REFILE-Canada manufacturers call for more government help

(Refiles to fix typo in headline)

TORONTO, Oct 2 (Reuters) - Canada's largest trade and industry association called for more government support on Thursday for the country's battered manufacturing sector, while announcing a $25 million ($23 million) fund that small and mid-sized manufacturers can tap into to enhance productivity.

Jayson Myers, an economist and president of the Canadian Manufacturers and Exporters, argued that the economy is at risk if a competitive manufacturing base cannot be maintained in Canada.

"We cannot continue to drive economic growth in this country on the basis of a commodity boom and a pricing bubble that will inevitably come to an end," he said in a speech in Toronto.

With a federal election less than two weeks away, Myers called on party leaders to step up their efforts to help the beleaguered manufacturing sector.

He said government could help by making permanent a two-year plan introduced last year to allow writeoffs for investments in manufacturing and processing technologies. As well, it could make tax credits for research and development refundable, introduce an employer's tax credit for training, and eliminate taxes on investments that create wealth.

"It would be reassuring if at least some of these issues were acknowledged by our federal party leaders in the current election campaign," Myers said.

Canada's manufacturing sector has shed 400,000 jobs in recent years, with over half that number coming from the country's most populous province, Ontario.

Factors in the decline include depressed demand from the struggling U.S. economy, soaring costs for energy and materials, and a stronger Canadian dollar, which has appreciated around 60 percent against the greenback in six years.

The latest hit to manufacturers has been tightening credit, which will continue to take a toll, said Myers.

"In my opinion, we're in for a gut-wrenching ride on financial markets for the rest of this year and next."

Myers used the speech to launch CME's Smart Manufacturing Program, a C$25 million plan funded by the government of Ontario, which will provide matching contributions of up to C$50,000 to small and mid-sized manufacturers investing in productivity-enhancing projects.

Despite recent weakness, manufacturing remains the single largest business sector in Canada, Myers said. It is a C$600 billion business, employs nearly 2 million people, and accounts directly for 15 percent of national economic output, and 18 percent of economic activity in Ontario. ($1=$1.08 Canadian) (Reporting by John McCrank; editing by Rob Wilson)