looking to consider supplying the Canadian market through U.S. ports, owing to the loss of confidence in Canadian ports.

While negotiated settlements are always the best solution, when parties are entrenched in their positions, the Canadian economy must not be held hostage until a negotiated settlement is reached. Since the port of Vancouver strike, we have witnessed the October shutdown of the St. Lawrence Seaway due to a strike, and based on actions taken by both sides to date, it would seem that a strike at the Port of Montreal may well be imminent when the current collective agreement expires on December 31 of this year.

Canada can ill afford the economic and reputational hits, combined with other highly visible and costly border incidents like the illegal blockade at the Ambassador Bridge and other key border crossings in February 2022.

In closing, for these reasons, we very much appreciate the Minister of Labour's October 19 announcement on initiating a review under section 106 of the Canada Labour Code to look at the structural issues that have given rise to the labour dispute at the port of Vancouver and elsewhere, and we will look forward to seeing the terms of reference for the review that the minister has committed to by December 31 of this year.

We are also hopeful that the appointment of Mr. Robert Dick to head up the supply chain office at Transport Canada will lead to not only issue and problem identification but also a clear and actionable road map for improvement. Canadian businesses and the consumers who rely on them deserve no less.

Thank you very much.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Adams.

We'll go to Mr. Ashton for up to five minutes.

[Robert Ashton, President, International Longshore and Warehouse Union Canada]

Good morning. Thank you, committee, for having me.

My name is Rob Ashton, and I am the national president of the International Longshore and Warehouse Union of Canada. I represent approximately 8,000 longshore workers on the west coast.

The 2023 strike negotiations were doomed to failure before they started. You may ask why I would start with such a statement. The answer is quite simple. It was due to who was and was not at the bargaining table. The BCMEA was at the table on behalf of the employers, with two superintendents and an HR manager, all of whom had zero decision-making capabilities. Who was missing from the bargaining table? It was the decision-makers. There were no terminal operator representatives with knowledge of the working conditions at their terminals who could actually make decisions on behalf of their companies in regard to bargaining.

This major shift in representation at the bargaining table began in the 2010 negotiations. Since 2010, our bargaining relationship has changed for the worse. Over the last few rounds of bargaining, the BCMEA has chosen to sit back and hope the Government of Canada would step in and legislate a collective agreement for our industry, or send us to a third party for a deal. This was proven to be true when the BCMEA handed us a letter stating its path forward. Its idea of a path forward was a binding arbitration scenario, which bypassed our charter right for free collective bargaining. As well, the BCMEA refused to meet with us directly when we were at the FMCS level. They forced us to go through the mediators to pass positions back and forth. This proved to us that the BCMEA had no intention to bargain a CBA with our committee.

The 2023 strike was the first work stoppage of significance in generations. The union knows this strike could have been averted if the BCMEA had shown up to bargain with us. During bargaining, when the BCMEA gave us their global offers for settlement, the union's bargaining committee responded promptly that same day. The union, with all of our decision-makers at the table, were able to respond at each step. The BCMEA, however, would take an average of seven to 10 days to respond to our global offers. Each decision had to be taken away and, we believe, reviewed by a decision-maker.

Another hurdle we faced was the announcement of Roberts Bank Terminal 2 getting approved. This had a significant impact on bargaining, because this terminal, for all intents and purposes, will be an automated terminal, which will affect our members.

The impacts of the west coast strike on other industries in Canada has more to do with companies surviving off just-in-time shipping. If companies in this country took advantage of the existing warehousing infrastructure of equipment and goods, issues like these, which can arise at the ports and in other transportation sectors, would have less of an impact on their businesses. It would also employ many more Canadians with good union jobs. This just-in-time shipping model is vulnerable not only to labour management issues but also to extreme weather occurrences, such as the atmospheric river in B.C. a couple of years ago.

In regard to innovation at the ports, we understand that technologies continually evolve, and the need to green our working environments is understood by all. With that in mind, we must look at technology and equipment that support workers and the environment at the same time. I'm not an expert in this field, but I know hydrogen-based equipment is much better for the environment, and we can keep workers in the seats of the machines. The only ones that gain from doing away with workers' jobs through automation and AI are corporations, which take their profits away from our communities and workers, to no one's benefit but their own.

In regard to port congestion at the terminals, you can land airplanes right now at some of our container terminals. It's that slow. This can be fixed if the parties in the marine industry decide to work together and go after the work.

I would like to thank the committee for allowing me to present here today. My testimony is complete.

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Ashton.

Now we'll move on to Minister Dreeshen.

I think we need to suspend for a moment to make sure that Minister Dreeshen's connection is working.

[The Chair, Liberal, Judy Sgro]

I'm glad we were able to fix up all of that.

Welcome to the committee, Minister Dreeshen. You have up to five minutes for your presentation and opening statements, please.

[Devin Dreeshen, Minister of Transportation and Economic Corridors, Government of Alberta]

Thank you so much, Madam Chair. I apologize to you and all of the committee members for the technical issues this morning.

I do welcome the opportunity to share insights on behalf of Alberta's government with regard to the strike at the west coast ports—Canada's number one, largest port and the soon to be second-largest port, i.e., Vancouver and Prince Rupert.

Let me start by saying that labour-related disruptions slow down trade and result in increased costs for Canadian consumers, particularly here in Alberta. As a landlocked province, Alberta depends on a well-functioning ports system, as well as transportation corridors and market-access infrastructure, to maintain economic prosperity.

Ports are an integral part of the transportation and supply chain system, and their effective operation impacts Canada's and Alberta's competitiveness. In 2022, $18 billion of Alberta's exports, including grains, minerals and forest products—

[Denis Trudel, Bloc, Longueuil—Saint-Hubert, QC]

Madam Chair—

[The Chair, Liberal, Judy Sgro]

I'm sorry, Minister Dreeshen. Can you just hold? It's not your issue. We may have a translation issue, so just hold the fort there, please.

[Denis Trudel, Bloc, Longueuil—Saint-Hubert, QC]

There's no French interpretation at the moment.

[The Chair, Liberal, Judy Sgro]

We have no translation at the moment.

[A voice]

We do now.

[The Chair, Liberal, Judy Sgro]

Okay, I apologize, Minister Dreeshen. Please continue.

[Devin Dreeshen]

Thank you.

I'll just say that back in 2022, 18 billion dollars' worth of Alberta exports were shipped from west coast ports, and that includes everything from grains, minerals and forest products, through Vancouver and Prince Rupert.

Most products were bound for Japan, China, the U.S., South Korea and Peru, but the prolonged work stoppage at the port of Vancouver this summer impacted the ability of many Alberta industries to move products to international markets.

According to the BC Maritime Employers Association, this strike action disrupted billions of dollars' worth of cargo, preventing goods such as automotive parts, refrigerated food, fertilizer and critical minerals from reaching Canadians or trading partners abroad.

Alberta's government had two primary areas of concern regarding supply chains during this strike: outbound bulk commodity exports that support industrial agriculture shippers and inbound containerized ports that support large segments of the consumer economy.

On the export side, Alberta's forestry industry is reliant on access to markets in Asia to maintain its competitive position and its reputation as a reliable shipper of sustainable forest products. For most pulp manufacturing exports, nearly all of their production is through the port of Vancouver.

Alberta's forestry sector also relies on access to railcars to support solid wood exports to the U.S. The labour action at the ports disrupted access to railcars, as Canada's major railways repositioned their trains and crews inland within Canada, affecting their operations and substantially limiting their operations to west coast ports.

While grain-related services continued to operate, as an essential service, Alberta was also concerned about the strike's impact on agri-food shipped by containers. The work stoppage caused time-sensitive, refrigerated goods to spoil, which, in turn, affected the overall supply of these goods available to Canadians.

There were also impacts for the imported products, such as household and consumer products, including electronics, fashion, appliances, construction materials, cars and car parts. The duration of the strike caused significant costly and long-term trade flow diversions for industrial manufacturers, particularly in the province's fertilizer industry.

For example, producers depend on the import of phosphate to produce fertilizer. A restriction on imports resulted in facilities needing to choose between costly and unscheduled worker shutdowns or entering into long-term contracts to import through alternative ports.

Over the course of the work stoppage at the port of Vancouver, Alberta's government expressed concerns regarding the significant and harmful impacts on Alberta's and Canada's economies and on our country's reputation as a reliable trading partner. We stressed the need for the federal government to develop a new process for addressing the risk of work stoppages at ports and other critical supply chain infrastructure.

As another example of the need for a new process, both Canadian National and Canadian Pacific Kansas City railways have collective agreements with the Teamsters Canada Rail Conference, expiring December 31 of this year. There is potential for further labour action in early 2024, next year, which could affect locomotive engineers, conductors and yard workers at both railways.

Alberta encourages the federal government to explore mechanisms that prevent costly labour disruptions in the transportation sector, such as amendments to the Canada Labour Code that would provide the federal government with the authority to compel binding arbitration prior to a work stoppage taking place.

Canada cannot afford to have further disruptions to critical infrastructure, such as class I railways, ports and airports, which are essential to the supply chain and economies of Alberta and Canada. Alberta, with Saskatchewan and Manitoba, for years has requested enhanced representation on the board of the Vancouver port authority, given the importance of this gateway to Alberta's trade with other international markets.

Finally, I would like to stress the importance of the federal government's treating supply chain disruptions in western Canada with the urgency with which it addresses similar issues in eastern Canada, where, in a one-day port strike in Montreal, back-to-work legislation was used. Here on the west coast, there was over a month of disruptions. That is why Alberta led calls for the federal government to be recalled and back-to-work legislation used in this instance.

It is critical that, moving forward, the federal government ensure labour stability and, in doing so, support a resilient supply chain to protect our economy and the Canadians who rely on it.

Thank you so much, Madam Chair and committee members, for the time to talk about the importance for Canada to work as a country and for the federal government to work on behalf of all Canadians.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Minister.

We're on to round one with our committee members, with Mr. Jeneroux for six minutes, please.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

Thanks, Chair, and thanks to everybody for joining us here today.

I first want to start with Mr. Kingston and Mr. Adams, just to get you on the record. What we heard about from Transport Canada last week was shipment losses of up to $13 billion and economic losses of up to $1 billion. Would you both agree with that dollar amount?

[David Adams]

From my perspective, that sounds about right, based on other sources that I've heard as well.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

Thank you.

Mr. Kingston.