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Kick ’Em When They’re Down

Due to Government Costs, Tariffs and Variable Energy and Labor Costs, Canada’s Small-Business Sector Is Falling Rapidly Off the Cliff

By Jeremy Pollard, CET

What a difference a few months makes. Here in Canada, we’re feeling the economic mess, as well.

Since 2005, Ontario, the province where I live, has lost more than 100,000 manufacturing-sector jobs. Our provincial economy historically has been automotive-centric, so it really isn’t any surprise. We wonder what the effects of the monetary issues in the U.S. will be here. We wait with bated breath for the elections here and in the U.S. to be over. A new dawn can’t come soon enough for most.

Some of our socialistic tendencies might be worsening our problems. The Canadian Federation of Independent Business produced a report that is sounding lots of alarm bells. The report talks about government leadership to pull the province out of the deep dark manufacturing dry well that we have fallen into. I’m not sure why we can’t do it ourselves, but that’s socialism for you. Depend on others.

The report suggests that the lifeblood business here has been the small to medium sector, and due to imposed costs by government, as well as tariffs and variable costs due to energy and employee productivity, this sector is falling rapidly off the cliff.

I know one of these small manufacturers. He makes pulleys and similar parts for a leading import automaker. The automaker is very specific when it tells Mick that it needs him to be successful, and to prove the point they will do the things they can to be sure he is successful.

Wow. A customer that cares about its supplier and won’t beat him up just to get the best price.

Even with this good relationship, his business is down and his bank got scared because of the business slowdown. They called his line of credit at 3 p.m. on a Friday and gave him until the close of business that same Friday to pay up.

A lot of companies would have thrown in the towel. Not him. He came up with a percentage of the dough that afternoon. He had to come up with the rest in a week or so.

He has managed to get funding from another source to continue to operate and build his business. Of course, he’s not doing business with that financial institution any more.

Mick works hard and smart. Being blindsided by a panicky, overzealous loan officer just is not cricket.

This is what the report warns about. When businesses are down but not out, the establishment or government comes along and makes sure that they pay their business taxes, their employee deductions and their lines of credit. If they don’t, then they will be closed down.

But 50 people will lose their jobs, and the government will lose all that revenue. They don’t care.
These are purposeful job losses that didn’t go overseas.

Socialism is a strange brew sometimes. It protects and serves people but also creates an attitude of entitlement.

Another related issue is compliance. Bill C-45 is Canadian federal safety legislation that states an employer must prevent any and all accidents. Existing control systems, when changed, must have a pre-start review done by a qualified engineer and will cost a lot of dough to make that process basically idiot-proof.

So would you move your manufacturing elsewhere to avoid this regulatory morass?

As one manufacturer remarked, no one is asking, “What can we do to help you?” As Mick found out, it’s all about being sure that you can keep going, almost despite the bank or the government.

Most businesses here are taxed and regulated to death. Socialism has its good side and its very ugly side. It allows a blame game and fosters the idea that lack of leadership is OK.

There is a picture in a newspaper article of a manufacturer holding his product, explaining that he is not selling much these days. He looks tired and beaten.

Take Mick’s approach. If someone comes kicking, then kick back. See what you can do to create your own leadership.

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