Winnipeg bus manufacturer NFI secures $250M government loan package to manage supply-chain chaos
Company can't complete $5B in orders because it can't get parts
The provincial and federal governments have made more than $250 million available to Winnipeg-based bus manufacturer NFI to cushion the blow of global supply-chain shortages.
NFI Group has been unable to complete approximately $5 billion worth of orders because it can't get parts, president and CEO Paul Soubry said Friday in Winnipeg.
This has left about 500 buses sitting idle on company lots, awaiting delivery to customers and depriving NFI of the cash flow it needs to obtain and complete more orders, he said.
On Friday, NFI announced it has access to a $50-million loan from Manitoba and a separate loan of $50 million US (roughly $68 million Cdn) from Export Development Canada.
It also has access to up to $100 million US (about $136 million Cdn) in loan guarantees from the federal agency to cover off performance bonds, which is money it must put up to guarantee it can follow through on orders.
NFI received orders for 4,000 zero-emission buses this year alone, and the loans will allow the company to follow through on them more easily, Soubry said.
"It's a strong message to our customers, to our suppliers, to our customers and most importantly, to our employees," Soubry said on the floor of NFI's product-development lab, a warehouse-sized space in Winnipeg's Transcona area.
"It also sends a very strong message that what we do is not just help move people around in cities and on rural roads," he said.
"We have a massive impact on [reducing] congestion in cities, but most importantly zero-emission goals that we all have around the world."
NFI manufactures both hydrogen fuel-cell and battery-electric buses. Soubry said the company was already in the process of transitioning away from making diesel buses when the pandemic arrived, creating economic havoc and disrupting supply chains.
More recently, NFI has also had to contend with currency volatility and rapid inflation in the price of parts, he added.
Altogether, the company has lost $300 million since the start of the pandemic, Soubry said, and also had to lay off staff.
The company employs approximately 7,500 people worldwide, including about 2,500 in Manitoba.
"In our Winnipeg plants alone, our people had to endure 25 weeks of either idling, no-line-entry weeks or shutdowns," Soubry said.
"We'd say to our people, 'Stop, start, hurry up, slow down, wait for the parts come to work, the parts are coming, the parts don't come up, hang on, come back.'
"And that has been tremendously draining on our people."
Manitoba deputy premier Cliff Cullen, who was at Friday's announcement along with Saint Boniface-Saint Vital member of Parliament Dan Vandal, said the province's loan to NFI will be paid off in one year, with the possibility of an extension for another year.
The federal loans and guarantees will be made available in 2023.
As a result of the aid package, NFI will suspend dividends until June, said Soubry, adding most investors understand this is necessary.
"There's no question the vast majority of institutional investors are far, far more interested in long-term value creation of the business," he said. "We know there's an impact on a retail investor that relies on a dividend."
