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January 21, 2021 08:14 AM

Wage subsidy kept sector afloat in 2020 with big players using government aid

John Irwin
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    Toyota

    Toyota Canada was among the automakers that received assistance through the Canada Emergency Wage Subsidy program while its operations were paused for two months last spring, spokesman Michael Bouliane confirmed.

    Auto-industry employers who received the Canada Emergency Wage Subsidy (CEWS) credit the program with averting economic disaster during the pandemic’s darkest period. 

    Steve Chipman, CEO of the Birchwood Automotive Group in Winnipeg, said his dealership group used the CEWS for about two months in the spring of 2020. He said the program helped pay to keep people on staff, while also giving the group confidence it would survive the crisis. 

    “We had gone down the routes of [examining] different unemployment programs and job-sharing programs. We never needed to use those because we were able to tap into this fund.” 

    Virtually every automaker, as well as the country’s largest auto suppliers and many dealership groups, received funding from the program, according to a new government database. 

    The CEWS is designed to partially cover wage costs for businesses impacted by the COVID-19 pandemic. During the program’s rollout in the spring, businesses needed to show a 30-per-cent year-over-year drop in revenue for the federal government to cover 75 per cent of their employees’ wages. 

    Since July, no minimum revenue drop has been required for businesses to receive a wage subsidy, though how much a business receives is proportional to its annual revenue loss in a given claim period, according to the government. The program repays employers up to $847 per employee per week. 

    CEWS recipients 

    Below are several of the notable companies to have received subsidies under the Canada Emergency Wage Subsidy program, according to the Canada Revenue Agency’s new CEWS registry. Note: This is not an exhaustive list.  

    Aisin Canada Inc. 

    AutoCanada Inc. 

    Autoliv Canada Inc. 

    Automotive Parts Manufacturers’ Association 

    BMW Canada Inc. 

    Bridgestone Canada Inc.  

    Calgary Motor Dealers Association 

    Canadian Vehicle Manufacturers’ Association 

    Daimler Trucks Canada Ltd. 

    Dana Canada Corp. 

    Dealer-FX Group Inc. 

    Dealer Solutions North America Inc.  

    Denso Manufacturing Canada Inc. 

    DesRosiers Automotive Consultants Inc. 

    Dilawri Group of Companies and/or the Dilawri Group 

    Edmonton Motor Dealers’ Association 

    FCA Canada Inc. 

    Ford Motor Co. of Canada Ltd. 

    General Motors of Canada Co. 

    Go Auto Corp. 

    Global Automakers of Canada 

    Goodyear Canada Inc. 

    Grand Touring Automobiles 

    Honda Canada Inc. 

    Honda Canada Finance Inc. 

    Hyundai Auto Canada Corp. 

    Jaguar Land Rover Canada ULC 

    Kia Canada Inc. 

    Linamar Transportation Inc. 

    Manitoba Motor Dealers Association Inc. 

    Martinrea International Inc. 

    Mazda Canada Inc. 

    Mercedes-Benz Financial Services Canada Corp. 

    Michelin North America (Canada) Inc.  

    Mitsubishi Motor Sales of Canada Inc. 

    Motor Dealers’ Association of Alberta 

    Multimatic Inc. 

    New Car Dealers Association of B.C. 

    Nissan Canada Inc. 

    Nissan Canada Extended Services Inc. 

    Pfaff Motors Inc.  

    Policaro Group 

    Robert Bosch Inc. 

    Steele Auto Group Ltd. 

    Subaru Canada Inc. 

    Tesla Motors Canada ULC 

    Toyota Motor Manufacturing Canada Inc. 

    Trader Corp. 

    Used Car Dealers Association of Ontario 

    Valeo Canada Inc. 

    Vaughn Wyant Autosport Ltd. 

    Volkswagen Group Canada Inc. 

    Volvo Car Canada Ltd. 

    ZF Automotive Canada Ltd. 

    Canadian entities of General Motors, Toyota, Subaru and Mitsubishi received money under the program, as did the four largest suppliers based in Canada: Magna International Inc., Linamar Corp., Martinrea International Inc. and Multimatic Inc. Major dealership groups such as AutoCanada Inc. and the Dilawri Group of Companies — the largest dealer group in the country — used the CEWS. 

    With a few exceptions, however, it is unknown how much these companies received in funding. The Canada Revenue Agency’s (CRA) CEWS registry, which went live in late December, does not include information about the value of the subsidy received or when it was distributed, instead only disclosing which businesses received assistance. 

    John Bordignon, Honda Canada spokesman, said the CEWS “was a critical component that helped guide us through difficult business decisions throughout the continuing pandemic and ultimately contributed to Honda Canada maintaining normal operating conditions while limiting the significant impact to our associates and business.” 

    While annual new-vehicle sales declined 20 per cent in 2020, many of the worst-case scenarios that were envisioned in March and April were avoided, said Brian Kingston, CEO of the Canadian Vehicle Manufacturers’ Association, which represents the Detroit Three. 

    “Government had to step in, and they did so in a big way, and they saved a lot of jobs, which is critical” for the auto market, he said. “And I think that has largely helped to avoid some of the worst damage to the economy.” 

    PROPORTIONAL PAYMENTS 

    The program is slated to remain in place in its current form through June. 

    The total scale of government support for individual sectors, including the auto industry, remains unclear. According to the CRA, about 1.9 million applications for wage assistance from 372,950 unique applicants were approved through Dec. 20. In total, the government has paid out $55.4 billion through the program, the CRA said. 

    The vast majority of those payments — 1.86 million of them paid out over the course of several four-week blocks — were for less than $100,000. According to the CRA, 3,840 payments between $1 million and $5 million have been made. Another 420 were more than $5 million. 

    At least some of those larger payments were for companies in the auto industry. According to the company’s earnings reports, supplier Linamar received about $108.1 million in assistance through the third quarter. AutoCanada, the country’s only publicly traded dealership group, reported $32.5 million in income from CEWS from March 15 to Sept. 26, most of it in the second quarter. 

    When asked for comment by Automotive News Canada, other companies declined to reveal the size and frequency of the CEWS subsidies they received. Many, however, said the program was critical to the companies’ ability to remain afloat during the pandemic, particularly during the spring, when manufacturing shut down for two months and sales plummeted. 

    CRITICAL COMPONENT 

    Michael Boulaine, spokesman for Toyota Canada, said the CEWS offered support during “what was a very challenging time for our industry.” 

    A spokeswoman for General Motors Canada called CEWS “an important economic program” for the automaker, while a spokesman for Magna said the program “was an effective way to provide additional financial support to our hard working Canadian employees during the initial stages of the pandemic.” 

    Robert Karwel, senior manager of automotive practice at J.D. Power Canada, credited the wage subsidy and other government programs, such as the Canada Emergency Response Benefit, for preventing the bottom from falling out under the auto industry and the economy at large. 

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