Export Development Canada (EDC) today announced USD 1.25 M in financing for Sherbrooke-based ISE Metal Inc. (ISE), to facilitate its purchase of new equipment for its plant in Mexico.
ISE, a custom metal manufacturing company that produces parts for a number of sectors, will use the new machinery to increase its productivity to meet a growing number of orders.
“With EDC’s financing support and introductions to new clients in Mexico, our export contracts have increased significantly,” says Robert Henderson, President of ISE Metal Inc. “Our sales in Mexico grew from a greenfield start-up to almost $18 million within two years of breaking ground.”
Financing international affiliates of Canadian companies like ISE Metal’s leads to market and production diversification, strengthening the company as a whole. In fact, EDC provided ISE with the original loan that helped the company open a subsidiary plant in Mexico in 2013.
Studies consistently prove that international affiliates insulate a company against economic and currency fluctuations, both domestic and international, and help grow its bottom line. In addition, a strong Canadian company with international operations typically creates higher value jobs in Canada.
“In addition to increasing our client base in a new market, the expansion in Mexico has really paid off as we were able to move our machinery to create more capacity in Canada,” says Henderson. “EDC’s support has been instrumental to our success, both locally and internationally.”
In the past decade, Canadian foreign affiliate sales have grown twice as fast as traditional export sales. Today, Canadian companies generate as many sales from their affiliates every year as they do from direct exports, roughly CAD 500 B annually.
“ISE Metal is a great example of the advantages of international expansion,” said Carl Burlock, Senior Vice-President, Financing and Investments, EDC. “Once Canadian companies are operating abroad, they reap the benefits of in-market exposure to new supply chains and deeper relationships with major foreign buyers. This allows them to learn about new opportunities sooner, and improves their competitiveness in bidding for new contracts.”
Expanding through foreign investment is not without its challenges. Small-to medium-sized enterprises (SMEs), for example, might have trouble getting access to the resources they need, such as financing, insurance, and foreign market knowledge.
EDC has a number of solutions to help SMEs overcome these challenges, including financing, guarantees that will help unlock financing from banks, foreign market intelligence, insurance against political risk, as well as insurance that will cover SMEs in the event that a foreign buyer can’t or won’t pay.
Companies interested in learning more about financing and insurance options for their foreign investments can call 1-888-434-8508 or visit our investing in foreign markets page.
