Good afternoon, Madam Chair and honourable members.
Thank you for the invitation to join you today to discuss Bill and the Air Canada Public Participation Act. We are pleased to be here to provide you with our perspective on how this legislation will support the growth and the competitiveness of the Canadian aerospace industry.
The AIAC represents Canada's aerospace industry, including major manufacturers and their suppliers. Our members are a diverse group of companies that are world leaders when it comes to the design, manufacture, and delivery of aerospace, space, and defence products, as well as the maintenance, repair, and overhaul, or MRO, of existing aircraft.
Aerospace is a global industry, so for us and for our members it is important to make business, policy, and investment decisions in a global context. Aerospace supply chains are not limited to a single country or even to a single continent. Our members are competing for contracts against other companies from around the world.
Canada's aerospace industry is the fifth largest in the world. For decades, we have punched well above our weight in the global marketplace. This is because we have built globe-leading capacity and capability when it comes to high-value, innovative aerospace products and services. We are home to a world-leading OEM in Bombardier and we have fostered a highly innovative supplier base that is integrated into growing markets all over the globe.
The legislation in question comes in the context of the announcement of two centres of excellence that will drive aerospace innovation and capacity in Montreal and Winnipeg, two of Canada's major aerospace clusters. These centres of excellence will help us maintain our competitive advantage in the global marketplace. They will help us ensure that Canadian aerospace firms continue to expand their capacity and capability to offer innovative solutions, not only to Air Canada but also to other major airlines and operators around the world.
In Montreal, a centre of excellence focused on maintaining the C Series will establish an important competitive advantage for companies seeking to conduct maintenance, repair, and overhaul activities on this new platform.
Bombardier, as I mentioned, is a world-class manufacturer, and they have created a world-class aircraft. As the C Series enters into service, this is also a prime opportunity for Canadian companies to secure a competitive advantage when it comes to contracts for any MRO activity related to the aircraft, not only for Air Canada but also for other major global airlines.
Manitoba is already home to a highly innovative aerospace sector. Winnipeg boasts Canada's largest aerospace composite manufacturing centre, an industry-leading cold weather engine-testing facility, and the world's largest independent gas turbine engine MRO company. The presence of a centre of excellence focused on MRO activity presents a new opportunity to develop additional capacity and capability for the Manitoba aerospace companies that can be exported into the international marketplace.
Bill is also important because it creates a level playing field for Canadian companies. As I mentioned at the beginning of my remarks, being competitive in a global industry requires an environment in which companies have the ability to make business, policy, and investment decisions in a global context. If our companies are going to survive, they need to be able to compete against the rest of the world, and we know they can.
For AIAC and our members, Bill is not only about providing services within Canada or to one Canadian company; it is also about the way in which we build an environment for our industry that will make Canadian aerospace companies more innovative and competitive on a global scale, and more able to attract business from airlines and operators all over the world.
Thanks to the strength of our industry and to smart investments in innovation, such as these centres of excellence, we are confident that Canadian companies will continue to win contracts with Air Canada and with other airlines and operators. We believe that Bill takes an approach that is necessary for Canada's future aerospace growth. It supports innovation, competitiveness, and Canadian growth at home and in the global marketplace.
Thank you very much. I would be happy to answer your questions.
Good afternoon, ladies and gentlemen.
Thank you for inviting us to this committee to speak about Premier Aviation and Bill .
My name is Ron Di Bartolo and I am the president and CEO of Premier Aviation. I'm joined by my colleague Jean-Pierre Bastien, vice-president of operations of Premier Aviation in Quebec City.
To start, I would like to provide you with some background on Premier Aviation. We are a wholly owned Canadian business that provides primary airframe maintenance to the aviation industry. In addition to doing airframe maintenance, we also have facilities and capabilities to do paint work and other maintenance on aircraft.
We currently have four facilities, located in Trois-Rivières, Quebec; Quebec City; Windsor, Ontario; and Rome, New York. Our Canadian facilities employ 550 people, while our facility in the U.S. employs 170 individuals.
Our company facilities provide service to a number of airlines and different aircraft types. In Trois Rivières we service Air Canada and its fleet of Embraers and its partner Sky Regional and its fleet of Embraers also. We also provide paintwork for WestJet.
In Windsor we service WestJet's fleet and currently service First Air, Canadian North, and Sunwing. This facility handles Boeing 737s, ATR 42s, Embraer 190s, and other aircraft types.
In Quebec City we service American, Caribbean, and European operators, including Piedmont Airlines, Peninsula Airways, Corvus, LATAM, Air Guyane, LIAT, and several lessors of aircraft.
In Rome, New York, we service a variety of aircraft for Republic Airlines, Atlas Air Cargo, and GECAS.
Our ability to service so many aircraft types for different clients has come from years of investment in our workforce. Clients seek Premier Aviation because of our hard-earned reputation for excellent quality of work, quick turnaround times, and flexibility to schedule maintenance, all while being cost competitive. This is what it takes to be competitive in this industry. Our ability to also do paintwork and other maintenance provides us a significant advantage over our competitors and makes us value-added to our clients.
With respect to our work with Air Canada, we were first contracted to do paint and maintenance in 2009. Following the closure of Aveos in 2012, the scope of our work for the airline expanded to include heavy maintenance of some of its Embraer aircraft. Due to the positive results of this maintenance, Air Canada soon contracted Premier to do all maintenance on its Embraer fleet. Previously this work had been done by Aveos and Embraer facilities in Nashville, Tennessee.
Today, because of the advantage we can provide to Air Canada, all of its work is done in Trois-Rivières and supports the 354 employees presently there. In addition, this growing work has required us to expand our facilities throughout Québec at different times. As a competitive MRO facility in Canada catering to not only Canadian but international companies, we know we have what it takes to compete in this industry. We are competitive. Bill and its amendments to the Air Canada Public Participation Act would not restrict the location of the work we do for Air Canada and would provide flexibility for us to keep growing our business with the airline.
Over time we have shown that we can compete for Canadian business as well as for international business, and it is our hope that we will continue to grow and create maintenance jobs in Canada. With our highly skilled workforce and our expertise, flexibility, and low cost structure, we are well positioned to do so.
I will deliver my remarks in French, if you don't mind.
First of all, we would like to thank the committee for allowing us to speak to you today about the importance of modernizing the Act to amend the Air Canada Public Participation Act through Bill .
My name is Yves-Thomas Dorval and I am the chief executive officer of the Quebec Employers' Council or QEC. I am accompanied by Mr. Benjamin Laplatte, principal director, Public Affairs and Corporate Development.
For close to 50 years, the QEC has represented the majority of industry associations, and Quebec's largest employers. Directly or indirectly, it represents the interests of more than 70,000 employers of all sizes, in both the private and parapublic sectors, some of which are Canada-wide, if not international, enterprises.
The mission of our organization is to see to it that in a context of increasing global competition, businesses benefit from the best possible conditions to prosper in a sustainable way, that is to say a stable, predictable and competitive environment.
In keeping with the priorities dictated by the economic situation, the actions of the council are guided by five broad strategic axes set out in its action plan; three of these are more closely related to Bill : competitive labour costs, intelligent regulation, and a sustainable, competition-based economy.
In light of these, the QEC was pleased to see the introduction of Bill , which gives Air Canada the necessary flexibility to optimize its activities and continue to develop.
However, let us take a step back and look at the situation more globally, as others have done before me.
We think it is important to appreciate the value of the bill in the context of the need to strengthen the aviation industry in Canada, which has to be competitive.
The Canadian aviation industry is one of the cornerstones of our national economy. It is comprised of more than 700 companies spread out across the country, supports close to 180,000 direct and indirect jobs, and contributes $29 billion annually to our GDP.
Every year, it invests about $1.8 billion in R and D, which is on average five times more than the manufacturing sector invests.
Finally, the Canadian aviation industry plays a large part in our export market, as close to 80% of overall production is sold on foreign markets. That is enormous.
As it is among the largest world-class international players, Air Canada makes an important contribution to the Canadian economy, and is among the largest employers.
Exporting Canadian ingenuity and inventiveness to the world allows us to develop our competitiveness and continue to grow, and will help us to come out of this period of economic uncertainty. Knowledge- and innovation-based industries make us competitive and contribute to Canada's economy.
However, the players of the aviation industry are not dealing with a level playing field on world markets, as they face competition both from giant multinationals and governments. Since 1980, the contracting out of certain maintenance activities to specialized firms has become standard in this sector throughout the world. Allow me to remind you in this regard that the number of Air Canada's maintenance workers has more than doubled over the past 10 years. Today the carrier hires approximately 2,400 maintenance workers in Canada alone, in addition to the 1,000 workers employed by its regional partners.
However, no airline company in Canada or the world was subjected to maintenance restrictions like the ones that were imposed on Air Canada by the Air Canada Public Participation Act, even though these enterprises compete on the same markets for the same consumers. These airlines make their decisions based on the how their services compete in quality and price, and their lead times.
It is true that the Aveos company unfortunately had to close, and many jobs disappeared, but it is important to point out that as for any private firm, the success of that type of business depends first and foremost on its ability to compete effectively with its competitors through the quality of its services and prices.
It must be acknowledged that over the years Aveos was unable to keep up in this regard. Following its closure, other Quebec suppliers emerged. Through their expertise and competitiveness, they created hundreds of jobs in Quebec. They compete internationally to win airline carriers' heavy maintenance contracts, as was said a few moments ago.
The modernization of the Air Canada Public Participation Act will amend a law that was passed more than a quarter century ago, taking into account the fact that the air transport industry has changed greatly since then.
Bill will allow the carrier to make decisions based on its business acumen and its commercial discretion, just as private sector enterprises must be able to do. The bill affords it greater flexibility, which Air Canada needs if it is to compete effectively on the world stage. The bill recognizes that the carrier is an enterprise that belongs entirely to private sector interests, and does business in a highly competitive global industry. Indeed, the experts, some of whom appeared before your committee, refer to a very low profit margin of 2% to 4% for this industry.
By creating more equitable conditions, Bill will allow Air Canada to determine how much and what type of aircraft maintenance to do in Canada and elsewhere in the world. It seems clear that Bill C-10 will allow Air Canada to remain competitive and contribute to job creation in the fields of aviation, tourism and aeronautics in Canada for many years to come.
This bill is in fact in keeping with agreements concluded at the provincial level, in Quebec especially, where Air Canada has committed to contributing to the creation of a centre of excellence and maintenance for its C Series aircraft. The federal government acknowledges the settlement of suits involving provincial governments by amending the act in order to avoid similar litigation in the future.
In conclusion, the time has come to ask ourselves a simple question: do we believe the aviation industry should be a competitive part of our future? Our answer is a resounding yes. That is why we support Bill .
Thank you very much, Madam Chair.
I thank all of the witnesses for their participation today.
I understand from what you have said that the representatives of the three groups of witnesses support Bill as presented.
Madam Chair, for the information of all the parliamentarians who are here and who need all of the necessary information in order to vote on Bill in the House, as well for the stakeholders who have just shared their position on the bill, I want to mention that my colleague Ms. Kelly Block has tabled a notice of motion which reads as follows:
That the committee request any documents, research projects, notes, emails and correspondence that contributed to or discussed the deck “Amendments to the Air Canada Public Participation Act” and that these documents be submitted to the committee by Wednesday, May 11, 2016.
This motion was tabled by Ms. Block within the required timeframe. It is important that our guests have access to this information. From the beginning, all sorts of things have been happening in committee. One day we are told that there were meetings with Air Canada; another day, we are told that there were no meetings with Air Canada. Sometimes we hear that Air Canada met with people; and then we hear that Air Canada did not meet people. In short, it would be important, to support the work of the committee, that members of the committee adopt this motion, and that we be given access to all of the information we need.
There is a reason for this. In fact, the bill itself mentions that, even if Quebec has stated that the term “overhaul” referred to heavy maintenance, the courts recognized that no such maintenance had ever been done in Mississauga. We have also heard that Air Canada concluded an agreement with the Government of Manitoba to create a centre of excellence in western Canada for the maintenance of aircraft in that province. However, we have learned that the agreements have not been concluded yet. The Government of Quebec said the same thing in the brief it sent to members of the committee.
I want to quote two excerpts from that brief. This is the first:
Pending the conclusion of final agreements, the Government of Quebec has agreed to drop its lawsuit in relation to Air Canada's obligations to have an overhaul and maintenance centre.
I repeat that that is “pending the conclusion of final agreements”. And yet today we heard the witnesses tell us that the agreement had been concluded with the Government of Quebec. However that does not seem to be the case; the Government of Quebec itself has said so.
This is another excerpt from the brief:
Additionally, in order to provide for all aspects of the agreements reached, the Government of Quebec is asking that, once Bill C-10 receives royal assent, the legislation come into force after the final agreements described above have been concluded.
Once again, I understand that the agreement with the Government of Quebec has not been concluded.
Later we will be hearing from a representative of the Government of Manitoba who will probably also tell us that the agreement has not yet been signed.
That is why, Madam Chair, it is important that the members of the committee be made aware of this notice of motion, which is quite simple. The purpose of the motion is simply to allow us to have access to all the necessary information. This will help parliamentarians and witnesses taking part in this committee's study of Bill .
Madam Chair, with the authorization of my colleagues, I would like us to adopt this motion immediately so that we may conduct our study with all of the necessary information in hand. This will also help witnesses to form an opinion about the bill.
Sure, I'd be pleased to.
Thank you for the opportunity to speak to the standing committee about Bill C-10, an act to amend the Air Canada Public Participation Act.
Historically, Air Canada has been a very significant employer and generator of economic activity in Winnipeg and in Manitoba more broadly.
In recent years, however, we have felt the serious adverse effects of Air Canada's scaling back its operations and moving and eliminating a large number of jobs from our city. Air Canada has cut flight attendants, pilots, finance positions, and call centre jobs from Winnipeg. Of course, most recently we've felt the huge loss of 400 high-quality jobs following the 2012 closure of the Aveos aircraft maintenance operation in Winnipeg, including some 350 IAMAW members. All told, Air Canada's total employment in Manitoba has dropped from nearly 2,400 in 2002 to less than 800 today, a reduction of about two-thirds.
The bill under consideration today deals most directly with overhaul and maintenance jobs and specifically proposes to relax existing requirements on Air Canada to maintain jobs, requirements that the corporation has disregarded and failed to honour.
The term “relaxed requirements” really doesn't accurately capture what this bill proposes to do. The amendments before you obliterate Air Canada's obligations to keep good jobs in Winnipeg, rendering them toothless and unenforceable.
The elimination of heavy maintenance operations in Winnipeg, which occurred with the collapse of Aveos, is in direct violation of the existing 1988 Air Canada Public Participation Act, which explicitly mandates Air Canada to maintain an operational overhaul centre in Winnipeg as well as in Montreal and Mississauga. We know Air Canada's actions violate the current act because the act is clear, precise, and specific. We also know this to be true because the Quebec Superior Court has told us so. In response to a suit filed by Quebec in April 2012 and later joined by Manitoba, the Quebec Superior Court ruled that Air Canada was in contravention of the act because it had not maintained required heavy maintenance operations. When Air Canada appealed this ruling, the Quebec Appeals Court ruled against the corporation.
It's been disappointing that the Government of Manitoba has thus far refused to enforce the legislation. This has been even more difficult to rationalize since the Quebec court ruling against Air Canada. This act, which privatized Air Canada, intentionally and specifically included requirements to ensure the maintenance of high-skilled, high-tech, good-paying jobs in Winnipeg and other Canadian centres. This didn't happen by accident. It happened in response to concerns raised by labour, impacted communities, and local and provincial governments at the time about the potential and likelihood of job loss, concerns which have proven to be right on the mark. The federal government of the day told us not to worry. Canada said jobs would be preserved and maybe even grow.
Similar concerns were raised again after the Air Canada-Canadian Airlines merger and after the spinoff of what would become to be known as Aveos. Again we were told there was nothing to worry about because the act guaranteed the jobs would be maintained, but that hasn't happened. The closure of Aveos has cost our community 400 good jobs, and Canada has failed to hold Air Canada to account and enforce the law. Instead, the federal government seems to have entered into secret negotiations with Air Canada, resulting in Bill C-10, which removes all substantive requirements for Air Canada to do its work in Winnipeg and other parts of Canada.
Section 2 of the act allows Air Canada to change the type or volume of any of its maintenance work and change the level of employment in these activities. This amounts to a total and complete gutting of the current job and operational requirements of the act. Now Air Canada tells us that they are working to establish a so-called centre of excellence in Winnipeg. In mid-March of this year, the corporation announced that it had concluded a deal with Manitoba, a deal that is said to take the form of an MOU, which is supposed to create about 150 jobs in Winnipeg through the establishment of three Air Canada supplier operations. However, few details and few specifics are known about the deal, as the MOU has been kept secret and is not publicly available. I should say that no mention was ever made about legislative changes as part of the announced deal, so we're left with few answers and many questions.
First, we don't know if Air Canada is truly obliged to create 150 jobs or has just agreed to try its best. Is that a firm number? Are they job guarantees?
Second, how long must they maintain the jobs? Could they be cut or eliminated in a year or two or three? What does it say about timelines and permanency?
Third, we understand from informal reports that Air Canada has been given until the end of June to live up to whatever obligations they agreed to in their MOU. Can the federal government confirm this time frame? If that is indeed the case, then why is the federal government proposing to change the legislation now before it can verify that Air Canada is actually going to follow through?
Why is Canada rushing to relieve Air Canada of its existing obligations, obligations that the corporation has refused to live up to for years, before we even know whether Air Canada is prepared to honour its new, secret pledges?
These are questions that Manitobans deserve answers to. On behalf of the Manitoba Federation of Labour, I urge this committee to reject this bill and to recommend to government that the existing Air Canada Public Participation Act be honoured and enforced.
Thank you very much, Madam Chairperson.
I'm pleased to be here today to speak on Bill , the amendments to the Air Canada Public Participation Act.
Manitoba is home to a world-class aerospace industry. It is the largest in western Canada, with approximately 5,400 individuals employed directly, and many more indirectly in related sectors of our economy. Our firms are diverse and on the cutting edge of technology and innovation. The outlook for the Manitoba aerospace sector is positive.
Nonetheless, the global supply chain is extremely competitive, and Manitoba companies face severe competition from lower-cost jurisdictions. The loss of high-quality skilled jobs that resulted from the closure of Aveos in 2012 is still very much felt in our province. It is healthy for our country to maintain a robust and competitive aerospace industry outside of eastern Canada. As a new government, we need to be sure that Manitoba will be given the consideration it is due if changes to the Air Canada Public Participation Act are being sought.
There are significant implications to moving forward with Bill . It is not appropriate to rush through without substantial dialogue and consideration. Actions taken by federal governments can have an enormous impact on the sustainability of Manitoba's aerospace sector. One of the most notorious was the CF-18 contracts. These types of conflicts serve no one's interests, and can be avoided through proactive participation.
Our government has been engaged with our partners in the federal government and Air Canada, as well as local stakeholders, regarding the implications of Bill .
In February 2016 the previous government wrote to request that amendments to the Air Canada Public Participation Act be limited to expanding the geographical scope of Air Canada's commitments within Manitoba. The proposed amendments go significantly further than the geographical scope. The spirit and original intent of the legislation was to ensure that skilled heavy maintenance work remained in Manitoba. While some flexibility can be appropriate, the proposed amendments virtually eliminate any obligation for the company to maintain high-quality skilled heavy maintenance jobs in our province. This is contrary to the interests of Manitobans.
The aviation industry has evolved substantially since the privatization of Air Canada and the introduction of the Air Canada Public Participation Act. Competitiveness is an integral part of economic growth. We embrace change, but it is the responsibility of our new government to ensure that Manitoba's aerospace industry emerges strengthened, not weakened, as a global competitor.
Manitoba's interests are clear: economic growth, high-quality jobs, and a strong and competitive aerospace industry. The federal government's approach to Bill , simply put, jumps the gun. Bill is being rushed through the process before the necessary specific investments and binding commitments by the federal government and Air Canada have been secured.
As a direct result, the Government of Manitoba must oppose Bill . Our province will continue to do so until such time as specific commitments have been made to reassure Manitobans that changes to the Air Canada Public Participation Act and related accompanying investments in job creation will provide a net benefit to the Manitoba economy.
This concludes my statement to the committee. I thank members for listening today.
I'll start by saying thank you to you both. It's nice to hear some voices from home.
I think part of the issue with Bill C-10 when it first came to the floor and as it has progressed at a rapid pace through the House of Commons has been that it pits sector against sector in terms of trading maintenance jobs for manufacturing jobs, and to the extent that it has serious consequences for the future of the maintenance industry in Winnipeg, it also risks pitting region against region. I think that's what Minister Stefanson was alluding to in her remarks.
Of course that's something we want to avoid. That's why in the NDP, Alexandre Boulerice from Quebec and I have been looking at this. We want to make sure that it doesn't encourage that kind of regional divide. Unfortunately I'm not convinced we are there yet.
I'll start my question to you, Minister Stefanson, just by saying congratulations on your new position and by telling you how pleased I am that on the first issue on which we've had occasion to work together, we're on the same side of the issue. May that long be the case.
I just want to say that earlier I tried to move a motion at this committee that would give time to the Canadian industry players, workers, and their representatives to make the business case for how we could keep this work in Canada. I think that's one of the issues at stake. We've got a federal government now that is pronouncing on the state of the industry in Canada and saying that Canadians can't do this work competitively. I don't think that's true. I don't think it's true of folks back in Manitoba.
You have a new government. You're getting used to these files. I'm just wondering if you would appreciate that time to work with people in Winnipeg to see if they can mount a business case for how they could do the work under the existing terms of the act.
Absolutely. Thank you for the question.
We do need to enforce the act. On that side note you raised, I think the centre of excellence is a great thing, but it should not replace living up to the obligations we have under the act.
Do we need a centre of excellence? We should have one. Is Winnipeg a good place for one? Absolutely. As you've heard, we have a lot of innovation, skilled workers, and the ability to have trained staff take on those roles. However, that doesn't let Air Canada off the hook for the commitment it made.
When it was established, an act was put in place and a promise of having jobs that did maintenance and service work in different regions of this country was established. We've lost those jobs. They moved away from their responsibility and had another entity, Aveos, under them providing that work, and that's folded up.
They need to renew the commitment they've made. Right now there are people who have those skill sets, who I'm not sure are all fully employed where they are. There's certainly the capacity here for us to step up and live up to that. I know our aerospace industry is thriving and could fill that void. Air Canada owes it to us and our government to make sure that act is enforced.
Thank you, Madam Chair.
I want to ask this question of both of you folks.
There is an attempt to strike a balance, ensuring sustainability as well as growth within the industry. I think we all can agree with that. With that said, there exists a reality to allow a more competitive environment for all those, especially the corporate bodies, to do just that. specifies that Air Canada's articles of continuance include:
maintenance of any type relating to airframes, engines, components, equipment or parts, in Ontario, Quebec and Manitoba
However, the bill would also allow Air Canada, while not eliminating those activities in any of the three provinces, to change the type or volume of any or all of those activities.
I have two questions.
What do you think should be the minimum levels, if any, of employment and maintenance activities in the three provinces, below which Air Canada would no longer be in compliance with the proposed amendments to its articles of continuance in ? That's question number one.
Question number two is.... I know, Heather, that you sort of answered this question, but I do want to try to dig a bit deeper, because I think there is some participation for all of us to work together for any amendments to be struck. What amendments, if any, would you propose to this provision of the bill?