Mayoral hopeful bases plan on tax-incentive model used in P.E.I.
Speaking on Tuesday morning at the Lacroix Hanger at the Greater Sudbury Airport, Melanson said manufacturers such as Bell Helicopter, Boeing, Sikorsky, Bombardier and Airbus Industries are all “looking for new links in their supply chains."
In P.E.I., the industry grew from $5 million a year in 1992 to $360 million in 2012, and now employs 3,500 people. A key part of the province's success is its Aerospace Tax Rebate Program, which guarantees a full rebate on all corporate income tax for eligible aviation companies for 10 years. The program was renewed for another 10 years in 2012. Companies also receive a full rebate on property taxes, provided they are aerospace firms operating in the province with 20 or more employees or have a payroll of at least $700,000.
A recent KPMG survey showed Greater Sudbury lags far behind in manufacturing, in part because it has the highest property taxes of any major city in Canada. Mining companies have adapted, largely by reducing their property tax bills by demolishing buildings and relocating underground.
Existing businesses in the city's industrial parks have complained about not only their tax bills, but the fact that, in some cases, they are taxed for services they don't receive. When asked how they would feel about other companies getting a tax holiday, Melanson said existing businesses would benefit first.
“This is a program designed for new businesses and to establish a new industry,” he said. “Quite frankly, established businesses are the ones that will benefit the most initially, because it's their services and expertise that will be called upon. They'll make more money by participating in this program.”
Existing mining manufacturers could add to their bottom lines by accepting minor aerospace contractors, he said, with an eye on making it a bigger part of their operations.
And students in Canadore College's aircraft maintenance technician program in North Bay would benefit, Melanson said, giving them a chance to find work in the North. The key would be starting small and creating the conditions for the industry to grow. The city wouldn't be in direct competition with North Bay, for example, where Bombardier already assembles waterbombers.
“We're not talking about full aircraft assembly,” Melanson said. “We're talking about sub-assemblies, bell cranks, parts and pieces, wiring harnesses.”
He cited the example of a company in Nevada that began with a small contract to make wiring harnesses for Wichita-based Cessna 40 years ago. Today, they have major assembly plant. With his background in aviation – 30 years in the helicopter business – Melanson says he already has a relationship with people in the industry.
“You don't have to have an existing aerospace capability to develop these things – the aerospace manufacturing industry is worldwide,” he said. “Parts come from all over the place. As long as you have the capability and the expertise to produce something, wherever you're located, we'll come and get it from you.”
While there are no tax-free zones in Ontario – P.E.I. and Quebec are the only provinces that have them – Melanson said the city could do its part to offer property tax relief, and lobby the province to offer corporate tax breaks. But he said, while it would make things happen much quicker, it's not essential for the plan to succeed.
“Who would ever have thought that, in potato country in P.E.I., you're going to send engines from all over the world to that location to be overhauled and repaired,” he said. “There's no reason why we can't achieve that same type of thing here? We have the expertise, we have the infrastructure and we have the equipment.”