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Manufacturers to face new challenges in next year, survey shows

ST. JOHNS, NF -- Rising business costs, a loonie above par, decreasing selling prices and a lack of customers are ...


ST. JOHNS, NF — Rising business costs, a loonie above par, decreasing selling prices and a lack of customers are the top challenges facing Canadas largest business sector the next 12 months, according to a survey of Canadas manufacturers and exporters.

Considering the challenges that face Canadian manufacturers and exporters, it comes as no surprise that companies remain extremely cautious about future business prospects, said Jayson Myers, president of Canadian Manufacturers & Exporters (CME), during his survey presentation recently at the St. Johns Convention Centre. As with last year, forecasts for sales, production and profit performance, employment and investment are relatively weak. A majority of companies report an overall deterioration in their business environment this year.

Weaker sales and profits have eroded companies’ ability to invest in new plants, equipment and research and development, according to the survey. More than one quarter of manufacturers and exporters said last year that they planned to boost investment in production facilities in 2007 — but only 17% did.

But a $565-million federal incentive allowing companies to write off investments in machinery and equipment over two years seems to be making an impact. The percentage of companies planning to increase investment in this area has risen to 43% this year from 34% last year.

A majority of companies surveyed said the two-year Capital Cost Allowance (CCA), slated to last only two years, needs to be extended for maximum effect.

Six in 10 surveyed said the write-off’s two-year window constrained the ability to take advantage of it, and 87% recommended that Ottawa extend the tax deferral until 2012.

Conducted in the fall of 2007, CMEs annual management issues survey is commissioned by Rogers Media, Grant Thornton and Machines Italia. It is a look at the current and future state of the manufacturing and exporting industry according to the nations top CEOs. This year, 1,014 companies participated in the survey that focused on an overall business outlook, global business conditions, employment, investment, public policy initiatives and innovation.

The full results can be found at www.cme-mec.ca/pdf/cme08.pdf.