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Manufacturer critical of loan approval process.

Companies thinking of going to the government for help in starting or expanding their business should think twice before they do so, suggests a North Bay businessman.

Don Champagne, president of North Bay Plastics, says he is finding it frustrating to deal with the government for a loan to expand his business.

Champagne claims the process for approval of a loan is a slow procedure made difficult by a government bureaucracy with too many employees unable to give a response to questions.

"You are dealing with so many (people) that getting any activity or communication is a problem. I never found any one person who is responsible for anything," he claims.

Champagne points to FedNor's policy of having a board review all studies and proposals from businesses as one cause of the delays.

"Rather than saying, 'We will have eight people looking at it,' why not have one person decide whether it's good or not?" he asks.

"There is no action and you don't know what is happening. I asked them to look at the feasibility study and let me know as soon as possible if it's a 'no.' I don't want to waste my time."

Champagne says indecision by government agencies is frustrating because it does not allow businesses to plan.

Hal McGonigal, administrator of the FedNor Secretariat, disagrees with Champagne's claims that the process is slow and there are too many bureaucrats.

McGonigal says FedNor deals with 500 to 600 projects a year and must carefully scrutinize each application to ensure that taxpayers' money is wisely invested.

He maintains that the agency attempts to deal with an application within 40 to 60 days, although response times vary with the size of the business and the detail of the application.

"Every proposal is different, and we have a structure to see if his (Champagne's) proposal is an ideal one," he insists.

However, FedNor policy prohibits McGonigal from commenting specifically on Champagne's case.

North Bay Plastics makes plastic parts for manufacturers. Champagne discovered three years ago that there was a need to add a bigger press to the two 80-ton units in use.

He says North Bay Plastics could not obtain contracts from some companies because it could not manufacture larger plastic pieces.

One of the company's largest clients, Wiik Hogelun Canada in Huntsville, will be requiring larger sized dust and pressure caps for the shipping of natural gas. North Bay Plastics manufactures these in four- to six-inch sizes.

Wiik Hogelun is also looking at using double containment pipes that will be required in chemical plants and university labs under pending U.S. legislation.

"The reason to expand was that I was told certain lines of product (we manufacture) are to be phased out. The upside was they wanted larger sized products," says Champagne.

The problem is that many of his customers want to deal with only one business.

"Many customers in Canada and the U.S. say we (North Bay Plastics) handle all their molding or get nothing," Champagne maintains.

He realized there was a need to diversify and expand his equipment. He looked at a 600-ton press that would allow him to make large and smaller parts.

Champagne approached the banks, but they wanted 30 to 40 per cent down. As a result, he looked to FedNor for help.

He hired Chris Rees of Suthey-Holler to file the application. Rees conducted a $2,200 feasibility study of the expansion which was submitted to FedNor in August.

However, FedNor says it will not be able to review the feasibility study and application until the end of November.

In the meantime, Champagne says he has already lost a contract with Phillips Petroleum of Texas to supply the same type of caps as required by Wiik Hogelun. Phillips had asked Champagne in the fall of 1991 if he was interested in making caps for them.

However, to start making the larger caps Phillips needed, North Bay Plastics should have started its expansion this fall.

When asked why he did not apply sooner for government assistance, Champagne explains that he was waiting to see what would happen with the economy.

"It really hurts to undertake an expansion like this. It's a very difficult and long process," he adds.

If the loan is turned down Champagne may move to the U.S.
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Title Annotation:Don Champagne, president North Bay Plastics
Author:Brown, Stewart
Publication:Northern Ontario Business
Date:Dec 1, 1992
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