Innovation Working Group

Final Report - May 23, 2003

Innovation that increases the wealthof Canada must include the first successful commercialization of an idea - process, material, or service. Our efforts will enhance firms with successful, thriving cultures of innovation, and enable those striving to achieve this.

Mission

"Continue to foster automotive sector innovation through aglobally competitive business environment that encourages industry relevant research, process & product development activities, and commercializing ideas, thereby maintaining and creating high value-added jobs and wealth in Canada."

There are several key characteristics of the automotive industry in Canada that impact our capacity to innovate. They are:

• All OEM auto assemblers are foreign owned and headquartered outside of Canada
• The primary value of any invention is generated after commercialization which may or may not directly follow successful research
• Commercialized automotive innovations will occur where the knowledge base, the appropriately skilled and educated personnel and the climate for a successful business case exist throughout the supply chain; however, they are fundamentally based on the retention of existing OEM assembly plants and the establishment of new plants in Canada.

Recognizing the unique nature of the industry, we developed the following objectives:

Objectives

1. Establish and enhance federal and provincial funding programs that specifically support automotive sector research, development, and productivity enhancement activities. (i.e., the development of advanced vehicle technologies, advanced manufacturing technologies, advanced materials and the education and development of highly qualified personnel for the automotive sector)

2. Develop new models of public and private partnerships with Canadian educational and research institutes to promote conducting industry relevant research that has commercialization opportunities in Canada.

3. Provide capital investment incentives to encourage the early commercialization of advanced vehicles, vehicle components as well as automotive manufacturing and materials technologies in Canada.

4. Facilitate commercialization of advanced vehicle technologies by assisting consumers in their early adoption by offsetting premium cost.

Action Items

1. Financing automotive innovation and commercialization

A. Develop an Automotive Application Paper

i. A specific communication and "how to" guide to better utilize existing financial incentive programs,

ii. A tool to assess gaps in programs; research through to commercialization

a) Next Step: CCRA to lead; industry to commit resources

B. Improve, expand and simplify the SR&ED tax credit system

i. Incorporate noted changes to promote research through to successful commercialization

a) Next Step: CCRA to lead;

2. Develop an "Automotive Portal"

A. A "One stop shop" website

i. A method to coordinate and improve access to the labyrinth of resources (finance, knowledge, partners, associations, etc.)

a) Next Step: I.C. to coordinate, develop costs and plan to implement

B. Develop a single entity in Lightweight Materials to:

i. Stimulate and coordinate research and commercializationefforts

ii. Manage a significant fund to assist collaborative industry efforts to commercialize next generation materials and systems

iii. Coordinate with website access above; use as trial for other advanced technologies (ie. Alternative fuels, Processing, Productivity, etc.)

a) Next Step: LWMSC to map requirements, agree on entity format, reporting structure

3. Expand financial support for Public/Private Automotive initiatives

A. Continue to develop and promote industry - educational institution partnerships to bolster knowledge development and alignment of multiple goals

a) Next Step: Support AII type process; work with all groups to ensure industry support

4. Establish and finalize specific automotive capital investment funds

A. Dedicate significant portions of existing funds (TPC, ORDCF, CFI etc.) to auto related projects, especially in relation to item 3 above and the promotion of first time commercialization projects in Canada.

a) Next Step: IC to lead ;MEOI to support

5. Establish a Federal sales tax Rebate program for advanced vehicle technologies

A. Provide incentives to match or exceed current provincial rebates for alternative propulsion technologies

B. Develop programs to support consumer pull for other leading technologies

a) Next Step: IC to lead; NRCAN,CCRA to support

Details on each of these items will be available in the final report of the Innovation Working Group. Detailed implementation plans for each of these items need to be developed with the support of the industry associations, selected industry representatives, selected academic representatives and the appropriate government staff.