Lynn Lau
Northern News Services

Fort McPherson (July 08/02) - After more than three decades as a government-financed job shop, Fort McPherson Tent & Canvas is reinventing itself as a viable business enterprise.

The changes began in January 2001, when the GNWT's job creation arm, the NWT Development Corp., hired a new general manager for business, commonly called the Canvas Shop. Parachuting in from Winnipeg, 57-year-old Erwin Kamenz came out of retirement to take on the task of turning the place around.

Originally from Germany, Kamenz got his start in manufacturing in Winnipeg with Monarch Wear in the 1970s and moved up from there.

At the Canvas Shop, he quickly reduced production time by buying inventory in bulk, and he cut costs by negotiating new contracts with all his suppliers.

"Nobody had really taken the time and said, 'We're going to be here for a long time. Let's order in that fashion,'" he says. "If you order small quantities, you're going to get robbed."

Kamenz also keeps the shop open year-round.

"It used to be closed down all the time," he says. "But you can't do that to your customer base. They want product all year."

Heading toward profit

All the new changes are slowly showing up in the company's books. From March 31, 2001 to March 31, 2002, the Canvas Shop recorded operational losses of $43,615 -- a $160,313 improvement from the year before when losses were $203,928.

During the same period, sales were $614,000 -- the highest in the company's history, and the gross margin (difference between the cost of production and net sales) was $192,166 -- a 760 per cent increase from the year before, when it was $25,291.

Ever since 1970, when the tent and bag manufacturer was formed as a job-creation enterprise, the company has relied heavily on government subsidies.

Kamenz projects that by 2002-2003, he won't need any government subsidy and by 2003-2004, he expects real profits. Last year, the company used $130,000 -- mostly to buy inventory.

According to figures from the development corporation, the Canvas Shop has used over $2 million in subsidies since 1991 -- about $188,000 per year.

"It's part of our mandate to provide funding to companies that aren't profitable," says NWT Development Corp. president and CEO Fred Koe. "Our formula is based on the number of jobs the company employs."

The formula sets the maximum subsidy at $25,000 per full-time equivalent job.

Two years ago, there were six employees, but with this year's additional hirings, there are now between 12 and 15 workers. Although the Canvas Shop was allowed to straggle along for decades, in recent years, the development corporation has been directing its companies to become viable within three to five years of creation. "Now they've got to hustle and sell," Koe says. "If they're marketing, they've got to deliver the product to the marketplace.

All these things are happening big time in Fort McPherson right now."

The Canvas Shop might face higher shipping costs associated with its remote location, but Kamenz says the business has the potential to be a viable enterprise, because it can depend on dedicated staff, and streamlined management structure.

"The employees are your biggest asset," he says.