Province privatizes testing centre

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This article was published 11/06/2020 (1973 days ago), so information in it may no longer be current.

A government-owned specialized testing and calibration centre, considered to be a fixture of manufacturing in Manitoba, is for sale.

The provincial government is entertaining offers to privatize the Industrial Technology Centre, located on the University of Manitoba’s SmartPark campus.

Earlier this month, the government issued a request for pre-qualifications to purchase all or parts of the operation.

The centre works with approximately 250 clients annually and provides calibration services, standards testing and certification, noise and vibration testing, 3D laser scanning, and lottery ticket quality control for manufacturers in the province and further afield on a fee-for-service basis. It was founded in 1979 and became a special operating agency of the provincial government in 1996.

Kevin Lusk, a partner at Sunwest Consultants Ltd., provides business development guidance and advice to manufacturing companies in Western Canada.

Lusk said the centre has been in a period of decline due in part to limited investment in new technology and promotion by successive provincial governments.

“The Industrial Technology Centre never really had much support from the province in terms of marketing… and you become out of sight, out of mind,” Lusk said. “Hopefully, some other organization will pick up the ITC because, I believe, that it still is very important to the province.”

The request for pre-qualifications says the centre is the only laboratory that offers accredited dimensional calibration services on the Prairies.

The province will give preference to a buyer that offers to take over all business operations of the ITC “as a going concern” in either its current space, or elsewhere.

“Its functions really are important to maintain and sustain in the province,” Lusk said. “At the moment in Manitoba, we are the strongest manufacturing centre in Western Canada and the province would do well to think of its competitive position.”

Economic Development Minister Ralph Eichler was not available for an interview Thursday.

In a written statement to the Free Press, a government spokesperson said divesting itself of the ITC creates an opportunity to increase government efficiency by focusing on services that cannot be replicated or delivered by the private sector, and reduces government expenditures and future financial obligations.

“Following an extensive review, it was determined that government should divest itself of the ITC and empower private business to assume these services to business,” the spokesperson said.

In the centre’s 2018-19 financial report, the most recent publicly available document, chief operating officer Trevor Cornell wrote that demand for calibration and mechanical testing was very strong and continued to grow. Lottery ticket testing was also in high demand.

Last year, the province provided an operating grant of $337,000 to the ITC, less than half of the $730,000 received in 2018, the statements show. The centre reported an operating deficit of $132,000.

Cornell deferred comment to the provincial government.

A spokesman for Manitoba Aerospace said members of the association seldom use ITC services. The Manitoba division of the Canadian Manufacturers and Exporters Association declined to comment for this story.

John Pollard, co-chief executive officer of Pollard Banknote, said his company uses the ITC’s lottery ticket services extensively and is happy with the quality of work. However, he doesn’t anticipate privatizing the organization to affect his operations.

“We don’t see any particular reason why if the ITC transitioned to being a for-profit venture, as long as they continued doing a good job, that would make any real difference to us,” Pollard said. “The nature of its government ownership in itself is not important to us.”

In April, the not-for-profit research and development facility Composites Innovation Centre (rebranded CIC Engineering in December) ceased operations after declaring bankruptcy.

Both the federal and provincial governments provided significant financial support to the CIC since it was founded 2003, but the organization lost much of that support as the years wore on.

Taking the ITC and CIC together, Lusk said the province’s move to reduce its stake in manufacturing signals to industry the province “isn’t overly interested in manufacturing.”

“If the province is going to say to the global manufacturing world, ‘We are open for business for manufacturing, bring your manufacturing here, our manufacturing here and we can help you set up,’ then that presupposes that the province has some resources that are available under its own provincial name in support of attracting manufacturers,” he said.

Sean McKay, president of Honger Innovations and a well-known figure in the local manufacturing sector, said the ITC also provides more than fee-for-service activities. The special operating agency model lends itself to “soft” services such as cross-industry support, connection and innovation.

“It’s a bit of a loss to the community, unfortunately, and I think that’s the way the province is going with the cost-cutting measures, to the long term detriment to economic development in the community and the province,” McKay said.

danielle.dasilva@freepress.mb.ca