Final Evaluation of the Canadian Apparel and Textile Industries Program

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:

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.

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.

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

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.

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