Peng-Sang Cau, CEO of TransformixRachel Idzerda for The Globe and Mail/The Globe and Mail
It is hard to make the mental leap to Cambodia in the late 1970s and the misery imposed by the murderous Khmer Rouge, while sitting comfortably in a quiet Japanese restaurant in Kingston, Ont. But Peng-Sang Cau is painting a vivid picture, recalling the horrors visited on her and her family when she was a young girl growing up in the killing fields of the Pol Pot regime.
Ms. Cau, 43, now lives in a different world. She is the president and chief executive officer of Transformix Engineering Inc., a mid-size manufacturer based in Kingston, known for innovative machinery it sells to companies that need to assemble plastic parts at high speed.
She's become an outspoken advocate for Canadian manufacturing, and has lots to say about government support, innovation and how companies can compete in a tough market.
But first, between bites from her bento box, she tells me about the chilling first decade of her life in Cambodia, her family's flight to Canada, and how that experience has informed her attitude toward business.
Her family, Chinese Cambodians who owned a successful bicycle-parts business, was forced to abandon its possessions and move to a collective farm in the countryside. Ms. Cau's oldest sister was taken away by soldiers and was never seen or heard from again.
Her memories include a dash across a field before a battle erupted, with dead bodies all around.
"As we were running, we were watching this person [who was] dead. There was a child that was crawling on her, screaming. And no one stopped, because we were all trying to save ourselves. We had to go."
The invasion of Cambodia by the Vietnamese saved the family from being slaughtered by the Khmer, but they all had to pitch in and sell rice noodles, in order to save enough money to get out of the country.
"We made enough to hire a guide, to take us by foot, at night, from Cambodia to the border of Thailand," Ms. Cau said. "The guide ended up being part of a gang, so we got robbed of whatever little we had."
Still, they made it to a refugee camp across the border. Miraculously, family members found out where they were, and a cousin in Regina helped them get refugee status and immigrate to Canada.
"We came to Canada with absolutely nothing except the clothes on our backs," Ms. Cau explained.
"We landed in Montreal at a military base, and the government did all sorts of tests on us to make sure we were not bringing any disease into the country. They gave us a change of clothes, pyjamas and a pair of shoes."
The family settled in Regina in 1980, when Ms. Cau was 10. For years her father washed dishes in a restaurant, budgeting $5 a day for groceries so he could send money overseas to less fortunate relatives, and put his children through school. Everyone was expected to study and work.
The effort paid off, and family members now own a number of businesses, including an Asian food retailer in Regina.
As for the roots of her own entrepreneurial drive, Ms. Cau has a vivid memory of helping her brother in his job cleaning office space.
"It was cleaning one of the executive's offices that made me swear that I would never do that for the rest of my life," she said. "At the time [employees] were allowed to smoke. I was cleaning the dirty ashtrays and the tables. I remember thinking, one day somebody is going to clean for me. I will not do this. That drove me to work, constantly."
Ms. Cau studied marketing and business at Queen's University in Kingston and stayed in the city after getting her degree, setting up a small consulting firm with three fellow graduates who were engineers.
Transformix, which was born in 1995 in Ms. Cau's basement, has grown dramatically and now has annual revenue in the $10-million range, and just more than 50 employees.
It makes highly automated machinery that allows its customers to assemble plastic parts – ranging from small medical devices to sunscreen pumps – at incredible speeds. While it once focused on making custom equipment designed for specific applications, it is now creating innovative new modular machines that can be adapted for a wide range of uses. Most of its customers are outside Canada.
"Historically, 90 per cent of the machine had to be invented every single time," Ms. Cau said. "We are hoping to take that down to 15 per cent."
But it is not easy being a mid-sized manufacturer in Canada, and despite her commitment to free enterprise and entrepreneurship, Ms. Cau sees a key role for government in supporting manufacturing, which is so vital to the national economy.
"Manufacturing is what creates value in an economy," she said. "It creates the business jobs, but it also creates the trades jobs and the engineering jobs and all the innovation that comes with it."
Adding value is crucial, she said. "We cannot manufacture by hiring a roomful of cheap labour. We can't compete doing that. Nor should we, because we don't want to bring our living standards down. What we want to do is look at high-value manufacturing, how to invest in automation, how to invest in technologies, so that we can create those high-paying jobs that people are looking for."
She says it worries her when she sees companies in developing countries buying Transformix equipment to automate their businesses, while many Canadian firms hesitate to do so.
"If, in a cheap labour country like Thailand, manufacturers are looking to buy automation, what is happening in Canada?" The fact that the vast majority of Transformix customers are outside Canada is a reflection of "risk averse" tendencies of Canadian companies, she said.
Governments in this country need to help manufacturers adopt automation and other innovations, and establish conditions so companies can export successfully, Ms. Cau said.
Specifically, that means expanding – not diminishing – programs such as the Scientific Research and Experimental Development tax incentives, and giving organizations such as the Business Development Bank of Canada a larger mandate to help entrepreneurs with financing.
Ms. Cau recently spoke out sharply against Ottawa's plans to change the employment insurance system, which will help only the smallest firms but do nothing for mid-sized companies. And she is adamantly opposed to Ontario's proposed new pension plan, which she said will add a huge burden to companies already struggling with a range of payroll taxes and the red tape that goes with them.
Yet, despite her criticism of some government policies, she is not broadly dismissive of politicians, and was thrilled to have met both Prime Minister Stephen Harper and Ontario Premier Kathleen Wynne. She spoke glowingly during our lunch about a federal trade mission to the Netherlands she recently participated in.
"I appreciate politicians so much more because of that trade mission, and seeing how hard they work and how hard their staff work. It frustrates me that so often we focus on the negative, because they do work hard. They do want to help."
Ms. Cau's outspokenness, and her work in the community, have led some to suggest she should run for political office. She dismisses the idea, saying it would be too "distracting."
Even if she doesn't run for office, "she certainly will make a mark as a leader in society, beyond her company," says Leslee Thompson, president and CEO of Kingston General Hospital. Ms. Cau serves on the hospital board, and has demonstrated tremendous leadership skills and a commitment to the community, Ms. Thompson said. "She is someone to watch."
Ms. Cau's immigrant background gives her tremendous drive and energy, Ms. Thompson added, and her traumatic early years don't appear to have made her bitter in any way.
"She is not someone who carries her background as a chip on her shoulder," Ms. Thompson said, but it does seem to motivate her, and has given her a strong sense of family and how to manage people.
Indeed, Ms. Cau says many of her management skills come from her parents' approach to business, not from her university training.
"Truly, my human resources practices come from my mom. She would always talk about how she managed the employees [in the family businesses]. She would say, 'When you compliment you do it in front of people; when you discipline you do it in private.' We grew up listening to her talk about business."
And the entrepreneurial spirit was clearly part of the family DNA. "It's not shocking or surprising that most of my siblings are business owners of some sort," she says.
Still, she acknowledges, her parents were surprised that not everyone in their adopted land shared their entrepreneurial zeal.
"They would talk about how they didn't understand that in Canada nobody wants to be entrepreneurs. In Southeast Asia, if you can sell something, you do it."
While it is simplistic to suggest that Canadians lack drive, she acknowledges, "at the same time there is some validity to it. There is the attitude that they deserve [things]. People who haven't gone through hell and back may think that, somehow without working hard, they deserve whatever it is. That is not every Canadian who is born here. But over all, there is that [attitude]."
The bottom line, she says, is that Canada cannot rely blithely on processing natural resources. It will only stay strong if it looks at more efficient, and creative ways of generating wealth.
"How do you create wealth? You make sure that there is manufacturing and that new companies are growing and starting up.
"Manufacturing is what creates value in an economy. It is what brings all these materials which are nothing, and makes them into something. It brings value into your community and into your country."
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Peng-Sang Cau's prescription for Canadian manufacturing:
What governments can do
"They can look at programs that encourage manufacturers to innovate, to improve their manufacturing and invest heavily in automation so that they are [ahead of] countries that are coming up and probably leapfrogging us."
Why R&D tax support must be maintained
"To take that away, you are taking away the incentive for manufacturing companies to continue to do R&D, which is critical for national economic wealth. We also need programs that are similar but focus on commercialization."
Supporting immigrant entrepreneurs
"It is important that governments make the climate
conditions ideal, not only for those who want to come here, but for those who are already here and want to build a
business."
Support for hiring
"It is risky for companies to hire people without skills. There should be programs that allow employers to offset their costs in investing in new apprenticeships."
On ownership
"It is imperative that we ensure that we build Canadian manufacturing companies that are owned by Canadians."
On wealth
"You cannot have a strong nation without wealth. How do you create wealth? You make sure that there is manufacturing and that new companies are growing and starting up. Manufacturing is what creates value in an economy. It is what brings all these materials which are nothing, and makes them into something. Exporting brings value into your community and into your country."