Archive for the ‘budget’ Category

Lines of credit have almost completely dried up in this recession, and it’s harder than ever for businesses to fund their new development projects.  Ontario’s Advanced Manufacturing Investment Strategy (AMIS) is a great venue for Ontario manufacturers to pursue. What’s more, AMIS is available to companies from all manufacturing sectors in Ontario. The $500 million dollar provincial program focuses on:

• industrial R&D
• design/prototyping/engineering
• new/ advanced products/materials
• advanced manufacturing processes
• robotics/software development
• waste reduction
• energy conservation

AMIS, when granting a loan, can provide up to 30% of the total eligible costs of a project (up to a limit of $10M). This funding is given in the form of a repayable loan. The loan is interest free and principal free for up to five years, providing the company receiving it meets job and investment targets mutually agreed upon between the company and the province. After that period, the repayment rate is the province’s cost of borrowing, plus an additional 1%.

To be eligible, projects must create and/or retain at least 50 jobs. Alternatively, the projects must invest $10 million over the 5 year period. The costs eligible for the loan (excluding ongoing costs of production or operations) include:

• research and development
• equipment and machinery
• materials
• construction/facility improvements
• training
• overhead
• labour (one time only)

The terms for the loan are negotiated individually. After completing the application process, most companies receive word of the province’s decision within a relatively speedy 45 calendar days. This sometimes may take longer for the more complicated applications. The Minister of Finance, along with the Minister of Economic Development, approve or deny applications based on the guidelines of the AMIS Assessment Committee.

What’s more, for those manufacturers who regularly claim for SR&ED, receiving an AMIS loan has no impact on SR&ED eligibility. The AMIS loan is not affected if a business has already received an SR&ED return or income tax credits.  Companies that have received AMIS funding often include extra cash procured by SR&ED towards their projects. In fact, any business that has received SR&ED credits is more likely to be meeting the AMIS eligibility requirements.

For more information about AMIS, visit http://www.ontariocanada.com/ontcan/en/progserv_amis_en.jsp

Cambridge area manufacturer Purchasing Manager Walat Yasin offers the following advice to fellow companies:

Buying foreign has become of great interest to our company recently, especially as we have the order quantities to justify the purchases and save significantly. We also do not have the local manufacturing resources for particular products.  We, like any company, are in search of the benefits of having quality goods produced from offshore countries at a competitive price.

For example, China manufacturers have progressed a great deal in recent years in terms of quality, technology and overall management; therefore there is reason to have more faith in their service, quality and overall handling of orders.

Below are some of the reasons as to why China is so successful on a global economic scale, and why importers around the globe are looking to purchase more and more from China to maximize their buying power:

1. Low overheads & labour rates
2. Large population
3. Huge industrial base
4. Supportive government
5. Growing infrastructure

There are obviously great benefits to buying offshore, but at the same time there are also potential risks and disadvantages. That is why it’s critical to establish your suppliers in business-developed countries such as China and Italy. By working closely with your foreign sources, you can gain that trust, partnership, quality, service, and profitability as long as communication is kept clear and flowing between you and your suppliers/sources.

There are only two ways to find an overseas supplier. One is to purchase directly from the supplier, the other to go through a procurement Specialist/third party. We utilize both options. Going the direct route, however, poses many difficulties. Besides the obvious language and cultural barriers, there is the issue of distance. For example, I cannot see a product or test it while it’s all the way in Italy. However; if my agent is located in Italy he or she can go and analyze the product on my behalf. Furthermore, if I lack experience in sourcing a particular product, the agent can assist.

Locating the perfect supplier is only the first step. Monitoring, quality control, and punctual delivery are all equally important. None of them can be handled effectively alone long distance.

Therefore, in most cases, unless a company is planning to hire knowledgeable staff and set up an offshore-based procurement office, the direct approach can be a tricky proposal for most.  That is why more and more businesses are using a third party agency. These agencies charge a small fee, but are very helpful when facilitating your offshore purchasing initiatives. They will connect with the right people and communicate between you and the suppliers to obtain the best value, optimum product and best services for your company’s dollar.

Some points to keep in mind when purchasing foreign:

• Do your research on the suppliers and products.
• Visit sources if feasible, see what their facilities look like, what technology they are utilizing, what type of staff they have , their capabilities etc.
• Negotiate everything, payment terms, pricing, freight, lead-times, as nothing is in stone. Ask for references from the potential suppliers, visit their website, see product reviews, testimonials from customers etc.
• Check to see if they have quality standards set in place, and what their procedures are. How long they been in business?
• Always get samples for your own testing purposes prior to purchasing anything offshore.
• Always keep in mind currency differences, freight charges, customs fees, long lead-times and duties for any product or service that is purchased from overseas as this might determine if purchasing offshore is suited for your company or not.

The proposed 2009 Ontario provincial budget, released March 26th, 2009, puts forward new tax measures intended to build on the government’s “5 point” economic plan. Understandably there is much controversy about the spending plans, and many Ontarians are expressing concern over the Sales Tax Harmonization, and how it will affect the individual.

On a positive note, there are a few bright spots for Ontario’s diverse technology sector. Most importantly, to our readers, are the changes to the Ontario Innovation Tax Credit (OITC), a tax relief measure for businesses to encourage technological development and new innovations.

Dalton McGuinty and Ontario Finance Minister Dwight Duncan (right), in Toronto on Thursday.

Ontario Innovation Tax Credit

The OITC is a 10% return for small to medium sized enterprises who perform qualifying SR&ED activities (Scientific Research & Experimental Development) in Ontario. The new budget proposes to extend the taxable income phase-out range from the current $400,000 – $700,000 to $500,000 – $800,000.  This measure will parallel the changes and enhancements to the Federal Investment Tax Credit for SR&ED claims, proposed in the 2009 Federal budget.

Sustaining and Promoting Research and New Technology

Ontario’s technological advancements require continuous support.  The new provincial budget is proposing more than $110 million in additional tax relief for 2009 and 2010, and $715 million in investments supporting partnerships in innovation, encouraging businesses to develop their new products, services, and processes.

These new investments are in addition to the $3 billion already to be provided by the Ministry of Research and Innovation.  They will include:

• $300 million in capital funds over six years for research infrastructure, to leverage funding from the Canada Foundation for Innovation

• $100 million in extra operating funds over four years for research in the biomedical field. This funding, as well as aforementioned funds for the research infrastructure, will be delivered via the Ontario Research Fund.

• $250 million over five years for a new Emerging Technologies Fund that will put focus on clean technologies and clean energy, health and life sciences, and information and communication technologies (including digital media).

• $10 million over three years to the Colleges Ontario Network for Industry Innovation, to assist small to medium sized enterprises with applied research, technology and commercialization.

Quote for March 27th, 2009:

“The most terrifying words in the English langauge are: I’m from the government and I’m here to help.”
- Ronald Reagan