Proceedings of the Standing Senate Committee on
Foreign Affairs and International Trade
Issue 22 - Evidence - Meeting of February 18, 2015
OTTAWA, Wednesday, February 18, 2015
The Standing Senate Committee on Foreign Affairs and International Trade met this day at 4:18 p.m. to examine such issues as may arise from time to time relating to foreign relations and international trade generally (topic: trade promotion).
Senator A. Raynell Andreychuk (Chair) in the chair.
[English]
The Chair: Senators, the Standing Senate Committee on Foreign Affairs and International Trade is authorized to examine such issues as may arise from time to time relating to foreign relations and international trade generally.
Last week, under that mandate, we heard from the Canadian Chamber of Commerce on trade promotion. Today, we continue in that vein.
I'm pleased to welcome Mr. Neil Lang, Chief Operating Officer of Corvus Energy Ltd., who is joining us by video conference from Vancouver, and Mr. Jim Reynolds, President and CEO of Padre Software Inc.
We will hear from both of our witnesses, and then we will turn to questions.
Welcome to the committee, and I'll start with Mr. Reynolds.
Jim Reynolds, President and CEO, Padre Software Inc.: Thank you, Madam Chair and senators for inviting me.
This is my first time presenting before a standing committee of the Senate, so I welcome the opportunity.
Our company, Padre Software, is an advanced manufacturer. We're in the high-tech area and we develop innovative conveyance material handling systems and concentrate on logistics that are inside the four walls of large manufacturing facilities. Everyone's familiar with logistics systems that bring product from other countries to a plant of manufacture here. With our customers, we've innovated and we focus on, when the parts get to the plant, all of the different logistic steps that take place inside the plant to get the product to the assembly point or the point of consumption just in time.
We've had a lot of success with that. It's unique, different than what the major ERP companies provide, and we're in large automotive companies with the Japanese and German automotive manufacturing facilities throughout the U.S. and Canada.
Another role that I play that I've been asked to comment on is I'm chair of the Small and Medium-Sized Enterprises Advisory Board that reports to Minister Fast, and we meet twice a year for about two days in Ottawa. We have 18 members from across Canada that are on the board, all CEOs of SME companies.
Our mandate is to advise the minister on matters related to small- and medium-sized organizations. We meet for about two days and have presentations from various groups within different departments of the government. There are also participant organizations and things of that nature. At the end of those sessions, we prepare recommendations for the minister. The minister comes in and sits with us for about an hour and a half, takes the recommendations, and then he goes back and his department acts on those.
Cam Vidler, who spoke earlier, is one of the participant observers, along with the Canadian Chamber of Commerce, the Canadian Association of Importers and Exporters, Canadian Federation of Independent Businesses, Canadian Manufacturers and Exporters, as well as the BDC, EDC, the Canadian Commercial Corporation and Canada Border Services Agency.
After looking at some of the notes and the material that have come from the board, my approach today will come from a different perspective, and it will be focused not only on trade in general for Canadian exporters but on SMEs. We're here as SMEs to build on the very positive free trade initiatives that the government has implemented over the last several years, and also to capitalize on what we see as a convergence between Crown corporations such as the EDC, the BDC, the CCC and the Trade Commissioner Service, which is part of DFATD, all focused on delivering a single message and offering support to SMEs.
Canada has never been in a better position to support and empower businesses of all sizes, but particularly SMEs, in export opportunities. Right now, SMEs have become a growth engine for export. Also, the term "SME'' is becoming very popular in the lexicon. The banks, the BDC, EDC and major financial accounting firms are all setting up either websites or services directed towards SMEs, and what I wanted to talk about was how we can better approach the export market and do things that help the SMEs more successfully.
I've looked at a report that picks up on four targeted areas. First, if you're familiar with the material from the government, they are putting out, as the statistics go, that 1,100,000 companies qualify as SMEs. Of that number, 40,000 actually export, and of those, only 10,000 export beyond the U.S. So there's less than 4 per cent that are exporting today and less than 1 per cent that go beyond the U.S. When you add them up, we're looking at a very small percentage of Canadian SMEs.
Now, on the other hand, you have to recognize the statistics for SMEs start with individual companies, one-off, on a main street or people who work from their houses. They could be SMEs as well, and then it goes up in a pyramidal shape to companies that are less than $1 billion in revenue. So there's quite an expanse.
We have to be able to target which companies of that million group that aren't exporting yet is ready to export, and in talking with the Trade Commissioner Service representative in the Kitchener-Waterloo area, he mentioned what we're looking for are export-ready SMEs, the companies that haven't exported yet, but are ready and willing.
The definition of what is an export-ready SME hasn't been clearly defined, but if I can, Senator Demers, it's as if you're selecting hockey players for a men's or ladies' hockey team at a competitive level. You need people that can skate, shoot, give and take passes, but you also have to have a mindset and a work ethic or what they call today a "compete level'' in order to move ahead.
When we talked with the Trade Commissioner Service rep in our area, he frankly said if you look at 1 million extra SMEs and try to get them into the funnel, we need to target the ones that are export-ready and add those in. So it's very important to note, as we go through and listen to other presentations that you've had where there's analysis and background about the problems or issues facing SMEs, there's no one looking at targeting the group that's out there and then preparing messages that relate directly to them.
At the SME board, we've made suggestions to the minister about work on communications and awareness building. There's a huge number of excellent programs that support trade and SMEs that have been developed over the years with various organizations, but it's widely acknowledged at all levels that very few SMEs are even aware of these programs and organizations.
So the first step to move forward is to gain a communications strategy and get the message out to the SMEs that there's a Trade Commissioner Service, a BDC and EDC that are open in a new way to support these businesses.
Second, within the support groups, or I guess the third block, is each of these organizations today has been in the past targeted at supporting large opportunities, supporting a $10 million revenue deal.
You meet with one customer. Companies that can support a $10 million export deal are usually pretty large and up. They have resources. They have corporate lawyers and accountants that are very well schooled in it, and the SMEs don't have that.
So you're dealing with a shift in culture and a shift in approach when you move from traditional larger organizations down to the SME level, and part of what I'm suggesting is this committee recognize that and help to think of things, help to support and nurture that concept of actually reaching out to the SME.
In some of the larger groups, like the BDC and the EDC, we have a senior executive presence at the SME board. They have their vice-presidents there. Really, what is taking place now and has been led by the minister is a bit of a cultural shift from concentrating on large organizations down to smaller organizations, and that's a big organizational change that's under way. It has to be supported by their recognition and reward systems. Their corporate structure has to change somewhat, if not a lot, in order to allow them to get down and start to present offerings that fit in the SME and can actually capture the SME's attention to empower that SME to go out if they're export ready and make the commitment to going beyond Canada.
I think the fourth area to touch on briefly, looking back in history, is the opportunity now with all of these additional free-trade agreements. Canada's absolutely ready to do things in the export market that we've never been able to do before.
If you go back to the introduction of technology in the 1970s, you find that, in those days, being able to put a large computer system in a company was cost prohibitive to all but the largest banks, insurance companies and retailers. Then, as technology came out, the costs came down, and all of a sudden you could reach your medium-sized businesses and your smaller businesses. I think that's what's taking place today.
The free-trade agreements are much like the technology-cost curve coming down. There are new markets opening up for Canadian exporters, and there are new opportunities for the small and medium enterprise to move into those opportunities.
Companies that addressed it in the 1970s had to go through and change their whole marketing approach, their support approach. I'm thinking of IBM. I spent 10 years with them and went through this, although I didn't know I was going through this at the time. We were helping to build the organization in a different way and had to set up separate divisions, had to have different goals and recognition systems to approach the medium-sized businesses in the territory, to go out and meet with those businesses and start to draw them in and justify and explain why we needed computer systems.
I think that today, if we want to tap into the large number of SMEs that are not exporting, we have to think along those aggressive and challenging parameters.
The Chair: Thank you, Mr. Reynolds.
Mr. Lang, please proceed.
Neil Lang, Chief Operating Officer, Corvus Energy Ltd.: Thank you very much for inviting me here today. I really appreciate the opportunity to speak to the Senate committee. Corvus is a young clean-technology company of approximately 50 people focused on providing energy storage systems or large batteries for the marine market.
If you think of a hybrid Prius or a fully electric Tesla, then that's what we do for ships by providing large rugged batteries for ferries, tugs and offshore supply vessels.
We're very export focused. About 95 per cent of our product is exported, primarily to Europe and Asia, and we have about 80 per cent of the market share in the niche that we focus on.
I suspect Corvus is pretty typical of many Canadian SMEs that are focused on new export markets, and I hope that sharing some of the challenges and also great support we've had along our road so far is helpful.
In many cases, when growing a technology business, the Canadian market is either not big enough or not in need of the product on offer. In Corvus's case, Northern Europe is the decision-making centre of the global marine market and has the most stringent environmental controls, so not exporting was never an option for us.
Ultimately, all things being equal, it's easier for your customer not to import product. Even in our own supply chain, we always look to local suppliers wherever possible. So for Corvus to be a successful exporter, we focused on three things: First, having a world-class product, whether it be in functionality, quality or cost; second, developing brand visibility in our export markets so that buyers have access to us and have actually heard of us; and third, minimizing the transaction risk for export customers so that, when they enter into the transaction, they're not concerned about dealing with a company from overseas.
Canada already has many activities in place that support these goals, and they certainly have helped Corvus considerably. Now I'll try to focus on each of these areas in turn.
Starting with having a world-class product, SR&ED has been invaluable in stretching the initial funding during the research phase of our company. Our challenge is now commercialization and taking field data from generation one, which is in the field, to developing generation 2 and 3 of our product that will ultimately be the basis of our long-term success.
SR&ED doesn't really support this phase, so we have been fortunate enough to be eligible for the Western Innovation Initiative that provides long-term, low-interest loans for commercialization activities and is now a vital part of our ongoing success.
Replicating this program across Canada would support many companies in surviving what is a very difficult phase in the growth of young companies.
Many of our suppliers and competitors have also benefited from core technology development and joint initiatives between national research institutions and industry, for example, ITRI, the Industrial Technology Research Institute in Taiwan; KITECH, the Korea Institute of Industrial Technology, or the Fraunhofer Institute in Germany. This foundational research is then released for either no or minimal licence fees. We found working with Canadian universities of somewhat less benefit, and a focus on a similar model in Canada may be helpful in enabling more successful technology commercialization.
Moving on to the second area of brand visibility, Corvus has received limited support from federal or provincial agencies. Most of what we've done was achieved through our own funding and initiatives on the ground and through contacts and support provided by our financial investors. Supporting companies to attend relevant trade shows and find speaking opportunities in target markets would likely be very helpful. Reducing costs by having a Canadian pavilion that SMEs can be a small part of would seem a very feasible first step.
To date, overseas trade missions have had less benefit to Corvus than for some other larger companies due to the cost to participate and also the broad focus. Maybe bringing groups of buyers back to Canada, targeted on specific industry, may be more effective for small- to medium-sized enterprises.
Trade commissioners, on the other hand, have been invaluable in facilitating the next steps in finding partners, and the activities to embed commissioners within groups such as CME have been very effective in providing a route to access this resource.
We have also used trade commissioners to develop our own supply network as we need to optimize our own global supply chain if we want to remain a cost leader in our field.
Finally, minimizing transaction risk, which can be split into two parts: technology risk and financial. Establishing reference projects for export customers and partners is a key to overcoming technology risk. STDC provided Corvus significant support by funding a joint project with the Norwegian government. This left Corvus with an overseas demonstration project, a new export customer and a core partnership with one of the largest marine engine manufacturers in the world. The overseas collaboration is unusual for STDC, which normally focused on projects that take place in Canada. It would be effective if it could be repeated for others in helping them to provide those overseas contacts.
Financial risk for the customer has to be minimized by providing foreign exchange hedging, letter of credit facilities and creditor insurance to smaller companies. EDC has supported Corvus very well in this regard by underwriting the risk and, although we are not yet profitable, enabling us to work directly with Canadian commercial banks. This is critical. Without their support, it is unlikely we would have been successful in growing our export business. I would strongly encourage continuing these activities for other companies.
For export focus companies, finding venture capital funding locally within Canada can also be hard, as they are perceived as a higher risk than companies focused on local markets. STDC has also been helpful in making introductions, mostly to North American funds. Their reach into Asia and Europe has been a little bit more limited. Developing a network similar to the one they have for North America, in sort of overseas geographies, would be very helpful.
Overall, there are an impressive number of resources available. It is daunting for SMEs to find and navigate them all. If access to these facilities was consolidated and a single point of contact was provided to act as a guide, so that the full benefit could be made quickly and easily to SMEs, the benefit would be significant.
I hope these thoughts are helpful. I look forward to answering any questions.
[Translation]
Senator Fortin-Duplessis: First, thank you both for your presentations.
Mr. Reynolds, my first question is for you. You have more than 25 years of experience in the information technology industry, both in Canada and abroad. You are a member of the minister's SME Advisory Board, as you mentioned earlier.
In your experience, have federal trade promotion services been helpful to Canadian enterprises exporting in the information technology sector? I would also like to know if the services provided to the enterprises have any shortcomings.
[English]
Mr. Reynolds: The answer to the question of have the government programs been helpful to SMEs in the tech sector is definitely yes. We are seeing, particularly in Waterloo, a great deal of focus on the tech sector — organizations like Communitech, which is an amalgam of a thousand tech companies in the Kitchener, Waterloo, Guelph and Cambridge areas. They receive support from a lot of organizations. They're there to develop, to have incubator centres, technologies and move them into the market.
The Trade Commissioner Service in the area is highly supportive of the tech area, as well as other businesses. We have received very good support from the TCS right across the board. Recently they invited a small number of companies to meet with their Trade Commissioner Services' reps that came up from Mexico, Atlanta and Detroit, who were all focused on the automotive side of things, to present excellent opportunities or opening doors and get to meet people in these other countries.
They hosted the event at the University of Waterloo. The University of Waterloo has a research and design facility called WatCAR. It is dedicated to the automotive sector and innovations in that area. The government is introducing us to those things.
The TCS has a pavilion reserved at a large Japanese car manufacturer in Mississippi and they have invited four companies to come down and participate in that pavilion. Those are things we wouldn't have known about had it not been for the government and some of those organizations.
[Translation]
Senator Fortin-Duplessis: In your experience, have you observed any obstacles for or risks to the SMEs? This question perhaps has less to do with the communications sector and more to do with international trade. Have you perceived any obstacles that might prevent the SMEs from operating?
[English]
Mr. Reynolds: Yes, I think we can say that we have identified some obstacles. Certainly each SME has a different set of obstacles. They're not the same ones. We do as well. I think the number one is access to capital, without giving up your IP. Our company is private. There are three partners. We own the company. My background is also in turnaround and things like that, so we're cash flow positive, we make a profit, we don't have any venture capital money in the company and we don't have any debt.
We're able to sustain ourselves at a fairly flat level and be profitable. But to take us to the next level, a company like ours that is trying to grow organically, doing it all yourself; you can't really do it. You need infusions of capital and you need them at a relatively competitive interest rate where you don't have to give up your intellectual property.
That's my view on the intellectual property, but I think it is important for SMEs to retain that.
There are also other potential obstacles, a little less so in the tech sector than there are in others, when you want to send people into other countries to work. Even though we have free trade agreements and bilateral understandings, when you get right to the customs agent who is letting the person into the country, things can change and can be a little difficult there.
There is the capital and the entry into the other organizations, or other countries. I would think for most of the tech sector, it is not hard to move product from one country to another because you do it electronically. That part is easy. For manufacturers that have other products to move — hard goods and other services — then it becomes a little more challenging.
I hope I have answered all of your questions.
Mr. Lang: I would focus on the financial aspect. The biggest challenge, especially in earlier stage technology companies, before they reach cash flow positive, is how to provide the financial services that export customers would expect to have. Typically, for us, the customer wants to buy in euros. We need to have hedging facilities. There are significant deposits laid down at the start of any contract. They want us to provide a letter of credit to guarantee the contract and ultimately, from our side, we need creditor insurance to satisfy the needs of our banks where they're providing trade financing.
EDC has done a good job. Their role in enabling early-stage companies to gain those facilities from mainstream banks in Canada by underwriting the risk is key in helping young companies break through to cash flow positive. Without that it's extremely difficult and it slows down the rate of growth significantly.
That was the first bit on the financial side. The other bit is how do you help SMEs market themselves in overseas countries in an economic way? Going to trade shows overseas is extremely expensive. If there are ways we can group together under a common brand to reduce those costs that will help companies, and also finding alternative ways to get the name out using trade commissioners to focus on speaking engagements and opportunities to become thought leaders in your market. It can be hard for SMEs to understand what all those opportunities are, but trade commissioners based overseas can help them to do that.
For me those are probably the two key focuses that are big blocks for us.
Senator Eaton: Thank you Mr. Lang and Mr. Reynolds.
Between 2003 and 2012, Canada increased the value of its exports of goods and services to the world at a slower rate than countries like Australia, the United States and Germany. Are there specific things that they're doing?
Mr. Lang, you've talked about the lack of credit and finance and promotion. Are the Germans and the Americans better at doing that than we are? Is there more money in their system?
Mr. Lang: Maybe I can comment on something slightly different that I think is important. I talked a little bit about the development of core technologies between national research institutions and industry and making that core technology available for companies to use. When you look at the more successful nations that have grown their export trade quickly, doing that and providing that base platform technology or enabling technology to companies to build from has helped to accelerate the rate of growth.
It's great to fund R&D or research within an individual company, but ultimately that knowledge is only then available to the company that has developed it. If you're developing core technology that's then released to the open market of Canadian companies and you can get multiple benefits from the same core technology, as I mentioned, I think ITRI, KITECH and Fraunhofer are great examples of successful exporting companies that have done this very well. I saw this both from the company I work for currently, Corvus, but certainly in the energy sector, for a previous company we worked for, we came up against the same sort of strengths as Fraunhofer and ITRI.
Senator Eaton: Thank you for that, but I'm wondering, too, whether we're producing products that the world wants. Bombardier has had success in China and BlackBerry went all over the world. I'm not talking about what's happening to BlackBerry now but the world wanted those products.
Mr. Reynolds: There has been a decrease in our export volume, as the senator says, since 2003. One reason for that perhaps, and back to the comments of Senator Fortin-Duplessis on obstacles, is in the tech sector in Waterloo. It's now becoming recognized that between the University of Waterloo and the tech companies there are a lot of start-ups that are coming through. A lot of companies are reaching that stage where they're ready to grow and what we're seeing is companies from the U.S. and elsewhere are coming in and they're buying the organization.
If you picture it, you've used BlackBerry, there's OpenText, there's quite a few companies that have made it through that. But in the Waterloo area, amongst people in the business in the technology sector, there's a concern that we're doing a great job incubating and growing the companies to a certain point and then losing them. For whatever reason — and no one can really put their finger on it — why is that happening? One good reason is that there's a propensity, if you develop a software company and it's valuable and someone comes in and makes you an offer that's pretty good you sell your company. That may be part of the mentality. Companies don't stay here.
The other is, again, a localized one but it's an observation passed on by a senior person in one of the public accounting companies that has an SME practice. And they were actively engaged, probably several months ago but it wasn't too long ago. A company from Europe wanted to relocate to North America. They took the company through and showed them offerings in two provinces and this accounting firm, an international firm, was quite surprised at the different level of interest shown by different provinces. They characterized them as rather surprising, and then when the company went to the U.S., they found that the offerings by two states in particular in the U.S. were far more competitive.
One of the reasons our exports may be going down is we're not bringing in companies or retaining companies that when they come to Canada will create a natural export base. If this organization from Europe that relocated in Canada, there would be a lot of exports flowing out. They don't come over here just to serve the Canadian market.
I think there are two angles. The small businesses are getting bought up and perhaps Canada, more broadly speaking, isn't as competitive or as hungry to attract investment.
Senator Cordy: Thank you both. These are excellent presentations. We heard from witnesses last week from the Canadian Board of Trade who spoke about the made-in-Canada brand. The country of Canada brand is number two in the world but the made-in-Canada brand doesn't even reach the top 20. That speaks to the fact that we have to do a lot of work at the federal level to get the brand up. When you talk about the small and medium enterprises, 1 per cent exporting beyond the United States, I think that needs a lot of work.
Mr. Reynolds, you spoke about export-ready companies but I think you both spoke very well about the challenges faced by small and medium businesses and they just don't have the capital to be able to get export ready.
What would be the most important thing that the federal government could do or that could be done at the national level to help small- and medium-sized enterprises?
Mr. Lang, you also spoke very well about the challenges faced when these international trade groups travel it's not easy for a small company to send somebody, or to send somebody to an international expo; they just don't have the financial resources. What kinds of things can we do at the federal level? Mr. Lang, you also spoke about limited resources from federal agencies. Perhaps you could expand on that a little bit.
Mr. Lang: From the trade perspective, the grouping of small SMEs together so they can share resources at trade shows will be a very effective way to do that. The Trade Commissioner Service is also key. A lot of technology companies are very focused on a very small market, so the commissioners can find opportunities for that small market. That one-to-one relationship is key.
There are a lot of good programs there already. I don't think many SMEs are aware of them. They need to be made more accessible through a single point of contact. Embedding trade commissioners with industry organizations has been a good start, but they only access one piece of what is available. Expanding that so that they could access more broadly across all the different facilities available federally I think would be a huge step forward.
Mr. Reynolds: First, I definitely support Mr. Lang's comments.
Add to that a more reasonable pool of capital at a lower interest rate for SMEs. It could pass certain financial hurdles. I'm not interested in going back to the days where there was corporate welfare or any of those types of programs, but capital needs to be easier to access. We had presentations from our SME board members that working with EDC or BDC was easier than a chartered bank, but not easy enough to get there. There were restrictions on loans, covenants, et cetera, and, if you could free those up or reduce them somewhat, it would be immensely helpful.
Then the third is simply to provide funding for companies that want to travel to go to some of these events.
They are relatively small amounts to a large group like Canada, but to an SME it's very difficult.
Senator Demers: Thank you, Mr. Reynolds, for being here. Mr. Lang, thank you for being able to communicate with us, too.
According to the December 2012 report by the Conference Board of Canada, Canada is shifting away from some of its traditional export strength in manufacturing toward professional services and industry related to our natural resource well.
Is there an advantage or disadvantage to that, sir?
Mr. Reynolds: My sense is there's a disadvantage in that you're giving up beachheads, strengths that you used to have.
It's great that we're able to move into the other industries, but we should be able to do both. I just don't think, listening to the comments of different SMEs that are on our board, that we're as competitive as a country as we need to be.
There's an adage, "strong at home, strong abroad.'' We need to strengthen some of our infrastructure. We can't attract companies that want to come into North America. The same litmus test pretty much applies to keeping companies in Canada rather than having them move and go out.
In manufacturing we've taken a hit. If you read the article in The Globe and Mail on the weekend about what's gone on with Mexico, you start to see that in a larger perspective. But we've still got a vibrant auto industry in Ontario. We're investing in it, and people are focused on it. I think there's hope and optimism. We shouldn't give up on any of the fronts.
Senator Demers: Thank you, sir.
Mr. Lang: I would agree. There's no one single area that you have to focus on. Every company has a different offering. Some may be service. Some may be manufacturing. Some may be more tech selling, more of the technology part of it. They can all be successful. They all create jobs in Canada or bring wealth back to Canada, so you can't go on a narrower footing.
The Chair: I'm just going to put one question. We keep talking about the capability of getting money to move to that next export stage. I've talked to some people who say that they simply can't find the money in Canada. They can find it in the United States, and eventually, therefore, they move there. Equally, they move offshore where they can find a partner.
Is there something about getting money to sustain your company and to start reaching for those markets but then to go into a really international mode of company? Does it take something else that we're lacking in Canada? Mr. Reynolds?
Mr. Reynolds: I could offer my personal perspective, and I've heard this echoed for Canadians in a very generalized sense, not everybody. We don't see ourselves as able to play on an international front. I think that starts with how you perceive things. Once you've experienced it and gone out and worked in other countries, you realize that not only can we compete successfully, but we can also better many of the other players out there. So I think that, as we go forward, we have to keep that in mind.
As far as capital is concerned, the hurdles seem to be tougher in Canada than they are elsewhere. My earlier comments may reflect back to the lenders of money or the investors in the U.S., for example. They see them on a bigger stage, and they don't see the same inherent risk in investing in a small company as, perhaps, some of the Canadian investors do.
I know it's a common theme among board members at the SME that finding capital is very tough. My associates there say, "Stay away from VCs in Canada because they just want too much equity, and they put too many constraints on your organization.'' So it is very difficult and challenging, yes, Madam Chair.
The Chair: Thank you. Mr. Lang?
Mr. Lang: I would just add that I think that the Canadian VCs seem focused on and understand the risks associated with companies that are focused on selling within Canada. When you present a business plan that is largely export- based, then they see that as too high-risk a venture. When we go to VCs that are offshore, they are much more open to a sort of global perspective and probably better understanding of the risk. I don't think it's that they're prepared to take more risk. I think it's more that they understand export and what will make you successful in that market.
The Chair: Is this because of the mentality in Canada that I keep hearing that we're risk-averse and, therefore, all of the financial institutions —
Mr. Lang: Maybe they don't understand the risks of export. They understand the risks associated with doing business in Canada. They don't understand the risks of a heavily export-based business. Therefore, they focus on what they know.
The Chair: We've come to the end of the questioners, so, on behalf of the committee, Mr. Reynolds and Mr. Lang, thank you for your input. It's been extremely helpful.
We regret some of the video conference difficulties, but, nonetheless, I think we have the evidence and information that we need. So thank you, Mr. Reynolds and Mr. Lang, for being with us today.
Honourable senators, we will start with Mr. Philip Turi, General Counsel and Director, Global Business Services, from Canadian Manufacturers and Exporters.
We are continuing our study of examining issues that may arise from time to time relating to foreign relations and international trade generally. It's under that mandate that we heard from the Chamber of Commerce on trade promotion and we continue that study today.
Mr. Turi, please proceed with your opening statement and then the senators will go to questions.
Philip Turi, General Counsel and Director, Global Business Services, Canadian Manufacturers and Exporters: Thank you, Madam Chair, and thank you, honourable senators, for the opportunity to be here this evening in front of the Standing Senate Committee on Foreign Affairs and International Trade.
I'm pleased to be here to talk about a couple of things — the Global Markets Action Plan and trade promotion in Canada more broadly — in my capacity as CME's general counsel, but tonight as CME's head of global business services because I think that's more relevant for our discussion. At CME I oversee all of our trade and export-related initiatives.
For the benefit of the committee, if you don't know, CME is Canada's largest industry association. We represent manufacturers and exporters from across Canada, and collectively our members represent more than 80 per cent of Canada's non-commodity exports and thousands of high-paying jobs.
I want to start off by noting that, in my capacity as CME's head of global business services, I'd say that my team and I are at the front line of trade promotion in Canada and have witnessed first-hand the impact of the Global Markets Action Plan.
Over the past two years my team has organized six sector-specific trade missions to foreign markets in the EU and in Mexico, each supported by GOA funding. For those of you who don't know, GOA is the Global Opportunities for Associations.
We've coordinated and supported several incoming missions to Canada. We've hosted over 30 export-opportunity webinars, featuring our trade commissioners posted abroad and other international business experts. More recently we will be working with Export Development Canada in launching an export mentoring and learning workshop series to help build export capacity. That's really important, particularly among our SME community.
With respect to the GMAP, earlier today our CEO, Jayson Myers, appeared before the house committee on international trade to comment on the GMAP. We've now passed the one-year mark since the launch of the GMAP, in October or November of 2013.
The GMAP is important, clearly, because it emphasizes the significance of exports to Canada and it signifies that exports are an engine for growth for Canada's economy and international business more generally. The GMAP prioritizes the export needs of small- and medium-sized enterprises and sets clear and measurable targets with respect to increasing the number of SMEs that are exporting. That's really important. It's important to set a number and we're encouraged by that.
Second, the GMAP identifies the geographic and sectorial markets that are most promising for Canadian companies, as well as the support strategies that are most appropriate for the government to pursue in each case. Certainly the United States will continue to be Canada's most important trading partner and is, at present, kind of a global growth story.
However, emerging markets continue to present significant opportunities for Canadian exporters, and it is encouraging that the government has prioritized these markets under the GMAP.
The GMAP also identifies a number of priority markets based on input received from the business community itself, and it sets out a plan to better align the government's trade policy initiatives and trade support services that match to those business priorities.
With respect to alignment, and here I'm referring to the alignment of our trade-negotiating objectives and the government's support services, observable progress has been made. That alignment has in turn brought about a greater degree of coordination within the Department of Foreign Affairs, Trade and Development and other departments, and between DFATD and the government's trade portfolio partners, namely the Trade Commissioner Service, EDC, BDC, the Business Development Bank of Canada, and the Canadian Commercial Corporation.
I have personally spent a significant amount of time with some of these agencies with respect to the coordination and information sharing to better support Canadian exporters. I would be happy to comment on the work I have been doing with those government agencies in that regard.
Each of these agencies provides valuable and unique services to Canadian companies doing business in international markets, and particularly our SMEs that often lack the expertise and resources to tackle international markets and profit on their own. But far too often they are some of our best-kept secrets, particularly the Trade Commissioner Service.
The GMAP has shone a spotlight on their services and activities. I am proud to say that CME has partnered with the Government of Canada in the delivery of a national outreach program called GO-Global.
I'm sure you heard about it from Jim and Neil. Both Jim and Neil were panellists on previous sessions that we conducted earlier in the year. We will be doing 20 of these. We've done seven now across Canada to promote both the GMAP, international trade agreements such as the CIDA, the Canada-Korea deal, and more importantly highlighting how Canadian companies can leverage relationships with TCS, EDC and BDC in their journey to going global.
We've had over 100 attendees at every one of our sessions. The lion's share has been SMEs, so we've been making some significant progress in that regard.
Finally, the GMAP is helpful for us because it creates an environment for organizations like CME to support the government's international ambitions. It's kind of a point of intersection for us.
My organization is an example. With the support of EDC, the Trade Commissioner Service and the National Research Council, my team at CME has launched the Enterprise Canada Network. ECN is an online service that helps Canadian companies identify and connect to thousands of qualified leads in international markets, but particularly to offers and requests that are in the areas of business, technology and research partnerships.
The database feeds off of a European database that houses over 20,000 qualified offers and requests for partnership opportunities. Since we launched enterprisecanadanetwork.ca in September 2014, we've recorded 26,000 visitors to the site. Over 600 companies have registered their interest in receiving our posting opportunity profiles, and we've already concluded 32 international partnerships.
On all partnerships my team works closely with the Trade Commissioner Service and EDC to ensure that, first of all, they are aware of the matchmaking activity that's happening, they're sharing referrals and also they're supporting SMEs. That's CME's way to actively contribute to the GMAP.
In order to grow, Canadian companies need to access and take advantage of international business opportunities. This is a theme that continues to surface in our annual survey of members. We do a survey of our members biannually, and almost every year the number one issue that comes up with respect to international markets is finding and identifying new and reliable international business partners. That ranks above access to finance. That ranks above managing international foreign exchange risk, for example. That's the number one issue.
The GMAP recognizes this and sets out a coordinated plan to open markets and support Canadian businesses more effectively by aligning and coordinating government services. This plan will need continued review and improvement and, while progress has been made, there is much work that needs to be done.
Here are some suggestions. Work needs to be done to align all government departments behind GMAP's international business objectives. More work needs to be done to further coordinate information sharing within and across key government departments and trade agencies for the benefit of SMEs. More work needs to be done to streamline trade promotion funds, such as the GOA. I've personally drafted the GOA application for the past three years running, so I'm happy to comment on that fund and how it works.
More work needs to be done to take a single-window approach to better meet the export needs of SMEs so that they can better navigate the very complex world of international business, and also the complex world of publicly supported trade promotion programs that are available, just hard to oftentimes understand how to access those programs.
More work needs to be done to make strategic investments in the Trade Commissioner Service. They are a valuable resource. Our trading partners are oftentimes jealous of the Trade Commissioner Service. They are doing a great job. I think there's more that they can do and they need to do, but I'm happy to talk about that during the Q&A.
Also, more needs to be done to map out the global supply chains that pass right through Canada so that SMEs can identify access points to international companies that have a presence in Canada. More needs to be done to leverage, for the benefit of our SMEs, the relationships agencies like EDC have with some of the world's largest buyers of products and services.
To conclude, I'll echo the sentiments of our CEO, Jayson Myers, that the GMAP should be applauded, for it quite correctly focuses on the needs of the customer — that's the Canadian business and particularly the SME. It focuses on those companies that are actively seeking new opportunities in international markets. It should be invested in and promoted, and we, as an organization, will continue to support its growth and development.
I'm happy to take questions when the time arises.
The Chair: Thank you, Mr. Turi. We will now to turn to questions. Senator Eaton?
Senator Eaton: Mr. Turi, thank you very much for coming. It was nice to hear an optimistic presentation, but, listening to the other two gentlemen and listening to you, I guess what strikes me is: How much can government do, and how much is the responsibility of the manufacturer themselves? I guess that's a philosophical question, and you might not have an answer. But I'm struck by the nanny state here. We have to practically take the goods. It seems we have to do a lot.
But here is a simple question: Do we have the right products, or are we lacking in innovation? Are we keeping up to countries like Australia and Germany, for instance, that seem to be beating us, exporting more than we are?
Mr. Turi: That's a really valid point, and I certainly don't want to give the impression that we, as an organization, are expecting the government to lead. Definitely, the government has done a lot in terms of opening doors. Trade agreements, for example, are an excellent opportunity for governments to lead. Ultimately, companies themselves have to step through the doors that governments are opening for them.
The GMAP —
Senator Eaton: Do you think TPP, for instance, will provide us with a huge opportunity?
Mr. Turi: I do. Just look at the market in and of itself. If you were to total up what Canada would have access to, counting NAFTA, CIDA and TPP, that's over 70 per cent of the world economy. So the opportunity is significant with trade agreements like TPP, but you're absolutely right that the investments we make in trade promotion to assist companies have to follow in lockstep with investments we make in things like innovation and strategic investments to support manufacturing growth — advanced manufacturing, for example. A lot of companies have made those investments themselves, despite the falloff in 2008-09. Most of our members that are around today have gotten used to operating at a dollar at par and have made investments in things like automation, in robotics, in things that can help to train their workforce. Those are all things that companies need to do if they want to stay competitive, and, frankly, they are a prerequisite to any ambitions of going global.
We kind of need to go at this in both respects, but you're absolutely right.
Senator Eaton: Can I ask one small question?
The Chair: Sure.
Senator Eaton: I think it was Mr. Lang who made the remark that it's very difficult for people to navigate Foreign Affairs, EDC, CDC, all of the various agencies that could help them. Has there been any thought, for instance, that a company would simply phone a telephone number? They would be given a navigator who would sort of take them in hand like a client and take them to all the agencies that would specifically find what they need or help them and give them what they need?
Mr. Turi: The concierge idea, effectively. That's an idea that's been around for a while. We have definitely spoken to DFATD about this. This is something we've spoken to EDC about. It seems like there's an appetite from the government side to do something like this. We would definitely be interested in being part of that. It's something we've heard from our members for a long time.
I guess the best example I could give you would be looking at what NRC has done. NRC has recently launched a concierge service. This is through IRAP. There are advisers that are located across the country. If you're from a particular sector in Canada and you want more information on access to funding for your particular research project, for example, you can contact an NRC concierge adviser. Their website is fairly straightforward. It asks two questions: What are you looking for and where are you located?
Based on those two questions, NRC has a concierge adviser that will contact you if you contact them and try to help you to navigate through the different government funding programs that are available to you. The same thing I think would be valuable on the trade side, so that begs the question: What is the most appropriate organization to do that?
My thinking is that, from CME's perspective, we'd love to do it. But resources are thin, and acting as a concierge I think is sometimes difficult.
I think it's probably best suited for someone within the department to do this. I think it's a departmental initiative.
Senator Eaton: Foreign trade.
Mr. Turi: Right. We've tried to assist in this regard. On the website I mentioned, enterprisecanadanetwork.ca, there's a tab that is called the "export assistance navigator.'' Believe it or not in the summertime we had a student come in and her one job was to go and identify all of the trade promotion programs that are available in each province across the country because most provinces have export promotion programs. Ontario has them. Quebec has them. Every province has them. Often, those are funded programs. Those are programs that operate similar to the GOA, so that's direct funding to companies that are interested in going on trade missions in foreign markets, for example.
But there really wasn't one single window, so we had the student do about two months' worth of research, tally up all of these programs. We put them on our website, on enterprisecanadanetwork.ca, for companies to access. It's a start toward an online concierge. It's definitely not a concierge that you would typically think of over the phone, that type of service. I think that would be hugely valuable because even identifying the right person within Foreign Affairs can often be difficult. That's the right person who's got experience in aerospace in France. You may not necessarily want to call up the post. That may not make sense for you if you're an SME. You'll probably want to start with someone who's local who can then put you in touch with someone off in post, for example. At these GO-Global sessions, I have the benefit of being up there and listening to the Q&A sessions. One of the questions that has come up on a couple of occasions is for the government to make available to companies who of their staff have experience in certain markets and how long they have been in aerospace in France or in Mexico or what have you so that companies know who to call first. There would be huge value in an initiative like that.
Senator Eaton: Thank you.
Senator Ataullahjan: Thank you, Mr. Turi, for your presentation. We have heard time and time again that the Canadian businesses are comfortable trading with the U.S. and face challenges in exposed diversifications. How are we encouraging businesses to move beyond the comforts of the U.S. market? Are there any initiatives in place?
Mr. Turi: At the governmental level or within the private sector?
Senator Ataullahjan: Both.
Mr. Turi: Okay. Emerging markets are interesting because the GMAP prioritizes emerging markets. There's clear emphasis on emerging markets because, obviously, the growth potential can be more significant if you get in early. They are also more daunting. There are cultural differences. There are language differences. There are uncertainties as to how much you need to spend. So one of the questions that often comes up at the GO-Global sessions is: How much do we need to set aside as a budget for our Asia strategy?
Often, companies will travel with groups like CME. They'll travel on a government-supported trade mission. Sometimes they'll travel with the minister to South Korea, for example. That's a good way to introduce the company to the market, but, unless a company has a real strategic plan in terms of what it's willing to spend, often in emerging markets they don't want to see you at one trade mission. They want to see you at trade shows every year. And often you won't actually get traction with a buyer or even identifying a distributor, for example, that can get passionate about your products or services until that community of buyers or business partners sees that you've been there for a while.
Obviously, the challenges there are the costs. The costs of travelling to an emerging market are obviously much more significant than hopping on a plane to the U.S., so that's a big challenge.
We're trying to work closely with our trade commissioners in market in those emerging economies to try to access their local networks so that we can come to Canadian companies with information on soft-landing services that are available to them.
Oftentimes the challenge is, okay we have come to market and we seem to identify business partners that we can work with, so who do we go to for legal counsel? What is relevant tax legislation or local legislation we need to be aware of? Who can we trust? Those are all of the challenges that the companies are looking at and trying to navigate through.
We are all trying to help with that, but the most important thing is we need to help those companies go to market and maintain a sustained presence and not just be there on one-off occasions.
Senator Cordy: As the new person on the committee, I wonder if you could explain to me about the Canadian Manufacturers and Exporters. What do you do, who belongs to it and how are you funded?
Mr. Turi: In my opening remarks I mentioned that CME is an industry association. We are the country's oldest industry association. We actually started the Trade Commissioner Service. The first trade commissioner was in New Zealand. He was a former CME president. So we have been around for a long time. We represent, by and large, manufacturers, most of which are exporters. We also represent a large constituency of exporters in that middle phase. They're not making anything, but they help get your products to market. Those are brokers and service providers.
Our membership exists across Canada. There are no chapters. There are divisions of CME that provide various services to companies. We play a very significant advocacy role in Ottawa and in the capitals of most of our provinces. We represent countries from every sector. Over 80 per cent of our members are SMEs. Those are the companies with 250 employees or less. All of the challenges that I have been talking about here are the challenges that I'm hearing them tell me. They're not the challenges of our large numbers — we were just in Ottawa last week for our board meeting. They're not their challenges.
The challenges of our large members are: "Phil, we need more SMEs to get into our supply chains; and how can CME play a role in terms of matching?'' One of my comments was that a lot of companies can export by tapping into relationships right here in Canada. So tapping into a company like GE or Siemens that have large supply chains all over the world and establishing relationships with those companies in Canada can mean stepping into a larger supply chain and larger markets.
Senator Cordy: You said that you have been doing a lot of work with the SMEs. The challenge, I think we heard it from you and others, is that there are a lot of government agencies doing a lot of work, but a large percentage of small and medium enterprises are not knowledgeable about what is out there. Because you are a small company, you don't necessarily have the resources to spend looking into the agencies and what they can provide for you.
How do we go about educating — or our previous witness says making small and medium enterprises export-ready — and that's gaining knowledge? We all hear the term "power is knowledge,'' but you have to have the knowledge, know where to get it and it has to be easily accessible. I think Senator Eaton spoke about the Concierge Service or the Service Canada aspects where you can do one-stop shopping and get all the information you need.
Mr. Turi: Sorry, to clarify the question?
Senator Cordy: You said that there are government agencies doing a lot of good work but that the small and medium enterprises really aren't —
Mr. Turi: Got it.
Senator Cordy: — a high percentage, or certainly what we heard last week and from our earlier witness today, they really aren't aware of what is out there.
Mr. Turi: That's a good question. That is part of the challenge. The GMAP sets ambitious targets in terms of the number of SMEs we want to see export that are not currently exporting.
The big challenge there is that a lot of companies are going to have to take the leap themselves, but they need to know that they can leverage partnerships with organizations like TCS, BDC, EDC and CCC. That's really what underlined the GO-Global series.
I don't know if the previous witnesses had a chance to tell you about that series, but basically after the minister's remarks, I will moderate a session where I act as the CEO of Canada Inc. I'm a fictitious CEO — I have always wanted to be a CEO — and I walk through the life cycle of: I'm a domestic company selling domestically, I have sold a little to the U.S. and I'm looking at international markets. So where do I start? We start telling that story.
I need to identify where I want to go, where there are business partners that I could actually sell my products to and where there are customers that can buy my products or services. That's where we turn to TCS and the services they provide. In the next part of the story we turn to BDC. For those of you that don't know, BDC has launched an export strategy consulting program. Part of that service is doing the market research on your products and the likelihood of those products actually getting to foreign markets. Doing some of that harder consulting type research is some of the capacity building.
We then tell the story that I have a foreign buyer. So now what? That's where EDC can come in and provide trade financing, accounts receivable insurance, the difference guarantees and performance bonds that that agency can provide. We are trying to tell the story to an audience that perhaps has never heard of these organizations, let alone knows what each of them do.
It is going well. The feedback has been overwhelmingly positive. I would love to see this initiative carry on past the election because we have built a lot of momentum here. It would be great if this initiative turned into a concierge service, but that is yet to be seen.
Part of it is a marketing, advertising and awareness-raising exercise that we need to do in many respects.
Senator Cordy: You spoke about the single window approach to navigating trade promotion. How challenging would that be to enact? Is it just a matter of getting all the resources and gaining the knowledge for people?
Mr. Turi: We're moving in the right direction. I know that each of the organizations — so the trade commissioners, EDC and CCC — they do have meetings on sharing information. The big thing that they always talk about is Canadian capabilities. They're always trying to identify what are Canada's true industrial and technological capabilities. They're always trying to map that information out. I know they're trying in earnest to do a better job of sharing Canadian leads, referrals and information on Canada's capabilities, so they can leverage their global relationships and then the domestic relationships that their staff have here with SMEs.
In the course of doing that exercise of sharing that information, they have gotten together enough to the point where we are probably not that far away from launching a single window. Whether that is the department that does this — and it is funny because their website is increasingly looking more and more like a single window. So they're perhaps listening to us.
I don't think we're that far away from getting to a true single window, but it is more than just the links to other websites. That exists. We need to do more in terms of here are all of the forms that you need to process, if you actually want to get your product or get your people into a foreign market.
The EU recently launched an exports website and all you have to do is put in the tariff code for your product. After putting in that tariff code, you will have a long list of forms that you need to be aware of if you want to export into the EU market.
That's huge. That's something they did on their own accord. It is something that we're telling our members about because it will save them a lot of time and energy. The same thing can be done here in Canada.
Senator Johnson: Thank you for coming this evening. Would you like to comment on a report by Michael Hart from the C.D. Howe Institute, I think in 2012, talking about Canada's productivity performance over the past decade as one of the worst. Would you identify the factors in that report that you feel are good, wrong or right? I'm not sure myself what you think of it or what has changed since then.
How is this affecting our Canada-U.S. relationship? To me that's most important. We have to have the other markets going all the time.
Mr. Turi: Sure.
Senator Johnson: But as chair of Can-U.S., I'm always working on this relationship with my colleagues. It's critical and there are so many things on the table right now.
Mr. Turi: Sure, and it's a fair comment. In talking about exporting and entering new markets we can forget all of the things that need to happen here. Productivity is a huge issue. I don't recall the report. I'm sure I have looked at it a while back.
Senator Johnson: Right. It was just kind of nasty talking about our worst performance in the past decade, productivity-wise, and mentioning our business leaders are risk averse; the private sector was inefficient and insufficient. Were they just in a bad mood that day or what do you think? Lack of innovation. This is only two years ago, but I'm sure things have picked up.
Mr. Turi: From a productivity perspective, some of this speaks to perhaps a risk aversion in Canada to making strategic investments in skills training for people. All of those things would go towards assisting with the productivity gap vis-à-vis other countries.
Part of that is a cultural shift that needs to happen within the business community. I don't think that's something necessarily that government can help with. That's something that we've definitely tried to push and advocate for and remind our companies of.
We do a lot with respect to Lean Manufacturing and making our manufacturing facilities more lean-oriented. All of that will assist with productivity. It's crazy that Lean has been around for many, many years. There are still companies, particularly SMEs, that really have no sense of what Lean is and how to implement that practically. That could have huge impacts on productivity and would definitely go a long way to strengthening relationships with the U.S. Those are things we need to do in lockstep with anything we do on trade promotion.
Senator Johnson: Do you have any comments on federal priorities in order to improve Canada's trade performance? What should the federal priorities be in order to improve Canada's trade performance? Do you have any comments on that?
Mr. Turi: That speaks more to domestic investments. I have a funny feeling this is going to be a big year for manufacturing. I do think manufacturing will probably receive quite a bit of attention in the upcoming budget and in our election, whenever that happens.
We need to make sure that we're making strategic investments. We can't be good at everything. We want to pick what sectors we really want to champion and be good at. We need to support those sectors so that it's easier for them to access capital, whether that's public or private. Companies can then use that capital to invest in people.
The skills gap is significant. It's something that every single region, every CME office in every region across Canada, hears about. There are just not enough skilled labourers that can step in and hit the ground running. Part of that is addressing the connections between what is happening in our academic institutions, the training that students are receiving, and the apprenticeship programs, for example, that some of those young people are accessing. Industry needs to be part of that because that will allow us to ensure that the people coming into our companies are more responsive to our needs.
All of those things need to happen. At what point in time is yet to be determined. Definitely we would be supportive of that. That's our view on priorities, at least.
[Translation]
Senator Fortin-Duplessis: Thank you, Madam Chair.
Mr. Turi, I want to thank you for your presentation. My question is as follows: according to a report published in December 2012, by the Conference Board of Canada, and I quote, "Canada is currently distancing itself from certain traditional export sectors that made its manufacturing sector so strong and is instead focussing on professional services and industries related to our expertise in natural resources.''
I would like your thoughts on the advantages and disadvantages of such a shift.
[English]
Mr. Turi: In response, I would say that there are advantages to prioritizing certain sectors where we have competitive strengths. I do think though that there are risks in prioritizing certain sectors at the expense of others. Manufacturing has been one of those sectors that has always been strong in Canada. Although it's strong, it's still one of those sectors that continues to drive our economy.
I don't think it's an either/or. We have to invest in both and ensure that both are strong because oftentimes they're connected. If you're a manufacturer you're often supplying a variety of different sectors, you're not supplying one sector. So ensuring that you're supporting both is critical. I don't think we can part ways with one particular sector because we're seeing strength in services, for example. I do think it's encouraging that in at least this modern era of trade agreements that we're seeing, there's definitely an emphasis on trade liberalization with respect to services. But I do think that we need to continue to support all sectors and not one over the other.
The Chair: Mr. Turi, we were looking at the area of trade promotion and more particularly something innovative and different. You've gone through a lot of suggestions and for that we're very grateful.
Am I to read that of all of that that we have to be more consistent and more transparent to those that may be breaking into it, but behind that there's perhaps some mindset that has to be changed from businesses that when they start they should see themselves as part of either a chain of delivery systems but really thinking globally.
How do we change the mindset? The rest seems to be the government side of it. How do we get small businesses and innovative businesses — IT has been an exception to that — elsewhere to see the next step, the next phase?
Mr. Turi: There are many ways we can do that. The GO-Global, given that it's a public workshop series across Canada and we're in front of many SMEs, tries to do that. It tries to teach and create a little bit of a cultural shift, but part of it is the role of industry associations. It's our role as CME to try and assist with that culture shift.
One of the best ways for companies to get exposure to that mentality and thinking is going on trade missions. I'll give you a practical example.
In September of this past year my team organized an automotive mission to the U.K. This was an automotive mission that looked at low carbon vehicle technology. We travelled with seven Canadian SMEs with innovative technologies in the fields of vehicle electrification, hybrid vehicles with lithium ion battery technology, for example. All of them who travelled with us enjoyed the meetings that we set up, and working with the Trade Commissioner Service with companies like Jaguar, Land Rover and BMW and even Ford Europe.
Obviously, any Canadian SME would love the opportunity to access an OEM directly. I think a lot of them took more value out of the meetings we set up with tier 2 and tier 3 suppliers that supply into those larger supply chains.
The opportunity to establish a relationship with a Ricardo that manufacturers 50 engines in a year and one of those engines — they're an engineering firm — may make its way into the next Jaguar Land Rover vehicle. Having a relationship with Ricardo is a perfect way to get into JLR's global value chain.
Part of that is taking companies to market and making those key introductions and assisting them with it but that's expensive so that's where the incoming missions are really important. The challenge with incoming missions is there is no funding to support incoming missions.
We are contacted by foreign embassies on a weekly basis with incoming missions from Belgium and France, you name it. They are sort of expecting us to set up all of these matchmaking events; but it's difficult for us to do that from a funding perspective. That could be one way — just getting them to market.
The Chair: You said "matchmaking.'' Is it their expectation that Canada would do that because their countries are doing it for incoming; or is it their culture to want to be enticed to come?
Mr. Turi: Yes, it's not an expectation. It's definitely a hope that it would happen. I don't know if it's an expectation.
The Chair: Mr. Turi, you've covered a lot of ground, and for that we're very grateful. We are looking at trade promotion and ways and means to suggest to both businesses, associations and the government how we can maximize the productivity and the ingenuity in Canada amongst our businesses. One way of course is for us to televise. We hope we're reaching across Canada with your comments. We're grateful for the time that you've taken with us.
Senators, there is an informal meeting — you received an invitation — with the delegate from a country that wishes to meet with the committee formally. However, on short notice we could not accomplish that. It will be at 6:15 in room 256-S. By all means, if you're available, you're invited to come. But it is not a formal meeting of this committee.
Senators, we are adjourned formally until tomorrow.
(The committee adjourned.)