Precision SF Tech, an aerospace landing gear manufacturer based in Terrebonne, QC, has secured a significant order with an American aerospace giant with the help of a loan guarantee from Export Development Canada (EDC).
The company has 37 employees and is part of the supply chain along with Boeing and Bombardier through other big players such as Heroux-Devtek, Mecaer and RTI Claro, notes Michel Lapierre, company CFO of the supply chain contracts for Boeing in an online EDC article. The company has also built parts for Bombardier’s C-series.
According to the online EDC article, when a bank has already extended as much credit as it’s willing to offer, contracts that require a lot of R&D, can also cause financing headaches. SF Tech turned to Export Development Canada (EDC) for help.
“Our bank didn’t want to increase the line of credit,” Lapierre explains. “This is where EDC helped by giving a guaranteeto our bank, which allowed them to almost double the credit line. That’s very valuable for us.”
EDC also guaranteed 90 per cent of a new line of credit to be used to finance work orders linked to the Héroux-Devtek contract, where the parts will be exported to Cleveland. The way the deal is structured, the financing will ultimately pay for R&D (upwards of $500,000 for the Boeing 777 contract alone) as well as the equipment required to build the new components for both Boeing contracts.
SF Tech is one of only a few companies in Quebec that have secured a coveted MACH III designation. MACH is a certification program in Quebec’s aerospace cluster designed to maximize the industry’s performance and increase its competitiveness worldwide. SF Tech is currently working toward MACH IV, which would put it in an exclusive club with only four other Quebec companies.
The EGP is a flexible, risk-sharing guarantee that EDC provides to the bank of an exporter. It assures the bank that a percentage of a loan they give to an exporter will be repaid (generally 75 per cent but can be as high as 100 per cent of the loan, as it was in this case.)
By EDC sharing in the bank’s risk, Canadian banks can often be more willing to lend larger amounts to Canadian companies for their international business. This is especially important for small- to medium-size enterprises (SMEs) that need working capital to grow and meet the demands of new orders.
“EDC’s guarantee to our bank allowed them to almost double our credit line,” says Michel Lapierre, CFO of SF Tech in a press release. “That’s incredibly valuable for us. When large companies use our products, it’s a real endorsement of our work.”