How manufacturers can access government stimulus to fight COVID-19: "Be agile"

May 13, 2020

"Manufacturing companies need to be agile now. They need to be entrepreneurial, to recognize the opportunities emerging during the COVID-19 crisis, both from the government and in the marketplace," advises Paul Boucher, a BDO partner specialized in innovation, growth, and maximizing government incentives for manufacturing.

"This is an ever-changing environment—government announcements are made every day based on the latest developments in the coronavirus crisis—so many manufacturers are focused on ‘what are we doing today' and ‘what are we doing tomorrow'—next week is probably the horizon right now," he says.

"In our discussions with clients, we help them to broaden their horizons to supply local and global needs," Paul continues. "An individual manufacturing client is dealing with what's in front of them. We have the knowledge and information that comes from working with hundreds of clients who are in this situation, so we can provide insight."

That breadth and depth of experience can be invaluable in taking advantage of government stimulus issued in response to the COVID-19 crisis.

Paul notes that, widely speaking, there are three levels of response—provincial, federal, and global.

The provinces' responses focus on immediate volume requirements for manufactured items like gloves, masks, and gowns—personal protective equipment (PPE).

The federal response is to get necessary supplies—and get them where they are needed throughout the country.

The global response offers opportunities for manufacturers that scale up or pivot to meet provincial or federal requirements.

"Regardless of the trajectory of the pandemic, the provincial and federal governments will need to replenish their strategic supplies, and there is a certain amount of global volume for which there will also continue to be demand," Paul notes.

BDO can help clients with the structured project plans and business-case applications required to access government stimulus—in addition to broadening their horizons to benefit from contributions to the COVID response.

Government stimulus for manufacturers

Government stimulus is focused in two streams—procurement and funding.

Government-procurement programs

Both the federal and provincial governments are seeking to become a customer for manufacturers that produce critical medical supplies or equipment needed to combat COVID-19.

Manufacturers can seek to become government suppliers through procurement stimulus by scaling up or pivoting.

Paul illustrates: BDO is working with a company that manufactures temporary walls that could be used to build provisional medical facilities. Typically, the manufacturer produces the walls from cloth or other lightweight material not conducive in a bacterial environment—could the manufacturer re-tool or re-adapt their product so it opens up new avenues of sales and revenue?

"We're also working with a clothing manufacturer that has invested in new equipment and built the capacity to make the level-two masks and gowns used in medical facilities," Paul says. "The question we put to them: Can we leverage a short-term investment into long-term revenue? Could the gowns and masks be a permanent product line, a source of new growth?"

Established government funding

Governments are also providing funding to manufacturers that produce the products or supplies needed in the fight against COVID-19—or that pivot to make them.

In Canada, short-term and long-term funding initiatives are available through NGen (Next Generation Manufacturing Canada).

Short-term funding (before June 30, 2020)

The short-term initiative focuses on projects with an immediate impact in the period leading up to June 30, 2020, and offers manufacturers up to a 100% grant to cover the incremental expenditures incurred while pivoting or scaling up.

Paul illustrates: "We're working with a company that makes chemically treated wipes that kill bacteria and viruses, and that can be used on surfaces, and on hands and other body parts. They are looking at doubling their production volume, operating around-the-clock in two extended twelve-hour shifts. They need to buy additional equipment to scale up. Those incurred and incremental costs can be covered under the COVID-19 fund."

Longer-term funding (after July 1, 2020)

The funding for longer-term initiatives offers up to a 50% grant to cover manufacturers' incremental expenditures on production started after June 30, 2020.

Paul illustrates: "We're working with a 3D-printing company that has to order more equipment to produce face shields—it will take a couple of months to get the equipment in, and up and running."

Paul offers another example: "A hockey-helmet manufacturer that we're working with is now is also making face shields, visors worn in hospitals—they physically stopped making their consumer product and shifted to making these emergency medical products."

Emerging government funding

Governments are continuing to issue new funding opportunities—often with almost-immediate deadlines.

"The application windows are very tight—days—so it's important for manufacturers to be prepared—ready to adapt and respond very quickly," Paul advises. "Professional assistance is required to prepare, quantify, and submit qualified applications. BDO is that professional-services provider."

What's next: how BDO continues to help manufacturers―during and after the COVID crisis

What happens next, as manufacturers adjust to the so-called next normal?

It will require a lot of management expertise, a lot of planning, a lot of time to come back from this," Paul cautions.

In addition to helping manufacturers access government stimulus, Paul and other BDO partners are helping companies with business continuity, crisis management, strategic planning, tax planning, human-resources consultation, and financial modelling for 2020 and the time periods to follow—as companies emerge from the COVID-19 crisis and move toward recovery.

"Although manufacturers are currently focusing on managing their cash flow and potentially pivoting to manufacturing PPE, they need to be considering longer-term aspects of COVID-19," says David Linton, Manufacturing & Distribution Industry Leader of BDO's Consulting group.

"We will not see a return to business-as-usual any time soon, and it's likely that the current situation will result in some permanent changes to the way many businesses operate. Now is the time for manufacturers to take advantage of the experience gained in the last couple of months and start planning for these changes."

There are several government-incentive programs applicable to manufacturers that are not directly related to COVID-19—they can be used to assess and deploy process and technology improvements, and BDO can advise on these as part of a manufacturer's overall long-term business plan.

"It's the agile and forward-looking businesses that emerge stronger from situations like these," says David, "so we are always talking about both the present and the future with our clients."

To learn how BDO can help your manufacturing company, contact:

Paul Boucher, Partner, SR&ED and Government Incentives

David Linton Partner, BDO Consulting―National Manufacturing & Distribution Industry Leader

Mike Gillespie, Partner, National Manufacturing Leader

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