I call to order the 29th meeting of the Standing Committee on Industry, Science and Technology.
Pursuant to Standing Order 108(2), we're continuing our study of the proposed sale of a part of MacDonald, Dettwiler and Associates to Alliant Techsystems.
We have two panels before us today of an hour each. In the first panel we have representatives from the Canadian Auto Workers, the National Automobile, Aerospace, Transportation and General Workers Union of Canada. We have four members of the organization: Dawn Cartwright, the national aerospace director; Carol Phillips, assistant to the president; Steven Shrybman, legal counsel; and Mr. Roland Kiehne, president of CAW Local 112.
We are supposed to have a professor of the Institute of Air and Space Law from McGill University, Ms. Lucy Stojak. Hopefully she's on her way.
And then, from the University of Sherbrooke, we have Mr. Alain Royer, professor and researcher member of CARTEL—Centre d'application et de recherche en teledetection—department of applied geomatics, faculty of literature and social sciences.
You've all been told you have up to five minutes for an opening statement.
We'll start with the CAW, then we'll go to Professeur Royer, and then hopefully Professor Stojak will be here.
Ms. Cartwright, are you presenting on behalf of the CAW?
We appreciate this opportunity to come before you and speak on an issue that we think is of paramount importance to the future of our country on a number of grounds, as we'll lay out. You see that you have before you a written submission. I'm going to make a verbal submission this morning. We have various participants here, too, who can answer questions.
We have about 11,000 members as a union in the aerospace sector, and in our union we have 260,000 members. We came together in council this past weekend, and I can tell you that the issue of the sale of MDA was a very high priority in that body, which is representative of citizens in this country. We had a lot of speakers, a lot of concern about what this means.
Many of you will have received a legal document that we made available. We mailed it out to you. The clerk has it, because it's in for translation right now. In our view, based on this legal opinion complementing our opposition, we believe that this sale cannot in fact go ahead.
Also, in view of MDA's comments earlier this week where it made assertions about who controlled the shutter, the U.S. or Canada, we have Steve Shrybman here today, our legal counsel, who will be able to speak to any questions you might have on our opinion, which is that U.S. law triumphs.
We're here today for a number of reasons. As a social union, we're concerned about anything that threatens the well-being of Canadian workers as a whole. This not only threatens our members at MDA and their future, but it also threatens our country.
We've been asked a number of times, as a union, about job security. It's a prominent preoccupation of manufacturing workers generally in this country today, the issue of job security. At MDA these days, especially at the robotics division in Brampton, the company has worked hard to cast fear about how the sale of ATK is necessary to save their jobs.
You heard earlier this week CEO Friedmann saying that essentially they were in a situation where the sky was falling. We're here to say that the problem at MDA was not that we needed a foreign buyer, but that we needed the Canadian Space Agency to release funding for ongoing development.
We've seen in written comments by Andrew Eddy from Athena Global, who is formerly from the Canadian Space Agency, that there are lots of possibilities, lots of contract opportunities for MDA, and in fact they weren't interested in selling the company until a $1.325 billion offer came in from ATK, and suddenly they got interested in selling the company.
MDA had an overall profit increase last quarter of 37%, projected a rosy future, and badly needed an influx, however, of Canadian Space Agency money to get the next generation. And that's very important to understand in this industry. There has to be a constant development of the next generation of technology. They needed that badly, to get the next generation in robotics and RADARSAT-2 going, to improve their already excellent product.
The sale is about what ATK wants MDA for, what purpose ATK wants MDA for, and we hope you'll get a real answer today—a real answer, not a public relations answer—about exactly what their intentions are for MDA.
In the world overall, there's about a $200 billion market in aerospace. Only a part of that, only a part of the potential customers for that, is in the United States. There's huge competition going on out there. The United States is being left behind. You can find customers. We know there are customers out there for this product, and there will be, ongoing, as well.
In our view, what ATK wants is intellectual property rights, and our view is that that is especially why this sale should be blocked.
We're going into the next generation, 3-D imagery of RADARSAT, which will pinpoint accuracy. Ask them, please, what their intentions are for the future of the robotics division in Brampton. Does anybody in this room seriously believe the assurances that once ATK completes this sale there will be security? We certainly don't, and we would be very surprised if you did.
In conclusion, the proposed sale of Canada's leading domestic supplier will erode Canada's national and Arctic sovereignty. It is contrary to existing Canadian law. It will transfer ownership and control of vital technology and data to a foreign nation, contrary to our national security interests. It will wipe out future opportunities for Canada to enhance domestic expertise in space technology and know-how. And the supplier firms that support Canada's space program will result, once again, as we saw with the Avro Arrow, in the emigration of countless high-skilled aeronautical engineering and technical positions to the United States and provide no guarantee for employment levels in Canada.
We're asking you to block this sale.
Good morning. I will be concentrating my remarks on RADARSAT, the Earth observation satellite developed by MDA and the Canadian Space Agency. With your permission, I would like to make my presentation in French. I will thus be more comfortable in defending this jewel of Canadian Earth observation technology.
I will deal mainly with five concerns relating to the sale and the loss of control over the RADARSAT-1 and RADARSAT-2 satellites.
The first concern relates to the environment monitoring capability provided by RADARSAT. This satellite is unique and is extremely effective for the monitoring of flooding, ice areas and oil slicks. Who will now decide on the purchase of these images? Who will decide on the control of the satellite in situations of natural disaster or conflict? Imagine a scenario — not that it is something I would hope for —: two simultaneous floods, one in the United States and one here. Who will decide on intervention priorities? That is a source of concern. The loss of control over the satellite could be harmful to environment monitoring. That is one of the major aspects.
Secondly, I would like to underscore Canada's participation in the International Charter on Space and Major Disasters. In 2001, Canada was a pioneer when it initiated, along with the European Space Agency (ESA) and the French Space Agency (CNES) the creation of this Charter, the signatories of which committed to making available throughout the world means of Earth observation for follow-up and assistance in the management of natural disasters. If we lose the satellite, what will Canada have to offer under this Charter for which Canada was a pioneer and to which RADARSAT presently makes an extremely significant contribution through these images and its enhanced observation capability?
The third issue pertains to the applications and innovations flowing from the use of these images. At present, MDA and a whole host of companies throughout Canada have developed expertise and are carrying out research and development in the use and exploitation of these images. This technology is extremely advanced, but it has not yet been completely assimilated. Much remains to be done to improve the interpretation and analysis of these images. RADARSAT-2, in particular, has a polarimetrical capability that significantly augments the information included, but there is still much research to be done in this area.
What will these industries become if they no longer have access to these images as they did previously? The Canadian Space Agency had an entire promotion and distribution program for these images in view of developing this expertise within Canadian SMEs. These services companies transformed the raw material into a product that could be used by the Coast Guard, the Canadian Ice Service, the forestry industry, for logging monitoring, agriculture monitoring, etc. There are all kinds of applications for which radar technology is in the process of being developed. I am somewhat concerned about their chances of survival. What are the risks if we lose control over these images?
The other important issue is that of the international projects in which Canada is involved. These projects are funded by the Canadian Space Agency or by other agencies such as CIDA or IDRC. The projects that the university played a role in were research and development projects, including demonstration pilot projects. We had access to radar images in view of promoting this technology. I am worried by Canada's loss of independence with regard to the running of these pilot projects. There was, for example, the flooding project, MekongFrom Space, in which radar images were used and were of precious help.
In such situations, will Canadian interests not be in conflict with foreign interests?
My final point is the one that concerns us most directly. I am talking here about this fear that we have with regard to research. At the present time, there are programs that are developed by the Canadian Space Agency in order for these images to be provided to universities and research centres, the purpose being to increase the analysis potential for this data. Will we still have access to this data? Will we continue to develop this expertise which, in the end, might wind up serving interests other than Canadian interests?
I wish to thank you for having allowed me to speak to you.
Thank you, Mr. Chairman, members of the standing committee, for the invitation to appear before you.
For the record, I would like to make a correction. I do not hold the title of professor. I am a doctor—that's a title that I earned and worked for—and I am a consultant. My contractual links with the Institute of Air and Space Law, as of very recently, are no longer there. I just wanted to clarify that for the record so there is no misinterpretation as to my affiliation and title.
I have a few points that I would like to highlight this morning.
Canada has a very long and proud history in the space industry, and I think sometimes it's good to go back in time and remember what the government policy drivers were at the time the decision was made to develop RADARSAT-1.
The three primary drivers were to allow Canada to be able to manage its own resources, to have sovereignty over the northern regions of Canada, and to allow environmental monitoring. These three issues have, over the years, increased in importance. Every government in the past 10 years—and most recently the throne speech that was pronounced in 2007—has indicated that strengthening Canada's sovereignty is a clear priority.
Within the next 10 to 15 years the Northwest Passage may be open to routine maritime traffic. Canada must ensure that it has the ability and capability to monitor the comings and goings in the Arctic. Clearly, space-based technologies such as RADARSAT-2 are...in terms of SAR, radar technology is really the jewel in the crown, and it is the most highly available commercial SAR satellite on the market today.
Another point I would like to highlight is what other countries around the world are doing. When Canada entered this field there was only a handful of space-faring nations. Now the competition is much fiercer. Countries, even small-scale countries like Nigeria for example, are coupling with private companies in the U.K. to launch their own satellite packages for remote sensing purposes. Clearly, they will not have the resolution and the amount of finite valuable information that a three-metre SAR can provide, but the trend, if you look around the world, is increasingly for countries to have their indigenous remote sensing systems. The reason for that is to not be overly dependent on those countries that traditionally, for the past 30 or 40 years, have developed an extensive market in that field. I think there are valuable lessons to be learned there. At least questions should be asked as to why it seems that we're going in the opposite direction.
Another point I'd like to raise is the need, in the very near future, if not today or tomorrow, for this government to really think about the adoption of a coherent space policy. Again, the United States adopted a new policy in 2006. For the first time, the European Union adopted a policy in 2007. Though the interests and the drivers may not be the same—because national interests are important and they vary—all of them will agree that it's a strategic decision.
It is important for the development of industry to retain competitiveness. It's extremely important for the research and development and future training of individuals in the science and engineering fields. There are socio-economic benefits that have already been tabled in terms of numbers, and future technologies can only increase with time. The dependence of governments and citizens on space-based technology has increased dramatically, and this trend is not going to stop; it will only increase in time.
My colleague mentioned that Canada has international obligations to meet, as well, in terms of providing certain imagery under international agreements like the UN charter, for example, and I would also raise the whole issue of public good.
The technology that MDA developed for RADARSAT-2 is not equivalent to a technology for a new widget or a new paper clip. This is extremely valuable high technology with national security implications. Millions of Canadian taxpayer dollars were invested in this. The space industry is one that needs an extremely long lead time, so to develop something like RADARSAT-2, or to try to repeat it.... If you lose the IP, you lose the stepping stone on which to build the future generation. You really have to start at zero, and the lead time is extremely long. It's between seven and ten years. It's high risk, with a lot of financial investment, and stakeholders need to be gathered to make this happen.
I feel that some of these points really need to be answered very clearly.
Last but not least, I would like to raise a question.
Canada's Remote Sensing Space Systems Act, the legislation that entered into force in 2005, and the regulations that just entered into force in March 2007 were clearly inspired by the U.S. legislation. The United States has by far the biggest stakes. It has the broadest legislation, and that's normal because they have the biggest fleet and the biggest stakes.
Again, I don't have an answer; I'd just like to flag this for discussion. But when you read the regulations that apply to the United States' operators of private land remote sensing space systems, what's interesting to note is the definition of “person” under this act. The act applies to “any person subject to the jurisdiction or control of the United States who operates or proposes to operate a private remote sensing system, either directly or through an affiliate or subsidiary”.
Therefore, because it is my understanding, at least from what I've read in the press, that the potential sale of MDA to ATK would make MDA a subsidiary, I just raise this point for discussion.
Thank you for your attention.
I want to follow up on Dr. Stojak's comments on U.S. security laws and the genesis of RADARSAT-2 in Canada and the intentions.
RADARSAT-2 was developed by the Canadian government in part to strengthen our ability to protect Arctic sovereignty. The Americans do not recognize Canada's claim on the Northwest Passage, and as late as December 2005, there was an issue around an American submarine in the Northwest Passage. It seems indefensible that we would take $445 million of Canadian tax dollars to invest in a satellite to defend our sovereignty and then have that satellite fall to the use of the Americans, to be used against Canadian sovereignty in a dispute on the Northwest Passage.
I'd like you to quote the U.S. security law, the specific phrase, once again on the affiliate side.
Further, I'd like your opinion, or that of any one of the experts here, on whether there is any way that a Canadian government, can protect a Canadian company against U.S. security law. If this transaction were to go through, is there any legislative or legal means to absolutely, totally inoculate the RADARSAT-2 technology against that law?
I think both departments have a critical role to play, though the statutory mandates they have are quite different.
MDA has to maintain control of the licence of the satellite and control over its satellite unless it seeks a transfer of the licence to another company, and that transfer application has to be approved by the Minister of Foreign Affairs. In exercising his authority under the act, the minister has to have regard--and I'm reading from the Remote Sensing Space Systems Act for Canada--“to national security, the defence of Canada, the safety of Canadian Forces, Canada's conduct of international relations, Canada's international obligations” and certain “prescribed factors”. There are two prescribed factors relating to economic development that have been promulgated by regulations under the act. Those are pretty explicit criteria, and unless they're satisfied, the minister cannot authorize the transfer of the licence from MDA to any other corporation.
Our legal opinion is that there is no reasonable basis, given the fact that U.S. law will apply to this satellite, for the minister to approve that sale, given the explicit criteria of Canadian law.
Good morning to the witnesses.
I want to pursue the question around the applicability of U.S. law should this sale go through. I want to ask those who are giving legal opinions.
Under the U.S. Land Remote Sensing Policy Act of 1992, as I read it, in the regulations there are conditions that would apply to the licence, and these conditions would apply whether the licence is held in Canada or in the U.S. I'm quoting from these regulations. It says:
The licensee shall maintain operational control from a location within the United States at all times, including the ability to override all commands issued by any operations centers or stations.
This is the so-called shutter control right of the U.S. government.
Further, it says:
The licensee may be required by the Secretary to limit data collection and/or distribution by the system as determined to be necessary to meet significant national security or significant foreign policy concerns, or international obligations of the United States...
Now, I understand that foreign policy concerns and national security concerns are not defined, so they could be quite broad. This leads me to believe, in spite of the categorical assurances we've been given about Canadian control and Canadian law applying, that will not be the case once MDA is sold to ATK.
Can anyone comment on that?
I think your reading of the U.S. regulations—and I referred to them earlier—is quite accurate.
It is conceivable that the Canadian legislation would apply as well to this satellite. I think it's unlikely, but it's possible. To the degree that Canada can claim jurisdiction under Canadian law if the subsidiary is operating in Canada and is based in Canada, there's an argument that Canadian law would apply as well.
There's no question that U.S. law applies, so it's conceivable that ATK could be given competing directions from U.S. and Canadian regulators. I don't think it will have much difficulty, being a U.S. defence industry contractor, in figuring out which directions to abide by. Somehow I think that Canada will cede its jurisdiction with respect to its own regulatory requirements.
We haven't seen the licence, as I understand, or any amendments that are being proposed to it. That may well make that very apparent. But there is no question that U.S. law and regulations will apply to a subsidiary of ATK whether it's based in the United States or Canada, and that includes the stipulation that requires the company to maintain control over the satellite systems in the United States.
Thank you very much, Mr. Chair.
Thank you for being here, witnesses.
As my first comment, someone mentioned the loss of the intellectual properties. As far as I'm concerned, that's probably the most important thing here. If you look back at the Avro Arrow case, we suffered for 50 years because of that decision.
When we're talking about MDA, we were told by the CEO the other day that it is the jewel in the crown. One problem we have is that there's nothing else that's even close as far as we're concerned. We're talking about Canadarm, we're talking about Dextre. If you ask Canadians about our claim to fame in the aerospace industry, they would probably name those two things.
By selling our intellectual property to the American company--there's nobody else in the wings--what are the consequences? Someone was saying that it's zero to 10 years to develop this from scratch. There's not a second company that's 50% of MDA that can take up the fight, if you will, for Canada.
What does that mean for Canada over the next 10, 20, or 30 years?
It's interesting you raise the Arrow. You're absolutely correct when you talk about where people point to in terms of what our icons are and our expertise in space and aerospace. The first thing, of course, is the Avro Arrow, which just recently celebrated its 50th anniversary of flight, and now the next piece, of course, is the Canadarm.
Certainly our experience with respect to the Arrow was that indirectly lost were 14,000 jobs, and indirectly, in total, 30,000 jobs, many of which, in terms of our expertise in engineering, went south, quite frankly, and in many cases eventually ended up in NASA.
Clearly we have a history and a pattern here that says if we don't continue to grow, and we don't continue to invest in development and expertise, then in fact we're going to lose that base. We did; our experience at least with respect to the Arrow was that this in fact did happen. There's no question that here we see the same thing.
Let me just clarify. What we heard yesterday—and Mr. Friedmann was very clear on this—is that there is work that an MDA/ATK company, irrespective of its ownership, will provide to other countries in the world. And when they do so, those contracts are done for those countries, and they're licensed by those countries. Ultimately, those devices will be controlled by those countries in the same way as RADARSAT-2 was developed by Canada for Canada and is controlled and will continue to be controlled by Canada.
So that's the distinction I wanted to make. We did hear that loud and clear.
I wonder if I could move on to Dr. Stojak. On the same question of the law.... We actually had some very pointed questions yesterday in regard to the distinction between the ownership and the law. We heard, for example, that when MDA was a subsidiary of Orbital, for example, which was 100% U.S. owned, it was still subject to the laws of Canada.
Have you seen anything here that would in any way trump that Canadian law, particularly the Remote Sensing Space Systems Act, on a contract and on a project like RADARSAT-2, which was licensed by Canada? Is there any way that a foreign law could trump that?
Let me just provide the following comments in response to that question. I've also read in the press the oft repeated comment that in the past MDA was already a subsidiary of a U.S. company called Orbital Sciences.
The one question that I have, and I don't remember the answer to it, is in what five-year timeframe did that happen? That's important because the MDA we're speaking of today does not have the same technological capabilities as, I believe, MDA had under its first iteration as a subsidiary of Orbital Sciences. I think the technology that needed to be developed for RADARSAT-2 came a little bit further on during that relationship.
Just as an another example, in 1999 the United States tightened the ITAR rules, based on something called the Cox report. There had been huge concern in Congress that there had been high technology leaked to the Chinese. What this did—and again, it is important to put these things into their historical context—is this. Until that time, ITARs were regulated in the U.S. by the Department of Commerce. The goal of the Department of Commerce, just as it is of Industry Canada and of Foreign Affairs and International Trade, is to promote the industry so that they achieve benefits and revenues—and that's normal. Once the ITARs were tightened, that was passed over to the State Department, and one can argue that the national security, foreign obligations, etc., aspect came into play.
So the sale of MDA today is a different sale of different technology. Maybe the key thing that should be mentioned is that as of December 2007, RADARSAT-2 is not just a bunch of technology that was built here, but it produces images, and those images can be bought.
Well, we haven't seen the contracts that Canada has with MDA. But under Canadian law, Canada has the right, as the U.S. will, to assert priority access to certain information.
It's important that you understand that right now, under Canadian law—and U.S. law is very much the same in this regard—Canada has the right to determine which images are collected and with whom they're shared. There are specific provisions in the legislation about sharing that information with other governments.
The same is true under U.S. law, but of course, the objectives of the claim to priority access will be very different, as will be the constraints that our respective governments may choose to impose on the collection and sharing of commercial data. The problem is that once the sale takes place, U.S. law will apply to ATK and its subsidiary, and it really has no option but to comply with those regulations.
So those regulations may supersede whatever contractual agreements the companies entered into with Canada to provide Canada with access to information that the U.S. may not want us to have, or access to information that simply isn't available because U.S. priorities have been asserted—and the company has been told to collect information about U.S. forces in Iraq and the situations they encounter there, rather than information that's important for our forces in Afghanistan.
There will just be different priorities. That's the problem.
I'll just address the issue of concern about jobs, and you spoke about ITAR and other regulations.
With respect to the work that is done—and I'll speak to the location in Brampton—it's really very highly advanced and a state-of-the-art type of work that our members, and those others at Brampton, are involved in.
The sale to ATK would permit distinctions between classified and non-classified work. Classified is, of course, the high-end and most advanced innovative work that is critical to our members.
The non-classified piece—really, the nuts and bolts or the minor manufacturing—we could see potentially being retained in Canada in the short term under a sale like this. But there is no question that—in terms of the pattern and what ATK has done in the past with respect to how they control and move their work—we would see the non-classified potentially staying here and the classified work and money-maker, if you will, for MDA fall to the U.S.
Mr. Chairman and members of the committee, good afternoon.
On behalf of the 17,000 employees of Alliant Techsystems, it's my extreme pleasure to testify before the committee regarding the pending acquisition by ATK of the information systems and geospatial services business, MacDonald, Dettwiler and Associates.
For ATK this acquisition is the most significant transaction in the history of the corporation. It reflects the determination of our chief executive officer, Dan Murphy, and our board of directors that the growth strategy for ATK will focus on space, space systems, and moving into international markets. Aligning ATK and MDA into a single complementary team will drive collaborative, collective growth and success.
Today's hearing affords ATK our first official opportunity to introduce our corporation to the committee and Parliament and explain ATK's intentions, strategy, and commitment related to the acquisition of MDA. While many elements remain subject to specific regulatory requirements governed by the Investment Canada Act, today I will attempt to report on those portions that we can address in this forum.
Since the transaction on January 7, 2008, business and functional teams at ATK and MDA have focused on three immediate priorities: to bring the two accomplished, proud companies together; to address the needs and interests of all our employees and their families; and to address through regulatory processes both Canada's and the United States' issues. Needless to say, we've learned a great deal together, and each step of the process has increased excitement about the technologies, culture, and innovation reflected by each corporation. We are rapidly realizing that together this will be a remarkable and unique enterprise.
Earlier this week Dan Friedmann, president and CEO of MDA, testified before this committee and spoke to MDA's perspective on the transaction and how it will impact this corporation and its employees. I will address many of the same topics from the perspective of ATK and how our team intends to build on those successes achieved by the men and women of MDA.
First, ATK seeks to acquire this segment of MDA by virtue of the record of technical engineering and manufacturing prowess demonstrated by the workforce at MDA. The value this constitutes by the people, industry partners, and community relations make MDA what it is today. It is ATK's intention to grow and to build on that powerful foundation at all four primary sites in Canada, and it will be the anchor for the international work and growth for ATK Space—I reference British Columbia, Nova Scotia, Quebec, and Ontario.
The most powerful factor in bringing these two corporations together is the absence of substantial overlap between our existing businesses. Achieving success in this integration is not based on downsizing the technical or operational workforce, or the combining of manufacturing or engineering functions; the success will be a product of leveraging the respective talents and capabilities of the two companies combined and the physical capital that has already been established. Together they will provide a new force in the marketplace. In fact, we anticipate significant growth in our space business from teaming these capabilities.
In February our CEO, Dan Murphy, penned a letter, which was published in the Financial Post, speaking to ATK's intentions on the unique capabilities that MDA currently provides to Canada as the Canadian standard-bearer on significant international science and space pursuits. Dan voiced that there will be no change or reduction in the Canadian profile and the leadership on Canadarm, RADARSAT, or the new Dextre robotics—the system just employed on the International Space Station. These systems are Canadian, they will remain Canadian, and the next generation systems will be developed and manufactured out of Canada.
ATK's strategy to grow the existing information systems and geospatial services businesses now operated by MDA will focus on presenting these capabilities to a wider range of international customers. The international regard and interest in MDA's technologies and products will be central to the business opportunities we will pursue and achieve together. The international market also includes the U.S. government.
We believe our long-standing and deep relations with U.S. government agencies, including NASA, the Department of Defence, NOAA, and the Department of Homeland Security, will expand and accelerate the business opportunities for what will be the ATK space systems group in Canada.
The strategy does not contemplate moving the production, engineering, or design of these systems from Canada to ATK facilities in United States. These technologies, developed here in Canada by MDA, in many cases with the support of funding from the Canadian government, will be manufactured in Canada subject to the export licensing and intellectual property laws of Canada.
MDA and ATK both have excellent records as suppliers to our two nations' national security, homeland defence, and law enforcement services. We intend to continue that proud record of service to Canada and the United States and will invest to grow the capabilities of the new combined businesses. The result of those investments will not only serve these two direct home markets but fuel our international offerings.
Let me close my presentation this afternoon with recognition of a wide range of media coverage and address one issue that continues to be most important to folks. Regarding RADARSAT-2, ATK will implement and adhere to the contractual requirements currently existing between the Government of Canada and MDA. The structure of Alliant Techsystems Canada will be that of a wholly owned Canadian subsidiary. It will be a Canadian company, headquartered in Canada, and led by Canadians. There is no intention on the part of ATK to diminish or exchange the control regime exercised by the Government of Canada over RADARSAT-2.
More than a decade ago, while MDA was previously owned by another U.S.-based corporation, the Government of Canada and the U.S. entered into an intergovernmental agreement addressing the management and control of RADARSAT-2. We respect that agreement and will fully comply with its conditions and terms, as established between the two nations.
Mr. Chairman and members of the committee, I appreciate the opportunity you have afforded us here at ATK to have this conversation and participate in a very important hearing today. All of us at ATK look forward to the opportunity to work closely with this committee and the House in the upcoming days and years. We're excited about the prospects and the very bright future, as we move forward together, and strengthening the technology, the capability, and the workforce here in Canada.
Thank you very much.
First of all, I would like to say that in the past couple of weeks I've had the great opportunity to visit these strong assets.
Categorically, intellectual property rests in the people; it doesn't rest in facilities. Success in growth, and with technology breakthroughs and innovation and productivity—all ending up in RADARSAT-2, -3, -4, or RapidEye—comes from people. It is our intention and my belief that you don't move these things. These are assets that have families, they have locations, and they have a sense of purpose—and we will get aligned—and a mission.
Our ability to work together as two companies will flourish based upon the two companies wanting to move forward and develop. We have no intentions of extracting or removing these key sets of resources that are there. The people I talked with, from Brampton to Richmond to Montreal, and so on and so forth, engage and are very interested in what the future will be like as we move forward with these new technologies. That is the beauty of this. There is no overlap between ATK Space currently and MDA; that's the beauty of this opportunity.
Thank you, gentlemen. I would like to welcome you to Canada. I understand you're both American citizens, so thank you for coming before our committee.
Along the lines of my colleague's remarks on exporting anything out of Canada's control, with or without an export permit, I gather you need approval of some kind. I will put it this way: just before the sale of MDA was announced, MDA actually purchased Alliance Spacesystems in the U.S. It is along the lines of advanced technology solutions, and it also deals with robotic mechanical structures. The statement made by the vice-president basically went like this: “This acquisition significantly enhances our U.S. presence, and will provide a capable conduit to leverage and offer our world class space robotics and space surveillance solutions into the U.S. civilian and military aerospace markets”.
How does that conduit apply, now that there is an MDA subsidiary in the U.S.? So you have your apparent company as this, and there's already this other entity that was created just before the sale was announced.
I'm going to give you a little bit of a shocker. Did you know that the average campaign in Canada is about $85,000? I understand that, for congressmen, the average is probably about $1.2 million or something like that.
Why do I bring that up? We don't allow any contributions from corporations. It has to be individuals. I think last time my brother and my friend, because they love me, gave me $1,000. From everybody else it was just $100. The reason is that when it gets right down to it, I don't owe anything to anyone except the good people of Chatham-Kent—Essex. It's a good way to do business.
That's why I get a little bit upset when I hear the rank and file aren't being listened to, because really, what it boils down to at the end of the day is that if the place packs up, closes down, they're the ones who are going to be stuck without the jobs. They're the ones who have to feed their families.
My line of questioning for the whole day has been to that effect, and I'm concerned. Forgive us, we're a great country, we're a bright country, but we're a small country. You're a superpower. This is one of our small companies being taken over by...maybe not a multinational but a huge company. So there's an element of distress possibly. We're just a little bit uneasy about this thing.
You've been asked a question. I'm going to ask it again because I don't think I got an answer.
I have to get my glasses on because, you know, when you go past 50, you start losing your sight.
Thank you, Mr. Chair and thank you, colleagues, for allowing me to ask a question today.
I've been looking at this sale for a couple of months now since it was announced--and by the way, gentlemen, it's good to see you again--and I'm not sure I see this as necessarily a bad thing. I see it as a new door, a new way to go for the Canadian space industry. Indeed, in my riding we have COM DEV, with 1,100 employees, and I think over 80% of the satellites in space have COM DEV hardware and software on them.
Here's my concern. The Land Remote Sensing Policy Act was written in 1992 in the United States, so clearly the government of the time, in 1998, our previous Liberal friends across the way, negotiated to give $400 million, give or take, to MDA to build a satellite, but failed to foresee the problems we're having today. In fact, I would venture to guess that none of us would be here today if this original $400 million of taxpayers' dollars had been managed better. Here we are without assurances on some of the issues that face us in this sale, so I'm going to ask you this very directly.
First of all, I'm becoming convinced we're going to get our $400 million back in terms of imaging over the next seven years. Needless to say, when Canadians invest in space, we usually get $8 back for every $1 we spend, so I don't know whether it's a great deal, but at least we're getting our money back--
Thank you, Mr. Marchetto. Thank you, Ms. Nash.
I have the final Conservative spot here.
I'd just like to follow up on what a lot of the members have raised. And Mr. Simard really jogged my mind when he said “not to my knowledge”, because we heard that phrase both today and on Tuesday.
My big concern is that we have statements saying it all stays within Canadian control and Canadian laws will apply, but we have a markedly different legal opinion presented here today. I don't know, offhand, which one is correct.
But Mr. Friedmann argued on Tuesday that there was not enough work in Canada for MDA; MDA therefore needed a U.S. partner, ATK, in order to have access to U.S. contracts.
On Tuesday he said, “The control and access of the satellite is according to Canadian law, and there's no way to do anything other than what Canada says. The company is owned by a U.S. company, but it operates under Canadian law...”. He mentioned Canadian export permit approvals.
But won't it inhibit MDA, as a subsidiary of ATK, in terms of accessing U.S. contracts if this is seen as an entity that is completely under Canadian law? If the position of both ATK and MDA is that this Remote Sensing Space Systems Act applies at the end, won't the U.S. government, or anyone else giving contracts at this end, be less likely to give contracts if they know there's always a possibility for the Canadian government to say no at the end?