On October 4, 2023, after many years of advocating for the wood industry to the Federal government, the Honourable Bardish Chagger, Member of Parliament for Waterloo, on behalf of the Honourable Filomena Tassi, Minister responsible for the Federal Economic Development Agency for Southern Ontario (FedDev Ontario), announced almost $2.9 million in support for WMCO to help SMEs adopt digital strategies. You can see the official announcement here.
After the announcement, I was quoted on the importance of this funding milestone.
“This project demonstrates the importance of industry-led clusters to deliver results for small- and medium-sized wood manufacturing companies, and government partners alike. SMEs who do not have easy access to support for digital transformation can work with the cluster to achieve global competitiveness through data integration and Industry 4.0 investments. The cluster provides an environment for companies to learn from each other’s projects and leverage the synergies to boost global competitiveness.”
There are a few big important factors at play here:
1. This all stemmed from the issue of our industry being behind the rest of the world for Industry 4.0: digital integration. The vision of the WMCO cluster is to strengthen the performance, innovation and agility of Ontario’s value-added wood manufacturing industry. WMCO made the case to FeDev to support our industry.
2. Most Small and Medium sized companies (SMEs) don’t have the resources or the knowledge to fully navigate and understand the whole Industry 4.0 landscape; along with the myriad of vendors trying to sell them solutions. Leveraging the cluster ecosystem demystifies this.
3. SMEs don’t have the resources to complete large and complex grant applications with no guarantee of success.
4. Government programs are typically inefficient when dealing with one SME at a time with such programs, with complex reporting and claims processes. By working the funding through the WMCO cluster, the government can help multiple companies at once; while the cluster can simplify and streamline the paperwork for the SME.
For this project, WMCO had already done the homework with the Industry 4.0 Digital Road Map study of 10 companies through the NRCan IFIT program (See last issue) . We now know what a digital integration project is for the wood industry. SMEs don’t require extensive digital assessments by consultants for the WMCO project, unlike other programs that fund digital integration.
SO HOW DOES IT SHAKE OUT FOR YOU AS AN SME?
We had to budget the available funds over a 2.5 yr period ending March 31, 2026, and we had to allocate projects by fiscal year (April1-March 31).
We also wanted to help as many companies as possible.
To be fair to everyone, a call for interest goes out to industry at large, and it is a first come-first served basis to submit a simple completed Project Plan template by a deadline. Projects get reviewed for their digital eligibility by WMCO, and is followed by a contribution agreement (contract).
Funding is 45% up to a max fundable spend of $100k ($45k) but ineligible costs are asked to be captured to track total industry investment. For example, the last IFIT project, $1 million leveraged $6 million in total industry investment.
The funding cycles run with a total 50 projects helping SMEs over the life of the project.
Current Round 1: Expenditures retro to April 1, 2023 - Feb 28, 2024 - 10 Projects
Round 2: Expenditures April 1, 2024 - March 31, 2024 - 18 Projects
Round 3 Expenditures April 1, 2025 - March 31, 2026 - 22 Projects
The claims process is simple by SMEs submitting expenditures and progress updates on a quarterly basis. Then, WMCO compiles all of the claims, and makes one big claim to FeDev on behalf of the SMEs. FeDev then approves the bulk claim from WMCO, and the funds channel through WMCO back to the SME. Companies do not have to deal directly with the government to access this funding, they deal with the cluster.
What is eligible for funding? Here it is from the project plan template:
Project demonstrates an investment in digital integration. Digital integration is an investment in software technologies that connect the various data-points in the manufacturing process. This will include investments such as: computer-aided design and computer-aided manufacturing integration enhancements; supply chain digitalization; software and hardware facilitating digital connectivity including enterprise resource planning (ERP); the internet of things (IoT) capability and optimization; and the corresponding analysis and training to support DI for SMEs.
Projects must demonstrate expenditures toward digital integration investments (see Eligible Costs below).
Projects must demonstrate expenditures toward digital integration investments. Details of project eligible activities are listed as:
- Computer hardware (Computers, tablets, networking, cabling, supplies, etc)
- Software (ERP, MES, integration, CAD/CAM, etc.)
- Systems optimization: Enhancements to current systems to facilitate Digital Integration.
- Training: on software, ERP, MES, and other integration investments.
- Manufacturing equipment upgrades that facilitate digital integration, connectivity and optimization
- Max 20% of project expenditures on New Capital Equipment (Manufacturing), including robotic or automation equipment and integration
- Internal Project Labour costs for implementation and training.
- External consulting for the project.
- Analysis reports costs
We have finally arrived at an important time when governments are now listening to the wood industry in Ontario. FYI: Here’s how it works in the EU: Industry Clusters, who represent industry, dictate policy based on industry’s needs to targeted levels of government to develop programs and supports. Together they collaborate on designing programs, and the programs are executed through the industry clusters to the companies. The cluster is accountable and measured against performance for metrics on the program and impact on the companies. Companies deal with the clusters, not the government.
The WMCO cluster is well positioned to execute a program such as this because it includes all segments of our wood manufacturing industry: cabinetry, millwork, furniture, construction components, mass timber, niche products; anything that changes the form of wood in the secondary manufacturing sector.
If you are not a member of WMCO already and have operations anywhere in Ontario, its time to get on board, as we have other programs on the horizon to build on this one, plus all of our ongoing programming, and our peer network; to help you and all other companies in our industry thrive to be globally competitive. It’s about time we all come together, and the cluster model is the way to do it!