Canada Loans 400M to Volkswagen for Chance at Supplier Table

Mark Stevenson
by Mark Stevenson
canada loans 400m to volkswagen for chance at supplier table

As Volkswagen plans to expand in Chattanooga and Puebla, the Canadian government is loaning €400 million ($433.8 million USD) to the German automaker in exchange for possible future supplier business.

Export Development Canada, a Crown corporation (an entity owned entirely by the Government of Canada), announced the “financing is designed to create opportunities for qualified small and medium-sized Canadian companies to win new business with the global automotive giant as they grow their operations in North America.” The loan is being extended to Volkswagen with “market-rate interest and administrative fees.”

“There’s no doubt Canada needs Volkswagen more than Volkswagen needs Canada,” said Phil Taylor, spokesperson for EDC, to the Windsor Star.

The financial agreement gives smaller Canadian companies exposure to Volkswagen as they tool up their North American operations for future product. Suppliers can register their products or services on a website run by EDC.

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  • HerrKaLeun HerrKaLeun on Apr 27, 2015

    “market-rate interest and administrative fees.” couldn't VW get financing like that on their own? they have huge cash reserves and sure someone lends them money for cheap. sounds like there is a part of the story missing. "possible future supplier business." sounds very non-committing. you pay me $10K fora possible $60K BMW. I take your money and me giving you the BMW is a possibility (but I chose not to exercise that option). Seems something is missing in this story.

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    • Lou_BC Lou_BC on Apr 27, 2015

      Mark Stevenson - it is more of a case of I'll pay you to feel up my ugly daughter hoping that you'll gain a son-in-law.

  • Th009 Th009 on Apr 27, 2015

    "Canada lends" ... the noun is "loan" but the verb form is "lend".

  • Mikey Mikey on Apr 27, 2015

    Did we switch over the Euro here ? $ 400 M USD = $486 M CDN. Just wondering when we started lending our money, using Euros

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    • Mark Stevenson Mark Stevenson on Apr 27, 2015

      @mikey That's the thing though -- it's over $500 million the Canadian government is loaning to VW. Not only is there no guarantee of Canadian companies reaping any reward from this, but even if they did, I doubt it would add up to $500 million. You should only risk what you are liable to gain, I believe.

  • Big Al from Oz Big Al from Oz on Apr 27, 2015

    “There’s no doubt Canada needs Volkswagen more than Volkswagen needs Canada,” said Phil Taylor, spokesperson for EDC, to the Windsor Star." This statement says it all. Canada obviously isn't competitive enough for this arrangement. Why do governments constantly waste taxpayer money? Put the money to better use. If the Canadian economy isn't suited for the business that the government wants, the government really needs to make some structural changes. You can't just borrow to buy jobs.

    • Mark Stevenson Mark Stevenson on Apr 27, 2015

      I couldn't agree more. At least it's a loan, though, and not straight up corporate welfare.