Archived — Final Evaluation of the Canadian Apparel and Textile Industries Program (CATIP)

Final Draft Report

October 2009

Tabled and approved by the Deputy Minister at the October 30, 2009 Departmental Evaluation Committee meeting

Table of Contents

Executive Summary

The Canadian Apparel and Textile Industries Program (CATIP) was introduced in 2002 to assist companies in adjusting to significant trade and market changes. In 2004 and 2005 CATIP received additional funding for the Textiles Production Efficiency component (TPEC) (also referred to as Canadian Textiles Program—CANtex).

CATIP provided assistance to apparel and textile companies (firm projects), as well as industry associations (national initiatives) through a contribution program. Funding for firm projects for the apparel sector ended in March 2005. CATIP was administered by Industry Canada (IC) for the rest of Canada and delivered jointly by IC and Economic Development for the Quebec Regions (CED-Q).

This report provides the final evaluation results for the period from 2002/03 to the summer of 2009. The scope of the evaluation includes issues of relevance and performance. The evaluation was carried out by TDV Global Inc. for the Audit and Evaluation Branch (AEB) of Industry Canada. It was managed by an AEB evaluation manager. A member of the AEB evaluation team was included in the evaluation team. An Evaluation Steering Committee made up of Industry Canada representatives and key external stakeholders provided input and guidance during the course of the evaluation. CATIP is scheduled to sunset March 31, 2010. As a result, the evaluation report does not contain any recommendations, and a management action plan was not required.

In summary, the program was appropriate and well-aligned with government priorities. CATIP was successful in meeting the majority of the identified objectives, resulting in smaller, yet possibly stronger and more productive sectors. There is some indication of the development of niche and higher value added markets in both the textile and apparel sectors. As a contribution program, it was efficiently administered. Steps were taken to implement the recommended changes from the formative evaluation; however some differences in program delivery consistency remained.

Rationale / Relevance

CATIP was well aligned with departmental and federal government priorities. Federal Government intervention was appropriate due to the market pressures on the sectors at the time of program initiation. Fund recipients report that most of the projects would not have proceeded without CATIP support. As CATIP sunsets, industry has expressed concerns about a continued coordinated federal approach to support the apparel and textile sectors. Some complementary programs exist federally and in some provinces. No duplication was identified and the terms and conditions protected against double counting of expenses.

The apparel and textile sectors have experienced significant restructuring as a result of trade liberalization and international cost competition—developments which were anticipated in the creation of the CATIP program. While many of these developments were anticipated, both sectors are adjusting to the new market realities. As well, both sectors have indicated the need for additional assistance, in support of activities focused on their strategic priorities. Of note, the textile sector has articulated a vision and plan for the future through the "Technology Roadmap for the Canadian Textile Industry" which includes a range of activities that require implementation assistance, such as enhancing partnerships, marketing studies, communications activities and a human resources vision and continuing education models. The apparel industry has identified a number of priorities including product standards and product safety, regulatory compliance and the continued need for an integrated marketing strategy for the sector.

Performance: Effectiveness

CATIP succeeded in meeting most of the program objectives in a substantial manner and in other objectives, it partially succeeded. Although the sectors have decreased in volume of product and most economic indicators, the Program did help identify new markets, promote the capabilities of Canadian industry abroad, improve cost efficiencies, promote best practices and develop mechanisms to mitigate the impacts of trade liberalization on the sector.

The one objective that was not well met was in assisting the sector to access non-government capital. After careful consideration to achieve this objective, CATIP management, in consultation with industry representatives, decided to reduce this priority. Access to capital remains a significant issue for both the textile and apparel sectors, however this objective was deemed less cost productive in light of CATIP means; the Program met the objectives that were most important to its clientele. The evaluation did not identify any unforeseen consequences to the program implementation.

Performance: Efficiency and Economy

CATIP has been implemented in a cost effective manner. Administrative cost ratio was slightly below ratio approved in the original program documentation. Fund recipients were extremely satisfied, reporting that the application process and reporting was straight forward, the terms and conditions were clear and that the administrative level of effort was appropriate.

Steps were taken following the mid-term evaluation to improve program consistency across the country. Some differences remained in the approval process between CED-Q and IC such as requests for non-repayable contributions required ministerial approval at CED-Q, where IC managers were authorized to approve such requests.

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List of Acronyms and Abbreviations

ADM
Apparent Domestic Market
AEB
Audit and Evaluation Branch
BNQ
Bureau de normalisation du Québec
B2B
Business to Business
CA
Contribution Agreement
CANtex
Canadian Textiles Program
CATIP
Canadian Apparel and Textile Industries Program
CED-Q
Canada Economic Development for the Quebec Regions
CMIS
Contributions Management Information System
DFAIT
Department of Foreign Affairs and International Trade
FTA
Free Trade Agreement
FTE
Full time equivalent
GDP
Gross Domestic Product
GOA
Global Opportunities for Associations
HRC
Human Resource Council
HRSDC
Human Resources and Skills Development Canada
IC
Industry Canada
ISO
International Organization for Standardization
LDC
Least Developed Countries
MDEIE
Ministère du Développement Économique, de l'Innovation et des Exportations (Québec)
MIR
Manufacturing Intensity Ratio
MRPS
Material Requirements Planning System
NAFTA
North American Free Trade Agreement
NI
National Initiatives
NRCan
Natural Resources Canada
O&M
Operations and Maintenance funding
PEMD-A
Program for Export Market Development - Associations
PPG
Program Project Group
R&D
Research and Development
RMAF
Results Based Management and Accountability Framework
SMART
Program to help small and medium-sized manufacturers in Ontario improve their productivity
SME
Small and Medium Enterprises
TBS
Treasury Board Secretariat (of Canada)
TPEC
Textiles Production Efficiency Component
WTO
World Trade Organization

1.0 Introduction

The Government, through Industry Canada (IC), introduced the Canadian Apparel and Textile Industries Program (CATIP) in 2002 to assist companies in making the necessary changes. In 2004 and 2005 additional funding was provided for the Textiles Production Efficiency Component (TPEC) and the Canadian Textiles Program (CANtex) of CATIP. TPEC and CANtex are used interchangeably in program documentation; in this document both TPEC and CANtex (I or II) are referred to as CANtex. CATIP is used to refer to the entire program from 2002–2010 including all three funding streams.

This report provides the final evaluation results for the period from 2002–03 to the summer of 2009. It covers the issues of relevance and performance and follows up on the recommendations of the mid-term evaluation that was completed in January 2007.

CATIP is scheduled to sunset March 31, 2010. As a result, the evaluation report does not contain any recommendations, and a management action plan was not required.

This report is organized as follows:

  • Section 2 provides an overview of the CATIP program and its resources;
  • Section 3 outlines the goals of the evaluation;
  • Section 4 describes the evaluation methodology, data sources and limitations;
  • Section 5 describes the key findings related to the evaluation issues of relevance, performance and formative evaluation follow-up; and
  • Section 6 summarises the study conclusions.

2.0 Background

Industry Canada (IC) has legislated responsibility for industry and technology in Canada (Department of Industry Act, 1995). Duties are to be exercised in a manner that will strengthen the national economy and promote sustainable development, and increase the international competitiveness of Canadian industry, goods and services and assist in the adjustment to changing domestic and international conditions.

2.1 Sector Overview

The apparel and textile industries have long been an important feature in the Canadian economy. Almost 70,000 Canadians were employed in these industries in 20091. In recent years, both industries have been forced to make significant adjustments in response to changing domestic and international conditions. Figures 1 and 2 below illustrate the impact of the changing conditions on the major economic indicators for the textile and apparel sectors.

Both the textiles and apparel sectors are industries composed mostly of small and medium enterprises requiring relatively low capitalization levels when compared with other industries such as the automobile and aeronautics sectors. The textiles and apparel sectors have been attempting to shift to niche markets and specialized market opportunities.

Figure 1: Number of Loans/Average Size of Loans (1999–2008)

Number of Loans/Average Size of Loans (1999-2008)

Description of Figure 1

Figure 2: Major Economic Indicators

Major Economic Indicators

Description of Figure 2

ADM: Apparent Domestic Market, GDP: Gross Domestic Product

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2.2 Program Description

Introduced in 2002, CATIP provided assistance to apparel and textile companies (firm projects), as well as industry associations (national initiatives) through a contribution program. Additional funding was provided in 2004 and 2005 and the focus of the program was adjusted to emerging conditions.

Contribution agreements were issued for approved projects. The agreements were based on a standard template agreement based on the TBS Policy on Transfer Payments and the approved terms and conditions for the program in effect at the time.

The program was delivered jointly by IC and CED-Q. CED-Q was responsible for firm level projects in Quebec, while Industry Canada managed firm projects for the rest of the country as well as all of the national initiatives.

The nature of the projects funded under CATIP evolved over time. At the outset, funding was provided under CATIP to:

  • Identify and introduce best practices and leading edge technologies. Firms used the contributions to undertake evaluations of their operations and introduce best practices in design, technology, management, administration and production and other areas related to company operation. This included e-commerce applications related to trade, product development, and inventory control. A contribution was also provided to an industry association for the development of a technology centre to promote the adoption of leading edge technologies and innovations by apparel firms. Contributions were also available to industry associations to implement e-commerce initiatives.
  • Facilitate access to capital. Contributions were available to firms to develop business plans and to undertake sector and market analyses. IC initially used internal funding (Operations and Maintenance—O&M) to contract sector and market analysis including global yearly review of emerging trans-national apparel and textile companies, studies of international apparel and textile lending practices, development of specific financial analysis tools, and communication campaigns targeted at financial institutions and investors.
  • Develop and implement global marketing strategies. Contributions were available to associations to undertake marketing/branding campaigns both domestically and internationally. Internal operating funds (O&M) was used to support the participation of firms in trade shows, by making sure that appropriate booth space was made available and the presence of Canadian firms highlighted.

CATIP includes four components, of which two (firm and national initiatives components) are of interest for both textile and apparel companies and two (CANtex I—Productivity and CANtex II—Transformative) have been specifically designed to meet the textile companies' needs. The firm components for the apparel sector were funded from 2002 to March 2005.

Table 1: CATIP Components
Component Client Type of projects
1. Firm Canadian apparel and textile manufacturing firms

Studies identifying best practices in design, technologies and production;

Innovative projects that will implement the results of these studies;

Development of strategic business plans for financing applications.

2. National Initiatives

Apparel and textile industry associations

Not-for-profit organizations

Corporations and consortia of other not-for-profit organizations

Developing a global strategy, including marketing studies and other related activities, to brand Canadian apparel and textile products;

Branding and marketing Canadian apparel and textile products;

Establishing electronic business initiatives.

3. CANtex I—Productivity Canadian companies established prior to June 27, 2002, and created for the purpose of manufacturing textiles Implementation of textile production processes to increase productivity
4. CANtex II—Transformative Canadian companies established prior to June 27, 2002, and created for the purpose of manufacturing textiles Implementation of a project to re-engineer textile production processes and/or re-tool production equipment and facilities to produce innovative and/or higher value-added textile products.

Firms were generally eligible for up to 50% of the eligible costs, to a maximum, non-repayable contribution of $100,000 per approved project. Aboriginal firms were eligible for up to 100% of the eligible costs. Through the National Initiatives, associations and not-for-profit organizations were eligible for up to 90% of the eligible costs, to a maximum of $3 million.

The TPEC of CATIP (also called CANtex I) was introduced in 2004 to further encourage textile firms to identify and introduce best practices and leading edge technologies that would improve productivity and reduce production costs. The maximum contribution under this component was 50% of the eligible costs or $500,000, whichever was less. Contributions over $100,000 were repayable.

CATIP was further modified in 2005 as part of a package of new measures that included proposed tariff relief on textile inputs and extension of duty remission orders. The definition of eligible costs under the program was expanded to include equipment and machinery costs directly related to re-tooling projects. Marketing costs of up to 20% of the total eligible costs were also made eligible. In addition, the maximum contribution was increased to $3 million. Contributions over $100,000 continued to be repayable as were all contributions for capital costs.

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2.3 Program Resources

The planned annual resources for the delivery of CATIP are summarized in Table 2 below. The figures reflect approved transfers of funds from O&M in 2004–2005 and 2005–2006 to grants and contributions but do not reflect internal re-profiling of funds from one year to another through arrangements made with other programs. One significant change occurred in September 2006 whereby the government announced a reduction of $24.9 million in program resources effective for 2006/07 and 2007/08.

Of the $84.86 million available for the program, approximately 83% ($70.5 million) was targeted for supporting recipients' projects with the balance to be used for the administration of the program by IC and CED-Q. This includes some 55 projects funded using O&M in the years 2003/04 and 2004/05.

Table 2: Resources allocated to CATIP
Year Industry Canada CED-Q Total Funding Available
Salaries & O&M G&C Salaries & O&M G&C
Source: Results Based Management and Accountability Framework, 2007
2002–2003 $944,000 $1,293,000 $56,000 $707,000 $3,000,000
2003–2004 $2,802,000 $4,525,000 $198,000 $2,475,000 $10,000,000
2004–2005 $1,922,000 $7,681,000 $637,000 $5,110,000 $15,350,000
2005–2006 $1,896,610 $14,506,000 $1,000,390 $12,597,000 $30,000,000
2006–2007 $794,610 $4,272,000 $823,390 $4,858,500 $10,748,500
2007–2008 $770,610 $4,273,000 $844,390 ($1,526,500) $4,361,500
2008–2009 $395,300 $2,212,000 $389,700 $2,703,000 $5,700,000
2009–2010 $460,300 $2,179,000 $397,700 $2,663,000 $5,700,000
Total $9,985,430 $40,941,000 $4,346,570 $29,587,000 $84,860,000
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2.4 Program Reach

As of August 2009, approximately 850 projects had been completed or authorized through contribution agreements across 444 individual organizations (see Table 3).

Table 3: Projects delivered or in progress as of August 2009, by Department
Managing Department Number of Projects Number of Recipients
Industry Canada 520 219
CED-Q 330 225
Total 850 444

The distribution of projects by province is illustrated in the figure below.

Figure 3: Distribution of Projects by Province

Distribution of Projects by Province

Description of Figure 3

In addition, Industry Canada initiated 55 contracts using internal funding (O&M) in the early stages of the Program. This investment represented just under $1 million and was made from 2003 to 2005. After that time, all projects were done through contribution agreements.

Projects were categorized into seven major types, reflecting the objectives of the program. These include: branding and marketing, e-commerce, innovative best practice, productivity, sector and market analysis, transformative and access to non-government capital. The breakdown by type is illustrated in Figure 4.

Figure 4: Distribution of Projects by Type

Distribution of Projects by Type

Description of Figure 4


1 Statistics Canada employment data. (Return to Reference 1).

3.0 Goals of the Evaluation

As CATIP is scheduled to sunset on March 31, 2010, a final evaluation is required. This evaluation covers the time period from 2002–03 to the summer of 2009 and is final in nature. The objective of the evaluation is to assess the key issues of relevance and performance and follow up on the recommendations of the previous evaluation.

3.1 Evaluation Issues

The Results-based Management and Accountability Framework (RMAF) was updated in October 2007 and included a Program Profile, Expected Results, Logic Model and a Monitoring and Evaluation Plan. The RMAF was used to guide this evaluation. Appendix A contains the evaluation matrix including the indicators and data sources for each of the issues and sub-issues. A summary of these issues follows:

  • Relevance
    • To what extent was CATIP aligned with departmental and governmental priorities, including departmental strategic priorities?
    • Was the federal government intervention justified?
    • Is there a continuing need for CATIP?
  • Performance (Effectiveness)
    • To what extent has CATIP resulted in:
      • Greater understanding of changing apparel and textile market in Canada and internationally;
      • Increased number of firms making investments to adjust to the changed marketplace;
      • Increased access to capital from non-government sources;
      • Increased knowledge of Canadian manufacturers of potential market opportunities;
      • Increased knowledge of the capabilities of Canadian manufacturers;
      • Increased knowledge of Canadian manufacturers of more cost effective practices;
      • Increased usage of industry "best practices";
      • Improved productivity and cost competitiveness of Canadian textile manufacturers;
      • Mitigated potential impacts of increased competition due to increased access to the Canadian marketplace for foreign competitors and other changes in the international supply chain; and
      • Enhanced international competitiveness of Canadian apparel and textile manufacturers.
    • Were there any unintended outcomes (positive or negative)?
  • Performance (Efficiency and Economy)
    • Has CATIP been implemented in a cost effective manner?
    • Are there alternative ways to achieve the objectives of CATIP?
  • Follow-up on prior evaluation recommendations
    • What steps were taken to ensure that the program was consistently delivered in all parts of the country? How successful were these measures in ensuring that a program was consistently delivered in all parts of the country?

In addition program documentation from 2005 identified the need to document in the evaluation, information on each TPEC activity where a contribution is provided for re-tooling research and/or development. A table of these projects is contained in Appendix B.

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3.2 Prior Evaluations

A mid-term evaluation of CATIP—Textile Production Efficiency Component (TPEC/CANtex) was completed in January 2007. It concluded that:

  • "CANtex's design is suitable for the program and for applicants' and recipients' needs.
  • In the main, CANtex is well delivered. A number of factors appear, however, to have led to uneven program delivery in some regions.
  • CANtex is likely achieving the types of results that were intended.
  • More effort needs to be allocated to collecting the required performance information."2

Recommendations were made to address the uneven program delivery and to establish a complete and systematic process for collecting and compiling results information.

Also, in 2005/06 in a separate activity, a set of 32 case studies was conducted for the National Initiatives (NI) component of CATIP. That study concluded:

  • "The Analysis of the sample of projects indicates that intended immediate and intermediate outcomes from the National Initiatives (NI) component of the Canadian Apparel and Textiles Industries Program (CATIP) are being successfully achieved."3

2 Formative Evaluation of the Canadian Apparel and Textile Industries Program (CATIP)—Textile Production Efficiency Component (TPEC/CANtex), 2007. (Return to Reference 2).

3 Performance Analysis of the Canadian Apparel and Textile Industries Program (CATIP)—National Initiatives Component, 2006. (Return to Reference 3).

4.0 Evaluation Methodology

The evaluation was carried out by TDV Global Inc. for the Audit and Evaluation Branch (AEB) of Industry Canada. An AEB evaluation manager oversaw the evaluation. A member of the AEB evaluation team was part of the evaluation team. An Evaluation Steering Committee made up of Industry Canada representatives and key external stakeholders provided input and guidance during the course of the evaluation (see Appendix C for a list of the Steering Committee members).

The evaluation was conducted in accordance with Treasury Board Policy on Evaluation using a multi-method approach, including:

  • Document review;
  • Database and File review;
  • Management interviews;
  • Key stakeholder interviews;
  • Survey of fund recipients; and
  • Case studies.

Details of each data collection approach are contained below.

4.1 Data Collection

4.1.1 Document Review

Key documents were reviewed using a standard template to collect findings related to each evaluation issue. A review of key websites was also included in this task. Appendix D contains a detailed list of the documents and websites reviewed. The categories of documents reviewed included:

  • Program information;
  • Audit and Evaluation reports;
  • Industry documents;
  • Key government and industry websites; and
  • Other miscellaneous documents.

4.1.2 Database and File Review

A review of the Industry Canada and CED-Q administrative files and database was conducted to collect key statistics and trends for the evaluation. In particular, the Contributions Management Information System (CMIS) and its equivalent in CED-Q (Hermes) were examined. Administrative files were reviewed as appropriate to the evaluation issues.

4.1.3 Key Informant Interviews

Interviews were conducted with 20 individuals within IC, CED-Q, industry associations and other stakeholders (see Appendix E).

Table 4: Distribution of Interviews
  Group Number of Interviews
Management and Program Staff Industry Canada 7
CED-Q 4
Stakeholders Industry Associations 7
Other 2
Total Interviews 20

Three interview guides have been developed, one for each group of interviewees: Industry Canada/CED-Q, Industry Associations and other government departments (see Appendix F). The interview guides were approved by the project authority and translated. A review of the Staff Interview Guide was held among the team members after the first few interviews were conducted and the guide was adjusted slightly. A pre-test of the Industry Association Interview Guide was conducted with program management prior to translation.

Interview guides were provided to each interviewee prior to the interview. Interviews were conducted in the interviewee's preferred official language. Each interview was documented. The analysis of the interviews was conducted by the consultants and summary level information provided in the evaluation report. No comments are attributed to specific individuals or organizations.

4.1.4 Survey

A survey of fund recipients was conducted over July and August of 2009. The survey was designed, pre-tested and refined prior to translation and posting (see Appendix G). The survey was sent to a total of 419 organizations, 276 by e-mail and 143 by surface mail due to a lack of email addresses. Of these, 94 addresses failed or were returned, for a net reach of 325 recipients. A completion rate of 23% was achieved.

4.1.5 Case Studies

A series of six detailed case studies were completed in March through June 2009 to support this evaluation (See Appendix H). A list of all projects completed within the time frame of the study were stratified by the following criteria: value of projects, number of CATIP projects conducted by a recipient to date, province and the program under CATIP used. Because of the overwhelming large percentage of contribution agreements done in Ontario and Quebec, it was decided to limit cases to those two provinces. A random listing of potential firms that would be representative of the stratified list was identified and the firms were contacted by Industry Canada or CED-Q and asked if they would be willing to participate. Based on availability and willingness to participate, a final population of six cases was selected.

The case studies included file review, interviews and site visits to the fund recipients. The six case projects selected were:

Table 5: List of Detailed Case Studies
Project Recipient CATIP Program Province
488906 Le Groupe CTT National Initiative National
494259 Tilley Endurables Firm Component Ontario
498607 Atlantic Braid Ltd. CANtex I Ontario
499792 Firestone Textiles Company CANtex I Ontario
400018314 Stedfast Inc. CANtex II Quebec
400023502 A textile manufacturer CANtex I Quebec

Separately, a Performance Analysis of Industry Canada's National Initiatives component of the Canadian Apparel and Textile Industries Program was undertaken during the summer and fall of 2006. The analysis used a case study approach and sampled 32 individual projects from eight separate associations.

The results of both sets of case studies were incorporated as a key line of evidence into the analysis and findings.

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4.2 Data Quality and Limitations of the Methodologies

Overall quality of the data was considered to be good, including the IC and CED-Q files and databases.

Program Project Groups

  1. Branding and Marketing
  2. E-Commerce Initiative
  3. Innovative Best Practice
  4. Productivity
  5. Sector and Market Analysis
  6. Transformative
  7. Access to non-governmental capital

The databases allow for one program project group (PPG) to be identified for each project. However, many projects are aligned with more than one program objective. As such, the analysis is limited to the primary project goal.

Overall, the response rate from the survey at 23% was considered good. A lack of email addresses from Quebec organizations resulted in the use of surface mail for many Quebec organizations. The significantly lower response rate for surface mail resulted in an under-representation of Quebec firms in the survey. Figures 5a and 5b compare the proportions of CATIP program recipients to the survey response rates for Quebec, Ontario and the rest of Canada.

Figure 5a: Distribution of Recipients
 

Distribution of Recipients

Description of Figure 5a

Figure 5b: Distribution of Survey Respondents

Distribution of Survey Respondents

Description of Figure 5b

There were three limitations to the case studies component of the evaluation. First, the cases represent a randomly selected group from which volunteers were willing to be interviewed. With a procedural requirement of an onsite investigation for the case, this acceptance on the part of recipients was necessary and created an unavoidable bias in the case selection. Second, cases were restricted to easy commutable cases within Ontario and Quebec to avoid multiple long distance trips to conduct the site investigations. Third, the cases represent activities in the private sector that were several years old. Personnel changes, firm restructuring and other priorities make recollection of case details difficult for the recipients and case officers.

These limitations do not affect the validity of the conclusions presented in this report as the responses collected through multiple lines of evidence were consistent.

5.0 Findings

5.1 Relevance

This section of the evaluation contains an assessment of the relevance of the program. It evaluates the extent to which the program and its objectives are aligned with government priorities and the need for the program. The described findings are derived primarily from the document review, key IC management interviews, stakeholder interviews and the survey results.

5.1.1 To what extent is the Program aligned with departmental and governmental priorities, including departmental strategic priorities?

Conclusion:

CATIP was well aligned with departmental and federal government priorities.

Findings:

The original objective of CATIP was to assist apparel and textile firms to diversify their markets and increase their competitiveness. Industry Canada's 2010 Business Plan has a specific strategy related to these types of program: "Supporting business through policies and programs that promote competitiveness and productivity."

CATIP is linked to CED-Q's strategic outcome #2 (Report on Plans and Priorities—Main Estimates 2009–2010): "Presence of conditions conducive to sustainable growth and the competitive positioning of small and medium enterprises (SMEs) and regions". Within this outcome, one of the priorities is to reinforce the performance of innovative, competitive SMEs. Specific activities identified under this priority include:

"Declining export demand, tighter credit and lower projected revenues will affect SMEs' investment projects. To help SMEs and the regions of Quebec negotiate this period of turbulence, the Agency will continue to support intervention that enables enterprises to enhance their capabilities in terms of management, innovation, adoption of new technology and integration with value chains."

At the broader federal level, CATIP is aligned with the Government of Canada outcome: "Strong economic growth" (Canada's Performance Report, 2007–08).

Internal management and staff interviews consistently reported that the program was in line with Industry Canada and CED-Q objectives and priorities.

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5.1.2 Is the Federal Government intervention justified?

Conclusion:

Federal Government intervention was appropriate due to the market pressures on the sectors at the time of program initiation. Fund recipients report that most of the projects would not have proceeded without support. As CATIP sunsets, industry has expressed concerns about a continued coordinated federal approach to support the apparel and textile sectors. Some complementary programs exist federally and in some provinces. No duplication was identified and the terms and conditions protected against double counting of expenses.

Findings:

The terms and conditions of the contribution agreements related to CATIP are clear on other government funding sources and stacking in order to avoid double funding for the same expenses.

Interviews with management, trade associations and other stakeholders confirmed that other federal and provincial programs are complementary and do not duplicate CATIP. Some complementary programs existed in the past and some remain in place currently at the federal and provincial level. These include:

  • Program for Export Market Development—Associations (PEMD-A): DFAIT program now called the Global Opportunities for Associations (GOA), provides contribution funding to support national associations undertaking new or expanded international business development activities, in strategic markets and sectors, for the benefit of an entire industry (member and non-member firms). Federal funding has been reduced to this program.
  • CED-Q: a range of ongoing financial support programs for businesses across sectors including textiles and apparel in the regions of the province of Quebec
  • NRCan: ecoENERGY Retrofit Incentive for Industry: designed to help industrial facilities overcome financial barriers to improving the energy efficiency of their operations.
  • Human Resource Councils: HRSDC program funding for human resource councils including apparel and textiles
  • SMART: A Government of Ontario $25 million SMART Program announced as part of the 2008 provincial budget. SMART focuses on four specific improvement areas: productivity, IT best practices, health and safety or energy efficient programs
  • MDEIE Quebec: ProMode, launched in 2007, provides support for innovation, productivity and market development programs for apparel and textile companies.

Interviews with trade associations report that many of the projects would not have proceeded without federal support and the tools developed through the national initiatives would not exist. As CATIP sunsets, some concerns were raised by industry representatives regarding a potential lack of a coordinated federal approach to the sector. In addition, the province of Quebec appears to consider both the apparel and textile sectors to be priority sectors for provincial support.

The survey found that 76% of respondents indicated that the likelihood of being able to complete their projects without financial support from CATIP would have been highly unlikely or unlikely.

Figure 6: Percentage of respondents that would have completed the project without funding from CATIP (n=60)

Percentage of respondents that would have completed the project without funding from CATIP (n=60)

Description of Figure 6

Furthermore, of the six detailed case studies completed, three recipients reported that their respective project would not have proceeded without government funding whereas the others highlighted that their projects would have proceeded but at a slower pace and with lower expectations.

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5.1.3 Is there a continuing need for CATIP?

Conclusion:

Interviews with industry representatives and case studies of selected firms indicate that there is a continuing need for support for the textiles and apparel industries as there are ongoing pressures on both of these sectors that indicate the need for additional support in a different form.

Both the apparel and textile sectors have experienced significant restructuring as a result of trade liberalization and international cost competition. The conditions that prompted the support to these sectors though CATIP have largely been realized. Of note, the textile sector has articulated a vision and plan for the future which includes a range of activities. A comprehensive strategy for the apparel sector has not been articulated to date.

Findings:

Both the textile and apparel sectors experienced significant trade liberalization and restructuring in the period under review.

  • The original purpose of CATIP was to help alleviate any disproportionate impact on apparel and textile firms of the Market Access for Least Developed Countries (LDC) initiative which gave duty-free and quota free access to imports from 48 of the 49 LDCs as of Jan 1, 2003.
  • Trade liberalization initiatives such as North American Free Trade Agreement (NAFTA) intensified globalization pressure and increased imports.
  • On Jan 1, 2005, the World Trade Organization (WTO) removed all remaining quotas for its members on this sector.

Key economic indicators for the apparel and textile sector demonstrate the significance of the structural changes over the period under review. In the apparel sector, employment, export volumes and domestic manufacturing have all experienced significant declines while imports have grown. Likewise, the textile sector has demonstrated steady declines in the same indicators. (See Figures 1 and 2 in section 2.1).

Broadly, expectations were that the Canadian textiles and apparel industries would become smaller in terms of the number of firms; however they would be in a stronger position with less of a focus on low cost manufacturing. The table below demonstrates the shrinkage in terms of number of active firms.

Figure 7: Number of Active Firms—2002 to 2008

Number of Active Firms—2002 to 2008

Description of Figure 7

Source: Statistics Canada 
*Note: Different methodology introduced in 2007

While these trade measures are now fully implemented, pressures remain on the sector.

Technology Roadmap for the Canadian Textiles Industry

The Canadian Textile Industry has prepared a twenty-year strategy known as the Technology Roadmap. The Roadmap targets specialised products (technical textiles and other value-added textiles) through R&D, innovation, commercialization and business networking.

Interviews found that the current economic slowdown / recession is continuing to affect both the textile and apparel sectors. In addition, international low cost competition continues, particularly with respect to the domestic apparel manufacturing sector.

Acknowledging that the markets have changed and much restructuring of the Canadian sector has occurred to date, the need for some type of restructuring support is consistently voiced by associations within the textile and apparel sectors. The textile sector in particular appears to have momentum and a vision for continued change as described in the Textiles Roadmap4. Industry representatives have indicated that a queue of additional projects that could be funded remain on their "to do" list. The apparel industry has identified a number of priorities such as product standards and product safety, regulatory compliance and the continued need for an integrated marketing strategy for the sector. Examples from the textile sector include activities to enhance partnerships, conduct marketing studies, implement communications activities, and develop a human resources vision and continuing education model. Both industry sectors are expressing concerns related to program funding drawing to an end.

The case studies reported a strong appreciation for the program and its value and a number of the companies identified potential projects they would like to proceed with if the program continued.


4 www.textileroadmap.com. (Return to Reference 4).

5.0 Findings (Continued)

5.2 Performance (Effectiveness)

This section of the evaluation contains an assessment of how well the program met its specified objectives. The described findings are derived from database reviews, case studies, stakeholder interviews and the survey results. The following table outlines the conclusions and also shows the percentage of survey respondents who felt their programs met the objective.

Table 6: Summary of Conclusions by CATIP Objective
# Objective Was it met? Survey %
1 Greater understanding of changing apparel and textile market in Canada and internationally Met N/A
2 Increased number of firms making investments to adjust to the changed marketplace Met 75%
3 Increased access to capital from non-government sources Not met 29%
4 Increased knowledge of Canadian manufacturers of potential market opportunities Met, had a significant impact 58%
5 Increased knowledge of the capabilities of Canadian manufacturers Met, had a significant impact 59%
6 Increased knowledge of Canadian manufacturers of more cost effective practices (merged with #8 below) Met, had a significant impact 84%
7 Increased usage of industry "best practices" Met, had a significant impact 82%
8 Improved productivity and cost competitiveness of Canadian textile manufacturers This objective is merged with # 6 above.
9 Mitigated potential impacts of increased competition due to increased access to the Canadian marketplace for foreign competitors and other changes in the international supply chain Partially met, made a positive contribution but had minimal impact 58%
10 Enhanced international competitiveness of Canadian apparel and textile manufacturers Partially met, made a positive impact 66%
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5.2.1 Greater understanding of changing apparel and textile market in Canada and internationally

Conclusion:

CATIP did improve the understanding of the changing markets in both the textile and apparel sectors.

Findings:

A greater understanding of the changing marketplace for apparel and textiles includes understanding of evolving: consumer preferences, supply chain characteristics, distribution channel characteristics and profiles of international competitors. This could include fashion trends, new products and technologies, social drivers such as increased thrift by consumers or desires for changes in marketing methods, etc.

CATIP was the catalyst for several initiatives aimed at improving knowledge of the marketplace for both apparel and textiles. Examining the 850 projects funded by CATIP, there were 36 projects related to this outcome. The total value of the projects that had a primary goal of Sector and Market Analysis was $1.5 million, representing less than 3% of program budget. Projects existed for both textiles and apparel and exploratory contracted projects were used along with contributions.

Fast Fashion

A concept of fashion creation that involves a drastic reduction of time lapsed from design to production to retail allowing more rapid presentation of new fashions and accompanying reduction of costs.

In interviews with CATIP staff, the evaluation team heard of the effectiveness of several initiatives aimed at giving manufacturers a greater perspective. These included participation in international trade missions such as the Magic Apparel Show in Las Vegas, promotion of new techniques such as Fast Fashion and a variety of sector surveys conducted under O&M contracts in both the apparel and textile sectors. In interviews with trade associations in both apparel and textiles it was viewed that they had been able, with the assistance of CATIP, to inform their members of emerging trends and help disseminate information in general.

Of the six case studies selected, two were projects that advanced this objective. In the case of Tilley Endurables, a study was conducted using 50% funding from CATIP on the consumer preferences for travel and leisure wear. The results of this study impacted marketing plans for Tilley Endurables. CTT Group, in their Geotextiles project communicated changes in the textile market to their participant members and facilitated discussions on how Canada's textile industry should respond to these changes.

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5.2.2 Increased number of firms making investments to adjust to the changed marketplace

Conclusion:

CATIP did have an impact on firms investing to adjust to the changing market place through some forward thinking strategy activities by the associations. This impact did not reverse a downward trend in investments in the sectors.

Findings:

Investments to adjust to the changed marketplace (as opposed to investments for best practices or cost efficiency) would include actions by firms to adjust their business practices or product offering specifically due to a recognizable change in the global marketplace. One example is a firm investing in equipment to add additional finishing steps that previously were done by another firm. A few examples include the projects of the Textiles Roadmap and the Geotextile initiative that did promote actions to help firms adjust to the changing marketplace.

In a review of Statistics Canada data on capital and repair expenditure trends, there is a steady downward trend in investments in the apparel industry that had expenditures drop from $133 million in 2002 down to $91 million in 2007. A similar downward trend was noted in the textiles industry dropping from $284 million to $178 million over the same period. However, when reviewed on a per company basis, the R&D in both the textiles and apparel sectors are on a clear progression, albeit the amounts are small in relation to the manufacturing sector at large. The capital repairs and expenditures are decreasing for the textiles sector, and remain relatively flat for the apparel sector. It is noted that R&D in the apparel sector is mostly related to fashion design activities, and fashion design is not captured as R&D in StatsCan data.

Figure 8: Textiles Sector Capital Expenditures and Research and Development expenses on a per company basis—2002 to 2008

Textiles Sector Capital Expenditures and Research and Development expenses on a per company basis—2002 to 2008

Description of Figure 8

Figure 9: Apparel Sector Capital Expenditures and Research and Development expenses on a per company basis—2002 to 2008

Apparel Sector Capital Expenditures and Research and Development expenses on a per company basis—2002 to 2008

Description of Figure 9

Interviews with CATIP staff and stakeholders found that investment was not a primary focus of many projects but that associations in both industrial sectors were promoting strategic adjustments to reflect the changing marketplace. In the apparel sector, this involved a promotion of the Fast Fashion initiative to accelerate getting new fashions into showrooms. In the textile sector, it included the development of new products that meet more specialized needs recognizing that lower end products are being produced at lower cost off shore and that adjustments to the product base are needed to provide customers with a value proposition that is competitive. It is assumed that this strategic shift would result in capital expenditures but no significant evidence was found to support that assumption.

Three quarters of the respondents to the survey reported that their project goal of allowing them to make investments to adjust to the changed marketplace were met or met very well (see Figure 10). This implies, in general, that CATIP promoted activities that include investments to accommodate to market changes. This objective was considered met or fully met in a large percentage of survey respondents as shown in the following diagram:

Figure 10: Percentage of respondents who felt that CATIP projects met their objectives of investing to adjust to the changed marketplace (n=56)

Percentage of respondents who felt that CATIP projects met their objectives of investing to adjust to the changed marketplace (n=56)

Description of Figure 10

Of the six case studies selected, the Firestone Textiles Company case represents a firm making an investment to resolve a product issue and address an emerging market—plastics for electrical wiring. The involvement of CATIP made it easier for Firestone Textiles Company to promote the project internally and get funding from the parent firm to upgrade facilities.

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5.2.3 Increased access to capital from non-government sources

Conclusion:

CATIP did not advance this objective in any significant manner. There were very few program activities directed to this activity.

Findings:

This objective looks at the program assisting firms to secure capital more easily from venture capitalists, financial institutions and other non-government sources.

One project through contribution agreements identified this as their primary objective. In addition, three of the 55 O&M contracts examined advanced this objective, primarily studies comparing financing models in other countries (e.g. the United Kingdom). However, none of the contracts reflected a large investment.

In a review of Statistics Canada data from CANSIM, total loans to the clothing, textile and leather sectors declined from $2.7 billion in 2002 to $1.7 billion in 2007.

In interviews with CATIP staff, it was acknowledged that after a few small contracts at the beginning of the program, efforts on this objective were not vigorously pursued. Comments from industry suggest that, while access to capital has been and continues to be a significant impediment to industry, companies did not see CATIP as a viable method of addressing the problem. Therefore companies increasingly looked to various financial service providers (asset-based lenders, credit insurers) in order to meet their needs. Efforts turned to more productive and critical objectives of the program.

This objective received the least reports of being met by survey respondents as shown in the following diagram:

Figure 11: Percentage of respondents who felt that CATIP projects met their objectives of accessing non-governmental capital (n=52)

Percentage of respondents who felt that CATIP projects met their objectives of accessing non-governmental capital (n=52)

Description of Figure 11

None of the six case studies reflected significant advancement of this objective. Firestone Textiles Company did report that CATIP involvement helped secure internal funding from their parent corporation but this was not considered the primary focus of this project.

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5.2.4 Increased knowledge of Canadian manufacturers of potential market opportunities

Conclusion:

CATIP had a significant impact helping firms identify new market opportunities.

Findings:

This objective is to help Canadian manufacturers understand the potential market and to identify new opportunities either in domestic or foreign markets with either new or existing products.

The system that tracks primary project goals did not have a selection that directly corresponded with this objective. It is therefore difficult to accurately reflect what portion of the budget was allocated to this outcome. The majority of projects (about 70%) fall under the category Business Development that would include activities to understand and identify potential markets but would also include a wide variety of other projects.

Of the O&M contracts, 21 contracts advanced this objective covering both the apparel and textiles sector.

In a review of Statistics Canada export data, presumed to be reflective of new potential markets identified, there was significant decrease in volumes and dollar values. In the textile sector, overall exports decreased from $3.2 billion to just $2.0 billion from 2003 to 2008. In the same time period, apparel suffered an even greater downturn from $2.3 billion to just $900 million.

There is no clear trend in the destination countries. Some countries increase, others decrease. The United States is by far the largest customer and all other destination countries are rendered statistically insignificant due to its disproportionate size.

In interviews with CATIP staff and stakeholders, the evaluation team heard that both sectors were undertaking significant activity assisted by CATIP. In apparel, the Canadian Apparel Federation uses contribution funds to assist in the promotion of Canadian apparel at trade shows in the United States where vendors can identify potential customers. Likewise various efforts in the textile sector have helped to identify needs for specialized fibres and textiles.

This objective was considered met or fully met by just over 58% of survey respondents as shown in the following diagram. This represents a reasonably average response for the survey. It is interesting to note that 14% of respondents felt they did not meet this objective at all (see Figure 12).

Figure 12: Percentage of respondents who felt that CATIP projects met their objectives of increased knowledge of potential market opportunities (n=50)

Percentage of respondents who felt that CATIP projects met their objectives of increased knowledge of potential market opportunities (n=50)

Description of Figure 12

Tilley Endurables

In 2005, Tilley Endurables used CATIP assistance to conduct a market study. The resulting report enabled them to adjust their strategies in the US market.

Of the six case studies selected, two addressed identification of potential markets. Tilley Endurables commissioned a study of consumer needs in both Canada and the United States and identified potential new vendors to get a better understanding of their market and its potential. CTT Group with its Geotextile project conducted a needs assessment and identified potential products offers that could be exploited by Canadian firms.

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5.2.5 Increased knowledge of the capabilities of Canadian manufacturers

Conclusion:

CATIP had a significant impact helping to promote Canadian capabilities, particularly to export markets. Niche markets in specific countries were developed, specifically for high end products.

Findings:

This objective is to promote the capabilities of Canadian manufacturers both abroad and domestically.

There were 105 projects that identified Branding and Marketing as the primary project goal. These projects represent an investment by CATIP of $6.4 million dollars. There were more projects identified for this objective in Ontario than in Quebec. In the textile sector, significant effort was seen in branding geotextiles. In the fur industry, the Origin Assured labelling system provides cachet to Canadian products. Promotional tools were developed to allow fashion designers to appreciate the qualities of Canadian fur and the capabilities of Canadian trappers and producers. The Canadian Apparel Federation promoted the Wear Canada program.

Of the O&M contracts, this objective was served by 12 projects, seven in the apparel sector and five in the textile sector. The contracts in support of this objective were usually for trade shows and included booth design, message design, support for printed materials, strategy development and branding exercises.

In interviews with CATIP staff and stakeholders, the evaluation team heard that both sectors were undertaking significant activity assisted by CATIP. Trade shows, fashion shows and branding exercises like Origin Assured are helping Canadian firms carve out a niche of products and improve their international recognition on value added products, innovation and creativity. This was aided by a textiles trade office established in China, excellent attendance at significant industry events such as the Magic Apparel Show in Las Vegas and improved validity of quality of Canadian products reflected in ISO certification efforts of at least one plant.

This objective was considered met or fully met by just over 59% of survey respondents as shown in the following diagram. This represents a reasonably average response for the survey. Also, 12% of recipients felt they did not meet this objective at all (see Figure 13).

Figure 13: Percentage of respondents who felt that CATIP projects met their objectives of increasing their knowledge of the capabilities of Canadian manufacturers (n=51)

Percentage of respondents who felt that CATIP projects met their objectives of increasing their knowledge of the capabilities of Canadian manufacturers (n=51)

Description of Figure 13

Le Groupe CTT

Le Groupe CTT, with CATIP assistance, has promoted the development of geotextiles and the capabilities and innovation of Canadian firms.

Three of the case study projects increased awareness of the Canadian textiles industry. Firestone Textiles Company can now report to clients that it has a new capability and produces a better quality product (does not yellow when exposed to UV light). Stedfast Inc. noted that the hiring of an overseas consultant enhanced the visibility of their products in markets and tradeshows that they would not have participated in without the support of CATIP. CTT Group has promoted the development of geotextiles and the capabilities of Canadian firms.

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5.2.6 Improved productivity and cost competitiveness

Conclusion:

CATIP had a significant impact helping firms to reduce their costs and improve their cost competitiveness. There are indications of improved productivity in the textile sector.

Findings:

This CATIP objective was focused on the reduction of production costs and development times to realize productivity gains and the reduced costs.

The program project groups of e-commerce, transformative, and productivity Components were used to determine activity towards this objective. There were 405 projects for a total value of $32 million invested within these program project groups. Most of these projects were done at the firm level rather than through national associations. The list of projects includes many electronic system implementations (e.g. Material Requirements Planning (MRPs) and e-commerce business-to-business systems (B2B)).

Labour productivity in the textile sector, while somewhat variable over the period under review does demonstrate an increase from 2002–2008. Labour productivity within the apparel sector remained flat. See Figure and Table below.

Figure 14: Labour Productivity ($,000)

Labour Productivity ($,000)

Description of Figure 14

Table 7: Labour Productivity: Percentage Change by Sector, 2002–2008
Sector % change 2002–2008
Manufacturing Sector 10.8%
Textiles 12.3%
Apparel -3.0%

Within the mechanism of O&M contracts, six projects related to this objective. These initiatives involved efforts to promote industry specialists to determine bottlenecks and inefficiencies in member firms.

Lean manufacturing or lean production, which is often known simply as "Lean", is a production practice that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination. www.Wikipedia.org

In interviews with CATIP staff and stakeholders, the evaluation team discovered that many consistent efforts were being applied. Many firms were implementing "Lean" manufacturing to reduce costs or were modifying their business model to allow for electronic commerce and material tracking and just in time inventory management.

This objective was considered met or fully met by 83% of survey respondents as shown in the following diagram. This number is significant and suggests that CATIP is having a significant effect on cost competitiveness.

Figure 15: Percentage of respondents who felt that CATIP projects met their objective of improved productivity and cost competitiveness (n=59)

Percentage of respondents who felt that CATIP projects met their objective of improved productivity and cost competitiveness (n=59)

Description of Figure 15

The textile manufacturer in Quebec

The manufacturer conducted a study that resulted in the identification of several best practices for the firm to implement—best practices that improved plant efficiency.

Four of the six case studies showed improvements to cost competitiveness. In some instances, these improvements have dramatically improved the viability of the firm or plant. For CTT Group, the discussion of geotextile norms and standards has resulted in a discussion on quality and efficiency among the industry. For Atlantic Braid Ltd., the automated cutting system and the improvements to the layout of the winding room have improved cost effectiveness. Stedfast Inc. noted that the modifications to equipment as well as the implementation of the MRPII system have improved cost effectiveness. A textile manufacturer in Quebec noted that their consultant report highlighted a number of best practices worth implementing that helped reduce costs.

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5.2.7 Increased usage of industry "best practices"

Conclusion:

CATIP had a significant impact in promulgating best practices in both sectors.

Findings:

One objective of CATIP, closely related to the objective above, is to promote best practices among Canadian firms. It was a plan of the Program that successes will be promulgated throughout the sectors and that the adoption of these best practices would help to strengthen the industry. Best practices were considered to be any technique or tool that has been used to good effect in other situations or firms and is recognized as the most appropriate solution for either the textile or apparel industries.

The program project group of innovative best practices was used to determine activity towards this objective. There were a total of 99 projects for $6.6 million administered by Industry Canada and 161 projects worth $9.2 million administered through CED-Q.

In interviews with CATIP staff and stakeholders, the evaluation team discovered significant activity related to this objective. Most projects seek out best practices but in particular two initiatives were established, one in each of apparel and textile sectors that were geared specifically to promulgation of best practices. In the textile sector, a project called Expertex5 was established to examine firms and look for situations to apply a best practice to various parts of the business. The apparel sector had a similar program called Management Competency that aimed to raise the level of understanding of managerial issues among managers and was studied by the Conference Board of Canada as a Case Study6.

This objective was considered met or fully met by 82% of survey respondents as shown in the following diagram. This high number, second only to improved productivity suggest that these two objectives were the focus of the program.

Figure 16: Percentage of respondents who felt that CATIP projects met their objective of increased use of "best practices" (n=55)

Percentage of respondents who felt that CATIP projects met their objective of increased use of "best practices" (n=55)

Description of Figure 16

Firestone Textiles Company

Firestone Textiles Company used CATIP assistance to implement a modern control system, upgrading old pneumatic controls to new state of the art electronics improving efficiency and capacity.

Most of the case studies involved the recipient firms adopting a best practice. In two of the cases, CTT Group and Atlantic Braid Ltd., the projects furthered certification establishment. In general, the Case Studies suggest that the program is succeeding at getting industry to adopt best practices. CTT Group noted that the implementation of ISO-9001 has improved quality and manufacturing processes within the industry. The Health and Safety procedures at Atlantic Braid Ltd. are an implementation of best practices as was an improved creel system that introduced the use of copper in filament handling to reduce static electricity in the product. Use of modern control systems at Firestone Textiles Company improved the practices of the plant. It adds traceability and historical data to allow for process improvements.

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5.2.8 Mitigate potential impacts of increased competition due to increased access to Canadian marketplace for foreign competitors and other changes in the global value chain

Conclusion:

Although CATIP has made a positive contribution, the effect of increased foreign competition has been so great that CATIP has had minimal impact in mitigating potential impacts. There are some small indications of a trend towards increased value added in the textiles sector.

Findings:

A main reason for the creation of CATIP was to anticipate impacts on the sectors as a result of the removal of tariffs and quotas from 48 least developed countries.

Looking at statistical data from Statistics Canada, it is evident that the impacts of trade liberalization have been to increase imports and decrease domestic production in the apparel industry and domestic production has decreased in the textiles industry (see section 2.1 for key economic indicators). This has been felt in both sectors but is more noticeable in the apparel industry where traditional and long time Canadian icons of apparel have moved their operations offshore.

The Manufacturing Intensity Ratio (MIR) "gives a sense of how much transformation takes place within an industry and what proportion of value is added in industries where relatively significant capital and labour is applied, the manufacturing intensity ratio is relatively high"7. The table below illustrates the MIR for the manufacturing sector in Canada as a whole and the textile and apparel industries over the 2002–2008 time period. From this a small improvement in MIR is noted in the textiles sector. The increase in the manufacturing intensity ratio (MIR), which indicates a growth in the proportion of higher value-added products, also suggests that the apparel industry is seeking to maintain its competitiveness through an enhancement of its products.

Table 8: Manufacturing Intensity Ratio
Sector 2002 2003 2004 2005 2006 2007 2008
Source: Statistics Canada
Manufacturing Sector 32.6% 32.2% 31.7% 31.3% 30.8% 30.5% 29.0%
Textiles 36.6% 35.6% 38.3% 37.3% 37.0% 37.9% 38.7%
Apparel 44.4% 43.6% 46.6% 48.2% 47.3% 48.4% 49.4%

No specific program project group was established for this objective. It is recognized that the National Initiatives component addressed common priorities by working with representative groups and the projects under that component of the Program produced benefits that addressed the priorities of many industry members.

Interviews with stakeholders and program staff have consistently shown that significant structural changes have occurred in both sectors. There is a belief that while the domestic sector is smaller, it is stronger and provides either niche services or a quality differentiator. In the textile sector, the Textile Roadmap clearly identified path for Canadian industry to adapt to changing competitive landscape. There was less mitigation in the apparel sector as a broad range of consumer goods can no longer economically be produced in Canada.

This objective was considered met or fully met by less than 60% of survey respondents as shown in the following diagram. This percentage places this objective below average compared to the suite of objectives for the Program.

Figure 17: Percentage of respondents who felt that CATIP projects met their objectives of mitigating the impacts of increased competition (n=55)

Percentage of respondents who felt that CATIP projects met their objectives of mitigating the impacts of increased competition (n=55)

Description of Figure 17

Atlantic Braid

Atlantic Braid Ltd. reacted to increased competition by upgrading their twisting and testing equipment to enable them to work with higher quality products, developing new products.

Within the case studies, two projects enabled firms to better compete against encroaching foreign competitors by helping to establish product differentiations. CTT Group, through the creation of the geotextile road building standards has promoted higher grade and quality to differentiate Canadian products from other geotextile competitors. This project has indirectly reduced competition. It has not focused on creating a trade barrier but rather demanding that the geotextile used in Canadian/Quebec roads meet stringent quality requirements.

The Atlantic Braid Ltd. project enabled the firm to stay competitive by enabling use of high tech fibres. Firestone Textiles Company improved the quality of nylon pellets.

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5.2.9 Enhanced international competitiveness of Canadian apparel and textile manufacturers

Conclusion:

CATIP had a positive impact in helping Canadian products be more competitive in the international markets.

Findings:

International competitiveness is seen to relate to both cost and perceived quality of the product. The product needs to present a value proposition to potential buyers and that proposition needs to be well communicated, also.

National Initiatives funded 37 projects aimed at international trade missions. In addition the projects associated with mitigating potential impacts also contribute to international competitiveness.

Interviews with stakeholders and program staff indicate that in many respects, Canada has established a niche market in both textiles and apparel. This is reflected in four initiatives that help differentiate Canadian products:

  • The Wear Canada8 program presents Canadian apparel in a unified manner and suggests to the potential buyer that the industry is solid, well organized and hence reliable
  • The Origin Assured and Beautifully Canadian9 labels provide quality assurances to the purchaser
  • Bureau de normalisation du Québec (BNQ) certification of geotextiles provides stringent quality assurances.

This objective was considered met or fully met by 66% of survey respondents as shown in the following diagram. This percentage places this objective as average compared to the suite of objectives for the Program.

Figure 18: Percentage of respondents who felt that CATIP projects met their objectives of enhancing their international competitiveness (n=56)

Percentage of respondents who felt that CATIP projects met their objectives of enhancing their international competitiveness (n=56)

Description of Figure 18

Several of the case study projects directly improved the firm's competitiveness.

Stedfast

Stedfast reduced their heating costs and implemented modifications to practices and equipment that allowed them to land a large tent fabric contract.

In the case of Atlantic Braid Ltd., the project enabled new products both through the use of high-tech fibres (Ultra high molecular weight polyethylene) and new markets, the result of being able to prove through testing that the product was competitive. The BNQ certification developed by CTT Group has attracted interest from France and ASQUAL (A French non-profit organization promoting quality and certification in geo-synthetics www.asqual.com French only.) As such the project is likely to lead to the opening of the European marketplace to BNQ certified geotextiles.

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5.2.10 Were there any unintended outcomes?

Conclusion:

The following unintended outcomes were observed: closer collaboration between IC and individual companies and industry associations, companies initiated closer interactions with each other through participation at trade shows funded by CATIP.

Findings:

Unintended outcomes arising from the Program could be either positive or negative. They could include unanticipated changes to the structure of the industry or to the recipient, changes to nature of business in the sector, impacts on other sectors, political impacts, etc. No negative outcomes were identified. The following are positive outcomes.

Interviews with Industry Canada and CED-Q program staff suggest that the program brought them closer to their clients and engaged them more in sectoral activities as a result of working with the National Initiatives and helping firms articulate their needs. In particular, staff in both organizations found that they developed better relationships with the textile industry. One interviewee expressed that they believed that the program had a positive impact in the minds of recipients who had not previously experienced government support, raising their appreciation of the work of the Federal Government and the Department.

Interviews with both staff and stakeholders indicated that the process of applying for contribution funds and reporting on progress and outcomes had an unanticipated effect of improving the managerial capabilities in both the apparel and textile sectors. These sectors have many small to medium sized enterprises and the logistical requirements of articulating a project, calculating expenses and intended outcomes required the development of skills which could be transferred to other aspects of running a business. Projects in the fur, fashion and geotextile sectors helped foster more collaboration within the sectors and resulted in the development of tools shared among fashion designers, toolkits for promoting fur usage, and roadmaps for the apparel and textile industries.


5 See Group CTT website for more information: http://www.gcttg.com/index.php?module=CMS&id=44&newlang=eng. (Return to Reference 5).

6 On the Cutting Edge: Strengthening Management Competencies and Business Success in the Apparel Industry, Case Study by P. Derek Hughes , Douglas Watt, June 2008, Source: The Conference Board of Canada. (Return to Reference 6).

7 http://www.ic.gc.ca/cis-sic/cis-sic.nsf/IDE/cis-sic31-33prde.html. (Return to Reference 7).

8 www.wearcanada.ca. (Return to Reference 8).

9 http://www.beautifullycanadian.com/OriginAssuredfur.aspx. (Return to Reference 9).

5.0 Findings (continued)

5.3 Performance (Efficiency and Economy)

5.3.1 Has CATIP been implemented in a cost effective manner?

Conclusion:

CATIP was implemented in a cost effective manner. The administrative cost ratio was slightly below the ratio approved in the original program documentation.

Findings:

In the original program documentation, 83% of the funds were targeted for supporting recipient's projects and 17% to be used for the administration of the program by IC and CED-Q. The approved project lists from both CED-Q and IC indicate that a total of $65 M was granted in contributions to firms and industry associations, and $12 M was expended on administering the program, which provides a ratio of 15% spent on managing the program. This is slightly below the assumptions incorporated in the original program documentation, in spite of the program funding being reduced by $24.9 million over the course of the program.

Administrative ratios can vary depending on the nature of the program, on the level of effort required to review each application, on the size and number of contributions granted. It was not possible to find similar comparative programs within IC, the other programs for which information was available involved programs with considerably different parameters, e.g. either much larger contributions for the ship building industry in the millions of dollars, or a few thousand dollars for the language industry.

IC allocated between two and six FTEs on CATIP throughout the program's duration. As work was distributed to a number of regional offices, it is difficult to estimate the level of effort that CED-Q invested in delivering CATIP. Initial indications reveal that two FTEs were to be dedicated to CATIP within CED-Q. At IC, 520 projects were approved, and 330 projects were approved at CED-Q. IC had the complete management of the program, including the audits, the mid-term and final evaluations, the overall management of the original program documentation and the reporting function. For CED-Q, CATIP was an incremental program in addition to running multiple industry assistance grants and contributions programs.

Interviews with representatives of industry associations revealed that applicants thought the application process for funds was well structured, information requested was logical and the level of effort required to prepare the documents was reasonable. A few expressed that some guidance was required to prepare the first request, and that some applicants were not familiar with the federal government's requirement for documentation. Once the initial learning curve was overcome, applicants were comfortable with the process. All external interviews revealed a very high level of satisfaction with the service and professionalism from the staff who answered their questions and helped them with the application process.

Survey respondents mostly agreed or strongly agreed with the statements:

  • The application process and reporting was straight forward (83%)
  • The terms and conditions were clear (97%)
  • The administrative level of effort was appropriate (90%)

In 2004, Industry Canada conducted a client survey of CATIP recipients and received 25 responses, mostly from apparel sector companies. The survey which focused on client satisfaction with the operation of the process, asked clients how satisfied they were with staff knowledge, courtesy and professionalism, process fairness, problem resolution, accessibility, clarity and speed of claims processing and overall satisfaction. In addition, survey respondents were asked if they would recommend Industry Canada, do business with the Department in the future and their view of positive and negative aspects of CATIP.

All respondents indicated that they would work with Industry Canada in the future and recommend the Department as a place to do business. The following table shows the level of overall satisfaction with the program ranging from 1 – Not Satisfied to 5 – Very Satisfied:

Table 9: Overall Satisfaction with CATIP, 2004
Ranking 1—Not 2 3 4 5—Very Total
Overall satisfaction with the program 0 0 4 11 10 25

Positive Aspects of CATIP:

  • "Great show of support for domestic industry"
  • "Well targeted for this sector"
  • "Everyone was very helpful"

Negative Aspects of CATIP:

  • "So much paperwork"
  • "Completing initial documentation required a knowledgeable consultant"
  • "Second payment was very slow"

Comments:

  • "Any continuation or expansion of this program could greatly help our business…"
  • "I appreciate your guidance and support through this project, thanks"
  • "Claim for payment process needs to be simplified"

In general, respondents were most satisfied with the staff, fairness and professionalism. Only three aspects received any scores below satisfied and they were for accessibility to services, time to process payment claims and clarity and ease of claims process. Hand written comments were mostly favourable with many taking the time to thank CATIP management. The box illustrates typical positive and negative aspects and constructive comments.

The case study review revealed that program staff was effective and efficient. In one case, there was a communications failure that resulted in a delay in getting a contribution agreement (CA) signed and that CA did not accurately describe the project.

It was noted by the evaluators that most of the cases involved multiple sub projects under one umbrella project. These were often very different in nature and, in the view of evaluators, should have been treated as separate projects. In one instance, Atlantic Braid Ltd., this resulted in an inaccurate CA and delays in the process. This bundling of projects would have the benefit of allowing for fewer active projects and hence lower management costs but it also tends to make projects more complex and more difficult to manage. In several cases, the projects did not use all funds requested. This is likely due to three factors: a) submitters presenting a "worst case scenario" to ensure that they do not end up short of funds, b) projects being too ambitious on activities and many activities being dropped and c) changing business conditions over the life of the project.

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5.3.2 Are there alternative ways to achieve the objectives of CATIP?

Conclusion:

There is no strong consensus as to an alternative way to achieve the intended objectives of CATIP.

Findings

Research and interviews revealed a number of suggestions on how to better achieve the program objectives. Some proposed that all industry assistance programs (not only IC programs) be managed out of one efficient organization rather than have a variety of providers with differing levels of services: CATIP, PEMD-A, SMART, MDEIE, etc.

Another potential model would be to let associations manage the whole program. This would allow association members to work together on a nationally coordinated approach, would lend itself to more strategic projects benefiting the whole sectors, provide a better sense of empowerment to the sectors, support a strategic capacity building with association management. This could parallel the Human Resources and Skills Development Canada (HRSDC) model with sectoral Human Resources Council (HRC). Other ideas include centralization vs. regionalization of program management, outsourcing of project approval process as in the SMART program.

Interviewees expressed that the program would benefit by allowing for multi-year planning and approval of projects since the work required in this industry is going to happen over a number of years. When it takes a few months to prepare a project request, the request may get approved another two months later, it sometimes left very little time before fiscal year-end to execute the project. CATIP spanned over eight fiscal years.

Web research identified some mechanisms available to governments to help an industry adjust to adverse conditions and include the following:

  • Support to marketing efforts
  • Research and development
  • Loan guarantee programs
  • Workforce adjustment programs: retraining of workforce, transition support services, short-term job creation, etc.

Most of these activities were covered by CATIP.

Thirty-three survey respondents provided suggestions on improving the program delivery. Their answers are summarized below:

Table 10: Survey Comments—General Themes
Themes # of responses
Improve clarity of application process, and automate application process 11
Make more funds available for the textile industry 5
Funding should be more flexible to accommodate alternative methodologies, smaller amounts, budgetary changes and implementation and training costs 9

The case studies revealed that in general, no significant changes to the model were proposed except that many recipients felt a registration model where frequent recipients could have their corporate financial data retained for re-use would help.

Improvements were suggested by recipients that included changes to the way information is accepted, the retention of financial data that is not project specific to make it easier for subsequent submissions, improvements in carrying funds across fiscal years, a two tiered approach to allow for speedier processing of small submissions and better online tools to support submissions and claims filing.

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5.3.3 What steps were taken to ensure that the program was consistently delivered in all parts of the country and how successful were these measures in ensuring that a consistent program was delivered in all parts of the country?

Conclusion:

Steps were taken to improve the consistency of program delivery. The level of communication between the two organizations involved in the delivery of CATIP increased. Interpretation bulletins were jointly developed. Terms and conditions were aligned. Some administrative differences remained between IC and CED-Q such as the approval process which required ministerial approval for non-repayable contributions at CED-Q.

Findings:

Following the formative evaluation, interview information indicated that there was an increased dialogue between IC and CED-Q. An MOU was developed to harmonize specific issues related to project funding, conditions of the program, and admissibility criteria. Interpretation bulletins were developed jointly. Regular meetings and phone conversations occurred between IC and CED-Q. CED-Q administered the smallest 10 regions in terms of volume for CATIP out of the Drummondville office through one advisor who was specialized in CATIP. The Terms and Conditions developed for CANtex II are consistent between IC and CED-Q. IC centralized claim processing to improve consistency. Similarly, within CED-Q, all CATIP funding requests were reviewed by one manager before the request was forwarded at the ministerial level. Program officers indicated better consistency after discussions occurred following the formative evaluation results were brought to the attention of program management in both organizations.

The six case studies demonstrated a difference between applications in Quebec and those in Ontario. In Quebec, the cases were managed by a generalist who was assigned to a specific territory and handles all CED-Q programs in that region. In the rest of Canada, applications were supported by CATIP staff in Industry Canada. Good communications between the CATIP staff in Industry Canada and the program co-ordinator in CED-Q mitigated the impacts and all six cases reported competent and capable staff.

6.0 Conclusions

Major conclusions reached during the evaluation are summarized by evaluation issue as follows:

Rationale / Relevance

CATIP is well aligned with departmental and federal government priorities. Federal Government intervention was appropriate due to the market pressures on the sectors at the time of program initiation. Fund recipients report that most of the projects would not have proceeded without support. As CATIP sunsets, industry has expressed concerns about a continued coordinated federal approach to support the apparel and textile sectors. Some complementary programs exist federally and in some provinces. No duplication was identified and the terms and conditions protected against double counting of expenses.

Performance: Effectiveness

CATIP succeeded in meeting most of the objectives in a substantial manner and in other objectives, it partially succeeded. Although the sectors have decreased in volume of product and most economic indicators, the Program did help identify new markets, promote the capabilities of Canadian industry abroad, improve cost efficiencies, promote best practices and develop mechanisms to mitigate the impacts of trade liberalization on the sector. The one objective that was not well met was assisting the sector to access non-government capital but this objective was deemed less critical than the others and the Program met the objectives that were most important to its clientele. There were no unforeseen consequences.

The apparel and textile sectors have experienced significant restructuring as a result of trade liberalization and international cost competition—developments which were anticipated in the creation of the CATIP program. While many of these developments were anticipated, both sectors are adjusting to the new market realities. In addition, both sectors have indicated the need for additional support, in support of activities focused on their strategic priorities. Of note, the textile sector has articulated a vision and plan for the future through the "Technology Roadmap for the Canadian Textile Industry" which includes a range of activities that require further assistance to implement. The apparel industry has identified a number of priorities including product standards and product safety, regulatory compliance and the continued need for an integrated marketing strategy for the sector.

Performance: Efficiency and Economy

CATIP has been implemented in a cost effective manner. The administrative cost ratio was slightly below the ratio approved in the original program documentation. Fund recipients were extremely satisfied, reporting that the application process and reporting was straight forward, the terms and conditions were clear and that the administrative level of effort was appropriate.

Steps were taken to improve program consistency across the country. Some differences remained in the approval process between CED-Q and IC where non-repayable contributions are concerned.

Figure 1

Figure 1 describes the major economic indicators of textile sector from 2004 to 2008.
  2004 2005 2006 2007 2008
ADM 9,697.7 9,273.5 8,238.9 7,929.1 7,451.7
Shipments 7,129.3 6,724.7 5,717.5 5,384.8 4,719.1
GDP 2,731.2 2,510.7 2,113.7 2,038.4 1,825.6
Imports 5,692.5 5,493.5 5,185.8 4,967.7 4,758.1
Exports 3,124.1 2,944.7 2,664.4 2,423.5 2,025.6
Employment ('000) 44.7 37.5 32.1 32.7 24.3

ADM: Apparent Domestic Market, GDP: Gross Domestic Product

Return to Figure 1

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Figure 2

Figure 2 describes the major economic indicators of apparel sector from 2004 to 2008
  2004 2005 2006 2007 2008
ADM 10,182.0 10,065.5 10,450.0 10,517.0 10,302.5
Shipments 6,241.1 5,289.6 4,981.0 4,325.4 3,288.0
GDP 2,906.0 2,549.0 2,358.0 2,095.0 1,622.8
Imports 6,084.4 6,509.0 6,976.9 7,391.6 7,910.3
Exports 2,143.5 1,733.1 1,508.0 1,200.0 895.8
Employment ('000) 82.2 67.3 65.0 56.2 44.4

ADM: Apparent Domestic Market, GDP: Gross Domestic Product

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Figure 3

Figure 3 illustrates the distribution of projects by province.

  • 46% of the projects are done in Quebec
  • 46% of the projects are done in Ontario
  • 4% of the projects are done in British Columbia
  • 2% of the projects are done in Manitoba
  • 1% of the projects are done in Nova Scotia

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Figure 4

The Figure 4 illustrates the distribution of projects by type.

  • Productivity 40% of the projects
  • Innovative best practice 31% of the projects
  • Branding & marketing 16% of the projects
  • Transformative 5% of the projects
  • Sector & market analysis 4% of the projects
  • E-Commerce 4% of the projects
  • Access to Non-government capital 0% of the projects

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Figure 5

Figure 5a is the distribution of recipients by provinces.

  • Quebec 54%
  • Ontario 36%
  • Other provinces 10%

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Figure 5b

Figure 5b is the distribution of survey respondents by provinces

  • Quebec 29%
  • Ontario 50%
  • Other provinces 21%

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Figure 6

Figure 6 illustrates the percentage of respondents that would have completed the project without funding from CATIP (n=60).

  • Highly unlikely 27%
  • Unlikely 49%
  • Neither likely not unlikely 17%
  • Highly likely 2%
  • Likely 5%

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Figure 7

Figure 7 illustrates the number of active firms from 2002 to 2008, by sector. (Read the table below)
Sector 2002 2003 2004 2005 2006 2007* 2008
Textiles 1,801 1,764 1,654 1,595 1,506 1,438 1,383
Apparel 3,323 3,252 2,852 2,631 2,407 2,227 2,055

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Figure 8

Figure 8 illustrates textile sector capital expenditures as well as research and development expenses on a per company basis from 2002 to 2008, in dollar.
  2002 2003 2004 2005 2006 2007 2008
Research and Development $26,641 $29,618 $34,394 $34,199 $35,534 $33,544 $35,268
Capital Expenditures and Repairs $157,190 $199,830 $148,609 $164,075 $144,223 $123,992  

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Figure 9

Figure 9 illustrates apparel sector capital expenditures as well as research and development expenses on a per company basis from 2002 to 2008, in dollar.
  2002 2003 2004 2005 2006 2007 2008
Research and Development $5,214 $7,455 $9,961 $10,430 $10,710 $12,242 $12,753
Capital Expenditures and Repairs $40,174 $39,145 $40,778 $32,953 $32,862 $41,041  

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Figure 10

Figure 10 illustrates the percentage of respondents who felt that CATIP projects met their objectives of investing to adjust to the changed marketplace (n=56).

  • Fully met 39%
  • Met 36%
  • Met somewhat 23%
  • Did not meet 2%

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Figure 11

Figure 11 illustrates the percentage of respondents who felt that CATIP projects met their objectives of accessing non-governmental capital (n=52)

  • Fully met 10%
  • Met 19%
  • Met somewhat 42%
  • Did not meet 29%

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Figure 12

Figure 12 illustrates the percentage of respondents who felt that CATIP projects met their objectives of increased knowledge of potential market opportunities (n=50)

  • Fully met 20%
  • Met 38%
  • Met somewhat 28%
  • Did not meet 14%

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Figure 13

Figure 13 illustrates the percentage of respondents who felt that CATIP projects met their objectives of increasing their knowledge of the capabilities of Canadian manufacturers (n=51)

  • Fully met 12%
  • Met 47%
  • Met somewhat 29%
  • Did not meet 12%

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Figure 14

Figure 14 illustrates the labour productivity by sector from 2002 to 2008
Sector 2002 2003 2004 2005 2006 2007 2008
Manufacturing Sector 94,7 95,1 98,8 102,1 102,7 105,4 104,9
Textiles 66,9 61,7 61,1 66,9 65,9 62,4 75,1
Apparel 37,7 36,2 35,4 37,9 36,3 37,3 36,6

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Figure 15

Figure 15 illustrates the percentage of respondents who felt that CATIP projects met their objectives of improved productivity and cost competitiveness (n=59)

  • Fully met 41%
  • Met 43%
  • Met somewhat 14%
  • Did not meet 2%

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Figure 16

Figure 16 illustrates the percentage of respondents who felt that CATIP projects met their objectives of increased use of "best practice" (n=55)

  • Fully met 38%
  • Met 44%
  • Met somewhat 18%

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Figure 17

Figure 17 illustrates the percentage of respondents who felt that CATIP projects met their objectives of mitigating the impacts of increased competition (n=55)

  • Fully met 29%
  • Met 29%
  • Met somewhat 38%
  • Did not meet 4%

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Figure 18

Figure 18 illustrates the percentage of respondents who felt that CATIP projects met their objectives of enhancing their international competitiveness (n=56)

  • Fully met 32%
  • Met 34%
  • Met somewhat 29%
  • Did not meet 5%

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