EDC Loans Volkswagen $525 Million
CBJ – In an effort to remain competitive in the automotive industry, Export Development Canada is making a $525-million loan to Volkswagen that will hopefully lead to the German auto maker increasing its Canadian supply base as it expands in Mexico and the U.S.
New auto assembly investment is migrating south to Mexico and the U.S. at an alarming rate, and the EDC says its job is to make sure their supply chains still reach Canada.
EDC made a similar loan last year to BMW, which, like Volkswagen, has also noticeably increased it production in Mexico.
More than 30 Canadian parts makers sell components to Volkswagen. Under World Trade Organization rules, governments can’t tie most loans directly to specific purchases. Instead, Volkswagen makes a commitment to meet Canadian suppliers and look at what they have to offer, but it’s still no guarantee of landing business, however, it’s a necessary risk. Failure to make an overture means that automakers will continue to take their business elsewhere, most often where it’s cheapest.