Winnipeg Free Press - PRINT EDITION

SUNDAY SPECIAL

Fire trucks, Hutterite-style
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NEAR WAWANESA -- It's a five-year-old boy's Christmas dream -- big, gaudy-red fire trucks rolling out of the garage.

Green Acres Hutterite Colony manufactures the fire trucks for customers as far away as Vermont and Washington state. Last month, it shipped a mini-pumper truck to the City of Winnipeg.

Workers are now building an over-size fire truck for the oilfields in Saskatchewan. The truck will have a high-volume water pumper, plus a decontamination centre, three separate showers...

Wait a minute! You're a Hutterite colony. You're supposed to be out rounding up pigs or something, not building complex and highly labour-intensive emergency vehicles.

But times are changing as Hutterite colonies transform themselves into manufacturing hubs.

"Our business is growing. This has been our best year yet in gross income," said Tim Waldner, the 36-year-old manager of Green Acres Industries, the colony's manufacturing division.

At least half of the more than 100 Hutterite colonies in Manitoba are involved in major manufacturing businesses today. They are making kitchen cabinets, metal bike racks, crazy carpets and saucers, pickup truck trailers, gravel-truck boxes, tin roofing, tin siding, roof trusses, and more.

"They excel at whatever they take on," said Ted Muir, former Manitoba Pork Council general manager, who had many dealings with Hutterite colonies over the years. "I can tell you from personal experience that the Brethren is very competitive and is the first to embrace new technologies and practices that advance whatever industry they happen to embrace -- farming or manufacturing."

The main reason for the switch to manufacturing is agriculture doesn't provide the income it once did. Now comes the province's Bill 17 ban on hog-barn expansion, affecting about half the Manitoba's colonies. In fact, Green Acres sold off all its pigs earlier this year.

Although the public often associates colonies with agriculture, Hutterites weren't agrarian until recently, explained Johnny Hofer Jr., a teacher at James Valley Hutterite Colony near Elie.

Before coming to North America in the early 1900s, Hutterite men possessed more than 40 trades and none in farming. "They came over here and basically changed in mid-slide, and in the process became some of the best farmers. Now they're going back into trades," he said.

Good ideas spread like pollen between colonies, resulting in the rapid growth in manufacturing. "You're going to see more and more of it. On a colony, you don't just share your resources, you also share your intelligence," Hofer said.

The fire-truck business at Green Acres, 180 kilometres southwest of Winnipeg and almost straight south of Brandon, began in 1999. A Winnipeg businessman was looking for someone to refurbish a used fire truck. Green Acres, like many colonies, did some metal fabrication work and took on the job.

That led to contact with a Winnipeg distributor of fire trucks, which quickly led to more manufacturing.

"It's called seeing a business opportunity," said Waldner, sounding very capitalist. He was 27 years old at the time when he steered the colony into fire-truck manufacturing. "We built one at a time and slowly grew the company."

The colony purchases the truck cab and chassis, then builds everything that goes onto the back of a fire engine, including the water pump.

It uses a heavier metal on its fire trucks, and consequently has had no warranty costs on fire-truck bodies in its nine years, a successful track record that Waldner calls "ridiculous."

Green Acres installs the most modern electrical system called a multiplex electrical system. That reduces the wiring that runs through a fire truck from the standard bundle of 30 wires to just two. The electrical system is operated by a master computer.

"People's lives depend on that electrical system, so we cannot take shortcuts," Waldner said.

Green Acres also provides service. Its staff will travel across Canada to service its trucks, because local mechanics don't always know how to work with the advanced technology. The company can also log-in remotely via computer to diagnose and correct certain problems.

"Our market is rural municipalities, towns and First Nations," Waldner explained. The trucks sell from $200,000 to $250,000. Large cities typically require slightly higher-end trucks than those built at Green Acres.

It doesn't seem likely that colonies will ever achieve the type of economies of scale of outside companies, because colonies limit their populations to under 150 people, including children. When numbers approach 150, a new colony is formed.

And colonies don't like to hire people from outside, because that brings in potentially negative influences that they try to live apart from, Waldner said. However, Green Acres Industries could outsource certain manufacturing functions to other colonies if it wants to expand someday, he said.

The company employs 12 men directly, and one engineer who was recruited from off the colony.

"It's been a severe learning curve, but now our product has a reputation and it's selling itself," Waldner said.

As success grows, so do suspicions that colony businesses like Green Acres Industries receive unfair tax advantages as part of a religious sect.

"It's getting to be a very sore spot in the industries," said a competitor in another sector, who requested anonymity.

The biggest competitor in fire-truck manufacturing is Fort Garry Fire Trucks in Winnipeg, the largest fire-truck maker in the country. In fact, Manitoba is the fire-truck hub of Canada.

Fort Garry makes 110 fire trucks a year, compared to about a dozen at Green Acres. Fort Garry production includes fire trucks to fight grass fires for natural resources departments, pumper trucks for the Department of National Defence, and fire trucks for the Olympics in Vancouver. It builds all the fire trucks for Northern Canada, Alaska and the Arctic. It even sells fire trucks to places like the United Arab Emirates, China and Africa.

"It's an extremely competitive market. There are 14 or 15 companies in Canada, plus U.S. competition," president Rick Suche said. Those competitors include Green Acres and Grunthal Welding & Supplies Ltd. in southern Manitoba.

Suche did not want to bad-mouth a competitor like Green Acres, but did allow there are differences. "Free labour is a pretty big advantage. A standard fire truck to us is 1,000 hours of labour," he said.

Free labour?

A colony is regarded as "a communal organization" under Section 143 of the Income Tax Act -- no one owns property.

Income earned on the colony goes into a trust that takes care of all finances. So revenue from the fire-truck business virtually supports the Green Acres colony of about 120 people, including all meals, housing, transportation and utility costs. "To some extent, our operating costs are higher," Waldner maintained.

A calculation must be made for an income allotment of every adult 18 years and over, but it is basically an accounting figure. Colony members then file income-tax returns individually based on that information.

The individual allotment typically determines a salary below $35,000, often making families eligible to maximize child tax benefits and access prescription drugs for free. That salary would also place individuals in the lowest tax bracket, where they pay about 25 per cent on earnings.

Colony companies do not pay employment insurance and pension premiums. But colony members don't access those benefits either.

In summary, all colony income must be accounted for, only accounted for differently. "I would say they're not treated any better, in my mind," said Ken Grower, BDO Dunwoody senior tax partner.

Even so, it would be naive to credit Hutterite success to tax laws if, in fact, they have advantages. Their main advantage is that colony members work together, not as individuals, and make sacrifices together to continue their lifestyle and Anabaptist faith.

"It doesn't have to be a Hutterite colony to do it," Waldner maintained. "If you take 20, 50, 100 people out of Winnipeg for a business venture of some kind, with one heart, one soul, one mind, the net result is prosperity."

bill.redekop@freepress.mb.ca

 

Republished from the Winnipeg Free Press print edition January 4, 2009 A6

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