Prescott, Ontario -- January 2004
If you believe in your company, have a strong strategy for success, and can provide spin-off benefits to your community, build a team committed to getting you government funding.
That's what Prescott Finishing, of Prescott, Ontario did. Faced with impending foreign competition that could drastically undercut its prices, the company came up with a business strategy that would give them a niche market the foreign competition couldn't touch. Then they built a team consisting of the Town of Prescott and their own suppliers to help raise the substantial capital costs required to move ahead. The result: a $600,000 grant from the Ontario government through the OSTAR program.
Prescott Finishing manufactures, dyes and finishes fabrics at its plant in Eastern Ontario. And in recent years the market has grown tougher. A number of third world countries are able to produce commodity (or popular) fabrics at much lower prices, thanks to the lower wages paid in those countries. By the end of 2004 tariffs will completely disappear and the Canadian market will open wide to these overseas producers.
The question then, says Prescott Finishing's Rene Nutuola, is, "How the hell am I going to stay in business?" The answer, he explains, was to look at niches in which the overseas producers can't complete. "The niches are mainly in the industrial area," says Nutuola. "These are complicated fabrics which can be developed now because the technology exists. The overseas guys don't have that technology, so if we can get it, we have an edge over them."
Beyond that, the company needs to do more than make the fabrics; it needs to keep developing newer, better products. "Eventually, the overseas guys will start copying our products. But we're heavy into R&D, developing new fabrics, always staying a step ahead of them," says Nutuola.
He developed partnerships with key suppliers in the Prescott area, which allowed them to stay ahead of the market during the last few years. Prescott Finishing emerged from 12 Canadian competitors to become the only player in its market.
But the equipment needed to stay on the leading edge represented a major capital investment. "A frame, for example, can cost you $3 million," says Nutuola. "You don't buy a frame every week. We've had ours for more than 30 years, and the technology today is completely different."
Nutuola started investigating various government programs that might apply to his business; at the same time, he contacted the town of Prescott and started sharing his vision of developing niche markets by creating, manufacturing and selling the new fabrics. With his supplier-partnership onside, and recent expansion of the plant's warehouse demonstrating his commitment to the business, he was in a good position.
"We could see that were putting in a large significant investment of their own, and they were exploring government assistance on their own," says Laurie Kirkaby of the Town of Prescott.
The CAO of Prescott at the time discovered the potential for the OSTAR grant, which is intended for mainly agricultural areas. Prescott, while a small urban centre, fit the bill because of the region's location and its economy, which has been hard hit by manufacturers closing recently.
Having various partners onside made the project manageable, says Laurie Kirkaby.
"There was an extensive proposal that had to be put through and of course it was very important that partnerships be developed in order for it to proceed through the right programs. There were quite a series of meetings, and when it looked like we were ready to proceed, there were still a number of things that needed to be done."
The town sought out letters of support for the project from the Chamber of Commerce and from the local Brendel Community Futures Development Corporation. It also helped get Rideau St. Lawrence Utilities onside as a partner. "We also did an evaluation that showed it would result in $1.7 million in direct wages and $5 million in indirect jobs and $3 million revenue in new export markets," says Kirkaby.
"The partnership was very important. I think that’s one reason that this grant was successful. The partners had a common purpose and it was beneficial to the local economy."
"I would say if there's a benefit aside from just making profits for your company, the likelihood of you getting a grant are much higher," says Rene Nutuola. "And a little luck helps, too!"
www.mah.gov.on.ca/userfiles/HTML/nts_1_11073_1.htmlt
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Source: Arkilite.com Finance