Winnipeg Free Press - PRINT EDITION
Posted: 09/19/2013 1:00 AM | Comments: 0
In the last month, New Flyer Industries announced orders for more than 800 buses over the next five years from its newly acquired Alabama-based bus-maker, North American Bus Industries (NABI).
There is obvious demand for the buses built there and labour costs are about 20 per cent lower in Alabama than in Winnipeg or Minnesota where New Flyer also has production facilities. But that's not necessarily going to convince New Flyer's senior management or board to divert capital investments from Winnipeg to Anniston, Ala.
Labour costs make up only 10 per cent of the cost of making a bus and New Flyer's headquarters and main production facility in Winnipeg has benefited from a revved-up capital-cost allowance program the federal government announced in its last budget would be extended for another two years.
Federal cabinet ministers fanned out across the country on Wednesday reminding manufacturers of the $1.4-billion commitment Ottawa is making to encourage investments by allowing the entire capital cost to be deducted in two years rather than the 12 to 15 years that might otherwise be the case.
Minister of State for Social Development Candice Bergen, the MP for Portage-Lisgar, was at New Flyer's plant on Wednesday with other members of Manitoba's manufacturing sector.
"Investment in equipment and technology makes Canadian businesses more competitive," she said. "When you hear the challenges they have... and where they have manufacturing in the U.S. where lots of the costs are less than in Canada, we have to find ways to encourage them to continue in Canada, to be profitable, create jobs and grow."
David White, New Flyer's executive vice-president of supply management, said the accelerated capital-cost allowance (ACCA) program is helpful and provides an extra incentive to invest in new equipment.
"If you want to be a world-class manufacturer you have to make those investments," White said. "The decision comes down to where you are going to house your centre of excellence. We have invested in Winnipeg as the centre of excellence for this type of manufacturing."
Over the past few years, New Flyer has invested about $10 million in new equipment in Winnipeg and during that time it has bolstered its industry-leading market share in the urban bus market in Canada and the U.S.
"Incentives like the ACCA program become an additional factor to support those investments," he said. "Any time you analyze equipment and decide whether to purchase or not, the financial guys get involved and they want to know what are the cash outlays and what are the benefits. This lets us recover the cash quicker."
The latest manufacturing numbers Statistics Canada released Tuesday underline the significance of an additional two years of incentives to make capital investments.
July manufacturing sales numbers were up slightly from June, but for the year to date, sales are off in Canada and Manitoba this year compared to last year.
Manitoba's shipments were up 1.8 per cent in July -- $1.3 billion versus $1.28 billion in June -- they were still down 3.7 per cent from a year earlier and were running 1.2 per cent behind last year's pace after the first seven months of 2013 -- $9.1 billion versus $9.2 billion. Canada-wide, sales are off by 1.8 per cent this year compared to last.
Ron Koslowsky, vice-president of the Manitoba division of the Canadian Manufacturers and Exporters (CME), agreed first-half sales weren't as strong as hoped.
"There's no question we are still dependent to a large extent on the U.S. market (for export sales)," he said, "although not as much as before."
But most of the companies he's been talking to lately say sales have picked up in the last few months, Koslowsky said, especially for firms focused on producing products that are "meaningfully different" from those being mass-produced in China.
The economic recovery in the U.S. continues to be a work in progress, but Koslowsky said there are signs there will be ongoing improvement there.
Republished from the Winnipeg Free Press print edition September 19, 2013 B4
Have you found an error, or know of something we’ve missed in one of our stories? Please use the form below and let us know.
Having problems with the form?Contact Us Directly
Build-first strategy bearing fruit
Palace of 'Queen of Mean' goes on block for $65M
Bank of Cyprus says 1 billion euros raised
Mining deaths on rise, 22 in first half of 2014
Finance memo flags Bitcoin crime potential
Judge OKs record-setting $2B sale of Clippers
City: Emails show 'cozy' ties of PG&E, regulator
OTPP weighs larger stake in Bristol Airport
Rates on US Treasury bills mixed at weekly auction
Ford raising prices on new F-150
Most actively traded companies on the TSX
Cruz ends hold on nominees over FAA flight ban
Darden CEO to step down amid Olive Garden troubles
How the Dow Jones industrial average fared Monday
Family Dollar and Trulia are big market movers
Gov't outlines rules for wireless auction
Grain mostly higher, beef and pork higher
Officials: Funds secured for nuclear fuel project
Deal to improve veterans' health care costs $17B
House says US airlines can advertise pre-tax fares
Smith & Wesson paying $2M to settle SEC charges
FAA proposes to fine Southwest Airlines $12M
More Crown wood for New Brunswick paper mill
Mall collapse report won't be kept secret
UN condemns terrorist oil sales from Iraq, Syria
Mall construction boom fuelled by wealthy
Trial in salmonella outbreak begins in Georgia
US companies increasingly fish for growth overseas
Medicare's own health looking better, report says
TransAlta to build new Australian power plant
US stocks fall at midday on cooling home sales
Red Lobster goes vertical on plate to push quality
Athabasca shares drop amid asset sale doubts
Atco, Canadian Utilities report lower profits
Dollar Tree steps up fight, buys Family Dollar
Grain mixed, livestock higher
Contracts to buy US homes slip in June
US stocks open mixed on Wall Street