Some Ontario manufacturers say they may have to relocate production unless the "Buy American" policy in the United States is lifted.

The "Buy American" directive says that government contracts in the U.S. that are part of the country's $787-billion US economic stimulus package must be filled using only American-made products.

Federal procurements cannot discriminate against Canadian companies because of the North American Free Trade Agreement, but about $280 billion US of the stimulus money is being spent at the state and local levels, and it is this money that Canadian businesses are not eligible for.

John Hayward, president of an industrial pump company in Halton Hills, west of Toronto, wants Canadian municipalities to retaliate by not buying from U.S. companies until the "Buy American" policy is lifted.

"Some of our customers include City of Philadelphia, City of Atlanta, City of New York," said Hayward, who heads Hayward Gordon Ltd.

About 75 per cent of the company's pumps are sold in the U.S., and Hayward said the new "Buy American" policy has slashed sales. To stay in business, the company may have to move part of its production south.

"We now have a very large number of contracts that we have succeeded in getting orders for but we cannot produce in Canada, so we are weeks away now from producing our first product outside of this factory, in the U.S.," he said.

His idea has the support of Halton Hills Mayor Rick Bonnette. He brought forward a resolution at the Federation of Canadian Municipalities meeting in June that urged municipalities to direct their purchases to companies located in countries that don't restrict Canadian trade. The resolution passed 189-175.

But Toronto Mayor David Miller is against the proposal. He thinks it's an unnecessary step.

"American companies do very little business with the City of Toronto," Miller said. "Our investment this year at the city through our capital budget is creating or maintaining 35,000 jobs, and I'm sure many of the products of Toronto manufacturers are being used in our capital work right now."

Hayward countered that if the U.S. policy continues in the long term, his company will have to move production to the United States, and 75 jobs will go with it.