Amid the sawdust and plywood at Kilrich Construction’s truss factory, Minister of Democratic Renewal Stephen Fletcher announced $213,000 of government money is heading to the company’s coffers.
The money will help buy a new $1-million state-of-the-art truss making machine, with lasers and computers to help Kilrich better the design and precision of its trusses.
But there doesn’t appear to be any research proving the need for the investment.
And the group handing out the money owns a stake in Kilrich.
While the minister defended the government handout by describing the Yukon’s truss shortage as critical, one of the company’s managers wasn’t so sure.
“It’s going to be way overkill for the Yukon,” said Rick Boyd, speaking to reporters.
In the last two to three years, Kilrich has had to turn away customers because it couldn’t make enough trusses, said Boyd.
“But right now, we’re going pretty good.”
Kilrich isn’t turning away any customers at the moment, he said.
Once the new machinery gets running later this year, Kilrich will look at exporting trusses.
“Yes, we will be working for other markets,” said Boyd.
This is a far cry from Fletcher’s earlier declaration that a truss shortage was cutting Yukon’s economic growth at the knees.
“I understand there’s going to be 2,000 to 3,000 new resident lots built in Whitehorse, that’s a lot of trusses,” said Fletcher.
“It is critical for development in the Yukon that these products are made in a way that is affordable,” he said.
There was no long-term market research submitted to the government, said Boyd.
“There’s no real research but the writing is on the wall,” he said.
Kilrich doesn’t know how many trusses it produces in a year.
“No idea, we’ve never counted,” said Boyd.
The department providing the funding, the Canadian Northern Economic Development Agency, or Cannor, was also asked to produce any research on the future truss needs of the Yukon.
In an e-mail, Cannor could only provide national construction forecasts.
“Nationally, residential construction showed strong growth in the first two quarters of 2010,” wrote Kathleen McLeod, a spokesperson from Ottawa.
“The forecast for this sector is expected to pick up again in 2011,” she said.
Commercial construction is anticipated to grow by a total of 12.4 per cent over the last two quarters of 2010, with growth continuing into 2011, the e-mail says.
“In Yukon, the lack of housing (vacancy rate at 1.7 per cent) and the low mortgage rates have assisted in keeping the construction industry more or less constant with 2009 totals,” she writes.
In other words, the construction rate in the Yukon has been relatively static for the last two years.
“It is anticipated that in the Whitehorse area alone an additional 2,200 to 2,300 residential lots will become available over the next few years,” the e-mail says.
It is not clear whether this forecast demonstrates an increased rate of construction that Kilrich needs to match.
Most of Cannor’s investments have so far gone to public projects.
Asked why a private business needs a handout from Cannor, Fletcher said it was part of the agency’s mandate to help First Nation business.
Kilrich is partly owned by five First Nation governments and Dana Naye Ventures, an aboriginally run business advisory service.
But Dana Naye is not only receiving the money, it’s the outfit that’s providing it.
The $213,000 is coming from Cannor’s
pan-territorial Aboriginal Business Development Program.
In the Yukon, the program is administered by Dana Naye.
According to McLeod, companies that want money from the program apply on “a first-come, first-serve basis, based on the eligibility criteria of the program.”
In a report commissioned by the Department of Indian and Northern Affairs last year on Yukon’s economic growth, Dana Naye was found to favour aboriginal businesses and graduates from its own training programs.
The report also criticized Dana Naye in general, declaring its board “dysfunctional” and its lending practises unfair.
Dana Naye is suing the authors of the report, including Indian and Northern Affairs, for what it considers defamatory statements.
Asked if the government was worried about a backlash from nonaboriginal businesses that don’t get a handout, Fletcher repeated the critical importance of the truss plant.
“This is the only truss factory in the Yukon,” he said.
The new truss machine will reduce the time it takes to make a truss from 15 minutes to five, said Boyd.
But it won’t take away any of the eight jobs at the truss factory, he said.
Contact James Munson at