The companies that manufacture farm machinery and other heavy-duty equipment in Canada need help keeping up with foreign competitors, says Howard Mains, a spokesman for the Association of Equipment Manufacturers.
“AEM members such as Mac- Don Industries compete on a global basis,” Mains told the Commons finance committee pre-budget hearings. That means they “must invest significantly in research and development to bring to market equipment that meets the demanding needs of customers in Canada and around the world.”
Not only must they contend with foreign trade barriers and the high value of the loonie, “dealers that sell and service their equipment must have access to a skilled workforce,” he said.
Mains outlined five budget measures that would assist the manufacturers:
Extend the two-year writeoff for investments in manufacturing and processing technologies to at least the end of 2016 and consider making this accelerated capital cost allowance permanent;
Make the Scientific Research and Experimental Development tax credit refundable and improve its administration;
Introduce a refundable tax credit for workplace training in order to offset the impact of rising Employment Insurance premiums;
Follow through on commitments to reduce the corporate income tax rate to 15 per cent;
Act on recommendations of both the Commons industry and finance committees to review and modernize the capital cost allowance (CCA) for equipment.
“Modernizing capital cost allowance rates would have a positive economic effect. Faster replacement of older equipment increases productivity and promotes real environmental savings,” he said. “Improvements to the CCA rates would also bring Canada in line with its major competitor and customer, the United States.”
The industry also needs to invest in research and development, technology and workforce skills, Mains said.
To illustrate the challenges facing the manufacturers, Mains recounted problems that high tariffs in Russia and Eastern Europe countries have created for MacDon and other Canadian companies that make combines, combine headers and air seeding equipment.
“Canada, because of its long history in small grains, has developed technology which has increased the productivity for grain farmers in Western Canada as well as other parts of the world,” he said. “This technology is just astonishing, to see how much ground can be covered by one farmer, one operator using seeders now that are over 80 feet wide and planting a quarter section of cereal in a matter of hours, versus days before.”
In addition to MacDon, sales by Saskatchewan manufacturers Seed Hawk and Vogel continue to be hurt by tariffs in Russia and Ukraine, he said.