Transport Committee on June 8th, 2010

[The Chair, Conservative, Merv Tweed]

Thank you, and good morning, everyone. Welcome to the Standing Committee on Transport, Infrastructure and Communities.

When we left last meeting we were in the middle of a motion presented by Mr. Bevington. I notice that Mr. Bevington isn't here, but we do have our guests, and I would like to get to them.

If we want to, we can deal with the motion as quickly as possible and then we can move on. We've heard the motion. We've heard Mr. Bevington's comments on it. Are there any other comments? Then we can proceed to a vote.

Mr. Jean.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Mr. Chair, as an issue of fairness, I think Mr. Bevington should be here. I'm wondering whether we could have agreement to defer it to the end of the meeting, just so that nobody thinks any chicanery is happening.

[The Chair, Conservative, Merv Tweed]

If the committee is comfortable with that, I appreciate that advice. Thank you for it. I'll set aside five minutes at the end of the meeting for this.

With that, then, I'll invite our guests to come forward from Purolator.

Pursuant to Standing Order 108(2), we are doing a study of the management and operation of Canada Post Corporation. Joining us today from Purolator Courier Ltd. are Mr. William A. Henderson, president and chief executive officer, and Mr. Stewart Bacon, chairman of the board.

Welcome, and thank you for coming today. I'm hoping you're aware that you're allowed to make an opening statement. Then we would move to question-and-answer rounds from the committee.

If you are ready, I would ask you to proceed. I will give you a heads-up that the meeting is conducted in both official languages, so you may have need or desire for translation at some point. You'll see us all wearing headsets throughout the day.

With that, I would ask you to please proceed.

[Stewart Bacon, Chairman of the Board, Purolator Courier Ltd.]

Thank you very much. Merci beaucoup.

My name is Stewart Bacon. I am the chairman of the board of Purolator Holdings, and my colleague Bill Henderson is the president and CEO.

Chairman Tweed, vice-chairmen Volpe and Laframboise, and members of the committee, we are pleased to be here today and welcome the opportunity to speak with the committee about the important work Purolator does for Canadian businesses.

As Canada's largest courier company, Purolator delivers innovative products and superior service on which Canadians have come to depend. Flexibility and responsiveness are the hallmarks of Purolator's approach to customer service. To deliver unparalleled customer service, we have built Canada's most extensive national network and supporting infrastructure.

Purolator employs more than 11,000 Canadians, of which over 9,000 are members of Teamsters Canada and just under 2,000 are Purolator shareholders. We maintain facilities across all regions of Canada with more than 35% of those facilities located in rural areas. We have more facilities in more regional centres than any other courier company in Canada. Nationally, provincially and regionally, Purolator delivers the same exceptional, value-added service and support, regardless of where our customers choose to call home.

We operate approximately 4,000 ground vehicles, of which more than 200 are hybrid-electric vehicles, and, through our partners Kelowna Flightcraft, leverage a domestic air network of 15 aircraft including two DC-10s dedicated to delivering mail product for Canada Post. Purolator's vast network and team of dedicated employees enable Purolator to deliver 275 million packages and envelopes annually.

However, Purolator's story cannot be told solely by the number of packages and envelopes it delivers. Each and every day, milestones are reached that serve to improve the quality of our service for Canadians.

In 2009 alone, Purolator reached several milestones. First of all, Purolator Global Supply Chain Services opened a facility in Toronto, Ontario, supporting GSC facilities in Richmond, British Columbia and Montréal, Quebec.

Secondly, Purolator launched its new advertising campaign promoting “a network unlike any other”, highlighting its role as the Official Courier for the Vancouver 2010 Olympic and Paralympic Winter Games.

Thirdly, Purolator was selected by the Ontario Ministry of Transportation and Ontario Trucking Association as one of 50 companies to test long combination vehicles.

Fourthly, Purolator received its Customs-Trade Partnership Against Terrorism re-certification membership approval, thus doing our part to help secure the Canada-Us border.

It is this continual commitment to renewal that allows Purolator to deliver directly to more points in Canada than any of its competitors; in fact, to every region across our nation.

[William Henderson, President and Chief Executive Officer, Purolator Courier Ltd.]

Mr. Chairman and members of the committee, I'll continue in English.

Each and every business day, Canadians rely on Purolator to deliver life-saving medicines, just-in-time emergency surgical kits, manufacturing supplies, critical business documents, and other items necessary for the well-being of our communities and the businesses that sustain them. In so doing, Purolator brings our large and sparsely populated nation together, enabling economic development in both urban and rural communities. Purolator is very proud of the vital role it plays in connecting Canadians, Canadian communities, and Canadian businesses.

Purolator's ability to connect Canadians comes from its strength as a company, a strength that is built on our corporate culture, enabled by almost 2,000 employee shareholders, which encourages employee involvement, thrives on communication, and empowers employees to find innovative, real-time solutions in everything we do.

In fact, our unique culture has been recognized in the last three years by the National Post and Waterstone Human Capital as one of Canada's top ten corporate cultures. That strength enables Purolator to provide reliable and cost-effective transportation and logistics solutions that deliver exceptional value to Canadian businesses.

Every business is a part of our community, and Purolator is no exception. Everywhere throughout the company, our people contribute to the betterment of the communities in which we live and do business, truly embodying Purolator's corporate value of social responsibility.

Purolator is committed to Canada. Unlike our foreign multinational competitors, we make Canada our primary market. Purolator people work around the clock to ensure that Canadian businesses in both urban and rural communities remain connected across Canada.

Over the last four years, we have re-invested our profits to improve the efficiency and reliability of our delivery network to ensure that we can continue to deliver exceptional value to all Canadians, no matter what place they choose to call home. Those investments include the construction of state-of-the-art hub facilities at Montreal Trudeau Airport and Vancouver International Airport, as well as Surrey Port Kells.

Servicing the needs of Canadians better than anyone else is essential to Purolator's success; our investments, thankfully, enable us to do so. With such an extensive footprint nationwide, Purolator is committed to supporting Canadian communities in ways that go well beyond the provision of our services.

Since 2003, we've focused our attention and efforts on what we believe is one of the most fundamental and pressing issues facing every community—hunger. Purolator employees have made a meaningful difference in the fight to end hunger. In the province of Quebec alone, we have raised over 60,000 pounds of food in an exciting partnership with the Grey Cup champion Montreal Alouettes. To date, through our sponsorship of the CFL's Tackle Hunger program, we have raised more than three million pounds of food for communities across Canada.

Purolator's commitment to the communities we live and work in extends to the environment we all share. In 2009, the Toronto Star listed Purolator first on its list of Canada's greenest companies. Purolator's Greening the Fleet program has been recognized nationwide and is figuratively and literally employee-driven.

All of our hybrid-electric vehicles are driven by our proud Teamsters employees. In fact, it is our unionized workforce that has been the driving force behind our success in reducing our carbon footprint nationwide by over 1,450 metric tonnes since the inception of the program.

Since 2005, we've acquired over 200 hybrid-electric vehicles and have recently committed to adding an additional 200 hybrid vehicles to our fleet by the end of this year. That provides Purolator with the largest hybrid-electric fleet in the country. Our fleet includes hybrid-gas, hybrid-diesel, and all-electric versions, spread through all Canadian cities.

Once again, we welcome this opportunity to share more details of Purolator's commitment to Canada, Canadians, and Canadian businesses with you today. We would be pleased to answer your questions with respect to our operations nationally and specifically regarding our commitment to ensuring that Canadian business receives on-time deliveries of their time-critical packages, as well as the role we are honoured to play in ensuring Canadians receive their daily mail.

[The Chair, Conservative, Merv Tweed]

Thank you very much.

Madam Crombie.

[Bonnie Crombie, Liberal, Mississauga—Streetsville, ON]

Welcome, Mr. Henderson and Mr. Bacon.

I'm just wondering whether our chairman has given you any indication as to why you may have been called here today.

[William Henderson]

I understand there was a request made by the committee in relation to the dedicated domestic airlift contract.

[Bonnie Crombie, Liberal, Mississauga—Streetsville, ON]

That's correct. I've been reading with great interest the transcripts from the committee meeting almost a year ago, June 11, 2009, which reviewed the 2008 contract that had been awarded to you by Canada Post Corporation.

First, I wonder if you could describe for me your ownership structure.

[Stewart Bacon]

Perhaps I could help with that. Purolator is a subsidiary of Canada Post. It is owned in part by almost 2,000 employees. Barry Lapointe, through a holding company, owns 7% of the shares, and Canada Post owns the remainder, just a little over 90% of the shares.

[Bonnie Crombie, Liberal, Mississauga—Streetsville, ON]

When this contract was awarded back in 2008, there was some suggestion from the transcripts that there had been a lack of openness and transparency, and even a suggestion of a conflict of interest and preferential treatment. I think those are some of the questions that committee members will have for you today.

Perhaps we can go into a little greater detail on how that contract was awarded. I wonder if you might describe for me the bidding process that was undertaken.

[William Henderson]

Purolator responded, as did the rest of the aviation industry in Canada, to a public RFI issued by Canada Post.

[Bonnie Crombie, Liberal, Mississauga—Streetsville, ON]

Excuse me. What is a public RFI?

[William Henderson]

It's a request for information.

[Bonnie Crombie, Liberal, Mississauga—Streetsville, ON]

How does that differ from an RFP?

[William Henderson]

An RFP is a proposal for quotes or bids. In some companies we respond to both RFIs and RFPs.

[Bonnie Crombie, Liberal, Mississauga—Streetsville, ON]

Did you ever have to undertake an RFP?

[William Henderson]

No, because we participated in what Canada Post issued, which is the RFI.

[Bonnie Crombie, Liberal, Mississauga—Streetsville, ON]

Which other companies also participated in the RFI?

[William Henderson]

I believe there were probably about four or five other corporations in Canada that participated in that.

[Bonnie Crombie, Liberal, Mississauga—Streetsville, ON]

Do you know which ones those were, for the record?

[William Henderson]

I believe there was Morningstar, which is the carrier for FedEx; Cargojet; and probably a couple of others.

[Bonnie Crombie, Liberal, Mississauga—Streetsville, ON]

I have the list here. I'm just looking for it. There was Cargojet, Esposito, First Air, and you, Purolator. So was Morningstar part of the bidding process or not?

[William Henderson]

I understood Morningstar had initiated their intention. Perhaps they didn't bid. I wouldn't be privy to that information.

[Bonnie Crombie, Liberal, Mississauga—Streetsville, ON]

Those were the four companies that were listed. I was actually curious as to why UPS or FedEx were not part of that process, but I guess you wouldn't have any knowledge.

Are you aware of the sole-source provider provisions that any company has to undertake, as stipulated by Public Works and Government Services Canada, when it bids on contracts? Are you familiar with the framework?