A fast-growing part of Canada’s auto industry is at risk unless the federal government broadens financial aid in the Covid-19 pandemic, a trade group has warned.
“What we see is that daily, companies are dropping. And once they drop they're gone,” Suzanne Grant, CEO of the Ottawa-based Canadian Advanced Technology Alliance (CATA) told Automotive News Canada.
Of some 12,000 small tech companies that collectively employ 85,000 in Canada, a significant if uncharted number, focus on transportation, from autonomous driving to hydrogen fuel cells and electric-car batteries.
On April 5 CATA urged Prime Minister Justin Trudeau to establish a $3.6-billion emergency fund for the tech sector and release $200 million in backlogged claims for scientific research and experimental development incentives.
The aid could mean survival for start-ups that have yet to show a profit and thus don’t qualify for government wage subsidies announced in March, or whose founders are unable to meet bank demands to personally guarantee up to 20 per cent of loans otherwise backed by government in the new Business Credit Availability Program.
“Those entrepreneurs may have already leveraged everything to get a company off the ground, and they just may not have that available to them,” said Grant.
CATA has since been in talks with the Prime Minister's Office and Innovation, Science and Economic Development Canada. So far there's been no commitment to an emergency fund from a government scrambling to meet the Covid crisis on multiple fronts. On Monday, however, the Canada Revenue Agency said it is again processing claims for the science and research tax credits after delays due to staff relocations.
Without help, Grant fears a loss of crucial momentum in a tech sector starting to show the fruits of $36 billion in annual investment spread between universities, research institutes and programs to commercialize intellectual property. Already, multinational giants better able to withstand a COVID-19 shutdown are scooping up engineers and developers laid off by start-ups, she said.
Colin Dhillon, chief technical officer at the Automotive Parts Manufacturers’ Association, said he has yet to hear concerns from the group’s high-tech members, some of which have pivoted to help in efforts to supply needed medical supplies in Canada.
He urged any company that is struggling to contact the Business Development Bank of Canada or Export Development Canada, which are overseeing federal relief efforts for business. Among them is a bridge financing program that will match investments in startups with notes that can be converted into equity in the firms. Startups must have already raised at least $500,000 in venture capital to qualify.