Volkswagen has received a $520 million loan from Export Development Canada on the terms that the automaker must participate in “matchmaking sessions” with Canadian automotive suppliers, The Windsor Star reports. The Canadian Federal government is hoping the talks will give Canadian suppliers new business opportunities as VW expands its manufacturing operations in Mexico and the southern United States.
The loan, which takes market-rate interest and administrative fees into account, was given to VW in hopes it will encourage the automaker to buy parts from Canadian automotive suppliers. VW is not obligated to go with Canadian suppliers in taking the loan, as that would violate World Trade Organization rules, however they are required to at least meet with Canadian suppliers who are interested in working with the company.
VW is currently looking for suppliers who specialize in tooling and sub-assembly, according to The Windsor Star. An EDC spokesman said they are currently working to try and identify suppliers who meet VW’s needs and may interested in working with the automaker.
Not everyone is on board with the loan. Anthony Faria, co-chair of the Office of Automotive Research at the University of Windsor, noted VW will likely go with the supplier that best meets their needs, whether they received a loan for the consideration or not.
“It’s strange; I’m not quite sure what to make of it,” Faria told The Windsor Star. “I can see how getting a loan from the Canadian government would please VW, but I don’t see how it will encourage VW to buy from Canadian suppliers. Volkswagen is going to buy where the price and technology is the best.”