March 23, 1944

SC
LIB

Clarence Decatur Howe (Minister of Munitions and Supply)

Liberal

Mr. HOWE:

I did not say that. If you cannot get them it is not a matter of materials being in short supply.

Topic:   DEPARTMENT OF MUNITIONS AND SUPPLY
Permalink
SC

Robert Fair

Social Credit

Mr. FAIR:

I notice farm implements are rationed and we have quite a few complaints coming in of people not being able to buy the implements. If the materials are there, it would be a good idea to put the workmen to work.

Topic:   DEPARTMENT OF MUNITIONS AND SUPPLY
Permalink
LIB

Clarence Decatur Howe (Minister of Munitions and Supply)

Liberal

Mr. HOWE:

If my hon. friend can find any spare manufacturing capacity I am sure we

shall be glad to use it for that purpose. The industry is working at full capacity at the moment.

The price of aeroplanes is not a subject to discuss in five minutes. If my hon. friend is interested in the price of aircraft I shall take fifteen minutes to-morrow and give a lecture on the subject.

Topic:   DEPARTMENT OF MUNITIONS AND SUPPLY
Permalink
PC

Agar Rodney Adamson

Progressive Conservative

Mr. ADAMSON:

I think it would be interesting in view of the policy the minister has brought down in regard to post-war civil aviation. It might be a complementary subject which would be of interest to the hon. members.

Topic:   DEPARTMENT OF MUNITIONS AND SUPPLY
Permalink
LIB

Clarence Decatur Howe (Minister of Munitions and Supply)

Liberal

Mr. HOWE:

I shall be very glad to do that, but it is not a subject on which you can say, what does this plane cost? To take a figure and compare it with the cost of another plane somewhere else, and then to decide that one plant is doing much better than another. I will show how the manufacturing costs of aeroplanes vary with the size of the contract and the range of the run, the number of units produced. After that I shall be glad to discuss costs, but I think it is important to have a background.

Topic:   DEPARTMENT OF MUNITIONS AND SUPPLY
Permalink
PC

Agar Rodney Adamson

Progressive Conservative

Mr. ADAMSON:

That is what I hoped the minister would do, and in the same way I should like to get some information from the parliamentary assistant with reference to the methods of reallocating contracts.

Topic:   DEPARTMENT OF MUNITIONS AND SUPPLY
Permalink
LIB

Lionel Chevrier (Parliamentary Assistant to the Minister of Munitions and Supply)

Liberal

Mr. CHEVRIER:

I think I can give my hon. friend that now. He spoke first of all of the cost-plus contract, which he said was a necessary evil. That is true; but it is a fact also that we have tried in the department to get away from cost-plus percentage contracts, and we have done very well over a period of time. I went on to discuss this afternoon the main purchasing branches of the department, and I think I showed how, in each of those, the percentage had gone down tremendously. Last year I was able to say that four-sevenths, in point of number, of contracts granted in the department were on a fixed price basis. This year there are substantially more than that. I do not know what they are, in point of numbers, but there are certainly five-sevenths, if not six-sevenths.

Then, with reference to re-negotiation, renegotiation is brought about by our cost accountants, who are stationed in plants and who, when they have evidence of undue profits, re-negotiate immediately. The re-negotiation in the department is a retroactive re-negotiation. That is, it is one which dates back to the original date of the contract. In other words, if a re-negotiation begins now-to-day-and we find there is undue profit, the price will

War Appropriation-Supplies

revert to the date of the original contract. This afternoon I compared our system with that in Australia, where re-negotiation is not retrospective, and dates from the time of renegotiation. I believe those are the two questions which were asked.

Topic:   DEPARTMENT OF MUNITIONS AND SUPPLY
Permalink
PC

Agar Rodney Adamson

Progressive Conservative

Mr. ADAMSON:

That is the question in which I am interested. If, because of increased efficiency in a plant, the manufacturing cost comes down, and undue profit is being made, it might be that undue profit was not being made at the beginning of the contract because the operation was not handled as efficiently as it was six months later. Then the department re-negotiates at the beginning of the contract, and reduces the price of the article from that time. It seems to me that the department is going to cause considerable loss, if it does that, because the first period of production might have been nearer the fixed price allotted by the department. Only after six months, or a period of time has elapsed, and because of increased efficiency is an undue profit being made. It seems to me that if they are made retroactive, the department will be paying less than the article actually cost during the first period of the contract. It appears to me that there is that danger.

Topic:   DEPARTMENT OF MUNITIONS AND SUPPLY
Permalink
LIB

Lionel Chevrier (Parliamentary Assistant to the Minister of Munitions and Supply)

Liberal

Mr. CHEVRIER:

That is exactly what we have done, that is, we re-negotiate them as of the date of the original contract.

While I am on my feet perhaps I can answer before 'eleven o'clock some of the questions asked this afternoon and this evening. The hon. member for Lake Centre asked for some particulars with respect to re-negotiation. He wanted to know the numbers. There are eighty-three re-negotiations which have taken place. The value of those re-negotiations amounts to $119,107,000. Then, with reference to the number of cancellations of contracts, m3' hon. friend will appreciate that cancellations have to do not only with prime contractors but also with subcontractors, and therefore it is impossible to obtain the information. I cannot give him the number of those.

While I was speaking he asked me to give the percentage of profit allowed to aircraft operating companies. In the department we aim at five per cent. Sometimes it is under that, and sometimes over. But the profit is in the order of five per cent, with something better in certain cases where unusual skill has been shown, and something less in other cases. There are also some occasions where the fee is fixed. For instance, there is the cost plus a fixed fee.

Topic:   DEPARTMENT OF MUNITIONS AND SUPPLY
Permalink
PC

John George Diefenbaker

Progressive Conservative

Mr. DIEFENBAKER:

How much does

"something more" amount to?

Topic:   DEPARTMENT OF MUNITIONS AND SUPPLY
Permalink
LIB

Lionel Chevrier (Parliamentary Assistant to the Minister of Munitions and Supply)

Liberal

Mr. CHEVRIER:

It depends upon the

circumstances, and I am not in a position to give any further details. As I said before, the target is five per cent. We aim at cost plus five per cent. There are cases where it is under that amount, and other cases where it is over.

The hon. member for York-Sunbury asked some questions yesterday with respect to the subsidy on wood fuel. * The total production subsidy is $757,664.15. This represents a payment. of one dollar a cord on all commercial wood fuel cut on or before March 1, 1944, and delivered to a dealer or held to his account after March 5, 1943. In addition to the production subsidy, transportation subsidies amounting to $257,639.71 have been paid. These pa>unents cover such portion of the transportation costs incurred by wood-fuel dealers in the transportation of wood fuel. Both of these subsidies are paid by the Commodity Prices Stabilization Corporation on receipt of a certification by the wood-fuel controller.

The hon. member for- York-Sunbury also asked what quota of heavy-duty trucks are being imported into Canada.

Topic:   DEPARTMENT OF MUNITIONS AND SUPPLY
Permalink
NAT

George James Tustin

National Government

Mr. TUSTIN:

How is the subsidy on transportation arrived at?

Topic:   DEPARTMENT OF MUNITIONS AND SUPPLY
Permalink
LIB

Clarence Decatur Howe (Minister of Munitions and Supply)

Liberal

Mr. HOWE:

If wood is required in an area, and must be brought in from outside the normal sources, the transportation bonus is paid, representing the difference between the normal cost of transportation and the actual cost paid from the greater distance. We had a situation that represented, among other things, a very bad distribution of wood. The normal sources could not be developed sufficiently to produce the required supplies and, as I say, we went outside the area. For instance, at the head of the lakes we cut 75,000 cords of wood as a reserve supply for points both east and west of the head of the lakes. That is not a normal operation; it was an emergency. And moving wood from that emergency store, either to Winnipeg or to the east, involved an abnormal cost that was covered by the transportation bonus.

Topic:   DEPARTMENT OF MUNITIONS AND SUPPLY
Permalink
LIB

Lionel Chevrier (Parliamentary Assistant to the Minister of Munitions and Supply)

Liberal

Mr. CHEVRIER:

Perhaps I might continue. I had referred to the question by the hon. member for York-Sunbury as to the quota of heavy-duty trucks being imported into Canada. The answer is that heavy-duty trucks of 16,000 pounds or over, gross vehicle weight rating, are not produced in Canada. The quota of imports from the United States is fixed by the motor vehicles controller in consultation with the director of the automotive division of the war production board in the United States. The quota in 1943 was seventy-four; the quota in 1944 is 207.

War Appropriation-Supplies

Then the hon. member for Peterborough West asked a question with respect to glycerine. The answer is that glycerine is now on the free list, by virtue of order CC-2-B-3 of December 31, 1943. At that time all restrictions on glycerine were lifted.

Topic:   DEPARTMENT OF MUNITIONS AND SUPPLY
Permalink
NAT

Grote Stirling

National Government

Mr. STIRLING:

The minister will remember that he undertook to bring down a statement with regard to the processing of coal at the mine. Will he be good enough to make a statement to-morrow?

Topic:   DEPARTMENT OF MUNITIONS AND SUPPLY
Permalink
LIB

Clarence Decatur Howe (Minister of Munitions and Supply)

Liberal

Mr. HOWE:

My hon. friend spoke about processing coal at the mine head. We are doing no processing of that type in Canada at this time. But the Department of Mines and Resources are continuing studies on the hydrogenation of coal at this time. In fact a special laboratory has been built for that purpose. The subject matter will be considered very carefully. It is appreciated that it would be a favourable way to deal with some of the western mines, particularly if it turns out to be an economical process. We are hoping that some progress may be made.

Topic:   DEPARTMENT OF MUNITIONS AND SUPPLY
Permalink
NAT

Grote Stirling

National Government

Mr. STIRLING:

It has not got beyond the experimental stage?

Topic:   DEPARTMENT OF MUNITIONS AND SUPPLY
Permalink
LIB

Clarence Decatur Howe (Minister of Munitions and Supply)

Liberal

Mr. HOWE:

No.

Item stands.

Progress reported.

Topic:   DEPARTMENT OF MUNITIONS AND SUPPLY
Permalink

At eleven o'clock the house adjourned, without question put, pursuant to standing order. Friday, March 24, 1944


March 23, 1944