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Finding funds: Favourable export climate has more Canadian SMEs ready to cash-in on grant funding for research and innovation


May 22, 2014
By Ryan Weaver

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With warmer temperatures finally sweeping across the country, the weather is not the only climate trending upwards. Small to mid-sized businesses are also looking to take advantage of favourable conditions for global expansion.

After years of stagnant growth, U.S. demand is finally on the rebound, and the Bank of Nova Scotia is forecasting the Canadian dollar to remain below 90 cents until 2015.   

“A reinvigorated U.S. economy should translate into better prospects for Canada’s export sector, but in order to reap the full benefits, we need to strengthen our competitiveness, tap new markets and secure and grow our involvement in global supply chains,” states Tina Kremmidas, chief economist of the Canadian Chamber of Commerce in its 2014-2015 Economic Outlook.

Kremmidas goes on to add that to become more competitive, Canadian businesses need to focus on the following: enhancing their operational efficiency; reducing costs; continually upgrading the skills of their workforce; constantly improving their products and services; working with government to penetrate new markets; investing in R&D and information and communications technology; and building internationally recognizable brands.

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Canadian SMEs look to the federal government for help
As one might expect, even with the global economy warming up, business owners are still hesitant to invest in research and development. The OECD has reported that Canadian businesses have been among the laggards when it comes to increasing R&D expenditures amid improving economic conditions. Fortunately, Canadian SMEs can look toward a host of Canadian government grant programs to make sure they are better prepared for international competition. Below are some programs aimed at businesses looking to commercialize new and/or improved products or services, adopt new technologies to improve efficiency, and/or foster key relationships with post-secondary institutions and research centres to access cutting-edge facilities, as well as the fresh ideas required to overcome obstacles to growth.

• IRAP Funding for Mid-Sized Projects support projects that aim to solve an innovation challenge through technology and research, with an average of $150,000 in grant funding per project covering as much as 65 per cent of salary costs. Eligible activities include: the production of original software/IP; R&D, prototyping and feasibility studies; as well as the development of new products, including manufacturing process analysis and product testing.

• Industrial Research Assistance Program (IRAP) Accelerated Review Process (ARP) helps small to mid-sized businesses across Canada solve innovation challenges. The loose focus of this funding program opens up a number of opportunities for businesses to take advantage of grants from the Canadian government. For example, some businesses have accessed IRAP ARP to help with market expansion activities such as website improvements and the development of e-commerce portals to better reach export markets. The details are:
•    Amount: Maximum $50,000 in government grants covering as much as 80 per cent of direct labour and 50 per cent sub-contractor expenses.
•    Timeline: Federal funding is released April 1 of each year. Projects can be carried out from April 1 to March 31 of the following year.
•    Eligibility: One to 500 people on payroll, at least two years incorporated, and a commitment to internal R&D activities.

SMEs tap Canada’s human capital through federally funded programs
R&D intensity is by no means the sole determinant of innovation performance by firms. Learning and external networking have also been found to have a significant influence on innovation. And while Canada’s status as a global innovator has slipped and funding for R&D has remained flat, Canada is still among the leading OECD countries in terms of spending on higher education. What is more, the federal government has committed a substantial portion of direct funding dollars to support collaboration programs between businesses and industry partners, post-secondary institutions and research centres. Here are a few of the programs that are helping Canadian businesses leverage collaborative research projects.

• National Sciences and Engineering Research Council of Canada (NSERC) offers the NSERC Engage program to fund short-term research or development projects (up to six months in length) aimed at addressing a company-specific problem. The details are:
•     Amount: Up to $25,000 from NSERC (no cash required from company) directly to the post-secondary partner to support the project.
•     Timeline: Rolling applications; no deadlines; four- to six-week turnaround on approvals; four- to six-month-long projects.
•     Eligibility: Company must operate from a Canadian base. Eligible collaborations include focused projects with specific short-term objectives with an academic researcher from a Canadian university. There is no limit on how many Engage grants a company can hold.

• NSERC Collaborative Research and Development (CRD) is a longer term research or development project, usually following an NSERC Engage project with the same faculty partners for projects up to five years in length to solve a larger R&D issue. The details are:
•    Amount: NSERC typically provides grant funding of up to $150,000 per year for a maximum of five years. However, funding above this amount can be requested from the NSERC selection committee.
•    Timeline: Rolling applications; no deadlines; one- to five-year-long projects.
•    Eligibility: Company must operate from a Canadian base. IP ownership to be agreed on by both partners.

• Investing in Commercialization Partnerships (ICP) is a program offered through the Federal Economic Development Agency for Southern Ontario (FedDev Ontario) that supports business-led partnerships that have a focus on helping to develop globally competitive products and services. The details are:
•    Amount: Grant of up to $20 million (50 per cent of project costs). Remaining costs must be made up from other partners.
•    Projects: Business-led projects that focus on new technologies or platforms; priority of regional diversification.
•    Timeline: Open now; continuous intake.
•    Eligibility: Post-secondary institutions and incorporated not-for-profits, including research institutions and industry associations; located in southern Ontario; must have 50 per cent support from industry/partners for cost.

Learn more
Mentor Works holds regular information workshops and webinars on government funding that are free of charge to owners and leaders of established small to mid-sized businesses. Visit www.mentorworks.ca/events/ for more details. •

Ryan Weaver is a marketing analyst at Mentor Works Ltd., an organization that helps companies identify and apply to government funding programs from both the provincial and federal levels.

This article originally appeared in the May 2014 issue of Manufacturing AUTOMATION.