The Challenge
Established in 1978, Woodbridge is a major international supplier and manufacturer of automotive, commercial and recreational vehicle components. Today it has 62 locations in 17 different countries and operates in numerous emerging markets including China, India, Thailand, Egypt, Mexico, Brazil and Argentina.
Doing business in emerging markets often involves some degree of political risk, ranging from foreign exchange restrictions to political violence. For Woodbridge, currency transfer and conversion risk—which would prevent the company from repatriating its cash to Canada—is seen as the danger most likely to affect it. While Woodbridge monitors its markets closely for this and other political risks, and takes all the steps it can to reduce its exposure, it recognizes that some gaps in its protection will always remain.
How EDC Helped
To cover these gaps, Woodbridge uses EDC’s political risk insurance (PRI). The company reviews its PRI coverage annually, looks at its capital investments and expected funds transfers in each market and adjusts its policy to cover its requirements as necessary. With EDC’s PRI in place, Woodbridge is covered for up to 90 per cent of losses resulting from designated political events, including restrictions on currency transfer and conversion.
“Just like casualty and property insurance,” says company Treasurer Joe Estriga, “political risk insurance is a core coverage if you’re a global company. If you’re operating abroad, PRI should be part of your comprehensive insurance program.”
The Result
Woodbridge has been purchasing PRI from EDC for approximately 15 years and values the long-term relationship it has built with EDC’s political risk insurance team. Its PRI coverage helps the company protect its investments in its emerging markets and ensures that it will be compensated if one of its foreign affiliates is unable to repatriate cash back to Canada.