Forest Sector Investment and Innovation Program — Collaboration projects

The Forest Sector Investment and Innovation Program (FSIIP) provides funding to Ontario-based wood product manufacturers and processors to encourage innovation and market expansion, improve productivity, and strengthen regional economies and supply chains. Eligible projects must align with the program's objectives of fostering technological development, economic growth, and innovation within Ontario's forest sector.

The Forest Sector Investment and Innovation Program (FSIIP) is a strategic initiative by the Government of Ontario designed to bolster the province's forest sector. The program targets both business and collaboration projects that promise to enhance productivity, increase innovation, and foster market expansion. With a specific focus on leveraging technology and specialization, FSIIP aims to make a transformative impact on Ontario’s broad forest and wood products sector.

The primary goal of FSIIP is to create an environment conducive to innovation and economic growth within the forest sector. The program focuses on: 1. **Productivity**: By supporting a highly skilled workforce and promoting the adoption of advanced technology and processes, FSIIP helps increase industrial efficiency, introduce product variety, and drive technological development. 2. **Innovation**: FSIIP fosters research and development (R&D) and commercialization capabilities, encourages collaboration among partners, and integrates innovative practices into the business climate. 3. **Market Expansion**: The program aims to enhance the ability of Ontario enterprises to compete in global markets, improve market access, and promote domestic, international, and interprovincial trade. 4. **Regional Impact**: Greater weight is given to projects that have a transformative impact on regional economies, especially those regions experiencing economic disparities. 5. **Sectoral Importance**: The program emphasizes projects that address sectoral needs and priorities, benefiting Ontario’s broader forest and wood products sector.

To be considered for funding under FSIIP, applicants and projects must meet the following criteria: - **Eligible Applicants**: Ontario- and extra-provincial-based forest and wood products corporations, federal forest and wood products corporations, and foreign forest and wood products corporations (provided they have a Canadian/Ontario subsidiary). In addition, forestry-related not-for-profits and Ontario-based post-secondary institutions can apply. - **Eligible Projects**: The program supports projects that either involve significant capital investment by for-profit forestry companies or collaborative efforts by various stakeholders (including at least one for-profit forestry or wood products company). - **Ineligible Projects**: Restructuring activities, mergers, and acquisitions are not funded under FSIIP.

FSIIP offers grants covering up to 30% of eligible project costs, with a maximum funding cap of $3 million. For collaboration projects, funding from various government sources can be combined, provided the total government funding does not exceed 75% of the project’s eligible costs. Each applicant is generally permitted to hold only one funding contract/project at a time, though exceptions may be made on a case-by-case basis.

The application process for FSIIP involves two stages: 1. **Stage I - Preliminary Assessment**: - Applicants complete an initial eligibility checklist and application form, which includes an overview of the project and its alignment with program objectives. - Ministry program staff assist in evaluating if the project meets the guidelines and how well it aligns with FSIIP criteria. - Notification of advancement to Stage II is provided within 10 business days of the completed Stage I application. 2. **Stage II - Detailed Evaluation**: - Applicants submit a comprehensive application and supporting documentation within 15 business days after Stage I approval. - In-depth evaluation includes financial and technical due diligence, project risk assessment, and a thorough review based on FSIIP’s criteria. - Projects are scored and ranked, with priority given to those with greater impact on productivity, innovation, regional economies, and Ontario’s broader forest sector.

Projects are assessed based on: - **Project Outcomes**: Alignment with goals of improving competitive advantage through productivity, innovation, and market expansion. - **Sector/Cluster Priorities**: Strategic importance to Ontario’s forest sector. - **Regional Impact**: Positive social and economic impact on regional economies, especially in areas facing economic disparities. - **Incrementality**: Demonstration that the project will not proceed without government support and will generate a net positive return on investment. - **Due Diligence**: Comprehensive identification and mitigation of financial, technical, and public risks.

Successful applicants are required to sign a funding agreement with the province, detailing project commitments, funding disbursements, and clawback provisions. Disbursements are typically made in arrears, and a portion (usually 20%) is withheld until after project completion. Clawbacks are applied if project commitments related to investment, jobs, and payroll are not met by set deadlines.

Eligible costs under FSIIP include: - **Facility Modifications/Upgrades**: Necessary modifications directly attributable to the project, such as the installation of project-related equipment. - **Equipment and Machinery**: Costs for purchasing or upgrading necessary equipment and machinery, including delivery and installation expenses. - **Capital Lease and Software**: Non-interest portions of capital lease payments and specialized project-related hardware/software. - **Materials**: Direct materials used for project completion, such as prototypes and configuration/testing materials. - **One-Time Labour Costs**: Salaries, wages, and benefits for employees directly involved in the project, as well as costs for developing new market access. - **Research and Development**: Costs directly attributable to R&D, including consulting services from third-party firms or institutions. - **Training and Market Expansion**: Training costs within or outside Ontario (subject to approval), market certification/testing, and development of new products in new markets. - **Travel, Legal, and Accounting**: Project-related travel (economical options only), intellectual property protection fees, and accounting/reporting expenses directly related to the project. Ineligible costs include ongoing production costs, general operational expenses, equipment depreciation, rental costs, business plan preparation, and costs not incurred in Ontario, among others.

FSIIP tracks several mandatory performance measures, including gross margin percentage, total sales revenue, export sales, and active employees. Additional measures for wood utilization, such as improvements in yield or recovery rate, are also monitored.

The Ministry of Natural Resources and the Ministry of Economic Development, Job Creation, and Trade adhere to the Freedom of Information and Protection of Privacy Act (the Act), ensuring the confidentiality of trade secrets and other sensitive information submitted in confidence. Approved projects are subject to public announcements and annual reporting on project status, government support, and achieved results.

Applicants must avoid conflicts of interest that could compromise the integrity of the application process. This includes avoiding unfair advantages, influencing preferred treatment, or engaging in conduct that undermines the fairness of the funding process. In essence, the Forest Sector Investment and Innovation Program offers a robust framework of financial support designed to stimulate innovation, productivity, and economic growth within Ontario's forest sector, ensuring sustainable development while addressing regional disparities and fostering market expansion.