[Recorded by Electronic Apparatus]
Tuesday, October 3, 1995
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[English]
The Vice-Chairman (Mr. Volpe): Order.
Pursuant to Standing Order 108(2), a study of small and medium-sized businesses, otherwise known as SMEs, in the globalized economy, the Canadian experience, as the work of this committee, is about to resume.
We are joined this morning by two witnesses. I was going to say expert witnesses, but I prefer the word ``practising'' witnesses. They are in the field. One is from Omeid International Inc.: Kamyar Peyrow from Red Deer, Alberta. I think we have a representative on the committee from more or less the same place. We also have Mr. Gene Barbee from Gene Barbee & Associates Ltd., from Winnipeg, Manitoba.
Gentlemen, welcome to the committee. You are familiar with the process. We're going to give you free rein for about 15 minutes each. Subsequent to your presentations to the committee, we'll have interventions and questions and comments from committee members.
Mr. Peyrow.
Mr. Kamyar Peyrow (President, Omeid International Inc.): I would like to take this opportunity to thank the committee for inviting me to this session. I am honoured to be here.
I'm here to bring to your attention some of the important issues in order for the government to help Canadian companies that are interested in exporting to a very competitive foreign market. The majority of my experience deals with the Middle East, and this will be the focus of my discussion today.
To provide you with some of my background, I am the president and owner of Omeid International. It is a 100% Canadian-owned company, incorporated in the province of Alberta. The company was originally established in 1981 to meet the expansion of the market share for Canadian companies within the Middle East. Our head office is in Alberta and we have associated offices in the United Arab Emirates, Kuwait, and Iran.
Omeid's role is to provide services to assist Canadian companies to do a profitable business in the region. Some of our services are complete market research, which is assessing the demand and feasibility of the particular product or service; organized introduction of the client within the target market; and foreign agency pre-qualification and selection.
This aspect of the business is quite crucial, because any foreign company wishing to do business in the Middle East requires a locally owned agent or a sponsor. It is crucial for success for the company or sponsor selected to have both the resources and the capacity required to help the client to maximize the return on its investment.
Assistance with the preliminary contract negotiation: We assist in achieving a complete understanding of business standards and practices on both sides.
Direct selling to local governments and major end-users: Omeid has cultivated a network of high-level contacts within the government, as well as within the private sector. We also receive, on an ongoing basis, inquiries requesting products and services from Canada.
Complete logistical support is provided by us as well: for visas, transportation, accommodation, customs, and any other local requirements the company might need.
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International marketing is complex, challenging and risky regardless of which country you're dealing with. This is partly due to cultural differences and foreign barriers such as tariffs, regulations, sanctions, etc.
Foreign competitors - Far East, European and American companies - are very active and aggressively promoted by their respective governments. Excessive Canadian government paperwork and pre-qualification criteria delay business transactions.
Political risk factors and stability within the target market are also factors to be considered and dealt with accordingly.
Canadian trade commissions must actively promote Canadian companies and help lend them the type of credibility that only government can. For example, during my last trip to the Middle East in March of this year, I requested that our ambassador put in a good word with the Kuwaiti government on behalf of our client. Even though this company is a well-established, true Canadian success story, the government's view of the situation was that it simply wasn't the kind of thing that could be done.
Other countries that participated in Operation Desert Storm and the clean-up of carnage the Iraqis left behind are literally maximizing their exposure in Kuwait. In my opinion, we are simply not maintaining a high enough profile to be effective at promoting Canadian companies to the same extent as other countries are promoting their interests.
This is not so much a matter of competence as of tactics and procedures. A more hands-on approach using appropriate people and resources is a role our trade commissions could expand. For instance, having specialized personnel with the related training and background in a specific sector is important. By ongoing visits to government and to the private sector, embassy personnel can stay abreast of market trends and needs. Formal visits by our ambassadors to the decision-makers of the public and private sectors on behalf of Canadian companies would also be advantageous.
A few years ago a group of Canadian businessmen and I were invited to the Canadian ambassador's residence in Teheran. In his speech he emphasized that Iran is a great market for Canadians interested in doing foreign business. Because Iran has a great dependency on a U.S.-based infrastructure and there is a current absence of U.S.-based companies this is now an optimal time for Canadian firms to fill this role.
Canadians must take advantage of this current political situation as much as, if not more than, our foreign competitors such as the Far East and European countries do. Already they have penetrated the market and some have set up full-time offices and production and marketing facilities. In order for Canadian companies to do the same, we must have the assurance of the Canadian government.
Omeid is currently representing the Canadian professional geologist who has formed an informal consortium of major Canadian petroleum exploration companies interested in significantly enhancing production from depleted or near-depleted onshore reserves in Iran on a production-sharing basis.
Iranians are very keen about this proposal because of their desire to increase production as well as their desire to introduce a new technology to their oil industry. Because the overall scope of this project is immense and would certainly give Canadian companies a foothold in a very lucrative market, we need the EDC to insure the first phase of the project.
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However, EDC's position is that Iran is not stable enough to meet EDC's criteria. Other countries obviously don't hold the same point of view. Naturally, when the Canadian government is reluctant to underwrite this type of venture, it does not help to build confidence in the Canadian companies that are literally willing to risk hundreds of millions of dollars to complete it.
Because of Iran's current relationship or, more precisely, lack of relationship with the United States, there is a window of opportunity for Canadians to do very lucrative business there. If we are reluctant to assume our position in the Iranian market, our foreign competitors will replace us and we'll be left standing on the outside looking in.
Canadian government support is crucial in lending credibility to this project. With EDC currently unwilling to insure Canadian projects in Iran, a very important question is raised. Is the Canadian government objectively assessing the actual risk to business operation in Iran, or is it assessing the political risk of Canada-U.S. relations?
With the exclusion of the U.S. and Canada, almost every other industrialized nation actively and aggressively promotes its business interests and relations with Iran. While foreign competitors are doing excellent business there, the U.S. embargo has had little or no effect on the export of U.S.-made products to Iran even if U.S. sales and service infrastructure is no longer present. If Canadian foreign policy is truly independent, we should be expanding, as needed, to meet international market demands.
In conclusion, I would like to say that all I have discussed here today is based on my own experience and current market indicators in the middle east.
Particular attention should be given to continued discussion with the private sector, such as this meeting, the need for industry-specialized personnel within foreign trade missions, taking advantage of the multi-ethnic nature of Canada in promoting Canadian business, and in general a more hands-on approach by government would be helpful. I respectfully recommend the committee consider these points and develop a more aggressive posture in assisting Canadian companies in developing foreign trade.
Thank you very much for your time.
The Vice-Chairman (Mr. Volpe): Thank you, Mr. Peyrow. We'll come back to you in a few minutes, but right now we'll turn to Mr. Gene Barbee.
Mr. Gene Barbee (President, Gene Barbee & Associates Ltd.): Good morning. Thank you for inviting me to attend this session. I consider it a great honour to be invited to speak here.
Our company is a management consultant and engineering company. We work with labour-intensive light industry in assisting it to improve productivity. We commonly refer to this now as re-engineering, but this includes such techniques and skills as training, layout, work flow, ISO 9000, activity-based costing, machinery evaluation - basically any costing systems, CAD/CAM systems, related to manufacturing. Anything that deals with manufacturing and labour-intensive light industry we're comfortable with.
Most of our work takes place in the textile and apparel manufacturing sectors, since this is a very labour-intensive industry. Thus, industrial engineers usually head for labour-intensive industries. By the way, the Canadian domestic apparel industry exports close to $1 billion a year to the U.S., up fourfold since 1990. So there's a lot of the exposure in the U.S. to the textile and apparel industry. It's a good network of activity.
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Twenty-five percent of our business is in non-apparel-related work. We have a project in Philadelphia with a company that makes toilet seats. We have a client in Calgary making dried flower arrangements. This is a very large company. We've worked with metalworking or metal fabricating companies. We work in all industries, but 75% of our work is still generally in the textile and apparel industry.
I moved to Canada in 1974. Prior to that I was vice-president of a U.S. consulting company. I was doing the same work out of Atlanta, Georgia, as what I do now.
I realized the opportunity in Canada, in particular western Canada, for industrial engineers. At the time, we were a rare breed anywhere in Canada, but mainly in western Canada.
So I set up my company there. My family is there. My kids have married Winnipegers. I guess my grandchildren now are Canadians. So that is home to us.
The nice thing about Winnipeg is that it's centrally located. We can go east, west or south quite easily. So we really consider ourselves a Canadian consulting company that just happens to be located in Winnipeg.
We developed export projects over the years. About 25% of our work now is done in the U.S.; maybe it's closer to 30%. We have worked at it over the years by developing a network of contacts, some of which are U.S. accounting and management consulting companies, such as Peat Marwick and Price Waterhouse in Washington, D.C.
When they have a textile-related project in eastern Europe, they call us. They called us in to assist with a project in Bulgaria and Lithuania. We have worked in Brazil and the Philippines. Again, it's the network we've developed that has helped us in our exporting. We're members of the Institute of Certified Management Consultants, which is a worldwide organization of management consultants. We have positioned ourselves to be able to export over the years.
Besides a network, we've done work in Canada that has had a spin-off effect in the U.S. We worked with Correctional Service Canada, for example, in setting up industries in six Canadian prisons through CORCAN. That led to work in UNICOR, the U.S. prison industry, through the Federal Bureau of Prisons. We ended up working in six U.S. prisons, including Leavenworth, setting up textile and apparel industries. You learn the language of an industry and that leads to a spin-off in another country or another industry.
I worked for a time as a part-time technical adviser to the National Research Council. They were called ITAs. That was a two-year assignment for just part of my time. That put me into contact with some of the U.S. R and D centres, so now we do work with what they call TC2, which is the U.S. R and D centre in Raleigh, North Carolina. It develops new technology for the apparel industry of all the U.S. It's a very large organization.
I have found over the years that we can develop the markets. One of the things that has helped, as fairly minor end funding, is the PEMD program through Industry, Science and Technology Canada, which is now Industry Canada. That helped us to attend several trade shows and to present seminars. As a matter of fact, we're just finishing a grant that helped us with three seminars in the U.S. It was not much money, but it provided an incentive to a small company such as mine to make contacts in the U.S.
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We have worked with the Canadian consulate in Atlanta, Georgia, but we didn't get much help there. One of the largest trade shows in North America is in Atlanta every year, and we don't consider that to be much help.
The provincial government has not been of great assistance. It tried, but maybe we just haven't found the right contacts.
Through Industry Canada, probably some of the best help that we've received through the PEMD programs originated in the Winnipeg office.
I was asked in a memo from the committee about how to handle financing or if there is any way in which the government could help with financing. Generally, we're quite comfortable with our own financing. We just don't bite off a bite bigger than we feel we can finance, and if it means going into a consortium with a group of other consultants, just as the European work was done with Peat Marwick and Price Waterhouse.... They didn't pay us until they got paid, but they handled the collection, so we knew what to plan on. It was not speculative. It was planned. It was just a matter of time and the money would come in.
I've never tried to get financing through.... I know there's the World Bank and there are different sources. We're just not large enough to go after the funds. We're not bridge or dam builders. We're not that kind of engineering company, so we find we can do our own financing.
What would be helpful - and I'm crossing over into suggestions or recommendations; I've been talking with the CIDA people - would be some R and D assistance.
We have a potential project in the Ukraine. We have a letter from the minister of textiles that says, ``Come. I want you to help study our textile industry to see what can be done'', which could lead to a fair amount of consulting work.
This is highly speculative. Basically, you have to come with money in hand. That's more speculative than we want to bite off - to go over there for two or three weeks to visit plants and talk with the government personnel to see what can be developed. Once a project is developed, we're quite comfortable with financing it.
Some help there would probably be a big help in getting a project such as this Ukrainian one going. It's not much money; it's more a matter of seed money that could lead to a big project.
It has done this in the United States. We had a big project in the Philippines with a company that had 11,000 people that was owned by Sara Lee Corp. in the United States. That was a spin-off of some of my networking in the U.S.
The plant in Brazil had 4,000 employees. We were requested to come down to audit the industrial engineering program, which was being run by an American engineer, but he had about 20 Brazilian industrial engineers. They wanted an audit to see if the company was up to competitive levels in its engineering program.
Basically, that is what we did in the Philippines: we audited or surveyed the company to see what needed to be done to make it more competitive.
Even in the Philippines competition is quite keen. Companies are even moving out of the Philippines into Malaysia and some of the other countries. So this company in the Philippines, which makes Isotoner gloves, was needing to get more competitive. They were beginning to look at equipment there. Low wages just wouldn't fill the bill any more, so they had to look at some CAD/CAM equipment. We helped to survey that.
In summing up the recommendations or suggestions that I could see helping - and I just received a questionnaire on the PEMD programs - I have found that those that help most.... Again, it's never much money and we end up by paying it back. If we sell work in that country, we pay back the grants. We have paid back most of them. So it's some seed money to help you with speculation, and if it pays off you repay it over a percentage of the fees over a period of several years. You spread out your investment money.
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As far as passing on contacts to me is concerned, I haven't found it or the trade offices overseas to be helpful, because before we go we know who we're going to see and we know what we want to do. We already have the contact from the network we have developed in Brazil or the Philippines or eastern Europe. We know what we want to do in that country, so it's just a matter of doing it if it's within our realm of financing.
Again, thank you very much for inviting me. I suppose we're available for questions.
The Vice-Chairman (Mr. Volpe): Okay, Mr. Barbee. Thank you very much.
I'll go directly to our list of questioners, starting with Mr. Yves Rocheleau of the Bloc Québécois.
[Translation]
Mr. Rocheleau (Trois-Rivières): I have three questions to ask, two for Mr. Peyrow and one for Mr. Barbee.
Mister Peyrow, you mentioned in your conclusion, in your first recommendation, the necessity to pursue discussions with the private sector. Do you consider that the banking structure we have in Canada is sufficiently open or do you think that the banks' attitude toward the companies operating in Canada and exporting to foreign markets is too conservative? In other words, are you satisfied with the behaviour of the banks?
[English]
Mr. Peyrow: We don't have much personal experience as far as financing the work being done overseas is concerned. We represent companies, and each individual company does its own financing. So my experience is unfortunately very limited in that regard.
I'm pretty sure any help the export companies could get would be welcome. There is quite a bit of competition out there, and if they have a better position in the marketplace it would be definitely helpful. But as far as going into the details and giving you some information on the financing aspect is concerned, unfortunately I don't have very much experience in that.
The Vice-Chairman (Mr. Volpe): Mr. Barbee, do you want to add something to that?
Mr. Barbee: Most of our projects are under $200,000 or so. We find that once we start a project we're comfortable with financing it ourselves. We haven't looked for any financing and are not really interested in the rigours of going through getting it at this stage.
[Translation]
Mr. Rocheleau: One is automatically brought to mention the EDC. If you need financial help, you have to know that the EDC is a government organization and you wonder if we should not further call upon the private sector, in the context of the new ideological shift in the West.
At page 4 of your text, you mention Iran, and you say:
- Except the United States and Canada, most other industrialized countries try to actively, even
aggressively promote their interests and their business relationships with Iran.
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[English]
Mr. Peyrow: I would say both. The private sector itself is seeking to have proper representation, of course, and to establish their offices and marketing and production facilities as well as the government supports. Without the government supports establishing proper credibility for a company it is very difficult to do business in the Middle East. You have to have the government backing.
On your first question, when you were discussing the financing, the insurance aspect of the EDC is quite crucial, especially for the big projects such as the one in Iran I mentioned. The mobilization alone will cost millions and millions of dollars, to take the equipment over there, to set up, before we can even start doing the production. Without the government's assurance it's not possible. We definitely need that kind of guarantee from the government. The company's willing to risk going into the market, but we definitely need the government's backing.
[Translation]
Mr. Rocheleau: Thank you. I will now ask a question to Mr. Barbee. You might have approached it earlier. Do you consider that high technology and knowledge-based companies benefit form a reasonable support from the government, and from the private sector in trying to export their knowledge?
[English]
Mr. Barbee: I was trying to figure out just how to answer how much support is support. I'm not sure I can answer that. So much of it falls back on the company itself to expose the product. There's a company in Edmonton - I'm not associated with them, but I know them quite well - that makes laser cutters for fabric. They sell for $300,000 to $500,000 each. They go to trade shows. They bring people into Canada, into Edmonton, to see demonstrations. They're doing reasonably well. They have had a lot of help in the past from the Alberta government. I don't think they get too much now, but they do get some help. I'm not sure whether it's federal or provincial now. They go to trade shows and they get some help at the trade shows, machinery shows, probably from Industry Canada. I'm not sure what else they could get.
Since I don't produce or sell high-tech equipment, I recommend it. Usually if it's in the U.S. it would probably come from the U.S. If it's in Europe, it would come from the Orient or Europe.
I'm not totally qualified to answer that, other than with the example I've just given.
The Vice-Chairman (Mr. Volpe): Thank you, Mr. Barbee.
Before I go on to the next question, maybe you could clarify something for me. You've both used two words about government. One is government help, which is translated in my own mind as a forgivable subsidy or grant. The other is government support and backing. This is especially for Mr. Peyrow. Just what does the exporter mean by ``government backing'' or ``government support''?
Mr. Peyrow: In the different countries our embassies can work from a hands-on position versus more of a formality in the work they do annually or semi-annually. What I mean by that is that if they are having specific personnel working in specific sectors and dealing with the private sector as well as the government, talking to the people either in charge of making decisions or who are aware of the different projects that are coming up in the country, that type of information, that type of feedback is quite crucial and quite important to the Canadian company wanting to do business overseas.
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Those are some of the supports I was talking about.
The financial assistance can be.... For instance, they have a program, but let's look at the past five or six years. There has been a reduction in the amount of money that is available in those programs. They cut down the hotel or transportation or even attending the trade shows overseas compared with four to five years ago. I think we should be going in the other direction. If we are going to promote our Canadian products and services overseas, we definitely have to give them help. We've got to promote. In most cases, small amounts of money to get them started is quite helpful and quite important to the company. It gives them the initiative to start something over there.
The Vice-Chairman (Mr. Volpe): I think I understand that part. I was just wondering whether having some sort of stamp of approval by the Canadian government was in any way beneficial to a potential exporter.
Mr. Peyrow: Oh, definitely, again depending on which country we are talking about. In Kuwait, for example, it's very crucial. The formality is everything. If you have the right department and if you talk to them through the Canadian ambassador and have them put in a good word, as we requested and as I mentioned in my paper, that makes a lot of difference. That kind of endorsement, yes, of course.
The Vice-Chairman (Mr. Volpe): Let me turn to Mr. Mills.
Mr. Mills (Red Deer): Mr. Penson has to leave, so perhaps I could just swap places with him.
The Vice-Chairman (Mr. Volpe): No problem. Mr. Penson.
Mr. Penson (Peace River): Thank you.
Welcome, gentlemen, to our committee this morning.
In our study of small and medium-sized businesses, we're certainly aware that there are some very important components of our business in terms of potential for export, the need to expand in this area. Therefore, if there is anything government can do to help industry to move forward, or if there are any impediments to business, we certainly want to hear about them.
Mr. Peyrow, when you were talking about targeting markets in a trade promotion area, especially in the middle east, I'm a little bit surprised to learn from you that there's not the kind of expertise in our embassies or consulates that is really required. For example, it's a big oil-producing area and I would expect that our consulates would have that kind of expertise in determining market intelligence, market information. I would see that as an area that could be improved.
But the more specific question I have for you is this. In the area of export insurance or export credit, we know you've talked about EDC becoming involved. EDC has said they don't want to get involved in Iran. Is there not any source of private capital in terms of risk insurance that you could access and not have to rely on EDC in that case?
Mr. Peyrow: I'm not aware of any.
Mr. Penson: Some of the people I've talked to in industry say that EDC is sort of pushing.... There is that export insurance out there, but with EDC taking over that whole area it's very tough to compete with them. My understanding is that in other countries a lot of the export insurance is done by private companies as opposed to government.
Mr. Peyrow: The type of insurance we are asking for is mainly done by government. Other insurance doesn't cover in case of war, revolution, take-over of some sort. They definitely won't cover that, whereas in the case of government to government some sort of agreement and understanding can be established where the companies are protected.
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Mr. Penson: Just to follow that up a little bit, I can understand EDC being a bit cautious, not only if there's any political instability, but because they have a lot of taxpayers' money on the line. We know there's something like $2.5 billion in non-performing loans in the EDC portfolio. It's a concern to me and it's a concern to all of the taxpayers in this country that this kind of money is at risk. So it is important that they be careful as well.
Can you help us out here? I gather you're suggesting that we are sort of an extension of U.S. foreign policy and we should be looking at a more independent position in this regard.
Mr. Peyrow: Definitely. Right now Canada should be taking a much more aggressive position than it has taken up until now. As I mentioned, because of the dependency of the Iranian industry on the U.S. - and basically the Canadian products and system are similar to what the U.S. has - it is an ideal situation for Canadians to do business over there.
The Iranian political situation is not as unstable as we think it is, mainly because so many other European and Far Eastern countries are already doing very good and lucrative business. As a matter of fact, there is talk that even the U.S. is going to be going back and doing business in Iran in a matter of a year or so.
We have to assess our situation accordingly, and if we want to be there first, we have to do something right now.
Mr. Penson: It seems to me that you're also suggesting that U.S. goods are circumventing this boycott in any case. Am I reading you right, sir?
Mr. Peyrow: That is quite true. If you go to Bandar Abbas, which is a main port in Iran, all over the place you see the container loads of twenty-footers and forty-footers, made in the U.S.A. So it's not that there are no American-made goods going into Iran.
Mr. Penson: Mr. Barbee, I was interested in talking to you a little bit about tariffs under GATT as they affect the garment textile industry. Do you see that your group of customers will be able to compete as the tariffs are phased down in the textile industry? How do you see that playing out over the next few years?
Mr. Barbee: We work with a lot of Canadian companies, which is the basis of our work. Even though we're talking about exporting consulting services to the U.S., we're pretty close to the apparel manufacturing and textile manufacturing sectors in Canada because we have so many clients here.
Some have grown dramatically as a result of this. Yesterday I was at the Canadian Apparel Federation, which is the association of associations for apparel. Each province has an association for the apparel manufacturers and they all belong to the Canadian Apparel Federation. That's where I picked up these statistics that show our exports to the U.S. have increased fourfold since 1990. In 1994 it was $1 billion.
Exports have grown very nicely. We have clients that have doubled production and have aggressively gone after the export business. Some companies can't afford to do that and they have been hurt, and some products are hurt more than others, but some companies have benefited very significantly from it.
Some who have not been able to get into the U.S. and develop a sales base have not benefited from it; they could have been and probably were hurt by it some. So it's a mixed bag - some yes, some no.
Overall, looking at statistics, it looks like it's been favourable. I can't poll every company, but when your export sales go up four times in four years, it's a pretty significant increase.
Mr. Penson: But you still have the benefit of tariff protection, which is gradually being phased down.
Mr. Barbee: Yes.
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Mr. Penson: I guess my question is, as that becomes a so-called level playing field, at that stage do you still feel confident that you'll be able to compete in those areas?
Mr. Barbee: That I'm not sure of, because there's still some protection from the Orient. I'm not in a really good position to give a good answer to that. Some companies will be hurt as that comes off more.
Right now the company's exporting heavily to the U.S., which is the main receiver of the domestic export. It's just amazing how no one else is even close to the U.S. in receiving export product from the apparel industry.
As to how much they'll be hurt, we've done work overseas in Asia, in the Philippines. I've been there on three trips. The wages are increasing in the Orient. They're now having to put in more and more advanced technology.
Eventually you're going to get out of low-wage countries, because to buy from the Orient you have to have a letter of credit. This means it ties up your money before you even make the goods, whereas if you order domestically, you pay 30 to 90 days after you receive it. You use the manufacturer's money. On a letter of credit, you're putting money down ahead of time. You're sure of the quality on domestic production. You're sure of quick response.
Most companies - and I'm in an area here where I'm not really strong - do some import to supplement their product line and then themselves manufacture. It's a mixed bag. I guess they're hedging the bet by developing lines of export expertise to bring in from, say, the Orient, or in some cases, from Bulgaria.
Still, in Winnipeg there's a shortage of 1,000 operators, a situation the federation is trying to help. So they are running pretty much full blast and then importing as well.
The Vice-Chairman (Mr. Volpe): Thank you, Mr. Penson.
I'm going to turn to the government side. I have three speakers there.
I wonder if you'd allow me to abuse the chair for just one more question. I just want to get this on the record.
Mr. Barbee, you indicated that the apparel and textile industry saw a fourfold increase in exports from 1990, I think you said on one occasion, and on another occasion you said four increases.
Mr. Barbee: Both are true. I'll give you a copy of this. I just received it yesterday.
The Vice-Chairman (Mr. Volpe): I'll make it available to all colleagues.
Mr. Barbee: In 1990, the exports were $275 million; in 1991, $346 million; in 1992, $518 million; in 1993, $704 million; and in 1994, right at $1 billion.
The Vice-Chairman (Mr. Volpe): I asked that question because you will recall, of course, that not that long ago people suggested that the liberalization of trade was going to sound the death-knell of the apparel industry in Canada. I see you're smiling at me. It would appear that the opposite has happened.
One, what would account for that, in your estimation? Two, why is there a public perception that banks and government public policy wouldn't support the apparel industry even though those statistics suggest, at least from an export point of view, that they're doing quite well?
Mr. Barbee: You make it be helped and heard at the same time - but I'm not the expert in this area.
Canadian apparel manufacturers are very aggressive in their selling. They've had to be to survive in the Canadian market. They learned the term ``quick response'' before the U.S. really knew what it meant, because in Canada you have a very mixed market. Manufacturers have to make a lot of different products to satisfy the needs of a small population. They learned to make different products and learned quick response very early, whereas the U.S. came along afterwards.
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So the Canadian industry is very aggressive in going after the sales. They can also be heard through imports from Asia. Several years ago it looked as if it would be a disaster, but I don't think it's a disaster yet. I don't want to be the expert.
But you can export and still be hurt. I'm not playing both sides of the fence, but some companies will be hurt by imports from Asia. If you make gloves, say, the glove industry has pretty much been wiped out. But the companies that make outer wear have done quite well: shirts.... It depends on your products too. But some companies have been hurt pretty badly. The companies that export are benefiting very nicely.
The Vice-Chairman (Mr. Volpe): Mr. Peric.
Mr. Peric (Cambridge): Mr. Peyrow, you mentioned in your explanation that Canadian officials here are fully encouraging Canadian companies to export to Iran. At the same time EDC is somehow reluctant because of the insurance. Are you aware of any companies that are dealing in business with Iran on their own, without EDC help?
Mr. Peyrow: The smaller projects don't require EDC support. If you can -
Mr. Peric: What is small? Up to what?
Mr. Peyrow: Anything below $5 million I would say is a smaller project. In the project we are involved with you're talking about $100 million just to mobilize, with the equipment and taking stuff from Canada into Iran. Without EDC insurance it's not possible.
There are companies that are operating in Iran and are quite successful, but they are on a smaller scale, not a large scale.
Mr. Peric: Are any other companies in need of EDC's support outside of Iran, such as the Middle East?
Mr. Peyrow: Yes. EDC'S position is that they treat each country differently. In Kuwait, the United Arab Emirates, Saudi Arabia, countries like that in the Persian Gulf, the EDC would insure at any time. In northern Africa some countries they do and some countries they don't. It all depends on the country.
We feel Iran is stable enough for the EDC to participate.
Mr. Peric: Canadian officials in Iran probably feel the same way.
Mr. Peyrow: Yes.
Mr. Peric: I have experience with other countries in Europe, particularly with Croatia. Many Canadian companies have approached me for help and support. They would create jobs here in Canada and export special building materials to Croatia today and tomorrow probably to Bosnia, but beyond that to southeastern Europe as well. The answer is the same. They want insurance. They want to be reassured that they get money back and that the companies and banks over there especially would guarantee the loans.
I'm really disturbed that our officials abroad are encouraging companies - ``come, be more aggressive'' - at the same time as bureaucrats at home are sitting back and just excusing themselves.
I heard that last year in Taiwan as well, that our companies are willing to come and export but somehow the government side is a bit passive. Especially since we have the parliamentary secretary here and he is very well aware of what is going on in eastern Europe, I hope this committee will send a strong message to both ministers.
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The Vice-Chairman (Mr. Volpe): Thank you. You are not really looking for a comment by either of our two witnesses, are you?
Mr. Peric: No.
The Vice-Chairman (Mr. Volpe): The committee has heard your observation.
Mr. Flis.
Mr. Flis (Parkdale - High Park): Thank you, Mr. Chairman.
Mr. Barbee, you mentioned in your opening remarks what a great honour it is to speak before this committee. It is our honour to have you gentlemen here to share your expertise with us.
We have a double honour this morning, Mr. Chairman. We have distinguished visitors from Russia studying our parliamentary system. We welcome them to this committee.
Mr. Barbee, you mentioned that one of the largest trade fairs in Atlanta is not of much help to Canadian exporters or potential exporters. If a trade fair of that magnitude is of little assistance, I think this committee wants to know why. Should we deploy those resources elsewhere in helping the small and medium-sized businesses to export?
Mr. Barbee: I was reluctant to put that comment in my brief because I don't like to point the finger at someone. It could be an isolated experience.
It's pretty common knowledge among my peers that the department has not been of any help, including government personnel. Thirty thousand people attend this seminar. It's the largest trade show in North America. Probably about 4,000 or 5,000 Canadians go to the show. There are a machinery show and a fabric show for the textile and apparel industries.
Over the years I have been invited to present some seminars at the consulate, which is across the street from the convention centre in Atlanta. They have good potential but they were usually advertised only the week before and few people knew about it. The attendance was quite low. This year nothing was done.
Are you familiar with the Canadian consulate in Atlanta? It's in the CNN Tower which is less than a city block from the convention centre so it's quite convenient. We all thought it would be an excellent place for good coverage and it hasn't occurred. That's the only consulate office I've had dealings with. The people are very nice but I don't think it's a good return on the investment.
Mr. Flis: Where would you recommend that investment be redeployed?
Mr. Barbee: They might become more effective if they were....
You see, we develop our own contacts through the network I described earlier. In our case we don't really need a government official to help find potential projects. We can do that ourselves. A little bit of seed money helps. If the office were there we could meet somebody there, but we don't really need that. We sell a service so we go to the client's facility.
I'd rather see it go back into Industry Canada with the various PEMD programs that help. I know a lot of people benefit from PEMD by going to trade shows around the country. The programs are repayable. If you sell business you have to pay it back. If you don't sell, you don't have to pay it back. It's obviously to your benefit to try to sell business, and if you pay it back that means you've sold business.
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Personally I would rather see it put in the PEMD programs. It may be that others would see more use in the office.
Mr. Flis: To Mr. Peyrow, I would like to pick up where Mr. Peric left off, because you do state that the Canadian officials working in Iran are encouraging Canadian business to move in there, that now is the optimum time. Yet there are people in Ottawa, such as the people in EDC, recommending the opposite. My question would be: who is more accurately attuned as far as the business potentials and opportunities are concerned, measured also against political risks?
If China is building nuclear reactors in Iran, Canada has that same expertise. But if Iran refuses to sign certain guarantees that the technology will not be used for other purposes - maybe the EDC people are more attuned to that sort of thing than the people working in Iran. We see this in many countries, where people working in that country are saying ``come on out, you should be here''. Examples are Kazakhstan, Azerbaijan, and the former Yugoslavia - there is great potential there. There are projects that the World Bank is going to fund, and that the European Bank for Reconstruction and Development is going to fund. Yet Canadians are losing out because of these double messages we're getting because of uncertainties.
With your expertise and experience on the ground, maybe you could help the committee. Who is more accurate? Who does the business community listen to? How do our foreign political objectives interfere with the promotion of trade?
Mr. Peyrow: To answer the first part of your question, I would say the Canadian embassy in Iran is more aware of what is happening in Iran than Ottawa is. I don't know whether there is a lack of communication between the two areas. But we know for a fact that the Canadian embassies over there are encouraging Canadian companies to do business.
As for political situations, I don't know whether China is building a nuclear reactor in Iran or not. I know for a fact that most of the American allies, most of the European and Far Eastern countries, are in Iran and doing good business there. There are definitely much more threatening areas in countries other than Iran. I'm not aware of any political problem, other than what has happened in the past.
Right now because of the eight-year war that Iran had with Iraq, they are 100% geared up to recuperate and reconstruct after all the damages and destruction that they experienced during those eight years. The atmosphere is just prime. Right now they are inviting everybody to come and do business. In our case, because of the calibre of this particular project, it's going to be government to government - we are dealing directly with the Iranian government. As far as the payback is concerned, it will be based on the production-sharing arrangements. We are secure in that sense. It's just the initial mobilization that we are looking for.
I believe the situation in Iran is excellent for doing business. I think it's a big mistake to look at it as a political threat, or think of our situation in relation to the U.S. Canada is an independent country and we have to approach the issues independently.
Look at the European countries, for instance. European countries are allies of the United States. Yet they have established offices, and their embassies are very, very aggressive. By that I mean they go out there and talk to the decision-makers in the private sector and government on an ongoing basis, trying to put the good word and trying to promote their country's business in that region.
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The Vice-Chairman (Mr. Volpe): We'll go to Mr. Mills.
Mr. Mills: I guess between Mr. Flis and me, we are trying to get a score sheet put together from each of our witnesses as to the effectiveness of our foreign affairs trade offices. Certainly -
The Vice-Chairman (Mr. Volpe): Are you suggesting cooperating with the opposition?
Mr. Mills: No. Maybe Mr. Flis and I are cooperating to try to come up with a score sheet.
Anyway, I think we've heard where each of you would rate that involvement, and that's very helpful.
Mr. Peyrow, I've been concerned for some time about the occasion when we hosted the speaker and five members of the Kuwaiti parliament. Only three members of our committee were there.Dr. Patry would probably remember this the best.
Our line of questioning to these people was: Canadians helped you put out the fires, and when it came to the restructuring, we pretty well lost out on every single rebuilding contract; Canadian business played almost no role. We asked them why that had happened. We were there, we were on the front line fighting the fires but then we got nothing in terms of ongoing contracts.
I think they put it - would you agree, Bernard? - that Canadians just aren't aggressive enough, that though we were there and can do the job and have the technology, our businesses just got outmanoeuvred by the Americans.
I wonder if you could comment on this lack of aggressiveness and what we could do to change that. You're very familiar with that part of the world. Is that still the case? Were they exaggerating it? What's your feeling about that?
Mr. Peyrow: During the time when all the different countries were in Iraq trying to put the fires out, Canadian companies were the most aggressive and most professional.
In Ahmadi, which is an oil town just outside of Kuwait, Red Flame and Safety Boss had the biggest facilities in that area. We were the pioneers. We were the ones who gave them the proper information as to how long this was going to take - not three years, as everybody else was saying. So they were going to benefit from the situation - it was going to take a much shorter time to do the work. We did it professionally, and at the end we didn't get anything out of it.
Our jet fighters were out there in the Persian Gulf during the war, supporting the Kuwaitis. I would say Canadian companies had a much stronger position in Kuwait before the war than they do now.
It's incredible. It has changed 100%. If you go to any department in KOC, which is their national oil company, you will notice that all their quality assurance people, their advisers - everybody is American. Of course they are advising the Kuwaiti government to hire American companies over the Canadian companies.
So we are left in the outfield, not doing much. When we talked to the Canadian embassy over there, they said they thought it wasn't their position to do anything, which I think is 100% their position. I think they are the ones who should remind the Kuwaiti government that it was Canadians who played a very major role in helping them put out the fire. Without that kind of support, I think Canadian companies have a very difficult time doing business in Kuwait.
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Mr. Mills: Mr. Barbee, you made reference to the tariffs and so on. I wonder as well, since 75% of your business is in the textile area.... I don't really want to ask you this question, but in passing I want your comment on the effect of the referendum on the stability of that whole industry. It must be a very tense time for that business. That's sort of a question.
My main question comes down to CIDA. You make reference in your presentation to having tried to make some contacts within CIDA. I wonder if you could just elaborate on what CIDA could do for you in terms of CIDA's involvement in your type of business.
Mr. Barbee: CIDA is a very big organization and I have met with them several times. I was there last night and one of the officials actually met with me from 5 p.m. to 6 p.m. In talking about the Ukrainian potential project, he said: ``Gene, I just don't know who to call''. He has a book with names, departments. He is a career CIDA officer. He said he could probably make three or four calls and narrow it down. So it's hard to find out just who to go to.
What I'm looking for - and I have the letter here - is some kind of support to get over to explore this potential project. I think we could do a lot of business there. Winnipeg has actually a very strong Ukrainian community. A friend of mine is a professor in engineering over in the Ukraine setting up one of their technical schools. He's on a sabbatical from the U of M. I think we have the contacts to do a lot of work, but it's a little more speculative than I want to invest in to go over there for three weeks and go from door to door looking at factories to try to nail down a project. What I was looking for is something like a PEMD, some assistance to help explore this.
It's a wise investment, but I was told originally that you needed a Canadian company to co-sponsor it. Eventually, that is what you would expect, but a Canadian company is not going to sponsor a study of the Ukrainian textile industry. So I was really looking, and I am still. No door has been shut on me; it's just that I'm trying to find which door to go through to see if there is assistance to help with what I call R and D. But it's an exploratory trip.
Mr. Mills: CIDA has a problem with bureaucracy. You're not the first one to make reference to that. Thank you.
The Vice-Chairman (Mr. Volpe): Mr. Mills, we're in that five-minute section, so I'm going back and forth. I have three other speakers, Mr. Lastewka, then Mr. Rocheleau.
Mr. Flis: I have a point of order, if I can put it on the record, Mr. Chairman. I think it has to be understood that the technical assistance programs for Ukraine and former Soviet Union countries have been shifted to CIDA. That was one of the recommendations made by this committee. So they are in that transition period, just to be fair to CIDA.
The Vice-Chairman (Mr. Volpe): Thank you, Mr. Flis.
Mr. Lastewka.
Mr. Lastewka (St. Catharines): Thank you, Mr. Chairman.
I wanted to ask both witnesses some questions. Mr. Peyrow, you mentioned that excessive government paperwork and pre-qualifications is a problem in Canada. Could you give me some examples and compare them with the U.S., France, Germany or Japan?
Mr. Peyrow: I'm not familiar with how they do their paperwork in other countries. But in Canada, for instance, even with the PEMD program, sometimes there is not enough time to do the paperwork. There is a trade show, for instance, coming up within a matter of a month or so. The paperwork might take two to three months to complete. These are some of the examples we have experienced, but I'm not familiar with the other countries and how they do their paperwork.
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Mr. Lastewka: How did you determine that it was excessive? Compared with what?
Mr. Peyrow: I don't know - excessive as far as we are concerned. There is no need for us to wait for two months. We don't compare it with other countries; we compare it with our own situation. Sometimes the trade shows and information come in a short time and you have to make a decision and get mobilized to attend. There's not enough time to get government support.
Mr. Lastewka: Mr. Barbee, you mentioned you had some good assistance from PEMD. Could you once again review what specific assistance helped you the most?
Mr. Barbee: Yes. I was just listening to his comments. The U.S. has no programs like PEMD to help, or like CIDA, to my knowledge. We're unique in that sense, in that there are some incentive programs to help us develop business in other countries.
The U.S. has some through the U.S. aid department. When Peat Marwick called us to go to Bulgaria, they were operating through a grant of assistance to the U.S. aid department. So they do have a program. I'll backtrack on that a little.
We use the trade show. We have a good working relationship with Industry Canada, both the Ottawa office and the Winnipeg office, and we've participated in several trade shows for which they would pay 50% of the air fare, the booth rental, and the cost of setting up a booth, which could be a total of $10,000, of which they're paying 50%.
The seminars we have found very helpful. We've presented quite a few seminars across the U.S. that have actually generated a lot of business and network. They will pay some for the development of the literature and air fare to present seminars in the U.S. You don't want to present a seminar, because you're paying more of it than they are. You want to present a seminar only if you're going to get good attendance, which we have, and which has resulted in some good exposure for us.
Those two are where PEMD has been a big help.
Mr. Lastewka: You mentioned the number of times you know what you want to do, you know the people you want to contact, and you needed some type of R and D funding and seed money. Is this where now we're getting into a situation where the larger companies, which could afford dollars to do marketing research or to follow specific leads and make contacts and so forth...? For the smaller companies that's a big-dollar item. It's not a big-dollar item for a big company such as General Motors, Ford, Northern Telecom, or Lavalin.
What I hear you saying is...and I don't think it's R and D money, it's promotional money, it's marketing money, it's small business assistance money, such as the PEMD, to assist the small and medium-size businesses to go into countries and get started.
You mentioned a couple of times that paying it back, if I'm able to sell, is okay. Where a small or medium-size company runs into a problem is if they did the promotion and did the marketing and it just wasn't their connection; that dollar item would still be a large-dollar item for a small or medium-size company. Did I read you correctly?
Mr. Barbee: Yes, you summed it up quite well. That's it.
Mr. Lastewka: I being an industrial engineer, we have some common language. It's a foreign language.
The Vice-Chairman (Mr. Volpe): Looking for a freebee.
Mr. Lastewka: This is the quagmire we get into. On the one hand we have the chamber of commerce, boards of trades, and people such as Bob Mills saying government should be out of business, should get away from business. But then there is some requirement for assistance to get started and make those early connections and make it happen.
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Mr. Barbee: The U.S. is doing it with the aid department in the big projects they're funding. That's equivalent to our CIDA, I think. They are funding. Peat Marwick is not a small company, nor is Price Waterhouse, and they worked on big projects in Bulgaria and Lithuania that I know are partially covered by these grants.
Mr. Lastewka: I'm familiar with the ones in Bulgaria. My understanding is that that assistance was for them to help the small business, though. Is that right?
Mr. Barbee: Yes.
Mr. Lastewka: So you're right. They just kind of put a bunch of companies together and hid it under Peat Marwick as an umbrella.
The Vice-Chairman (Mr. Volpe): Mr. Jackson is next.
Mr. Jackson (Bruce - Grey): I'm very interested in the growth and development of Canada as we move into this new paradigm shift. I think that traditionally business types, whether they were small or large, were always helpful to the government. After recessions, they would reinvest and allow people to work. Because we've had a paradigm shift, I think everybody is perplexed.
I note with interest that we have a problem. Canada is a leader in the world in a lot of ways. We're the best country in the world to live in, and so on. We're always in these countries to help with the law and order.
My favourite story is that we're like the guy who comes around to the gal. We're the Ivy League type: we're clean, we help her mow the lawn and do all her chores, and so on. When she's about to get married, some ugly American comes along with a big ugly beard and picks her up and takes off with her.
My first observation is that in the world we're in, places such as Taiwan have come from a Third-World-country position into an extremely competitive mode. When you go there, of course, you have to be careful not to get shanghaied, because you go with your technology and, whether it's on computer disk or what have you, these things are easily available.
I understand that people who go to China, for instance, will see a very old-fashioned factory where people are really labouring, and then in the corner there'll be boxes. They ask what's in the boxes. They are told, ``This is the latest technology. Once we stop this production run, we're going to go into that''. So the environment is extremely tough and competitive.
So what's the answer for Canada? I'm very interested in us getting our people working and getting our industries moving. Tactically, we have to have strategic exports. Notwithstanding the piece of equipment - you say that there's a laser for cutting cloth - there are some dynamics in there that they can't copy and that they'll have to buy from us.
As well, in places such as Kuwait, for instance, where we've had good people for fighting fires or we're good at removing land mines or what have you, where we have that type of technology, perhaps there was no strategy in place through our embassies, and with our industries, in order to make sure of what the Canadians would do once the war was over. That's the problem.
How can we help you with those strategic exports? Government has to be involved, because there's a total picture. We can't come out of it completely.
The things we did in the past worked well. There's no question that they need rearranging, whether it's in CIDA or what have you. We're not saying that we're going to get out of it completely, because you've said that you can't get in without the embassy. They know the contacts and they can get you in. You can go there and spend six years, but you'd never get in the bureaucracy tent without the embassy's help.
What I want to know from you, in order to help us as we develop this strategy, is, number one, how we can help you with your strategic exports. Some of that is R and D and so on. The other one is how you can help us by providing some more of those jobs for people. I'm very interested in those two areas.
Mr. Barbee: Again, we develop our own contacts through a network that was developed over the years. We actually developed a network both from Canada and in the U.S. In the jobs outside the U.S., the projects, we have a spin-off from our contacts with American companies. So a lot of times we piggyback on their expertise, but not always.
The Brazilian job was a result of going to a trade show and meeting the owner of the company. We negotiated to go to Brazil to do work for his company. However, a lot of our work has just been plugged into the network in the U.S., which has more people and more exposure than we can get. We're not that many.
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We have an expertise, like the fire-fighters. We have an expertise such that, when that need develops, they think about us as being specialists in a fairly restricted area. There are other people who can do it, but if we get our name in front of somebody else's, they will then call us.
We do a lot of it through networking, both in Canada and with U.S. companies, and not just on our own.
Mr. Jackson: You do a lot of piggybacking, which is a strategic type of action. You have a resource. You perfect it, and you keep your contacts on the ground so you can move in when they need help.
Mr. Barbee: We do a lot of contacting or staying in touch with the companies we network with. We send them mailers and promotional literature just to keep our name in front of them. We call them periodically. As soon as the need arises, they look at their list of resources that can do that and hopefully our name comes up first.
Mr. Jackson: My question is how could we do that better? Obviously, the reason you're in business is because you have that kind of mechanism. But is there anything we can do to help. I don't mean throwing money at it; I'm wondering how we could help strategically.
Mr. Barbee: Throwing money at it obviously doesn't solve it. It does provide some seed money to improve your network. Your network is one of the ways.
We did some work in the Philippines. The Canadian embassy in Manila was quite helpful at the time. We received some excellent assistance from the Canadian embassy there. They were available when we needed help to interview a lot of people for a client. They were quite helpful in that sense. I can't answer it any more, as I don't know -
Mr. Jackson: How can we help you put some more Canadians to work strategically?
Mr. Peyrow: I will summarize it in three words: a ``more aggressive posture'' by the government. From my experience, we also have good contacts in the countries we are involved with. We have offices and contacts in the government, as well as knowing some of the decision-makers in the private sectors.
But I look at other Canadian companies who come to the region and want to do business. They have a difficult time doing business.
I realize that our foreign missions in different countries, such as the Middle East, are not as aggressive as they should be. It fluctuates. Maybe for a period of two to three years, there's a particular person in the commercial attaché section of the embassy who is very aggressive. He goes to the private sector, as well as the government, and talks to them on an ongoing basis. He knows what's going on, what projects are coming up, what they need, and how we can help based on knowledge he has from the Canadian companies.
It works really well. But then after that there's no consistency per se. It fluctuates. It's all at the mercy of the person who is doing the job versus the system, which is what should work.
Mr. Jackson: First, then, Mr. Chairman, what I'm hearing is that we should keep our guys hungry and aggressive, notwithstanding the fact that we rotate people in these postings. We are sensitized that this is exactly how they'll stay.
Mr. Lastewka: I thought your last remark was absolutely excellent. We need to find a secret on the system that can be used, and then train the people to apply that system from what we've learned and what we're going to learn from the various interests.
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One of the questions that has always concerned me from this standpoint is about the U.S., which has many multinational organizations and enterprises and does a lot of work around the world, getting into new markets and so forth. Then they have their own network of primary and secondary suppliers in the U.S., which allows their small and medium-sized businesses to get business.
In Canada we are limited in the companies that are really, truly Canadian - that aren't directed by head offices in Detroit, Cleveland, Toledo or New York. Have you experienced this type of problem?
Mr. Barbee: A company in Montreal, Ideal Equipment Company Ltd., is one of the primary makers of CAD/CAM equipment for the apparel industry. All your shirt pockets are set with this automatic equipment, probably. About six years ago they moved their manufacturing to Mexico and their sales office to Charlotte, North Carolina. They still have their R and D centre in Montreal to better compete. They made that decision themselves. That was a wholly owned Canadian company.
The laser-cutting company I mentioned is owned and run by Dr. Roger Ball. It's Canadian-owned. He markets heavily in the U.S. and has sold quite a few units. Most of the equipment is probably tied in with U.S. manufacturers, because they have more resources to develop some of this equipment, but in the textile and the apparel industry there's not that much CAD/CAM equipment or high-technology equipment made. It's made in either the U.S. or Japan or Europe. There's not that much made here that I'm really familiar with.
Mr. Lastewka: Is there as much of a tie-in with large corporations and small and medium-sized businesses in Canada as there is in the U.S.?
I give the example you mentioned of the textile industry in the Ukraine and so forth. Ernst & Young is doing a lot of work there. Are you tied in with Ernst & Young in any way?
Mr. Barbee: No.
The Canadian accounting consulting companies don't bring in outside expertise like the American companies, surprisingly enough. We have had very few references, although we've worked with Coopers & Lybrand on some projects.
Generally we initiated a contact because we needed the cross-Canada resources they have, but they tend not to call us in, or at least they haven't with us. We know a lot of the people through the Association of Management Consultants, but we've had more references and more involvement with the U.S. companies, for some reason. I'm not sure why.
Mr. Lastewka: That's my question. I'm quite familiar with the U.S. system, having worked for a large U.S. company, but I don't see our Canadian companies networking and working with Canadian small and medium-sized businesses comparatively.
Mr. Barbee: No, they don't. You're right.
Mr. Lastewka: I just wrote Ernst & Young only because I know they're doing work in Kiev and Donetsk exactly along the line that you're trying to get into.
Mr. Barbee: You see, they tend not to call in outside expertise, where again Peat Marwick and Price Waterhouse in Washington, D.C., have. We've had Price Waterhouse in Los Angeles incorporate us in a tender. They didn't receive it, but had they won the project, we would have been involved with them.
I don't know why there's the difference. I know people with Ernst & Young and all the accounting companies and know them well; it's just they don't bring in outside expertise.
Mr. Lastewka: They don't bring in outside Canadian expertise?
Mr. Barbee: Correct.
Mr. Lastewka: But they'll bring in outside U.S. expertise?
Mr. Barbee: Well, I don't know if the Canadian accounting consulting companies bring in U.S. expertise. I don't think they bring in anyone other than their own staff. There's more of a tendency to bring in their own staff, not bring in Americans or Canadians. I may have limited exposure but I haven't seen it.
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The Vice-Chairman (Mr. Volpe): Thank you.
Mr. Barbee, Mr. Peyrow, thank you very much for coming to and for preparing yourself for this committee. I'm sure that both your presentations and your responses will help the committee in its deliberations.
Committee members, I'm going to ask you to stay behind for a few minutes. We'll come back to the business of the committee as our guests make their way out
Our first item of business is an addition to our agenda for tomorrow. Really the only time we can meet is tomorrow, Wednesday, October 4, between 4 p.m. and 5 p.m., in this room. We will haveMr. Faisal Husseini, chief negotiator for the Palestinians in the Palestinian-Israeli accord, as a guest. There will be a whole committee meeting here with Mr. Husseini. Notice will go out to everyone, but I.... It's gone already? Great.
I wanted to go over a couple of items with respect to the ongoing business of the committee. I'm going to turn part of this over to Warren Coutts for your input. It's important for us to have some input here, colleagues, so that we can continue either in the directions we have established or so that we can make some adjustments as we go along.
First, you will have noted today that one of our interveners had to cancel out for business commitment reasons. We had one cancellation last week as well, and it's not difficult to notice that we will have some of these taking place because most of our interveners, in fact - if not all of them - come from the business world. They aren't always as flexible as some of the others who have vested interests - not in the negative sense - in being in Ottawa.
Statistics Canada is supposed to send us a report to help the committee. It is not yet available to us, but just as soon as it does become available it will be distributed to all committee members.
As for the other two items, rather than being your voice, I'm just going to ask you to go ahead and do it, Warren.
Mr. Warren Coutts (Committee Researcher): Thank you, Mr. Chairman.
I was just hoping to draw your attention again to the demonstration project that we're trying to get going. We've made a number of arrangements, but it would be helpful if your offices would give us some indication as to whether or not you're going to be able to attend.
Again, this is the project in which we have some outside experts coming to demonstrate on-line research methods - what goes into the types of data people find on-line and how it's done. This is being conducted through the Library of Parliament, so it will also give you a better idea of what exactly they do when they're doing their on-line research for you.
The Vice-Chairman (Mr. Volpe): Maybe we can do that. Can you give an indication to our researchers by tomorrow as to whether or not you're going to attend?
Mr. Lastewka: When is that scheduled for?
Mr. Coutts: October 17, right after the committee hearings. It will go right through and there will be lunch served.
Mr. Lastewka: Until 12:45 p.m.
Mr. Coutts: Until 12:45 p.m. or one o'clock - whenever.
The Vice-Chairman (Mr. Volpe): The clerk is going to call everybody just to make sure, so expect a call from Janice.
Mr. Coutts: The fourth issue I was hoping we could just throw out, somewhat rhetorically possibly, deals with making sure the witnesses meet with your expectations. If we can, we'd like to have any comments you might have about the nature of the hearings, about the witnesses and about the topics that have been discussed so far.
During the course of the summer, I was in contact with either each of the members or with their office staff directly, at least twice in every situation. We've had a number of things go from the chairman's office in a background briefing paper. I'm assuming that because there have been no negative comments so far, you're satisfied with everything. I just want to make sure everything is to your expectations and see if you have any comments on changes you might like to add to what we have so far.
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Mr. Lastewka: I think after this week's timeframe we need to have some scheduled discussion on this. What have we seen? What have we heard? Knowing what we will see going forward, we need to be able to review what additional things we might want to look at. I think it would be good to do that every two or three weeks as we go through the system. Let's schedule a half hour or an hour in advance to do exactly that.
The Vice-Chairman (Mr. Volpe): Are you suggesting we have the entire committee stay to do committee business, or did you want to refer this to the -
Mr. Lastewka: No, I think we should give our viewpoints as a whole.
The Vice-Chairman (Mr. Volpe): Are we looking to do the first one some time next week?
Mr. Lastewka: The week after.
The Vice-Chairman (Mr. Volpe): Oh, sorry. Thank you. I was willing to make an exception and come up here next week.
Mr. Lastewka: Not me.
Mr. Mills: I think we're basically starting to get a pattern here, and that's kind of what we expected. I think it's pretty good to get the feeling of business confirmed in our minds so we really know what their thoughts are.
I feel really good about the seven people we have had. I think we're developing a definite line of what the problems are. After all, that's what this is all about. I feel it has gone really well.
If we were going to hear 50 people, maybe there would be a point of diminishing returns. I guess that's, as Walt says, what we have to keep evaluating. At this point I still think what we're getting is pretty good stuff.
Mr. Flis: Just this morning I saw that Marie has summarized in point form how to remove the obstacles, etc. I found this very helpful.
I like the variety of witnesses coming who do business in different parts of the world. At the end of this process, I hope we will have tapped into the new markets that Canadians aren't in at all. There's a new frontier out there.
Where we are doing business, we want to look at how to increase our exports, and look at these other vehicles such as the big accounting firms and see whether they are incorporating the smaller businesses, etc.
I think we'll hear from the chambers of commerce. I don't think one of them has told us it is actually working through the chamber of commerce, yet the chamber of commerce appears to be doing a lot in helping small business penetration. I think we're on the right track.
The Vice-Chairman (Mr. Volpe): Good. Before we suffer termination by attrition here, let's just agree that we will have the chairman section off a part of a meeting when we come back so we can review some things again.
Mr. Flis: I would suggest, in fairness to all three parties, that if we call the meeting at 9:30 a.m., we start at 9:30 a.m. These are very busy people, and I think we should make every minute count. If we start at 9 a.m. let's hope we can get the message out that we will start then and not at 9:15 a.m. I think the members will come, but if I come at 9 a.m. and the meeting doesn't start until 9:15 a.m., I might as well make another three calls. So I'm wondering if we could stress punctuality for the rest of our meetings.
The Vice-Chairman (Mr. Volpe): Thank you very much.
The meeting is adjourned.