[Recorded by Electronic Apparatus]
Tuesday, April 22, 1997
.1008 
[English]
The Chairman (Mr. Walt Lastewka (St. Catharines, Lib.)): I call this meeting to order. In accordance with the order of reference adopted by the Standing Committee on Industry on Wednesday, October 2, 1996, we are continuing consideration of a conversion of military industries to civilian purposes.
We have a number of witnesses this morning. I understand we're getting some copies made of the briefs. I'd like to welcome the witnesses: Mr. Yves Bélanger from the research group on the military industry, University of Quebec at Montreal; from the CTNU, Pierre Paquette, secretary general; and from La Fédération des travailleurs et des travailleuses du Québec, Henri Massé, secretary general.
I think we've decided to start with the FTQ presentation. We usually allow five to ten minutes for your presentation, and we then have a question-and-answer period with my colleagues from the House of Commons. Please begin.
[Translation]
Mr. Henri Massé (Secretary General, Fédération des travailleurs et des travailleuses du Québec (FTQ)): First, we intend to present a snapshot of our organization, the FTQ, and then ask the CNTU to explain its industry. Mr. Yves Bélanger is here to support the many initiatives that have been undertaken on this issue. Afterwards, we will present the largely identical recommendations of our two organizations.
The FTQ represents 19 of the 50 largest military suppliers operating in Quebec. A delegation representing each of these companies is accompanying us here today. I will only name a few of these companies: CAE Electronics, Canadair, Marconi, Allied-Signal, SNC Industrial Technologies and the 202 Workshop Depot which we will discuss when we present our recommendations.
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This issue is a top priority for us because since 1987, the Quebec defence industry has lost approximately 10,000 production jobs. Within the companies that the FTQ represents, there's been a loss of 30% of all jobs since 1990, a total of 2,573 jobs. These are high quality jobs, well-payed jobs, high-tech jobs, jobs that require a higher degree of training than what is usually found in other industrial sectors.
For example, a CAMAQ (Quebec aerospace labour force adjustment committee) study showed that in this industry, 37.3% of jobs demand university-level training, 25.7% require college level training and far fewer jobs than those found in other sectors require no training at all. To give you a simple illustration of this, we could say that one job in this industry often represents two or three of the new jobs that are created.
The objective of the FTQ is to regain the positions lost in high technology jobs. We are forced to tell you here this morning that our grassroots unions are disappointed with the federal government's low level of involvement in seeking solutions to the erosion of employment in this sector. We are often told that it is not the government's role to intervene. We would like to remind you that in the United States and in Germany in the wake of decreasing defence expenditures, governments have invested significant sums in military conversion programs. Let us take for example Bombardier, in Montreal, which was the target of significant government effort. We see the results. If such efforts were deployed for the rest of the defence industry, we could achieve considerable progress.
Another thing we find quite disturbing is the lack of interest in the defence industry's contribution to the development of Canadian or Quebec society. It is not just the government we are criticizing here, but society as a whole. These companies and their employees play a leading edge role in the development of technology and contribute very actively to the renewal of Canada's economy. In public forums, this industry is often treated as a pariah. We will have to make a collective effort to revamp the image of this industry, which often creates high technology employment and conducts a great deal of research and development that has many applications in all other industries and in civilian society. These are projects and products that were initially developed within the defence industry.
We want more direct and more concrete action in order to convert and diversify the defence industry. Our definition of the defence industry is companies with more than 50% of their production devoted to defence materiel. We fail to understand the absence of a clear policy for the renewal of defence industries, especially since before the last elections, the Liberal Party of Canada had made a clear commitment to supporting the conversion of the military industry.
As we pointed out earlier, certain companies such as Bombardier and Rolls-Royce have been very successful by opting for diversification. However, many others have remained far too dependent on the defence market, and this is where action is urgently needed. It is all the more urgent that if we had some assurance that the decline in the military market had levelled off, we could concentrate solely on regaining the positions lost by our companies. However, forecasts for 1993 to 1999 lead us to anticipate a decrease of 20% in capital expenditures by the Department of National Defence. If a change of course is not undertaken swiftly, we will clearly continue to lose jobs in this sector.
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We also want to point out the fact that the former DIPP program significantly reduced the subsidies that it granted for research and development in Quebec. Research and development grants fell by 49% between 1989 and 1994, from 167 million dollars to 85 million dollars. This was not the only factor involved in the decline in employment in Quebec in this sector, but we do see that it is not simply a coincidence; it is a parallel phenomenon and one of the major causes of the job loss.
We have often been told that Quebec's share in this program had to be reduced because Quebec had the lion's share. I admit that Quebec received a larger proportion of the funds available under this program than the rest of Canada, but if you look at other research programs subsidized by the National Defence Research Centre which benefit from tax credits, you will generally note that Quebec's share is far lower than its relative importance in Canada. This program gave us a few advantages which must be maintained. Will the new Technology Partnerships Canada Program correct the situation? We wonder. The situation should be corrected.
Lastly, I would like to discuss the recovery of the Montreal region and job recovery in Quebec. Everyone is talking about this. It is an extremely topical and important issue. The vast majority of jobs in the firms that we have just discussed are in the Montreal region or at least in the greater Montreal region. Clearly, the decline of our defence production firms has also brought about a significant decline in employment in the Montreal region. This situation must be corrected in order to improve the economic vigour of the Montreal region and ensure constant job creation.
I will now give the floor to Pierre Paquette, Secretary-General of the CNTU, who will describe his organization.
Mr. Pierre Paquette (Secretary-General, Confederation of National Trade Unions (CNTU)): The CNTU, the Confederation of National Trade Unions, represents 250,000 workers in all regions of Quebec and in all sectors, including firms involved in the military industry.
In 1994, Quebec had over 1,300 firms connected with this industry with sales of over 2 billion dollars. Approximately 30 companies were particularly dependent on the military market and are now in an especially vulnerable position. We represent members who work for these firms.
Currently, in Quebec, 23,000 jobs are directly or indirectly related to the defence industry, which represents 18,000 fewer jobs than in 1987. If the forecasts about the evolution of military spending turn out to be accurate, we will lose from 5,000 to 9,000 jobs in the coming years. Clearly, the situation is a dramatic one and requires intervention by the federal government.
Let us point out that we are not calling into question reductions in military spending. I think everyone can only rejoice in the fact that the global situation allows us to reduce such expenditures. However, we do not accept that this reduction is being done on the backs of workers who earn a living in this industry and that of regions and communities that welcomed them in the past.
The federal government has a special responsibility in this matter because it structured this industry through its policies. It promoted a specific culture, a culture that explains in part the difficulties that these firms have in adapting. We are referring, for example, to the highly bureaucratic relationship that exists between the Department of National Defence and these firms, which means that there is a very large clerical, secretarial and engineering staff in relation to the number of production employees. This is therefore a cost plus culture. Thus, the less effective you are, the more profit you make because the profit margin is necessarily added to the cost of production.
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The federal government has a special responsibility which should lead it to take energetic action and assume its specific responsibilities vis-à-vis Quebec, because the programs implemented in the past few years have systematically placed Quebec at a disadvantage, for reasons that have as much to do with the nature of the industry in Quebec and its high level of dependence, which I pointed out earlier, as with the political choices made by the federal government.
Essentially, the government intervened through three types of measures. First, there were equipment purchasing programs. We are aware that in this regard, Quebec was placed at a systematic disadvantage, be it in terms of expenditures made by DND personnel or by the overall budgets spent directly by the government. Thus, as you can read in our brief, even if Quebec has approximately 25% of the population of Canada and pays over 23% of the taxes, it only benefits from 14.1% of expenditures linked to DND personnel. It is only under the heading "equipment purchases" that Quebec benefits from its fair share of federal government spending.
Moreover, the policies set out by the federal government in its last White Paper favoured the purchase of equipment already on the market rather than the production of such equipment in Quebec. We do not feel that with such purchasing programs - of course, Quebec is still entitled to its fair share, since we also pay taxes to Ottawa - we will be in a position to diversify and convert this hard-hit industry.
A second type of measure has been the Defence Industry Productivity Program, the DIPP, which Henry Massé referred to. He pointed out that Quebec's share had continued to decrease until the end of that program. Allow me to point out that this program targeted the high tech sector and placed certain firms at a disadvantage, including shipyards and munitions manufacturing companies.
We represented several thousand workers and three shipyards: Vickers in Montreal, MIL Davie Inc., which has now become MIL Lauzon, and Marine Industries, which has become GEC Alsthom. We have seen jobs bleed away in these three shipyards. Vickers closed its doors in 1989, and everything involving the maritime sector has disappeared. You are undoubtedly aware that in Lévis, there are now approximately 200 workers in the shipyard whereas two years ago, there were over 2000. There has also been a significant decline in jobs at Expro Chemical Products Inc. In addition, we have witnessed other closures: Vittforge, in the early 1990s, and IVI in Valcartier, in the past few years. We have also noted difficulties in other firms where we have a presence, including GEC Alsthom in Tracy, MIL Lauzon and Expro Chemical Products Inc., where, despite significant efforts by the workers, the company continues to be in trouble. That's also the case in McMasterville, at ICI as well as at SNC Industrial Technologies. As you can see, the situation is not rosy. In our case, the DIPP did not fulfil the hopes that had been raised following its implementation.
Up until now, we can't say that the federal government's interventions have been particularly successful. We now have the Defence Industry Research Program and, according to our information, Quebec's share will not surpass 17 or 18%. Once again, we see here an illustration of the systematic problem that I mentioned at the outset.
We feel that there must be a significant change of course that could be plotted by focussing on two strategies. In 1992, the former Minister of National Defence, Marcel Masse, announced one strategy aimed at concentrating the military industry in regions where there was already a critical mass. Half of the large firms that supply products to the Department of National Defence are located in Quebec. That would therefore be a policy that would benefit Quebec. But we do not think that this would be a solution in a context where the reduction in military spending and the decline in the market will continue.
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The second approach that the federal government could adopt would consist in implementing a true industrial conversion and diversification program, perhaps within the framework of the envelope already provided for this in the last program that I mentioned. This is the approach we would advocate, namely the implementation of a conversion process. What does this involve? It's simply a process that aims at reducing a firm's dependence on the military market by increasing its civilian or commercial production. This is what was attempted in many of our companies, particularly Expro and MIL Lauzon. These experiences have enabled us to identify the conditions necessary for success in this conversion process.
Let me list the most important ones. First, you have to be able to identify a diversification product compatible with the basic skills of the workers and likely to elicit consensus within the firm; implement an adaptation strategy based on training and the development of a formula that will lead to greater productivity, while respecting individuals; change internal administrative regulations - I mentioned these problems earlier - as well as accounting and work organization policies that create a barrier to productivity and to a move toward commercial and civilian production; make use of the strengths of the firm and find new partnerships in order to reinforce Quebec's industrial network; improve the planning process in order to find a medium and long-term vision within the firm; obtain sufficient funding for research and development in order to market the diversification product; and rapidly acquire a knowledge of the marketing techniques required in the commercial market.
As you can see, if conversion is approached in an adequate way, it can lead to successful results. Nevertheless, these firms needs government's support. As I stated at the outset, the federal government has a specific responsibility with regard to the difficulties experienced in this industry. That's why the FTQ and the CNTU are recommending the establishment of a conversion or diversification fund for military plants, a specific fund earmarked for the conversion and diversification of plants and defence firm divisions within Quebec, to be taken from the Technology Partnerships Canada Program budget. This fund would be in the form of a budget envelope reserved for diversification of defence firms in the commercial sector and would give somewhat more substance to the conversion segment already included in the Technology Partnership Canada Program. The fund would also provide financial support to the regions and sub-regions that continue to be confronted with major unemployment problems following the loss of their military market and that wish to diversify their manufacturing industry. Henri Massé spoke of the Montreal region, but we could also mention Sorel, Valleyfield and Saint-Jean, which are also facing hardships related to the problems of this industry.
Under our proposal, this fund would have at its disposal a single non-renewable envelope of $55 million for five years. Given the number of jobs at stake, this is quite a modest amount, except for the first segment, which I will present. It would be used to finance 50% of the projects developed by the firms, with the other 50% provided by the firm itself or other partners. The following activities could be covered by this fund: provide information on the defence market and establish a techno-watch oriented toward diversification opportunities - we have identified the amounts that would allow for the implementation of these different activities - ; finance feasibility studies, market analyses and technical assistance projects; support research and development activities that specifically target conversion and diversification; and help reequip eligible plants and divisions.
As for eligibility, the fund would be available to business plants and divisions whose military sales represented at least 50% of revenues in 1994, to the most vulnerable companies, the ones that rely the most on the defence market, to companies that had to lay off employees because of the decline in the military market, to defence enterprises in the naval, munitions, rolling stock, electronic and aerospace sectors, and to regions and sub-regions affected by job losses in the military sector, in order to help them formulate diversification plans for their regional manufacturing industry.
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I now invite Mr. Massé to present the second part of our proposal.
Mr. Massé: We would like to have an issue table specifically for the defence sector, that could be in the form of tables based on the Labour Force Adjustment Committee format, the LFACs. We think that is a very important recommendation. It is important that those discussing defence matters really know what is going on. Unions affiliated with the FTQ, local unions, the grassroots unions in each of those firms as well as those of the CSN have invested a lot of energy and human and financial resources in all this. Our representatives and local members want their businesses to survive and they are working hard towards that. They are trying to come up with all sorts of ideas, but occasionally, we need a good round table so that we can sit down not only with the employer, but also with the responsible levels of government, and we feel we have some levers to help us go ahead with some projects. Otherwise, we get the feeling we are getting nowhere, and cannot get ahead. It is therefore very important.
The group would advise the government on how to allocate the funds Pierre was referring to earlier. It would recruit financial partners who could help increase the funding of the conversion and diversification. By the way, the FTQ Fonds de solidarité and probably that of the CSN, who have experience in this area, could work on coming up with better, more specific projects. The group would ensure there were links between the various programs that could help with conversion and diversification, and would also ensure that the projects help create new jobs or maintain existing ones. It would also ensure that the projects submitted would help modernize Quebec's economy.
This approach has a future. We really have to establish some partnerships and we really need support from the various levels of government to do so.
Our first recommendation would be to support the 202 Workshop Depot in Montreal. It is nearly the biggest and most important machine shop. We know it is often being reviewed. There are all sorts of projects in the air. It is important to keep the vocation and mission of the 202 Workshop Depot, which has many jobs that are directly related to defence, but also generates a number of indirectly related jobs in the Montreal region. If its vocation were to change, it would certainly hurt employment in the Montreal region.
Yves Bélanger will now talk about what has been done in the past and about the numerous measures we and governments have taken. He will give you a quick overview.
Mr. Yves Bélanger (Research Group on the Military Industry, Department of Political Science, Université du Québec à Montréal): I will be much more concise. Thank you for inviting me. Unfortunately, I received your invitation quite late, so I was not able to prepare a brief. If you wish, in the next few days, I could certainly send you some documents on the topic I am about to discuss.
With a little assistance, I was able to find the recommendations tabled in 1992 by the Sub-Committee on Arms Export of the Standing Committee on External Affairs and International Trade. That committee had identified the major issues surrounding the conversion and diversification of the defence industry. I would like to remind you of a few of them in order to give you some background, and then go over those issues.
First of all, it is clear when reading that document that the problems related specifically to the defence market had been clearly identified. So what you have just heard is nothing new for the institution you represent. More specifically, the problems related to administrative procedures, awarding of contracts and the industry's culture. The complexity of diversifying the defence industry was also highlighted. I think those problems are well known.
The committee also got a very clear grasp of the issues surrounding research and development in the defence sector. Particular attention had been paid to the choices government had made for industrial development and regional development. I think they had understood that to ensure active and effective interaction for the conversion, you had to intervene at the local level.
It was also recognized that the conversion assistance provided in other countries could have quite a devastating effect on Canada's competitive position internationally.
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A lot of Canadian firms in the aeronautical and electronic sector, for instance, could tell you today that some of their competitors became modernized under the American conversion programs. They now have a lot of trouble competing with those firms. We could discuss that further if you like.
So, the committee first concluded that more diversification was essential and then that research and development activities for trade had to be prioritized and research and development assistance had to be used for conversion and diversification. It was suggested that the Defence Industry Productivity Program be changed. I think some progress has been made by establishing the Technology Partnerships Canada Program.
The committee also concluded that local intervention was required and suggested that conversion committees be established. I'm sure it will come as no surprise to you that the union partners who are here today would want to talk to you about such a committee. The committee also concluded that it would be a good idea to have an information centre on diversification and conversion.
Obviously, some slight alterations are being suggested this morning because the situation has changed, but it is surprising that we're still talking about the same things as in 1992. A number of elements are being looked at from a different angle, but the proposals before you, although a little more specific, are basically on the same issues, the same questions and the same problems.
Personally, I am astounded at how little the government has done, aside from the aeronautics industry which, in any case, is still riding the tide of the 1970s and 1980s. Very little has been done to follow through on the committee's recommendations.
The technology Partnerships Program does stipulate that to be eligible, the funds must be used for conversion of the defence industry, but it has obviously had very little impact on Quebec businesses, especially those not involved in aerospace. We could discuss that further, but that seems to me to be a very basic requirement.
How do you explain what is happening? One could find all sorts of reasons. One could develop arguments that would probably turn into a 45-hour course, but I want to spare you that. I personally think it is mostly linked to the fact that firms - and in fact, this is in the committee's document - said they objected to obtrusive government intervention aimed at encouraging conversion and said they would adapt on their own.
We've seen the results of that adjustment over the past few years. They can be summarized in a few words: streamlining and lay-offs. Sure, there may have been a few breakthroughs on the export markets, but you probably know better than I do what current defence exports are, in a very competitive industry. The latest figures show that Canadian exports are declining. In fact, our exports depend on just a handful of contracts. As soon as those contracts have ended, exports will probably drop back to a fairly low level.
On the other hand, it is true that there are technological transfers in aerospace, from the military to the civilian sector, but they are very limited if you compare them to what is happening right now in the United States or in France. The results are disappointing. And yet, there are very fundamental problems.
In my view, the government's commitment under the Technology Partnerships Canada Program is not clear enough, not public enough, not tangible enough, not tailored enough, especially not tailored. In any case, that is the way it strikes me. I have spent 15 or so years working with defence firms. What strikes me is that each case is unique. It is very difficult to establish platforms or approaches that can apply universally to all those firms.
We need ongoing support to do feasibility studies in certain areas. In other areas, we need major marketing assistance, because a lot of firms do not know how to market civilian products. Their expertise is in the defence sector. Some firms need help with the adjustment, because of their culture, because of the way they operate and because of DND requirements, which may be perfectly legitimate.
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I think it is time to stop the rhetoric and allocate a few more resources to the conversion. Right now, there are too many firms, some of which are represented here in this room, that have projects in mind, but that clearly lack the tools to implement them. Thank you.
[English]
The Chairman: Thank you very much for your presentations. We'll start off questioning with Mr. Ménard.
[Translation]
Mr. Réal Ménard (Hochelaga - Maisonneuve, B.Q.): Mr. Chairman, I have been anxiously awaiting this day. Since the beginning of our work, I have been very much looking forward to having the CNTU and the FTQ at the same table as Professor Bélanger. They are the three experts in Quebec. I will start by asking you three questions.
First of all, there is some bias in this Parliament and I will tell you exactly how it works. I think it is very widespread and may even exist within the Industry Department and especially the Department of National Defence. When the topic of conversion is broached, we are often told that firms that had to convert or diversify - people don't always make the distinction between the two - have done so already, that those who were able to do so have. Why help those who haven't? I am just giving you an idea of the negative bias out there and I would like you to show us that that is not the case, that there are firms that have projects and who need help and that the conversion process will not occur unless the public sector drives it.
Secondly, we heard from the Deputy Minister of National Defence. I think I sent you a copy of the minutes of our meeting with him; if not, we can send one to you. He was somewhat of the same view. We are to meet with him again, but I would like you to tell us very clearly why, in your view, the Technology Partnerships Canada Program has not been adjusted. When that question is raised with the government, we are told that a vehicle exists already. Strictly speaking, when you read the press releases that were issued when the Technology Partnerships Canada Program was announced, you can see that there were funds for the conversion, that the aeronautical industry can apply for them and that projects can be supported.
When the deputy minister appeared before us, in February or March, he told me that three firms had submitted projects. So, for all intents and purposes, the Technology Partnerships Canada Program is hardly being used.
Lastly, could Professor Bélanger tell us about how much other countries do to help with the conversion? France and the United States were mentioned. If you could give the committee specific examples, it would be very helpful.
Mr. Bélanger: I will answer the third question a little later, the one that was for me, but I would first like to react to Mr. Ménard's very first question.
Some firms have indeed diversified, but it is interesting to see how they have done so. One of the firms, in fact, is well recognized internationally: the French and Germans are very impressed when we tell them about Bombardier and that in the 60s, 70% of its activities were in the defence sector, whereas now, only 20 or 25% are.
How was that made possible? You know, as I do, that it was essentially thanks to government support. A lot of money was injected into Bombardier. Billions of dollars were injected so that it could modernize its operations, change its strategy and basically rebuild all its activities, so Bombardier is now one of the world leaders in sales and one of our most dynamic firms in the aerospace industry. Government help enabled Bombardier to carry out that diversification.
Is it worth saving the other firms? Let's look at what used to be called Canadian Arsenals, which is now called SNC Industrial Technologies.
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You would have to ask many people that question, including the Department of National Defence. Does the department want to maintain a supply capacity in some areas? Does it also want to keep a truly Canadian equipment maintenance capacity? If so, it will have no choice but to support the operations of viable firms.
Right now, if they do not get new money to start other projects, a number of those companies may face difficulties which may become insurmountable. In fact, they have already started diversifying because they are fully aware of the situation.
Are you going to answer the second question?
Mr. Paquette: I would like to add to what Mr. Bélanger just said. That is the case with SNC Industrial Technologies, which buys its raw materials from Expro. They rely on each other for survival. Since the Canadian government wants to keep a local munitions supplier, both those firms will probably be allowed to struggle along to maintain those supplies.
But the challenge, both for communities and workers, is to ensure that jobs are kept and created. Communities therefore have a vested interest in ensuring that those firms develop new markets and diversify, while at the same time maintaining a military vocation.
If Expro closes, it will be a harsh blow for the region of Valleyfield. It will also lead to the closure of SNC Industrial Technologies and will affect subcontractors; there will be economic costs related to unemployment and social costs related to problems with exclusion from the labour market. So, as a society, it is in our interest to help our industrial heritage diversify rather than just slough it off, since we know it is extremely difficult to develop a firm with very specific expertise. So, as a society, from an economic and social perspective, we should try to help those firms convert and diversify.
Company directors are often less determined to ensure the survival and the development of their businesses than the workers. Management has a particular mindset, which we and Yves Bélanger referred to in our briefs. They always think they'll be awarded the next big DND contract and won't make the required effort since short term profit is unfortunately their principal motivation.
So the government must make these businesses realize that it will provide assistance to those that show a real willingness to undertake conversion and diversification. It can count on union support in such an undertaking. We refer to this in the criteria set out in our proposal. We are not talking about giving money to companies that simply want to get public funding. This support should be reserved for companies that have shown that they are serious in diversifying and converting.
This is the approach we've tried to develop in a number of our companies. For example, there's the case of Expro, a company with two shareholders. It isn't a big business but it does generate several hundreds if not thousands of jobs. These people don't have any liquidity because they have always lived on the advances on purchases to be made from them by their American clients. They don't have any credit even though they do have an annual business turnover of 60 million dollars. They are in definite need of government assistance because they are not in a strong enough position to effect this turnaround. And what we want to do is ensure that this turnaround is taken seriously.
This is one of the reasons why the workers decided to take on, through a workers' shareholders co-operative, a 33% share of the ownership of the business to ensure that the diversification and conversion efforts were undertaken seriously. It's an example of the collective willingness of workers to ensure the maintenance and development of their jobs in their communities.
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Mr. Massé: This leads me to your second remark concerning the fact that the technology fund is not properly adapted. That is why we are recommending the creation of a dedicated fund. I think that this is quite a realistic approach. First of all, 55 million dollars over a five-year period amounts to a million dollars a year. That accounts for approximately 4% of the total funds. We are not talking about new money.
We are aware of the state of public finances. However, since there already is a fund, we think that a part of this fund should be devoted to this particular use. Why? The arguments of my colleagues have partly answered that question but we should also be aware of the inequality of the players involved. Bombardier, to name only one, does not require a program or an LFAC to be able to come up with solutions. It already has a lot of power and a strong lobby. There are a lot of inequalities in this particular sector.
If we set up a dedicated fund with a committee, like the LFACs for example, with a partnership among the various parties and a certain vision, we would certainly be able to generate a lot more business and a lot more projects that there are at the present time. As Pierre noted, some of these people feel powerless, they are simply waiting for more contracts and don't see the need to undertake this kind of development. In this way we would have more cohesion. If we want an effective program, we will need a dedicated fund.
We have one last recommendation to make to you on this point. It is not contained in our briefs. Over the years, weeks and days, we've had a great deal of difficulty in obtaining figures and details on how the money is used and the percentage that has been devoted to conversion or diversification. We go from one official to another and it is extremely difficult. If we wish to attain certain objectives through this fund, and it is possible, particularly if it is modified in keeping with the recommendations we've made you, then the process must be much more transparent. This would be of great assistance in developing jobs in the industry.
Mr. Réal Ménard: I would like to ask two related questions, if I may, unless I come back on the second round.
[English]
The Chairman: We'll come back to you on the next round.
Ms Brown.
Ms Bonnie Brown (Oakville - Milton, Lib.): Thank you, Mr. Chairman.
In listening to these presentations I get the sense there's a lack of understanding of the deep meaning of changing from the DIPP program, the Defence Industry Productivity Program, to Technology Partnerships Canada. Technology Partnerships Canada is in a business, but it is not in certain businesses. It's not in the business of rescuing firms that do not have a highly competitive product. I don't think it's in the business of coming up with a creative idea for a product that a firm could switch its production capability into making. It is in the business of backing high technology, innovative ideas that have the potential to be the best in the world and therefore have a high potential for export.
In all the remarks I've heard from the three presenters, I did not hear anybody say that a firm had a high-tech product it had discovered through innovation that had a high potential for export and that needed some assistance. I may have misunderstood you, but I didn't hear about any product of that kind that one of your member companies wanted to convert into making. I just kept hearing people say that all these companies need help to survive. We're not in that business. Maybe you'd like to respond to that.
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[Translation]
Mr. Paquette: We could not look into all the local situations, because, as Mr. Bélanger said, each company is unique, even though all of the problems stem from the same cause, namely, the reduction in military spending and the declining market for military products.
In the case of Expro, the CNTU, through a group of consultants that is established, developed a whole series of interesting environmental projects to make use of workers' expertise and skills. The technology is similar. One of the projects involved cleaning up the land. The objective is to maintain, develop and diversify the company.
In order to achieve this goal, the company needs a little help. I spoke earlier about its cash flow problem. With help of this type, which the workers themselves could not provide, even though they made a significant contribution, a company would be able to not only diversify and maintain jobs, but also to get into a market that is promising for the future - namely the environmental industry.
We developed this project, but we do not have the financial capacity of private or public capital. The government has a responsibility to help this company as part of its job creation responsibilities. I agree with you that this should not be done regardless of cost, but there is no opening for companies of this type in the context of Technology Partnerships Canada. Expro, which manufactures powder for ammunition, is not considered a high technology company, and is therefore not eligible for the program.
The shipyard in Lauzon raises another problem. Clearly, we are talking about something extremely important in terms of investment and infrastructure. The company has developed considerable expertise, particularly in the area of ocean liners. As you know, the cruise sector is growing quickly. As the population ages, we expect significant developments in this area. The fleet of ships is old and there will be a demand for vessels of this type in a few years. Here again, the union hopes that the new owner will be able to develop this new production, should it become the priority.
In each of the cases with which I am familiar, there are some promising projects, but there are special problems that mean that the company needs some assistance to get through the transition period. I agree with you that the Technology Partnerships Canada Program does not meet this need. Some companies which are already in a better position are using this program to convert, but we need an envelope within the program to help out those companies that are particularly vulnerable and dependent on the military market.
Hence, the current program does not meet the needs of companies not considered high technology firms, which are having difficulty and would like to convert or diversify.
Mr. Massé: Mr. Paquette stated the main arguments, but I would like to state again that we are not here to ask for grants to support dying companies. We believe in these businesses. We think they have a tremendous potential and that they need a little help to develop or market a product. There's a great deal of potential here.
We at the FTQ are prepared to work very closely with the Solidarity Fund. The policy of the Solidarity Fund is not to provide grants for business, but rather to invest in those companies that can develop, export and create jobs. That is the reason we are here this morning.
Mr. Bélanger: It is not up to us to tell you in detail about these projects. You should ask the companies themselves the question. They will make them public when they think the timing is right. Perhaps they would provide the information for your committee at an in camera meeting.
I would just like to mention as an aside that our vision of technology resembles an accordion a little. There are times when we have a broad vision, and others when we have a somewhat narrower vision. At the moment, we have a somewhat narrower vision.
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I have seen assembly activities in ammunitions manufacturing plants. I can tell you that that process involves some very high technology activities which enable these firms to develop unique areas of expertise that can be used most effectively in the commercial market.
In any case, I think it is possible to respect the spirit of the Technology Partnerships Canada Program without changing it at all. The program is open to conversion projects. It is true that it provides resources for companies that qualify under the other program criteria. I am sure you were surprised to learn that several firms were considering transferring some of their technical expertise to the environmental area. That is absolutely in keeping with the department's objectives, one of which is to encourage Canadian industry to head in a new direction.
[English]
Ms Bonnie Brown: From what I'm hearing, then, there's some potential of new high-tech products, particularly in the environmental field. But in a general way, would you say the inability of the companies you represent to tap into TPC funding has been due to the fact they're not meeting the high-tech criteria? You mentioned ships, tourism, cruising and maybe environmental products, which may or may not be high tech. Is that the main criterion your firms are having trouble getting over?
The Chairman: Just to clarify, I think what Ms Brown is getting at is have they put through the proposal and been rejected.
Ms Bonnie Brown: Yes.
The Chairman: Is that what you're telling us?
[Translation]
Mr. Paquette: Yes. Perhaps not in the case of Technology Partnerships Canada, but in the case of DIPP.
[English]
Ms Bonnie Brown: No. We know what the DIPP program did, and we know TPC is different. You're saying it's not good enough. My question is, has the company you mentioned as having a bunch of new, interesting, and environmentally technical products applied to TPC and been rejected?
[Translation]
Mr. Paquette: I don't know what happened under that particular program, but I do know that they had submitted some applications under DIPP, and these applications were rejected. Yves works with Expro and could perhaps give you a more up-to-date answer. However, in both cases, our problem was that the companies were not considered high tech firms. In this respect, our situation may not be exactly the same as that of the FTQ, which is much more involved in the high tech sector.
[English]
The Chairman: What Ms Brown wanted to get on the record, I think, was whether or not the company had looked at doing conversion, had put a project together, had applied for TPC and been rejected. So we want to get that on the record. Who has the answers to that?
[Translation]
Mr. Bélanger: I could answer the question. It is true that some companies were told by government officials that their projects were not eligible at the moment, for the simple reason that they are in an area outside the priorities of the Technology Partnerships Canada Program.
On the other hand, one company got funding from Technology Partnerships Canada to develop a product with a commercial use. It found - and this is extremely interesting - that, essentially...
[English]
The Chairman: Excuse me, I must stop you, because I know Ms Brown is going to run out of time, and then I'm going to get heck for cutting her off. I think her question referred to Expro, which is a good example and one that you used. Have they applied and have they been rejected?
Mr. Bélanger: No.
The Chairman: Okay. Proceed, Ms Brown.
Ms Bonnie Brown: You mentioned some people who had been turned down, and you're about to give me an example. What I really want to know is were they told they probably would not pass and get funding because it was not sufficiently high tech? Is that the criterion that's blocking the funds from flowing?
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[Translation]
Mr. Bélanger: It would be very difficult for me to answer this question without violating my confidential relationship with the companies in question. I would prefer that you ask them the question directly. They could then answer you and tell you how they see the situation.
I did tell you that one of them got some funding. I think that it is important to say that this company concluded that the assistance it received was not exactly what it needed in order for its product to produce commercial results quickly enough to recover its investment. So the existing program should be adapted. There is no doubt about that.
Mr. Massé: The FTQ would like to go beyond that stage. This morning we are presenting the union viewpoint, not one that is out of touch with reality. We've been very much involved in this for about ten years now. There have been job losses throughout most of our companies. Local union officials are there day by day and week after week. They have been working on this issue within company parity committees. They are working with us at the FTQ, and the same goes for other union organizations. They are trying to develop instruments because there is potential in these firms, as well as high technology, expertise, research and development expertise that are more advanced than in most companies, both in Quebec and elsewhere. We must also develop a culture that will allow us to give companies a bit of a push and help them recognize their potential.
As I was saying earlier, access is unequal. One or two companies could drain the fund by themselves. We want all companies to be able to take part in the program. In some cases, a labour force committee and other projects would be required to help them present their projects. There's a great deal of potential, but it is being used badly. That is why I always come back to the idea of a dedicated or special fund.
[English]
The Chairman: If you don't mind, I'm going to ask one question. I never have a chance to ask questions.
I'm really interested, Mr. Massé, in the example you used. I think you mentioned that we must act at the local level. You also talked about the employees and the union becoming a partner with the company so they could also have some say to move the company even to think of converting and then looking at proposals. I would be very interested if you had any other companies like the one you mentioned, Expro, where you're trying to take a one-third partnership. Could you tell us a little more about that, and if you have another company like that example?
[Translation]
Mr. Paquette: I'm talking about a mechanism which, in the case of Expro, proved helpful for the workers. In my presentation, I listed a number of conclusions we reached. One thing is clear: companies that want to convert must review the way their work is organized and their labour relations. In the case of MIL Lauzon, there was a complete review of labour relations as part of the firm's recovery process. You can find the conclusions in our brief.
No conversion can be successful without a complete review of the way in which the work is organized, the way the company does business, both in the case of managers and hourly workers. That is what we found, and it is true not only in the case of companies that need to convert. In our view, this problem exists in many firms, where the organization is too hierarchical and does not give workers enough responsibility.
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The brief sets out seven or eight conditions for the success of the conversion project. From the union point of view, as Henri mentioned, we are working on this. However, we are not 100% owners of the companies, and the owners must show some willingness to convert and to develop their companies. Otherwise, the company's survival is problematic.
[English]
The Chairman: It's for that reason I was asking the question. I'm anxious to know of a couple of examples in Quebec outside of MIL Davie and the shipping industry, because the shipping industry is another situation right across Canada where probably one-quarter or one-fifth of the workforce left after the shipping industry and transportation changed so much. You gave the example of Expro, and if you could give us another example I would appreciate it. It need not necessarily be today, but you can table it with the clerk.
[Translation]
Mr. Paquette: We've a great deal of documentation about the reorganization of labour in companies in paper, metallurgy and trade sectors. I could have it sent to the committee. We consider this an essential condition for the success of a conversion project.
[English]
The Chairman: You see, in discussion with previous witnesses and from people who have sent us letters it becomes very clear that the companies that wanted to change and saw the future worked on various projects to change from military type to commercial type. Then we get into a group of companies and businesses that say no, we're not going to change, although the employees and the stakeholders around in the communities say you had better change, because there are going to be fewer and fewer projects in the future. That's where we're at.
[Translation]
Mr. Paquette: I will also send you some material on the background of Expro, which we consider exemplary. Our vice-president, Marc Laviolette, who was the president of the union formerly, wrote a paper which I will send to the committee.
Mr. Massé: There are about 20 locals in the defence sector within the FTQ. In all cases, we try to work jointly with the employers to review together the way in which the work should be reorganized, in addition to the new conversion or diversification policy. Yves could perhaps give you some more specific examples. One of them is Technologies industrielles SNC, where there's a great deal of work has been done, and other firms that are unionized with the FTQ. We are in the process of strengthening our policies in this regard, and we support our local unions. We're trying to develop more comprehensive policies. Even though the record is somewhat uneven we are starting to see generally good co-operation from companies.
Yves could give you some examples of this.
Mr. Bélanger: To put things in perspective, Expro is a unique case in Canada in the defence field. It is a company in which workers are directly involved: they sit on the board of directors. So it is really an exceptional case. However, there are all types of approaches that have been used in various companies.
We just referred to Technologies industrielles SNC, which set up a labour force adjustment committee to look after diversification. The committee completed its work, and the firm decided that its results were interesting enough to carry on by creating a labour-management committee that would not be financed in the same way as traditional LFACs. There will be no provincial or federal government involvement. The committee will be funded by the company itself. The firm thought the work was interesting enough to pursue it and to continue trying to find diversification products together with its employees. Some have already been identified.
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The same thing happened at Peacock. There is union-employer co-operation in Quebec at the moment. There are obvious advantages to this. I could give you a number of examples. The labour relations culture is in the process of changing in Quebec. Clearly, this has an impact on companies in the defence sector and makes possible initiatives of the type I just mentioned.
[English]
The Chairman: I appreciate your comments. I come from an industrial background myself. That's why I wanted at least to have a chance to ask those questions. I personally would like to come to visit, especially organizations where the management and union are working together and looking not only to today and tomorrow but to four, five, or ten years in the future. So I appreciate your comments.
Now we'll go back to Mr. Ménard.
[Translation]
Mr. Réal Ménard: In its future work, Mr. Chairman, the committee should plan to visit some firms. I am sure that would be a worthwhile experience for all committee members.
That being said, we should not get off-track here. Our witnesses should not think that the problem is that they did not apply to the Technology Partnerships Canada Program. The deputy minister confirmed that three companies had applied to the program. We could certainly find out their names, because we're talking about public money.
The fact is that the Technology Partnerships Canada Program is not really good at supporting conversion projects. That is the basic fact. I am not saying that this was done deliberately, and I am not imputing motives to anyone whatsoever. However, I would not want us to give the impression that the problem is that Quebec companies were not vigilant enough and did not submit enough applications.
Am I mistaken to think that there are three major facts that must be considered if we want a genuine conversion assistance program? I know that Ms Brown believes, as I do, that we must give concrete tools to people who want to introduce conversion.
The first is that companies must have information about the way in which the defence market is evolving. No such information is available at the moment. Companies have no single source of information about the various opportunities that will be coming forward. Once you have identified the opportunities, there must be a product, and the way in which the product is managed must show some respect for the existing expertise, the skills of the workers and the potential to market the product.
You said as well that once there's a product, the company does not always have the administrative skills required in order to market it, and therefore needs some help in this regard. The concrete help in this case is market studies.
Once companies are well informed about the defence market and its developments, once they have made the connection between what they do and the market opportunities, the last stage, and the most important one, is production capacity. However, companies do not always have the equipment they require.
In order to convince our chairman and Ms Brown who, like myself, are people of good faith, we could invite the people from Technology Partnerships Canada to come and meet with us. In your brief you give some very specific examples of firms that have to go through this diversification process and you talk about their needs. If, in the course of our work, we were to realize that the Technology Partnerships Canada Program could meet these needs, I would be the first person to promote it.
This is not a partisan issue, but I am firmly convinced that the Technology Partnerships Canada Program cannot meet the four needs you identified. There are two reasons for that. The minister was very clear when he announced the program. He spoke about two areas: environment technology and new communications technologies. The program has $250 million over three years to fund projects of this type and there must be an export market connection. It is reasonable for a government to think in these terms.
Am I wrong in thinking that the businesses whose workers you represent have not yet reached that stage and that you would be unable to meet these four criteria?
Mr. Massé: That is true and I would like to respond by giving you an example. I won't name the company but I can tell you that there is an experiment in diversification now taking place in a company with an FTQ union. First of all they had to hire specialists familiar with the international market to determine what types of products could be fitted into their production lines. They had to do this work with their own money and with few resources.
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The remainder of the exercise was to determine what was logical and realistic and what direction they could head in exactly. They are in the process of converting but with very limited means. This brings us back to the four points you mentioned and the matter of monitoring or techno-watch. I think that this is where we will be able to develop tools that are far more effective.
The will is there but we do not have the support. Once again, if we had a dedicated fund, we would be able to target more precisely this particular aspect among all those affecting the industry and in this way we are convinced that we would be able to make significant progress.
Mr. Bélanger: There may be a misapprehension about defence industries, particularly those in Quebec. Most of these companies do not have as their sole mission supplying the government of Canada or the Canadian army. Most of them are very active in exports. Expro, which was previously mentioned, is not at all dependent on the domestic market. From its very beginning, Expro has lived mainly on exports.
The same is now true for Technologies industrielles SNC. They were told that they now had to focus on exports and successfully carried off this turnaround. It would be a mistake to make a correlation between defence and... This would inevitably lead to a situation of dependency. There is no purpose in supporting companies with little scope, since the domestic market in Canada is limited, but this is not what we are talking about. We are talking about companies that are able to extend Canadian export opportunities and able to make a very active contribution to the creation of new jobs.
Mr. Réal Ménard: I'd like to ask two last questions, if I may. There is a consensus in Quebec. You are from the union movement and I think I'm correct in remembering that a few years ago - Professor Bélanger probably has a more precise recollection of the date - the CUM, the city of Montreal, the government of Quebec, unions and representatives of Industry Canada got together around the same table and made the same diagnosis as you this morning, namely that if nothing is done for Quebec, between 4000 and 10,000 jobs will be lost. I think it was closer to 10,000 than 4,000.
That was a first consensus and you have sounded the alarm this morning and told us that we need a designated fund. That is not simply the point of view of the union, it is also the view of the city of Montreal, the CUM and the Department of Industry, isn't it?
Mr. Paquette: We even had a joint press conference with all the representatives you've named. But I don't remember there being someone from the federal government.
Mr. Réal Ménard: Wasn't there someone from the Quebec Department of Industry?
Mr. Paquette: From Quebec, yes, but not from the federal side. Perhaps Yves remembers.
Mr. Bélanger: There were people from the City of Montreal, from the Montreal Urban Community, the Federal Bureau of Regional Development (Quebec), the Department of Industry and Commerce, who supported a study and tabled a report in 1992, a few months before the holding of hearings by the subcommittee to which I referred in my presentation.
Mr. Réal Ménard: I see.
Mr. Massé: Most companies also support this idea. As I said earlier, there are some companies that don't need it. That's where we have to be careful.
Mr. Réal Ménard: One last short question, if I may.
[English]
The Chairman: No.
Mr. Ménard always wants a little question, and then another little question and another little question. But we go back and forth. We still have lots of time.
Ms Brown.
Ms Bonnie Brown: I think I understand what you're saying, but I still have this sense of a lack of reality in the thinking I'm being exposed to. For example, there was some allusion to some of these owners who are expecting the next big contract from the Department of National Defence to come any day now. I can't believe, after ten or fifteen years of shrinking defence budgets around the world, that anybody is thinking the company is going to be saved through another defence contract. If there's one thing we're sure of... It's not just in Canada; it's everywhere. It's the same thing with those products that you suggest are military but there's a good export market for them. That market is shrinking too.
The bottom line is that for anything that has to do with defence buying, whether it's domestic or abroad, that market is shrinking. The whole thing is the need for a new kind of product.
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I just don't understand how you can... You were talking about the organization of work, labour relations. The point is there won't be any workers to organize and there won't be any relationship if there's not a product to sell domestically, or, we hope, both domestically and internationally - a product that is competitive and the best in the world. In other words, there's not going to be an infusion of government money unless it is focused on maybe a breakthrough, an innovation, something new Canadians want to buy for their commercial use, having nothing to do with the military, and something civilians in other countries want to buy. We have to leave behind all this vocabulary that has to do with defence exports. We have to move into this whole era of being competitive, where we have the best product in the world.
In the past week you've seen this news about the hydrogen fuel cell through the bus company in B.C. Immediately Daimler-Benz has moved into a formal partnership with them, and as of yesterday Ford Motor Co., because it's an innovation. That is the kind of thing government participation is going to go to, where it's a scientific breakthrough and it's happening for the first time in Canada.
So I feel as if our conversation is reflective of the past, and certainly your current reality, which doesn't sound very good, but I don't hear much coming from you about the future and future products unless the government pulls in. Well, it seems to me the government is coming in behind firms that have that innovation, not firms that are hoping for help to come up with it.
[Translation]
Mr. Massé: I think that we've misunderstood each other or we haven't really explained our views properly. I'm perfectly at ease with the statements you've made. That's really what we've been trying to say to you this morning. We have an industry with high tech potential and R & D capacity, an industry that with its R & D programs for defence equipment is able to produce important consumer goods for civilian use that can be exported and sold domestically.
We've been trying to make you understand this morning that conditions must be created to facilitate this change. We've carried out a number of operations to reorganize work and put businesses on a sound footing through labour force adjustment committees, LFACs and we have been successful. We think that defence businesses in Quebec have a huge potential. This potential can become even greater with a bit of assistance, not in terms of grants, but in the form of support to businesses and partnerships.
There are certain kinds of technological research that require more time than others in order to make a breakthrough. They can easily be quashed. If the big companies are the only ones to get the opportunities, then the other ones have no chance of success. Sometimes a bit of support is necessary. Several small and medium-sized companies have spent a few years developing technologies. With a bit of support, they were then able to do a great job of facing competition. That is the message we want to convey to you.
Mr. Paquette: Let me add, before concluding, that the $11 million a year over five years that we are requesting to support our efforts for maintaining and developing jobs in the sector is in no way disproportionate in relation to the responsibility of the federal government. The culture that you denounce and that we also denounce was created to a large extent by the federal government and by the behaviour of the Department of National Defence.
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I'm surprised to see that in spite of the efforts we've been making for many years now, whenever a contract is expected to be announced, the directors of certain companies - I don't want to lump them all together - change their behaviour completely. Officially diversification is the order of the day but that isn't where the conscious efforts are made. Those who are really aware of the need to diversify to civilian production are those who are afraid of losing their jobs, they are our members.
This is an extra card that we can use in dealing with our employers. We can tell them that there are programs available to do serious work and that we are ready to sit down with them and roll up our sleeves. The Labour Force Adjustment Committee would play an extremely important role in maintaining the kind of sensitivity to which you refer. In the case of Expro, there is a potential at the civilian level in the United States. At the present recreational shooting is becoming extremely popular but we are not familiar with this market. One of our difficulties is convincing the owners of businesses to give serious study to the potential of this market.
For the time being they're having a look in a rather halfhearted way and we are concerned about the future of this potential market, which is a very real possibility. I could name a whole series of other companies that do have some potential but our fear is that because of the transfer of ownership or the announcement of a contract, such efforts may prove to be more theoretical than real. In this respect, as Henri so rightly pointed out, what we are asking for is a bit of help from the federal government to do the kind of things you talked about.
[English]
The Chairman: Before I go to Mr. Ménard I just may comment that our trade commissions provide a lot of information, and the Department of Industry Strategis program, which has been improving every day since its inception a year and a half ago, has done an excellent job of providing all that information. It's right there, right on the Internet. Hundreds of thousands of documents are available.
Mr. Ménard.
[Translation]
Mr. Réal Ménard: I think that Mr. Bélanger had a short comment to make.
Mr. Bélanger: Let me be quite concrete in the case of Expro even if it means I'll get told off later on. You know that we academics sometimes feel free to take liberties...
Mr. Réal Ménard: ... that others will soon be taking.
Mr. Bélanger: ... and live with the consequences. Some years ago Expro gave some thought to what its future would be and undertook a study on what its competitors were doing. That was a good reflex. It observed that there were about 20 explosives manufacturers on the planet and wondered what they were doing. They were facing the same problems as we were and four sectors were identified where these companies were attempting to effect diversification, namely specialized chemicals, airbags, commercial ammunition and the treatment of environmental products.
We looked at each of these markets to determine what their potential was for Expro in North America. A sector that struck us as particularly promising for the future was the environmental one. What can a company like Expro do in a field like the environment?
It has a labour force used to handling dangerous substances; there's nothing more dangerous than explosives. They are accustomed to following extremely rigorous procedures. Furthermore, the company has very large grounds as well as access to unused buildings. We thought it might be possible to make use of this potential in the field of the environment. Right now we are no farther than that. I don't know if that answers your question but this gives you a more concrete idea of what the possibilities are.
You know, these businesses are not necessarily something from the past, but they are often perceived that way. It depends inevitably on your point of view and the kind of analysis you do.
Mr. Réal Ménard: I'd like to reiterate my point before asking my question. I hope the committee will make a visit to these companies. We could easily spend an afternoon visiting the different companies to get an idea of what the situation of the workers is. I also hope that we'll be able to sit down with the deputy minister, who's shown a great deal of good faith, with the workers and the representatives of the employers and the unions to ensure that the Technology Partnerships Canada Program does become the vehicle you would like it to be. Everyone is ready to work for this transition. The important thing is to achieve the result, and for the money to be made available.
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To make sure that this is properly understood by committee members, I'd like to go back to page 58 of your brief. You advocate the creation of a dedicated fund. You talk about a fund of a similar size to that proposed some years ago. You haven't taken into account inflation because I can remember quite well that the CADIM, the Military Diversification Assistance Centre, proposed exactly the same amounts.
On page 55 of your brief, you provide a breakdown of the amounts required. I'd like to understand the rationale behind this breakdown. You say first of all that information must be provided on the defence industry and a techno-watch should be on the alert for diversification opportunities. This would require a million dollars. Am I correct in assuming that this would amount to a kind of monitoring operation of the defence market? Could you clarify what exactly you mean by the term "techno-watch"?
Mr. Bélanger: Yes. There are a number of technological monitoring groups in various areas of activity. There is one, for example, which is very actively involved in the agri-food sector in Quebec. Its purpose is to provide access to tools to inform users of what their competitors are doing, new products emerging, and also possible business opportunities. That is essentially the purpose here.
Mr. Réal Ménard: The second point, for which $4 million should be set aside, is to fund feasibility studies, market surveys and technical assistance projects. What can you tell us about that second point?
Mr. Bélanger: This is a stumbling block found to date in many businesses. In fact, some have appealed to the Labour Force Adjustment Committee to try to get around this obstacle, with varying degree of success, because the structure is sometimes a little heavy.
So you must have the resources you need to test the feasibility of a number of products or certain specific products identified beforehand as being realistic projects and likely to impact on the company's productivity.
Mr. Massé: One of the weaknesses of the defence industry is product marketing. Often the products are very good. It is very important to have a good product, but if you cannot market it, that creates another problem.
Mr. Paquette: Funding possibilities are also closely linked at that stage to the quality of the information on the project.
Mr. Réal Ménard: I fully appreciate the importance of that. Would I be mistaken in thinking that the DIPP had four components, one of which, not a very substantial one, was designated for market surveys? In the good years, the DIPP obtained $300 million. That was always the smallest share. However, I do not believe that the Technology Partnerships Canada Program has a budget for market surveys. We can appreciate the importance of market surveys in coming up with a product you can actually sell.
The third point is far more important: supporting research and development activities intended specifically for conversion purposes. We are not dealing here just with market surveys, but with real industrial research.
Mr. Bélanger: In this case we are talking primarily about development. As you will appreciate, if you fund research with $25 million, you are unlikely to go very far. We talk primarily about development, because there are opportunities for purchasing patents and making necessary adjustments so that products can be made by the company itself. At the present time, there are at least three cases where the product had to be adapted to the company infrastructure. Therefore, it is primarily to fund that type of activity.
Mr. Réal Ménard: It is important that committee members fully understand the sequence in which you want to use that $55 million. The final point is as important as the third. It is really linked to production technology. Is that the case?
Mr. Bélanger: Yes.
Mr. Réal Ménard: Perfect. Therefore, it is a clear recommendation, and I hope that the committee will support it when it tables its report. Fifty-five million dollars is not an unreasonable amount when you consider how much is spent to create other types of jobs. For example, in the case of the transitional fund for job creation, I regularly see projects to which 10, 15 or 25 million dollars are allocated and create 100 to 150 jobs. Here, we are talking about the possibility of maintaining 9,000 jobs. I do not believe it is unreasonable to ask the government to invest $55 million. That concludes my questions to the witnesses.
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Mr. Massé: As regards visits, if the committee is interested we can organize them very quickly. You will have the opportunity to meet specialists who, given that they're actually working in this field, will be able to answer many of your questions far more competently.
Mr. Paquette: We would be very willing for the committee to visit businesses, and we would also like to show you the resources the FTQ and the CNTU provide to their unions for this work. As Henri mentioned, we have been working on this for over ten years, which makes it quite an innovative undertaking. We did not wait for the problem to hit us. Even though it is hitting us now, we did try to anticipate it. You would find it interesting to see the resources made available from membership dues to our unions so as to help them work in this area.
[English]
The Chairman: I would like to thank you for your presentation.
We have many more witnesses to come before we do anything else. Because of the very busy industry committee, our committee was forced to move away from our schedule. We have a number of witnesses still to hear. Our responsibility is to hear all sides and to hear from a few more departments.
I should mention that Canada has one of the best R and D tax credits. It has the best in the G-7 countries. Our previous work on the industry committee has shown that. More dollars have been put into R and D as a result of another subcommittee. Not to get Mr. Bélanger into any more problems than he has already by talking about Expro, maybe, Mr. Ménard, you could get the CD-ROM on the environment out of the industry department. It was just released. It is absolutely excellent. I purchased one of the copies to use myself. It's very good.
Your discussion here was very valuable for us. I'm very interested in the approach you mentioned where local organizations and local committees must act in partnerships and look to the future on how we do things. So I want to thank you very much. I thank you for your time and I really appreciate your being a witness here today.
I adjourn the meeting to the call of the chair.