INDY Committee Meeting

STANDING COMMITTEE ON INDUSTRY

COMITÉ PERMANENT DE L'INDUSTRIE

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, April 23, 1998

• 0907

[English]

The Chair (Ms. Susan Whelan (Essex, Lib.)): I call this meeting to order. Pursuant to standing order of the House dated February 26, 1998, our study now continues of the main estimates for the fiscal year ending March 31, 1999.

We have appearing before us today the Honourable Fred Mifflin, Minister of Veterans Affairs and Secretary of State responsible for the Atlantic Canada Opportunities Agency. With him are Paul LeBlanc and Peter Estey.

Minister, I understand you're with us until 10 a.m. We would ask you to begin with your opening statement, and afterwards we'll entertain questions.

Hon. Fred Mifflin (Minister of Veterans Affairs and Secretary of State (Atlantic Canada Opportunities Agency)): Thank you very much, Madam Chair and colleagues. Bonjour, mesdames and messieurs.

First of all, I want to say that this is my first appearance in front of the committee and I'm delighted to be here. We've had a good opportunity with the officials to prepare for what I hope will be an interesting hour. This will give us a chance to exchange views and to tell you about how ACOA operates.

At the outset, I want to say that I've been following your work very closely, like my two colleagues yesterday, Mr. Manley and Mr. Duhamel. The work you're doing on competition and cooperation in small business loans and telecommunications legislation is very much appreciated, in particular the concern you've shown for one of the problems we have in the country and perhaps worldwide. The concern you have shown for Y2K, year 2000, is certainly making the issue very public and is increasing awareness. I think that is one of the difficulties we have. If you want to get into that, we can discuss that as it relates to the agencies.

As I said earlier, I'm delighted to have the opportunity to appear before my colleagues and to outline for you this government's commitment to regional economic development and the real and positive impact this commitment has had and continues to have on lives, communities, and businesses in Atlantic Canada.

[Translation]

When the Atlantic Canada Opportunities Agency was established, it was given a mandate by Parliament to help create new and lasting jobs across the region.

[English]

When the Atlantic Canada Opportunities Agency was established it was given a mandate by Parliament to help create new and lasting jobs across the region. More specifically, under the Charter of Rights and Freedoms the federal government has committed to “furthering economic development to reduce disparity in opportunities” and “promoting equal opportunities for the well-being of Canadians”. This means the well-being of all Canadians in all regions. Why? I guess because strong regional economies are the basic building blocks of a strong national economy. Whether we are talking about providing Labrador iron ore for Ontario steel mills, selling central Canadian automobiles in British Columbia, or shipping prairie grain to the maritimes, each region helps reinforce the strengths of all others.

• 0910

Each strong regional economy in Canada provides its own momentum and creates the conditions necessary for business formation and the survival and expansion of business. I will stress the business formation and the survival and expansion.

Consider, for example, that Atlantic Canada contributed 17,000 business start-ups to the country's total in 1995. A strong regional economy also breeds opportunities for entrepreneurial enterprise, innovation, and the successful use of technology, as well as expanded trades with other parts of Canada and the rest of the world. In fact, the R and D effort in Canada was supported in 1995 by $440 million worth of research and development investment in Atlantic Canada.

As well, Canada's burgeoning trade performance incorporates billions of dollars of exports by Atlantic businesses each and every year, with $11 billion in goods and services in 1996 alone.

A strong regional economy also encourages commercial and industrial diversification, as well as the adoption of cutting-edge management practices. I ask you to consider Atlantic Canada's vigorous IT sector, which contributed more than 14,800 jobs to the national economy in 1996. When you look at the number of jobs we have created in total, that represents a fair proportion.

I want to mention an organization called Operation ONLINE Inc., which means Opportunities for Newfoundland and Labrador in the New Economy. This is a not-for-profit corporation formed to provide investment and leadership in information technology, as an engine of economic renewal. This is a partnership between industry and ACOA representing the federal government and the province of Newfoundland and Labrador. Operation ONLINE's primary role in this capacity is to serve as a facilitating and advisory body on information technology in Newfoundland.

Finally, a strong regional economy is a fundamentally competitive economy that generates jobs, stimulates productivity, boosts consumer spending, and contributes directly to the fiscal well-being of our entire country.

The bottom line is that Atlantic Canada provides markets for billions of dollars of goods and services from other provinces each year, and to be precise, $14.6 billion in 1996. The other provinces provide markets for billions of dollars of goods and services from Atlantic Canada—$6.7 billion in 1996.

Clearly, Atlantic Canada is an important contributor to our country's economic well-being. But like many parts of Canada, we are not without our problems, and these problems must still be addressed by those of us in the public sector, together with our partners in the private sector.

So with such a clear and direct role for Atlantic Canada in a strong national economy, the importance of meeting challenges in order to build strength and economic capacity within Atlantic Canada is crucial. This, in a nutshell, is ACOA's great preoccupation.

[Translation]

As the principal federal economic development organization in the region, ACOA helps build the very strength and economic capacity that makes Atlantic Canada a growing contributor to our national economic well-being.

[English]

As the principal federal economic development organization in the region, ACOA helps build the very strength and economic capacity that makes Atlantic Canada a growing contributor to national economic well-being. We do this by investing strategically in people and in the business infrastructure of Atlantic Canada and all its competitiveness.

When I say strategic, I mean we are investing in order to obtain clear, measurable and positive results. Knowing, for example, that 94% of all new jobs are created by small and medium-sized enterprises, we are helping more people start and expand their own businesses and obtain much needed access to capital and information.

• 0915

Madam Chair and colleagues, if I could draw as I speak—I'm getting close to the end of my presentation—I have a triangle that will be mirrored by the remainder of my comments.

There are literally thousands of successful SMEs across Atlantic Canada to which I could draw your attention. One that comes to mind and one that was assisted by ACOA is an organization called Allain Equipment Manufacturing, located in the very small rural community of Notre-Dame in Kent County, New Brunswick. They manufacture custom products such as sawmill equipment, cabs for trucks and trailers, fish plant equipment, fire trucks, and snow grooming equipment. This small enterprise employs about 40 people and is typical of the SMEs that are the backbone of our region's economy.

Knowing that expanded trade and export activities generate jobs, as I mentioned earlier, we are working with several key federal and provincial players in the region to help businesses acquire export training, access to international markets, and relevant trade-oriented information and research.

An example of ACOA's effort to increase export activity is the recently established Atlantic Canada home program, an initiative under the Canada-Atlantic Provinces Cooperation Agreement on International Business Development. It has allowed 36 building products manufacturers and service suppliers to form a consortium for marketing in Japan. They have successfully penetrated the new market and so far have generated revenues in excess of several million dollars. That's good for an SME. Although the current economic situation in Japan is cause for concern, the ACH is forecasting growth in revenues for the next year.

Knowing that innovation and technology are critical to competitiveness and business growth, we are supporting alliances for technology development and commercialization and for facilitating the expansion of knowledge-based sectors of the economy.

Clinical Trials Atlantic Corporation, an independent, not-for-profit corporation headquartered in Halifax, is an example of a strong technology alliance. This is a network of more than 500 investigators and 200 research coordinators from across Atlantic Canada. It has facilitated 44 clinical trials, thereby significantly enhancing the clinical trials resources in the region.

Knowing that better management practices increase business survival, growth, and productivity rates, we are supporting programs that enhance the skills of owners and managers and improve the quality of business development resources available in the region.

As such, through a partnership with the New Brunswick Training Group Inc., ACOA has, for example, provided a series of workshops to address the needs of business people in the rural communities of that province, specifically as they pertain to learning hands-on practical management skills.

Now I come to the area that is very big in Atlantic Canada; I'm talking about tourism. As we all know, tourism is the largest growth industry and is currently underdeveloped in the region. Because of that, as you will see from reference to the triangle, we are supporting comprehensive initiatives such as the recently announced Atlantic Canada Agreement on Tourism, one of the pan-Atlantic agreements we have, which will coordinate the development and marketing of the industry.

This agreement, managed by the Atlantic Canada Tourism Partnership, which is made up of private sector and government partners, including ACOA and the provinces, is fostering a marketing campaign this year in the United States. If you want to know more about that, I can give you the details. I'm very proud of this organization, first because it is a pan-Atlantic organization, and second because it is focusing on the fastest-growing industry in the world, and there is room for much growth in Atlantic Canada.

These are ACOA's strategic priorities, through which, in the delivery of specific programs and services, we are helping to create the conditions for a thriving and diversified entrepreneurial economy.

You may ask, is it working? Well, you would expect me, being the minister responsible for ACOA, to say yes, but I hope in our discussions we can prove it is. I have some statistics. I'm not going to mention them now. You've heard me in Question Period, and they're pretty well known. The one I take great comfort in, if I can call it that, is the fact that an ACOA-assisted business has two and a half times the survival rate of an enterprise that has not been assisted.

But if we have achieved success, it's because we've learned what any successful business knows implicitly, and that is that we mature with time and we benefit from our experience, and we are prepared to change when change is necessary.

Make no mistake; the past decade has brought profound change to the people, communities, and businesses of Atlantic Canada. It has been a decade of challenge and opportunity for everyone.

• 0920

We have become more focused on the tangible business development needs of small or medium-sized firms and on the economic environment that supports entrepreneurial start-ups and growth.

We support community-based economic development and we advocate the interests of Atlantic Canadian business in the national arena, particularly when it comes to the federal procurement policy.

We are now focused more tightly than ever on the strategy of investing in the region's economic potential and by focusing on key strategic priorities in the region. As indicated again by the triangle, we endeavour to remain fresh, relevant, and up to date.

Over the next three years, ACOA plans to continue in this manner. The agency will generate employment opportunities by investing in the start-up and expansion of approximately 3,000 small and medium-sized businesses. We will do this by supporting the community business development corporations and by expanding the network of the Canada Business Service Centres. We may want to discuss some of that in detail.

We will help secure the future of the next generation of Atlantic entrepreneurs by supporting opportunities and programs designed to help young people learn the nuts and bolts, the hows and whys of entrepreneurship. Again, we're very proud of our youth entrepreneurship, and I hope I'll have the opportunity to give you some rather startling examples of the success of that in a relatively short time.

In 1996, the Organization for Economic Cooperation and Development decided to profile ACOA's entrepreneurship development strategy as the Canadian model. I refer you to the small booklet here. The strategy, which is based on awareness creation, education and training, help for business support organization, research and network building, was published in a booklet form and given wide distribution internationally.

We're very proud of that, and, as I say, it is a copy that I have provided for you.

Ladies and gentleman and colleagues, I want to again thank you for listening to my opening gambit, my opening presentation.

I guess the message is that from assisting the individual small and medium-sized business owner, in laying the foundation for economic diversification and prosperity in Atlantic Canada, ACOA works not only in the interests of Atlantic Canadians but of all Canadians. Building a strong Atlantic Canada, one that produces, one that prospers, and one that contributes, is fundamental and essential to building a strong Canada.

I'm proud of the role ACOA has played and will continue to play, and I look forward to our discussions.

Thank you.

The Chair: Thank you very much, Minister.

We'll now begin questions with Mr. Schmidt.

Mr. Werner Schmidt (Kelowna, Ref.): Thank you, Madam Chair.

Thank you, Mr. Minister and your officials, for appearing before us this morning. I also want to welcome you. I understand it is your first time before this particular committee. I have some questions I would like to address to you with regard to regional development.

I will start with the two reports the auditor general made, one in 1995, the other in December 1997. I want to quote from both of them. The first one is the November 1995 auditor general's report with respect to ACOA, FORD-Q, and WED. In that particular report he makes the following observations in chapter 17.

In article 17.37 he says:

The entities do not have risk-based assessment procedures to provide guidance to staff when they review projects. Such procedures would help staff to understand the degree of financial risk the government wishes to assume, and would give guidance on the types of projects the entity wishes to support (or avoid).

Secondly, in article 17.39 he says:

Our chapters indicate that programs have funded projects where the case for incrementality was not made clearly, and the applicants appeared to have the financial resources available to proceed on their own.

In article 17.47 it goes on:

Taken as a whole, results measurement in the entities has been disappointing. Not all of the program elements have been evaluated and for newer elements it is too soon to tell. Given the government's evaluation policies, program managers have used their discretion (other than ACOA, where legislation dictates the program elements to be evaluated) to decide whether it was worth investing in evaluation of all program elements and, where they have done evaluations, what issues to review.

I want to refer to the first two paragraphs in particular, and that was in 1995.

In 1997, the auditor general makes the following observation. He speaks of this in a number of ways. Among other things, the point he observes is that the programs are primarily activity centred rather than results centred. In particular, he refers to the cooperation program and says—and I'm quoting from the December 1997 statement:

In this context, we note that the objectives for both the new Business Development and the COOPERATION programs remain very broad, which will make it difficult for future program evaluations to assess the extent to which objectives have been met.

• 0925

He then goes on to say the “agreement objectives are still not stated in a clear, measurable and results-oriented manner”. Yet I think I heard you say just a moment ago that we now have clear, measurable results. So a lot has changed since December 1997.

Finally, “The assessment and monitoring processes used by the Agency are not significantly different from those found in the 1995 audit.”

So I ask you, Mr. Minister, how do you reconcile these two reports?

Mr. Fred Mifflin: Thank you very much, colleague. As you know, it's the auditor general's job to criticize, and we all expect that. We take the criticism as positive criticism, and we indeed react to it. As you suggested, in the 1995 comprehensive review of regional development—a review of us, along with other agencies—and indeed in his 1997 follow-up, he did make some criticisms of our results measurement techniques. More importantly, he gave ACOA overall high marks in 1995, on the other hand, for having gone beyond normal practice. I don't think you read that, but it was there in his evaluation activity.

So while there were in fact some discrepancies, as you did point out, I think the auditor general took pains to point out that he had gone beyond what the normal practice was. Indeed, in his 1997 report the auditor general explicitly acknowledged that the agency had made progress in improving the overall results measurement and in reporting the progress of this over the past two years.

I would say, Madam Chair, that with any organization that is striving for continuous improvement—and I think we accept that all organizations try to do this—we in ACOA welcome the comments from the auditor general, and we will indeed continue to strive to sharpen the objectives of our programs to more readily identify and track the result. In fact, ACOA has begun work on the development of what we call the comprehensive benefit monitoring program for all business development and cooperation projects that will be implemented during this year. The work has actually already begun.

With respect to the activity centres, it's really hard to argue with the auditor general that the 43 business development centres we have are activity centres. They are activity centres; I think they are by their definition. But in relationship to the criticism that we're not measuring our results as well as the AG would like, and in noting that he had given us kudos for having improved, in the overall sense and in the impact on job creation in the macro sense, economic development in Atlantic Canada is something that cannot be forgotten.

We talked in more detail in the report about the results and how they're achieved. Whether they're 2% lower, as suggested by the auditor general, or whether they're 10% higher, as StatsCan or Coopers & Lybrand have concluded, I don't think that's the critical point.

Colleagues, I come from Atlantic Canada. I come from an area that has hosted the highest unemployment rate of the 48 unemployment districts in Canada. I come from a town that has 4,200 people, and I have to tell you that, in that town, one job is a status symbol. So whether it's 2% less or 10% more, I think Atlantic Canada can take credit for having improved the economic development in Atlantic Canada, and indeed for creating a better atmosphere and a better entrepreneurial spirit. In those macro results, I think we can take macro credit, if I can use that term. Regardless of how fine a point you argue in econometric techniques, evaluation, results of management, or whatever the case may be, however, the unarguable fact is that the results are there and they are extremely positive.

Again, as a personal aside, I'm a great believer in measuring the results of what you do. My officials would tell you that I think the second or third question when I was briefed in my job was how we know what we're doing is right and how we know that what we are doing cannot be achieved in another way. To that extent, I am in the process of looking at the organization internally, specifically with respect to whether or not there are ways to implement a performance measurement system that would indeed increase that, in addition to the benefit monitoring program. If I gather from the tone of your question the belief that evaluation in its purest sense will inevitably lead to improvement and more effectiveness, I agree with that. I also agree with the criticism of the auditor general, and we will continue to improve in this regard.

• 0930

Mr. Werner Schmidt: Thank you very much, Mr. Minister. I would like to come to exactly this second last point that you just made about there being a better way to do this.

The Standing Senate Committee on Banking, Trade and Commerce makes the following observation: “...the Committee recommends phasing out regional economic development agencies”. It then makes the point that we have the Farm Credit Corporation, the Business Development Bank, and other agencies.

The question becomes how many different ways we hand out government largesse. Ought we to perhaps look at phasing out some of these, at subsuming them, at putting them together or merging them under the Business Development Bank, or at doing something like this in some other way? It gives me grave concern that we should have so many different agencies that are in effect doing the same thing.

That particular committee goes on to say:

To those who would argue against the independent regional economic development agencies,...

—I presume this is what you are going to do next, but they make two points—

...the clear focus of the regional agencies is now assistance to small and medium sized businesses, exactly what Crown...institutions do. Second, since Crown...institutions can leverage their paid-in capital, the implication of transferring funds from the regional agencies to the paid-in capital of Crown financial institutions is that there will be an expanded availability of funds, a multiple of the funds transferred.

So wouldn't it make sense, as I think you suggest, Mr. Minister, to determine whether there is or isn't a better way of doing this? I think the committee has indicated a way. Would you agree with their recommendation?

Mr. Fred Mifflin: I could give a political answer, but I won't. I don't agree with the recommendation. I wasn't the head of ACOA at the time, but I remember quite well—and you may also recall it—that there was a fair amount of discussion on this report and a fair amount of consternation and a fair amount of criticism of the report itself. But I will try to address it in a—

Mr. Werner Schmidt: What do you really think?

Mr. Fred Mifflin: What do I really think? Let me give you from the perspective of a politician who has been in opposition, has been a backbencher, a parliamentary secretary, and a minister—and I'll do it objectively. You would be aware that ACOA stemmed from a lot of regional development organizations in the past. They were called various things, such as DREE, FRED, DRIE. Again, in the macro sense of regional development and whether or not there is a better way to do it, I think this evaluation has gone on for a long time. I am not going to comment specifically on the Senate report, but I am going to comment on the subject and the principle in the issue.

The reason I believe so strongly in ACOA is that even in opposition for five years, while I didn't always agree with some of the decisions ACOA made, I always found ACOA was helpful when business people would come to me saying they needed my help to develop jobs in the area. They had a different mandate. Their account managers had a different attitude—and I'm not comparing to one organization; I'm talking about the Business Development Bank and other agencies and commercial banks. I found the relationship between an account manager and the business was very close, although I'm not suggesting the same is not true for any other organization.

I also found something I would have said five or six years ago: whenever businesses were turned down because of the many criteria that ACOA goes through—financial viability, competition, not enough capital invested—the reason the project didn't go ahead was quite explainable. I used to have trouble explaining it to my constituents, but, with a rare exception, I believe the entrepreneurial spirit, which I think has matured since then, and the objectivity of the organization with respect to getting enterprises under way—and I think that's key, getting enterprises under way—give me a strong belief in the organization.

• 0935

Let me go on from there. Since that time, ACOA, I suppose like any organization, has matured, and it's matured. We have had major changes in the sense that the loan insurance program, for example, was cancelled about three years ago and the philosophy of grants versus loans was changed. It was controversial at the time, but I think in retrospect the businesses who perhaps found it disappointing at the time now believe the loan repayable program we have is an improvement over the old system.

Having said that, I believe it's safe for me to say that the lending institutions—and I'm going to restrict it to lending institutions—of ACOA and BDC, which operates under Mr. Manley as one of his 17 subsets, are complementary.

If I could put it in the way I see it as the minister responsible for ACOA, we are in the business of starting an enterprise. We get the enterprise up and running through a series of criteria and long discussions with the account manager, and then when the organization is up and running, for expansion or further refinement, this is essentially where the Business Development Bank comes in.

So I see ACOA in its simplest terms as an organization for development and start-ups in small and medium-sized business, and BDC is essentially a bank that assists after the organization is in place and expands as it goes along.

I want to be more definite about some of the numbers here. Last year, for example, ACOA authorized about $112 million in loans to Atlantic businesses. Twenty-two percent of those loans were dedicated to getting businesses started. I think that's substantiation for the statement that ACOA is essentially a start-up business.

The other thing is that ACOA provided unsecured—that's a key word—interest-free capital, which enabled the SMEs to start up. Once they were organized, the additional funding from BDC was very helpful to them.

So BDC in a sense provides second-term financing or refinancing loans.

I could expand more on this, but I'm sure you don't want to go on. You wouldn't want to monopolize the questions.

The Chair: Thank you very much, Mr. Schmidt. Thank you very much, Minister.

I'm going to have to ask people, members of the committee and the minister, to try to be a little briefer in their questions and their responses. There are a number of people who have questions they would like to ask.

Mr. Murray, please.

Mr. Ian Murray (Lanark—Carleton, Lib.): Thanks, Madam Chair.

Minister, it's nice to have you with us today.

In the early days of regional economic development, the federal government used to negotiate fairly comprehensive agreements with each province for regional development. I imagine that's disappeared now with, for example, the establishment of ACOA some years ago.

I also imagine most provinces have their own economic development programs or departments. My question is, to what extent does ACOA cooperate with the provinces? Whenever there's a new start-up I imagine a lot of business people would go to both the province and to ACOA, and anywhere they think they might be able to find some assistance.

Is it the typical experience of ACOA that it would often work hand in glove with provincial agencies as well?

Mr. Fred Mifflin: I think your assessment that this attitude is changing might be slightly off, because while I don't think there are as many cooperative agreements right now, there still are cooperative agreements.

I used the key word “entrepreneurship”. The other word, which regrettably doesn't appear in here as a word, is “partnering”. We're very big on the business of partners, and partnering with the provinces is one of the programs that we have found to be very successful.

• 0940

I can give you specific examples, and keeping in mind the warning from the chairman that we shouldn't spend too much time on one question, the most recent one was the economic renewable development that was put together with Newfoundland and Labrador. It was a $100 million program that worked out, and the standard was 80-20 sharing. In that program, which goes on for five years, there were really three main segments. One main segment was $20 million for aquaculture, another $20 million was for tourism, and, in a large sense, the remaining $60 million was essentially for technology development, high tech and cooperation with universities.

Partly as a result of that and other measures, Newfoundland now has a high-tech industry of about 400 industries of varying sizes, employing 6,400 people. More importantly, it's growing at a rate of 6%. I can give you specific examples, but I'll refrain from doing that because I think Madam Chair would perhaps scold me. But there are other examples in Nova Scotia, Prince Edward Island, and New Brunswick.

So the answer is we still have cooperative programs and they're very important. I think one of the big things is it brings the partners of the provinces on board, and I think we get if not better programs, programs that get provincial involvement. I think from the overall perspective of ACOA, which is essentially to foster economic development in Atlantic Canada, it's a great contribution to our overall mandate.

Mr. Ian Murray: I have one more quick question. You've mentioned the relative success of ACOA-assisted businesses compared with other businesses, and I imagine by now there's almost a cadre of successful entrepreneurs who have gone through the ACOA process. Has there been any attempt to make use of their experiences and their expertise in terms of sharing that with others who may want to start up businesses in Atlantic Canada?

Mr. Fred Mifflin: Yes, we do. We have various programs that operate in that direction. But on the subject of entrepreneurship, which is really the big thing for us in Atlantic Canada—and it's way up there on the chart—I am very impressed with one of the least-publicized programs that we have in our shop, and this is the entrepreneurship in the school system. I don't think we advertise it enough. I am trying to change that, but sometimes it's hard to get the wheels grinding. It's a subject that people are not aware of and about which they ask me a second time.

We have a five-year program to have every student in every classroom in every public school in Atlantic Canada exposed to entrepreneurial content and to enable more communities to sponsor and manage the student ventures, which can have increased opportunities. At this present time we have just short of 60,000 students in Atlantic Canada who are exposed to entrepreneurship. Believe it or not, we start just after kindergarten, and by the time students get to grade 12.... We've only had the program in operation for a few years, but we're expecting that the dividends this will pay downstream will be absolutely fantastic.

I will give you one example, one that I am very proud of. Last fall I attended the entrepreneurship awards in Atlantic Canada, sponsored by a number of organizations, including ACOA, Ernst & Young, and similar organizations. One of the winners of that program was a young entrepreneur. Another entrepreneur who was at that event was a young man by the name of Chris Griffiths, in his early 20s, who was exposed to our entrepreneurial program. With the help of other entrepreneurs who had come back, which is your main point, he developed a business of making guitars. I have a personal interest in this, but Chris is now a well-established businessman. He is 25 years old. He lives in St. John's and he builds world-class guitars. This has built up in a period of three or four years. He sits on the board of trade as one of their directors and he's flying high. For one Chris Griffiths, I'd say there's probably another 150 out there. It really is something that puts a chill up your spine, and it's a great thing to see.

The Chair: Thank you. Thank you very much, Mr. Murray. Thank you, Minister.

[Translation]

Mr. Dubé, do you have a question?

• 0945

Mr. Antoine Dubé (Lévis, B.Q.): Yes, Madam Chair.

Welcome to the Committee, Mr. Minister. I would like to come back to a word that you have used and which has raised my antennas. You said that you wanted to promote the economic development of your region in order to reduce the inequality of opportunities.

In the document that we have received from our research shop, we see that the per capita income in your region is only 74 per cent of the national average, and that the rate of unemployment is much higher than elsewhere. We have not been provided with the exact figure but I believe that it is about 4 per cent higher than the national average. However, if I compare the amounts used for economic development in your region to those invested in Quebec, I see that they are at least three times higher in proportion to the population.

Our colleague of the Reform Party talked about program evaluation and, so far, you have answered in giving various examples of successful companies. However, are you able to tell us today that you have reduced inequalities in your region, that is to say the gap between the per capita income of the Atlantic provinces and the national average, as well as the rate of unemployment?

[English]

Mr. Fred Mifflin: Thanks very much. Merci. I think the question is a very good question, and I think it goes to the nub of what regional development agencies are all about.

Let me go back to the inception of ACOA. I look at it in two phases. From the beginning in 1987 until 1993, the agency reported to Parliament the employment impact of 42,000 jobs. As I said earlier, whether it's 41,000 or 40,000 or 50,000, I think if we're in that ballpark, that's a good number for an area that is considerably below the national average in unemployment statistics. You may recall that I quoted my own area as one that is of great concern.

Since 1993, until the last time we took figures, the agency has helped create and maintain an additional 61,000 jobs. This information is based on Statistics Canada surveys of ACOA commercial clients; Coopers & Lybrand; calculations based on models of the Conference Board of Canada; and follow-up to ACOA clients.

If you look at the overall federal presence in Atlantic Canada, ACOA represents I think less than 2%—it's 1.7%. So it's about 1.5% to 2%. That's a very small percentage of the federal presence in Atlantic Canada.

But I would maintain and I would posture and I would affirm and stand by with great conviction that although we're a small organization and although we're small in the overall federal presence, I believe we represent 1% of the region's GDP. The impact we have, with respect to jobs, I believe would compete very favourably with the other 99.3%.

Is it enough? Are we headed in the right direction? In order to answer that question, I asked myself—and I've asked others, and I go back to Mr. Murray's question about the need for an ACOA or a regional development agency—what would happen if you didn't have it there? It's always a good question to ask yourself if you're measuring the effectiveness of an organization.

Well, I don't intend to do a study on that, because there would be too much flack. I can tell you right now, though, whether you had another organization that produced half the jobs, the benefit of the 100,000 jobs plus or minus 5%, in addition to the other things we've mentioned—the cooperative program, the other non-core programs, the peripheral activities we get into, the entrepreneurship development.... I mentioned the 60,000 students in the school who ten years from now will be running businesses they would not have ordinarily run.

• 0950

I'll give you another concern that relates to this subject, and it applies to Quebec as well. We have at this time about 25,000 people who are in the fishing industry whose future is causing them a great deal of angst and discomfort. I can quote you examples of the relationship of ACOA programs, the involvement of ACOA and other activities, whether it's entrepreneurship, whether it's a cooperative program, whether it's the pure ACOA core program, or whether indeed it's one of the peripheral programs that have caused considerable success in certain areas to be achieved. It's not the solution to the overall problem. There is no one solution. It's a series of solutions.

But I think if you look at that aspect of ACOA and the non-declared or the entrepreneurial 60,000 students and the Chris Griffiths of the world, that I believe has to be taken with the successes in ACOA in jobs. I suppose in the overall sense the achievements in the numbers in the jobs in the core programs and the future achievements because of the peripheral activities we have, not the least of which is in information and technology, I believe augur well for the future of this organization and for continuing success in regional development. It's a long uphill battle, as you know. Are we winning it? I think we're at least stemming the tide.

The Chair: Last question, Mr. Dubé.

[Translation]

Mr. Antoine Dubé: Obviously, Mr. Minister, you like to talk about the efforts of your organization and of your officials, which is commendable. However, I am asking you if all those efforts have indeed reduced the gap between the average regional income and the average national income, yes or no, and if, yes or no, they have reduced the gap between the regional and the national rates of unemployment.

You said at the beginning that your role was to reduce inequalities. You said so yourself. I was not asking about your efforts but about your results.

[English]

Mr. Fred Mifflin: Well, one of the things that makes the results very difficult to measure.... I'll go back to the business of the decline of fishery. We have accounted for on the Atlantic groundfish strategy at the beginning, as you.... I don't know if you have fishermen in your riding or not; I suspect you have some. The TAGS program was put together in 1994 on the premise that 25,000 men and women in the fishing industry would apply and would be eligible. In fact, within eight months, there were a total of 40,000 who were eligible under the criteria of TAGS.

There were many others who couldn't even apply, who were not under the criteria. I would say, as a conservative estimate, that we probably had somewhere in the vicinity of 60,000 people in a period of a year, starting in 1991. So from 1991-1993, the unemployment statistics changed through let's say...let's say an act of God; let's say anything. Twenty-four species of groundfish disappeared.

How can you say,“Okay, ACOA's had a great effect because it's developed 100,000 jobs”? “Yes, you developed 100,000, but you lost 60,000 in three years”. So it's very hard for me to ask myself whether I'm the head of ACOA, or whether I'm a client out there, asking if ACOA has really done its job.

If there were no other things other than the usual sorts of ups and downs and the cyclical unemployment we're all used to, I think we could give you a better answer. But because of structural unemployment, because of acts of God, 60,000 people in a couple of years—boy, that makes it very difficult to do.

I have to rely on a less objective measure. I have to rely on something that—call it corporately subjective. I look at 100,000 jobs in ten years as being a pretty good indication of something that's working well.

The Chair: Thank you very much, Minister. Merci, Monsieur Dubé.

Mr. Mahoney, please, briefly.

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Mr. Steve Mahoney (Mississauga West, Lib.): Sir, I noted in your presentation that you used a couple of examples of public-private partnerships and entrepreneur issues that have worked. One is Allain Equipment Manufacturing in New Brunswick. The other is the Atlantic Canada Home Program. I don't know where that's based. Maybe you can tell me that. The third is the Clinical Trials Atlantic Corporation in Halifax.

I find the documents very interesting, and the concept of entrepreneurism is vitally important. It's a big issue in my riding. I think it's an issue that could well help solve the problems in Atlantic Canada due to the size of the unemployment problem.

My concern and question is this. What I'm seeing here is a focus on New Brunswick and Nova Scotia in the presentation, as opposed to the issue—I know you're very concerned about this—of Newfoundland and Labrador.

I've seen examples of the collapse of the groundfishery that could be compared to the collapse of the B.C. forest industry. Colleagues in our caucus have mentioned their concerns that if any industry in Canada were to lose 30,000 jobs, there would be some kind of support or an attempt beyond just TAGS. It seems to me that TAGS is—correct me if I'm wrong—very much an enriched welfare program instead of a sustainable investment or sustainable development program that will create ongoing jobs, new industries, and new opportunities for entrepreneurs. So I'm just a little concerned when I see that the focus this morning may be more on, if I could call it this, the western part of eastern Canada. I wonder what your remarks or comments might be on how entrepreneurism and your concept is working in Newfoundland and Labrador.

Mr. Fred Mifflin: Thank you for the question. I'm cognizant of the time, Madam Chair. I could answer this in half an hour.

The Chair: Briefly.

Mr. Fred Mifflin: Three hours or five minutes?

The Chair: How about two minutes?

Mr. Fred Mifflin: Two minutes, okay.

I want to out and out say that if I created that perception, then I failed miserably in my presentation here this morning. The division of funds in ACOA works out to about 30% for Newfoundland, 30% for Prince Edward Island, 30% for New Brunswick, and around 10% for Prince Edward Island. So in the overall sense, I can assure you that the examples I used were intentionally to not include Newfoundland, because I wanted to leave that for the last.

Let me give you an example. I talked about high tech. I can give you all kinds of examples in Newfoundland, but I wanted to give you an example of a conversion from TAGS to a very successful business. This was in the early days when TAGS indeed was designed to develop an exit from the fishery. We all know why it didn't work, and I won't get into that.

In the northern part of my riding is a town called Newtown. It's an area that essentially depended on fish back in the old days. It was the centre of the sealing industry. With the demise of the fish, there were really no main activities. There is one main plant still operating.

The residents of the Cape Freels area—this includes towns like Newtown, Wesleyville, Cape Freels, and Lumsden, in about 15 communities—got together and took something that they knew they could use. This to me is a perfect example of community development that works.

They had old houses that belonged to the old sealing captains, which were called the Barber houses. Over a period of three years, with $600,000, they put together a program that is nothing short of startling. They renovated two houses with $600,000. They put together a building that was to be used for a cafe and a small theatre with 90 seats. They bought the seats from a Gander theatre, which is about an hour's drive away. They paid $70 for all the seats.

Right now, with a further development grant of $400,000, they are going to develop essentially a heritage village that will take people back to the turn of the century. It's absolutely incredible. They're going to put in fish stages. They're going to put in general stores.

• 1000

The other incredible part of this success story is that in those three and a half to four years, women who worked in the plants have been transformed into hostesses. They dress in period costumes, they give presentations, they perform in plays.

I think the success I can use is that in one year, the year before last, 5,000 visitors came to see them. Last year they had 12,000, and this year they're expecting to have close to 20,000. Now that is a success story. It includes TAGS, it includes ACOA, it includes cooperative programs and many of the elements, including the entrepreneurship training that we're so proud about in ACOA.

The Chair: Thank you very much.

I'm going to have one last questioner to ensure that all opposition parties have equal time. Mr. Jones, please.

Mr. Jim Jones (Markham, PC): Thank you, Madam Chairman.

Mr. Minister, many concerns have been raised in regard to aquaculture, specifically salmon aquaculture. Can you give us a thumbnail sketch of the long-term viability of this industry?

Mr. Fred Mifflin: Yes. Noting the time, I'll be as brief as possible.

Some of our colleagues talked about cooperative programs, and I'm into the $100 million economic renewal development program for Newfoundland and Labrador with Canada. It's a 20-80 shared program of $100 million. We are convinced that aquaculture is going to be big some day in Newfoundland and Labrador. Our attitude is if you can do it in Norway, you can do it in Newfoundland.

We have dedicated $20 million. In other words one-fifth of that program is dedicated to aquaculture. I can quote you many success stories and figures, but there's one that I suppose is less quantifiable but is the biggest success story.

On the south coast of Newfoundland in an area called St. Alban's is Baie d'Espoir—called Bay Despair in Newfoundland. In the last five years they have developed such a mature industry in aquaculture, specifically with salmon, that I would guarantee with a 90% degree of certainty that if you were to have fresh salmon anywhere in Newfoundland—the Hotel Newfoundland, the Delta Hotel, the Albatross Hotel in Gander, or any other hotel—chances are that salmon would come from the Baie d'Espoir aquaculture farms.

We are experimenting with cod aquaculture. It's very difficult to convince a fisherman who has been a fisherman of the wild cod that you can actually develop cod. You can farm them and catch wild cod at the same time. ACOA partnered with a program to get a very credible gentleman to meet with fishermen all over the island and in Labrador to convince them that this can be done. Phase I is now complete and the actual building of pilot projects will be under way next year.

I'm glad you raised the question because I'm a great believer in aquaculture. I don't see it as competing with wild fishing; I see it as complementary. It's like everything else; it has to be done in steps, it has to be done with a great deal of patience, and it has to be done to complement the wild fishing as well.

The note I wish to finish on is that Memorial University in St. John's does most of the research for the province. In the last two years I have visited Memorial probably ten times, and on at least half of the occasions there was an injection of cooperative money to assist in the research and development of the aquaculture industry.

So it's all coming together, and quite frankly the strides it has made in the relatively short time I have been a politician are nothing short of spectacular in Newfoundland and Labrador.

The Chair: Thank you very much, Mr. Jones.

Minister, we want to thank you for being with us this morning. It's been a very interesting discussion. As you can see, it could go on for a very long time. We appreciate you taking time out of your schedule to be with us and we look forward to your next visit with us some time next year. Thank you very much.

I'm going to suspend the sitting for five minutes while we change witnesses and rearrange the table a bit.

Mr. Fred Mifflin: Thank you, Madam Chair.

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• 1013

The Chair: Let us reconvene. We will continue our hearings pursuant to Standing Order 108(2), a study on information technology preparedness for the year 2000.

It's our pleasure to have with us today a number of witnesses representing the automotive sector in Canada. As a committee, we've identified you as an industry sector example of how it affects from the top down. We'd like to hear about where you are with your year 2000 plan and how we can ensure that not only the companies will continue on January 1, 2000, but all consumers' cars will operate on January 1, 2000.

We have with us today, from General Motors, Tayce Wakefield, vice-president of corporate affairs; Roy Campbell, GMCL information officer, information systems and services; Doug Potier, systems manager, information systems and services.

We have with us today, from Ford Canada, Maureen Trenkler, technical assistance manager, and Michael Sheridan, government relations.

From Chrysler Canada we have Othmar Stein, vice-president, government relations and public affairs; Roger Buck, manager of year 2000; and Bob Renaud, vice-president, parts, services and engineering.

From Toyota Canada we have Brian Mason, national manager, corporate systems.

We will begin in the order as listed, with a person from each company doing a presentation. We will start with General Motors, please.

Mr. Campbell or Mr. Potier.

Mr. Roy Campbell (Information Officer, Information Systems and Services, General Motors of Canada Ltd.): Thank you very much. First of all, I would like to thank you for the opportunity to talk about this subject with the committee.

I'd like to start with the Canadian auto industry. As you realize, it is a key driver of the Canadian economy. It's about 12% of the manufacturing GDP. Direct employment in the auto industry is over 500,000 Canadians. In fact, one in seven Canadians directly or indirectly relate to the auto industry.

Our production was over 2.5 million vehicles in 1997, and we have a domestic market of 1.4 million vehicles.

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On investment, over $20 billion was invested by Auto Pact members in the past decade. We are also Canada's largest exporter, with 33% of the total exports attributable to the auto industry. Vehicles and parts represent 45% of Ontario's exports.

Moving to General Motors of Canada's reach in this industry, there are 30,000 people in direct manufacturing employment. We invested $1 billion in Canada in 1997 alone, and GM of Canada's worldwide purchasing sourced over $6.6 billion from Canadian auto parts manufacturers in 1996 alone.

There are almost 900 dealers across Canada employing almost 34,000 Canadians. General Motors of Canada Limited is Canada's largest exporter, as far as a company is concerned. We also have our diesel division, which produces light armoured vehicles and diesel electric locomotives.

When it comes to General Motors' Y2K program, this is a corporate-wide effort. It has program offices in all business sectors, with one being controlled out of Detroit. Dedicated resources, including both IT professionals and business professionals, are involved in the solution.

General Motors of Canada has been working on this problem since 1993. This is not something new to us. We have taken a strategy where the main remediation strategy is to replace our core legacy systems with up-to-date, compliant new technology and systems and only repair the remaining systems. The strategy here is, why spend the money twice? If we have to spend money on remediation, let's do it with new and up-to-date technology. Our target is to be complete and ready for integration testing by the end of 1998, giving us a full year for testing.

Y2K impacts the business in seven main areas we've looked at. We talk about business systems, manufacturing, engineering, including the product, sales, service, and marketing, supplier readiness, the infrastructure, and personal computing.

When I talk about business systems and Y2K, it's primarily the mainframe computing. It supports functional areas of our business such as finance, personnel, purchasing and logistics, production control, etc. Over the past five years General Motors of Canada has replaced over 20 core business systems with up-to-date technology, and our remaining legacy systems are 75% through remediation.

On manufacturing and Y2K, it includes all the plant floor support systems and process control intelligent devices. This includes items such as robots, machine controllers, facility monitoring equipment, etc. In General Motors worldwide, our inventory now sits at over 400,000 of these types of devices. The major issue is the accuracy of the inventory of the systems and assessment of the Y2K impact of each one of these individual plant floor devices.

Our inventory is complete. The assessment and remediation is being distributed within manufacturing worldwide. This is not something every facility can fix on its own. While the numbers appear large, they are multiples of the same problem. For example, if you have one certain model of robot and it has a control problem and you have 10,000 of these robots, you find the solution once and then distribute or disseminate throughout the rest of the organization. While it seems daunting, when you really break it down it's not that bad.

When it comes to engineering and Y2K—I'm talking primarily about design graphics and simulation tools—the corporation has leveraged Y2K to standardize and refresh all our engineering work stations so we're all up to date. As far as engineering, test equipment and laboratories, this includes areas such as the Kapuskasing cold weather proving ground, our experimental and quality garages in Oshawa, and about 200 engineering work stations in Oshawa. They are being handled in a similar manner to engineering. You can check multiple test cells once and then disseminate it. We have an accurate inventory with distributed assessment and remediation.

When it comes to product-embedded systems, all General Motors motor vehicles show no Y2K issues at this time.

The area of sales, service, and marketing and Y2K is comprised of General-Motors-owned systems, dealer-management system providers, and dealer-owned systems. These are such things as vehicle locators, warranty tracking systems, and satellite-based communications systems, including what we call Access and HIDL.

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GM systems are tracking to plan a remediation. A number of GM-authorized outside service providers are not yet compliant. All assure compliance in 1998, and GM is monitoring closely and we are an active participant.

As for dealer-owned systems, GM has developed a dealer self-assessment kit. It's been piloted in Canada for its validity with our technology board dealers and is to be issued to all GM dealers in the May timeframe. This is for their in-house-owned specific equipment.

As for supplier readiness for Y2K, GM has an integrated global supplier network. In Canada there are 381 tier I Canadian suppliers with estimated employment of about 40,000 people. This program is being driven by worldwide purchasing with IT assistance. Our suppliers have been stratified based on criticality to General Motors, and it is a coordinated effort with GM, Ford, and Chrysler, because we have the majority of the parts suppliers in the Canadian environment; I think 93% go to the big three.

We have a supplier self-assessment that's been issued. This is what they call the AIAG, the Automotive Industry Action Group, from the suppliers. It's a self-assessment Y2K. But we're not satisfied with just a self-assessment, and we are scheduling on-site audits with each of our critical suppliers to ensure they are capable of meeting the Y2K commitment.

As far as the infrastructure is concerned, this includes desktop PCs, networks, and computing platforms. Remediation is primarily being driven by the industry—in other words, the Microsofts and the IBMs—and they're out also in front of this technology. Our inventory will be complete by the end of May 1998, and we will be at compliant release levels by the end of 1998.

When it comes to personal computing, this includes programs and procedures written by individuals in day-to-day job operations, such as spreadsheets, local databases, and ad hoc mainframe inquiry procedures, that are not supported by a traditional IT department. We are resolving this primarily through awareness and an education program and by providing technical assistance. We're operating this one on a “pull”, or by request only.

When it comes to GMCL and the government in Y2K, with GM's huge reach across the economy and across the country, there are multiple points of contact with government at all levels, such as customs administration; taxation; safety and environmental support; industrial power grids; people programs, such as CPP, WCB, and EI; and transportation and communications infrastructures. We are relying on governments and governmental agencies to be in compliance to ensure that business can continue to function.

That concludes my presentation.

The Chair: Thank you very much, Mr. Campbell.

We'll now turn to Ms. Maureen Trenkler from Ford Canada.

Ms. Maureen Trenkler (Manager, Technical Systems Services, Process Leadership and Information Technology, Ford Motor Company of Canada): Good morning, ladies and gentlemen. My name is Maureen Trenkler and I'm the technical systems manager in Ford of Canada's process leadership and information technology department. I've been part of Ford's global year 2000 team since February 1997, specifically as the year 2000 program manager for Ford of Canada, managing and reporting Ford of Canada's year 2000 conversion progress.

My background is in application development, and I became aware of the year 2000 issue in the mid-1980s, when Ford began to write new applications with four-digit years and make modifications to expand the date fields in existing applications.

What distinguishes the year 2000 challenge from other business imperatives is its deadline. It can't be changed; it can't be missed. Whether a company is ready or not, December 31, 1999, the new century will arrive.

Ford has a very proactive year 2000 program. A Ford year 2000 team was established in November 1996 to coordinate the identification, evaluation, and implementation of the changes to systems and applications to achieve compliance with the year 2000 date conversion.

The company is in the process of assessing and implementing necessary changes for all areas of the company's business that could be affected. These include such areas as business computer systems, plant floor equipment, building infrastructure, end-user computing, affiliates, suppliers, and vehicle components.

For each of the areas of the company's business, a compliance process including inventory, impact analysis, compliance strategy, compliance planning, compliance execution, acceptance testing, and implementation has been developed. At each stage of the process, extensive tips, techniques and job aids have been developed.

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Ford has established accelerated conversion centres in various regions of the world and is using these centres, as well as external resources, to address the year 2000 issue. The company plans to have necessary modifications made to most of its critical systems and applications by the end of 1998 and reserve 1999 for a full year of testing.

The company has investigated the impact of the year 2000 issue on its vehicle components and does not anticipate any effect on the operational safety or performance of its vehicles. The electronic functionality of such components generally is based on engine cycles or the time elapsed since the vehicle was started, not on any particular date.

While the company will continue to investigate its vehicle components, at present it does not anticipate any significant exposure related to the year 2000 issue for its current or future products.

The company is working with suppliers and dealers to ensure they are aware of the issue and are taking steps to make the appropriate modifications to their systems and applications on a timely basis. Ford is actively working through the automative industry action group and with other manufacturers to educate and encourage suppliers to adopt common date standards and implement compliance strategies. The AIAG is also working with Deloitte & Touche and Coopers & Lybrand to evaluate supplier readiness and provide them with tips and techniques that will help them achieve compliance.

In addition, Ford will rely to a certain extent on equipment suppliers for the modifications that must be made to certain Ford manufacturing equipment.

Believe it or not, there may be some benefits from all the effort needed to make a company year 2000 compliant. Among them, companies will have developed a comprehensive technological inventory, something many companies do not currently have. Dealing with such a massive change while facing an immovable deadline can improve a company's ability to change, to handle change, and thus make it more reactive to external pressures.

Many companies do not regularly test or upgrade their technological systems. Becoming year 2000 compliant will force them to put such processes in place, which will ensure better response in the future.

The same techniques and tools that we're using for the year 2000 conversion can be useful in other areas, such as preparing for the common currency known as the European monetary unit. For example, many initiatives are coming up in the future, and these processes can be then applied to them.

Thank you for the opportunity share Ford's year 2000 program plan. I would invite any questions.

The Chair: Thank you very much.

We're now going to turn to Chrysler Canada. Mr. Roger Buck, manager, year 2000, will be doing the presentation.

Mr. Bob Renaud (Vice President, Parts, Service and Engineering, Chrysler Canada Ltd.): Bob Renaud, I'm sorry.

The Chair: I'm sorry, Mr. Bob Renaud, vice president, parts, service and engineering, will be doing the presentation.

Mr. Bob Renaud: Thank you very much. I've been sitting here listening to GM and Ford, and I think everything has been said, so thank you.

It will be apparent as I go through my presentation that actually we've all handled it in the very same fashion and I think are very confident that we're going to be able to beat the issue.

The key in your asking to have us here is that you see a problem. We're here because we agree that there's a problem, and I think we all agree that it's a problem that affects all of us. It emphasizes how dependent we are on each other in many ways, and in our case, on our suppliers. It's critical that we hit the year 2000 running together and not make any mistakes along the way.

In terms of preparation for the year 2000 issue, we developed compliant date routines in the late 1980s as an initial step in preparation for the need to proceed on year 2000 issues, and all new database date fields have been four-positioned since the late 1980s, again in preparation around new systems.

We also had a project in March 1993. It was a part number expansion. We took all our part numbers and went to ten positions. We had to go through 28,000 programs, and in doing that, we did two things. We were able to update to year 2000 in some programs; but we were also able to develop tool sets and processes and how to handle massive conversions like year 2000 by doing our part number expansion in the mid-1990s.

Our formal project was launched formally actually in late 1995. As with GM and Ford, all our areas within the corporation are representative, from manufacturing, engineering facilities, procurement and supply, finance, sales and marketing.

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We also knew we couldn't handle it as an internal issue only. Because we are an extended enterprise, we had to deal with our suppliers and dealers as well.

We are executing plans right now, and we have a target completion date of December 1998.

Relative to business computer systems, we have 60,000 computer programs, of which 82% are either okay or remediated at this point. The target completion date is October 1, 1998, which is a bit of a stretch. We want to be there before the end of 1998. The verification tests are planned from July 1, 1998 to June 30, 1999.

As we remediate, we are testing in an artificial year 2000 environment; we're going to test in a real year 2000 environment once we're complete. Look at that last line in the document: if you don't test it, it's not compliant.

There are many organizations that think that's okay. They'll make the conversion and then plug it in on January 1. You better test it, because you're going to have a lot of shocks along the way.

In terms of technical infrastructure, we have our data centres, our wide-area networks, local-area networks, communication networks, etc. In terms of software, our inventory has been completed and our research is in process. In terms of hardware, in 1996, 83% of our office automation and PC equipment was compliant. We actually have a rotation cycle on our PCs of every four years. That has worked to our advantage right now. As of March 1, we're 99% compliant, and we'll be totally there by fall.

In terms of manufacturing, this is an area in which I think a lot of organizations didn't see an issue. They kept thinking about the computer, the PC, the mainframe, but as mentioned again by GM and Ford, we've developed an inventory and testing process with Deloitte and Touche to get us started. We've completed a plant floor device inventory of 30 plants and have had testing at four plants. Generally, we're finding that 30% to 40% of the devices are exhibiting a Y2K failure. Fewer than 5% of those problems are critical to our production, and they're being addressed first.

In terms of project milestones for the manufacturing group, we've completed an inventory in all our plants. That's 51 plants as of April 1998. We'll complete the testing by July 1998 and complete remediation of critical items by December 1998.

Suppliers, again, were covered earlier by Ford and General Motors, but we are working in the Automotive Industry Action Group. We have Chrysler representatives on our Y2K task force within that group.

Roger Buck is that representative. It's a great name for a guy in year 2000, eh? Roger Buck or Buck Rogers? Isn't that perfect? He's the future. I had to do it.

The group also includes some European manufacturers: Volvo and some of the German manufacturers. The key was the presentations given to the CEOs of the big three suppliers in a May to July period. The CEOs of those organizations were sent a letter with self-assessments for 40,000 big three supplier sites. So it's not just the supplier's head office; it's the supplier's sites, each facility. There was an established information centre, and we, Chrysler, mailed score cards based on the survey results of the CEOs of all the Chrysler suppliers. That happened in February 1998, and we have a follow-up in place.

The tier I program is really driving similar programs through remaining tiers through the AIAG. It's not just a tier I issue, obviously, but we are counting on the tier I suppliers to do their part in supporting us.

In terms of dealers, we are working with the dealer system providers. We deal with eight. There are two major ones. That started last spring. At every dealer meeting we have, national or regional, we raise the issue.

We mailed self-assessments in October. We mailed commitment letters in January 1998. We have specific items being mailed again in May as a follow-up on the issues we're seeing as most critical to dealers. We'll have a continuous compliancy follow-up through the end of the year to ensure we're compliant with our dealers at the end of the year.

As for other areas, such as environmental operations, we have a compliance program with our facilities, and 180 vendors are involved. That's from HVAC systems, security systems, alarms, and fire protection elevators, which can all be impacted.

Our Chrysler vehicles, as indicated earlier by GM, are compliant. We have no problem, thank goodness. In our science R and D labs, we have 7,000 R and D devices that are being inventoried. The compliance testing is in process right now and again will be there by the end of this year.

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I've covered the issues mentioned on the next page: the computer systems infrastructure, suppliers, dealers, environmental operation, products, and science labs. In our package we have included an appendix of some of the letters that indicated an apparent interest in what kind of information we are sending to our suppliers and to our dealers. Those packages are included for the committee to review. The first package is actually the AIAG letter that was sent out by Ford, GM, and Chrysler and the attachments to that. By the way, the survey is copyrighted.

I think my time is up. Thank you.

The Chair: Thank you very much, Mr. Renaud.

We are now going to turn to Toyota. We have Mr. Brian Mason, the national manager of corporate systems.

Mr. Brian Mason (National Manager, Corporate Systems, Toyota Canada Inc.): Thank you, Madam Chair.

Good morning, ladies and gentlemen. I have just a few statistics about Toyota Canada and our business environment in Canada. We've been in business for 35 years now. We've invested $2.3 billion in Canadian infrastructure. We currently have more than 10,000 employees in our total Canadian network, which includes a dealer network of 229 private businesses.

I'm somewhat envious of the scope of the year 2000 project plans that have been presented by my peers this morning. I could only wish to have the resources to approach our project in the same manner.

However, we have been actively attacking the systems issues at least since 1995, when we first encountered a year 2000 failure in our extended insurance business with long-term maintenance contracts. We first ran into this problem back in 1995. That was an early wake-up call to us that this could not be put off. We've been dealing with it, from a technical standpoint at least, for several years now.

Unfortunately I have to admit that our business areas have not been as actively involved. We are currently aggressively trying to raise the awareness of the need for the business areas to research all aspects of electronic technologies and services they utilize. We expect that most of our major systems will be completed by the first quarter of 1999, and we're currently at approximately 65% completion. Our approach over the last couple of years has been to implement changes as we go along so we are not attempting to do a big bang theory implementation at the end of this project.

We see several risks. One of the major risks to us is the extensive supply chain network that threatens to disrupt our business if they're not adequately prepared. This includes both the upstream and the downstream, the suppliers through the distribution to the dealers themselves. Any of these parties have the potential to bring us to a halt.

As we're finding through our dealerships in particular, many small businesses are not adequately prepared. In fact most of them don't even have plans to address this. We find ourselves in a predicament in that we can't possibly help all of them because Toyota simply does not have the resources that could possibly help these people to deal with these issues.

From our standpoint today, I'd like to leave the message that we would like to see increased government leadership, awareness campaigns, and possibly solutions for small businesses. Help them understand that there is a need to go in and take a serious look at their business, use external auditors if necessary, identify the critical issues, and validate any project plans if they do have plans in place.

I'd like to raise a couple of points that I have been aware of in recent reports. One is the Conference Board of Canada's report in December 1997. In that report they stated that less than half of all Canadian businesses have taken any action at all to correct or limit the impact of the year 2000. This is based on a Statistics Canada study done in 1997. How else can this issue be dealt with effectively if our government does not take aggressive action to raise the awareness of this issue with business owners and officers?

Technology is not the only area that needs to be addressed. There are many legal issues, audit issues, and insurance services that need to be investigated in every company, no matter how small.

I would make one last point about another study that was conducted by IBM. They have a large group called transformation services. In late 1997 they identified that there were four categories that businesses fall into regarding the year 2000 issue: there are those that have the year 2000 issue under control; there are those that believe they do but really don't; there are those that don't believe there's a problem; and lastly, there are those that think they can replace or develop their way around the issue or a significant portion of it.

• 1040

To conclude, I would just like to assure the committee that Toyota Canada is doing everything in its efforts to deal with the issue at our corporation, with our dealerships, with the software providers that provide technology to our dealerships, with our suppliers and carriers in the distribution network, and, in collaboration with Toyota Motor Corporation in Japan, we have been assured that the vehicle technology components in our vehicles will not impact our customers on January 1, 2000.

As we know, many computers and chips and various types of technology are in our automobiles today, so we are very fortunate, I believe, that at this point we can state to our customers that they should not be concerned about whether their vehicles will operate effectively in the year 2000.

Thank you. I appreciate the opportunity to make these remarks at this meeting.

The Chair: Thank you very much, Mr. Mason.

We're now going to turn to questions. We have this room until noon, technically, and I know everyone has time constraints, so I'm going to ask that our questions and answers be as brief as possible.

If the question is directed to one particular company and another wishes to answer, you can just signal the chair, or if I don't catch it, you can jump in.

Mr. Schmidt.

Mr. Werner Schmidt: Thank you, Madam Chair.

Thank you very much, ladies and gentlemen, for appearing here this morning. It's rather comforting to hear that all the cars will be operating on January 1, 2000. You've all said that's going to be the case. I hope you're right.

I would like to compliment the Chrysler presentation in particular for including in the appendix the test you have there. It is in regard to the test that I would like to ask my question.

The question has two words: “reliability” and “validity”. In other words, how valid are these questions? In fact, if everybody answered these questions in a particular way by saying, “yes, we're ready”, does that then in fact reflect that they are ready? That's the first question. Second, how reliable is it? If I took the same test and applied it to the on-site places, would I get the same results as the individual doing the self-test, which is really what this is about? Those are the two parts to the question.

Mr. Bob Renaud: I'll let Roger Buck, who is deep in team year 2000, answer the question.

Mr. Roger K. Buck (Manager, Year2000 Information Services, Chrysler Corporation): I'm actually on the team at the automotive industry action group that put the questionnaire together. I meet twice a week with my counterparts at General Motors and Ford.

Actually, the answer comes from General Motors. General Motors, as they said in their talk, has gone out and audited suppliers. In particular, they went out and audited suppliers who filled out the self-assessment, because they wanted to know in terms of a company reporting how they're doing in regard to year 2000, whether they could send someone in and assess what the actual results are and compare it with what the company said on the self-assessment.

Their report to the AIAG was that it is very accurate, that the companies who use it are using it to determine that although they knew they had a problem in their mainframes or with their PCs, they didn't know they had problems in other areas.

While it's laborious and takes a long time to fill out the survey, it really tries to tackle all the areas you might have a problem in.

To answer your question, they reported that the self-assessment results were very accurate compared to what auditors found going out to those companies.

The Chair: Excuse me, Mr. Schmidt. I want to welcome a group we have here from the public accounts committee of the North-West Legislature of South Africa, and I just want to let them know that we're discussing the year 2000 issue, how it will affect the automotive industry, and what that will mean to Canada.

Mr. Werner Schmidt: Thank you very much, Madam Chair.

I'd like to express my welcome as well. It's great to have you here.

The other question, then, has to do with the General Motors statement. You made two points, I believe. In one case you mentioned that your inventory was complete—on page 4—as far as manufacturing is concerned, and then later on, on page 6, under infrastructure, the statement is made that inventory will be complete by the end of May 1998. So obviously these things are at different levels of readiness. Is that a correct interpretation?

• 1045

Mr. Roy Campbell: That is correct at this point. The manufacturing inventory was done and it was done early. It was done with the concerted effort of all the manufacturing organizations. The personal computing and network and infrastructure is being completed now and it will be done later. They're at two different levels.

Mr. Werner Schmidt: Thank you very much. My third question, the last one, has to do with the letters you have sent out making suppliers aware and also a second letter asking, are you aware? You've given us assurance that the automobiles will be operating, trucks will be operating, and all the other vehicles will be operating. The generation systems will be operating, all the stationary installations will be operating, and so on down the line.

How many of these suppliers to whom you have sent these letters have sent back to you assurances that, yes, indeed, we are ready and we'll be compliant on January 1, 2000?

Mr. Roger Buck: For Chrysler Corporation at this point, 44% of our production suppliers have filled out the survey and mailed it back to us. We're finding that many of the suppliers do not want to answer our 120 questions. Actually, when you expand that 120 out with questions 1(a), (b), and (c), there are about 250 questions. They have instead sent us letters stating how they're doing on year 2000. We are not entering that into our common database.

The big three decided two weeks ago to reduce the questions down to 24 key questions out of that survey in an effort to get a higher response rate. All three companies are sending out report cards on a quarterly basis. So we intend to continue to hound the suppliers to make sure they are all taking action on year 2000.

Mr. Bob Renaud: I think it's critical that one of the main issues is awareness, obviously, and there is critical awareness within the industry. Secondly, these are businesses that want to continue to be suppliers. If they can't produce, it's not going to work very well. That's the issue.

I really believe from everything we've seen and the people we've talked to that they may not always want to fill out a questionnaire, but I tell you they're planning to be ready. They're in the same boat with the tier II and tier III suppliers. They know they're dependent on them.

So the chain is very active. We feel very comfortable with more audits to come to make sure everything is going to be there.

The Chair: Briefly, Mr. Schmidt.

Mr. Werner Schmidt: Thank you, Madam Chair.

I think you indicated that 95% of the systems are not critical to plant operation. But that doesn't give me much assurance, because sometimes it takes a lot less than even 1% to close down a plant. Among the 5% remaining, are there those that could cause the plant to stop?

Mr. Bob Renaud: The critical systems are being handled. When we say non-critical systems, an example is a robot that has a date code but the date code has nothing to do with the operation of the robot. So in that case it will be converted, but it's not a critical item that will affect plant operations at all.

Mr. Werner Schmidt: By provision.

Mr. Bob Renaud: Yes.

Mr. Werner Schmidt: Okay, thank you.

The Chair: Thank you, Mr. Schmidt.

Mr. Bellemare, please.

Mr. Eugène Bellemare (Carleton—Gloucester, Lib.): Thank you, madame le président.

Given that the Canadian manufacturers are probably 50% to 65% ready—not defining readiness or auditing it at this point—and given also that we've discovered we're probably the country that's the most ahead, with the United States and Great Britain probably second.... We've also heard a lot about how on the continents, especially Africa and in the Orient, they seem to think this is all a North American plot to create programs and computer programs.

Given all these, it doesn't reassure me when I know that a lot of your parts, your components, are produced offshore. If these components coming from offshore are not reliable, how can you state today that everything is going to be okay after January 1, 2000?

• 1050

Mr. Bob Renaud: First of all, every supplier, regardless of the location of the supplier, produces to our specifications, and if our specifications require compliance, they have to do that. If they don't do it, again, they lose the business because they're not building to our specifications, regardless of where their plant is located.

Is there any other comment from Ford or GM?

We don't let them build whatever they want. There are very strict compliance requirements.

The Chair: Mr. Sheridan.

Mr. Michael S. Sheridan (Director, Government Relations, Ford Motor Company of Canada, Limited): The majority of parts used by Ford Motor Company for vehicles built in Canada are produced in Canada or in the United States. Very few parts come in from offshore.

Ms. Tayce Wakefield (Vice-President, Corporate Affairs, General Motors of Canada): I think you'll find that at both GM and Chrysler, as well. A very, very small number of parts come in from offshore.

Mr. Eugène Bellemare: Can you tell me how many embedded chips there would be in an automobile, on average?

Mr. Bob Renaud: Up to seven.

Mr. Eugène Bellemare: Do you have embedded chips within embedded chips?

Mr. Bob Renaud: I don't know; I can't answer that.

Mr. Eugène Bellemare: Safety vehicles—today it's about automobiles and what's coming out, but no mention has been made of safety vehicles. Have you all—at least the big three 3—produced fire trucks, police cars, ambulances, and so on?

We are aware that police cars are usually brand new. It's very rare that you'll see a wreck, except in the movies. Go to the other end and you get the fire trucks. Fire trucks have a survival rate of many years. It's not unknown to have a fire truck that's 12 or 15 years old. How do you address that problem, fire trucks produced or parts produced by one of the big three?

Mr. Michael Sheridan: I think I could answer that.

Actually, in the Y2K issue, the older the vehicle the better off we are. Most of the old ones do not have any technology in them.

Mr. Eugène Bellemare: That covers the fire trucks.

Ambulances can be five or six years old, and they would have embedded chips.

Ms. Tayce Wakefield: If I could add to that, you've heard for any of the vehicle systems we build that we are confident they are year 2K compliant and there won't be a problem.

Frequently, you will find with ambulances, fire trucks, speciality kinds of emergency vehicles, that the original vehicle equipment manufacturers supply a chassis, essentially an engine and a frame, and an up-fitter then builds the specific equipment related to firefighting or the emergency services. So we would provide full electrical drawings of our systems to that up-fitter, and we will work with them to ensure that their systems function perfectly. But we take responsibility only for that which we produce ourselves. The fundamental system is sound.

Mr. Eugène Bellemare: Okay.

I heard one of you talk about sending out questionnaires to your suppliers. Of course, suppliers are probably saying yes, everything is okay; smile, it's happy days; have a nice day, and so on. That is not reassuring enough in these questionnaires. Who audits? Is there a testing system? Is there an audit system?

No one is perfect, and the big three and Toyota and Honda are not perfect, because we are still getting recalls. Recalls are part of our life. If recalls that cost massive amounts of money and headaches are in existence....

Usually business people are always talking about the positive: “It's working. Let's make a deal. Smile, it's a nice day.” They're very aggressive. Business people don't go around saying, “Hey, I have a little problem here.” They would right away ring bells that would sound very poorly to a lot of people. So how do you rely on the answers?

• 1055

Mr. Roy Campbell: The answer is, you don't. That is why General Motors is taking an active role in going out and auditing its key suppliers to ensure that they are compliant with what they said. As previously mentioned by the Chrysler individual, what we have audited so far with the responses coming back—they are quite accurate and right on the money.

Mr. Eugène Bellemare: In your audit, is there testing?

Mr. Roy Campbell: Yes.

Mr. Eugène Bellemare: Thank you.

The Chair: Thank you very much, Mr. Bellemare.

[Translation]

Mr. Dubé, please.

Mr. Antoine Dubé: First of all, I would like to congratulate GM and Ford for having produced documents in French. It makes it easier for me to read them. I am a GM customer because GM is the only company building cars in Quebec.

I would like to come back to the year 2000 issue and to your questionnaire including 24 questions. Considering your good habits about French, could you tell me if your Quebec suppliers—because I imagine that you have some in Quebec—have received this questionnaire in French?

[English]

Mr. Doug Potier (Common Systems Manager, Information Systems and Services, General Motors of Canada Ltd.): Yes, they will be. We're converting the documentation.

[Translation]

Mr. Antoine Dubé: Very well. I would like to follow up on Mr. Bellemare's question relating to the use of chips in cars, especially in electronic injection systems. What happens if a car stops suddenly in the middle of the road, especially on a secondary road?

Let's imagine that there is a storm on January 1st and that the car stops suddenly. You may say that there won't be any problems but that is not enough to ensure us that... Older cars do not have any. Your answer was very good. Older cars won't have any problems since they do not have any electronic systems. And the new cars will probably not have any problems either.

However, is there a critical year for cars? For example, I had in 1975 a Volvo, at the beginnings of electronic injection. What guarantee do you have that used vehicles, which might last a long time, will not have any problems? Students have older cars, and I have seen some old Chevrolets dating back to 1970. Think of used cars which are not under your control anymore because they are being maintained by independent shops or by their owners themselves.

[English]

Mr. Roy Campbell: We've been in contact with our engineering organization, and they feel confident we don't have any Y2K issues with any of our product lines, dating as far back as we can go.

Mr. Bob Renaud: I think the same applies for all of us. We just are not aware of anything. We have not found anything.

Ms. Tayce Wakefield: If I can just supplement—remember, our industry is highly competitive on quality. In fact quality, reliability, and durability are the top three criteria in every market segment for what customers look for when they select vehicles. It's critical to all of us that we make sure our customers continue to run on January 1. It is in fact one of the first things we've checked and are focused on.

I should just add, going off topic a little bit, that one of the reasons we started to use computer power in our vehicles was to get environmental control. Those folks out there who don't have computer technology are probably in higher polluting vehicles, and as their contribution to the economy they might want to think of moving to a more modern vehicle so they pollute less. I couldn't resist the opportunity to say that.

• 1100

[Translation]

Mr. Antoine Dubé: In any case, there are many chips in new cars. We cannot deny that. There are electrical systems, gauges, etc. I'm a bit sceptical. I have to admit that I am not totally convinced by your answers. As a matter of fact, I have the feeling that your answers look a bit like those you get with your questionnaires. You send the questionnaires to your suppliers and they can only answer yes or no.

I would like to believe you all, and I am tempted to believe you, but can you give us any stronger guarantees? I must admit that I am very concerned. I would like to believe you but I am neither a technician nor an engineer and I believe that my questions reflect the general opinion of Canadians on this matter. I do not think that you can provide us a guarantee on the basis only of some questionnaire sent to a few suppliers. You could only do that if a detailed audit was being done on site by specialists. Nothing tells me that this is being done. Can I ask you if the other manufacturers do any audits on site?

[English]

Mr. Bob Renaud: There may be two parts to that question, the first being vehicles. Not every chip necessarily is date-dependent. Just because there's a chip, that doesn't mean it's a year 2000 issue. I also think the systems we have in our vehicles are more mileage related or kilometrage related than time related. So we have checked and checked and, as Tayce indicated earlier, we have no intention of having anybody stall on January 1.

Relative to the questionnaire, these are senior businesses that want to stay in business, and we've made it clear to them that they can't operate unless they're compliant. I can't imagine any executive team at any one of our suppliers deciding intentionally not to care, and not to care about staying in business or not.

Ms. Tayce Wakefield: Again, if I can supplement, there's probably no other industry on the globe today that is as sophisticated in quality tools at the kind of large volume that is common in the auto industry. The business processes that have been described for you here today have been derived from those rigorous statistical principles that we use to drive our whole manufacturing processes. A very frequent tool is self-assessment with rigorous audits to ensure compliance, and it works well, so it is a demonstrated approach.

Remember as well that for Canadian suppliers, for example, most of those suppliers have been built and have grown in partnership with one of the big three, all of the big three, or some combination thereof. It's not a completely arm's-length relationship. We act as their advocates at the global purchasing tables, we help to develop them, and we have teams that go in to help them to improve their processes for reasons other than Y2K. It's the kind of relationship in which, if suppliers did identify that they had an issue, they would feel comfortable putting their hands up and saying they needed help, because they understand the importance of reliability of supply to us.

That's sort of the nature of the relationship between supplier and manufacturer that also gives you a degree of surety—firstly, the fact that we have a strong knowledge base in terms of quality methods; and secondly, the fact that we have the kind of relationship in which we work in partnership to get solutions where problems are identified.

The Chair: Thank you.

Mr. Buck.

Mr. Roger Buck: We talked about having the self-assessment, and Ford mentioned that the tips and techniques we pick up we make available to our supply base. Additionally to that, when we, the big three, go out and test a device—we go through a series of tests to see that it works on January 1 and that the leap year and the year 2000 work properly—we take that test and put it on a website that our suppliers are allowed to access. As time goes by here and suppliers wake up to the fact that, gee, they may have a year 2000 problem and need to do something, that knowledge base is increasing daily.

Let's say a supplier has some PLCs from a given manufacturer. That supplier can go right into that database and find two things: one, we have collected what the manufacturers have told us about robots, programmable logical controllers, and paint systems, and we've recorded what they're telling us about their equipment. We also have put in there our own tests: if we have that device and we've tested it, we have the results.

• 1105

So when these suppliers finally wake up and decide they need to do something, we have a base of information that gets them off running very quickly. They can then find that 5% of those devices that are going to cause the problem and fix them.

So, as we near the year 2000, this knowledge base is increasing and is going to be able to help suppliers who are getting started late in the process.

The Chair: Thank you very much, Mr. Buck.

Mr. Shepherd.

Mr. Alex Shepherd (Durham, Lib.): Thank you.

I'm reading from a report of the Securities and Exchange Commission in the United States. I read things such as Ford saying that if the company's actual costs or timing for the year 2000 data conversion differ materially from its present estimates, the company's operations and financial results could be significantly and adversely affected. Chrysler says the total cost associated with the required modifications and conversion is not known at this time. Then General Motors makes the statement that it has spent $40 million in the 1997 fiscal year and anticipates spending $500 million in 1998.

This seems to be a question of resources. Also, I don't know if the timing of those expenditures is a direct indication of how far we're behind in actually dealing with the problem.

So the first question is, are there resources to adequately deal with these problems?

Ms. Maureen Trenkler: Ford definitely has been working with financial officers to make sure it is a budget item. All the costs have been put on our budget.

One thing that is becoming evident is that good COBOL programmers, people to work on applications, are starting to increase in price and will increase until the year end. Hiring agencies are getting more and more difficult, so as companies get closer to 1999, if they have not laid out plans, they will have an increased cost in the conversion.

Mr. Alex Shepherd: So does the situation occur where, at a corporate level—and we've heard this constant concern between chief executive officers and their IT people—they say they just don't have resources, they just don't have enough money to throw at this problem at this time, so the problem doesn't get solved?

Ms. Maureen Trenkler: IT has gone to our budgeting people, and there are items put on it.

In some cases what we have found is that other projects that were on the table needed to be re-priorized and deferred, or somehow funded through the initiative. Perhaps it's a replacement strategy, as GM talked about, moving other strategies of PC renewals forward. But there was a concerted effort to make sure budget plans would be there to support the plans of the IT organization.

Mr. Doug Potier: If I could just add one piece, one of the reasons the cost escalates is you have to wait for the other suppliers to provide software or new parts to be put into the computers. You can't put in a solution until your supply base has developed a new chip or something along that line for you to insert into the environment, whether it's an operating system or a piece of hardware. So you can only do the job this year coming up, because that's when a lot of the new things are being released through the markets.

Mr. Alex Shepherd: Given these figures—$40 million in 1997 and $400 million to $500 million in 1998—does General Motors know what the full cost of this will be?

Mr. Doug Potier: It's almost impossible to know the full cost, but we've done the assessment and we have a pretty good handle as to what the extent of the impact is, and that's how the estimates are derived.

Costs are changing, as was mentioned by the Ford group. The costs of programmers are going up and so on. But that's a pretty good estimate associated with the impact. If you look at it industry-wide, you'll see that many other manufacturing and non-manufacturing firms are forecasting those same costs, and a lot of it deals with a re-prioritization of work.

Mr. Alex Shepherd: My only concern is, when you say $500 million in 1998, I guess I'm trying to correlate the expenditure of money with the actual solution to the problem. Would we anticipate another $500 million in 1999?

• 1110

Mr. Roy Campbell: No. Anyone who is actively pursuing this problem will not...all their plans are to end by 1998. You cannot go up to the last minute and think you're going to flick the switch on December 31 and you're going to run January 1. That's why everybody's spending is loaded into the 1998 timeframe. A lot of it has to do with integration. It has to do with equipment upgrades, if you want to call it that, and in many cases it has to do with, from a budgetary perspective, existing internal labour to go out and make the physical changes on the plant floor, etc. That all has to be budgeted.

Mr. Alex Shepherd: On your outsourcing, at what point do you cut those suppliers off? At what point do you just say we're not dealing with you any more because we can't rely on your product?

Mr. Roy Campbell: That is a purchasing decision in which I don't have the purview, but if our supply looks like it will be affected, then we have the right to pull the business and move the tools.

Ms. Tayce Wakefield: Our first approach is always going to be to work with the supplier, to get them to comply. You're speculating on the end-of-the-road kind of situations, which would only occur after a whole lot of discussion and effort between the parties.

Mr. Alex Shepherd: But the end of the road is clearly defined here. We know it's the year 2000. So surely you must have it in your planning horizon. There must be a point at which you say, look, we just cannot rely on this source of supply. Ideally, you have an alternative. You'll say, if you're not compliant by the middle of June 1999, you cannot ship to us any more.

Mr. Doug Potier: I think a point that really does need to be made is that industry-wide with the Y2K, from a business point of view, there will be winners and there will be losers in the environment. Those people who don't comply will be the losers. They have to be able to supply the business, whether it's the automotive or your microwave. There are going to be changes, and all the testing and all the activity is headed towards that critical time period to get the job done.

The Chair: Mr. Buck, do you wish to reply to that?

Mr. Roger Buck: Yes. The big three are currently discussing contingency plans. We have a high-level strategy that says this summer we are going to tell our suppliers that if you're a high risk, we want to sit down with you and develop contingency plans. We believe just making that statement and giving them a report saying this facility you have supplies us these 10 parts and these are at risk, supplier, we need you to fill our self-assessment, we need you to actively be working on year 2000—we believe that's going to raise the next threshold here. As I said, Chrysler was at 44% of our production suppliers. We believe that's going to take another big step, and this is going to happen mid-1998, with still enough time for them to react.

But, you're right, as time goes by, there are still going to be some suppliers that we feel are high risk. At that point we have to disband. We can't talk about what we're going to do with the suppliers, together with Ford and General Motors, or any other auto company. We then have to make plans. What do we do? Do we bank parts and hope they can fix it in the first quarter of the year 2000? Do we move the tooling? Those are more drastic actions, and we really haven't set the timeframe.

I'll tell you that the three vice-president purchasing executives are meeting on May 13, next month, and this is a big topic. One of the questions on the agenda, is what's the threshold? When do we part ways with working together and trying to get the supply base moving and when do we take individual action? We don't know the answer to that question, but it is a question that's being addressed at the highest levels of our companies.

Ms. Tayce Wakefield: But, again, these are sophisticated businesses. These people are not going to capriciously say, I don't want to be compliant. These are their own businesses that will shut down; it's not just ours. Knowing the Canadian supply community, I can think of very few that wouldn't be taking this issue seriously. It would be business-threatening not to, and they have mature businesses and mature business practices. So it's highly unlikely that they're going to ignore the whole issue.

The Chair: Last question.

Mr. Alex Shepherd: The fact that you only have 44% compliance with your survey right now is an indication to me that they're not taking it seriously.

Ms. Tayce Wakefield: Maybe our survey is too long.

Mr. Bob Renaud: I really don't think it's an issue of not taking it seriously. The suppliers are taking it seriously. It is just that some of them chose not to fill out the form. As Tayce mentioned earlier, they don't operate in a vacuum. We have people in their businesses every day; they have people with us every day. Some of their people have offices in our buildings. It's a very formal relationship.

• 1115

They do not want to lose the business. That's what it comes down to, although we can't say that. They want to succeed in the future. We really don't see a problem. We really don't. If there is an odd company—they would literally be odd to ignore it—they'll be dealt with starting this summer. We don't see a problem.

The Chair: Thank you. There may be another group that will help if you have any offshore or overseas suppliers. NAV CANADA will be announcing in spring 1999 where it will not be safe to fly on January 1, 2000.

Mr. Jones.

Mr. Jim Jones: Thank you very much. I enjoyed all the presentations. Can the big three tell me how much money at a corporate level, worldwide, you've allocated to this resource? I know it's probably a number that all the chief executives bandy about.

Mr. Bob Renaud: Lots.

Mr. Jim Jones: As for the $500 million that Mr. Shepherd was talking about, was that for Canada or was that worldwide for General Motors?

Ms. Tayce Wakefield: It's an SIC filing. It's a corporate number, so it's a worldwide number.

Mr. Jim Jones: It seems low.

Ms. Tayce Wakefield: This is also a situation of, what do you count? You have very concrete physical things you can count, like replacing a chip in a PLC. But then also, if we're replacing a legacy system with a new, more robust system that does more in the way of a business process, how much of that do you account for as a year 2000—

Mr. Jim Jones: My point on this is that basically your chief executives are totally behind this project and they're willing to allocate any resources you have to the project.

What concerned me—maybe it was just his word—was when the gentleman from Toyota said he was “envious” of the resources you have allocated to your companies to fix this problem. Is the senior management at Toyota in Japan behind this? Are they really aware of this problem and willing to allocate whatever dollars it takes to fix this problem?

Mr. Brian Mason: I would like to be able to answer that question, obviously with all good conviction, that there is no problem. I guess all I can say is that I visit Japan regularly. I meet with many senior executives.

Toyota is a very large corporation, as I'm sure you can imagine. The IS infrastructure in Toyota is led by an executive vice-president and member of the board who attended a meeting I was at recently. He assured us that this issue is very prevalent in the minds of all of the members of the board, and that whatever resources are necessary are being assigned to it.

The numbers I heard from Toyota Corporation in Japan in terms of costs are nowhere near the scale of what we heard this morning. I'm not quite sure why that is, considering that Toyota has approximately 100,000 employees in Japan. It's a $150-billion company and it's in 180 countries in the world. So the numbers, as I say, are probably in the range of $100 million. But I'm not quite sure at this point if that's a consolidated number for Toyota Canada.

We're such a small company in relation to the companies you hear before you this morning. Our costs are probably in the range of $5 million in total. I don't know if that answers the question adequately.

Mr. Jim Jones: I just thought you seemed like you were having trouble getting resources. I sensed there might not have been a commitment from the top down.

My second question is this. All the people from the big three said, or so we think, that there's no impact on the cars. Say you could substitute the words “I believe” or use the words you're using in saying that you will guarantee and accept all liability for any incidents that might happen with the cars, trucks, buses, trains, or anything you manufacture. Then I would have a lot of confidence in what you have said. Would you be willing to substitute those words “I guarantee” and accept all liability?

Ms. Tayce Wakefield: We're all looking at each other.

Mr. Bob Renaud: We'll never, ever accept all liability.

Ms. Tayce Wakefield: Yes.

Mr. Bob Renaud: Our engineers have thoroughly tested this. They say there is no issue. We've gone to our fleet customers, who have asked the very same question, as they should. We have told them in writing that there is no issue. We can't find one. I don't know what to say. We have looked everywhere and we can't find one.

• 1120

Mr. Jim Jones: My other question is for General Motors. I think it was the gentleman from General Motors who, when you send out to your suppliers.... You are a supplier too, so do you send it upward? Basically, I guess, they're systems integrators, right? They're taking your product and maybe adding value to it. It could be a fire truck or any of these other types of vehicles out there. Municipalities or people like that will assume that if General Motors says there is no problem—or Ford or Chrysler—there is none, and maybe there still is a problem because all you are validating is your components in that vehicle. Have you gone both ways in the food chain, up and down?

Mr. Roy Campbell: I don't have that information. I will get back to you, but right now I don't have information on whether it's gone that way.

Mr. Jim Jones: That's a concern, because a lot of organizations will assume those vehicles are all right and they might not be all right because all you are is just a supplier now.

The Chair: Thank you, Mr. Jones.

Mr. Lowther.

Mr. Eric Lowther (Calgary Centre, Ref.): Thank you, Madam Chair. I am amazed that this is such a positive story here.

I know that General Motors has one of the largest telecommunications networks, albeit a lot of it south of the border, but you're in all kinds of things beyond just manufacturing cars. Yet in other sectors of our economy that we have had before this committee, oh boy, they're really struggling in parts of their operations to get up to speed. So I guess there's some relief in hearing that the cars are going to work in the year 2000.

I'm wondering about your other support systems. I want to dig into that a little. You have all kinds of systems to keep track of service records, your communications systems in-house, across the country, internationally and worldwide. I'd like to get a reading there. Are you that far along there as well? If so, maybe the rest of us should all be doing a critique of it and seeing how we can get the rest of the country up to speed.

Mr. Roger Buck: Those areas are the ones where we always knew we had the problem, and we started addressing those years ago. You talk about how far along we are. Part of the reason is that the Automotive Industry Action Group was formed in the early 1980s to help us break down some barriers and make our suppliers do things one way instead of in multiple ways.

There was already a forum for us to get together, and I'll be frank, I learned some things from Ford and General Motors that made me look at my shop floor more quickly than I would have had I not known they were having problems. We have alerted each other.

In fact, we have sub-teams that look at human resources. For example, this is a factor in the States: can our health care providers provide our employees with health care? We also have a joint effort to look at our banks, all the banks we do business with around the world. They developed a separate questionnaire for the big three and mailed that out.

So it's not only getting the parts there to build the vehicle. There are many aspects to the problem. And we have a infrastructure through the Automotive Industry Action Group that has allowed us to work together on many of the facets of this problem.

Mr. Eric Lowther: For example, we've had the communications people in here, and they certainly wouldn't give us a guarantee. They were somewhat reluctant to give us any real confidence around data transmission over telecommunications facilities.

Yet in your operation I would think that would be a huge part of the information movement, nationally and internationally, and globally, and I know many of those networks are your own. Is that part of it? Not to pick on that one detail, is that representative? If that's ready, I have a sense that a lot of your operation is ready.

Mr. Roger Buck: The important factor there is which technology you're using. Chrysler has stayed on state-of-the-art equipment and stayed with their latest releases, and we're finding that we've only had to do a minor number of upgrades to become compliant. However, if we were using technology from about seven to ten years ago and are still using it, then we'd be having a problem. But because we have kept up with current technology that is state of the art, we have minimized the problems.

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Mr. Eric Lowther: I see a lot of heads nodding there, so I'm assuming that sort of corporate agreement here?

Mr. Roy Campbell: That is absolutely true. You have to remember that our industry is incredibly competitive. You cannot afford to be left behind with old technology methods or systems, so you're continually forced to upgrade. We looked at the Y2K issue as an opportunity—if you want to call it that—to shed some of the stuff we had and didn't particularly like.

Mr. Eric Lowther: This is good. I think this is one of the brighter spots we have had on this for awhile.

With that perspective, from your high perch of readiness, where is the government on this, and is it a liability for you? You're a big driver of the economy here, and if the government isn't in step with you, there could be a problem.

Ms. Tayce Wakefield: Yes, that's really what the last chart in the GM presentation was trying to say. On the things we touch, that we either have control over or have an opportunity to influence by working closely together, we're confident we're heading in the right direction.

Ultimately, you can't do everything. You rely on governments to ensure that the infrastructure will be there to allow business to continue to function. We can't go out and audit every government function that we touch, for example. We're simply relying on the idea that they will also be functional on January 1, in every country where we do business, and in all the fundamental infrastructure items, the places where business touches the government or government-provided services.

Mr. Eric Lowther: Do you have any alarm bells there? Are you concerned about that, or do you think things are pretty much on track? Are you going to be okay?

Mr. Bob Renaud: We served on Minister Manley's year 2000 task force, and it was a remarkable experience. I think Jean Monty's chairmanship and Alain Desfossés' secretariat were remarkable in what they accomplished.

In working on that task force, we narrowed our mandate to specifically business industry, although we discussed the issue of governments, hospitals, and education systems. We in industry were concerned that it's great for us to be there, but I think I said in the beginning that we're all related in this. We're all dependent on each other and can't operate independently of the rest of the world.

The task force was remarkable in terms of communicating the problem. Alain Desfossés stated that he would ensure that other provincial and municipal governments were informed of the issue. It wasn't the mandate of the task force, though, so I think there's some follow-up required there.

Paul Rummell was also on the task force. He's the chief CIO for the federal government, and he indicated that he was very confident the federal government would be fine. That was his comment last fall, and I think the last time we met was in November or December.

Everybody has to be there. If we can't operate within the structure of our governments—not just federal but provincial and municipal—we will have a problem. It's a big issue, and everything goes back to the point that government has a role, but we all have a role in the task force. The massive mailings and awareness campaigns, the websites, are enormous. I don't know how anybody can miss it, really.

Mr. Roy Campbell: I think I could elaborate a little on that.

The technocrats know about the problem, but it's the business people who have to engage. This is not considered discretionary spending that you can put off to the year 2005. You have to do it if you're going to continue in the level of service that you're providing, whether it be a product or a service. It has to do with realigning the priorities of whatever industry, business or government you're in. This is a non-negotiable deadline.

Mr. Eric Lowther: It sounds like you've all done that as business people—not as technocrats, but as business people. But you're sounding a bit of an alarm here that maybe not everybody else out there has, including maybe governments and the infrastructure that you're dependent upon to continue to be successful.

Mr. Roy Campbell: That is just as a result of the fact that it is so large, we can't see everything.

Mr. Eric Lowther: Okay.

The Chair: Thank you, Mr. Lowther.

Mr. Bellemare, you had three brief questions.

Mr. Eugène Bellemare: Thank you, Madam Chair.

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How confident are you that the hydro grid system in Ontario, for example, will be totally operative January 2000 and not affect some of your plants negatively?

A voice: A very good question.

The Chair: Mr. Buck.

Mr. Roger Buck: The big three together were supposed to have our first meeting this week to talk about our utilities—electricity, water, gas, and oil—and sewage management also, because guess what, you can't operate a plant if you can't have sewage flowing out.

We are concerned, and we're considering working together so that all three of us don't have to go to all the utility companies to get those questions answered.

I don't want to pick any utilities out particularly, but one utility sent the big three a letter telling us about all the readiness. They talked about their billing systems, and they talked about their fleets of vehicles, but they neglected to put in there any information that they'd be able to give us power! It sort of raised a flag that gee, we'd better go out there also.

GM did include their utility companies in their mailings, so we kind of look at their surveys, and we're looking at putting a team together to look at our utilities, but we still need to do that. Of course if we can't get electrical power, it's going to be a much bigger problem than just the auto industry.

Mr. Eugène Bellemare: They've been advised in this committee.

The Chair: Thanks very much, Mr. Buck. Did Mr. Mason also wish to reply to that?

Mr. Brian Mason: Yes, just a comment. I'd like to say that obviously we have high confidence in the hydro providers, but I think from what we heard yesterday in the news—I guess it was the committee meeting here on Tuesday—it doesn't sound all that promising that we can take assurance that power will be available for us.

The only thing we've been able to do, I guess, in hindsight, in that we're relatively new in Canada, is that we've been able to locate facilities where we can have alternate power grids. Unfortunately, if the entire province is without power, as in the widespread incident that happened in Quebec, all of us are victims, the entire province—government, private businesses, public as well. I'm afraid I don't personally have an awful lot of confidence that all their issues will be dealt with as effectively as we think ours will be.

Ms. Tayce Wakefield: Madam Chair, can I just supplement?

The Chair: Sure, Ms. Wakefield.

Ms. Tayce Wakefield: One of the reasons we were pleased to receive the invitation to come here was that we recognized this committee's leadership in looking at this issue. If everybody's asking everybody else the question, we're going to get into a lot of sort of redundant bureaucratization in understanding what the capabilities are. That's where your committee is well placed to go out to the major sectors to understand where the gaps might be, and to raise the awareness. So we'll be following the results of your work on this issue as one of the sources for us to highlight any areas of concern.

The Chair: Mr. Bellemare.

Mr. Eugène Bellemare: I would implore you to push hydro. What we've seen in southern Quebec and eastern Ontario—some people say it will just seem like a glitch, because it is more than Ontario. The grid system affects all of the northern states, including the maritimes, Quebec, and Ontario.

My second and third questions: what provisions have you made for potential litigation regarding year 2000, or is that an unfair question?

Ms. Maureen Trenkler: At Ford we're using quality assurance checklists. We have internal and external auditors who are reviewing each of those steps. Tests are being documented thoroughly. There's a feeling of due diligence that we need to be making sure that we are verifying.

Mr. Eugène Bellemare: I would assume you have the proper paper trails so that should there be litigation on the part of any supplier or purchaser, you'd be ready.

Are you perchance experiencing problems with year 2000 insurance coverage with the different insurance companies?

Mr. Bob Renaud: Insurance companies were going to be requiring some of their clients to prove year 2000 compliance. Is that what you're referring to?

Mr. Eugène Bellemare: Do you find that the insurance companies are maybe shying away from covering you in case of problems for year 2000? If there are problems, they will be pretty large in magnitude, and litigation could be extremely costly. Therefore maybe some insurance companies are starting to give you signals, if not warnings, already that they're not in that business any more.

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Mr. Bob Renaud: I don't have an issue, and I don't believe Ford or GM does either.

Mr. Eugène Bellemare: Has the thought at least crossed your mind?

Mr. Bob Renaud: Yes, it has, and we've talked about it as an issue for some suppliers, some of our dealers, as an example. Again, it was a major issue outlined in the year 2000 task force. This did not just have to do with insurance requirements, but also with bank loans. You won't get a bank loan perhaps if you don't ensure that you are year 2000 compliant.

So it is an issue for all of Canada. But for us we do not see it as a major issue, because the way we ensured everything else, I think we're in very good shape.

Mr. Eugène Bellemare: Thank you.

The Chair: Thank you, Mr. Bellemare.

I would just like to follow up briefly with a couple of questions to clarify things that have come before the committee, or to clarify those that have not.

With regard to insurance, we've asked the insurance industry to meet with us. They are waiting patiently for the Canadian Bar Association to complete their legal liability study, which is not finished.

We do believe that the legal liability paper will perhaps turn a few heads when it does come out, and, as Mr. Bellemare has said, it will affect insurance. However, we're waiting to see what they both have to say.

With regard to hydro and other services—gas, transportation—you may want to read the testimony that was before the committee on Tuesday. It will probably shake confidence in your own plans.

I say that not to be pessimistic, but to let you know that there are concerns. I say that also to let you know that the committee has done its work, as we believe we can do, with regard to those utilities. We will be making recommendations in our interim report.

We're not doing a final report in May. We're doing an interim report, because the year 2000 issue does not finish until, we believe, after February 29, 2000.

As you are aware, there are time-sensitive dates: September 9, 1999; January 1, 2000; and February 29, 2000. It's that leap year every 400 years that most computers will not recognize.

We are very concerned that if large companies like yourselves are getting ready in 1998, suppliers that have not started will not find the resources, the systems, or the equipment to get ready in 1999.

In particular, the task force is meeting again in May, and we understand they are going to do another report. We met with Mr. Monty back in February when we started these hearings. It is my understanding that they are waiting for Stats Canada's next survey. Its results should be available, we hope, in June.

We're optimistic that they'll be better than they were last fall. We're hopeful that business has become better aware of it and has taken better control of the situation.

You have raised a couple of concerns today that conflict with testimony we've heard from others. In particular, General Motors talked about the fact that although the numbers appear large, they're multiples.

We heard from the embedded chip experts that you could have several thousand items of the same type of equipment or machinery that could have different processors within, depending on the date of manufacture, and depending on where they came from.

Several examples that have come before us have shown that when companies thought they were ready and did a year 2000 test, the only thing that stayed on was the lights. Even the doors didn't open.

So we ask that you test. We ask that you get ready. We know you're aware of that, but we ask that you test early.

And we ask that you take some responsibility with regard to the suppliers. I come from an automotive area—and we've discussed this—and I know that if a supplier shuts down a plant, there is a great economic impact. We know that's a potential in a just-in-time delivery system. We do know that you're looking at time lines and dates when they have to be ready, but we're very concerned.

We're also very concerned about the statement that you're relying on government and government agencies to be in compliance. With regard to that, transportation is a big issue. There are a lot of non-governmental factors, and you are going to find yourselves in your own legal battles if you don't ensure that they're ready.

There's a satellite that will affect global transportation such as shipping as of August 1999. A lot of work needs to be done, and as we've heard from telecommunications, as Mr. Lowther pointed out, they will only—I would say guarantee, but it's not even a guarantee—assure us that you will be able to make a phone call in Canada on January 1, 2000.

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They're optimistic, and pretty secure, that you may be able to call the United States. At this point they will not suggest that you can call any other country in the world. In an industry such as yours, that will have effects. So it's widespread.

Our interim recommendations in May will be interesting, but we appreciate the interest you've taken in the issue, and because you have such direct contact with suppliers, we implore you to go forward.

I'd like to ask if each of you has a closing comment before we wrap this up. We'll start with Mr. Mason.

Mr. Brian Mason: Thank you, Madam Chair. I welcome the opportunity to be here today. From my peers I have learned of some areas that I think maybe we've addressed not as adequately as they have. We'll certainly be going back to review our plans. We certainly do take your comments seriously, and we understand the potential impact on the economy.

I guess I would repeat again a comment I made earlier about government leadership for small businesses. Our concern is with the many small businesses throughout the country that have the potential, if they don't deal with this the way we are, of impacting local economies in many small towns.

We have many small dealerships. We're not a large organization like the other companies here, but a small dealer in Chicoutimi might have 17 staff. If his dealership can't operate effectively on January 1, 2000....

That is just a small indicator, but there are many small businesses that could be affected, and I think that has a huge potential impact. Certainly all of us do individually, but collectively I think the small businesses are a scenario that is probably being overlooked.

Thank you for your time.

The Chair: Mr. Buck.

Mr. Roger Buck: I'd just like to say that I'm very happy that you're so proactive on this. We do not have this in the United States.

In fact I was contacted by the national highway safety group a couple of weeks ago, and I described what you were doing. I directed them to your website. They may be gleaning some of the work you've done to be used in the U.S.A., because they are not active at all in helping out the various industry sectors.

It would be helpful if they would, because if the economy goes down even just a quarter of a percent, it's going to affect sales of our vehicles and other products, and affect everyone.

So I applaud you for that, and thank you for inviting me here today.

The Chair: Thank you.

Mr. Renaud.

Mr. Bob Renaud: I just have a quick comment. I think what you've heard today is that we think that with respect to what is in our control, we have our act together. But we all clearly understand that as a society we are dependent on so many things. If any part of it, even the health care system, has a problem, we all feel it. I think your comments at the end were quite appropriate.

I refer back to the fact that the task force had a great opportunity to spread the word and get people interested. But I do know that in spite of all the mailings and all the media, an awful lot of people still don't understand or don't know.

I personally don't understand how they couldn't. But we need to be together as a country with all parts. I appreciate what you're trying to accomplish with all the phases or aspects of the issue. But we all need to be there, and whatever we can do as a team to get it done, let's get it done.

The Chair: Mr. Renaud, I appreciate your comments about health care; you've mentioned it a couple of times. That's one area of testimony. If you want to sleep well at night, you don't want to....

Mr. Bob Renaud: Okay.

The Chair: Ms. Trenkler.

Ms. Maureen Trenkler: Thank you for the opportunity. I, too, have learned some things from my colleagues. I've been living, eating, sleeping this issue for at least a year and a half.

The work you're doing is bringing press attention. The front page of many of the journals are coming out with this. We used to read about this only in the technology papers; now everybody is reading about it.

So the awareness is very important. Thank you.

The Chair: Thank you very much.

Ms. Wakefield.

Ms. Tayce Wakefield: To sum up for the GM team, as we've said, we're working hard to make sure that GM customers and dealers and suppliers will all be there with us on January 1. We are confident and hopeful that we'll be able to continue to meet the needs of all of our partners.

In that regard, we appreciated your comments today, we'll take them under advisement, and we look forward to your interim report. It will help to broaden our knowledge, maybe raise some issues that we hadn't considered, as well as broaden awareness and hopefully create some impetus to action for some of the people who are lagging.

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I guess the other thought I'd like to leave the committee with, and hopefully you can share this with other sectors as you're talking to them, is that we really do see this certainly as a huge challenge, but also as a big opportunity. I think that needs to be borne in mind as other businesses and sectors look to how they want to handle the issue.

The Chair: Thank you. On behalf of the members of the committee, I want to thank you all for being here with us today. Your presentations have been well thought out, and we know that you are ahead of the game.

We do impress upon you the need to spread the word as much as possible. This is the same thing we did with the banking industry when they were with us, and with others who have been before us.

We appreciate you getting the word out and doing what you can to ensure that not only Canada is ready, but globally the industry is ready.

Thank you. The meeting is now adjourned.