Welcome to the trade committee. Today we're going to continue with our study on Canada's support for small and medium-sized businesses on international trade.
We have guests with us. We are waiting for one guest. Mr. Fowler from Manna International is on the way, I've heard, so we'll get started, and he can do his presentation when he comes in.
Welcome, witnesses. If this is your first time in front of a committee, let me tell you that we try to keep your presentations to five minutes or so, but whatever it takes to do it, that's fine. Usually I start with the witnesses on video conference, because sometimes we have technical difficulties. Give me a thumbs-up if you can hear me okay.
Okay. We have with us, from the Chambre de commerce de l'Est de Montréal, Madam Fréchette and Madam Mandelbaum.
Bonjour and welcome. You have the floor.
Thank you for this wonderful invitation. It is very much appreciated. First, I would like to point out that Mrs. Mandelbaum, who is with me, is the Director of Export Assistance for the Chambre de commerce de l'Est de Montréal. I am the President and CEO.
I would like to say a few words about the Chambre de commerce de l'Est de Montréal. Our organization covers a vast area located on the eastern half of the Island of Montreal. We cover half the Island and our area has 32,000 businesses. Our organization has 1,200 members working in 125 sectors of activity. More than 80% of our members are small and medium-sized businesses. Therefore, we are very familiar with the reality of SMEs. The Chambre de commerce de l'Est de Montréal hosts an ORPEX, or regional export promotion organization, which has four export specialists on staff. It is a real asset in terms of support for businesses that want to export. The Port of Montreal, which is the gateway for maritime shipping, especially with Europe and the Americas, makes our area a very strategic one. In short, we have a very strategic asset in our area.
How can the government foster export opportunities for SMEs, particularly with respect to CETA and the TPP? We have four suggestions.
We believe it is essential for the government to include in its efforts front-line service providers such as regional export promotion organizations, and that it work closely with them. These organizations have a special relationship with exporters, especially SMEs. Their close ties are particularly useful because SMEs often prefer that the organizations supporting them use a highly individualized approach. Additionally, our organization works with more than 200 exporting businesses every year, year after year. We have offered this service for 18 years. We can most definitely develop a relationship with the area's businesses and gain a sound understanding of their dynamics.
First, we simply want to tell you to make greater use of our organization. We have resources and we are on the ground. This is an advantage and an asset that the government can use to raise awareness among businesses and to inform them of the potential benefits of free trade agreements.
Second, it is important for the government to have a greater presence on the ground in order to reach out to SMEs. In the east end of Montreal, the Government of Canada's presence in the business community is insufficient. This lack of representation can be addressed in two ways. For example, we could ask that the businesses in the Montreal area that Government of Canada representatives cannot help, due to a lack of resources, be referred to organizations such as ours. Based on my personal experience, I can tell you that this has not happened very often. We have received few referrals from and had little contact with Government of Canada representatives concerning our export services. I think that there is a place for such referrals.
Third, the federal government could definitely increase its export services presence in the area. We can be a part of the solution and the government could also decide to increase its presence.
More tools, content and concrete information could be provided to SMEs. We invite the government to consider this option. In fact, our organization relays this information to businesses on its website, in its newsletters and with social media posts. These are different ways of reaching businesses. In that regard, the more information and documentation we receive from the Government of Canada, the more we can share them with businesses.
The fourth important element would be for the government to participate in events organized by organizations such as ours including training, team meetings, brainstorming sessions and presentations about government programs. We organize about fifty events a year, and we are quite open to having a greater Canadian government presence at these events.
We actually had an event a few months ago with the U.S. Consul General at the U.S. consulate to inform companies about how to export to the United States. That is the type of activity that we are very willing to organize with the Canadian government as well.
How much time do I have left, if any?
I was saying that the signing of free trade agreements definitely has a positive effect on businesses in the signatory countries.
These free trade agreements create a very clear financial interest for businesses. However, many barriers constrain SMEs' ability to take advantage of the government support and to benefit from these free trade agreements. It is important to be aware of these constraints so we can better support SMEs.
Although the number of free trade agreements has increased, we see that they occasionally cover markets that are not a priority or that are not well known by small and medium-sized businesses. Therefore, it is important to create a greater awareness of the countries with which we sign agreements and the business opportunities they provide.
The usual reflex of a small or medium-sized business that is beginning to export is to look to more familiar markets that are less risky and more geographically or culturally aligned. More mature SMEs that are already exporters will consider exporting to less familiar destinations outside the United States, France or England. We have to bear that in mind.
If we look at it from the SMEs' perspective, we realize that exporting is not necessarily a priority. We try to explain why it is important to export. However, sometimes the potential for growth in Canada has not been reached and the businesses feel the need to further work on the Canadian and even U.S. markets. We must be able to enhance the potential and further promote it on the Canadian scene.
The issues related to the recruitment of labour also lead to significant constraints at times. Increasingly, a number of businesses and SMEs are not operating at full capacity because there is a labour shortage. They sometimes curtail operations. In this context, it may seem impossible to open new markets abroad just because the business cannot consider increasing production. This could continue for some time unless we change our immigration rules and let in more immigrants who could be hired by our businesses.
There is also the factor of internal abilities and skills, which could quickly become an issue for SMEs, particularly when it comes to language.
Another issue is technical, tax and regulatory knowledge and knowledge of programs that the company could access for help. From our perspective, there is a lack of clarity regarding the different roles of such federal entities as Canada Economic Development, the Business Development Bank of Canada and Export Development Canada. It is sometimes not very easy for businesses to know who does what. This needs to be clarified for businesses.
To summarize, signing free trade agreements is a very important step that will encourage our businesses to export. However, other measures must be implemented to develop the true potential for our SMEs abroad. This means relying on more organizations such as ours, which are in direct contact with businesses every day. The Canadian government must have a greater presence in the area in order to be in contact with businesses. It must also develop information tools that can be used with businesses. Finally, the government must be available to share information and promote its programs to businesses.
We would be happy to answer any questions.
Good afternoon, Mr. Chair.
Thank you for allowing Iafrate Machine Works to provide input into this study of federal support for the international trade activities of small and medium-sized firms.
I will cover our experience in international trade under the existing NAFTA, the challenge of providing machined products on a global basis and the possibility of utilizing the trade commissioner service to identify potential foreign customers that meet our unique production requirements.
As a custom machine shop, we do not manufacture our own line of products. Instead, we invest in sophisticated computer-controlled lathes and mills that are operated by semi-skilled operators and skilled tradesmen to produce products designed by our customers.
Approximately 30% of our sales do constitute international trade as automotive products under the current NAFTA. These products are components that are assembled into a driveline module by a major automotive parts supplier and then sold to one of the most popular sport utility brands in North America.
Automotive vehicle platforms typically have a seven-year production cycle. We are now into the second platform for this product line. This is an example of a successful long-term contract based upon compliance with the terms of an international trade agreement because it meets the following business requirements for us: long production runs to spread the cost of machine set-up over significant volume, stable and specified lead times for both raw material and production schedules, relatively short shipping distances, the ability to control the shipping environment to minimize the risk of the finished machined product rusting during transit, and the ability to discuss engineering and design changes in English during normal business hours.
However, approximately 70% of our business is complicated by the challenge of short production runs of custom-designed products that require significant machine set-up time and subsequent tear down after the product is complete. This type of work is further complicated by unique steel requirements, heat treating and specialized testing to prove compliance with engineering specifications.
Providing custom machined products requires the coordinating of schedules for steel production, raw material shipping, machine set-up, production scheduling, heat treat scheduling, off-site hardness testing, final machining, and the shipping of the finished product in a controlled environment to minimize the risk of rust.
To conclude, these requirements can be managed with long, known production schedules; however, the shorter the lead time, the easier it is for any one of the above elements to seriously impact the ability to meet a customer's deadline. We do not want to be responsible for shutting down a customer's production line. This is precisely our concern with trying to take advantage of any non-North American trade agreement. Distance, language barriers and significantly different time zones make it extremely difficult to justify the risk of accepting production contracts that have a large risk of error when we are not able to control all the various organizations involved in the entire process.
There is no question that we support international trade. However, we must be able to manage the process to ensure our customer receives the level of service we have promised.
One possibility for identifying potential customers in Europe or Asia that would meet our requirements for long and stable production forecasts would be to utilize the trade commissioner service, which has offices around the world and is connected to the local community. We have used the trade commissioner service in the past to investigate the possibility of expanding our customer base in the U.S. They may be able to identify international opportunities through their local networks that could provide manageable risk. Naturally, we have to feel confident that our machined products are not at risk during transit.
Thank you for your time.
Thank you for the privilege of coming to talk.
My apologies for my outfit. Air Canada is protecting my blue suit, white shirt and blue tie incredibly well. In fact, they're in a secret location and no one really knows where they are, so we have to put up with my current Air Canada-approved outfit.
Voices: Oh, oh!
A voice: It's casual day.
Mr. Gerald Fowler: That's right. It's casual day.
Thanks again for allowing me to come. I'm new to this environment. It's very different for me. I thought maybe for the five minutes allotted I'd give a brief background of my history in exporting, to provide some context and perspective and also maybe some credibility.
I noticed from your mandate that you are to study ways that government can help small and medium-sized enterprises to export, so I'll target my presentation to that end, trusting that mandate extends not only from encouraging or generating interest in exports, but also enabling companies to realize that potential.
Again, I thought the best return on investment of your valuable time is if I give maximum time for questions, as opposed to my jumping up and down saying what I've done.
Please forgive me if this sounds like, “Look what I did.” I'm very blessed and very fortunate. I just want to give you an accurate background of where we're from.
We've been exporting products since 1980. In fact, 100% of our revenues are involved with exporting. We started with maple syrup and then moved to certified organic soybeans, which we moved to Japan and Europe. In 1996, we started moving non-genetically modified soybeans into Europe, first by vessel out of the Great Lakes, but then by containers since 2004.
As part of that, working with the biggest soy milk producer in Europe, we became the first in the world to ship fully traceable, guaranteed non-GMO soybeans to meet the EU standards. Because of that, we were invited to speak at a variety of international conferences on the subject and were able to raise the Canadian flag. Canada, therefore, became the preferred supplying country of this type of soybean in the international food sector, a position that Canada still holds firmly today.
I use that as an example to emphasize to you people that you have the potential to affect that type of stuff. As you already know, there is incredible importance in the value of small to medium-sized enterprise and the exporting values for Canada. We started doing this because a door was open to us in Europe. We were able to step through that door, and we were thankful it worked well.
Because of that, there are elevators, groups of farmers in southwestern Ontario, that are now exporting that would never have exported before. Just to emphasize the potential for small to medium-sized enterprise in the Canadian marketplace, all this is from an office with two people in Sault Ste. Marie, hundreds of miles away from the nearest soybean.
Because of that privileged position, someone—I don't know who it was, actually—put our name forward and we were fortunate to be recognized as the 1999 recipient of the northern region's leadership award for excellence in export development. We were then invited on numerous trade missions, predominantly by the Ontario Ministry of Agriculture. With that interest, as well as interests in ministries helping orphans, widows, refugees and human trafficking issues, I've been blessed to travel to 42 different countries to do business there.
In addition to agricultural trade missions, I was involved in the Soo in another export development project. I taught international business at Sault College for their first graduate class and subsequently ran a year-long government-funded program with the graduates of that course, developing export development business plans and reports for local businesses to try to encourage exporting up north. That led to being asked by FedNor to develop and lead a 10- to 14-day trade mission to Ecuador and Chile for forestry experts and professionals, as well as business people, to see if our Canadian forestry expertise had potential.
As a follow-up to that, we started looking at export clubs in Sault Ste. Marie where, in conjunction with FedNor, we started doing export breakfasts. That was a relatively informal time of talking with a wide variety of local businesses that were interested in exporting and didn't know where to go next with that, and they were just asking questions. We just sat around and talked about “I wouldn't do that if I were you”, “This would be a good idea”, or “Be careful of this”, that sort of stuff. It worked well.
In 2006, we received Sault Ste. Marie's Community Capacity Building Award and were also asked by then mayor, John Rowswell, to accompany him and a number of local businesses to Sault Ste. Marie's sister city in Portugal, due to the lack of expertise they had in exporting, and potentially help new export business to develop.
During that trip, I had the distinct privilege of meeting Mr. Terry Sheehan and his lovely wife. They were also on that trade mission.
As well as exporting soybeans, we're now focusing on the next phase of European market development, which is traceability. Traceability moved from—I'm trying to give you the Reader's Digest version—organic non-GMO. The new terminology, the new fascination for the European market place is called sustainability. The trouble is getting a definition of that, but that is defined by increasing yields and decreasing use of chemicals—an oxymoron for most farmers—but it is possible.
We're trying to find even more market share for Canadian soybeans by getting Canadian soybeans a bit more sustainable for the appetite that Europe is expressing with regard to sustainability.
At this point, I'm going to stop embarrassingly tooting my own horn in order to make the most time available for questions.
Thank you very much, Mr. Fowler.
That's a very interesting story. Most of the times you hear that to increase exports, it's mostly federally government led. Yours is locally driven, very organically driven, right in your own community.
That's a good job by you and your community. It's good to hear from you today.
Now we will turn to the dialogue with the MPs.
Witnesses and MPs, let's try to keep the questions and answers short. That way, we can have a good dialogue.
We're starting off with the Conservatives, for five minutes.
Mr. Hoback, you have the floor.
When I worked with Flexi-Coil and Case New Holland, we were shipping a lot of machinery over to Australia. We had the same issues with stuff being manufactured in Saskatchewan, putting it on a train and crossing the ocean. By belonging to STEP, we compared ways of doing things, and we realized there was something we could do to eliminate rust in our painting process. It's that combination of....
You have your coffee room meetings and your clubs, and that's kind of what STEP was in Saskatchewan. It gave us that information.
I'll go over to you, Mr. Fowler.
You talked about maple syrup, where you started and you've grown from there. I think that's fascinating. Obviously, something drew you to the soybean market. Was one of your visits on maple syrup and all of a sudden they wanted soybeans? How did that end up happening?
It's a long story, again a very fascinating one, but maybe not for this platform.
The challenge is there are some marketplaces that have a shelf life over here, but there are other ones that need to go elsewhere.
This particular case was doing some consulting for locals, a manufacturing facility for maple syrup. Their situation wasn't relative to the farm-gate mentality, where typically maple syrup is sold wherever. We had to do it in bulk, because in Austria, they mix maple syrup with lemon juice and cayenne pepper, and they use it as a food substitute. They were looking for bulk, basically.
This particular year, that couldn't happen. We put the deal together anyway from somewhere else, and we built a reputation. International business is done by relationship. Relationship is key.
Yes, we built a relationship with the guy we were working with shipping certified organic grains to Europe, and he said that that someone had called him. They were looking for someone in Canada to work with, and he said, “You have to work with this guy because he does business differently.”
He contacted me. His name was Vandemoortele. I met him in his office and he didn't measure up to who I thought I was going to talk. I was trying to make business, not feeling very comfortable, and I asked, “How's business?” He said, “Pretty good, we broke two billion this year.” I had an image of a small guy in a small office somewhere, and I asked, “Was that billion with a 'buh', or million with a 'muh'?” He said, “With a 'buh', and I thought, “I'm in the wrong place.” His very next question was, “What do you know about soybeans?” I said, “Nothing, but I'll learn.” He said, “Well, I've heard that about you.”
That relationship building is absolutely critical in the international trade world. Unless you're out there, unless you talk to them, unless you build a relationship, it's going to fall off the rails pretty quickly.
Thank you, everyone, for appearing.
I'm certain that some of the soybeans from Essex County make their way to market through you, Mr. Fowler. We're quite known for them.
We've heard a consistent theme about a lack of communication from the federal government about the programs that exist. You've mentioned several of them here today that you've found on your own and have access to. We hear consistently from SMEs that they don't know where to go.
What you've done, Mr. Fowler, is quite positive and unique, but it shouldn't be that it's in isolation. It shouldn't be that it's a community that's trying to find solutions on their own. There should be government support and a very clear path on how to access, what the programs are and what they offer.
The other thing is the trade agreements themselves. Madam Fréchette was talking about trade agreements. I think one of the fundamental flaws that we have is that SMEs aren't at the table in negotiations. On the opportunities that exist in trade agreements, the big players are already there. It really is for the SMEs. I hope that, going forward in future trade agreements, SMEs have a particular focus. I know there's been an attempt in some of the more recent ones to have a chapter to at least have the beginning of a conversation. I think it needs to be more extensive if we're to see those opportunities realized.
The question that I would have for all of you is: What would you incorporate into trade negotiations to address the issues of SMEs to ensure the best possible language and outcome for them? I know it's a bit of a big-picture question, but what do you envision that looking like?
I'll start with the chamber.
Thanks to all our presenters as well.
Gerry, it's good to see you and your lovely wife, Elizabeth, too. I'd like to extend the welcome to her, too.
Getting back on track, Gerry, you mentioned these breakfast club meetings that you used to attend. You were invited by FedNor to chat with some new entrepreneurs, new inventors who had created a new widget. We're back at it, pushing that innovation agenda here in Canada. What's the biggest thing stopping those inventors of the widget or the new entrepreneurs from getting into the export market in Asia, where you are, and in Europe?
There are all sorts of things, various ones. I think the challenge, in many ways, is qualifying the entrepreneurs. Entrepreneurialism is the fundamental, let's say, the foundational bit, but they also have to be culturally relevant. They have to be innovative. They have to be a little bit more multi-talented people because there are a lot of aspects they're going to deal with. Most of them in small to medium-sized enterprises aren't going to have a full complement of expertise there. They're going to go, and to get funding, dutifully so, they'll be asked to do a five-year pro forma balance sheet, a pro forma profit and loss, and they won't have the expertise to do that.
I think one challenge is to get those people who have wonderful widgets that have market potential—if they could identify the market potential first—from this point.... To get them from here to there is going to take a team of expertise. Sometimes those people don't have that. They need mentors, perhaps, but they need some sort of an escalator, almost, where they can say, “I want to get involved in exporting”, and there are services available that they can step on and that take them through all the various processes they have to go through: cultural expertise, shipping, logistics, pricing.
We are facing an issue—present tense—in Europe. There are other risks involved with exporting that aren't involved in typical business. There's exchange risk. There's cultural risk. There's political risk. There are all sorts of other risks, which are another factor that needs to come into that equation to protect them from stepping over the edge, basically.
They need some sort of expertise they can lean into.
Thank you very much, Mr. Chair.
I would like to thank all the witnesses who appeared today. Your comments were very interesting, especially those of the Chambre de commerce de l'Est de Montréal, which I found to be positive and invigorating.
Ms. Fréchette, you have a clear and precise view of the situation. You are already know that exporting is extremely important, especially since you told me that the Montreal Port Authority is a member of your organization.
In 2018, there was a 9% increase in traffic at the Port of Montreal, a direct result of agreements we signed in previous years, and in particular the Canada-European Union Comprehensive Economic Trade Agreement, or CETA. In total, Canada signed 14 agreements with 51 countries representing 62% of the global economy. Our markets are now open to 1.5 billion new customers, a fact you are surely aware of.
You spoke about the fact that the government could be more effective and that it could increase its presence on the ground. You also invited the government to refer SMEs to your services and to participate in joint activities. By the way, you can call me as I am always available.
Only 12% of our small businesses are exporters. We must grow that number. I have three questions for you. First, Mrs. Fréchette and Mrs. Mandelbaum, do our department's services provide enough assistance to small businesses that wish to export? Next, could you give us specific examples of small businesses that have received assistance from our government in your region? Finally, what barriers do small and new businesses face when they are considering exporting?
Have the services provided by the government benefited our clients? Yes, they have benefited some of them. Not everyone knows a trade commissioner. We talk to our clients about federal services to help them, such as support services, and some use those services. It is my understanding that the Quebec team of trade commissioners is small and that it cannot help everyone. We cannot look after every Quebec firm that knocks at our door and provide them with a list of customers in countries with trade commissioners. I think that the number of Quebec exporters that receive assistance from trade commissioners is still low.
The timing of trade commissioners' involvement in the business is another important aspect. Our chamber of commerce has a team that promotes exports, and we are not the only ones in Quebec. For those who do not know this, there are about twenty of these teams across the province that provide these services across Quebec.
Our job is to get businesses ready to export. Once they are ready, the trade commissioner can do a market study and introduce them to potential partners in a given market. It is my understanding that it is not the trade commissioner's job to establish the strategy or ensure the logistical success or regulatory compliance of the businesses.
That is why we suggested earlier that the federal government work more closely with us, as we are the ones preparing businesses to export. Some of them contact trade commissioners when they are not yet ready, and then they are not deemed a priority either because they are not ready or because of the sector in which they operate. In these cases, we are prepared to help them.
As other witnesses mentioned, there is a multitude of barriers. We understand why Canada enters into free trade agreements. That said, a business's day-to-day reality is altogether different. Just because an agreement was recently signed with Korea, companies are not suddenly going to go halfway around the world and spend a week in Korea. For example, we have clients who do business with Brazil or Saudi Arabia even though Canada does not have a free trade agreement with these countries, because they believe they are relevant markets. Now that the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership, or the CPTPP, has been signed, an agreement that includes Chile and Peru, will these clients look to Chile and Peru rather than Brazil? I am not sure that it is warranted by the market size.
There are a great deal of barriers. Businesses do not necessarily have the requisite capabilities and skills within their organizations. You could have the best invention in the world, but there are many barriers that could prevent you from achieving the desired results in a given market. The main factors to consider are logistics, being surrounded by good partners, and in the case of sanitary products, for example, obtaining the required certificates. These businesses need support, they need to know how to get the help they require and what resources are available to them.
In the current climate, it is important to encourage our SMEs to diversify their export markets. The government could provide incentives to foster diversification primarily in an effort to somewhat counter the usual response of turning to the North American market. Perhaps such measures already exist. This would certainly be a good message to send. We have heard it from Canadian federal leaders. With regard to these measures, there may be incentives for businesses that could be considered.
As we stated in our earlier remarks about barriers, the availability of Canadian government representatives is sometimes inadequate. Our organization could step up, identify the best candidates among businesses that may not yet be exporting and help them become exporters. In our opinion, this type of assistance is encouraging for businesses and provides them with more information about opportunities if they take advantage of export measures. They can be put in contact with several stakeholders, such as federal and Quebec government representatives, among others.
We are at the heart of a network or an ecosystem that brings together many stakeholders. We are familiar with government assistance programs and we can also network with other companies that have taken the same approach. In a way, we are a very useful tool that leverages the Canadian government's intervention.
In closing, I will add that when a free trade agreement is signed, we have to look at it as the starting point and not just the ultimate goal. Few businesses have the ability to unravel the text of a free trade agreement, and when they do it can still be difficult. These agreements use very technical terms. When an agreement is signed, the content must be put into layman's terms. We must use the tools available to explain to SMEs what was agreed to. It is very important that SMEs understand the agreement. It is an ongoing effort.
Fortunately, the impact is felt fairly quickly. That was our experience following exchanges with the Montreal Port Authority. There was a huge increase in trade flows, and others have been initiated in recent months. That is a good sign. However, what we are hearing is that these recent flows have generated more imports than exports.
Thank you very much, Mr. Chair, and I'd like to thank the witnesses for being here.
During the constituency week, I had a round table in Oshawa, focusing on trade opportunities. We have the new CETA. We have the new CPTPP . We had representatives of EDC, Global Affairs, manufacturers and agricultural interests there.
I think the chamber of commerce representatives hit the nail on the head when they say, “Who does what? No one knows.” Businesses are very anxious to expand and export, but they really don't know how to go about it. I brought these people in to see if we could make some connections. I don't know how it's going to land. We're going to follow up, and things like that.
I wanted to talk to you, Mr. Fowler, because some of the food manufacturers, especially with meat and cheese, think there is a huge market in Europe. There is interest over there, but they can't quite figure out how to get there. They said there are some Ontario programs, but they weren't really able to connect with the federal side of things. The Government of Canada does have the agri-marketing program. I don't know if you know very much about that, or if it's ever used.
I have a couple of things, actually.
I'll go back to your first point about the confusion. In the sales business, the challenge is not what you say, but what people hear. The other challenge is that people buy benefits, not features. We have the tendency to list the features and we have to translate those features into benefits. I buy something with a benefit to me. It's a personalized feature. That's the challenge in some of the sectors because you've got different features and different benefits that apply to different groups.
The majority of our business—what we get paid for and what we live off of—comes from Europe. We've been involved in business for 30-some years now in Europe. The challenge in Europe is understanding the marketplace. It's a bit complex. Using trade commissioners to delve into the nuances—not the specifics necessarily, but the nuances—is best done by just going knocking on doors, to be honest. You put in the shoe leather and find a couple of companies that maybe meet your thing. Go and learn. Go in without something you want to get across....
On the first number of trips I did to Europe, I was just learning. I didn't try to sell anything because I didn't know what they wanted to buy. I wanted to listen. I learned more with my ears open and my mouth closed. There's a time to do that. In Japan, it used to be that you didn't talk about business. It was rude to talk about business until they brought it up. There were a couple of trips to Japan when all we were talking about was the weather and all sorts of different things. It was easy to talk about weather in Japan.
Get to know the people and the nuances—not necessarily what's on the surface—because they're the people who have your cheque in their pocket. You want to know what turns their crank and what's important to them.
Are there any barriers to getting into a country? There may be. Europe has a far more in-depth understanding of the value of food than we tend to have in North America. You have to understand those nuances because they'll come back and bite you. In their minds, they're not nuances; they're absolute. Learn what those are and just talk to them. You just learn and listen.
My next question is for the chamber of commerce.
I really appreciated your input today. I've always found that in the teaching business, and also from being a business owner, the closer we get to the ground level, the more people can relate to those who are offering information. As we have heard at the committee, a lot of small businesses don't know anything about trade commissioner services or EDC or BDC. We have heard from Startup Canada and others.
I'm wondering, ladies, if you could let us know how you are making your members aware of services or workshops that are out there.
I don't think you can actually see this, but this is a workshop I was at yesterday. It gave a list of links. If we were to provide you with that type of information, would that be of value and how could you disseminate that to your members?
Yes. Thank you for sharing that.
Gerald, I'm going to come back to you. I want to finish on what Terry was talking about, your programming. That seems to always be the issue. In Niagara I think we have about 1,000 manufacturers, but the average size of most of them is fewer than 10 people, so I think Gary's company would be larger than most.
This always is about resources and all those things. There are many programs out there. I am encouraged to hear, even if it's informally, because I have a soft spot for business people—I think “just doing it” sometimes is better than reading a textbook, because things change.... You talk about that constantly. It depends on the market, so one program may not work.
Just talk a bit more. Are you still mentoring and still doing those things?
No, the wheels fell off that particular program, sadly, for all sorts of reasons.
The challenge is a big challenge. To generate the potential that is latent in the marketplace, you need to engage people who are practitioners rather than, with all due respect, the theoretical ones, and the challenge is how to get them involved.
In some circumstances, if a number of people show up at a meeting, it's a success. As an entrepreneur, I need to make cash out of it. If there were incentives for some of the people who are experienced in exporting to come alongside and just say, “You should try this, but be careful about this....”
There are so many facets. How do you finance the first deal? EDC has stuff out there, but it's not cheap, and to get there, understandably so, is a very slippery process. It's a bit of a tough way to get some of the funding in place.
I think if we can marry a lot of these different entities together, we can have a lot of success in the Canadian marketplace.
I'll tell you a sad fact. I bank in the States. They say, where we live, you can tell the Canadians, because they have a gallon of milk under one arm, a turkey under the other arm, and they smell like gasoline—
Voices: Oh, oh!
Mr. Gerald Fowler: —because everyone goes across the river to get [Inaudible—Editor] in Sault Ste. Marie.
I bank across the river, because doing business with the Canadian banks was impossible. I mean it was incredibly difficult, not impossible. I was fighting with a Canadian bank—a couple of them, actually—and then I went across the river and they offered me 10 times what I was asking.
I just said, “Can we do it by the end of the week?” They said, “Oh, yes, for sure.”
I think application of the needs, if there were means for that end, would be huge for the exporter, because the challenge is that they have to learn about different financial models.
The challenge in international business, too, is that it's the person behind the signature, not the signature, that is important. The signature on a deal means nothing; there are no teeth in it—no practical teeth, anyway—in an international situation, so you really need to know the person behind the signature more than the actual signature itself, contrary to the situation in North America.
That, then, is another thing. How do you finance the first deal? How do you put it together? How do you make sure you're not going to be damaged in the process and lose all the collateral you have by taking that first deal?
One barrier unique to SMEs is the lack of resources.
Large businesses have all kinds of divisions and services, human resources, and the ability to hire consultants to fill any in-house gaps.
However, as we heard a few minutes ago, the people who work for SMEs are often called upon to wear many hats. In an SME, the positions of director of human resources, vice-president of business development and manager of operations can all be held by a single person.
This certainly makes it harder to take on the added challenges associated with exports. The external financial resources available can be a major advantage for an SME that is deciding whether or not to get into exports. Businesses must also consider that exports are part of a broad, comprehensive process. Businesses cannot simply try exporting to a new country because a new free trade agreement was signed. There must be consistency, and it is more difficult for SMEs to have comprehensive strategic plans that are reconfirmed every year or every three years. All of these aspects make the process more challenging for SMEs.
I can also talk about fact-finding missions abroad to better understand an export market. It is more difficult for SMEs to do this, because they have fewer resources and the tariffs can be higher for smalls business than for large ones.
If the tariffs could be adjusted based on the size of the business, SMEs could have greater access to fact-finding missions on an export market.
My colleague may have more to add.
I want to thank the witnesses. Your focus has been so much on the people on the ground, on the nuances, as Mr. Fowler was saying, on some of the struggles, on the barriers and on the many hats that we see that small and medium-sized businesses wear. One thing I always like to say is that people buy from people, and behind that signature is a person and an understanding of that person.
We heard from Madam Fréchette on where the government could maybe have a different approach. Maybe it's a matter of the trade commissioner service doing that groundwork, being that sales force and being the marketing arm for many of the 3,200 businesses that you represent. That way, when an opportunity presents itself—and I think Canada is in an enviable position with the trade agreements that we have now globally—we have a real opportunity to capitalize on those.
Many of the people at the trade commissioner service would have all of that knowledge. They would know if the double-digit tariffs had just come off lobster or whatever the product is. They would be able to communicate that, to get in touch with the different companies here in Canada, our SMEs, and to make those connections globally so that the business could start.
When I say “those connections” I mean those people-to-people connections. Is that the kind of direction you'd be looking for? I ask this of all the witnesses, but I'll start with Madam Fréchette and Madam Mandelbaum.