Innovation Superclusters Initiative: Advanced Manufacturing Supercluster
Guide on Innovation Superclusters Initiative
Canada’s Innovation Supercluster Initiative is a program designed to bring together partners in industry, academia and the not-for-profit sector around project-based collaboration. The idea is that, by combining the strengths and capabilities of these different kinds of organizations and adding some government funding, Superclusters can help generate economic growth and technology leadership in Canada.
To date, the program has supported more than 325 projects, including 1330+ partner organizations and over $565 million in government funding. By March 2023, ISED will invest up to $950 million in the program.
Each of the five Superclusters is an independent, not-for-profit entity focused on a particular industry sector with their own membership rules and guidelines for selecting and funding projects. The five Superclusters are Digital Technology, Protein Industries, Advanced Manufacturing, Scale AI and Ocean. In addition, each Supercluster has a set of different programs, each with its own goals and criteria.
This is the third in a series of articles mapping out the different programs in each supercluster to help you find where your venture might fit. This month, we’re looking at the Advanced Manufacturing Supercluster, a.k.a. Next Generation Manufacturing Canada (NGen).
View more guides from this series:
Advanced Manufacturing Supercluster
The Advanced Manufacturing Supercluster is led by the industry-focused not-for-profit NGen with the goal of building world-class advanced manufacturing capacity in Canada, driven by digital technologies such as the Internet of Things, machine learning, cybersecurity, robotics and 3D printing.
With more than $230 million in total funding, NGen is looking to generate more investment and commercial opportunities for Canadian manufacturers and create more global scale manufacturing companies in Canada.
According to the NGen website, Supercluster projects must be:
- “Transformative, involving the development of advanced manufacturing capabilities with the potential to confer a significant global competitive advantage to Canadian industry.
- Applied, focused on solutions, supporting later-stage technology and manufacturing readiness with potential to generate significant long-term commercial and economic benefits, including jobs maintained and created.
- “Enduring, leaving a legacy in skills development, tools, testbeds, intellectual property, and/or business knowledge for Canada’s advanced manufacturing ecosystem beyond the partners and timeline of the project.
- Collaborative, developing industry relationships, building trust and sharing in knowledge, risk, investment and the resulting benefits. Projects must include at least one small- or medium-sized enterprise (SME) and are encouraged to consider the inclusion of academic and research organizations.”
Project Types and Application
Supercluster Projects are intended to create advanced, transformative manufacturing technologies or processes. In order to be funded, projects must have the potential to deliver significant commercial benefits and jobs both for the consortium members and the wider economy. If the project benefits only a single firm or organization, it likely won’t be accepted.
A project consortium must involve a minimum of three partners, and there is a focus on including at least one small- or medium-sized enterprise (SME), defined as a company having less than 500 employees globally. Supercluster Projects may be funded from $500,000 to $8 million, but programs greater than $8 million were on hold as of the writing of this guide. NGen will reimburse up to 44% of total eligible project expenses incurred by industry partners.
Because the core purpose of NGen is to build innovative manufacturing capacity, projects related to experimental or theoretical discoveries or without any direct commercial application or use will not be accepted. Even product development is limited to no more than 5% of project funding. Similarly, incremental changes to existing production lines or manufacturing processes are not in scope for a Supercluster project.
Given the scope of the program, the application process is extensive and includes application deadlines for financial workbooks and an intellectual property strategy. The NGen project team may assist in the development of Supercluster project applications through high-level guidance on funding rules, possible project partners or other program features.
A number of Challenge Programs emerged in response to COVID-19, looking for unique solutions during the height of the pandemic, but there are currently no challenge opportunities.
Cluster Building projects are intended to support groups of Canadian SMEs in forming a cluster to enhance their capabilities in creating and applying manufacturing technologies, best practices and principles. Clusters are required to have some unique collaborative potential and include a minimum of five SMEs that can create transformative change for the participating SMEs and the wider advanced manufacturing ecosystem in Canada. While the focus is on SMEs, larger organizations may join a cluster, with some restrictions.
The maximum value of a Cluster Building project is $150,000, and NGen will reimburse up to 50% of the maximum value. Projects must be completed within twelve months of the contract being signed, with capital and equipment expenses comprising no more than $15,000 or 10% of the total value of the project.
Cluster projects are intended to outlive the 12-month project period, so a business plan for the long-term operation and self-sufficiency of the cluster is required. Project applications are also required to demonstrate short-term commercial benefits, and the development of tools, testbeds, training, IP and supporting services for project participants and other SMEs in the ecosystem.
Again, the application process for a Cluster project is extensive and includes six elements, including a financial workbook, application agreement, project IP strategy and a risk registry table.
Pilot Projects & Feasibility Studies
Funding for pilot projects and feasibility studies is also intended to drive collaboration among SMEs, helping them to scale up project plans for implementation, prepare technologies for deployment in production, and increase technology adoption and scale-up by facilitating access to the expertise, training, tools and testbeds that are available within the Supercluster.
Again, these projects aren’t intended for experimental or theoretical work without commercial application, or for incremental change to manufacturing processes or product development. Project participants are required to provide well-defined work packages, milestones, timelines and estimated costs as part of their applications.
The total amount of a pilot project should be between $100,000 and $500,000. NGen will reimburse up to 50% of total eligible project expenses to a maximum of $250,000. Capital and equipment spending cannot exceed 30% of total eligible project costs and no single partner may receive more than 70% the funding.
Feasibility project costs should be between $50,000 and $200,000. NGen will reimburse up to 50% of total eligible project expenses to a maximum of $100,000, with ‘study’ capped at 70% of total project costs. Only expenses incurred by Canadian subcontractors are reimbursable by NGen. A single SME can receive all of the funding.
The application process for pilot projects and feasibility studies is assessed based on the answers to 10 application questions, with the application given a score out of 100. The process is competitive, with only the highest-scoring projects being recommended for funding. NGen will advise all applicants whether their project has been accepted or rejected. If the project is rejected, NGen will provide a feedback summary and the company can re-apply.
Eligible Organization and Costs
In general, recipients of Supercluster funding must be either for-profit organizations or not-for-profit organizations funded primarily by the private-sector. Other not-for-profit organizations, post-secondary institutions, government organizations or international organizations are not eligible.
Eligible costs must be paid in cash, not in-kind, and be reasonable according market rates, especially for salaries and hourly wages. Expenses must be reasonable and relate directly to the eligible activities of the project. Each of the active programs has its own Financial Guide, so be sure to check those out.
- Salaries and wages for personnel who are based in Canada and working directly on the project (i.e., not marketing or administration), but not severance or bonuses
- Sub-contracting and consultancy fees for Canadian contractors charged at fair market value not exceeding 30% of the total project cost where project partners don’t have the in-house expertise
- New equipment, capital costs, facilities and supplies are eligible expenses, but may not exceed 30% of the project cost (including materials consumed by the equipment or utility costs to run the equipment)
- Service fees and subscription/license fees directly related to the project
- Travel costs incurred exclusively for advancing the project (alcohol is not eligible)
- Reasonable costs relating to the patent protection intellectual property create in a project
- Capital, land, infrastructure or equipment costs unrelated to project objectives
- Fines and penalties
- Losses on investments, other projects, contracts, bad debts or expenses for collection charges
- Federal and provincial income taxes, including HST, GST and PST
- Customs and duties
- Expenses and depreciation of buildings or rooms that are not in use during the project, and amortization of unrealized appreciation of assets
- Honoraria, gifts, donations, entertainment expenses, and alcoholic beverages
- Dues and other memberships other than regular trade and professional associations
- Salaries of the members of the Board of Directors
- Legal, accounting and consulting fees in connection with litigation or financial reorganization
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