The Federal government plans to pour more than $1.5 billion into the manufacturing sector to encourage investments and to support innovation via collaborative industry-partnered research, but will this be enough to revive the ailing sector?
The initiatives outlined in the 2015 Federal budget, entitled “Strong Leadership: A Balanced Budget, Low Tax Plan For Jobs, Growth and Security” address the right hot button issues with manufacturers–low taxes, extended accelerated capital cost allowance on machinery and equipment investments, support for apprenticeship training and industry-partnered R&D–but the problem is they’re not that different from initiatives announced in previous budgets. And since the economy has not exactly turned itself around supported by a thriving manufacturing industry and lots of jobs, how will these initiatives help manufacturers?
Will the $100 million over five years being allotted for product development and technology demonstration by Canadian automotive parts suppliers through a new “Automotive Supplier Innovation Program” prevent companies like Toyota from moving their auto parts manufacturing to Mexico?
And will support to provinces and territories to “facilitate the harmonization of apprenticeship training and certification requirements in targeted Red Seal trades” actually remove the red tape and the cost manufacturers and apprentices often face with apprenticeship programs?
While these questions can’t be answered at the moment, they are questions to consider to assess and then compare to initiatives that will be outlined in next year’s budget.
One area to keep an eye on is skills training in technical schools. The Federal government plans to make a one-time investment of $65 million over four years to business and industry associations to allow them to work with post-secondary institutions to “better align curricula with the needs of employers.”
While Federal budgets don’t often contain a lot of details of planned initiatives, one question to consider is whether any of this funding will be allocated to upgrading technologies in technical schools’ machining, fabricating and welding shops. As many know, technical schools often fall short of funding to purchase leading edge technologies (e.g. five axis machining, additive machines, fiber laser cutting machines) that can help them better educate and train higher skilled students ready for the manufacturing workplace.
Here’s a rundown of the key initiatives targeted at manufacturing outlined in the 2015 Federal budget:
- provide a 10-year accelerated capital cost allowance for machinery and equipment investments
- reduce the small business tax rate to 9 per cent by 2019, putting an estimated $2.7 billion back into the pockets of small business owners
- improve access to financing for Canadian small businesses through the Canada Small Business Financing Program
- provide $1.5 billion in funding over five years to advanced the Government’s science, technology and innovation strategy
- dedicate $119.2 million over two years, starting in 2015–16, to the National Research Council’s industry-partnered research and development activities.
- provide up to $100 million over fiver years to support product development and technology demonstration by Canadian automotive parts suppliers through a new Automotive Supplier Innovation Program
- develop a national aerospace supplier development initiative
- invest $53.8 million over two years to extend the current Employment Insurance Working While on Claim pilot project to August 2016
- invest $248.5 million over five years in Aboriginal labour market programming to support a skilled and engaged Aboriginal labour force