Manitoba Committee Hansard — 8 May 1975 (Education Committee, Sitting 4, 30th Legislature, 2nd Session)

30-2-ed4

Manitoba — Debates (Hansard)

Legislative Assembly of Manitoba HEARINGS OF THE STANDING COMMITTEE ON EC ONOMIC DEVELOPMENT Chairman Harry Shafransky, M.L.A. Constituency of Radisson 10:00 a.m., Thursday, May 8, 1975. Printed by R. S. Evans- Queen's Printer for Province of Manitoba

ECONOMIC DEVELOPMENT COMMITTEE 10:00 a. m., Thursday, May 8, 1975 CHAIRMAN: Mr. H. Shafransky MR. CHAIRMAN: Go:Jd morning. We have a quorum, we can proceed. I believe we were not finished with the Flyer Industries Ltd. We can proceed on that this morning. 83 Mr. Parsons has some --there were some questions that were asked and he has the answers. Mr. Parsons. MR. PARSONS: Thank you, Mr. Chairman, gentlemen. I want to reply to some :Jf the questions that I took as notice last meeting and I'll run through all those before we go back into Flyer. Mr. Minaker asked what were the markets for the Alphametrics products?

I'll give you this answer in a geographical sales breakdown for the year 1974. Ontario there was 40 percent of our market; Manitoba 2 5 percent; other provinces 10 percent; United States 17 percent; Europe 8 percent. The product is mainly sold to Universities and electrical precision tool manufacturers. I think that answers your question. There were questions on William Clare also by Mr. Minaker. How many ofthe $1,424, 599 were spent in Manitoba? Of this amount $19(J, 000 was used to pay interest on the MDC loans and the remainder of $1, 235, 000, approximatel y $175, 000 was spent i.r. Manitoba. Mr.

Minaker: Who bought the filmstrip inventory? Answer: The filmstrip inventory was sold to Sch:Jlar' s Choice Ltd. of Toronto and they were not involved in any of the films trip programs previously. Mr. Minaker and Mr. Spivak both asked this next question: How much was the life in surance premium on Willia m Clare? The annual premium is $1,674 on the life insurance of $600,000. This is term insurance. It reduces $100,000 a year until the year 1979. Mr. Minaker: What was the total staff salary at the present time? This again is cm William Clare. Mr. Clare is the only full time employee.

I gave you his salary last session. The comp:my also has one part-time girl that looks after the accounting and office matters. Mr. Minaker asked what the Professional Fe.es covered. The professional fees of $14, 036 in 1973 comprised :Jf $8, 762 for accounting and audit services; and $5, 274 for legal services. Mr. Minaker asked was all the printing done in Winnipeg respe.�ting $135, 000 printing costs? My reply at that time was the majority of the work was d:me here. I wasn't correct. Analysis showed that there was $22,300 paid to Winnip3g firms and $113,300 to a Toronto comp:my. Mr.

Spivak asked were the insurance premiums on Mr. Clare's life paid by the company? The answer is that the premiums were paid ·Jy the company. The terms and conditions of the option under which William Clare can repurchase the 56 common shares. The a"lswer: The option provides for repurchase of the shares over six years at the greater of a specified price or a percentage of the .earnings. I think that completes all the questions on William Clare. I'll move on. The next questions were on the Sandilands Forest Prod lets. Mr.

Spivak asked me if there were any abnormal c.:>nclltions in the agreement with Sandilands Forest Products. The only conditions in the contract that are speeial to this agreement that might not normally be fou·1.d in a sale agreement or financing c.:>ntracts are as follow-s: The pur chaser is committed to recommence .:Jp.erations at the mill site as so:Jn as is reas·:Jnably practical b:lt no later than six mo::tths from date of closing and in fact they're setting under way right now. Alsc• the purchaser will use his best efforts to continue op:)ratio::ts at the plant for a period :Jf not less than three years.

That is really a statement more than an enforceable clause. At the last cammittee meeting Mr. Banma':l asked me what the interest rate was on the Sand llands Forest Products. I stated at that time it was 11 P·':!rcent. The corr ect rate is 11 3/4. That looks like the end of that. There were several questions on Flyer Industries. Mr. Minaker questioned the delivery

schedule for the Winnipeg order of buses. Production on these Urlits is now c.:Jmme:1cing and it is expected that delivery will take place through May and Ju.t1e to be completed by July. There was a question :Jn the sales for 1974 in the amoant of $ 5, 330, 000. In these units were included 51 diesel buses, 150 shells and 48 special knock-d:>m1 kits.

84 May 8, 1975 MR. SPIVAK: That was the sales for the year 1974. MR. PARSONS: That is correct. MR. SPIVAK: $5,300,000.00 MR. PARSONS: Yes. The payment terms on the San Francisco contract were raised hy Mr. Spivak out of a report that he had. There was a question regarding the payment terms cm the San Francisco contract, the terms for the basic portion of the contract consisting of 208 units. Payment is 30 days after acceptance of the unit except for a 10 percent holdback after 90 percent of the contract has been paid.

For the remaining 135 coaches payme:1t is 60 perce!lt at the frame ,ioin-up point in production, 30 percent on completion of the units and the remain ing 10 percent on acceptance. So in fact we Nill be - on the last 135 we get progress payments. There is no extra financing required other than for the normal production and accounts receiv able financing on this order. MR. CHAIRMAN: Do you have more questions to ask on this matter? MR. SPIVAK: After he's finished. MR. PARSONS: MR. SPIVAK: I will finish off the balance of the Flyer and then I'll go back. Yes MR. PARSONS: lJn the San Francisco delivery.

In accordance with the terms e>f the contract the San Francis,�o units are to be delivered from December, 1975 through January, 1977 to avoid any late delivery penalties. The company's schedtile at the present time will meet this. The amount of the San Francisco contract amounts to $2 5,633, 000. The Boston trolley bus contract. The company has an order for 50 trolley buses for the City of Bosto!l for a total value of approximately $4 million. The delivery

schedule required is from February through June of 1976. Payment terms p:mvided under this contract is 30 days. The Dayton Ohio contract -I wasn't asked this bJ.t I'll cover it anyway because I probably will be. The comp:1ny has just rece!ltly been award�d a contract to produGe 64 electric trolley coaches for Dayton, Ohio. The contract value is $6 ,700,000 and the delivery is to commence in late 1976. MR. CHAIRMAN: Mr. Spivak. MR. SPIVAK: MR. PARSONS: MR. SPIVAK: MR. PARSONS: Is this the new order? Yes. This is the new order - six point what? 6.717. At the last meeting Mr.

Soivak stated that the 1973 statement for Flyer Industries re - ceived in April were not tabled. Our records and the committee records show that this was tabled on May 9th together with an updated repe>rt. There was a question on the Flyer loan approvals during 1974 and how they were paid out. At the time of my report, the last Standing Committee in 1973 , I reported in February there was $2 million and there was one million coming up in June. Further to that, there was $4 million advanced in October of 1974 at the time that the strike took place.

Since that time, in ,January there was $6 million ad·vanced, two million was to pay out our ban'( loan. Our hank loan was called by - in January we had to pay that out. There was a one million dollar letter of credit that had to be taken out for one of our suppliers, out of that six millio'J.. Those are all advances to date. No.v questions on Flyer? MR. CHAIRMAN: Any more questions on Flyer Industries Lt d? Mr. Spivak. MR. SPIVAK: Well, Mr.

Parsons, I'll get back to the San Francisco contract in a few moments, but I wonder just with respect to the Dayton Ohio which I gather is the new contract of 6. 1, is that right? MR. PARSONS: Yes. MR. SPIVAK: I wonder if I can refer you back to your testimony of April 7th - well not

May 8, 1975 85 MR. SPIVAK (cont'd) ... testimony, to the information supplied of April 17th, 1975. In that, on Page 68, you essentially say, "we have not been quoting or taking any more orders and we will not until we know exactly what our production can reach." MR. PARSONS: That is correct. This one was quoted quite some time ago. We haven't been quoting since the beginning of the year. MR. SPIVAK: So this is an order that was basically tendered or a tender given prior to your statement in the Committee. Is that correct? MR. PARSONS: Yes. It's the only one that was outstanding. MR.

SPIVAK: Can you tell me when that was tendered? MR. PARSONS: It was in October-November. It was in the fall of 1974. MR. SPIVAK: While the strike was on? MR. PARSONS: Yes, I believe it was. The

schedule was far enough down as you can see that we don't foresee any problem in delivery. MR. SPIVAK: But I want to come back to something fairly basic. At the time that you tendered on this contract the plant was in the course of a strike? MR. PARSONS: Yes: MR. SPIVAK: How did you cost out the pricing on the buses? MR. PARSONS: We did it by actual -a ll the material costs are done at actual costs and accelerated on the ones that we can't get firm prices on. MR . SPIVAK: Are you suggesting that you really knew what your costs were when you were tendering on other buses? MR.

PARSONS: We know what our costs should be. MR. SPIVAK: Well it's not a question of what the costs should be but what the costs really were. Did you really know what your costs were at the time you were tendering on other buses. MR. PARSONS: No, our costing records weren't that accurate. MR . SPIVAK: Well at the time that you tendered on the Dayton contract had you lost substantial numbers of your management staff? MR. PARSONS: We had replaced-- yes. At the time we had a lot of new staff in the company at that point. MR.

SPIVAK: Were the new staff seized of sufficient inform:Jtion to be able to advise you as to what your costs really were at the time you tendered on this contract. MR. PARSONS: We felt they were. MR.

SPIVAK: What I find strange at this point is an attempt to try and tender when it was obvious to you and must have been obvious to others, both on the Board and on the MDC, that your costing procedures as a result of management problems and overall problems was such that there was a question as to really what your pricing should be to take into consideration actual cost plus profit or even zero profit, and it seems to me very strange that you could basically tender at that time realistically ... MR. PARSONS: Well the basic problem, your manufactured component parts and your buy-out parts could be established.

The part that you're talking about that is in doubt is the number of hours that it takes to build a bus. Now we know what it should take; we know that we weren't meeting that before but it's not an insurmountable problem. MR. SPIV AK: But on the other hand, you gave your statement in April that you would not quote and take anv more orders . . . MR. PARSONS: No. We can't because the orders that are coming out now are for deliv ery during 1975 and basically the ones that I was talking about were in the diesel market.

Now we can't put any more through our plant this year or we don't see that we will probably be able to, at this point, in early of 1976. So therefore we can't quote on any of the properties that re quire them in that time. MR. SPIVAK: Do you know what your optimum production level will be? MR. PARSONS: Our optimum'? MR . SPIVAK: Yes. MR . PARSONS: Yes, we're looking at two a day. MR. SPIVAK: Two buses a clay or two shells a clay'? MR . PARSONS: Two buses. Two bu �s a day. MR. SPIVAK: You've indicated that<f!to buses- a bus would be the equivalent of two shells. Is that correct'?

86 May 8, 1975 MR. PARSONS: No, I didn't say that. MR. SPIVAK: I believe that you stated a complete bus would take twice as long as a shell. MR. PARSONS: Oh, yes. All right. MR . SPIVAK: So therefore, in effect, what you're saying is that from a production point of view - and I know this is a very crude way of putting it but I'll come back to it and be more specific - you're basically saying a bus is equivalent to two shells. So therefore, in effect, when you say two buses you're talking the equivalent of four shells; in a five-day week you're talking about 20 shells a week as being sort of optimum production.

MR. PARSONS: Well, we' re not producing any shells. Our aim is to produce two diesel buses per day. MR. SPIVAK: Can I ask, in your statement on April 17th, you stated in the beginning of January and February over a three or four week period, we were producing five shells and five buses. MR. PARSONS: That was in 1974, yes. MR . SPIVAK: Well, Mr. Parsons, I want you to consider that statement again and con sider its accuracy. You're stating that in January and February over a three or four week period, we were producing five shells and five buses. MR. PARSONS: Yes. MR .

SPIVAK: Isn't it a fact that you did not complete any buses really until June of 1974? MR. PARSONS: Until June of 1974. MR. SPIVAK: Wouldn't it have been more accurate to have stated that you produced 12 to 14 shells a week during a four to six week period in February and March of 1974. MR. PARSONS: I don't really ... MR. GREEN: Mr. Chairman, we had this problem at the last session with Mr. Spivak making statements about what is supposed to have happened and I gather Mr. Parsons, hearing a member of the Legislature state something, has to wonder whether or not it's correct.

Now it turns out that two of those statements have been outright wrong. And they were made, Mr. Parsons appeared to be embarrassed in front of the public and in front of the media because he couldn't answer what was a patently wrong statement and then is put on the spot. H, Mr. Spivak feels that it isn't accurate he could give the information to Mr. Pars ons and Mr. Pa rsons could take it up. Mr. Spivak stated at the last session of this committee that Mr. Par sons did not file a report on May 9th. The report was filed on May 9th which he now acknowledges. Mr.

Spivak said that we have to sell and deliver all the buses to San Francisco before we get anything paid on that order, that 90 percent of the moneys are held back. That is not correct. Again that was put on as if Mr. Parsons was making a misstatement. So I would suggest that if Mr. Spivak wants information on some subject he should ask it and Mr. Parson s will attempt to bring the information. Mr. Parson s is here trying to an swer questions many of which, Mr. Chairman, I believe go to the internal operation s of the company and are none of Mr. Spivak's concern. But if Mr.

Parsons is to give the informa tion and if it's to be based on specific detail then he can't expect an answer to be tripped up two weeks later because it turned out that Mr. Spivak was wrong. MR. CHAIRMAN: Mr. Spivak. MR . SPIVAK: Mr. Chairman, I indicated, and I will deal with the San Fra ncisco refer- ences, and I simply indicate that I quoted a consultant's report forwarded to Mr. Parsons. MR. GREEN: Which was patently wrong. MR . SPIVAK: Well, then I think that you should take that up with the consultants. MR. GREEN: Well, I am taking it up with you. Mr. Chairman, on the point of order.

The honourable member quoted a consultants' report. The consultants' report was classified information. Some industrial sabotage was used to get Mr. Spivak the report. Mr. Spivak is prepared to use industrial sabotage and when he uses it, he has to accept responsibility for it. It was patently wrong. Mr. Spivak would have called it a lie. He would have said that the person who produced it was giving false testimvny and should be arrested for perjury. That is his style of dealing with these questions. MR. CHAIRMAN: Mr. Spivak. MR. SPIVAK: Mr.

Parsons, can you tell fie how much Flyer Industries or the Manitoba Development Corporat ion have paid Stevenson-Kellogg? What would their account be? How many hundreds of thousands of dollars?

May 8, 1975 87 MR. GREEN: Mr. Chairman, I am going to, as a member of a Comm ittee, say that I believe that that information is internal to Flyer Coach Industries Ltd. I am going to suggest to Mr. Parsons that that is the case. MR. CH AIRMAN: Mr. Spivak. MR. SP IVAK: Mr. Chairman, I think it's pretty germane . . . MR. GREEN: And I am going to suggest that it's internal to Flyer Coach Indus tries Ltd. MR. SP IVAK: Well, Mr. Chairman, I assume that Mr. Green will be able to say what he wants to say and I'll be given the same opportunity of expressing my opinion and then a de cision can be made. Mr.

Chairman, just on that matter, the information came from a report forwarded to Mr. Parsons by Stevenson-Kellog. Obviously if the information is incorrect and the Chair man has indicated that it's incorrect, someone has made an error. The error has been made . MR. GREEN: You have made an error. You must accept the responsibility for what you say before this Comm ittee. If you arc coming before this committee on the basis of incorrect, false information, you accept the responsibility for what you do. MR. SP IVAK: Mr.

Chairman, you know I would hope that you would allow me the oppor- tunity of making my state ment and Mr. Green then can make whatever state ment he wants to. MR. GREEN: Mr. Chairman, on a point of order. MR. CHAIRMAN: Mr. Green, on a point of order. MR. GREEN: I am dealing with, Mr. Chairman, as a representative of the people of Manitoba, with responsibility for trying to maintain viable some 15 Crown corporations in which the public has money. Mr. Spivak is using industrial sabotage to hurt those companies. He has to accept full responsibility for what he does. I am su ggestin g to Mr.

Parsons that as a memb er of the Legislature, that is internal information to Flyer Coach Industr ies. Mr. Spivak says that he has read from a report. He knows that report was wrongfully obtained; he does not know what the follow-up or other information relative to that report is; he brings it before the public and before the people of the Legislature to show some degree of incompetence. I sugg est to you that that is industrial sabotage and he has to accept responsibility for it. MR. CHAIR MAN: The point is well taken. MR. SP IVAK: Mr. Chairman, well I' m not sure that the point is really well taken.

I must tell you that I think that the purpose of this Com mittee, as I understand it, is to obtain information from the Chairman of the Manitoba Development Corporation dealing with a number of Crown corporations and the activities of the Manitoba Development Corporation. I think the purpose is to obtain accurate information. I suggest to you that there is sufficient evidence now to indicate that there is a substa ntial amount of information that has been both misleading and inaccurate.

I am quite prepared to deal with this in detail in the House, I think I have already and I intend to do this with some greater detail. But at the same time the forum that we have here is one of obtaining information. I am concerned and I think we have to be that public money is being invested into a series of projects in which the projections, the estimations, the forecasts have all, you know, appeared to be fairly inaccurate. Now there is, you know, there is a style to what is happening that is very very, I think, discouraging to the proper workings of our parliamentary syste m and to this legislative committee.

I may not have, you know, I relied on a report forwarded to the government which the ... MR. GREEN: Not forwarded to the government, Mr. Chairman. MR. SP IVAK: Well forwarded .. . MR. GREEN: MR. SP IVAK: MR. GREEN: MR. SP IVAK: MR. GREEN: MR. SP IVAK: this becomes ... I have never seen .. . Well, Mr. Chair man, I mean, Mr. Chairman, look. On a point of order. I am on a point of order. No, you're not. Well, Mr. Chair man, once and for all, either you control Mr. Green or MR. CH AIRMAN: Well, Mr. Spivak ... MR. GREEN: 1 say that Mr. Spivak needs to be controlled. MR. CHAIRMAN: Order please. Order please. Mr.

Spivak, you are stating a mis statement. MR. SPIVAK: They do have in Russia:, MR. CH AIRMAN: Mr. Green, on a point of order.

88 May 8, 1975 MR. GRE EN: Yes, Mr. Chairman, on a point of order. The member has said that in formation was supplied to the government. No information was supplied to the government. The information that Mr. Spivak was referring to was purported to be supplied to Flyer Coach Industries Ltd. Mr. Spivak has said that misleading and inaccurate statements were made. On the point of order I say that that is a correct statement but it leaves the impression that the inaccurate and misleading statements were made by other than Mr. Spivak which is not correct.

The inaccurate and misleading statements that were made referring to a report not being filed , referring to pay-outs on a contract were made by Mr. Spivak. And these inaccurate and mis leading statements are being made to the detriment of the companies operated by the people of Manitoba. If they were made with respect to private companies operating in the same field they would be slanderous; the person making them would be sued. Mr.

Spivak is using his po sition of parliamentary privilege to slander Crown corporations trying to do a job for the people of Manitoba knowing that he is immune from any suit in this connection and knowing that he is pandering to the interests of people who do not wish these corporations to succeed. MR. CHAIRMAN: Mr. Spivak, on a point of order. MR. SPIVAK: Mr. Chairman, well I would ... you know, Mr. Chairman, Mr. Green's paranoia with respect to Crown corporations . . . MR. CHAIRMAN: Mr. Spivak, do you rise on a point of order or what is your . MR. SPIV AK: Well because, Mr. Chairman, either I . MR. GREEN: Mr.

Chairman, on a point of privilege. MR. CHAIRMAN: Mr. Green, on a point of privilege. MR. GREEN: Mr. Chairman, I speak now o:-� a point of privilege. Mr. Spivak has re·· ferred to my paranoia. I suggest that that is a reflection of my ability to sit here which I trust to the people of my constituency. I am going to refer to Mr. Spivak's schizophrenia, maniac depression and hysterical behaviour. I do not ask him to withdraw nor will I withdraw. MR. SPIV AK: Mr. Chairman, on the point of order. MR. CHAIRMAN: Mr. Spivak, on a point of order. MR. SPIVAK: On the point of order.

The government has the authority and has writte:1 cheques on the bank accounts e>f the people of this province without any accountability whatsoever. The purpose of this committee is to protect the public interest.

The purpose of this committee is to determine accurately what forecast of public moneys will be required to be used, what probabilities of success can be forecast and to determine on behalf of the people the degree of protection that has to be offered to them se> that they can accurately assess whether they really want the goverament to continue into the developmeats and the expenses and the constant use of public money.

And the problem I have is that many of the questions - and I said this at the ear lier stage - I do not in any way take away from the enthusiasm and the general desire :m the part of the chairman or the members of the b.:>ard in their attempt to try and make something viable. But I must say, Mr. Chairman, that it is essential that we have some information which will be in a position to give us a judgment which we then can express outside of this com mittee and in the House and to the people as to whether this is or is not viable.

Now our problem at thi.s p:>int - and I'll come back to the San Francisco matter in a few moments -I was talking about the question of production and the statement that Mr. Parsons made. He indicated that they had produced, I believe, and I've already quoted that, I just have to find thi.s again - I believe it was five . . . "In the beginning of the year, January, February, over a three or four week period, we were producing five shells and five buses." Now again I'm in this position. I don't expect Mr. Parsons to know every detail of Flyer. I'm accepting that.

But I'm now asking him to review that to see how accurate that stateme::J.t really was. Be cause the information I have is that no completed buses were produced until June of 1974 and in fact that only between 12 and 14 shells a week were produced during the four to six week period in February and March of 1974. MR. GREEN: Well, Mr. Chairman, I have absolutely no objection to that type of question being put. That is not the way the Leader of the Opposition is putting the question. He is put ting the question as follows: "You said four or five buses were produced.

I have information that in fact this number of buses were produced, " and is suggesting and has suggested publicly and in this committee, has suggested publicly that Mr. Parsons is deliberately misleading this committee. And that is a suggestion that I do not accept because I know that the one who is de liberately misleading is Mr. Spivak. So if he feels that that answer should be checked and in formation brought back, I think he can put it that way. But that is not what he is doing, and is not what he has done consistently through these last two meetings.

May S, 1975 89 MR . CHA IRMAN: Ca n we proceed ? I believe that the points raised arc really ... MR. GREEN : I think we should proceed with the quest ions. MR. CHA 1RMAN : What we are trying to accomplish here and that is to ask questions of the Chai rman of the Manitoba Developm ent Corpor ation as to the operations of the various Cr own industries. May we proceed. MR. GREEN : Mr.

Chairma n, Iwa nt to further i.ndicate that it is my position that I will certainly support the Chai rman in not asking questions which have to cb with the internal day to-day managem ent of these corporations as they may affect the operations of those companies. And Mr. Spivak is not on the b::mrd of directors of the company nor are the members of the comm ittee; it is not for the members of the committee to run this company , and if what Mr. Spivak is seeking i.s to show that there are weaknesses in the company which he wishes to ex ploit in public debate, then I tell Mr.

Parsons that as far as I'm c;Jnct�rncd ne need W)t a:�swer those questi ons. MR. SPIVAK: Mr. Chairma '1, we have $30 million of public money invested in a company and I must say this through yoa to Mr. Green. It's 'JUr resp: msibility to see wh:;ther there is any purpose whatsoever in investing more mo·1cy in this project. MR. GREEN : That will be up to us. MR. SP IVAK: No, it's not up to you. MR. GREEN: Yes. MR. SPIVAK: You 're the government but it's going to be up to us to make that . MR. GREEN : You can vote against it on Capital Supply. MR.

SPIV A}):; Well, we can vote against it bat we have to have accurate information to be able to determine that and I can tell you this: that the statements by Mr. Green as to what is right and what is wrong I'm not prepared to accept, and I don't think most people in Manitoba are prepared to accept. MR. GREEN: Well, Mr. Speaker, the peaple of Manitoba will be much more prepared to accept my statements than Mr. Spivak's statements that the $1 50 million that was invested was when he ;vas responsible for the Manitoba Dev elopment Corp�ration neither we nor he had the right to ask wh.1.t was happcming to it.

That was the position of Mr. Su ivak and the Conser vative admini stration when they were in charge of the Manitoba Development Corpo ration. Nei ther he, the governm e;:tt, nor the members of the Legislature ;-wr anyb�dy else was entitled to ask. We have indicated that the Ch airman wi.ll be here; that he will say what is happening with those mo:�eys but he will nJt be required to deal with the day-to-day operations of the comp:my as they affect the company 's viability . MR. SP IVAK: Well I don't think the questions ... MR. GREEN: And I am prep:tred Logo to the people of Manitoba on those two positions. MR.

SPIVAK: Mr. Chairman, I think the qaestions that were asked Jf Mr. Parso:1s d:J n:Jt deal with the day-to-da y opcTation. I think that they are questions that can be answered. If he has the information fine, if he hasn 't ... to . MR. CH AIRMAN: Would you proceed with your question s. MR. PARSO NS: All right. Your question was 0'1 Stcv enson-Kellogg and I don't know . MR. SP IVAK: No, I 'll c-ome hack to Stevens0n-Kellogg. My question was with respect MR. CHA IRMAN : You did ask a question with that regard. MR. SPIVAK: If you haven't the answer Lhe;1 I appreciate you are going to have to . MR.

PARSO NS: I don't havP the ... you're asking me 0•1 Stcv enson -Kellogg Lhe :tmount we tJaid them, I don't have that. MR. SP IVAK: All right. Well I assume that you can get that for the next meeting. With respect to the production, the accuracy of the statemeats at this point I guess you're not in a position to confirm. MR. PARSON S: No , I'm not. MR. SPI VAK: Co:.tld you tell me the optimum production level, labour productivity per shell? Do you have any figures as to how many man- hours it actually took to complete a shell? MR. PARSONS: No. MR.

SPIVAK: If I was to suggest to you that it was probably about 2, 000 man-hours per shell, that was your best optimum produ8tion level, would you believe that that would be a cor rect figure ? MR. PARSONS: No , I would think that's high for a shell.

• 90 MR. SPIVAK: May 8, 1975 Well what would the industry standard be? Do you know what the industry standard should be? MR. PARSONS: For a shell? MR. SPIVAK: Yes. MR. PARSONS: No, I don't. MR. SPIVAK: If I suggest to you that 700 man-hours is probably the industry standard, would that appear to be correct? MR. PARSONS: I would think that that's a little high for a shell. But I'll accept what . MR. SPIVAK: What would be the man-hours for a completed b:1s? MR. PARSONS: The industry standard is something balow 1, 000 hours. That is what they shoot for, that is not what they necessarily get. MR.

SPIVAK: Yea, between 950 and 1, 000 then wo•.1ld probably be the industry standard, I think that's correct. MR. PARSONS: It's in that area although neither Flexible or GM are maldng that right now. That's what they use for a standard. the . ing it. MR. CHAIRMAN: Mr. Spivak, we did go over these questions last time. MR. SPIVAK: No, Mr. Chairman, we did aot. MR. CHAIRMAN: Unless you are leading to some particular point and wish to review MR. SPIVAK: No, as a matter of fact we did not cover this in the same way as I'm c.wer- MR. CHAIRMAN: Yes. MR.

SPIVAK: Partially, but not in the same way that I'm c.:wering it, and I'm leading up, Mr. Chairmac'1, and I hope I would be allowed to ... MR. CHAIRMAN: Proceed. MR. SPIVAK: ... to try and determine the productivity and the level that can be reached with Flyer. You indicated that approximately one bus was equivalent to two shells. But in ef fect if 700 man-hours, more or less, is the completion of a shell and 950 is the completion of a bus, then really one bus is equivalent to about one ... MR. GREEN: Mr. Chairman) on a point of order. On a point of order. You see this is where we get to. What I heard Mr.

Parsons say was that 700 may be a little high for a shell. He didn't say how much it would be for a shell. Mr. Spivak's next question is on the assumption that Mr. Parsons said that 700 hours is needed to complete a shell, 1, 000 to com- plete a bus and therefore two shells is not equal to one bus. Well that assumption did not come from Mr. Parsons and therefore I don't know why Mr. Spivak introduces it as an indica tion that Mr. Parsons has somehow got his calculations mixed up. MR. SPIVAK: Well, all right. Mr. Chairman ... MR. GREEN: He did not say what Mr. Spivak has attributed �o him. MR.

SPIVAK: As a matter of fact, I think he basically said it was less. MR. GREEN : He said that he thought it would be less. That's right. So why are you using it as if its gospel. MR. SPIVAK:-I'm suggesting that 700 is correct and I'm suggesting 1. 36 ( ?) percent is the right factor. I'll leave that at this point now. And I want to now come back to Mr. Parsons and ask. if less than 700 hours is more or less the requirement or the industry stan dard for a shell, how close at best has Flyer come in man -hours? MR. GREEN: Well, Mr.

Chairman, I am going to suggest that in my opinion that ques tion and how close they are to receiving what they need in the production scale - and I don't know the answer - but I am suggesting that no other company would unclassify that information and that the Flyer Coach Industries need not unclassify it. MR. SPIVAK: Well, Mr. Chairman, I'm suggesting that there is absolutely no justifi cation for more money to be put in Flyer . . . MR. GREEN: That's up to you. Go ahead. MR.

SPIVAK: ... until someone somewhere understands the productive capacity of Flyer in the past and its likely productive capacity against the necessary standards to be able to determine whether there will or will not be a profit. I must say, Mr. Chairman . MR. GREEN: They undarstand it. MR. SPIVAK: Well they understand it? Mr. Parsons, do you understand it? You don't have that information now but do you understand it?

May 8, 1975 [}1 MR. PARSON S: Do I under stand what you're saying? MR . SPIVAK: Yes. Do you unders tand the basic production ma:1-hours that are required by Flyer to be able to tum it around. Do you know what you have to reach as a goal? MR. PARSONS: Yec;. MR. SPIVAK: Woald you mind telling me that. MR . GREEN : No. Mr. Chairman, that is the information which I say that any comp.my would retain as clas sified. Now I don't kn'Jw what Mr. Parsons inte:J.ds to dJ but I say to you that I consider that to be something which no other comp:my would be req·.1ired to give. MR. SPIVAK: Well, Mr.

Chairman, I would suggest that if Mr. Parsons produced the information it would - before this committee - it would indicate that we are so far away from reaching any kind of standard that the probability of profit in the next period of time is remote and that the goveri1meat should be reassess ing and should have been reJ.sses sing th eir position with respect to the continual fur1ding of the operation. MR. GREEN: Mr. Chai rman, this is exactly the point of order that I was making. Now Mr.

Spivak is giving testimony to this committee which the previous testimony h� ;<;ave we have found to be false and that this should oe considered as equally unreliable, that it is not the kind of test imo'1y that is ex1Jected to be given by people wh·'J are running cDmmercial instituti ons, is being given by Mr. Spivak for the purp:Jse and with the intention of Urldermining the viability or the - any move towards viability on a Crown corp:Jration owned by the p:):lple of this prov ince. MR. SPIVAK : Mr. Parsons have you had an opportunity of reviewing the S�evens•on Kellog Report? MR. PARSONS: \Nhich one? MR.

SPIV AK: The report that I made reference to and I gu ess that was the interim re port that you received. MR . PARSONS: Yes, I ha ve a letter from them. That report that you received - I d:m't know lnw you got it, it was a confidential reporL between ourselves and Stevcnson-Kellog. It was;'l 't for their publication and the fact that you got it is very embarras sing to them. And I will give you a letter from their Vice President saying so. It was a prel.iminary report; they h:1d o.ot done any in-depth look at the plant at the tim e that this was done. MR. SPIVAK: Well, Mr.

Grenn, is continually saying what was wrong. What was wrong, Mr. Parso'1s? MR. GREEN : The suggestion that we have to wait for the whole order to be sold before \\'e get ... MR. SPIVAK : That suggestion with respe8t to the San Francisco order was wrong. What else was wrong in that report? MR . PARSONS: They have no -i n that brief rep:1rt there was . MR. GREEN: ... test imony that yo'l gave ab;>ut that report. MR. PARSO NS: There were two reports that you used. MR. GREEN : 100 percent of what you gave was 1vro:1g. MR. SPIVAK: Mr. Chair man, I am asking Mr. Parsons. MR. CH AIRMAN: Mr.

Pars·:ms is attemp<:ing to answer !Jut you keep 0�1 MR. GREEN : I am interrupting , I admit, Mr. Chairma n. But Mr. Spivak's line of ques tions has exasperated me and �aused mt> to lose my temp3r. MR. SPIVAK: Mr. Chairma �1, on a p:1int of order. l d:m't think it's my line of question ing. I think the realism that Mr. Grec,:l has. that a great deal of the information that he and the memh2rs have given has in fact been false. MR. GREEN : Mr. Chairman, on a point of order. I did 110t give any information ... MR. SPIVAK : Well we 're going to deal vvith it in a few momc:J.ts ... MR.

GREEN: .. . 100 perclmt of the information that Mr. Spivak has given has been false, presum ed to be false. MR. CH AIRMAN: Mr. Evans, on the -- you're speJ.king on what? I have Mr. Minaker. MR. EVANS: On the pQint o[ order. On a point of procedllre and ordJr. The fact is, Mr. Chairman, whe:J. we p.1ssed ·;he legislation requiring the Cha irma:1 of the MDC to c.Jme be fore the Commi ttee' to answer ... MR. GREEN : There is no legislatio:-� , that is strictly voluntary . MR. CH AIRMAN : Just the report. MR. GREEN: The reports in the Gazette. No legislation requiring .

92 May 8, 1975 MR. CHAIRMAN: Order please. Let's proceed. Mr. Spivak. MR. EVANS: Mr. Chairman, on the point of order. I would like to suggest that it's in the legislation. But the point is . . . MR. GREEN: The honourable member may be correct. MR. EVANS: The point is that the intent of the legislation was to require the Chairman to come and discuss, to lay before the committee the financial d:>cuments of the company of the latest fiscal year available . _ MR. CHAIRMAN: That is correct. MR.

EVANS: .. . and to discuss those reports as shareholders of a comp:my may wish to discuss the activities of the comp:my in that fiscal year. Now, Mr. Chairman, we're get ting beyond that; we 're getting into a discussion of the current day-to-day administration and :>perating problems that are facing the company. And while Mr. Spivak and others may wish to speculate and question the day-to-day operations of the company and make conclusions, and draw co:1clusions therefrom, I would suggest, Mr.

Chairman, that the people of Manitoba, the taxpayers that he's so worried about, are being done a disservice by the Opposition in their attempts to put questions, to elicit answers that may affect the competitive ability and position of this company in the industry which is truly a North American industry. And I suggest, Mr.

Chairman, that it is completely out of order for the Chairman of the MDC to have to answer questions dealing with operatio:1s and day-to-day administration that surely no group of share holders have, in the history of limited companies, have had the opportunity or expect to re ceive the answers thereto. I suggest, Mr. Chairman, that Mr. Spivak is doing a disservice to the people of Manitoba, to the taxpayers in Manitoba.

He's d:>ing a disservice to the em ployees of Flyer Industries Limited who he seems to be so concerned about - particularly a few months ago when there was a strike - the fact is that he is doing them a disservice and these questiocts could commerci ally endanger the viability, could endanger the commercial viability of this company and they are clearly out of order and they're not - these types of questions were not intended to be answered as the legislation is spelled out and in our discussion of that legislation. MR.

CHAIRMAN: We do have the financial statement and my understanding was that we deal with the Annual Report and the Chairma..'l of the Manitoba Development Corporation has updated reports. The one that we have here is up to March 1975, dealing specifically with the 1973 -74 report which we have received except for the questions that were handed out or rather the list of firms with the updated Einancial statements. And I think if we could put our questions to those levels, beside those questions that have been asked and the answers have been given at the last meeting, I think we can proceed. Mr. McGill. MR.

McG ILL: Do we have the financial report for Flyer Coach? MR. CHAIRMAN: Yes, it had bee!l tabled. 1973. MR. McG ILL: At the last meeting Mr. Parsons said it would be ready about the middle of next month which is this month and we're not yet at the middle but I thought he might have had it for today's meeting. MR. PARSONS: No, it's not ready. MR. McGILL: It's not ready yet? MR. PARSONS: No. MR. McG ILL: Have you any forecast on when that statement will be available? MR. PARSONS: The auditors aren't sure but it will probably be maybe another three weeks, three or four weeks. The problem is in inventory taken. MR.

CHAIRMAN: Mr. Spivak. MR. SPIVAK: I wonder, Mr. Parsons, if you can indicate to me . MR. GREEN: Point of order. MR. CHAIRMAN: Mr. Green, on a point of order. MR. GREEN: Mr. Chairman, there was some suggestion that the chairman appearing before committee was a legislative requirement. Honourable Mr. Evans seemed to think so, I didn't think so. It is not in the legislation to my knowledge and has been done because we felt that it was going to be a useful procedure for the Legislature. If it is not a useful proce dure, it will not be done. MR. SPIVAK: Mr.

Parsons, I wonder if you can indicate -you stated at the last meeting that there were 360 employees with 200 in production. Is it your intention to increase the num ber of employment at the . . .

May 8, 1975 MR. PARSONS: In the production level, yes. MR. SPIVAK: To what level? MR. PARSONS: It will probably go up to 300. 93 MR. SPIVAK: SCJ you would then have, at that p0int, about lOO salar�ed workers to about 300 production workers, is that right? MR. PARSONS: Well, it would b2 slightly more than that. MR. SPIVAK: lGO to abo'J.t 300. Yo'J. now have about 3'30 of which 130 are salaried. MR. PARSONS: Right. MR. SPIVAK: And 2(J0 -s o that would be 150 salaried pe::>ple to 200 prod.1ction now which would go up from 150 to 300 in production. Is that correct? MR. PARSC>NS: Yes. MR.

SPIVAK: Is that ratio of salaried employees to production employees, is that ratio sufficient for productivity? MR. PARSONS: Yes. It depends on where your salaried leave off. Some of those sala ried people work on the floor in a supervisory cap acity. So it's pretty -I can't tell you wheth er that's normally . . . MR. SPIVAK: Mr. Parsons, there is a new generation bus that is baing developed by the major bus ma'lufacturers both i.n the United States and Europe. It will be produced prol:Ja bly I guess within the year. Is Flyer in anticipation of this developmeat ... ? MR.

PARSONS: What type of bus are you talking abo'J.t? MR. SPIVAK: Well I gather from ... MR. PARSONS: There are several prototypes out. MR. SPIVAK: Well I gather though that the generatio:1 bus basically lasts for 20 years and we're at the end of a 20-year cycle. And that, in effe-ct, the nature of competition wo'.lld be that the new bus will be in operation pro"bably within a year or two years which will red.1ce the man -hours of 950 to 1, 000 down to about 600 man-hours for its production.

I just wo:-�der whether you can indicate wh3ther Flyer has attempted or is in any way organizing itself in anticipation of this new d·3velop'11e::-tt and the competition that will exist. MR. PARSONS: I'd like to know what bus you're talking ab::mt because there's an articulated bus coming out, we have looked at it and we will not be producing it because we don't think it will fit in the North America'l market. There's several types of buses ·on the market; now I don't know which o:1e you're talking abJut bat we !"tave bee;1 looking at th em. MR.

SPIV AK: Well my point is that if your compet itor s at this point are in the process of developing a new h.1s and I am asking at this point whether Flyer in anticipation of the ctew d·'!velopment has in any way organized itself to ba able to me.�t what would be comp.etition sim p1y because the man-hours req•.1ired for the building of that bus will be substantially less than the present man-ho'.lrs required. MR. PARSONS: Well I do:1't know what bus you're talking about that's going to take less man-hours. The UMTA bus takes more and that's the new one that Flexib le and GM are ,vork ing on under contract.

It is a much higher cost bus. So really, I can't answer your quest ion. MR. SPIVAK: I wonder, Mr. Chair ma:1, if I may be able to get . . . Well I would suggest it would be the one to be introduced by General Motors, that should be introduced by late 1976. MR. PARSONS: Is that the one with the very low floor? MR. SPIVAK: That's the one dealing with the method of using rivets on various types of panels which will be replaced, on snap-on molding systems and other advanced techniques which will basically reduce the man-hour production and thus the basic cost and become more competitive in the market.

My point being that is Flyer now organizing itself in anticipation of this new development and its abilit y to be able to compete for orders a year from today or a year and a half from today. MR. PARSONS: No, we're not looking at that right now. MR. SPIVAK: Okay. I'd like to now, if I can, go back to the question that was mentioned last meeting with respect to the Mercantile Bank. I wonder if you can indicate at what point the company arranged its line of credit with Mercantile? Do you know how long ago that was? MR. PARSONS: No, I don't. MR. SPIVAK: Was it several years ago? MR.

PARSONS: I don't know how long ago that was. I don't think it's that far back. MR. SPIVAK: Can I ask, did the bank ask Flyer or the MDC for a governme:1t guarantee of the loan?

I 94 May 8, 1975 MR. PARSONS: At what point? MR. SPIVAK: Well I just wonder at what . MR. PARSONS: I didn't negotiate it so I don't know that. MR. SPIVAK: Well I have to refer, if I can, back to Page 69 and I'd like to just read what was said from the Hansard and then if I can direct a question to you. MR. GREEN: Mr. Parsons, of the $ 23 million that has been advanced to the corporation, my understanding is that two million of that was advanced, which was formerly a line of credit that was given to you by a bank. MR. PARSONS: That is correct. MR.

GREEN: And did the bank cut off its line of credit during the strike? MR. PARSONS: Yes. MR. GREEN: That was the line of credit of $ 2 million? MR. PARSONS: Yes. MR. GREEN: You are aware of the commercial world in other areas. Do you know of a bank's cutting off lines of credit during a strike? MR. PARSONS: No, and we felt it was most unusual. Normally in the com mercial world when you're on strike you would expect your bank to support you more, not call your loan. MR. GREEN: Which bank was this? MR. PARSONS: It's the Mercantile. MR. GREEN: Thank you.

Are you going to continue to do business with that bank?" And then it goes on. Now I'd like to kn::Jw at what point the Mercantile Bank requested of Flyer or through the MDC that the government guarantee its loan? MR. GREEN: Mr. Chairman, on a point of order. Yes, I could give that information and I did not -- (Interjection) -- Yes, you did. You did say that I gave false information. MR. SPIVAK: Not on this. MR. GREEN: Well you have said that I did and now you are reading it. Mr.

Chairman, my information is that the Mercantile Bank asked the Government of Manitoba or the MDC or either to guarantee their line of credit to Flyer Coach Industries. That is my information. If we were to guarantee their loan and they were to make the interest, why do we need them at all? They have given a line of credit to Flyer Coach Ind�stries and they cut it off during a strike. That is the only information I have.

But they also asked the government to guarantee their line of credit so that they wouldn't cut it off,in which case they would have the credit of the Government of Manitoba rather than Flyer Coach Industries. MR. SPIVAK: Bu t how much earlier than the strike did the Mercantile Ba':lk ask for the guarantee of government? MR. PARSONS: I don't know the dating on it. MR.

SPIVAK: Well I wondE!r if you can confirm a'ld, you know, I think you will have to again obtain information, I find it sort of unusual at this point because I think the financial arrangements would be something that would be, you know, within the knowledge of the MDC at least ... MR. PARSONS: Well you're asking me for specific dates. MR. SPIVAK: Well I wonder if you can confirm that for some time the bank has been asking and requesting the government to guarantee the loan? MR. PARSONS: Before the strike you mean? MR. SPIVAK: Yes. , MR. PARSONS: If they were, I don't have knowledge of that.

They had pretty adequate security. MR. SPIVAK: Did the bank indicate that they were concerned about the account, that they were concerned about its financial viability, that they understood there were problem areas and that they wanted the security of the guarantee of the government. In other words did they not treat you at that stage like any other normal institution to which they had been loaning money? MR. PARSONS: Not before the strike to my knowled.?,"e. MR. SPIVAK: Was the bank aware that there was some difficulties in management? MR. PARSONS: Yes. MR.

SPIVAK: And they didn't at any time concern themselves or question or ask that there be additional security provided over and above whatever security had been provided by Flyer? MR. PARSONS: If they did it wasn't passed :m to me. MR. SPIVAK: It wasn't passed on to you? And you're saying that the only request, according to Mr. Green, that came through was a request during the strike for the guarantee of the government and the guarantee not coming they then called the loan. Is that what you're suggesting?

May 8, 1975 MR. CHA IRMAN : Mr. Parsons did not S'lggest ... MR. SPIVAK: But Mr. Green did and ... MR. CH AIRMAN: Mr. Spivak, Mr. Green indicated that and I don't sea the reasoning why you want it to be confirmed on the answers that were provided. 95 MR. SPIV AK: Well then I have to say to Mr. Parsons, is Mr. Green's statemeat then accurate as to what rea lly happened. And I'm not suggesting that he is necessa rily misl eading but h= may not have been seized of all the facts. MR. PARSONS: As far as I know it was . MR.

SPIVAK: So the only request was d.1ring the strike itself and they p·1lled the loan at that point ? MR. PARSONS: Yes. You're asking me questions that normally the men in charge of the finance of the company deal with. If they have a problem, and they might well run into a problem, then they would bring it back to the board of directors providing they can settle it or handle it, they would look after it. MR. SPIVAK: Are you sugge sting that the bank asked that the loan be called because of the strike or it was just called d:1ring the strike, MR. PARSONS: It was because of the strike.

And they also stated that whe!l the strike was over and we commenced p:roduction that they would reinstate the loan. MR. SPIVAK: So you'r e saying that the bank called the loan because of the strike ? MR. PARSONS: Yes. MR. SPIV AK: Ca n you give us the date that they called the loan ? Is there anything in writing that indicates it's because of the strike that we're c:1lling the loan ? MR. PARSONS: I will check the correspondence. MR. SPIVAK: And will you also, Mr.

Parsons, try to determine whether in fact there had been a request by the bank prior to the strike for a guarantee of the government , several requests. MR. PARSONS: Yes, I will inquir e. MR. SPIVAK: And would you then also determine or present the committee with the re sponse of Flyer at that time - or the response of the government - to the request for a guaran tee. MR. CHA IRMAN : It will be ap to the Minister. MR. SPIVAK: Well, Mr.

Chairman, my co'lcern at this p::>int is that there has been a representa tion with respect to ::me banking inst itution , the information of which I think is something that should accurately be placed in this commi ttee and docu me:1ted before we deal \Vith it further. MR. GREEN : I notice that Mr. Suivak is very solicitious as to what is said about a bank ing institutio'l and that everything has to be do�um ented and presented before the committe;::,. He is far less solicitious as to what is said about the institutio'ls which he and the rest of the public are owners of, that is the Flyer Co; lCh.

He has prese:1ted undocamented a'ld [alse in formation about these companies. I have indicated only the followin,?;: that the Mercantile Ba nk cut off the credit of the comp:my during a strike, a'ld that I asked Mr. Parso'ls whether this is usual in commer cial operatio'ls. He .said h2 thought it was very unu.'P.lal, that they usu ally support people during a strike. MR. SPIVAK: Mr. Chairman, on a point of order. On a p::>int of order, Mr. Chairman, so that we Ni ll be accurate. MR. CHA IRMAN : Mr. Snivak on a point of order. MR. GREEN : I don't wish to be inaccurate, go ahead. MR" SPIVAK: Mr.

Green just suggest ed that his un ders tanding was that it was because of the strike. MR. GREEN: Yes. MR. SPIVAK: Not during the strike . MR. GREEN : No. MR. SPIV AK: ... hut beca use o{ the strike. MR. GREEN: Because ::>f . . . My C['lestion was "during". I think it was Mr. Pars,Jns who said that it was "because of", and I respect his answer in that connectio'l. They certainly would loan us any money we want on the credit of the Government of Manitoba. No bank has to be a great hero to dJ that.

What I was indicating was that they cut off the line of credit during the strike and that we had to replace it ourselves. And as to whether that is or is not correct, let the Mercantile Bank speak [or thems elves. We're not here to protect the Mercantile Bank

I 96 (MR. GREE N cont'd) ..... and if Mr. Spivak is, May 8, 1975 let him get the information and give it to the public. MR. SPIVAK: Mro Chairman, my information is the opposite to what Mr. Green has said. MR. CH AIRMAN : But, Mr. S9ivak, I do not see the relevance of this question right now. MR. SPIVAK: Mr. Chairman, may I just on the point of order indicate the relevance is the question of the accuracy of the information that's give!'!. And I think this goes to the heart of the whole purpose of this committee.

Now we 're dea ling in a cont11oversia l and a complex subj ect with respect to this particular industry and the difficulty we have and we've had it this year, and I can go back to the Hansards of last year and the year before, is to, you !mow, at what point d::> we have to simply say we accept everything.

At what point have we a respons ibility to inv estigate to determine the accur acy of it, and at what point have w e a re sponsi bility to bring forward the questions that are relevant to determine the judgme!lts that are made with respect to the continual spending of public mo'leyo Now again in this, the Mercan tile Bank is a side iss ue but their name was brought in as a result of the questioning that took place and in order to try a'ld determine the accur acy of it as we have attempted to try and do it, and I may say, Mr. Chairman, and I say this to Mr.

Green because he may himself want to determine it, the accuracy, but the informatio'l supplied to me is not the informa tion that's been supplied to this committee. MR. GREEN: So Mr. Parsons has supplied information to the commi ttee, you have your own - you can take what you like. MR. CHAIRMAN : Mr. Minaker. MR. MINAKER: Mr. Chairman, through you to Mr. Parsons. My apologies for not noticing th e date of the Dayton Ohio order. When did you receive that? MR. PARSONS: I don't know, I'll have to get the actual date. MR. MINAKER: Mr. Chairma n, I wonder if Mr.

Parsons can advise when the bid for the order was placed. In other words, what month or what date last year did the ... ? MR. PARSONS: I will get that informa tion, I don 't have it at hand. MR. MINAKER: Well, Mr. Chairman, I would ... MR. CHAIRMAN : Were you asking for the bid or the tenders ? MR. MINAKER : The tender. Well the tender or the bid is the same thing. What date or time of the year was it ? I wonder if it would be fair to sugge st, Mr. Parsons, that it might have been somewhere around October 30th last year ? MR.

PARSONS: Yes, I said before it was either October or November but I d::>n't know the exact date. MR. MINAKER: I'm wondering, Mr. Chairma n , if I understa nd Mr. Parsans' answers that he gave at our last meeting on April 17th relating to oper ating costs or cost accounting, and I particularly refer to, I think, it was Page 68 of the minutes that Mr. Parsons indicated to questio'ls raised by myself with regards to cost accounting problem s, when it had beeil raised with the MDC board and if I u.. nderstood him correct ly, he said it came somew here in the order of Jun e or late spring of last year.

Is that correct ? When you were made aw are of the fact there were cost accounting problems at Flyer ? MR. PARSONS: Yes, it was in the spring. MR. MINAKER: Further to that I u.. nderstood him -h e U-'lswered a question that said with relation to outstanding acc ounts or committed orders that the company had. I asked, I said: "So that we 're committed to certain contracts where we know we will obviousl y not be covered. Is that correct ?" - referring to the fact that we will not cover the costs that are incurred to produce the vehicles. And Mr. Pa rsons' answer: "That's right.

" I'm wondering if the Dayton, Ohio, order is one of those particular contr acts. MR. PARSONS: No , we don 't believe so. MR. MINAKER : Mr. Chairman, I wonder if Mr. Parsons can re call last fall when the management were re signing right and left, I'm wondering if the bid was placed on October 30th or in thereabou ts, who was providing the policy and guidance for Flyer at that time ? MR. PARSONS: Mr. Wright and the Flyer board. MR. MINAKER: And the Flyer board. Because I am wondering, Mr. Chairma n, throu gh you to Mr.

Parsons, why the company would take on a potential new contract at a time when they were out on strike. It's our understanding that they were having difficulty in arriving at cost accounting and ;::>idding on equipment or bu ses, why the company would step out and bid on another contract at that time ?

�ay 8, 1975 97 �R. PARSONS: We felt that our process of mak ing up the bid was corre-�t and that we can meet that profi tal:Jly. �R. �INAKER: I'm wondering, �r. Chairman, through yo�t to �r. Pa rsans, our u.nder- standing is that the Canadian Indemnity provided the bid ·Jo"ld. Is that correct? �R. PARSONS: Yes, with the Province of �anitoba guarantee. �R. �IN AKER: Did they request the Province of �a.' titoba guarantee? �R. PARSONS: Yes. �R. �I NAKER: It might be a naive question to ask for that, but why did they req•.1est that? �R.

PARSONS : Because Flyer dJesn 't have a pasition. they felt was strong enough to sta"ld :m its own. Same thing with the Boston order and partially on the San Francisco order. �R. �IN AKER: At that time th3 c.ompany it was in management problems. (It would app2a r to be from the outside looking in) were on strike a.."ld with the answers that we now have received that they were having problems with cost accountin g, even with all of these prol:Jlems facing them, they felt it was important and in the best interests af the comp. :t"ly to pco�eed and try a"ld get this order? �R. CHAIR�AN: �r. Gree:-�. �R.

GREEN: I just want to l:Je on the list. �R. PARSONS: Yes, as an on going concern we had to look at this. �R. �INAKE R: And what was your backlog of orders at th.tt time in terms of bases? Was it not somewhere in the order of about 71 4 vehicles? �R. PARSONS: Ye .s. But this is for 1976- 77 delivery. It's well down the line. We think we have a good bid with the number of hours we put in, the escalatio '1 clauses and the price we were able to obtain. �R. �INAKER: �r.

Parsons, when you were giving answers with regard to delivery of City of Winnipeg buses is that the comp1.ete two orders that you were saying would be completed or is that the order that was back ordered I think in 1973 ? Is that both orders that the City of Winnipeg_ have nlace d wlti;l Flyer that will be .. . . . _? �R. PARSONS: I don't know. That was the a"lswer I got. I didVJ.'t check if it was both ord:;rs. I'll have to check that. �R. CHAIR �AN : �r. Green. �R. GREEN: �r.

ParsaVJ.s, other than being the Chairman of the �anitoba Developme;1t Corporation, I gather that you were the chief executive officer of your own corparation, Parsons Eq uipment? �R. PARSONS: It's not Pars ons Equipment, it 's Huggard Equipm e:-�t. �R. GREEN: Huggard Equipment, excuse me. �R. PARSONS : If we're going to advertise, we better get the ;1ame right. �R. GREE N: Yoa alsa have a certain knowledge of business administration that you have aG q•.lired through both your busi ness 8Xp.c;rie:nce and your professio:1al status as an accountant? �R. PARSONS: Ye.3. �R.

GREE N: And that there would exist on the board of directors p·30ple also who are exec ative officers of their own corpClrations and have had b..tsiness exp :Jrience ? �R. PARSONS: Yes. �R. GREE N: Do you know in the commercial world whether a comp:my that is havin,:s financial problems and may be in the process of a strike would st op bidding on ord 3rs two years hence bec..tuse of those features? �R. PARSONS: That's difficult to aVJ.swer ,b ut I would think that the directors would aave to look at their position a"Jd assess as to wh:Jther they're going to be ongoing.

If you pass up an order like we have just bid on, there is no way of going back. �R- GREE N: Is a strike a rea san to stop bidding on contracts two years hence? �R. PARSONS: No. Certainly not. �R. GREEN: Is a cost accou-:1ting prol:Jlem a reasan to stop bidding OVJ. . . . well I gather that your accounting is still n::>t . . . �R. PARSONS: No that's right. We did1't have -a s I said there nas :t breakdown in the C·JSt ac.::ounting process. It's not an impossible problem, it's a matter of time to re ctify it.

That doesn 't mea'1 that we dJVJ.'t know what the standard should b·e and if you 1mon what the stan dards are and add a percentage for variance 0'1. to that, you can arrive at a fairly accurate cost. �R. GREEN: I gather �otor Coach Industries was on strike a year ago. �R. PARSONS: Yes.

9 8 May 8, 1975 MR. GREEN: Are you of the opinion that they stopped seeking orders because they had a labour problem which I assume they expected would go away? MR . PARSONS: No, I wouldn' t think they would, no. MR. CH AIRMAN: Mr. Banman. MR . MINAKER: Well I wonder if I could finish, Mr. Speaker. MR. CHAIRMAN: I thought you were ... MR . MINAKER: Well he hopped in. MR. CHAIRMAN: No, you were finished. I'll put you on the list. Mr. Banman. MR. GREEN: Well if Mr. Minaker would get approval from Mr. Banman, I' m sure . but it is not the case that I interrupted him; he did indicate that he was finish ed.

If he wants to speak again, I' m sure we will all let him. But not on a false pretence. MR. MINAKER: I wonder if I might, Mr. Chairman, with the permissi on of Mr. Banman just ask a few questions prior to Mr. Banman asking. MR . CH AIRMAN: Mr . Banman do you agree? MR . BAN MAN: He' s got the floor. 1\ffi. MINAKER: Mr. Chairman, I wondenthrough you to Mr. Parsons, could I ask a question. If Flyer Industries had not got the guarantee of the government to guarantee the $6 75, 000 bid bond, would you have received the bid bond from Canadian Indemnity? MR . PARSONS: No, I doubt it. MR . MINAKER: Well, Mr.

Chairman, through you to Mr. Parsons. Is it not a fact that if a priv ate co mpany is operating and wished to bid on a particular project and they are unable to get a bid bond because they cannot get the banks or any other financial means to guarantee them, that they would not qualify. Is this correct? MR . PARSONS: That' s correct, yes. MR . MINAKER: Well would it not also be an indication that if it was a pri vate operating co mpany that it was in a very unhealthy state and probably incapable of procee ding wit h such a project ? MR. PARSONS: That could be the reason. MR . MINAKER: I would suggest, Mr.

Chairman, that it would be the main reason. That through analysis by business that this company was in dire straits and in the opinion of the busi ness com munity had not shown or had indicated that it was capable of commi tting and following through a con tract that it was propos ing to take on, and I suggest, Mr. Chairman, that the fact that the government was willin g to guarantee this bid bonci that it qualified your bid.

And I would sugge st that if the government which is staking its - I won' t say reputation but it has a stake in it like we all have - stepped out and made this decision so you could qualify and I sug gest, Mr. Parsons, that if this was a nor mal operating business type of operation that you would not have bid on that particular project because of the circumstances su rrounding - nothing to do wit h the strike neces sarily, it had obviously some com mitment to it - but I would suggest it also had, also involved in there was the fact that the management problem was existing or it appeared to exist. MR.

PARSONS: Yes. MR. MINAKER: And I would think if it was a normal operating co mpany that it would not have bid on that one. But the fact that it was able to get the guarantee from the government and it would appear that . . . MR. PARSONS: That was the only reason we were able to bid. MR.

MINAKER: ... the MDC would have gone outwards to other insurance indemnity besides the indemnity co mpany to try and get this bid bond and I presume that they had failed; so as a last resort they went to the government and the governmen t saw fit to utilize the funds in the particular loan, I believe it's for a spec ial municipal loan and gener al emergency funds. So I would suggest that if it had been a normal priv ate enterpr ise common business sense in the comm unity would have said, no don' t take on the bid at this time.

But for som e reason your particular corporation board decided to;and this is what I have difficulty in understanding, Mr. Chairman. MR. CHA IRMAN: Mr. Green. MR. GREEN: I don't know if that is a question or a debating point. The honourable member has indicated that in the business com munity they did not regard this as bein g a good venture to invest money in and Canadian Indemnity would not do so. I would suggest to you, Mr. Chairman, if the public of Manitoba had to depend on the busin ess comm unity to guarantee any

May 8, 1975 99 (MR. GREEN cont'

d) that. of its operations that we would not be able to exist. I agree with A MEMBER: Why? MR. GREEEN: Because the bus iness com munity does not want the pu blic to be competing with it. MR. SPIVAK: Maybe he doesn 't want the public to lose money. MR. GREEN: Well, no. The busin ess commu nity does not want the public to cause it to lose money. MR. SPIVAK: No, no. MR. GREEN: That is its prob lem. Now we are debating the question, now we are de bating the question, Mr. Speaker. I suggest to you that very shor tly, Mr.

Speaker, there will be underwriting, public underwriting companies who will underwrite this type of busin ess. MR . CHA illMAN: Mr. Ba nman. MR. BAN MAN: Thank you, Mr. Chairman. r d like to ask Mr. Parsons several ques tions with regards to Flyer and being in business myself - I' m not running a multi-million dollar busin ess like Flyer is but running a million dollar business, I have a bit of an idea of and a bit of business sense and I would question several things as so mebody that knows busine ss. Number One: We had an inventory prob lem.

That's why we haven't got the statement for 197 4 if I und erstand that corre ctly. MR . PARSONS: Yes . MR. BANMAN: We have prod uction prob lems. We had tendering and costin g problems. We've got tendering guarantee proble ms. We had a labour strike. We had management resign ing all over the place and I would just like to ask Mr. Parsons: actually this co mpany as it sits right now has to be totally rebuilt. Would he agree with me? MR. PARSONS: Not totally rebuilt. We've rebuilt a lot of it. MR. BANMAN: Well basically all you' ve got there is a physical facility. MR. PARSONS: We have quite a few people.

We have a full complement of management staff right now. MR. BAN MAN: But there' s a lot of new people involved, right? MR . PARSONS: Yes. MR. BAN MAN: So that you are sort of undertaking a complete rebuilding program really. MR. PARSONS: We did, yes. MR . BANMAN: With regards to the costing and tenderin g of contracts, was there sort of an understanding that because GM of course I would imagin e is your main co mpetitor with re gards to bus es ? In diesel units ? MR. PARSONS: Diesel units. These were not diesels we were bidding on, they were trolley. MR.

BAN MAN: What would you say your average contract that you got, how much lower were you per bus than your competitors ? MR. PARSONS: In the trolley, there isn 't any other. MR. BANMAN: No, no, on the diesel. MR. PARSONS: Well, we haven' t tendered on the diesels for quite some time but we were, oh, within five percent. MR . BANMAN: What would that be ? About $2, 000? MR . PARSONS: Yes, on the Toron to one . It was $1 , 500 on the Toro nto one, the differ ence between ourselves and GM . I believe. MR. CHA illMAN: Okay. Now that concludes the questions on ... No, there are more questions ? Mr. Spivak. MR.

SPIVAK: Mr. Parsons, last year your projections for the fiscal year which was the calendar year and the fiscal year for sales was estimated at $1 7 million. That' s what you pro jected or felt you could reach. From the information you' ve given us you' ve reached $5. 3 million, but the strike took place in October so that , in effect, the sales actually achieved - or the production achieved was really, in a nine- month period, was 5. 3 million. Is that correct? MR. PARSONS: Yes, produ ction. MR . SPIVAK: rm sorry, not sales, product ion. Production. Whatestimates of produc tion do you have for this year? MR.

PARSONS: Pll take that as notice. MR. SPIV AK: Mr. Chairm an, again the chairman indicates he' s goin g to take it as notice.

lOO May 8, 1975 (M R. SPIVAK cont 'd) ..... I would consid er that to be a question that could affect the com mercial viability of a company but the chairman will take it as notice and I suppose he'll con sider it. MR. PARSONS: Actually some of these questions that you' re asking, I think Mr. Green is right. If we indicated that we were totally filled up and unable to bid, such as these ques tions you' re asking, it affects the other people that are bidding. MR. SPIVAK: Well you' ve already indicated that you are unable to ... them until you know your optimum ... MR. PARSONS: That's right. Until we know.

That' s right. MR . SPIVAK: Bid ding and production are two different things. My point being that you have indicated . . . MR . PARSONS: As Pve told you, we' re shooting for two buses a day. Now we're get ting rolling. We'v e put out three or four a week the last three weeks. We get up to one a day and then we' ll go on the second line to introduce that, that's when we have to get more people. But we are build ing it up gradually. MR . SPIVAK: When do you expect that you will be at two buses a day? MR. PARSONS: Our

schedule shows in July. MR . SPIVAK: In July you should be at two buses a day. MR. GREEN: Because our

schedule shows in July. MR. PARSONS: This is what we're shooting for. If we can' t get another 100 employees, we' re not going to get to that either. MR. SPIVAK: Are you advertis ing for employees outside the provinc e? MR. PARSONS: Not to my knowledge unless Manpower are dofng it. MR. SPIVAK: Flyer is not soli citing or trying to solicit ... MR . PARSONS: No. MR . SPIVAK: . . . basically from the .auto industry area. Are you not attempting to try and get people in this way? MR . PARSONS: We haven't until this point because we 'd still be on a call back of our employees.

Until we get through our full call back of the old employees and find that they are not co ming back, then we don' t go outside that group. MR. SPIVAK: You indicated at the last meeting that the likely request from the govern- ment will be for about another million dollars for this fiscal year. MR. PARSONS: One million to two million, yes. MR. SPIV AK: A million to two million. MR . PARSONS: You asked me roughly. I said probably another million to two million. MR . SPIVAK: All Right. You' ve now made arrangements with another bank. You' re obviously not with the Mercantile now. MR.

PARSONS: I didn' t say that, no. MR. SPIVAK: Oh, do you have arrangements with another bank? MR. PARSONS: No. MR . GREEN: Manitoba Development Corporation. MR. SPIVAK: So the Development Corporation is es sentially financing . MR. GREEN: The friendly bank. MR . SPIVAK: ... is acting as a bank for the Flyer. MR. PARSONS: No, it isn 't . At the present time our account, our current accou nt is still with the Mercantile. MR. SPIV AK: Your current account is still with the 1\i)rcantile.

Then can I ask, will there be any additional financing required over and about the one million, two million for the financing of any rece ivables that Flyer may have as a result of delivery of some of the buses to your custom ers ? MR. PARSONS: As I said before there could be if we can' t get normal banking finan cing. Now that should be a normal industrial financial arrangement withou t any government guarantee or anything else. On the bas is of a rece ivable. in? MR. SPIVAK: And you' ll be financin g them with a bank at that time? MR. PARSONS: Yes. MR .

SPIV AK: Are you going to be financing with a bank that you now have your accou nt MR . PARSONS: Does that really affect the company busin ess?

May 8, 1975 MR. SPIVAK: No, it doesn' t affect the company busin ess. I question that the ... MR . PARSONS: I don' t expect that we will be. 101 MR. SPIV AK: All right. Well then the problem area that we have is the ability to be able to determine, you know, how much money will really be required now in terms of the estimates that have been made of a million or two million. Here again ... MR. PARSONS: You were asking me about input of extra working capital I believe at the time, and I said it could be a million to two million depending on your build-u p of your inven tories and depending on your product ion.

Once we start rollin g them out these inventories should reduce and we shouldn' t need more financing. But we might have to. MR. SPIVAK: Can I ask, the order of shells that have been delivered to AMG, have you been paid for them yet ? MR. PARSONS: Not in total. MR. SPIVAK: What percen tage of the account have you been paid? MR . PARSONS: I don' t know what the percentage is but there's roughly $300, 000 still outstanding. MR . SPIV AK: Has there been proble ms with difficulties in the shells, with parts that have not held up or portions of the buses that have had to be repaired? MR.

PARSONS: They have had problems but they haven' t indicated back to us that they are specifically on what we have built. MR. SPIVAK: Can I ask, when will your contract or your arrange ments with AM G termi- nate? MR . PARSONS: They're still in force. MR. SPIVAK: Yes, but when does it termin ate? You have a contractual arran gement with them. MR. PARSONS: It was a five-year contract; it was started in 197 3 so it would be 197 8. MR . SPIVAK: It's not 197 6 that it will. termin ate? MR . PARSONS: I'll take that as notice and check the actual dates. It was a five-year contract. MR .

SPIV AK: I wonder if you can indicate what the consequences of the termination of that contract will mean as far as Flyer and its projections and its operations. MR. PARSONS: You mean as ... MR . SPIV AK: What are the implications of the termin ation of that contract if it is termi- nated? MR . PARSONS: If AMG cancel the contract or the contract ... ? MR. SPIV AK: Just terminated. MR. PARSONS: I don' t think it would affect Flyer at this poin t. MR. SPIV AK: Either in competition or in its . . . MR.

PARSONS: We' re not in competition to AM G because the only buses that we are selling in the United States are trolley buses and the only buses they build are diesel and they don' t compete in the diesel market in Canada. MR . SPIVAK: I wonder if you can indicate, although I know you haven' t the statement, you probably have some general idea of what the inventory position was at the end of December 31, 19 74. MR. PARSONS: No I don' t. This is what the auditors are still working on. MR. SPIVAK: You still don' t know what that inventory wa s? MR . PARSONS: No . MR .

SPIV AK: But you would believe it to be substantial. MR. PARSONS: Yes, we know it' s substantial. MR . SPIVAK: I wonder if you can indi cate what has been done to organize the engineering department, personnel department to provide that the company will be put on a more solid bas is. MR. CHAIRMAN: Mr. Evans, on a point of order. MR. EVANS: Mr. Chairman, on a point of order. These types of questions are out of order. They are dealing with the day-to-day current admini stration of the company.

Surely we have to be concerned with whether or not the company makes a profit or loss at the end of this period and the legislation does refer to the discu ssi on, the discussion of the latest audited annual statement of the co mpany and we' ve gone away beyond that and again I say these que s tions, while they may be of interest to the honourable members, we must be concerned with the overall general inte rest and that is the fact that we've got to maintain a company which has to

102 May 8, 19 75 (MR. EVANS co nt' d) . . . . . compete with other manufacturers in North America and we should not put the Chairman of the Corporation in a position of having to pass out information which will be gleefully used by its competitors. MR. SPIV AK: Well, Mr.

Chairman, one of the proble ms, I think it's acknow ledged and I don' t think that there is any secret and it' s been acknowledged not only in this commi ttee but elsewhere, that there have been problems at Flyer and there have been proble ms with manage ment and there's been problems on production - - (Interjection) -- there are problems like in Chrysler Corporation but unfortunately . . . MR . EVANS: All the lay-offs. MR. SPIVAK: Well I think probably fortunately Mr. Evans and Mr. Green are not run ning Chrysler. MR . EVANS: But we don't have 40 percent unemployed. MR. SPIVAK: Mr.

Chairman, my concern would be to determine - and again reference has been made to the Stevenson -Kellog Report - one of the, I think, ser ious concerns ... MR . CHAI RMAN: Reference was made . MR . SPIV AK: By me . . . MR . CHAIRMAN: Right. MR. SPIV AK: . . . to the Stevenson- Kellogg Report. One of the serio us observations was that the policy- making function of the board of directors nee.ded clarification. The board tends to be drawn into discussions of details and the staffing operations that it should not have to face. MR. GREEN: Ho, ho, ho. MR . SPIVAK: Now, Mr. Chairman . MR .

GREEN: The board is discussing details. What about the legislative commi ttee? What does Stevenson-Kellogg say about the legislative comm ittee? MR. SPIVAK: Well I don' t think we paid them to give a report, and the interesting thing would be to determine what we paid to find out that the board was involved in the details. My point at this stage is because there have been problems of production, there have been proble ms in engineering, there have been problems in personnel, there have been prob lems in marketing; there have been problems in pricin g ... MR. CHAIRMAN: Mr.

Spivak, we've gone over these questions and would you proceed wit h the questions. MR. SPIVAK: No, but, Mr. Chairman, very straightforwardly to the Chairman we have gone over all of these problem areas. I want to know at this stage whether he is satisfied that his engineerin g department is adequate to meet the requirements now; whether he' s satisfied that the product ion - he' s indicated that there is a need for additional people in pro duction and I accept that - he has indicated at this poin t that they haven' t achieved optimum prod uction.

But I want to understand whether his costin g is correct, whether he knows what the likely loss will be, whether he has any idea of what will take place in the next six or seven month period assum ing he reaches the two buses per day that he hopefully suggests will be projected and will be reached.

I want to have some understanding at this point that he, as Chairman,to the members of the Legi slature and the people of Manitoba is saying that he is now satisfied that all of these proble ms are going to be settled in a way that the public will not be called upon to conti nually finance what obviously was a very difficult, complex and apparently mis managed position with respect to the company. MR. GREEN: Well, Mr. Chairman, you see it's the tenor of the questions that bothers me. lf Mr. Parsons answers that I am satisfied that all of these things are now looked after, Mr.

Spivak will accuse him of lying when some problem ar ises. lf he answers that r m not satisfied, then Mr. Spi vak will say you' re obviously running an inefficient operation. All that the members of the Legislature can hope to do is to understand that the Corpora tion is making themselves apprised of the questions and are working towards dealing with them. As to the state of where they are now that is a question which any comm ercial corporation would regard as classified and that is why I object to the questions. The honou rable member says we want to know that these problems have been rectified. lf Mr.

Parsons says they have been, then Mr. Spivak will pull out a document which says that last week a guy spent 30 minutes on his coffee time when he should have spent 15 minutes and therefore they have not been rectified. lf Mr. Parsons says they have not been rectified, then Mr. Spivak will say why are you selling bu ses? I think that all that the chairman can do and as Mr. Spivak well knows, is to indicate

May 8, 1975 103 ((MR. GREEN cont'd} .. ... that they are trying to find out what their problems are and they are working towards their solution and that they are making their best effort. And as to just what state they are in that is something which any commercial inst itution would be wanting to regard as their internal problems. MR. SPIVAK: Well, Mr. Chairman, my problem at this point with Mr. Green is that ess entially what he is saying is that Mr. Parsons should come here and make his presentation and we then should accept it, listen to it and ask a few questions, go away.

Next year he comet) , makes another presentation and there's no point at which we can say to Mr. Parsons, you know maybe your first presentation to us was pretty inaccurate and why? Now, as an example, if I go back to the Hansards of May lO th, 197 3, the projections made by Mr. McDonald in answer to certain qu estions was that there would be a million dollars profit in Flyer in 197 4. Now obviously we didn' t achieve that. We don't know what our loss is at this point but we obviously didn' t achieve it and there obviously were problems in 197 4.

There were serious problems that warranted a consultant being hired to try and suggest to the company changes that should take place. MR. CH AIRMAN: Mr. Spivak, I do not believe that the line of questio ning that you're rais ing ... MR. SPIV AK: Mr. Chair man, r m on the point of order. There's no line of questionin g at this point, r m now trying to deal with what Mr. Green has dealt with and I think r m entitled to do that. I am simply saying to you, you know, we have to seriously examine the whole pur pose of this com mittee. If the purpose of the comm ittee is , as Mr. Green sugge sts, for Mr.

Parsons to come here and for him to simply offer to the best of his ability at that time particu lar questions, particular statements and we then have no authority to examine, to cross-examln� , to ask for detail, to become concerned with respect to a comm itment or to at least - not to a comm itment, to a projection - then there is no point in this committee at all. Because then we must simply say that it would be just as well for Mr. Green to present a statement from Mr.

Parsons, this is what we intend to do; whether we achieve it or not doesn' t really make any difference because next year we' re going to tell you what we' re going to do; then next year we' re going to tell you what we' re going to do and then all the comm ittee has to do is listen to that. Now that's not the purpose as I understand it of this committee.

And I think that at this stage with the kinds of investment that are being made with really I think the confusion that has taken place between the expectat ion of what will happen because of information that's been supplied and the reality of what's happening, both in Flyer and a number of others' activities, commer cial activities in which the government is involved, that you know we'd better get it straight as to how we' re going to operate here. Mr. Green has been concerned about industrial sabotage. I may say to Mr.

Green that the report that I have comes from people who are seriously concerned and I say this, seriously concerned at the attempt on the part of the government and the Manitoba Development Corpora tion to mislead the public and to allow them to continue with incompetence and mis management and to drain the public purse. And that is the reason, Mr. Chairman. MR. CHAI RMAN: Mr. Green, on a point of order. MR. GREEN: Mr. Chair man, la m on a point of privilege. Mr. Chairman, there has been no ind ication that anybody has given false, misleading information to this comm ittee except that given by Mr. Spivak. MR.

SPIVAK: Mr. Chair man, on a point of privilege. On the point of privilege. MR. GREEN: I am now on a point of privilege. I am now on a point of privilege. MR. CH AIRMAN: Mr. Green, is on a point of privilege. MR. GREEN: I am now on a point of privilege. The honourable member says that the government and the chairman have been giving misleading information to this comm ittee. I suggest to you that the only person who has given misleading false information to the Comm ittee is the Member for River H;ights.

That a projection last year that one w_ill make a million dollars is not misleading information unless one produces a projection to the Fund which shows that that was not their projection. Mr. Parsons has come here and given his best information. I do not say . .. I say on my own part, Mr. Speaker, that I have not given false information, I have given the information which I knew t o be the case, believe d to be the case. The suggestion that Mr. Spivak makes that the Comm ittee is useless if he cannot cross -examine and examine, I would say that that is correct.

Nobody is suggesting that he cannot cross-examine and examine. He can get the information that last year this company projected a profit of a million dollars,

10 4 May 8, 1975 (MR. GREE N (con t'd) ..... this year it's showing a loss of three million dollars and there fore show that the proj ections were not correct. He can contin ue to elicit what the Development Corporation is doing, the loans that they are making, whether these are wise or unwise . He can then use that in debate to show the public that in his opinion we are not doing the right things.

But whe n he gets down to the detailed information of the company and how it is operating today and what are its production quotas for next week then I say he is dealing with comm erc ial in- formation which in any organization would be regarded as classified. The people that he got that information from who he says are si ncere people are saboteurs and he knows it. MR. SPNAK: Mr. Chairman, on a point of privilege. MR. CH AIRMAN: Mr. Spivak, on the point of privilege. MR . SPNAK: Mr. Green has gi ven false and misleading information with respec t to Mercantile Bank.

He has given false and misleading information wit h respect to the calling of the loan that is completely inaccurate and the information he has given has been false. The in formation furnished by . . . MR. GREEN: That is not true. That is not true. Where has that information shown to be false ? Where has the information shown to be false ? MR. SPIVAK: Mr. Chairman, Pm on the poin t of privilege. MR. CHAI RMAN: Mr. Spivak. MR. SPN AK: Mr . Chairman, all one has to do is check with the Mercantile Bank and they will find that the information that Mr. Green has gi ven is false and misleading.

The in formation that I furnished was furnished from a Stevenson- Kellogg Report commissi oned by the governme nt, forwarded to Mr. Parsons. If that's inaccurate then I suggest that the matter of inaccuracy is som ething that should be questioned with the cons ultants and that's why r ve que s tioned Mr. Parsons to determine how much money has been paid to the consultants who provided information to them which was inaccurate. But there's much more to the Stevenson-Kellogg Report, much more than just that one particular item. While Mr. Green may want to focus on the one item, I say to Mr .... MR.

GREE�;: It's you who focused on the ... MR. SPNAK: . . . I say to Mr. Parsons and I say to him again: how much of the in formation that Stevenson-Kellogg has furnished to him is ac curate? An d if it is accurate how does the governm ent or how does the board of MDC reorganize itself to be able to deal with the problem areas. MR. GREEN: That is internal. MR. CHAIRMAN: Mr. Parsons. MR. PARSONS: r d like to answer this question on Stevenson-Kellogg as Mr. Spi vak has accused .. . MR. GREEN: Mr. Chairman, on a poin t of privilege ... MR. CHAI RMAN: Order please. MR. GREEN: Mr.

Spivak has accused me of givin g false and misleading infor mation. The information that I had regarding Mercantile Bank was information that was given to me by Mr. Parsons. That information was confi rmed by Mr. Parsons. TheMercantile Bank has sin ce sent a letter to the Premie r indicating that they were prepared to back the governmen t - and I don' t re member the exact letter - back the Fund if the governmen t guaranteed their loan which means that they took no risk at all. I indicated that the loan was called during a strike and that it was my understanding that that is not usually done.

I want to know how that is false informatiorL That is the only information I gave. MR. SPNAK: Mr. Chairman, Mr. Gr een admitted before that it was because of the strike. MR. GREEN: No. I never ever said "bec ause of the strike". You will rwtfind that any where in my re marks. It was Mr. Parsons who said "because of the strike". I believe him and I would believe him more than the Mercantile Bank. But it was not my information that it was "because of the strike" . MR . SPNAK: Mr. Chairman, on the point of order. I believe the Stevenson -Kellogg Report. MR . CH AIRMAN: Well, Mr.

Spivak, the Stevenson -Kellogg Report has been bandied about. I think Mr. Parsons has a letter from the firm and I feel that we should have some clarification on the matter. Would Mr. Parsons please read the letter to the com mittee.

May 8, 1975 105 MR PARSONS: All right. Just on a matter of clarification on the Stevenson-Kellogg Report . This letter is writte n by Mr. Tan G. King who is the Vice Pres ident of Stevenson - Kellogg and he was present at the time that this report was made to us. This letter is to me. "D ear Mr. Parsons : We understand that a statement regarding Flyer Industries' San Francisco contract containe d in an interim report we presented to you a year ago is causing some question and diffi culty. We fu rther understand that subse quent events showed the state ment as it was presented to be inaccurate.

We would like to establish on record the background and intent of this state ment and other com ments made by us in our interim report. "O ur interim report was just that, an interim report. It was not intended to present any in-depth conclusions or recomm endations. Rather it contained frank statements between con sultant and client designed to provoke question, discussion and action. It was presen ted in person at a meeting in Winnipeg attended by the consu lting group and the company of ficers.

Your instructions to us called for frankne ss and in a report of this type we would not go to great pains to check the accuracy of an item of record that could be readily corrected during our meeting if this were required. "The speci fic ite m concerning the San Francisco contract was apparently in terpreted as a 90 percent holdback rather than full payment for buses accepted up to a 90 percent completion of the order. It was a statemen t we received from some source in Flyer and was included in the report for verifica tion , discussion or denial as necessar y. " 1\ffi, GREEN: Same sources he' s got. MR .

PARSONS: "It was designed to show our concern with the problem of cash flow that Flyer would face. However the persons to whom the report was presented were in the best posi tion to know the actual terms of the contract and while the statement may have been cor rected at the meeting, under the circumstan ces a correcte d versi on was neither prepared nor required. "In a final report or one in any way intended for third party presentation or review, a state ment such as this would have been checked in draft with the Flyer of ficials before being placed on the record.

We trust these com ments may help you to show our position and we apologize for any embarrass ment which we may have caused you. Sincerely, Ian G. King, Vice President. " The report that you have was not for publication. It was an interim report that they made up in discussion with Flyer and they had not checked any of the accuracies of the statements in it. They hadn't been on the job very long. We had asked them to go in and do a cursory examin ation. MR. SPlV AK: Is it not a fact that they had been on the job for at least a period of a month to six weeks? MR . PARSONS: I don't know, Pll have to ... MR .

GREEN: Mr. Chairman, on the point of order, Mr. Chairman. Whether they had been on the job for ten years, the state ment that you read was inaccurate. They have admitted that it was inaccurate. They have also tried to ration alize the inaccuracy but it is inaccurate . There is no doubt about that and they say so. MR. SPlVAK: Mr. Parsons, the state ments with reference to the penalty clauses in the San Francisco contract, are they inac curate. MR . PARSONS: I don't think they made any statements on the penalty clause. MR . SPlVAK: Yes they did. Unfortuna tely I haven' t them in front of me. MR.

GRE EN: Well you' d have to check that then. MR . PARSONS: We'l l have to check with the report then because I checked the state ment that you made last time. MR . SPlV AK: Can you indicate what the penalty clauses are with respect to the San Francisco . . . ? MR . PARSONS: They're $20. 00 a day per bus. MR . GREEN: He indicated that at last meeting. Mr. Chair man, again a report and an analysis and an ass istant to management which is prepared for the internal operation of a company would have exactly that opposite effe ct if it is a publicly discussed report. That is the rule that Mr.

Spivak would apply to the operations of the International Inn. That is the rule that would apply to the operation of any comm ercial institu tion . MR. SPlV AK: Including Schreyer Equipmen t.

106 May 8, 1975 MR . GREEN: . . . and Schreyer Equipment. That is right. That is the rule that would apply to any of these firms. I don't know why - well I guess I do know why - he is atte mpting to not have it apply to a corporation which we, the public, want to succeed but which he wants to fail. MR. SPIVAK: Mr. Chairman, you know there' s a constant reference, and I do this on a point of privilege, by Mr. Green as to the question that we want the enterprise to fail. MR . GREEN: You sure do. MR . SPIVAK: Mr.

Chairman, one of the problems that we've wanted right from the very beginning from the government was to deal with a degree of accuracy on the whole range of public enterprise that they were prepared to undertake. Whether, Mr. Chairman, we talk about King Choy or whethe r we talk about Saunders, whether we talk about Flyer, we are con stantly met in a court room setting by the attempts on the part of Mr. Green really to mini mize the amount of public information that will be given so that judgments could be made on how and in what way the government has handled the mselves.

We have tre mendous sums of money in a number of enterprises, and this one which is far greater than anything that was ever projected within this com mittee, far greater than anything ever forecast by the Chair man and by the othe rs who have appeared here which would indicate at all the kind of commit ment that has been undertaken and the possibilities of greater commitments of money. We now have commitments with penalty clauses and with the government financing and funding the bonding of the various comm itments and there are contingencies and obligations which in fact effect the public purse.

And you know we have a responsibility to try and deter mine the information. Now the difficulty that we have is that we do not have the information available to us. We have to rely on the information presented and we have eithe r one of two alternatives. We either accept what is said and that' s all or we try to obtain information to try to dete rmine what took place.

You know the course of conduct of the government and of the Fund with re spect to the locking out of the workers in Octobe r, with the realization of the management problems and the production problems that occurred, you know, puts into question very seri ously the whole maneuvering that took place during that period of time and the actions of the government and the real fairness of the negotiations that took place with the workers. That' s another is sue and it' s not for this committee but it' s for the House.

But we have to de termine in order to understand what has taken place, you know, information with some degree of ac curacy. Now Stevenson-Kellogg made a mistake and it' s their mistake, not my mistake. If they made a mistake, you know, then I guess the whole question of the accuracy of their report comes into question.

If. on the othe r hand.the management was of the opinion that that mistake having been made and corrected as a result of the meetings that took place, they still proceeded with stevenson-Kellogg and I believe they have, I think they are still continuing on with the government, with the MDC and with Flyer, if that' s the case then the question of the other areas that they covered become very important. And then we come back to the same basic question.

How are we to obtain accurately the kinds of forecasts which will give us the proper indication of how much public money is going to be invested so that we can make the determination that we, in the interests of the public, we say to the government, you know, that there' s no point in continuing.

Now if in the course of questioning, trying to obtain information, interviewing people which is what the opposition has to do, we obtain information which provides us with facts and data and sugges tions that part of what is being represented is not accurate, then we have an obligation to try in this committee to obtain the accurate information or to at least determine to our own satis- faction the information that' s being suggested is not correct.

Because if we do not do that then there is absolutely no protection for the public of the continual writing of the cheques on their account by the government because the position then that Mr. Green is saying is that every four years the public will have a right to vote but during that period of time the govern ment will have a right to simply put more and more and more money in without any account ability.

And 1' m saying to you - and I've said this before - that there is a neces sity for a manage ment audit to be presented on Crown enterprises for consideration by this comm ittee; I do not believe that the Chairman should be put into the position that he' s had to be put in. But on the other hand one has to look at the track record of Saunders and Flyer to recognize that

May 8, 1975 10 7 (MR. SPNAK cont'd) ..... unless we maintain the kind of vigilance that we have, and un less we do the things that are required and unless we basically bring to the public attention the information that' s given, we are not going to be in a posi tion to make any kind of assess ment because all we're getting is expectations of optim ism , and expectations of opti mism are not the way in which to judge public enterprises nor are they a way to judge the basis on whether the government should continue spending public money or not. Now to that extent that' s all we can do . . . MR. CH AffiMAN: Mr.

Spivak, you were speaking on a point of privilege. MR. SPN AK: Yes, I am speaking on a point of privilege. 1' m speaking on the point of privilege. So that the fact is that in all that has happened we have tried to fur nish as much information as we can and we' ve tried to get and elicit as much inf ormation as we can from the chairman, and I think there is an obligation on his part and on the government' s part to present as accurately as he can the info rmation.

But at the same time, I have to say that there has been too much of opti mism in the expectations that have been pres ented which have not been justified by the results and warrant, I believe, a very serious cons ideration, serious consid eration by this com mitte e and by the Legis lature as to the continuation . MR, CHAffiM AN: Mr. Spivak ... MR. GREEN: lVIr. Chair man, how long are we going to let ... MR. CHAIRMAN: I don' t know. You' re speaking on privilege and you' re speaking on an opinion.

So it was very dif ficult to deter mine where you were talking on privilege and I don't know what privilege you were trying to bring out but you are expressin g a point of view, an opinion, a personal opinion. Mr. Green. MR. GREEN: lVIr. Chairman, I believe that I have answered what has been said on four or five occas ions but I would like the committee to continue with its work. 1' d like ques tions to be asked, those that can be answered, answered; those that are not answered, not answered.

And I will go to the people, and the Me mber for River Heights will go to the people and see whether they have decided that the government has done the right thing vis-a-vis the Development Corporation or not. He is entitled to ask questions and the chairman is entitled to regard them as acceptable or not acceptable. MR. C HAffiMAN : Let us proceed. Questions on Flyer Industries. Are there any more questions on Flyer Industries Ltd? Specific que stio ns. Mr. Spivak. MR. SPN AK: Mr. Chairman, I wonder , Mr.

Parsons, if you can indicate whether there is any projections being made at this time of an expectation that the penalty clause will operate with respect to the San Francisco order? MR, PARSONS: No, our projections right now show that we will meet the delivery dates. MR. SPIV AK: Is there a provision in the contract that allows an extension of the period of time for the delivery as _a result of the strike ? MR, PARSONS: Yes we have that, 142 days. MR. SPNAK: The provision in the contract provides for 142 days ? MR.

PARSONS: That was the length of our strike and we already have that confirmed by San Francisco to us. MR. SPIVAK: They have confirmed that ? But was there any provision initially in the contract it self? MR. PARSONS: Yes, there was a ... clause. MR. SPIVAK: And they have now accepted a delivery date of 142 days late? MR. PARSONS: Delay. Right. MR. SPIVAK: Is that from the beginning of the delivery or is that for the co mpletion of the delivery? MR. PARSONS: Well either way you take it, it' s 142 days longer. MR.

SPN AK: Well I know but I think it makes a diff erence to your financing with re spect to what you' re saying . Is it a que stion of 142 days from the point of view of the first delivery or 142 days from the ... ? MR. PARSONS: We can take it whichever way. If we can deliver on time, that' s fine , we don't have to ... But we do have that 142 days before a penalty clause would come in. MR. SPIVAK: Mr. Minaker indicat ed - and I only missed part of the questi on - indi cated that the government had to guarantee I gue ss Canadian Indemnity with respect to the contract. Is that right ? MR.

PARSONS: The San Francisco?

108 May 8, 1975 MR . SPNAK: Yes. MR . PARSONS: Partly. It was a 25 percent guarantee on the San Francisco. MR . GREEN: ... 75 percent, they think we're terrific. MR. SPN AK: No, no. I understand the bonding company is liable for the 100 percent. The bonding is only for 25 percent which the government has guaranteed, some seven or eight million dollars, if I'm correct. Is that right ? MR . PARSO�S: On the San Francisco order, yes. MR . SPN AK: Have Canadian Indemnity taken the full contract or has it been taken as well by an American insurance firm? MR .

PARSONS: Well, Canadian Indemnity as far as we're concerned ... MR . SPN AK: They' re the prime bond hold ers .. MR . PARSONS: Yes. They wouldn' t ho ld it all the mselves, I wouldn' t imagine, but that is up to them. MR. SPN AK: Okay. When is it likely that you' ll have the auditors' report. I know Mr ... MR. CHAffiMAN: Well, it' s already been answered, in about three weeks, approximately. MR . PARSONS: They wonvt even give us a firm date. It's depending on the inv entory. But they hope three or four weeks. MR.

SPN AK: May I ask then, how have you been satisfied then on your cash flow if you haven1t the auditors' report that you' re going to be in a position to maintain the situation with respect to a millio n or two million dollars? MR . PARSONS: We have our cash flow projected. That has nothing to do with the audito rs. MR . SPN AK: But it certainly must be based on an inventory. MR. PARSONS: Well, we know what' s co ming in, yes, and our output ... MR . SPN AK: My understanding of the information that you presented was that the inven tory was at a fairly high level. MR. PARSONS: Yes. MR .

SPN AK: And that was indicate d in the Stevenson-Kellogg Report. And that in turn you' re going to be winding down the inventory and utilizing it in your manufacturing and the re fore your cash flow is projected on your labour plus your requirements for inventory ? MR. PARSONS: Yes. MR . SPNAK: I am suggesting to you that if you know what your cash flow requirements are going to be, you would now have to know, have a pretty good idea of what your inventory is over all. MR. PARSONS: Overall we do. The auditors are going through and checking all the co st ing and there' s thousands of ite ms for the m to check.

MR. SPNAK: Well would you say that your inventory is double what it was at the end of 1973? -- (Interjection) -- Well, Mr. Chairman, I can almost anticipate Mr. Green. I am not trying to do anything which will cause embarrassment to the co mpany. What I am trying to do is to determine the likely cash flow requirements and the requirements of public money. MR. GREEN: Mr. Chairman, that' s not my problem. My problem is that Mr. Spivak has in the past used the answers solicited on this kind of question to show that there has been a lie told or a suggested lie. Mr.

Parsons has indicated he doesn' t know and if he will bring back specific information then Mr. Spivak will not have in Hansard an answer which says, on May 7th you gave te stimony that there was double the amount of inventory, now you are telling us that there was two-thir ds. You were so far out. Mr. Parsons has indicated that he will look into that. I' m not sure that he is required to give the information but he has indicated he will look into it. MR . SPNAK: But la m suggesting, Mr. Chairman, that Mr. Parsons has to have some idea in a general way . . . MR. GREEN : Yes, but he doesn' t want to give it to you.

MR, SPN AK: And l' m saying at this point that the great concern I think that we have on this side is the requirements for public moneys to both financ e and to be placed as capital in vestm ent in the project. My concern at this point is that the only way in which it appears that you can avoid the additional capital investmen t would be that the inventory is an extremely high figure and that it will be utilized in the manufacturing of the buses to be co mpleted and fabricated. And so therefore I' m again saying to Mr.

Parsons , I think it' s relevant to know whethe r we' re talking about an inventory double or whether it' s just one and a half times what it was. MR. CHAffiMAN: Mr. Parsons did indicate that he will endeavour to find out. Mr. McGill.

May 8, 1975 109 MR . McGILL: Mr. Chairman, the receipt of the Annual Statemen t for Flyer Industries will not be possible for two or three weeks. I wonder . . . MR. CHAlliMAN: Three, four weeks approximately. MR. McGILL: I wonder if we should perhaps leave this item open so that we can return to it when the state ment has been received. MR . GREEN: It will come in next year. We may not meet after three or four weeks. MR. McGILL: Well assuming that the com mittee meets again ... MR. PARSONS: If the committee meets again, we'll br ing it in as soon as possible. MR.

McGILL: I would anticipate that the committee will be meeting again this year. MR. GREEN: Oh, yes, again but after three or four weeks? MR . CHAIRMAN: Well what we're dealing with is the fiscal year ending - Equity Invest- ment Account Information Report - 197 4. MR. PARSONS: We don't have the Dece mber 31st, 197 4 statemen t. MR. McGILL: That' s right. MR . PARSONS: If we have it before the next meeting, then I will table it. MR . McGILL: Fine. MR . PARSONS: I don't know whethe r I will have it. The auditors say it will probably be three or four weeks. That' s the best I can give you. MR.

McGILL: I presume that the committee agrees that we can return to the statement when the report is received. MR. PARSONS: We did this before with other ones. MR. CHAIRMAN: Agreed? (Agreed) Okay, then we can proceed to the next one. Leaf Rapids Development Corporation. MR . GREEN: I believe, Mr. Chairman, I am not certain but I believe that I had the Chairman of Leaf Rapids. MR . PARSONS: Yes, I was just going to state that. MR . GREEN: I will bring the Chairman. MR . PARSONS: The Leaf Rapids Development Corporation is under

Part IT of the Act. Last year we had . . . MR . GREEN: I will bring the Chairman of Leaf Rapids to deal with it. MR. CHAffiMAN: Okay. So we can go on to the next one. Macey Foods Ltd. MR. PARSONS: Yes. We have the up-to-date statement on Macey Foods to the 31s t of January, 1975. MDC owns 51 percent of the shares of Macey Foods. I don't think I need to run through the information sheet that we gave you with it. It outlines our share position in the operations. I could say that the company is operating well. It' s in Brandon as you may know.

We do employ 50 to 60 native people in the plant and they are working very well. This operation I think is being well run and it' s profitable. Macey Foods, incidentally, is in the duck processi ng industry and in the peak of our se ason we process about 7, 000 ducks a week. Right now we're down to about 5, 000 because of market conditions. We don't anticipate any great expansion of that during this next year although during 197 6 we will probably increase the production by about 20 percent. Are there any questions on Macey? MR. CHAIRMAN: Any questions ? Mr. McGill. MR . McGILL: Mr.

Chairman, Macey Foods is one of the operations which has proceeded from its inception without too many problems. Are they anticipating any problems with the mar ket for their product now? Is it maintaining its levels in the past year? MR. PARSONS: Yes. This year has been good. It' s dropped down slightly now because of some - well there' s some over-production in the poultry area but the frozen duck market has held up fairly well. We don't anticipate too much of a drop and we should meet at least last year's production through to January, 197 6. MR .

McGILL: So the company is not conte mplating any expansion but you expect that it will maintain its current levels of production ? MR. PARSONS: That' s correct, yes. The management are fairly confident that they can meet during 1975 the same as they did in 197 4, so there won't be any basic cutback. So it' s slightly lower now. MR. CHAlliMAN: That completes Macey Foods Ltd. Misawa Homes of Canada Ltd. MR . PARSONS: I don't have any report on Misawa. MR. CHA lliMAN: You don't have any report at this stage? Morden Fine Foods. MR. SPIVAK: Well then I assume we're going to get back to Misawa.

110 May 8, 1975 MR . PARSONS: 1f we have a report ready, yes. MR " CHAIRMAN: 1f the report is ready, we will be co ming back to Misawa. MR . McGILL: I was just wondering if Mr. Parsons could bring us up-to-date on Misawa and give us a general overview of the progress or otherwise of the company since the last meEt ing in antic ipation of at the next meeting having their financial state ments. MR. CHAIRMAN: Well I think we might as wellleave it until the next time when he has the report. MR .

GREEN: Let me indicate that there are uncompleted matters as between Misawa (Japan) Ltd. and the Manitoba Development Corporation which Misawa (Japan) Ltd. does not wish to have discussed until these things are completed. The amount of money that has been advanced - those things are on the record but there are uncompleted matters as between the two agencies that were involved and that in particular we have been requested and it was - they were entitled to make the request and we - these things have to be completed before the new situation as it is being envisioned, will be reported on. MR. CHAIRMAN: Mr. McGill.

MR . McGILL: Have there been any changes in the Board of Directors of Misawa Homes since our last review of this operation, in the executive officers or board of directors? MR . PARSONS: Yes, there has been some changes. MR . CHAIRMAN: I think we can leave this and have it when it comes back at the next meeting when the reports are available. It would be more meaningful to discuss it at that time rather than have . . . MR. GREEN: Mr. Chairman, I don't want to either withhold information that should be given or give information that should not be given.

I am telling you that on behalf of the govern ment that the board of the MDC has not entirely finalized an arrangement with Misawa Homes Ltd. which Misawa has particularly requested not be discussed until it is finalized. But the amount of money that has been advanced is on the record between the last meeting and this meeting. The security position has been indicate d so that that information is available to the public. I think that we have some $2, 500, 000 approximately in Misawa Homes Ltd. That' s sort of off memory. I might not be exactly right. MR . CHAIRMAN: Can we proceed to Morden Fine Foods Ltd. Mr.

McGill. MR . McGILL: Mr. Chairman, I assume there' s no point really in proceeding with Misawa Homes unless we are able to discuss matters that Mr. Green considers are at the moment some what sensi tive. So if we can be assured that the opportunity will be given to the com mittee within the meetings of the current sess ion then we' d be prepared to . . . MR. GREEN: Well, Mr. Chairman, when anything is finalized we will then also be some what limited by the fact that Misawa Homes will be discussed in light of its position at that time. At that time the position may be different than it is at this moment. MR.

CHAIRMAN: We can proceed to Morden Fine Foods Ltd. MR. PARSONS: Morden Fine Foods. Well the most recent state ment we have is the 31 st of March, 197 4. We have completed another year-end and we have tried to bring - I will discuss our last year's operations. Well this company is 100 percent owned by the Manitoba Development Corporation. The statement that you have before you now is really our second full year of - or third full year of operations. You can see the sales have increased. We had projected roughly 1. 5 million, we made 1. 434 million.

We did have a loss in the operations but that was after full allowance for amortization and organizational write-off $3 0, 000 and de preciation of about $35, 000. So actually even for our year ended the 31s t of March, 197 4, our cash flow maintained the operation. To bring you up-to-date, our sales are slightly larger for the 31st of March, 197 5. It looks before the audit is completed - so don't hold me to this figure - that we will probably make a profit of around $60, 000. MR . CHAIRMAN: Mr. McGill. MR . McGILL: Mr.

Chairman, this is one of the 100 percent-owned Crown corporations that the audit function is provided by the Provincial Auditor. There is no charge to the com- pany for that service ? MR . PARSONS: Yes, there is. Quite a large charge. MR . McGILL: Does it appear on the state ment ? MR . PARSONS: That will be under audit fee. MR. McGILL: Is that under professi onal services?

May 8, 1975 111 MR . PARSONS: I would assume so. That's about the amount of the audit fee, but I' 11 take that as notice, Mr. McGill. MR . McGILL: And the same would apply to other Crown corporations ? MR . PARSONS: Yes. We get charged by the Provincial Auditor. MR. McGILL: Fine. MR . CH AIRMAN: Mr. Brown. MR . BROWN: Mr. Chairman, I have some questions that I would like to ask. I under stand that the government is planning on expanding the plant at Morden and this brings to mind some questions. MR, CHAIRMAN: It would not be the government, it must be Morden Fine Foods Ltd. or the MDC. MR .

GREEN: Manitoba Development Corporation. MR . BROWN: Yes, the Manitoba Development Corporation. MR. PARSONS: Well I would like to correct that too. The board of Morden Fine Foods are the ones that have been consid ering the expansion. When that is completed, if they need fundi ng , then they would come back to the MDC or to whomever they want to get the funding fro m. MR. GREEN: Should we give it to them, George? MR . BROWN: Well this raises some questions, Mr. Chair man. MR. GREEN: I want it on the record that Mr. Henderson wants us to give the money to Morden Fine Foods when they ask for expansion. MR.

CH AIRMAN: Mr. Henderson. Mr. Brown has a question put. Did you want to answer it? MR . HE NDERSON: On a point of order, could I speak a minute ? MR. BROWN: Yes. MR . HENDERSON: Pm not against Morden getting help because they took over an old cannery to get a cannery going in that area that' s going to do the area an awful lot of good. But I think eventually the government should be negotiating a sale and get out of it because . MR. GR EEN: They made $60, 000 last year. MR . HENDERSON: Yes, I know you did. MR. GREEN: So why should we get out of it ? MR.

HE NDERSON: I don't believe in the government being in busine ss and I think even tually .. . MR . GREEN: You believe we should give the m the money, that1 s all' / MR . HENDERSON: No, you h ave a manager there now which is from - when Canadian Canners was there - a very ef ficient man and management is the key thing . . . MR. GREEN: He works for the government, he works for the public. MR . HENDERSON: Yes and he' s just about to the age where he' ll be retiring and when you put in somebody else you' re going to have trouble and Morden will be getting in trouble.

So I think build her up and sell her to so mebody else. Sell it to so mebody else, we aren' t happy with the government running it. MR. CH AIRMAN: Order please. Mr. Brown you have more quest ions? MR . PA

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Collection	Manitoba — Debates (Hansard)
Citation	30-2-ed4
Type	hansard
Volume / chapter	30th 2nd hansardpdf ed4.pdf
Language	en
Format	pdf
Source	PROVINCIAL
Identifier	0f8777fd6ccbcbfa15fc8267ac30a41727da20be

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