I just returned from a visit to Diamond Aircraft, a hidden jewel on Crumlin Road near the airport. With me were Mayor Joe Fontana and my colleagues Glen Pearson MP, Roger Caranci, and John McCallum MP.
In London since 1993, Diamond is the third largest producer of small aircraft in the world. It has enjoyed much success as an industry leader, and provides jobs for hundreds of Londoners.
Diamond has always made propeller-driven planes – until now. Now they have designed and built a new single engine jet plane called the D-Jet. All the research and development for this jet was done right here in London, Ontario. The jet seats 5 and is made of advanced composite materials. It will cost half the price of its nearest competitor.
The success of the D-Jet means hundreds more highly skilled or tech jobs here in London, and more spin-off business for Diamond’s local suppliers. And it is likely that more versions of the D-Jet will be built, with even more jobs to follow.
The plane has been designed, built, and flown. They have an excellent number of orders already in place. Now Diamond needs to ramp up production. That’s where they have hit a roadblock – financing.
The shareholders are putting up a huge amount of their own money, as have private sources. The Province of Ontario is in too. All the pieces are in place – except one: the Government of Canada, or should I more properly say, the Harper Government.
A year ago, Diamond Aircraft requested a $35 million loan from the federal government. They have not yet received an answer.
Not only that, they have been unable to even get a meeting with the minister in charge, Industry Minister Tony Clement.
The proposed funding is a loan that will be backed up by collateral. The government will be fully secured for repayment.
Why the delay? There is no downside – only an upside. This seems like a good news story for London and for Canada, yet the Harper government is dragging its feet.
This is the third time that London has been hurt by decisions of the Harper government. The first was the decision to put the Southern Ontario Development Agency in Kitchener-Waterloo, and not in London. The second was the cancellation (without explanation) of the AIDS vaccine plant that would have been partly financed with tens of millions of dollars by the Bill and Melinda Gates Foundation. And now Diamond Aircraft could be the third strike.
Please get in touch to let me know what you think – doug@dougferguson.ca. What do you think we should do to get this loan done?
The delay so far has been inexcusable. Further delay could have serious consequences for London’s economy.
Doug, I am confused. If this is such a low-risk investment, why does Diamond Aircraft need government funding at all?
London is a regional banking centre. All banks have commercial lending operations here. Why can’t the company access funds on favourable terms?
Adrian, as I understand it, they do have some private lending support. The shareholders are putting up a large sum of their own money. I don’t have a complete answer for you, but I do know that our banks can be very cautious when it comes to lending for new experimental products like this jet.