Demand Prompts EDC to Extend New Insurance Offer to Ford Suppliers

News Release

(OTTAWA) February 28, 2007 Export Development Canada (EDC) announced today that customer demand has prompted the expansion of its Insolvency Excess Loss Insurance for Automotive Suppliers policy to include Canadian auto parts suppliers to Ford. The policy was originally developed in 2006 for suppliers to GM. "EDC was compelled to expand the policy to include auto parts suppliers to Ford following numerous conversations with our customers in the sector," said Eric Siegel, President and CEO of EDC. "Auto parts exporters have been very clear that EDC's product fills an important niche, making a real and much needed contribution to this important Canadian manufacturing sector." EDC's new product, first offered in March of 2006, was developed to address a gap in coverage for auto parts suppliers that are contractually bound to a "just-in-time" delivery schedule. Original Equipment Manufacturers (OEMs) usually require parts suppliers to enter into agreements with guaranteed delivery obligations, sometimes up to 60 and 90 days, regardless of the OEM's financial situation during the term of the contract. This requirement means that suppliers are unable to adjust production to mitigate potential losses during uncertain economic times.
Auto parts suppliers can purchase a policy from EDC that covers their shipments to the OEM in the 60-day period prior to an insolvency event. The value of the policy is based upon calculations of the supplier's average daily shipments for the past and future 12-month periods. If an OEM becomes insolvent, EDC's policy will cover the supplier for an amount equivalent up to 80 times their average daily balance, depending on the level of coverage acquired. The supplier will assume an amount of 10 times their average daily shipment, or 10 days worth of receivables.
Any Canadian-based auto parts supplier to GM and Ford with long-term supply contracts that require the supplier ship regardless of Ford's credit scenario can apply for this policy. For more information about this product, please contact 1-866-283-2957.
Export Development Canada is Canada's export credit agency, offering innovative commercial solutions to help Canadian exporters and investors expand their international business. EDC's knowledge and partnerships are used by 7,000 Canadian companies and their global customers in up to 200 markets worldwide each year. EDC is financially self-sustaining and is a recognized leader in financial reporting, economic analysis and has been named one of Canada's Top 100 Employers for 6 consecutive years.
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Media contact: Phil TaylorEDC Public Affairs(613) 598-2904ptaylor@edc.ca

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2016-12-15

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Demand Prompts EDC to Extend New Insurance Offer to Ford Suppliers

News Release

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