Transport Committee on March 27th, 2014

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

Thank you, Mr. Chair.

I think it's really important that we have a clear understanding that everyone here is very concerned about safety and wants to see improvements. That's also why we're going forward with what we're doing here right now. The testimony today has been very helpful to us. We're looking for gaps, we're looking for the things that need improvement, and the testimony that's brought forward today is helping us to find some of those gaps, and it's going to be up to us to come up with recommendations that will close those gaps. Thank you so much.

I wanted to start with National Steel Car. I had a question regarding the 80,000 to 100,000 DOT-111 cars currently in North America. Of those, how many are the new version? Do you have an idea?

[Jamal Hematian]

The new version numbers about 14,000. When we say new version, it's the CPC-1232. Based on RSI data, this is recent, I think it's about a month old. I think it's about 14,000. I ask that you double-check whatever numbers I give you.

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

Yes.

This gives us a bit of a sense of where we're at. Somewhere between 10% to 15% of the fleet is updated and new.

The other question I had is in regards to you giving us quite a bit of detail about the design of the tank cars. On page 6 of your deck, you gave us information on all of the different tank car regulations, and all of the different people who have input into the setting up of those standards that you have to meet. As a manufacturer of these tank cars and with your engineering background, you have a lot to bring to the table. Is there any input from the manufacturers as they go through this process—do you have the ability to interact with them on some of these regulations and have your input on that?

[Jamal Hematian]

The short answer is yes.

Max is sitting on the safety task force. He has contributed immensely to putting together the new FRA safety rule S-2044. I really want to emphasize that one.

NSC is the most active team in North America. I was sitting on M-976, which is about bogies and suspension, and now I am contributing to the tank car task force. Max is on the safety task force. We have another person on the coating and painting team. We have another person who is very high level in AWS, the association of welding. So, we are contributing there. We also have really key members on the fatigue task force.

The way it works, AAR or FRA invite expert people from different sectors in the industry. They sit together, put a title down, and they work around it. It may take about six months to a year. When they come to a conclusion, they put it in a circular letter and send it to all other people asking for feedback. After that, it will be a rule and coming up. It is not a group of people sitting there behind closed doors and making rules for everybody else to follow. It's back and forth.

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

Thank you.

Mr. Boudreault, I want to touch on the safety management systems. I know that in regard to your testimony today one could walk away with the impression that there's absolutely no input on the safety management systems within the rail lines from the union perspective.

I actually had a fairly different experience when touring a fairly large rail facility in my riding with both the president of the company and the national president of the particular union representing the workers there. Both of them were talking very much about the safety management system and their collaboration on that, and how they work together. Is my experience there completely unique? Or is there some collaboration that maybe needs improvement? Or is there really just absolutely none?

[Richard Boudreault]

Earlier, I focused on deregulation and I said that, in some cases, companies were making substantial changes to regulations, to the SMS, consulting no one and providing no choice. One example I gave was that MMA had permission to have a one-man crew.

In that case, it was clear from the outset that we had no say in that and that we were not going to be making that decision. However, we were in the process of negotiating a collective agreement. It was none other than the federal mediator who told me, after a year and a half of negotiations, that he did not know why I was making such an issue about it, making it a deal breaker, because the decision was not mine to make, it was Transport Canada's. In the eyes of a person running the negotiations, it was clear that we had no say.

You say that there are good situations too, and I am sure that is the case. But I am not talking about the good situations, I am telling you about my concerns. For companies like MMA, it is like getting candy at Halloween. They do what they like with the regulations. They enforce and change them unilaterally without consulting anyone.

In 2014, after the events that occurred in Lac-Mégantic, I think it is important for me to tell you that. Then the committee can provide the government with the recommendations needed to make sure that it never happens again, even if that means imposing really clear penalties on the delinquent companies. If that means taking away their licence, then let's do it. The current situation makes no sense.

[The Chair, Conservative, Larry Miller]

Okay. Thank you.

Mr. Boudreault, did I just hear you say that you don't care about hearing about good examples?

[Richard Boudreault]

No, that is not what I said. I said that I was not talking about—

[The Chair, Conservative, Larry Miller]

So the answer is no, then. Okay.

[Richard Boudreault]

Okay.

[Jeff Watson, Conservative, Essex, ON]

That's not what the translation says.

[The Chair, Conservative, Larry Miller]

Yes, that's not what the translation said.

[Richard Boudreault]

What I just said was that we can have across Canada a good experience and that the train company respects the law, but we do have concerns about some of the—

[The Chair, Conservative, Larry Miller]

The floor is not yours. I asked you.... The interpretation came through that you said, “I don't care about hearing about the good examples”. So I asked you, and the answer is no.

Mr. Mai, you have five minutes.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Thank you, Mr. Boudreault.

We can see your passion for this issue as you talk about it. I can understand that. You represent people on the ground, for whom this is a daily reality and who are clearly frustrated at the government's inaction.

As you said—and I think we have to be very clear on this—deregulation exists; it is a fact. I know that people on the other side will talk to us about Bill S-4. Penalties are established and licences can be withdrawn. However, the Auditor General of Canada has pointed out that, for 70% of the problems, there is no follow-up because Transport Canada does not have the necessary resources. We are told that regulations are in place and that everything is going well, but we know that Transport Canada actually does nothing. The DOT-111s are a specific example. Since the accident in Lac-Mégantic, for example, the TSB has made recommendations. You say that Transport Canada listens to the TSB, sort of. The department hears what the TSB has to say, but does nothing about it.

For at least 20 years, the TSB has been saying that there are problems with the DOT-111s. With the accident in Lac-Mégantic, we know full well that the issue was the old DOT-111s. Today, once again, the rail companies and the oil companies are going ahead with timelines, but the government is not in a position to do so. We understand your frustration and we continue to press forward with this issue. It actually seems that the safety of people in the communities is not a priority. The government is doing nothing. In the last budget, not a cent was set aside for rail safety. That is unacceptable and incomprehensible.

I have some questions again for National Steel Car Limited. Right now you're talking about 20,000 more or less per year that can be manufactured across North America when we talk about the new DOT-111, and that's according to the regular demand, regular companies asking for new....They're taking their time in terms of changing and getting rid of the old DOT-111 since they're not forced to do it.

If the government actually thought about public security first, and forced the companies to change and to get rid of the old DOT-111, do you think that would increase the manufacturing capacity? Or would it force the manufacturers to increase their capacity or increase production of the new DOT-111?

[Jamal Hematian]

Right now, all of our manufacturers are at the highest capacity ever. This is what it is. If you come to NSC and put in an order for a car, you have to wait until 2015. With other car builders, it's getting to 2016. So we are talking about a big backlog right now.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

But if the government was to send a signal saying this is our intention, think about increased productivity, think about what you can do to increase manufacturing, wouldn't that create more competition? And wouldn't that create a drive to make sure that we can do more, and we can produce more? At least it would send a signal that the demand would be there, and the companies that are doing that would know they have a certain timeline to actually make a lot of money in terms of selling the new DOT-111.

Just quickly, would that send a signal?

[Jamal Hematian]

I'm not on the marketing side to see how we can react. But just to the improvement of the productivity, I think NSC is one of the highest efficiency companies and leaders in lean manufacturing and using all of the tools available. We do all the Kaizen, lean manufacturing, Six Sigma, Shainin. You name it, we do all of them.

I was talking to a friend and said, “If you come to talk to us, I won't have five minutes to spend, because everything is structured, and we have to get certain things done.”

[Hoang Mai, NDP, Brossard—La Prairie, QC]

I see. It's great to know that you're in Canada—even better.

[The Chair, Conservative, Larry Miller]

Mr. McGuinty, you have five minutes.

[David McGuinty, Liberal, Ottawa South, ON]

Thank you, Mr. Chair.

Mr. Hematian, I want to go back to your comments about timing. I think we're all aware of the practical hurdles in the manufacturing of new cars. You've talked about four to five major tank car builders in North America. My colleagues just reiterated you've talked about all these companies together might be able to manufacture 20,000 per year.

[Jamal Hematian]

I don't have exact numbers. What I'm telling you is just based on what I'm thinking because everybody's keeping it to themselves. Our competitors are not going to tell us how much they can build. I'm just going with rough numbers.

[David McGuinty, Liberal, Ottawa South, ON]

Okay. Presumably, that would be one of the most important questions that Transport Canada should have answered by now: what is the capacity of the four or five manufacturers in North America to manufacture on an annual basis?

[Jamal Hematian]

I'm not sure I can answer that because most of these companies, like us, are 100% private, so we don't report to anybody and they don't know our market forecast.

[David McGuinty, Liberal, Ottawa South, ON]

Okay, so Transport Canada—