Canadian government funding for Ontario automotive industry

Nearly a year ago, CBC reported on former Industry Minister, James Moore’s meeting with executives from leading automotive companies. In an ongoing effort to strengthen Canada’s automotive sector, Moore has been working closely with Ford, Toyota, Chrysler-Fiat, and Honda to secure additional investments in their Canadian operations.

“I’m very positive and very confident that we’ll have more good news to announce in the future.”
– James Moore, Former Industry Minister

In response to these discussions, the federal and provincial governments have created business grants and loans that can be accessed by automotive supply chain entities. Companies in the automotive industry should consider the following Canadian government funding programs to subsidize their strategic project costs in 2016 and beyond.

Related Blog: Linamar Receives $101M in Government Funding for Business Expansion Project – Canada’s second largest auto parts manufacturer, Linamar, will receive Canadian and Ontario government funding towards the implementation of a $506.8 million research and development project.

Government Funding Programs for the Automotive Industry in 2016

Five business funding grants and loans will provide small and mid-sized businesses (SMBs) with the funding needed to complete strategic projects in 2016. These programs include:

Jobs and Prosperity Fund (JPF)

Ontario government funding program Jobs and Prosperity Fund (JPF) offers two streams of funding that automotive businesses can access. The New Economy stream enables businesses to perform in-house research and development and productivity enhancing projects. A combination of grants and repayable funding may be awarded to a maximum 40% of eligible project costs, however businesses must have more than $10 million in eligible project expenses to qualify.

Automotive Innovation Fund (AIF)

Canadian small businesses can also leverage government funding to support research and development projects leading towards the improvement of environmentally-sustainable vehicles. Innovative products and processes that are energy efficient may receive 10-15% of project expenses to a maximum of $60 million through the Automotive Innovation Fund (AIF). In order to receive this repayable funding, the project’s value must meet or exceed $75 million and enhance the business’ competitiveness within their market.

Automotive Supplier Innovation Program (ASIP)

Developed by Industry Canada following discussions with James Moore, the Automotive Supplier Innovation Program (ASIP) was created to support innovation in Canada’s automotive sector. Businesses can secure up to 50% of eligible expenses to a maximum of $10 million in Canadian government grants. Projects commonly funded through ASIP include product engineering, product/process prototyping, and pre-commercial testing activities.

Investing in Business Growth and Productivity (IBGP)

Ontario small businesses can also capitalize on provincial funding available to the automotive industry. Large-scale business expansion projects can receive Ontario government funding to extend cash flow and encourage investment. Investing in Business Growth and Productivity (IBGP) provides repayable government funding for up to 25% of project expenses to a maximum of $20 million. Business expansion (through product diversification or market expansion) and innovative projects that lead to long-term business growth are a main focus of this Ontario government funding program.

Rural Economic Development (RED) Fund

Exclusively for businesses operating in rural Ontario, the Rural Economic Development (RED) Fund provides grants for business development projects; including business planning and strategy development, conducting market research, marketing and promotions, and workforce development. Projects that receive funding through RED must show an impact for rural Ontario regions, defined as those with populations less than 100,000. Through the program’s Business Development stream, small business grants valued at 20% of eligible project costs (to a maximum $1 million per project) will be provided to spur investment in rural communities.

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Jeff holds an Honours Bachelor of Business Administration at the University of Guelph. He is passionate about Canadian business, economics, and politics. As Marketing Coordinator for Mentor Works, Jeff educates business leaders about proactive funding strategies.

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