A built-in advantage - Macleans.ca

A built-in advantage

Hutterite-run firms don’t pay their workers wages or seek big profits. Competitors say it’s unfair.

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A built-in advantage

Tim Smith/Rogue Collective

Competitive spirit might run through the veins of any good businessman, but a handful of Prairie companies say they can’t win the war against some unlikely rivals in the building supply trade—Hutterite colonists. Frustrated by a steady drift of metal roof and siding orders to Hutterite-owned competitors, building supply companies are pressuring the Manitoba government to take action, arguing the market is tilted in favour of Hutterite enterprises because colony members work for free, and because their firms are exempt from certain taxes.

The Hutterites are an Anabaptist sect whose adherents live communally, sharing resources and property on farming colonies that speckle the southern Prairies and parts of the U.S. plains. For the most part, they’ve coexisted peacefully with neighbours, but tensions began rising in the 1990s, when some colonies turned to commercial enterprises to help support their way of life, raising the unexpected question of whether communal living constitutes an unfair advantage in the marketplace.

Unlike most private firms, Hutterite businesses are typically run as partnerships shared by every person in the colony. “The youngest person here owns as much of the business as the people from the colony who manage it,” explains Jonathan “Jonty” Wollmann, an assistant minister at Newdale Colony, a southern Manitoba community whose company, Domtek Building Products, offers a wide selection of metal roofing, cladding and ventilation products. The 10 colony members who actually work on the floor at Domtek don’t receive a wage, Wollmann adds, yet proceeds from the firm help pay for their food, clothing and housing. He disputes recent claims the company undercuts the prices of its competitors; its only advantage, he says, lies in the absence of pressure to reap big profits.

His competitors see things differently. Unionized workers in the building supply business pull down between $14 and $25 per hour, they note—a huge expense the Hutterite companies are largely spared (some, like Domtek, also employee non-Hutterites to do administrative work). They also face a reduced burden when it comes to taxes and fees levied on a per-employee basis, such as health premiums, post-secondary education taxes and workers’ compensation fees. “Every year they gain a bit more market share and a bigger customer base,” said Gino Coco, general sales manager for metal building products company Vicwest, in a recent interview with CBC Manitoba. “It takes away from companies such as ourselves who are operating under different circumstances, or different rules and regulations.”

Perhaps, but they’re getting scant sympathy from the Manitoba government. The provincial Finance Ministry regards the Hutterite businesses as standard partnerships, no different from, say, a restaurant jointly owned by family members who cook, wash dishes and wait tables. “Any company has the option of setting itself up in this way,” says Richard Groen, a director at the province’s taxation analysis branch. And while Hutterite companies have been warned in the past to keep their farm and business operations separate—they can’t use farm trucks to transport metal building products, for example—Groen says the government has never seen them as having an unfair edge.

His words no doubt will come as a relief to Wollmann, who turns cool when asked whether the colonies might discuss changing their companies’ tax status or compensation practices. He takes no joy in upsetting competitors, he says, but his people found the competition just as tough when they entered the business back in the early 1990s. “We believe the Lord will guide the way through this,” Wollmann concludes, “just as he has done for us in the past.”