Good afternoon, honourable members. It's certainly a pleasure to be here.
I'm here actually representing Fiat Chrysler Automobiles Canada, Ford Motor Company of Canada, and General Motors Canada. Together, these companies are responsible for approximately 60% of all the production in Canada. They are also among the largest multinational companies in the world, exporting their products to 100 countries around the globe, and producing award-winning quality vehicles from Canadian plants that are among the most productive in North America.
We are very pleased that the committee has undertaken a manufacturing study, and in doing so, recognizes that auto manufacturing has been a foundation for economic growth, and sustains a healthy middle class because it is highly productive and provides high added-value, high-paying jobs.
In fact, the auto industry accounts for roughly 115,000 direct jobs and about 500,000 direct and indirect jobs across the country. For every one assembly job, there are seven to nine other jobs created in the economy. No other manufacturing sector has such a high job multiplier. Our direct contributions to GDP in 2014 were over $18 billion, and our exports of motor vehicles and parts totalled some $87 billion last year alone.
Innovation in the auto industry is advancing at an unprecedented speed in its products and in its business models. The next five years will bring more change than what we witnessed in the last 100 years, and we do not see that pace of innovation slowing down. The automobile is the most technologically complex item a consumer will purchase, and the consumer is the ultimate benefactor of advanced vehicle technology in safety, fuel efficiency, and comfort.
New rapid advancements in technology, changes in consumer preferences, and new entrants into the global auto sector are inspiring new automotive products, services, and business models that will be increasingly electric, digitally connected, autonomous, and part of the sharing vehicle economy.
There is a tremendous opportunity for Canadian assembly plants to have strong quality performance and to remain at the forefront of innovation, while enjoying the same technological advantages as other plants across the globe through their embracement of global manufacturing systems.
Canada needs strong advocacy for its manufacturing sector in order to achieve its economic goals. The committee has requested input on what would strengthen, protect, and promote Canada's manufacturing sector to inform this manufacturing study. We are here to supply whatever information we possibly can to help you.
You may be aware that the Canadian Automotive Partnership Council, whose mandate is to lead a forward-looking and proactive effort to position Canada as a leading jurisdiction for automotive manufacturing, has submitted a response to the Canadian innovation strategy which provides detailed recommendations of what factors will support innovation in the automotive manufacturing sector. CVMA certainly supports those recommendations.
Today, I'd like to focus on four areas that would demonstrate the government's commitment to the manufacturing sector as a key economic driver for Canada, and increase competitiveness on a global scale.
First, we should improve access to capital and financial incentives. The terms of the automotive investment fund need to close the gap against competing jurisdictions, and ensure that Canada has the most competitive tools available. Most competing jurisdictions offer non-repayable contributions in many different forms, including cash grants, refundable tax credits, and infrastructure and training credits and grants, with contribution levels that can exceed 50% of the total investment spending. No additional taxes are incurred as a result of the incentives. The conditions are flexible and performance-based. Project evaluation and approval is nimble and responsive to applicants' business realities and investment cycles. Furthermore, lowering the investment threshold investment to $25 million from $75 million would certainly help increase innovation.
We also recommend that the current form of the scientific research and experimental development tax credit be revised to be more responsive. Research and development programs that are flexible and responsive to the needs of the industry and administratively efficient would help support the innovation agenda by promoting auto research excellence, and the opportunity to build on the existing research capacity. A research tax credit that is truly supportive of innovation must be robust and reflect the true cost of advanced auto manufacturing research and development, inclusive of capital equipment, and be based on a broader definition of innovation versus the current definition of science.
Second is a welcoming regulatory and intellectual property environment. While governments can assist their emerging technology champions to grow, their policies and regulations can also stifle innovation. Regulators, agencies, and institutions can have strong impacts on the decisions of global OEMs to undertake R and D activities in a given jurisdiction.
Canada's governments need to take a strategic approach that comprehensively addresses the specific innovation needs of the auto sector. Going forward, it would be important to identify and track regulations that encourage or dissuade automotive innovation in Canada and to propose solutions that enable investment in automotive innovation.
Industries like the automotive industry which are fully integrated with the U.S. will benefit competitively by aligning regulations and removing regulatory differences. In fact, there are material cost efficiencies for both companies and governments with this approach, ultimately benefiting consumers.
North American harmonized standards through the efforts of the Regulatory Cooperation Council enable auto manufacturers to continue to design and build once for the North American market cost efficiently, while ensuring consumers are able to purchase the greatest choice of new vehicles that are equipped with the most comprehensive safety systems and meet the most stringent emission requirements in the world. We strongly urge the government to maintain its commitment to the RCC.
Third, we need to negotiate trade agreements that are fair and balanced, providing actual benefit to Canada's auto sector.
As the government works toward furthering opportunities to expand Canada's exports, we need to ensure Canadian companies are provided opportunities to fairly compete in foreign markets on the same equivalent basis as foreign companies have in Canada's domestic market.
The CVMA submits that there are important core principles for trade policy. The first is that free trade agreements must result in fair and free trade. Second is to focus on opportunities that will support and enhance Canada's industrial and commercial strengths. Third is inclusion of currency disciplines to ensure that market access provisions in a final agreement are not undermined by a country's inclination to manipulate its currency, given the intersection of trade and finance. Fourth is to create a level playing field for Canadian companies by removing market-distorting non-tariff barriers in advance of tariff reductions.
The industry is following with interest the efforts toward a successful passage of the CETA this fall as it represents actual growth opportunities for us. Our members, as multinational companies doing business around the world, are committed to working with the government to ensure Canada's free trade agenda supports and provides benefits to the sector, and positions Canada as that globally competitive automotive producer.
Last, we need to keep the costs of doing business low. We need to provide long-term certainty to companies which make global investment decisions as many as 10 years out. As I have said, increases in the costs of doing business have a negative impact on our competitiveness as a determinant in terms of decisions to place new investment in various jurisdictions.
One of the examples most recently is the pan-Canadian framework on climate change. It will be important in that regard to collaborate with the provinces and ensure the federal government establishes a floor on the price of carbon that does not add to the costs that are already being imposed on us by the provincial cap and trade program in Ontario, for instance. Another would be the proposed increases in CPP employer contributions, which really are payroll taxes, adding costs that would not be present in other jurisdictions.
We support efforts to address the effects of climate change globally, but measures will need to be collaborative and balanced to support competitiveness and avoid unintentionally hurting overall auto manufacturing competitiveness, primarily with our primary trading partner, the United States.
Higher costs to operate in Canada could lead to new or expansion of plants with the associated jobs landing elsewhere instead of in Canada. This is otherwise known as carbon leakage and we would lose on two fronts: the environment and the economic job-related benefits.
Finally, there are critical times in our business when specialized expertise is required for new product launches, emergency production equipment, installation and repair, as well as after-sales service. Sometimes this can be on very short notice. CVMA member companies are global companies which have global teams that provide specific expertise and any delay to get temporary foreign worker expertise to Canadian facilities has repercussions on our productivity and on future investment decisions.
Delays to get expertise across the border, as needed, can lead to a shutdown in production and result in costs and lost revenues of over $1.5 million per hour. The CVMA members would welcome opportunities to work with government to address these deficiencies in the temporary foreign worker program and replace it, perhaps, with a new "global talent” visa or "trusted employer” visa program.
Honourable members, that is a very quick overview that would support auto manufacturing in Canada. I certainly look forward to answering any questions you may have. Thank you.
Thank you, Mr. Chair and members, for the opportunity to come and speak. Thank you for the invitation.
I won't belabour Mark's inventory of some of the regulatory issues. There is no daylight between the vehicle manufacturers and the parts manufacturers. I'll give you a bit of a contextual overview and speak a bit contemporaneously about the industry itself so you have context for what we're talking about.
The APMA, first of all, is Canada's national association representing OEM suppliers of parts to final assembly, both to the Canadian footprint and for export abroad. Founded over 60 years ago, we represent 95% of independent parts production in Canada, and that includes many machine tool, die, and mould makers.
In 2015, shipments by our industry were $25 billion, the GDP contribution was $6 billion, and direct employment was 81,000 people. We also have a formal partnership with the Canadian Association of Moldmakers, representing 70 mould makers whose subsegment of the industry ships $2 billion of products a year.
In the Canadian auto sector, we talk about innovation and we talk about chasing new investments. We talk about taking advantage of our trade relationships through trade agreements and our geographical proximity to the world's greatest economy. The first added-value sector that was built in the Canadian economy in the early 20th century was the automotive sector.
It started over 110 years ago with Walkerville Wagon Works' production of the Ford Model A in Windsor, and four years later with the joint venture of Mr. Sam McLaughlin and the Buick Motor Company to provide engines to carriages to sell vehicles. The industry is bookended by Oshawa and Windsor, and 95% of this activity is on a 250-mile or 400-kilometre stretch of Highway 401.
The difference between the Canadian automotive sector and its direct competition within the Great Lakes region, which up until 20 years ago was its only North American competition, was that after the American wave of 100 years ago, Ontario and Canada were the beneficiaries of the Japanese investment wave. In 1984, 1986, and 1988, Toyota, Honda, and Suzuki, in the now wrapped-up partnership with General Motors, all invested in final assembly in Ontario.
Canada's first substantive international trade treaty was the 1965 Auto Pact, which ensured the efficient integration of the auto assembly business in the Great Lakes region. In many quantitative and qualitative measures, it's the most integrated supply chain in the world. Our supply chain successfully competed for product mandates with international competitors for over 90 years and we're very competitive in overseas markets as well.
Mark went over the industry snapshot, so I'll just add a few pieces. Of manufacturing GDP, 10% is automotive; 21% of merchandise trade in manufacturing is automotive; and Canada represents 14% of NAFTA vehicle production in total. Our annualized rate is about 2.4 million units, all of which is happening along that stretch of Highway 401 in southwestern Ontario.
There is also heavy truck and bus assembly in Quebec and Manitoba, and specialized, very high added-value technology—I think fuel cell technology—in B.C. We're very export intensive: 75% of annual output leaves the country; 88% of vehicles assembled leave the country; and about 51% of auto parts built here leave the country.
In auto parts, we have 450 companies representing 1,250 facilities. For the machine tool, die, and mould makers, there are 200 firms, and they are concentrated very heavily within a 150-kilometre corridor from the Detroit-Windsor border.
Assembly plants are the main drivers of any automotive business. The manufacture of vehicles is a very localized venture. You put a plant in a location and your customers, whether they are Mark's members or other members, will expect that their supply happens in concentric circles around the plant.
Sometimes that's location, and sometimes that's timing, and sometimes you manage the location and timing within inventory requirements. The point is that if you're going to supply an auto assembler, if you're supplying an OEM, you're going to supply a very specific plant, and you're going to do it in the comfort zone as prescribed by that company.
I say that because it's very important to note that we have 19 facilities run by OEMs in Canada, from five different OEMs. That is a distinct advantage that we have specifically in Ontario over a lot of the other subnational jurisdictions in the Great Lakes and in the U.S. southeast. We have Fiat Chrysler in Brampton and Windsor. We have Ford in Oakville. We have General Motors in Oshawa, Ingersoll, and St. Catharines. We have two plants at Honda in Alliston. We have the Toyota facilities in Cambridge and Woodstock.
To note on those facilities, the first place that Toyota decided to build a Lexus brand new product anywhere outside of Japan was Canada. Then recently, in the last year, the first place where Toyota has announced the assembly of hybrid Lexuses is in Canada. In the heavy truck and transport assembly business, which my members also supply but to a much smaller degree in volume, 2.4 million light vehicles are produced and 150,000 heavy vehicles are produced. You're looking at Blue Bird in Quebec making school buses; Hino, which is a Toyota subsidiary, making class 4 to 7 trucks in Woodstock; Lion Bus, MCI, and New Flyer in Manitoba; and PACCAR and Volvo Bus in Quebec.
To note in terms of recent OEM activity in Ontario that impacts the sector, we also have the news of last month, which is that as a result of the collective bargaining agreements between General Motors and Unifor, there's a renewed commitment to Oshawa. One very important cluster bookend in our business has been secured at least for the next four years. It is incumbent on the federal government and the provincial government to partner in building up the tools that are required for the new products allocated.
Honda, as a result of the CETA negotiation, and pre-ratification, has declared its Alliston assembly plant the global lead for the Civic and CRV. I went over Toyota. Oakville assembly, for Ford, is the global exclusive for the Ford Edge platform. FCA's Windsor assembly is its lead for the minivan. While there's a lot of discussion of the product mix, and are we in the right product mix in terms of fuel efficiency and size, certainly the assets that the companies run in this country are very important assets within their families.
Much has been given about Canada's relative place in automotive assembly in North America falling to third place behind Mexico over the last 20 years, and specifically over the last five years. Of the last 11 greenfield investment announcements in North America, eight have gone to Mexico, and the other three have gone to the U.S. southeast. An important context is that the Great Lakes region and the Great Lakes cluster, of which Canada, Ontario, is one-third by units of volume, so about 7.5 to 8 million units of volume of installed capacity, is still much bigger than the U.S. southeast, which last year was 5.7 million vehicles assembled, and Mexico, which was 3.5 million. Mexico will crest around five million, but in terms of subnational jurisdictions, Ontario still is ranked either first or slightly second, depending on the year, behind Michigan. That's a very important distinction.
The Canadian supply base is a good mix of private and public companies, Canadian companies and foreign transnationals, but it's very important to note that amongst the global 100 there is a lot of Canadian representation, led, of course, by Magna, which last year ranked number two in the Automotive News' 100 global suppliers. But there are Linamar, Martinrea, Woodbridge Group, ABC, all globally relevant firms, all significantly materially higher than $1 billion of activity annually, in Linamar's case, $5 billion, in Martinrea's case, $4 billion.
The traditional competition is adapting. While Canada held its own, this government and the provincial government partnered with the U.S. Treasury in a restructuring of the industry to anchor General Motors and Chrysler and, by extension, the rest of the industry in the Great Lakes. New investment and added value investment is going south.
Much has been made of the flight of suppliers. Suppliers move with customers by necessity, but what Canadian suppliers have been doing over the past five years is co-locating. When a new investment in Mexico...maybe you need to supply investment from Mexico, but you'd keep your headquarters here in Canada.
I'll leave you with a NAFTA snapshot. In partnership with the Canadian trade commissioner service in Mexico, we participated in a survey of Canadian supplier investment in Mexico, tracking how many companies, their locations, and the trends.
The gross numbers are that 55 Canadian companies have invested in Mexico, have set up 110 facilities over the last 10 years, and the growth rate is 20% year over year. Those companies have all maintained a footprint in Canada. Some have set up a service shop. Some have set up new footprints. The reality for a Canadian supplier is that there is little growth in the Canadian market, although it's solid and thanks to some of the current negotiations, but all the growth is in Mexico.
That's right. It's taxed in the first year you receive it, in which case, when you expected x
dollars, you're not really getting x
dollars. You're getting x
dollars minus whatever tax rate applies. You're not getting the full benefit of the fund or the loan, which is why we're saying that it should not be taxed. Other jurisdictions are not taxing those incentives.
It should be more of a grant structure, and that grant structure should not be kept to the 20% threshold. It should be upwards of 50% plus. Take a look at why Tennessee got the Volkswagen plant. On a $1 billion investment, they got roughly $540 million in incentives. That's $540 million on a $1 billion project by various means, in all various means.
We have to look at how we close the gap. That's one reason that we've seen an exodus—not our fair share is a better way to put it—of new investment. Out of the roughly $18 billion in new investment over the last few years, $10 billion went to the U.S., $8 billion went to Mexico, and we got $1 billion here in Canada. That's not including the most recent announcements and so forth.
It's that, and then it's the cost of doing business. This is where, again, the federal-provincial approach here to new investment decisions or in support of new investment decisions is really critical.
In Ontario, for instance, the cost of electricity was mentioned. We are high users of electricity, and we're very flat in the sense that we don't have the ability to go to off-peak hours. We have to maximize the capacity utilization of our plants. We don't have the ability, for instance, to go to off-peak hours and reduce our global adjustment cost, so we're seeing costs upwards of two to three times higher in Ontario versus our competing jurisdictions. More roughly, on average, that's about a difference of $42 per megawatt hour versus our benchmark plants in the United States. That's one of the issues that also goes into the equation here.
There are also the costs of other regulatory issues and the complexities. These are all things that add to the cost of doing business. It's the multitude of those things that actually affect and influence a decision to invest here or not. Most recently, we've seen “or not” apply.
Let me take a shot at that.
Traditional OEMs can be counted, right? Whatever your number or however you define them, there are 13, 17, or 20 of them.
Take a look at the prospects of the company. Take a look at what they're making. Take a look at the regulatory environment in the target markets, like corporate average fuel economy in the U.S., and you can say, “We can triage two or three targets.” Then, take a look at those targets. You don't have to put your ear to the ground to find out who else is talking to them. Take a look at their package. Take a look at our package. Build it pro forma over 20 years, and then say, “Look, on a 20-year basis, I think Canada is more competitive than anybody else.”
But, these other jurisdictions bend that NPV, net present value, curve with the package. You started on AIF, and I've been very public about this; I think every other competing jurisdiction recognizes that we are now in a very cheap money environment. A company with a good balance sheet can borrow $1 billion at very low commercial rates.
Every other competitor says that if they're in the game—and you have to decide that you're in the game—then you're in the business of grants and/or training dollars or other contributing pieces like that.
I think it's an expectation of this industry that sooner rather than later the AIF terms get changed to reflect a competitive environment.
Suzuki is no longer here.
When we say we're part of the solution, I'm speaking from an industry-wide perspective. All automakers are investing tremendous amounts of money in new technologies to improve fuel economy, reduce CO2 emissions, and reduce other smog-related emissions at the same time.
It's the entire industry that's working towards this. The entire industry is probably one of the most technologically advanced, green-technology industries that exists. For instance, in the 2017-25 GHG emission regulations for light-duty vehicles, we are spending over $200 billion in new technology investments, $100 billion of which is probably going directly into electric vehicle development. You will see much more of that going forward.
Year over year, fuel economy or fuel efficiency improvements are roughly 3% to 5%. They used to be 1% to 1.2%. That's changing the entire profile, if you will, of new vehicle fuel efficiency. That will deliver about a 266 million tonne reduction in GHG emissions from the light-duty fleet between now and 2025—and beyond, actually, because these vehicles are going to be on the road much longer.
By virtue of those investments in technological advancements, we are making significant reductions in those emissions. On top of that, we now have what we call electrification taking place in our industry. That includes not just the vehicle itself, but also vehicle-to-vehicle connectivity and vehicle-to-infrastructure connectivity. These are all things that are ultimately going to help reduce congestion and move vehicles more effectively in terms of constant speeds and safer operations because they will communicate with one another.
We recently had Transport Canada officials in Detroit to look at those very technologies. I'm not going to speak for them, but I can tell you what they thought. They thought it was mind-boggling just how quickly this technology is taking place. Whether it be lightweight materials, mobile communications, sensors, software, artificial intelligence, analytics, advanced battery technologies, these are all things that we as an industry—I'm speaking of all manufacturers now—are contributing to the global change equation.
This requires a long explanation, but I'll try and be as brief as I can. We can take it offline as well.
Clearly, the cap-and-trade program poses certain requirements on industry. This requires, from a manufacturing standpoint, reductions in greenhouse gas emissions. What people don't understand is that, from a manufacturing standpoint, vehicle assembly is less than 1% of the total Ontario inventory, so we're not very energy intensive at all. Vehicles in our supply chain may be perhaps because of the products they provide to us. Ultimately, the idea with cap and trade is that if you can't meet what we call the cap decline and meet the fuel efficiency improvements, and you don't have sufficient allowances or credits, then you have to buy them.
Unfortunately, with the way it's been constructed to date and thus far for the next four years, even though they commit to giving industry allowances, because we have made so many improvements in our energy efficiency over many decades—why? Because it made good business sense to improve the bottom line—we've taken all the low-hanging fruit away. Now we're talking about high-cost energy-efficiency projects.
The idea here is, you take cap-and-trade revenues and you recycle them back into the industry, hopefully using appropriate criteria to help companies to make some of the more costly energy-efficiency improvements in their operations. Ideally here, we have to keep in mind that these are costs imposed on us in Ontario, and ultimately Canada, that our competing jurisdictions do not have.
We only use, for instance, natural gas, which is part of the cap-and-trade program, to do two things: to paint vehicles, in other words, temper the air that goes into our paint shops, and to heat our buildings. Those are two things that our competing plants, say, in Texas, don't have to do. We're automatically, potentially, paying higher costs in energy or electricity that could offset our competitiveness.
There's a lot of things there.
First off, I think with the federal government and Ontario, when you talk about exemption, I guess it would be Ontario that needs that exemption, in that sense.
I think really what we're talking about is to recognize that there is a cap-and-trade program there, that they are imposing costs already on the price of carbon, and that should be sufficient at this point in time. It doesn't mean that won't change in the future, but for us, we're already incurring high electricity costs that we don't see south of the border in our competing plants in the United States, and additional costs of carbon and whether we have to buy credits, which is really a tax on our business that we don't have in those other jurisdictions. That's what we need to avoid, so it doesn't further undermine our competitiveness. We still have a lot of good things going on in Ontario and Canada.
The issue for climate change is not to have something that's necessarily an issue across Canada per se, although we as a country have to meet our commitments that we have now made internationally. The real issue here, from a competitive standpoint, is north-south, whether it be the United States or Mexico. Our primary competitor right now, given the cost of labour and so forth, is really the United States, so we can't be adding to those costs.
On the CPP, under the ORPP originally.... We have some fabulous companies as well that have rich pension plans, which are defined benefit plans or a combination of defined benefit and defined contribution. They are rich plans, and under the ORPP, the issue of equivalency was there. It was acknowledged and it was accepted. We don't have that commitment at the CPP level. We could well be adding cost in that respect to our plans that are already significant and quite rich plans. That's the issue.
I mentioned a couple of things, including the AIF. We're very grateful for the fact that the fund has been extended, but now it's a question of how we can improve it from a tax treatment perspective. We read things in the paper that maybe the government's considering going to a grant structure. That would be a great thing, although I'm not sure I've seen any official announcement of that yet. There are also SR and ED credits. We're talking about what qualifies and what doesn't qualify. In terms of the shop or on the floor, what makes a difference there can help as well.
These are all things, but the key is in how we adjust it and close the gap between ourselves and our competing jurisdictions. Right now we take an envelope approach—the federal government and Ontario, for instance. That envelope needs to be expanded. We shouldn't be talking about 20%. We should be maybe talking about 50% plus, as I mentioned.
These are the things that can help, but they will also help because the assembly plants are kind of the nucleus. That's what attracts the suppliers, the supply chain that creates the concentric circles around us. Now we're getting into the fact that it also supports engineering facilities. It's not likely you'd have an engineering facility if you didn't have assembly here. I can say that pretty confidently. The fact that we do means that we do have, certainly in my member companies, research and engineering facilities here. Supporting them and expanding these programs so that they apply to some of the activities in those facilities as well is something that will not only help the auto industry but also help us become even more diverse and be able to promote and carry forward the innovation agenda more effectively and more broadly.
I think that is what's key when we go forward. We are challenged right now in trying to find talent in the areas I mentioned—lightweight materials, sensors, artificial intelligence, communications. We need engineers in those areas, and we need them now.
Those are the things that I think could be very helpful to us.
I was part of that original CAPC meeting. It was well done. We brought not only the industry together on a competitive level, but we also brought together the parts people, the tool and die makers, the mould makers, and basically everybody involved from producing a vehicle to actually selling it and servicing it. Allan Rock created that.
Since then, though, I don't think CAPC has been very active, not in the last 10 years anyway, in my opinion. It's had some goals, and it's had some things. You could go on the website. Some governments have not really had any meetings at all.
The reality is that we can't actually create our own strategy. Many have. There's ProMéxico. I was in China, and I met with their auto industry. They had over 100 companies. It was similar to when Canada created the industry. We had over 100 automotive manufacturers at that time. You mentioned Walkerville. It is interesting how one of the first manufacturers got free hydro to produce their vehicles in Windsor. You also have the whole strategy behind the United States right now, with Obama and also with some trade restrictions, even on the border, that have made it more difficult to compete within the realm of our integrated market.
We have training. We have patents. We have R and D. We have a skilled workforce. We have safety productivity that's through the roof in terms of our competition. It's very attractive. We have the history. We just don't have a game plan when we get down to the 10-yard line. It's like we get down there in a football game, and we decide to spike the ball before getting a touchdown because we don't want a greenfield site anymore.
I think what's really important is to see us come out of this with specific things. One of the things that hasn't been touched on is the extension of the capital cost allowance. We're going to review that, and I think it's one of the things that this committee came to a good resolution on before.
Back in the original plan, I argued for a 10-year window, five years with the potential for a five-year renewal. I wonder what your thoughts are on that. I know that we keep getting about two-year renewals, and so forth. Those are some of the investment strategies that have already had decisions made on them.
What I'm looking for are the mid-term to long-term ones. Would extending the capital cost allowance to five years with a five-year renewal, for a total of 10 years, at least help?
One of the reasons I like that strategy, and it does have its detractions, is that it's harder for those who take advantage of the capital cost allowance to move a piece of equipment to China. Whether it be tool and die, mould making, or whatever it might be, if Canadian taxpayers are going to invest in it, the writeoff and everything for that which they invest in as a population is harder to actually dislodge through a general corporate tax cut. It's a carrot-and-stick approach that is a little more appropriate in my evaluation.
At any rate, I'd like to hear what you think about whether or not the capital cost allowance should be continued. To credit certain governments, they have extended it, so it hasn't disappeared, but it hasn't been to the longer cycle that some are advocating.
I think I would support those comments as well.
Part of it is the way the companies are structured. The engineering facilities, for instance, where we do innovative work and research and development, have been historically located in head offices elsewhere. Pulling those projects out and putting them in Canadian facilities has always been a challenge. Certainly, my companies have them here.
This is where Minister Bains' work on the innovation agenda is going to be very helpful, I think, because I am assuming that he will be looking at these very issues. I know that my companies have been, and will continue to be, a big part of that discussion.
I mentioned a couple of things today that I think could help, and I know there are many more that individual companies, because of their individual circumstances, will speak to more directly.
I think the timing is right. What is going on in our industry is going to drive a lot of this, because we are going to need to innovate, and we are innovating, I think.
As Flavio says, we are spending a lot of money. How we rank in the standings globally, how that plays out, is a different issue. Other countries, such as Germany, have very specific programs, and they have been at it for a long time.
Certainly, our view is that we can do more, do it better, and make a move faster.