June 2010 Issue 20

Turning Lemons into Lemonade

The Canadian dollar is not only once again challenging the U.S. greenback, it’s also possibly looking to match the Euro — and this means that companies must brace for sales lulls. The current state of exporting manufactured goods to the U.S. is already dampening many of our core raw material industries but, as the Canadian dollar dukes it out with our friends to the South, it’s as if a big spotlight has been put on the Canadian manufacturing sector. Since there is nothing we can really do about it except ride the global economy wave and scramble to diversify our markets, we should be thinking about present circumstances and potential opportunities, and making the best of it!

If you turn on one of the U.S. news stations, you’ll hear the same ‘doom and gloom’ economic forecasting . Sometimes they try to put a nice face on their fiscal state with skeptical employment and spending figures but, the reality of the situation is clear to anyone in manufacturing: it’s rough out there right now and there is not going to be any quick fix.

March 3, 2010 was a good day for manufacturers in Canada. During the annual Throne Speech we were informed of an unprecedented level of Government support for manufacturing in terms of spurring innovation and market diversification. While we, in the SR&ED (Scientific Research & Experimental Development) services sector, have already been heavily involved in helping companies claim for such support programs, more companies across all industries are learning that Innovation is the key to Canada’s success and that there really is a lot of available help just waiting out there.

Investigating new equipment can get the ball rolling in terms of new product development or process improvements. The information readily available both on the Internet and a phone call away can give you ideas towards becoming a more efficient and effective manufacturer. Canadians, for the most part, understand that collaboration is a fundamental component of our export-ability; it is surprising how many business owners share proprietary information for the sake of the country as a whole. The initial colabrative research could then lead to thinking about improving efficiencies — potentially even through new equipment.

When it comes to manufacturing, Canada is lagging in efficiency when compared to the U.S. and Europe. With the changes to tariffs on foreign purchased equipment, now is the time to start looking at advancing our manufacturing technologies. By axing the import duties on new equipment, the government has essentially provided ideal conditions for companies looking to become more efficient and productive.

Innovation support programs, removal of tariffs on foreign equipment and the value of our dollar are giving us an opportunity to redefine our manufacturing sector for decades to come. Canadian businesses should seriously consider capitalizing on the state-of-affairs if they truly want to remain competitive in manufacturing on a global scale and turn lemons into lemonade.

Testimonial

“As a company that is still fairly young, as well as being a first time claimant, we realized that the SR&ED program would be a great asset to the growth of our company, as well as to the development of our technologies. The Northbridge team was able to coach us and mediate for us while we were claiming for SR&ED in a professional manner that reassured us throughout the whole process. With their assistance, we received our SR&ED refund three months after we had submitted our claim, allowing us to reinvest the funds back into our business.”

—Eric Vlessing, President of Sofa4Life

Sofa4Life manufactures the Coja and Amici55 brand custom leather upholstery, including sofa's, chairs, sectionals, recliners and home theater seating. skilled fabricators and welders.

On the Blog

Northbridge continues to bring you the latest updates and hot topics that are important to our clients. Some of our May highlights:

• Software: Who Can Claim for SR&ED?. What exactly is an eligible SR&ED project? We take a look at the eligibility requirements.
• Enough Natural Gas to Power Canada for a Century.. A new survey was released taking a look at the natural gas industry and the amount of natural gases that are currently availble in Canada.

Read about these topics and more on our blog.

Grant and Loan Guide

Some clients looking for additional funding have been approaching us for information on other grants and loans. While we can provide some general information, we are not experts in claiming for these other grants and loans, and do not necessarily assist companies in applying for these programs. In the upcoming issues, we will be highlighting some of these other grant and loan programs.

NSERC Engage Grants Program

To encourage the partnership between industrial businesses and academic researchers. Companies can receive up to $25,000 for a program that lasts up to 6-months. http://www.nserc-crsng.gc.ca/Professors-Professeurs/RPP-PP/Engage-Engagement_eng.asp

MITACS

This organization helps companies with university partnerships through internships for short term R&D projects. Companies can receive half of the student’s internship pay (up to $7,500). The portion of the student's pay that is not covered through MITACS is SR&ED eligible as a subcontractor cost. http://www.mitacs.ca/index.php?option=com_content&view=article&id=243&Itemid=6&lang=en

This is information of a general nature only; Northbridge does not necessarily assisst companies applying for the grants and loans listed above. Projects may not be eligible for more than one grant or loan; receiving funding from one grant or loan may disqualify that project from others, including the SR&ED program. Please speak with your Account Manager for more information.

Ask the Experts

Dear Northbridge; We were at one of your seminars and decided to sign-up with Northbridge. Although we have a pretty good understanding of how to capture all of the eligible applied Research and Development activities, we wonder if there are other areas of our organization that can also benefit from the program, but are unsure where to begin looking as we prepare for our initial visit with a Northbridge SR&ED consultant.

Dear Valued Client, An often overlooked area for eligible SR&ED activities are process improvements. Companies that survive are companies that innovate; certainly you don’t operate today as you operated 2,3 or 5 years ago. Your manufacturing processes are constantly evolving to keep up with the ever increasing level of technology and to keep pace with foreign competition. Even within traditionally low-tech but very competitive industries such as forestry and construction, Canadian companies are finding ways every day of improving quality, adding value or being more efficient. Most companies have literally hundreds of process improvement solutions implemented every year, that would be inconsequent when looked at individually, however, bundled together, these experimental development efforts amount to progressive technological leaps and gains. Some fail and some succeed, but as long as the effort is to make a technological gain and that you identify the challenges and uncertainties, the development, implementation and monitoring of these solutions can be eligible under the program. Machine improvements, quality improvement initiatives, tighter tolerances, increased throughput or reduced labour costs and outsourcing are areas to look at when trying to capture eligible activities. Your local Northbridge SR&ED professional will help you identify these process improvements and organize all of the necessary information to substantiate the claim.

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