Canadian duty program’s demise hits manufacturers

A Canadian apparel duty program in place since 1988 has been unceremoniously halted and at least two shirt factories may have closed as a result. The Duty Remission Program, originally intended as a temporary measure to protect Canadian apparel manufacturing, offered incentives to keep domestic factories running by refunding duty on imported apparel. It was used primarily by shirt and outerwear manufacturers.

“The original mechanism was that you make a shirt in Canada and you get to import one from any other place for free,” explained Bob Kirke, executive director of the Canadian Apparel Federation. “There are about 60-70 manufacturers taking advantage of this program at the end. Not everyone will close because of this but many will revisit their domestic manufacturing.”

Kirke, who admitted to being baffled by the Canadian Finance Minister’s decision to end the program, estimates that as many as 3,000 Canadian jobs may be at risk.

“This was the one apparel program that had survived for 20 years,” continued Kirke. “As a result, we didn’t want to see it go and we don’t think it was terminated for any good reason. There was nothing, in my estimation, preventing the Canadian government from continuing these programs.”

The first casualty was the John Forsyth Shirt Company in Cambridge, Ontario, which made dress shirts for retailers like Harry Rosen. The factory, which employed 110 workers, closed earlier this month after more than 100 years in business.

“We assumed and were assured by the Finance Department and various ministers that the program would continue another five years,” said Harris Hester of Forsyth. “Suddenly they said, ‘nope, no more’ That made our domestic operations in Cambridge no longer economically viable. We looked at all kinds of alternatives but it just did not make sense. So ultimately, we had to announce the closing.”

Hester said Forsyth’s Canadian manufacturing accounted for about 20 percent of annual sales.

As a result of the closing, Forsyth has sought court supervised restructuring in Canada and expects to emerge with few other major changes beyond the factory closing.

There’s a small bit of good news: the Forsyth factory’s former director of operations is trying to reopen his own, smaller facility, which may do contract work for Forsyth.

A second, smaller dress shirt factory in Guelph, Ontario, Behar-Cline Manufacturing, which made shirts for Miami-based Ike Behar, is closing as well. According to reports in the Canadian press, 20 workers at that factory were being laid off in March. Ike Behar CEO Alan Behar did not return requests for comment in time for this story.

“Whether it’s Forsyth or any of the other companies that benefited from this, they contributed so much more to the economy by operating domestic factories than they took out in terms of reduced duties,” said Kirke. “It was a no-cost program, and I have to imagine that there aren’t too many governments that eliminate programs like this for no apparent reason.”