Special Committee on Cooperatives Committee on July 25th, 2012

[The Chair, Conservative, Blake Richards]

Sorry, we're out of time on the round. I apologize.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

Thank you.

[The Chair, Conservative, Blake Richards]

We'll move now to Monsieur Gourde. You have the floor for the next five minutes.

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

Thank you, Mr. Chair.

I want to thank the witnesses for being here.

My question is for Mr. Diggins. Over the years, you have developed a certain expertise in an important economic sector. Could you tell me once again about your company's history and the needs it meets?

[Alan Diggins]

Yes, it arose out of a need, first of all, in Owen Sound when the one plant closed down. I was fortunate at that time. It was a small community and I had about a 10-year history with these companies when I was working for the college system and had developed a relationship with each of the manufacturers and then with the people in those buildings.

For an organization like ours to be successful, we're in the plant, we're on the floor. We're not up here; we're not in the boardroom, but where the money is being made and where the problems are. How it started really was by building one relationship at a time and then getting those relationships working together and really adopting the philosophy that sharing and borrowing ideas were okay.

When we were first asked to expand into another community, for example, I took what we were doing in Owen Sound and I failed. I failed three months in a row with what we were doing to get them working together. I found out through a friend of mine, after the third month of failing, that this whole thing of expecting people to share and help each other out is a learned behaviour.

We have adopted some philosophies, if you will, of how to teach people to give themselves permission to behave that way. The fundamental success or why it works is about the relationship-building and having them understand that it's okay to behave this way.

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

You use a human approach that is very close to the reality of companies you have set up over the years. You have developed your expertise and found a way for companies with problems to improve their methodology and competitiveness.

However, beyond all that, what services do you provide to them? You say that, in the beginning, your company was not a cooperative. Yet, your approach and philosophy include some cooperative aspects, right?

[Alan Diggins]

The primary way we get them working together is to get into a community, a geographic grouping of manufacturers, and we invite them, in a facilitated way, to help each other out. That's the primary methodology we use. After we do that to them two or three times in the community on a regular basis, they learn to understand the power of helping each other out.

We don't consult to or train to our manufacturers; we work for our manufacturers. Through the years we've listened to them and we've developed many programs and services that they need. We provide the due diligence ahead of time.

For example, with the energy program I mentioned earlier, we did a whole year of searching and due diligence, finding out what the best approach was, finding the best facilitators there were in the province to make that happen, and then brought that to our members. As we've grown, those trusted relationships we've developed with other programs have paid off well.

For anything the manufacturers need, they tend to come to us now. We listen and if it's something we can help them with and help more than one or two of our members, or help the group collectively, then we'll start pursuing that. That takes a lot of work.

In terms of capitalization, we have done a lot of work ahead of time for any of the programs we bring to our members. It takes a lot of our time, a lot of our capital, and a lot of our manpower to make sure we get the best of the best that we can present to our manufacturers.

The energy program was one. The purchasing cooperative, although we're just a member of it, took similarly the same due diligence, finding the right company to run that for them. In many other programs, from training to consulting to 360-degree health and safety programs, and environmental programs and that kind of stuff, we have a very heavy investment at the front end before we bring anything to the manufacturers.

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

Thank you very much.

[The Chair, Conservative, Blake Richards]

Thank you.

We'll move now to Mr. Preston for five minutes.

[Joe Preston, Conservative, Elgin—Middlesex—London, ON]

Thank you very much.

First of all, Mr. Lahey, thank you for the work you do on the microloans piece. There's not enough of it out there, and the fact that you're doing some of it is making a great difference.

In terms of the training programs you're putting the new entrepreneurs through, many of them probably have not ever been entrepreneurs before they've come to you from a microloan or microcredit point of view. Is it done through the CFDCs or the local economic development agencies? You mentioned that it maybe was a federal program, but....

[John Lahey]

You're getting to a level that I'm probably ill-qualified to comment on. I can certainly get you the information.

[Joe Preston, Conservative, Elgin—Middlesex—London, ON]

That's fine. Thank you. I haven't read through the whole book. It may very well say it in there.

Again, thank you for doing that. It's a great way; planting the seeds of business is a neat thing to watch. Some of the plants wither, but most through extraordinary effort grow and succeed.

You also mentioned something with regard to a credit union point of view versus a bank point of view. I'm not here to say bad things about banks. I've often said that the second-most important relationship in my life as an entrepreneur was with my banker. My wife, of course, would have been first.

[A voice]

She was first? Phew.

[Joe Preston, Conservative, Elgin—Middlesex—London, ON]

Yes, she was first—honest. She dislikes it when I tell this story, because I say that sometimes they were pretty close.

[Voices]

Oh, oh!

[Joe Preston, Conservative, Elgin—Middlesex—London, ON]

But the real answer is that what we're learning from the credit unions and the caisse populaires, the cooperative banking sector, is that there still is that on-the-ground relationship. I happen to know the manager of my credit union, and whether I see him at the baseball diamond when the kids are playing or at the chamber of commerce, there's more of a relationship than “Hey, that loan I need...”. There's that day-to-day relationship, and that's an integral part, we're saying.

Alterna has grown into a fairly large organization, of those relationships. Do you work at all with other credit unions of smaller size to help them succeed, to help them with best practices that you found as you grew?

[John Lahey]

We do. Most of it is indirect, because we share it with what we call our Central, which is Central 1. We share all of those stories. We have a pretty open book to credit unions in terms of our policies, our bylaws, and anything they want of that sort. There's a credit union in town here, Your Credit Union, which is much smaller, where we provide their audit services on contract for them.

To be honest with you, I think we could do a heck of a lot more, but we do some, directly and indirectly. The reality is that everybody is just busy with coping to get through the day. Sometimes cooperation, as Alan suggested, is a learned behaviour. Some of us didn't learn to share when we were kids, and we haven't learned yet.

[Joe Preston, Conservative, Elgin—Middlesex—London, ON]

The business gets in the way of the business, right?

[John Lahey]

Sometimes.

[Joe Preston, Conservative, Elgin—Middlesex—London, ON]

Your day gets full, and before you can help the next guy your day is finished.

You mentioned the red tape reduction piece and the compliance piece from a banking point of view. If you have some ideas as to how we can better suit smaller credit unions from a compliance point of view, with large banks from a compliance point of view, we'd all be happy to hear it. We keep hearing about it, but I'm not sure I've heard a solution yet other than, “Gee, I wish it were better.”

So if you can think of something along those lines, I'd love you to provide it to us at some point.

[John Lahey]

We'd be happy to submit something. I'm sure Credit Union Central of Canada could help me with that, because they hear this all the time.

[Joe Preston, Conservative, Elgin—Middlesex—London, ON]

But again, I don't think any of us want to say, “Oh, let's quit: just comply”.

[John Lahey]

No.

[Joe Preston, Conservative, Elgin—Middlesex—London, ON]

You know, it's about—

[John Lahey]

No, it's not about changing the standards. It's about adapting the standards to the complexity and the size of the organization.