2002 December Report of the Auditor General of Canada

Certain products in the medical sector

The Canadian producer suffered a decline in domestic sales of over $2 million in nine months. The gross margin of one of these products fell by more than 50 percent over two years, resulting in financial losses.

Certain products in the steel sector

For one of the steel products, domestic producers suffered a cumulative decline of over 16 percent in net sales revenue over two years, mainly due to reduced sales volume and significantly lower average selling prices of this product. This reduction contributed to a loss in operating income of over $44 million.

For another steel product, the producers' gross margin declined from 23 percent to 7 percent in six months. Their net income before taxes dropped $92 million from $61 million to a loss of $31 million.

Certain products in the retail sector

The Canadian market grew but the share of domestic market by Canadian producers was declining. Gross margins of the Canadian producer for refrigerators declined by 33 percent and 25 percent in two successive years. Similar weak market and financial performance also occurred for dishwashers and dryers.

Certain products in the farming sector

The financial performance of the domestic garlic growers collapsed. In 1998, the garlic growers (small and medium-sized producers) were profitable with gross farm returns of about $170,000. In 1999, the domestic growers lost $348,000. In 2000, their loss increased to over $1 million.

Approximately 70 percent of garlic farming in Canada was steadily increasing from 300 acres to almost 900 acres between 1997 and 1999. However, it dropped by about one third in 2000.