Manitoba defends loan to bus maker New Flyer after layoffs

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The Manitoba government says protecting local jobs is the priority as it hammers out the terms of a $50-million loan to local manufacturer NFI Group following a recent round of layoffs.

Economic Development Minister Cliff Cullen said he was not aware the Transcona zero-emission bus maker had laid off 30 employees at its New Flyer subsidiary on Dec. 22, one day before he joined NFI Group chief executive officer Paul Soubry to announce the taxpayer-supported loan.

“Our focus has been on the bigger picture,” Cullen said. “We’re optimistic once New Flyer gets through that we’ll be able to grow the work force here in Manitoba.”

Supply chain issues, parts shortages and disruptions caused by the COVID-19 pandemic have left the company with about $5 billion worth of unfulfilled orders and options and about $250 million in cash tied up in assembled, but undelivered vehicles.

The company has laid off about 2,000 people from its global operations in Canada, the U.S. and the U.K. since the start of the pandemic. About 2,500 people are employed locally by NFI Group.

“We fully appreciated the challenges that they were facing with the supply-chain disruption,” Cullen said Wednesday. “Clearly, there’s some short-term pain there and those tough decisions have to be made.”

Layoffs are always concerning, Cullen said. However, the cuts in Winnipeg do not change his government’s commitment to the future of New Flyer and its focus on the 2,500 people it employs, the minister said.

Terms of the loan — which involves commercial rates on a 12-month repayment schedule — are still being finalized, Cullen said. No money is expected to flow to the bus maker until later this month.

The minister would not go into detail about the conditions of the loan or whether he wants the contract to include language that protects the existing workforce.

“I’m just going to say today, because we are still having those discussions, that job protection is top of mind for us,” the minister said.

NFI Group said it views the layoffs as “temporary” and looks forward to production and the local labour force ramping up as it recovers from supply disruptions. The company is waiting on loans and surety valued at US$150 million from Export Development Canada to come through this month.

On Wednesday, Soubry said he did not know if the company had informed anyone at the province about the layoffs prior to the loan announcement.

Provincial regulations require companies to notify the Employment Standards branch if 50 or more people have been laid off. Soubry noted the latest layoffs were below that threshold.

“We have had to let all kinds of people go in all kinds of locations and our business has been massively hammered,” he said.

He applauded the Manitoba government and Premier Heather Stefanson for their support.

“She didn’t hesitate to try to find a way to stand up and bring along the feds through EDC and support our business recovery,” said Soubry.

The company attributes its losses to the unavailability of critical parts, meaning unfinished buses are parked on factory lots.

“We fully intend to ramp our volumes back up in the back half of this year… not all the way, but to continue the recovery in the back half of this year,” Soubry said.

He added the company’s order book is stacked and there is generous government support in Canada and the U.S. for transit authorities to buy zero-emission buses. While the company is optimistic, he said the recovery will take time.

“The province realizes it is not a light switch,” Soubry said. “It is a recovery game that will take some time and will have some bumps and bruises.”

— with files from Martin Cash

danielle.dasilva@freepress.mb.ca