SASKATOON – Terry Summach doesn’t apologize for taking government money. The farm machinery industry is competitive and he’s willing to do anything to stay in business.
“A company has no choice but to look at what’s there and to take what’s offered if you’re going to remain competitive,” said Summach, president of Flexi-Coil.
Expanding businesses often find they’re short of money to pay for daily expenses. By using government money it “maximizes the availability of cash,” he said from his Saskatoon office.
“We pay a lot of taxes. With a growing private business we can’t just run and get more money when we run into difficulty.
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“We’re putting a lot of economic benefit into the community. I think the right thing was done.”
But Dale Botting, executive director of the Canadian Federation of Independent Business, said the days of government giving money to a “chosen few” has got to stop.
“The clock has run out on this stuff,” he said. He pointed to a recent survey of CFIB members that showed most are opposed to business subsidies. Even members who have received grant money said they would have proceeded with their expansions without it, by a margin of three to one.
“They just got free candy when the sign said there’s free candy,” said Botting.
Flexi-Coil, based in Saskatoon, finished its biggest expansion five years ago. The 1989 news release announcing the $17-million expansion included a $10-million Saskatchewan Economic Development Corporation loan in combination with a $4-million federal Western Economic Diversification loan and a $400,000 grant from Saskatch-ewan Trade and Investment.
Summach said Flexi-Coil never got the $400,000 grant initially announced. With interest, the original $10-million SEDCO loan grew to $15 million. Summach said the company now owes just under $14 million on the loan, and it has about $437,000 owing on the original $4 million WED loan.
Summach maintains the government has gotten good value for its money. Flexi-Coil employs about 1,300 people and its farm machinery sales are in excess of $50 million.
In 1985 there were 1,732 people employed in the farm machinery manufacturing industry in Sask-atchewan. In 1994 it had almost doubled to 3,019. In 1988 the value of machinery manufacturing was $176 million, most of it generated from agriculture. In 1994 that number had jumped to $437 million.
Larry Schneider, general manager of the Prairie Implement Manufacturers Association, said the 400 members in the farm machinery umbrella organization are split on whether government money should be directed into manufacturing.
“There is mixed feeling among our members,” he said.
Saskatchewan isn’t the only pro-vince with government incentives to keep businesses in their areas.
When Flexi-Coil was planning its latest expansion, the company was besieged with calls from officials in Alberta, North Dakota and South Dakota with various incentives to entice it away from Saskatchewan, said Summach. Some American states offered the company $14,000 for each new job created.
“It comes with free land and a whole bunch of incentives. That increases the ability of companies to grow and survive and hire people,” Summach said.
Botting said giving up government subsidies is like “unilateral disarmament.”
With other provinces or states playing a bidding game, it’s difficult for Saskatchewan to avoid offering its own incentives.
