Union condemns Crown agency for lending Volkswagen $526 million

Photo: The Canadian Press. All rights reserved.

In this July 12, 2013, photo, Passat sedans are lined up to be tested at the Volkswagen plant in Chattanooga, Tenn. Export Development Canada is lending Germany's Volkswagen Group 400 million euros in a move to boost sales by Canadian suppliers to the global auto giant. THE CANADIAN PRESS/AP-Erik Schelzig

TORONTO - Canada's largest private sector union is condemning a federal agency for lending roughly $526 million to Volkswagen to expand its operations in the U.S. and Mexico.

Unifor issued a statement Friday saying it's "absolutely incredible" that Export Development Canada is helping facilitate the migration of the auto industry to Mexico.

Unifor president Jerry Dias says there is no guarantee that the loan will benefit Canada.

In a statement earlier this week, EDC said the financing to the German automaker is designed to create opportunities for qualified small and medium-sized Canadian companies to win new business with the global automotive giant.

But Dias says there are no requirements for Volkswagen to buy anything from Canadian auto parts firms.

Dias is calling for Industry Minister James Moore to review EDC's actions and to prohibit future loans to automakers in other countries.

"If the Canadian government is really interested in supporting the auto parts sector, then it should focus on winning new investments and creating new jobs right here in Canada," said Dias in a news release.

"It is painfully ironic that we recently lost out on a lucrative engine investment in Windsor by Ford, largely because of inadequate government support. Yet we can somehow find $526 million to help a foreign firm invest in Mexico," he said in the statement.

Export Development Canada is a Crown agency that's role is to develop Canada's export trade. It operates at arm's length from government.