be a challenge to sort that out, but I'm pretty sure I can get this under control. The really big problem that has me worried is our rural development grant." "I don't know a lot about government grant programs," cautioned Daniel, "but tell me more." \"When business fell off, Matthew Deega n, our president, attended a seminar on how to get government grants. He discovered that a matching program was available for rms to establish rural manufacturing facilities. So, Matthew and our VP. of operations submitted a grant proposal for us to manufacture chemicals in Hiawatha, a remote village with about 2500 people, where the mines have been phasing out. The proposal was simply an adaptation of an earlier unsuccessful grant application for our Hudson operations. The government must have been real anxious for someone to locate in Hiawatha, because the new proposal was accepted in a wink this time. Moreover, both levels of government have provided matching funds of $750,000, a total of one and a half million in government money. They also guaranteed a bank loan for us of $750,000, and we used the loan proceeds as our contribution." "Well, that sounds great, Lila. What's the problem?" "After the funds were provided, we rented a temporary facility in Hiawatha and we hired a few staff there to maintain the building. However, we told the Ministry of Rural Development that the new equipment needed to be tested and the manufacturing process needed to be developed further. 50 the equipment was delivered to our Hudson facility. The equipment is currently being used there to streamline our manufacturing of a new line of chemicals that should allow us to regain much of the market share we lost to Superior. The problem is that the grant requires us to use the funds in Hiawatha." Daniel jumped in, "But will anybody check on how the funds are really being used?" "That's what I'm worried about, Daniel. At the present time, one of my tasks is to ensure that optimistic reports are sent about how the development work is coming. In the short run, I could handle this because there was a real need to shake down this new equipment. The supplier had suggested two months, but we have already been 'testing' the equipment for six months in Hudson, and Matthew is hoping that we can continue to 'test' it for a full year." \"Well, after the year, they'll simply move the equipment up to Hiawatha and your problems will be over! " "No, Daniel, that's when my problems will really start. You see, there is absolutely no way that we can turn a prot up in Hiawatha. We would have to transport all the raw materials up there, and then ship the nished product back here. Superior will soon be competing in our new line of chemicals and, even though they don't have our advanced technology as yet, they will be able to beat us on cost because of the transportation factor." "I see. Then you'll have to shut down operations and return the funds?"
