Revving Up Relationships With Global Auto Parts Buyers

Surviving and thriving in the automotive parts business today means aggressively looking for trade opportunities in new markets. So, put your engine in gear and follow how Export Development Canada (EDC), is racing to help pull in new trade opportunities and real deals for Canadian companies.

Fuelling growth in India

India’s automotive sector is forecast to grow more than 15 per cent per year over the next decade. This means massive production by India’s automakers and unprecedented demand for auto parts. This is just one of several key foreign markets where EDC has been revving up its relationships and loans to some of the world’s key OEMs and global Tier One parts suppliers.

The goal—what EDC calls its pull strategy—is to use these loans to help influence, or pull in, trade opportunities and business deals for Canadian auto parts and tooling makers of all tiers.

Fueling some of the auto-sector growth in India, for example, is a US $500 million syndicated loan given last year to Tata Motors Ltd. (TML), including US $100 million from EDC to encourage purchases from Canadian companies. That’s just the first step.

EDC then helps make the right connections by organizing matchmaking activities to introduce qualified Canadian suppliers to senior procurement decisionmakers at the major automotive companies. These are often done in partnership with APMA, Canada’s Department of Foreign Affairs and International Trade (DFAIT) and the Ontario government. Early this year, for example, EDC was on the road helping to coordinate the India Automotive Supplier Days 2012 in New Delhi, Chennai and Pune.

Conducted in partnership with DFAIT and APMA, the event followed the Auto Expo 2012 Show in Delhi where a number of Canadian companies showcased their capabilities, networked and gained insight into the dynamic Indian auto market. Nine Canadian companies viewed presentations from Indian OEMs and took part in face-to-face matchmaking meetings with senior decision makers from Mahindra & Mahindra, Ford India, Ashok Leyland and Tata Motors Ltd. The OEMs also received an overview of the Canadian automotive sector and Canadian capabilities. As a result, at least two Canadian companies were given the opportunity to quote on business and others have been invited to follow-up meetings with the key Indian automakers.

“For Valiant, the supplier visits have been very instrumental. For example, as a result of the Ford introduction meeting in Delhi, we have been asked to quote the entire closure manufacturing line for their new India facility,” reports Tony Elias, senior vice-president of operations at Valiant Machine and Tool Inc.

India’s automotive sector is forecast to grow more than 15 per cent per year over the next decade. This means massive production by India’s automakers and unprecedented demand for auto parts.

In addition to Tata Motors, EDC has pull loans and relationships with senior decisionmakers at Mahindra & Mahindra and Ashok Leyland and a growing relationship with Ford India. Given that India has only some 14 vehicles per thousand people, compared to the world average of 120, these companies are at the forefront of changing the roadscape in India. As more of India’s nearly 1.3 billion population—with a fast growing middle-class—are able to afford a vehicle, there will be a corresponding increase in demand, similar to what has been happening in China. In 2010 alone, India’s auto sector grew by more than 25 per cent over the previous year, with passenger vehicle sales up 30 per cent in the same period. In 2011, sales moderated somewhat; the long-term trend is still positive.

Moving ahead in Mexico

Mexico is another key automotive market for Canadians, EDC representatives have close ties with major automakers and parts suppliers working in that country such as Metalsa and Nemak. This is a unique market where suppliers from both countries use a common manufacturing platform to serve customers in Mexico and the United States. Our Canadian suppliers, including leading global players like Magna and Martinrea, have invested heavily in Mexico to get closer to their customers. In Mexico, Magna now has 30 manufacturing facilities and Martinrea has six.

By locating in Mexico, in addition to their operations in Canada and elsewhere, they have secured a spot in the complex global supply chain of the auto sector. Overall, Canadian companies active in Mexico’s automotive sector employ more than 23,000 people. EDC, along with DFAIT and APMA partners, has organized successful trade missions in Mexico and have brought Mexican buyers to visit Canadian operations and will continue to do so.

Working in Europe

In Europe, EDC has worked closely with BMW, Faurecia and Benteler to help create more trade for Canadians. This is a very sophisticated market with high standards and they appreciate Canadian expertise, innovation and long experience in the auto parts sector. In 2010, for instance, EDC participated in the IZB Automotive Supplier Fair in Wolfsburg, Germany, again in conjunction with APMA, DFAIT, the Ontario government and other stakeholders.

EDC and these partners are planning to facilitate another trade mission to IZB this fall for a delegation of Canadian automotive suppliers. IZB is the leading European trade fair for the automotive supplier industry and presents the latest trends and innovations of the industry. The last Canadian delegation was comprised of 24 automotive suppliers, including several EDC customers such as The Woodbridge Group, AGS Automotive, Van-Rob and ABC Group, and represented a good cross-section of Canada’s automotive strengths and capabilities.

EDC facilitated matchmaking meetings between Ford’s European procurement team and Canadian suppliers, and also provided its customers with a business space within the Canadian Pavilion to allow companies to conduct business with their clients. These events are of huge value to Canadian suppliers and to Canada. As our customers tell us, many would not have such a convenient opportunity, or any chance at all, to meet senior executives at these companies. For Canada, our image on the global automotive stage is also enhanced by these missions and, most of all, by the know-how of our Canadian auto parts companies.

If you look at EDC’s combined loan facilities to foreign companies in all key industry sectors in 2011, the results are impressive—those loans helped propel more than $3 billion in new contracts, for some 870 Canadian exporters, including those in the auto parts sector.

John Earl is EDC’s Strategic Account Executive for Transportation. You can contact him at: jearl@edc.ca
Toby Herscovitch is an EDC Senior Advisor in Planning and External Relations

Getting Close to an International Deal?

EDC Has Other Practical Tools

EDC offers a wide range of credit insurance, loans and guarantees to Canadian companies and their customers to help you grow your business abroad. Accounts receivable insurance protects your sales against a wide range of risks if your customer doesn’t pay. You can cover a single customer, one contract, your full book of export business or even the receivables of your foreign affiliates. And knowing that your foreign receivables are covered means your financial institution may be willing to extend more working capital to you. EDC’s foreign buyer financing lets you offer your customers attractive credit terms and since we typically pay you directly and collect from your customer, this solution also gives you the equivalent of a cash sale. And our export guarantee program shares the financial risk with your bank, so you can get the financing you need to break into new markets, increase production for a new order, or support foreign investments. For our full toolbox, visit www.edc.ca.

Categories Europe, Manufacturing, Mexico

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