SINS Committee Meeting

SUB-COMMITTEE ON THE STUDY OF SPORT IN CANADA OF THE STANDING COMMITTEE ON CANADIAN HERITAGE

SOUS-COMITÉ SUR L'ÉTUDE DU SPORT AU CANADA DU COMITÉ PERMANENT DU PATRIMOINE CANADIEN

EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, November 4, 1998

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[English]

The Chairman (Mr. Dennis J. Mills (Broadview—Greenwood, Lib.)): Mr. Grimard and Mr. Paquette, we will begin hearing your report and the other members will catch up with us.

First of all, having given you that backgrounder, we thank you for coming. You represent a very important sector within the sports sector. We turn the floor over to you.

Mr. Yves Paquette (President and Chief Executive Officer, Canadian Sporting Goods Association): First of all, thank you very much for having us here to present our brief. We feel that the work you're doing with the committee is long overdue. I think we need to shape up the whole sports system in Canada, including the industry. Hopefully the report you will be bringing forward will help achieve that. I have no doubt that it will.

The sporting goods industry, by its nature, has always been closely associated with the development of sports in Canada. Some sports have naturally been identified with Canada because of our sports history, our culture, our climate and our geography, all of which constitute our Canadian sports heritage. This is particularly true of hockey and also, to a lesser but very significant degree, of sports and physical activities, which are associated around the world with the Canadian image of vast outdoor spaces as well as that of a country at the leading edge of social and technical development. These factors have had and will continue to have a determining effect on the Canadian sporting goods industry.

As we move forward, we will need to maintain our leadership position in these key sectors and develop new sectors where our technological expertise opens new frontiers for manufacturers and participation opportunities for Canadians. This is particularly true in the developing world economy in which the free flow of goods will require Canadian manufacturers to be competitive with other manufacturing countries.

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The sporting goods industry is relatively small in comparison to other major industries. It does, however, have a significant weight within the sports phenomenon, which includes professional sports and private and public sports facilities and programs. Its product offerings are directly related to sports participation.

We don't want to go into all the details of the whole sports phenomenon. I believe you have had a pretty extensive and detailed analysis of that phenomenon from Professors Lavoie, Harvey and Saint-Germain of the University of Ottawa.

We have focused on what we do. The numbers we have in our brief are conservative in terms of employment and number of manufacturers. Our data bank is often much higher than that; we don't feel the numbers we have are that accurate, however, so we've also cross-referenced our numbers with those of the Canadian government, especially as you will see in addendum 1, which is directly drawn from your Industry Canada Strategis web site. These numbers are pretty much accurate.

The volume of domestic shipment from our 200 manufacturers in Canada is worth $643 million. We also have a number of distributing suppliers—importers—that deliver goods to our retail network. We have an import value of $1.56 billion, against an export value of $579 million. We have a trade deficit and obviously we need to work on that. We are a mature market, so our way to grow is through exports.

The retail network is also very important, with 9,500 retailers, of which you have 1,088 stores that are part of buying groups. All of that represents about 37,000 employees. The volume at retail of our industry is worth $5.14 billion.

Addendums 2 and 3 are excerpts from our Sports Vision program, which actually is supported by Industry Canada, and they give you some details about the market. We don't want to go through this now, but I think that by going through this you will find that the channels of distribution are very diversified. Our national retail network is very solid and encompasses all of the sectors of the sporting goods industry that are there to serve sports participants.

One thing you will note is that the most important retailers in our industry are not necessarily oriented towards sporting goods or are not perceived that way, such as Canadian Tire, which owns a good portion of our market, and for good reason: they are doing it very well.

We have five major national buying groups. As I said, they have over 1,000 stores and are becoming a major force in the industry. That is complemented by smaller regional buying groups, which also total over 150 stores and are important in our industry.

Our association, with the membership drive we have going now, has a little over 1,700 members. There are five other industry associations and we work work closely mainly with with the Bicycle Trade Association of Canada and the National Snow Industry Association. As you'll notice, we haven't touched anything at all regarding firearms because the Canadian Sporting Arms and Ammunition Association is doing that very well and is doing a strong lobby on that.

The involvement of the sporting goods industry in the development of sports participation has always been directly through supporting the development of sports, from grassroots community programs to the highest possible national elite level.

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A whole spectrum of initiatives is conducted by the industry members to help promote sports participation and support existing programs and athletes directly. These partnership associations take all possible shapes and forms: direct financial donations, sponsorship, publicity, volunteer personal involvement in sports programs, athlete support, etc. They also range in scope from local kids' programs to the highest possible competitive level, including pro sports and major amateur international games.

The interest of the industry in supporting participation is genuine and the efforts made are important. However, the resources are limited and the industry's financial input cannot make up for the decrease in public funding for support of governing bodies by all levels of government. Thus, the organizations responsible for increasing sports participation and for promoting a more active and healthy lifestyle are facing a dilemma of having to levy more funds on their own, regionally a well as nationally, at a time when resources are scarce.

We understand as well that all of this is happening at a time when there is unprecedented pressure on the family tissue, with an ever-increasing solicitation from non-physically-active leisure activities: Internet, video games, TV, etc.—you name it, they're all there. These factors, combined with the diminishing funding to sports governing bodies, have a negative effect on sports participation. This, in turn, has a negative impact on our industry. We feel socially and economically concerned and we feel this needs to be seriously addressed.

We could at this point give you a series of examples of how we support grassroots programs. I think we won't do this at this time; if you need more examples I'll come back to that. Some are very important and have had a lot of success, so we could come back to them later if you want.

In terms of specific industry characteristics, through the years the Canadian sporting goods industry has developed a balanced and efficient environment. The buying, production or sourcing, and corresponding show cycles were well in place and, generally speaking, responded to the needs of the industry so that it operated successfully in a well-contained environment. This was key to its success, since the industry is divided into as many as 15 key sectors that have different products and interests and often deal with different groups of buyers. Most of them, however, have a common means of reaching their buyers through industry shows. This is mainly where the importance of consensus in the industry is so meaningful to its business needs.

For most Canadian industry sectors, as well as for most national sporting goods industries around the world, the last recession and the new realities of the global economy have contributed to throw off some of our comfortable certainties and bring in new rules to play with.

Although it is meeting these challenges head-on, the industry has not yet taken a full and firm grasp on these new characteristics: mergers, closures, world competitiveness, shorter product lifespans, changes in buying cycles, etc. These are obviously putting unprecedented pressure on the companies individually, and they also bring major changes to the industry as a whole, particularly in Canadian ownership of our major companies, Canadian content of our products, industry employment and industry institutions such as its shows. The biannual industry gatherings around its trade shows are being challenged—as they are around the world, for the most part.

During the restructuring cycles, the eclectic nature of our industry has come out in more practical terms, as each sector has a different and pressing cycle of business, often dictated by outside sources. It now becomes increasingly difficult to reach the same kind of consensus which made it function around its shows in the past.

Change is happening. The industry welcomes it and is working to restructure according to its requirements. A total review of the industry's major events is presently being conducted.

Major changes are happening at the retail level. Recent years have created a turmoil at this level as well. From a positive outlook, one assessment that could be made is that the recent years have accelerated the natural cleavage of our retail network and helped streamline it. In reality, many retailers had to close their operations, and a good portion of retailers remains fragile.

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The ever-increasing domination of the buying groups and the major retailers has added to the pressure felt by the independent owners who now more than ever need to adjust their operations to niche, specialty and the service markets.

The globalization of the economy affects the retail sector as much as it does the manufacturers. The buying and sourcing patterns are more complex than ever.

The offering to the end consumer is also in the midst of a revolution. Direct marketing, electronic and Internet sales are increasing in leaps and bounds. The Canadian retail network cannot ignore it and needs to be at the leading edge of these developments in order to integrate them as new opportunities.

The Canadian sporting goods industry has historically developed and maintained a world-leading position in hockey products, which are widely recognized as being the world's best. The development of hockey around the world creates new opportunities and new challenges as more foreign manufacturers are entering this market.

Other products are closely identified with the Canadian image, such as outdoor activity products, fitness, cycling and aquatic products and accessories, and technical sportswear, etc., and they enjoy prominent visibility and recognition abroad as well. They are known for their high-quality design, engineering and technical content. This is an unequivocal strength that we should build on.

The Canadian government should offer an active and flexible support which would create an operational context enabling the industry to be competitive in world markets and get the best possible results. More specifically, it could take the following forms.

There could be active support from the various Canadian government departments dealing with industry and foreign international trade in order to enhance the presence of Canadian products abroad through international shows. Over the years, we've enjoyed a constructive co-operation with Industry Canada on key programs and with the Department of Foreign Affairs and International Trade as well. We are very thankful for their support since they have been a key factor in the success of the areas they supported.

There could be proactive support and international promotion of MISE, the Montreal International Sports Exhibition, considering its importance as a strong component of our domestic industry and its key role as the Canadian sporting goods industry international showcase.

As stated earlier, trade shows in general are being challenged. This show in particular faces new competition from south of the border. It is recognized as the World Hockey Show and it also services other sectors of our industry. It has been an integral part of our industry since 1917, having been founded in the same year as the NHL. For all those years it has been serving our industry as well as the international hockey trade. We strongly feel that support in this area will help maintain and further develop our leadership position in this key sector of our industry.

There could be direct support of research and development for sporting goods products, particularly those with high technology content, so as to further establish our position in this area since labour-intensive products are being sourced mainly from the Orient at a much lower cost. It is not very well known, but the sporting goods industry is second only to the military in using components in the products they manufacture, mainly to get better results, either through sportswear or any other kind of products being used in competition.

There could be consistency and regulations across the country concerning the sales and use of some sporting goods equipment. A recent issue has come up in the case of an electrically assisted bicycle. Its sale and use as a bicycle is permitted in some provinces and not in others, which creates some kind of a fuss around the country. This has come up in the last two years.

We also feel it is very important to develop a land access policy in parks so as to prevent the unnecessary closures of trails, thus facilitating popular involvement in mountain biking and other activities.

We feel the government should support specific retailers training programs for our industry. Considering the changes now happening at the retail level and the additional pressure being put on this sector with the advent of new technologies, it is of prime importance that the government support training programs for retailers for the purpose of consolidating the national network.

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And we understand that this is also a delicate issue because it deals with various levels of governments, but I think if we had the various levels of government working on this particular issue it would be very helpful for our industry.

International visibility and brand recognition opportunities should be systematically made accessible to Canadian manufacturers through in-kind sponsorship of public service organizations during world games. We understand that a sponsor selection process needs to be fair and equitable. A lot of fine and reputable international brands sold in Canada would be entitled to obtain this privilege in a normal bidding mechanism since they are bona fide members of the industry.

We feel, however, that the offering or bidding process should necessarily include Canadian manufacturers if we are to use national media to promote a product. This is very much a part of how we intend to promote Canada. Incidentally, in some of the world games, sponsorship was awarded to TV broadcasting companies from outside Canada without the Canadian industry being able to bid for that sponsorship.

And finally, the government could offer additional financial incentives for corporations to provide private funding in order to increase sports participation levels and ease the public access to sports that have financial barriers to entry associated with them. This could come in the form of a tax credit system similar to that available to research and development expenditures via the investment tax credit mechanism.

We have one more suggestion that could be studied by your committee. That would be to provide equipment manufacturers that maintain a Canadian base a tax incentive in the form of a corporate Canadian abatement. This is similar to the Quebec abatement provided federally via the personal income tax system. By maintaining a supplier's presence in the market, local hockey or sports associations are supported, grassroots promotional initiatives are maintained, and the world class reputation of Canadian hockey products and other products that are part of our heritage will be maintained.

Furthermore, while many long-standing Canadian companies fight the threats of U.S. expansion, Canadian dollar devaluation and the temptation to move south of the border to enjoy the fruits of a larger U.S. populace, with rapidly growing registration levels, a Canadian abatement would fuel the fight.

We certainly want to thank the subcommittee for having taken the time to meet with us. We feel privileged to be an active part of such a vibrant and developing human field and business sector.

Our industry now operates in a mature domestic market and has tremendous opportunities to grow on the export market.

We feel that we can contribute to increase the level of active living in Canada, where only a minority of Canadians are considered to be active. This is obviously in our best economic interest, but much more importantly, as corporate citizens we share the inherent health and social values of active living. We urge the government to ensure its growth and we offer our commitment to support all efforts made in that direction.

Thank you, Mr. Chairman.

The Chairman: Thank you, Mr. Paquette.

We will now go to questions. I'll start with Mr. O'Brien so that everybody else can catch up a little bit.

Mr. Pat O'Brien (London—Fanshawe, Lib.): Thank you, Mr. Chairman.

Thank you for your presentation. I appreciate it.

Unless I missed it, I didn't see a breakdown of jobs. Do you have any idea about that? Maybe I did miss it, so I apologize—

Mr. Yves Paquette: In the employment sector alone there are 10,000 jobs, and there are 15,000 in the supplier sector. Supplier is a term we use; we do not differentiate between manufacturers and distributors.

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The Chairman: That's huge.

Mr. Jean Grimard (Vice-President, Sales and Marketing, Canadian Sporting Goods Association): It's on the first page of the report.

Mr. Pat O'Brien: You said 15,000 in the supplier sector, right?

Mr. Yves Paquette: Yes.

Mr. Pat O'Brien: And 10,000 in...?

Mr. Yves Paquette: Manufacturing.

Mr. Pat O'Brien: And where's—

Mr. Yves Paquette: And you have 37,500 in retail.

Mr. Pat O'Brien: It's just so I can understand.

So the 10,000 make the ball gloves and the skates, and the—

Mr. Yves Paquette: Yes, a lot of it is in hockey or bikes.

Mr. Pat O'Brien: Right. And the 15,000 in the supplier sector, what exactly...?

Mr. Yves Paquette: Let's say it's Adidas Canada. These products are brought in. We're considering them as a supplier, so they have a lot of employees—

Mr. Pat O'Brien: I see.

Mr. Yves Paquette: —but they don't manufacture in Canada.

Mr. Pat O'Brien: Okay, but—

Mr. Yves Paquette: That base also employs a lot of people. You have all of those Nikes, Reebok—

Mr. Pat O'Brien: But to know how many jobs are in this industry in Canada, what numbers do I add—10,000, 15,000 and 37,500?

Mr. Yves Paquette: That's right.

Mr. Pat O'Brien: Okay. That's a heck of a lot of jobs.

The Chairman: With respect to the employment in the supplier sector, aren't they offshore jobs?

Mr. Yves Paquette: No, these are distributors in Canada. Let's say—

The Chairman: Oh. These are the people that take the—

Mr. Yves Paquette: They work here in Canada.

The Chairman: They move out the imports.

Mr. Yves Paquette: Yes. Let's say they start in Canada and import products. They may have 100 employees. Adidas may have 200 or 300. And Reebok.... There's such a large number of them.

Mr. Pat O'Brien: Thank you.

Mr. Yves Paquette: And that also includes their reps on the road. They all have six or seven or eight reps, depending on the total of the—

Mr. Pat O'Brien: Right. Thank you.

The Chairman: Just so Mr. O'Brien understands, what was your...did you get a total of 72,000 jobs?

Mr. Pat O'Brien: I got 25,000 and 67,500. Is that right? What's the total? That's a good question.

Mr. Yves Paquette: It would be 65,000 tops.

Mr. Pat O'Brien: Yes, that's really where I was going—about 65,000.

The Chairman: Okay, fair enough.

Mr. Pat O'Brien: There are 65,000 of these jobs in this industry in Canada in total, in all phases.

Now this may be impossible for you to quantify, and I understand that, but I'm going to ask the question anyway. Do you have any way of even estimating how many of those jobs result from having pro sports franchises in Canada? You know where I'm going with this.

Mr. Yves Paquette: Yes, I know where you can go with that. However, I cannot evaluate that. My feeling is that for a lot of these products that are made in Canada and seen on TV during hockey games, let's say, parents would tend to buy them because they're worn during National Hockey League games. This is true and false at the same time—mainly true. I would say that it does help. The Nike skates, for instance... I shouldn't mention that, but—

Some hon. members: Oh, oh.

Mr. Yves Paquette: Generally speaking, the products made offshore may come in and be seen there, and if they don't resist the pressure, then—

Mr. Pat O'Brien: Sure. I don't think there's anything wrong with mentioning it.

A friend of mine is involved in Vaughn Sports. You see the goalies with the “Vaughn” name, and obviously the names are in big letters for a very good business reason.

I'm not surprised you couldn't give me a number, but would it be your estimate that if we had no pro sports franchises in Canada that would constitute a significant hit to your business?

Mr. Yves Paquette: I will give the best possible indirect answer I can give you.

The fact that we are so very well received abroad in hockey, for instance, is certainly because of the hockey phenomenon in Canada and, to a large extent, because of the National Hockey League presence and viewing abroad. This is a fact. I guess part of the answer I could give you is that it does have a very strong effect. How much, I cannot quantify.

Mr. Pat O'Brien: I understand that. Thank you.

The Chairman: Mr. Mark.

Mr. Inky Mark (Dauphin—Swan River, Ref.): Thank you, Mr. Chairman.

First, thank you for being here today. I apologize for being late. Like many of us, there are 10 different directions for me to run in every day of the week.

The question I raise is in regard to a definition of what is Canadian in terms of Canadian content. Is that an issue in your industry? Can you tell me whether Canadians prefer to buy Canadian? Is there a danger of being overcome by world global companies like Nike and Reebok or whatever?

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Mr. Yves Paquette: Generally speaking, any consumer would like to have the best product possible and will, to a certain degree, give preference to a product made in his or her own nation.

But to give you an example, we have the 80:20 rule, which means that 80% of the products sold are brand names. Brand name recognition is very important. A lot of kids are now buying Nike or Tommy Hilfiger products or these kinds of things, and athletes will wear Adidas.

In some of the sectors where we are very strong, such as hockey, recognition is with Bauer, CCM and some of the companies that are American but have products made in Canada, such as Easton, for instance. That's the way it works. Basically, the fact that we could lose prominence in various sectors could certainly have a very negative effect on sales and on the jobs that we could keep in the country.

When I mention it in this brief and I ask for support, generally speaking, for the industry to create a context where we can grow and develop, this is partly what I mean as well. If we lose some of the leading positions that we have, we'll never get them back. Hockey, for instance, is developing now all around the world. The Americans are very strong in it. They're creating a show in Las Vegas, and the people from other shows have wanted us to move our show to Orlando.

The Chairman: From Montreal to Orlando?

Mr. Yves Paquette: From Montreal to Orlando. Now basically, if we lose the prominence we have and the leading edge we've developed and worked hard to get, we're in a very bad position. I don't think we'll be able to regain it.

On the other hand, we're making big scores and getting more recognition for the quality of the products we make. A good example is Louis Garneau. Louis Garneau started from nothing in his mother's garage and eventually bought out a company in France. The name is recognized now, basically because of the high quality of the product. We can name a series of companies like that. They're very important and they're doing well in Canada.

We have also exclusive products in very small niche markets. One company that comes to mind, out of Burnaby, is Feathercraft. They manufacture a folding kayak, which is very highly technical. Not much sales, but they sell a lot in countries where they don't have room, like Japan, for instance.

So it's important for us to get that recognition. If we lose that, jobs will suffer.

Mr. Inky Mark: So you're saying that Canadians in your industry can compete globally without any problem. They really don't need government protection to ensure their industry stays healthy.

Mr. Yves Paquette: I don't think I could call it government protection. It would be government support and openness through your consulates and embassies and, in some cases, through international events such as shows. In the text I referred to—

Mr. Inky Mark: That's the promotional aspect.

Mr. Yves Paquette: —the support we got from DFAIT. This is very important to us because this is the only way you can get a product into a country. When you have 140,000 buyers coming to a show in Munich and you have a Canadian stand, people see the flag, they recognize it, they appreciate it and they know they're going to get quality. They come to see it and visit us. For the year, we'll do over $10 million in sales with one show there. It's important for a summer show, and for a winter show, it's even more important.

We have unique products in Canada. I think we're very proud of that as well. So we should maintain that. If you want to call it protection, you can call it protection. I know the Americans would not like that in a free-trade world, but if you want to, call it “support”, direct or indirect. I think we definitely need it. For the show, as I mentioned with MISE and the Americans, some are competing now and some want to buy out the show. We'll need to do something. We're acting on it but our resources are very limited.

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As Canadians, we have that Canadian attitude of being down to earth and very businesslike. This very scenario may not be the best position to be in. Maybe it will all play out, things will turn around, and people will say they have to go Canada anyway because this is where we have the technology. To give you an example, there's a small company that has started in Rock Forest and is making skates for various brands around the world. They're all flocking to that company now and having their skates made there because—

The Chairman: Where is that?

Ms. Suzanne Tremblay (Rimouski—Mitis, BQ): Near Sherbrooke.

The Chairman: Oh. I'm sorry, but I don't know this place.

Mr. Yves Paquette: It's right near Sherbrooke. They do skates for Easton, for Fila, for some of the major brands around the country. This is a success story. And we would like to repeat that in hockey but in other sectors as well, sectors where we feel we have something to offer the world.

Mr. Inky Mark: I'm glad to hear that because I believe Canadians have the brainpower to compete anywhere in the world.

Mr. Yves Paquette: I agree with you.

The Chairman: Mr. Solomon, then Madame Tremblay.

Ms. Suzanne Tremblay: I must leave in five minutes.

The Chairman: Okay, Madame Tremblay.

Mr. Solomon is next.

[Translation]

Mrs. Suzanne Tremblay: Thank you very much, Mr. Solomon. I apologize for being late, but I still haven't figured out a way of being in two places at the same time. What's more, I unfortunately have to leave in five minutes because I have a flight to catch at 5 p.m.

I was very happy to see these figures and I listened closely to your exchange with Mr. O'Brien. We heard testimony from another group, a group of women. They told us that some sporting equipment that they needed cost much more than the same items for men. For example, goalie skates for women are much more expensive then goalie skates for men, although admittedly, there are fewer women goalies. I would like to know why equipment for women is more expensive.

Mr. Yves Paquette: That's your question? Very well then. There's no denying that in some cases, equipment for women is more expensive, but that's not always true. As for goalie skates for women, I was unaware that they were more expensive. We're talking about the same skates, but they are probably made smaller. Some companies even make custom-fitted skates for women. However, since the explosion of women's hockey, some protective equipment has had to be designed specifically for women. More research and development was needed and manufacturing this equipment is a somewhat more time-consuming process. Therefore, this equipment cost more at the outset for two reasons: first, research and development costs; and second, the smaller volume sold.

I don't think this is the case for every type of women's sporting equipment. In some cases, clothing is more expensive, but this is often a question of fashion, because as a general rule, male and female clothing is the same. However, if some colours or designs are the latest trend, then the price of the product may increase. Otherwise, I can't see why there would be any price difference.

If you can give me any other examples, I would be happy to have them. It is important for our association to be aware of such issues so that we can follow up on them closely. We have never heard about this, except in some very specific cases. Obviously, if only 2,000 or 3,000 sets of shoulder pads designed specifically for women are sold compared to 75,000 sets for men, the price will be higher.

Mrs. Suzanne Tremblay: I can understand why some special equipment may be more expensive, but the witness was referring to goalie skates.

Mr. Yves Paquette: I'd like to hear about that case because...

Mrs. Suzanne Tremblay: we'll ask Mr. Mills to contact this women's association and ask it to get in touch with your association.

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The Chairman: That's a good idea.

Mr. Yves Paquette: We'll be happy to do that. If I hear differently, I will get back to Mr. Mills or to the clerk. I want to be certain that I don't give you the wrong information.

Mrs. Suzanne Tremblay: With respect to sporting goods stores, is it your association's policy to encourage package deals for families who must outfit their children with skis or skates? I often hear from families who tell me that they have to get involved in sports that don't cost anything because equipment has become too expensive. For example, if there are three boys or three girls, or two boys and one girl, in a family, if the parents buy equipment for the first child, they have to do the same for the others and it ends up costing them an arm and a leg. Do you have any thoughts on the subject?

Mr. Yves Paquette: I can't say if this is systematically the case, but certainly it is something to consider. Let me give you a few examples. The National Ski Industries Association, which represents ski centre operators, has a program called Ski Passport. Children accompanied by a paying adult receive a free lift pass.

The association also operates a program called Discover Skiing. One-day packages including equipment rental, lessons and a lift pass can be purchased at ski centres. The price of this package is well below what it would cost to pay for these features separately. I can give you many other similar examples. Cost is a concern of ours.

A number of introductory sports programs have also been brought in. It can be very expensive for parents to buy a tennis racket, for example. Retailers have programs where they loan equipment to young people so that they can find out whether or not they enjoy a sport before having to go out and purchase a racket costing $200 or $300.

Earlier, I mentioned some of the programs that we have. I won't list them all, but in Edmonton, there is a program in place where used sporting equipment is collected and donated to underprivileged children. It goes by the name of Sports Central. The association has looked into this program and has agreed in principle to establish a foundation. Unfortunately, we are lacking the necessary resources, but if two of the recommendations that we are making are implemented, money might become available to support this foundation and this program could be implemented nationwide. That's what were trying to do by setting up a committee where the people who set up Sport Central could get involved.

We are also in touch with a group called In Kind Canada. This foundation collects equipment and distributes it to agencies in the community which then donate it to individuals involved in certain sports. Therefore, a great deal is being done on this front.

Some retailers hold equipment exchange days at the start of the hockey season and the like to help offset the high cost of equipment.

Therefore, cost is a major concern. There is even a chain of stores called Play it Again Sports which buys used equipment and then sells it back at prices everyone can afford. Efforts are being made to address the cost issue.

The same is being done across Canada for all sports and I think it would be worthwhile to implement programs of this nature nationwide. Thank you very much.

[English]

The Chairman: Thank you, Madame Tremblay.

Mr. Solomon.

Mr. John Solomon (Regina—Lumsden—Lake Centre, NDP): Thank you very much, Mr. Chairman.

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Before I ask Mr. Paquette a question or two, I just want to introduce to the committee my 14-year-old son, Matthew Solomon, who's in grade nine and is shadowing me today because it's career day for grade nines. He's been attending meetings since 8.30 a.m this morning and he's going to find out first-hand when my day ends.

Some hon. members: Oh, oh.

Mr. George Proud (Hillsborough, Lib.): What does he think of it so far?

The Chairman: Welcome, Matthew. If you have any questions, you're welcome to ask.

Mr. John Solomon: I thank you for allowing him to attend the meeting with me.

Mr. Paquette, I appreciate your presentation. It's well done. I have always tried to buy Canadian products whenever I shop. My most recent shopping venture was to buy Matthew some hockey equipment, not his entire outfit, not top of the line, but good quality stuff, and it cost about $1,000. That's a pretty large investment for a family, especially if you have a number of children.

It's difficult sometimes to find Canadian products in sporting goods stores. I come from Saskatchewan. I represent part of the capital of Saskatchewan, Regina, so we do have many of the stores you've outlined in your presentation that are members of your organizations.

From my experience as a business person, I can concur with your observations. I think many retail operations in the sports industry are fragile because it is seasonal, it is cyclical.

As a former businessman, I used to operate a Dairy Queen. I owned a Dairy Queen. Dairy Queen and other businesses, franchises in particular, do offer their own training of management and employees, basically in-house. You've made recommendation (f) here, that governments support specific retailers training programs. I think that's a good idea. Could you expand on how governments might be able, in a cost-efficient way, to assist retailers in that regard?

Mr. Yves Paquette: We have presented a request to Industry Canada, the retail department. What we are presenting here is our idea of a good system that could work, an in-service program. On days that are really slow, people could get on the computer and learn just one tiny bit that is very practical, like fitting a pair of skates or a bathing suit. Or they could learn how to approach a customer. It could go as far as stock management, in-store merchandising, management of inventory or turnover of inventory and replenishment and/or merchandising on the shelves.

We feel if we could prepare a program like that it could be used by all our retailers in Canada. Mind you, a lot of them are very well trained. They're well-educated people. They're very strong in what they're doing. Others have come to this business because they're old sports people and they like it, and they would definitely need the training. And I don't think I'm being negative when I say this. It's a fact of life. We feel that a lot of people will enjoy acquiring new knowledge on how to improve their business and on making more money out of what they do.

Part of the problem is that a lot of these people do not have the time to attend a structured program that would lead to a degree. In that program, actually, we're ready to tie in with Ryerson or Red Deer College or Dawson in Montreal, whatever college that would be able to be part of that program and eventually recognize whatever has been done in-store during an in-service program. The beauty of something like this is that the owner of any store can take it himself or have his part-time employees—sometimes students—do it so that they serve the customer better.

So there would be two benefits. Like the question from Madame Tremblay suggested, they could suggest ways for a family to save money in the store, and on the other side of it, the owner would have a better return for his investment because the store would be run in a much better, more efficient way. We think this is crucial at this point.

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The other factor that should be brought into this too is the new technology. It is incredible what number of sales are now made on the Internet or through mail or telemarketing. And if, as Canadians, we're not right there, we're going to be lost. I'm not saying that this threat is there, that tomorrow we'll die; I'm saying that in the long term, we need a solid retail network for various things, first, to have a hands-on approach to products and, second, to service after market. This is important. And I think that for a lot of people, even in servicing, these training sessions would be.... We started some of those, with a lot of success.

Mr. John Solomon: So are you saying that your organization would have these computer self-help programs already on-line? Or franchisers...?

Mr. Yves Paquette: No, we do not have them on-line, but we're looking at it. We already have talked to some colleges and universities and even private educators that would help in putting it together. Once it's there, it could probably be self-supporting after a while. Obviously, if on a computer you have a way to fit a skate or you show shelves or how to display things and if it's a Bauer product on the shelf in that computer, maybe the product manufacturer would be able to put in some dollars.

Mr. John Solomon: Is this something that the training and educational institutions...? When you say government would be involved in—

Mr. Yves Paquette: What we would need is a kick-start on that, and maybe—

The Chairman: Free

[Inaudible—Editor]....

Mr. Yves Paquette: Yes. You see, this is very valuable for us, for the industry. We would never have been able to have that had it not been for support from Industry Canada, and we certainly are thankful for that. And since we've had that.... Now, the support will be declining over the years and we will be on our own with a profit on it. It's helping a lot of companies do their business better.

Mr. John Solomon: I have two more very brief questions, Mr. Chair, one pertaining to the discussion earlier about whether an athlete buys Canadian or not and why. I just asked Matthew very quietly when that discussion was underway whether it made any difference to him. His analysis is that when he buys a skate he wants a light skate and he buys it because it's the lightest skate he can get. He hasn't learned from his father yet that it's really important to buy Canadian, but he'll be learning that over the course of time.

I think Matthew thinks like most Canadians. If they're going to buy a particular product or service, they want the best for the lowest price, and in many cases they don't consider whether it's Canadian or not.

I'm interested in knowing what you think about that and whether or not your association is working with your manufacturers and retailers to reinforce that. Maybe you have some market research that is different from my very quick research.

Mr. Yves Paquette: No. You're absolutely right. I said earlier that the 80:20 ratio applies, that 80% of the products sold are brand-name products. Brand recognition is very important. We're in a fortunate position. For instance, in hockey the brands that are recognized are Canadian and they're bought. Obviously they are also the best and, generally speaking, the best for the best price.

What parents probably need to know is that they don't need to buy the highest-priced product. Sometimes the middle range is sufficient—almost sufficient for someone playing in the national league—but we all want the best for our kids and we want to make sure we will not be the ones to prevent them from going to the NHL, so sometimes we buy what is more expensive or the most expensive we can afford.

Generally speaking, we are very much aware of that. And as you saw in our first recommendation, (a), we need to get around the world and get that message across all the time.

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During our shows, obviously, we do it for the retailers. In our show guides each of the Canadian manufacturers is identified with a maple leaf. People coming in who want to buy Canadian immediately recognize this. We also do it in our membership directory for anybody making or manufacturing Canadian goods. It's right there. It's identified. We feel it's very important.

Mr. John Solomon: I have a final question, with maybe an (a) and a (b).

What percentage of winter sports equipment sold in Canada is Canadian-manufactured? And in the (b) side of that question, I'm told that Nike bought out Bauer, the hockey skate company: is that true?

Mr. Yves Paquette: Yes. That was part of my report as well. Part of the problems we are faced with in Canada, with the turmoil, with the global economy and so on.... Yes, Bauer has been bought out by Nike. For a while Nike wanted to take all of the product design for their own, probably out of Portland, but they realized they could not match with Canadian technology. They gave it all back to Bauer, which will now manage the brand. So it's still Canadian-made, Canadian-designed, with our technology and so on and so forth.

This is why also I mentioned—when I answered Madame Tremblay, I think—that we do have another factory in Rock Forest, Quebec, where we manufacture skates with the capability and know-how of Canadians. So the more we spread it with those brands that are known around the world, then it comes a fait accompli: if you want to buy a skate, you buy a Canadian-made skate. Period.

And that's what I think we are striving for.

Mr. John Solomon: And the percentage of sales of winter sports goods manufactured...?

Mr. Yves Paquette: Oh, I'm sorry. The percentage of sales? In hockey sales in general I would say it represents about 75% of the market. That's for Canadian hockey sales. For Canadian-made products in the hockey business, it's about 75%.

In other sectors—

Mr. John Solomon: Skiing?

Mr. Yves Paquette: —like winter wear, we have Sun Ice, Far West and a few others, like Kanuk, like Sorrel in boots and so on. They are manufactured here and hold a very strong percentage of the Canadian market.

However, when you go to skis and to snowboards, we do manufacture snowboards and we're very strong in cross-country skiing and snowshoes and things like that, but the bulk of the downhill skis are brought in, mainly from Europe.

Mr. John Solomon: Thank you.

The Chairman: Thank you, Mr. Solomon.

Mr. Proud.

Mr. George Proud: Thank you very much, Chairman, and thank you, gentlemen, for appearing here today.

I have just two issues following up on John Solomon's questions about the Canadian-made stuff. Another industry that's very much taking off today is the fitness area, in which some people are involved quite heavily, and although not enough, it's beginning to take hold.

First, is the manufacture of gymnasium equipment a big industry in Canada?

Mr. Yves Paquette: Yes, it is a big industry. I don't have the numbers with me, but I could send them to you.

Mr. George Proud: But it's a primary industry.

Mr. Yves Paquette: It is, and we have at least four or five that are among the best in the world.

Mr. George Proud: Apex and some of those.

Mr. Yves Paquette: Yes. You also have what used to be Weider, which is Icon now, bought by outside ownership; Bodyguard, which is owned by Procycle, out of Saint Georges de Beauce; and York Barbell, somewhere around the Toronto area, maybe in Brampton. Actually, York Barbell is with us; it does tremendously well around the world. It's a good industry, a strong industry, and we're very much recognized in that sector as well.

Mr. George Proud: The other thing I wanted you to go back to, if you would for a minute, is this exhibition and the possibility of it moving—or that they wanted it to go to Orlando. You said probably the reason they have to come to Canada is this place you talk about near Sherbrooke where they're building the skates, and there's Bauer and this type of thing. But if the price is right—let's put it that way—is there still a real possibility of this happening?

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Mr. Yves Paquette: I don't want to be an alarmist. I just wanted to bring that out because this is actually what is out there in the market. There's another show being presented in Las Vegas. The people who will go there will certainly buy Canadian-made products in good part, but will buy some more American products that do not come here to Canada, because if they are manufactured in the United States, with the dollar value it's out of range to bring their stuff up here.

But in hockey I don't think we cry too loud about this, because, in any case, our stuff is of better quality and is much cheaper. This is not the threat. The threat is that if we lose that international showcase, the Japanese buyers and European buyers who come to Montreal would start going down south and we won't see them again. And eventually that could also have a ripple effect on the production.

As it is now, it is a threat. I don't see that all hell has broken loose yet. But it's there and we need to treat it as such, and we do need the support. We went to the city of Montreal, to the Quebec government, and I've talked to Industry Canada about it. And we do need to make that showcase, because short of creating the NHL.... We started with the NHL. I can't rewrite history, but if I had to guess, I'd say that this show was started to serve these teams—

Mr. George Proud: Yes, because of that.

Mr. Yves Paquette: That would make sense. It started at the same time and it's been here all along. Now, to a certain degree, we've lost the NHL. I don't think we should lose the industry.

Mr. George Proud: Thank you.

The Chairman: I'd like to build on this line of questions from Mr. Proud. In regard to this Montreal International Sports Exhibition, how many exhibitors are involved?

Mr. Yves Paquette: I would say between 250 to 350, depending on the years and also on the support from outside exhibitors, people who are not in hockey but are there.

The Chairman: Yes. This exhibition is the whole realm of sport.

Mr. Yves Paquette: Yes.

The Chairman: And how many visitors are there to that trade show?

Mr. Yves Paquette: Last year we had 8,000 visitors, which represented about 5,500 different bodies. Some people came for a day and a half and things like that, so basically I could say that 5,500 different people were there as visitors, not as exhibitors. The exhibitors have about 3,500 people working the show.

The Chairman: But of those visitors, a lot of them could be buyers.

Mr. Yves Paquette: Yes. They're all buyers.

A voice: It's a trade show—

The Chairman: So this is not just a sports show. This is a tourist event as well.

Mr. Yves Paquette: Yes. It is a trade and tourist show.

The Chairman: I think this is a serious thing that you're telling us here and I think this committee really has to—I defer to my colleagues—flag this. How long has this sports exhibition been going on?

Mr. Jean Grimard: It's in its eighty-second year.

The Chairman: Well, how the heck can we sort of...? We should be all over this if there's any danger. We're all busting our creative minds here to try to figure out a way to rekindle some spirit and energy in Montreal, and here you have this jewel of a show that you tell us could be in danger of moving out. Have you talked to the tourism commission?

Mr. Yves Paquette: We are in the process of doing our rounds, as we say.

As I say, we don't want to be alarmist either. But obviously since the threat is there, we have to treat it as such, and we will be going to the tourism commission and possibly to Heritage Canada directly.

The Chairman: Yes. Mr. Paquette, this committee appreciates you flagging this to us. I think this committee has to put pressure on the various people responsible for economic development in the province of Quebec, especially in the downtown core of Montreal.

Let's take the example of some of these manufacturing firms in Canada that are now owned offshore. Their sensitivity and their allegiance to having an event like this in Canada is not as strong as that of those of us who live our whole lives here.

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If somebody comes along from the head office in one of these offshore countries and says their vote with the Sporting Goods Manufacturing Association goes to Orlando, because maybe they like the sun in February rather than the cold of Montreal, we could get screwed on this.

Mr. Yves Paquette: This is why we brought it up. I thought it was important enough to bring it up here. Our opening statement in our recommendation is that we need to create that context for us to develop and grow and be successful, and this is part of it. You're very right in what you're saying. I think this is something we should look at very carefully.

The Chairman: I don't want to drag this out because I know we have other witnesses and you've been very gracious with your time here today, but I would like to offer that this committee set up a meeting for you with the minister responsible for economic development in Quebec. Quite frankly, he would feel that we are negligent if we don't tip him off to what you told us today. We will deal with that immediately with Minister Cauchon, who is responsible.

I'm sorry that our colleague, Denis Coderre, had to leave. As you know, there's an election in Quebec right now, but if he had heard what you just said to us, he would be jumping out of his skin.

We will follow through on this and we'll get a meeting for you with the minister responsible for economic development for Quebec, because this is more than a sports show or a sports manufacturers' show. This is tourism. This is self-respect. This is part of the psyche of a community and a country. And I'd hate to think that an 82-year-old jewel like this ended up in Orlando.

Mr. Yves Paquette: We certainly appreciate it. I thank you. We certainly feel, like you, that this needs to be protected. I welcome your offer. We will be there for any meeting of that nature and will support it in every way we can.

The Chairman: Good stuff.

Are there any other questions before we wrap this up?

Mr. Paquette and Mr. Grimard, we thank you very much. Let's stay in touch. Sixty-five thousand jobs, $5 billion in sales, a lot of manufacturing, a lot of exports.... I think you and your colleagues, your industry, should be very proud of what you do in this community and country. As a committee, I know, we're going to make sure that we tell a lot of people about the good work you're doing and we're going to see what we can do to help move you on to even higher ground.

Mr. Yves Paquette: Thank you very much.

Mr. Jean Grimard: Thank you.

The Chairman: Colleagues, we've lost two of our witnesses, so my advice would be that we adjourn. If these witnesses want to meet us.... We have their briefs. We can see them privately or whatever.

Tomorrow we have representatives of the Canadian Hockey League here, as well as representatives from the race tracks and the Quebec Hockey League. I implore you for tomorrow, because this is going to be very.... There are 50 cities across Canada involved with the Canadian Hockey League—all three divisions—and they've been in a lot of controversy lately, as you know. Even last night, I'm sure, you saw The National, showing where this David Branch suspended a kid for life for an obviously stupid act—anyway, what I saw was stupid.

But I think we should be there, because this Canadian Hockey League touches a lot of kids' lives. I implore you to be on time tomorrow.

I'll find out where it's going to be. All these committees and rooms are being changed around.

Matthew, we want to thank you for attending our committee meeting today. You're welcome to come back any time.

Meeting adjourned.