Cambridge Towel’s Closure Caused by Contract Loss, Electricity Rates
After 52 years in business, Cambridge Towel is expected to close its doors on November 30, 2016. The closure means that 120 unionized and 40 non-unionized jobs will be lost. After losing a major contract with Walmart in March 2016, the textile manufacturer faced financial pressure and has recently entered bankruptcy protection.
Cambridge Towel understood the difficulties of remaining competitive as a manufacturer in southern Ontario, and proactively sought government grants and other incentives to make their operations more efficient. This, unfortunately, was not enough to support the business, and they began experiencing recurring losses.
While most businesses who receive Canadian government grants use them to grow and become more sustainable, Cambridge Towel was unable to completely implement their project, which led to reduced funding contributions. The manufacturer never received the upgrades required to be sustainable, and therefore it became increasingly difficult to stay in business.
Inefficient Manufacturing Technology Led to High Monthly Expenses
Since 1979, Cambridge Towel has become a leading textile manufacturer and is one of only a few North American businesses who produce towels. Because of this, Cambridge Towel found its place within the market and became a top supplier for hotels and the hospitality industry.
Despite this competitive advantage, operating costs continued to rise and began eroding the business’ profits. In fact, Cambridge Towel has been paying as much as $155,000 every month to cover electricity costs alone.
Hydro electricity rates were a key obstacle for the company to overcome, so in 2014, Cambridge Towel began planning ways to become more efficient and thus lower energy costs. The manufacturer was approved for up to $190,000 in provincial funding through the Southwestern Ontario Development Fund (SWODF) to purchase new equipment, perform facility upgrades, and create new employment opportunities.
Ontario Business Grant’s Value Diminished
Although Cambridge Towel was eligible to receive up to $190,000 for their proposed project, the company was unable to deliver on its promises which led to less funding actually being awarded. Because of the inability to hit project milestones, their funding contribution was rolled-back to a mere $40,000.
Ontario Small Business Grants for Energy Efficiency and Productivity
Canadian manufacturing executives should become more energy efficient to avoid similar production issues. Reducing monthly electricity costs can improve productivity and lead to sustainable profits, ultimately making you more competitive on a global stage.
Luckily, manufacturers can reduce the cost of equipment adoption and other business expansion projects with Ontario small business grants.
Southwestern Ontario Development Fund (SWODF) Business Grants
The Southwestern Ontario Development Fund supports strategic, large-scale business investments that strengthen the business’ ability to continue growing. Projects often strengthen a manufacturer’s competitive positioning and enable the hiring of new employees as result of increased production abilities.
SWODF provides Ontario business grants worth up to 15% of eligible project costs to a maximum $1.5 million. An additional $3.5 million in small business loans may also be awarded if project budgets exceed $10 million.
Learn More: Is Your Business Eligible for the Southwestern Ontario Development Fund?
CME SMART Green: Clean Manufacturing Grants
CME SMART Green is a new Ontario government grant specifically for manufacturers who are not participating in the provincial Ontario Cap and Trade program. Eligible applicants may receive up to $500,000 to assess their manufacturing process and install new, more efficient equipment. Projects must lead to the large-scale reduction of greenhouse gas emissions (GHGs) created as a by-product of the manufacturing process.
CME SMART Green will provide up to 50% of project costs to a maximum $200,000 per facility, or up to $500,000 for multiple facilities.
Mentor Works Resource: Will CME Green Grants Fund Your Next Emissions Reduction Project?
Enhance Your Competitiveness with Ontario Government Grants
Manufacturers can fuel their competitiveness by applying for government grants and loans. When used to strategically offset a portion of project costs, funding can help companies accomplish more projects and better adapt to changing market conditions.
To discover if your business about is eligible for Ontario small business grants or loans, contact Mentor Works.
