A common problem experienced by Canadian exporters is the inability to finance foreign expansion, be it due to internal risk tolerances or inability to access funds.  Many companies wrongly see foreign expansion as an absolute requirement for their future wellbeing.  Foreign expansion isn't for everyone - there are many cases of Canadian manufacturing companies (including in the automotive industry) who can economically ship parts/components/tooling to far flung markets.

 That said, if a company…

At this point in 2010, public automotive parts companies have reported financial reports if not twice, at least once.  What we are all seeing is (largely) a return to profitability among the supply base, which is driven by i) increased production volumes, and ii) improved cost containment.  On paper and in theory, this looks great - the industry is apparently recovering.  But what about the banks?

 Profits, EBITDA, and other improved financial metrics aside, are the banks (be they Canadian or…

Many automotive companies in Ontario fail to realize on their SR&ED expenses and the associated liquidity possibilities.  Companies are well aware of how to file & claim for their SR&ED refunds, but few companies seek to leverage these refunds with their financial institutions.  Most financial institutions are happy to create new lines of credit supported by an authenticated & filed SR&ED return - is there a better credit risk than the Canadian federal government?  This is…

Parts manufacturers face a new risk as the OEM's become leaner and more decisive in their new vehicle strategy - downsizing of program volumes. While this in itself is not a new risk (manufacturers have long had to adjust to the realities of decreased production volumes), the new reality has brought forward the possibility of volumes being greatly reduced based on corporate strategy vs. market demand. Take for example the recent decision of General Motors to not sell the new Chevrolet Orlando…

The financial turmoil of the preceding two years have brought to light (once again) the role of private equity in the automotive industry.  In recent years, there have been numerous cases of companies changing between being public corporations and private equity held entities - what does the near future hold?

 It is likely that private equity is right now poised to re-enter the automotive industry in a significant manner.  This is because we are presently at an inflection point in vehicle…

Over the course of my career I have heard many people downplay the obvious credit risks in some of their clients, taking comfort instead in their prompt payment on previous dealings. Are these companies playing it smart or taking risks with their assets?

One of the first things I learned in my career was that there are two key determinants in establishing credit:

1) Ability to pay, and

2) Willingness to pay.

Ability to pay is quantitative and fact based.

Willingness to pay is more speculative, as it…

Export Development Canada (EDC) seems to be known within the Canadian automotive supply chain almost exclusively as a provider of Accounts Receivable Insurance (ARI).  While EDC is a dedicated provider of ARI within the OEM automotive industry, they also offer a wide variety of other services.  Did you know that EDC can potentially assist you with increasing your bank line of credit, investing abroad, getting improved credit from your suppliers, hedging your foreign exchange exposure, and more? 

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