Western Canadian Drywall Tariff rebate program announced

The government of Canada collected approximately $12 million in anti-dumping tariffs on drywall product entering Western Canada from September 2016 through to February 2017. Now contractors negatively impacted because of prior fixed price contracts can apply to have some of their losses refunded on a one-time basis.

Who is eligible?
According to the application guide for contractors issued by Western Economic Diversification Canada, the Drywall Support Program is designed to provide ‘partial relief’ only, and will be pro-rated according to the number of applications from “registered Canadian drywall contractors and builders operating in British Columbia, Alberta, Saskatchewan, Manitoba, Yukon, and the Northwest Territories who experienced a financial loss as a direct result of higher drywall costs.” A relief pool of about $1 million has also been established specifically for homeowners in the Regional Municipality of Wood Buffalo (ie, Fort McMurray) area to help with rebuilding efforts there. Separately, the Government of Alberta is providing more than $7 million in tax relief for families in RMWB whose residential properties were affected by the 2016 wildfire.

Get your paperwork together….
Size matters. Although a single organization can theoretically claim up to $1 million in substantiated losses due to the anti-dumping tariffs, eligible contractors are restricted to those with fewer than 500 employees. However, the relief program does not cover “lost revenue due to cancelled jobs or lost work.”

In addition, the following conditions apply:
Applicants must provide proof of fixed price drywall contracts entered into prior to September 6, 2016 that includes drywall quotes with quantities and pricing. Furthermore, they must provide proof of drywall purchased between September 6, 2016 and February 24, 2017, and then estimate the amount of the resultant loss that was passed onto others. Supporting purchasing documentation must include the square footage area of the purchases, plus proof of payment such cancelled cheques, purchase orders or bank statements.  To make things a bit easier, the on-line application process includes automatic calculation software.

….And get it together FAST!
Those able to gather their paperwork together have less than 30 days; the program closes to applications on May 31^st .

Where are the promised 32 per cent tariff reductions? Not anywhere we’ve seen!
When Finance Canada announced the reduction of tariffs on drywall product entering Western Canada back in February, the Ministry estimated there would savings at the border of over 32 per cent. The expectation was of course was that these savings would be passed on to purchasers.

However, Canadian Contractor has seen little evidence of any meaningful price reductions. In fact, for the most part, prices for drywall in Western Canada remain at the same level as when the high anti-dumping tariffs were in effect last fall and winter. Looking across the country, drywall prices for our benchmark drywall board (surveyed continuously for over 7 months now) remain 42 per cent higher in Western Canada than in Ontario, and 15 per cent higher than on the East Coast.

“Thanks for everything you’ve done for us, Finance Canada,” say Western contractors
Looking back on the entire episode, one cannot help but empathize with contractors in Western Canada, and understand their frustration. The Canadian Border Services Agency clearly over-stepped by placing tariffs as high as 275% on U.S. drywall product entering that market. The Minister had to step in when a CITT review found the tariffs unjustified. However, this fiasco did more than disrupt the pricing structure on which many companies had based agreements, costing profits and possibly new work. It disrupted the supply chain across the country as distributors and manufacturers adjusted to the sudden new landscape. Now, the government has come back with a relief program that will perhaps reimburse some of those losses, and only to those contractors who are able to pull together the required documentation to substantiate contracts, purchases and losses.

Topping it off, the anticipated return of drywall costs even close to pre-tariff levels simply has not materialized. To whom should one owe gratitude for all this?

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