National Defence Committee on Dec. 9th, 2010

[Maurice Guitton]

For us, as you know, we are smaller in Nova Scotia, but it will affect some of our supply chain. Probably 20% will be affected if the program does not go.

There is another thing, which has not been mentioned tonight, which we have done and we have to do. We do spend a lot of time on training in our company, helping employees to graduate and receiving the right certification and qualifications. But we do also participate and promote the aerospace business to the universities and colleges to develop things. So of course it will affect those sector activities a little bit.

We are confident, however, that the program will go and we can support the program.

[Gilles Labbé]

I want to answer your question a bit differently. As you know, the AIC has made a study with Deloitte, which was published more than a month ago, that for each dollar of revenue in our industry you have a factor of 1.73. In other words, there are suppliers, but more than the suppliers, we have consultants, etc. It generates quite an economic impact for the Canadian industry and Canadian economy if you invest in aerospace.

[The Chair, Conservative, Maxime Bernier]

Thank you very much.

Now I will give the floor to Mr. Wilfert.

[Bryon Wilfert, Liberal, Richmond Hill, ON]

Mr. Chairman, I have one question.

Again, I want to thank you gentlemen for outlining to us your company's successes and where you see yourselves going. In terms of this program, it's clear you believe the goals of this program for Canadian industry will be achieved.

In terms of this unusual model the government has taken, do you believe it's time for us to look at scrapping IRB targets in future procurement programs that you, or many others, may bid on?

[Maurice Guitton]

It's a great question.

I don't know if I'm going to give you the right answer, but I do feel it's about globalization and the way the world is moving. In the past it used to take ten years to see things flow, regulation modified. Today, with the speed of the Internet and the way things are moving, I think a lot of policy and things are going to be changing in how we do our business in the future.

I can assure you that if Composites Atlantic wants to win a job today, you don't look for IRB, for whatever; you have to play the rules of the market today. We follow the market and we try to win. Maybe five years from now IRB will be very strong. Today it is not strong.

I can tell you, if you want to win with Airbus or with Boeing, now we are fighting with China and India. They are not yet on the joint strike fighter, but I'll tell you, if they do it will be a very hard business.

[Gilles Labbé]

Yes, but I don't think they will.

[Maurice Guitton]

No, because it's ITAR-protected. It's well controlled. But on the commercial side, no more offsets--it's finished.

[Bryon Wilfert, Liberal, Richmond Hill, ON]

I asked that question because you had talked about the international changing landscape, and this may be.... This is different from what Treasury Board rules have outlined clearly in the past. If this is in fact from the industry standpoint a way to go--you know, we are policy-makers, and we make recommendations--I take that under advisement.

I'm obviously very interested in your answer, and I'm glad you appreciated the question. I appreciated the answer from you.

Does any other member want to make a comment?

[Gilles Labbé]

Mr. Chair, I have to excuse myself, if I may. I have to catch an airplane to try to get some more business in the U.S.

[The Chair, Conservative, Maxime Bernier]

Great. Thank you.

Thank you very much, Mr. Labbé. Have a good day.

[Bryon Wilfert, Liberal, Richmond Hill, ON]

I want to say thank you, Mr. Chairman.

The chairman isn't usually this liberal in allowing the answers, so I want to thank the chairman. I think we've had an interesting airing of the issue.

[The Chair, Conservative, Maxime Bernier]

Thank you.

I will give the floor to Mr. Hawn.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

Thank you, Monsieur.

I probably won't take the full five minutes.

Mr. Guitton, we had an offer on Tuesday for pickled herring and aquavit in Sweden, but I think I'll go with lobsters in Lunenburg instead.

[Maurice Guitton]

Sure. We have scallops, lobster, shrimp, halibut—the whole thing.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

What's the population of Lunenburg?

[Maurice Guitton]

Lunenburg has 3,000 people in the wintertime and 10,000 to 12,000 in summertime. Lots of people from all over the world are buying houses for their families during the good summer holidays.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

You mentioned 1,600 jobs. Will that continue in the next 20 years?

[Maurice Guitton]

Yes.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

Can you qualify the impact of that on a small city like Lunenburg?

[Maurice Guitton]

Those are the direct jobs. There have to be indirect jobs attached to that. I would say we will develop more companies, more volume, and more work.

The good thing with a defence contract is the fact that in this case, when the airplane is qualified or the product is qualified, you don't have major change. There are a few little things. If you have a contract on an airline, for example a Boeing 787 or an Airbus 340, generally every two years you have a new certification to achieve because they are changing something and the customer wants something new.

The defence contracts are really stable, and we think we'll do extremely well.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

Mr. Beach, my last question is for you.

We've talked about the next-generation fighter being the next generation of technology for Canadian industry at large. How important is participating in the F-35 level of technology to being in a position to compete in whatever comes after that level of technology? How critical is it?

[Thomas Beach]

That's an excellent question, because I think it has a significant impact on our company. For a small company, the joint strike fighter badge—crest of honour, if you will—has put us on the map in terms of aerospace and defence contractors.

Attending the CANSEC show this year, which was held at Lansdowne, we visited the Lockheed Martin booth, where they brokered conversations and meetings with half a dozen potential clients for Handling Specialty. The relationship has been so strong--I think we've earned a position with them and some credibility and some trust--that they don't hesitate to broker relationships and meetings for us.

The understanding of the technology we've put in there and the learning curve we've undergone are the same as the curve in intellectual property we recently took to Boeing Military. We've contacted Embraer in Brazil and Alenia in Turin, Italy. As a small business, in 48 years we've done business on the other side of the ocean only three times, and our focus is to triple that in the next five years. I think the platform that the joint strike fighter has allowed us to utilize will accelerate that and give us a higher chance of success.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

Would you have any hope of doing that in the next five years without the joint strike fighter?

[Thomas Beach]

I don't think I would get near the pace. I'm a believer in myself and my people and our initiatives, and to take a page out of Apollo 13, “failure is not an option” for our small business. This is my third recession. We will survive. We will not lose people. So the spirit is there, but the question is at what pace?

I think our country needs to market ourselves better to the world. I understand there are low-cost countries, but we won business on the joint strike fighter because of our innovativeness, because we do something well in a solution-driven way. We don't sell product; we sell capability. We can sell capability through a movie on YouTube. We're currently quoting Korea. We just finished a $22-million job in Macau. For every one of these products, we used the reference of joint strike fighter. That's how I feel about it.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

You don't have to answer this question, but taking another line from Apollo 13, I know that the Montreal aerospace community is chagrined about some of the things they're hearing from some members of the opposition, and I think one of the things we might hear in the election is “Montreal, we have a problem.” But you don't have to answer that.

Thank you, Mr. Chair.