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MJ Manufacturing on Lakeshore Road West in Toronto. MJ Manufacturing is a unit of auto parts maker Martinrea International Inc.

The new incentive program being offered to auto parts makers by the federal government will begin taking applications in June and the first projects could be under way this summer, a senior federal government source says.

The $100-million Automotive Supplier Innovation fund was announced last week in the federal budget. More details will be announced Tuesday by Industry Minister James Moore at a plant operated by parts maker Martinrea International Inc. in Vaughan, Ont.

"Canada's auto sector is a central part of our strength in manufacturing and the suppliers who support this sector are essential to our economy," the source said.

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The federal program is designed to help auto parts makers develop and demonstrate innovative technologies and turn them into commercial successes.

It is expected to fill a gap between the basic research that goes into the early stages of development of a new product or process and pre-commercial development.

Parts makers are eligible for funds that help them develop prototypes, engineer new processes and in the testing and validation of new products before they reach the commercial stage.

The program is designed to encourage auto parts suppliers to increase their own investments, the source said.

Shipments by auto parts makers in Canada amount to about $24-billion a year and supplier companies employ about 65,000 Canadians.

The supplier fund follows on the heels of the federal government's Automotive Innovation Fund, which has contributed to larger projects such as a $700-million investment by Ford Motor Co. to retool its assembly plant in Oakville, Ont., to make a new generation of Ford Edge crossovers that will be shipped to global markets.

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