Canadian government funding for automotive research and development

Toyota Canada recently announced that they will be investing $421 million for state of the art enhancements to their Ontario production facilities in Cambridge and Woodstock. This amount, which includes a portion of Canadian government funding, shows the company’s commitment to the Ontario automotive industry and 8,000 jobs which area supported between the two plants.

Cambridge will benefit from the installation of laser welding robots which are equipped to produce the next generation of Lexus models. This will be the first time that laser welding technology has been used outside of Toyota’s Japanese manufacturing plants. Since the production of Toyota’s Corolla will be shifted from Cambridge to Mexico, this new technology ensures production output will remain stable and competitive. Alternately, metal stamping technology will be added into the company’s Woodstock manufacturing facility. With this upgrade, fewer auto parts will need to be imported from international markets and Canada will be able to export many specialty products into the United States market.

Canadian Government Funding Invested into Facilities

Toyota Canada has leveraged provincial and federal contributions to upgrade technology and maintain jobs at the two facilities. The Province of Ontario has invested as much as $42.1 million of conditional grant funding through the Jobs and Prosperity Fund. In turn, the Federal Government of Canada has provided up to $59 million in repayable government loans through FedDev Ontario’s Automotive Innovation Fund.

Jobs and Prosperity Fund Government Grants Ontario ($42.1M)

The Ontario government’s $42.1M contribution to these projects represents 10% of Toyota’s total expense. In order to receive the full amount of that funding, Toyota must meet stringent investment and job creation/maintenance targets. The Government of Ontario will routinely monitor the projects throughout their lifespan to protect taxpayer investment and ensure the funding has been spent for the province’s benefit.

The Jobs and Prosperity Fund (JPF) maintains a total funding pool of $2.5 billion to be allocated between three project streams. The stream that Toyota took advantage of is the New Economy Stream, which enables private sector organizations to receive up to 20% of eligible costs to enhance innovation capacity, improve productivity and performance, expand exporting activities, and increase job creation capacity. Projects must have at least $10 million in eligible project expenses and focus on one of Ontario’s key sectors, such as advanced manufacturing. This fund can act as either a grant or a loan, and is intended for large-scale businesses and projects only. Smaller projects that focus on the adoption of innovations, production/productivity increase, and the creation of jobs may apply for the Investing in Business Growth and Productivity small business 0% interest loan.

Automotive Innovation Fund Canadian Business Grants ($59M)

The federal government will provide $59M in support for Toyota’s investment through the Automotive Innovation Fund (AIF). AIF is repayable funding for Canadian automotive manufacturers who are engaging in research and development to create more innovative, fuel-efficient, and environmentally-friendly vehicles. Companies may receive up to 15% of eligible project costs including new product development, engineering and design, product testing, and the implementation of new transformative production methods (such as laser welding). Projects must have a total spend of $75 million or more to qualify, and funding received may range from $16 million – $80 million.

Resources for Canadian Automotive Manufacturers

In addition to Canadian government grants and loans Mentor Works provides several free resources for automotive manufacturers who seek to improve their productivity and business potential. Download our free Comparing Funding Types tool to understand the unique characteristics of Canadian small business grants and how you can use them to enhance your operations. Since businesses are in a constant state of investment, you will also find value from our blog and infographic on the Business Funding Cycle where we identify Canadian government grants for the major four areas of capital expenditure. Automotive companies seeking to expand into new international markets will also want to download our Guide to Export Expansion where we’ve gathered all of the best resources from around the internet to expedite your export planning efforts.

Stay Informed About Canadian Government Funding

If you have any questions about the funding programs listed in this blog, or simply wish to explore your options with a Canadian government funding expert, contact Mentor Works today and discover the potential that government grants and loans can provide your business. Register for our weekly e-newsletter to receive informative, useful government funding news delivered to your inbox every Monday. You can also follow us on Twitter and LinkedIn LinkedIn for daily blog updates and other relevant funding news.

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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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