In The News
‘We’re not going anywhere’: $50 million loan from province to help New Flyer with supply chain issues
Published by CTV News Winnipeg
One of Manitoba’s largest employers is getting some help from the provincial government in the form of a $50 million commercial loan to help keep the company running while it deals with supply chain and inflation issues.
The NFI Group – which owns both New Flyer Industries and Motor Coach Industries in Winnipeg – is the largest bus manufacturer in North America. NFI employs 7500 people worldwide, 2500 of which are Manitobans.
The loan announcement was made Friday at New Flyer’s new product development facility. The loan will be given at commercial rates with the expectation that it will be paid back within 12 months.
“NFI is well-positioned to capitalize on the transition to green transportation technologies. We’re creating opportunities for Manitobans today and into the future,” said Economic Development, Investment and Trade Minister Cliff Cullen at the announcement.
“To have three levels of government supporting a critical business like ours is really a strong message,” said Paul Soubry, NFI president and CEO. “It’s a strong message to our customers, to our suppliers … and most importantly to our employees.”
Supply chain issues have majorly impacted the bus manufacturer, according to Soubry. He said a shortage of parts has forced inventory build-up at all of their manufacturing facilities. Unfinished buses are sitting idle while they wait for parts.
“While it’s now starting to come down, we peaked at almost 500 vehicles built, then offline,” said Soubry. “Every one of those vehicles is about half a million dollars, so that’s $250 million in cash tied up that we can’t complete because we didn’t have the parts.”
However, he added that demand has never been higher for their product.
“Our total backlog, now that’s both firm orders and options, is now five billion – that’s a ‘b’ – billion dollars,” said Soubry.
He said they have more than 4,000 units currently on order from transit services in Toronto, Vancouver, New York, Philadelphia, and many other cities across North America.
Soubry said their customers have been very understanding, and that no orders have been cancelled despite the delay.
“We’ve had an unbelievable ride, and an unbelievably terrible ride since COVID began in March 2020, which then led into global supply chain challenges,” he said.
NFI has lost close to $300 million since the pandemic began. Soubry said the company has had to renegotiate financial terms with its banking partners six times over two years.
“This support comes at a critical time in that we have incredible and unprecedented demand for our vehicles, and there is tremendous support from all levels of government for public transportation,” said Soubry.
In addition to the $50 million provincial loan, NFI will also be getting some help from the feds. Export Development Canada will be providing $50 million (USD) in credit for accounts payable support, and $100 million (USD) in credit to help secure bids for new work.
“NFI is a shining example of a Canadian company that’s working a better and a cleaner environment while creating good jobs and contributing to a strong green economy here in Winnipeg,” said Dan Vandal, the federal minister responsible for Prairies Economic Development.
Cullen said it’s not the first time the province has lent money to NFI.
“I did look back in terms of previous loans with New Flyer group. It goes back to 2002, there was a $20 million loan to New Flyer, repaid. In 2004, $15 million, that was (a) U.S. dollar loan, again repaid by New Flyer,” said Cullen. “So it’s certainly not something out of line that the government of Manitoba would support New Flyer or any other industry that finds themselves in these types of situations.”
Soubry said he is grateful to everyone involved for the support.
“This is massive in terms of sending a message to our people, to our suppliers, and to our customers – we’re not going anywhere.”