John Deere board approves construction of tractor plant in Russia
NEW YORK. Aug 31 (Interfax) - The John Deere board of directors has approved an investment project for the construction of a tractor plant in Russia, the company said in a statement.
The plant will be built outside Moscow near Domodedovo Airport.
At the new Russian plant, the company will produce a wide range of its own equipment including tractors and combines, as well as harvesters.
In addition, John Deere plans to unite several Russian component warehouses into a single facility, which will also be located near Domodedovo Airport.
The statement did not divulge total investment in the project. In July, John Deere announced that it would be investing over $500 million in joint production and innovative technologies in Russia.
In the future, Russia will play a leading role in meeting world demand for food and forestry products. As a result, John Deere is very interested in the Russian market, the company's general director, Samuel Allen, was quoted as saying in the statement.
He said that the Moscow project is the first in Russia of several discussed during Russian President Dmitry Medvedev and U.S. President Barack Obama's meeting in July of this year. Mark von Pentz, president in John Deere's Agriculture and Turf Division, said that the company intends to expand its presence in Russia and surrounding countries if government policy and market trends permit. Among the sectors of interest to the company is construction.
In addition, the company announced that it was planning additional investment including funding an operational center in the Kaluga Region and its current production plant in Orenburg.
A year ago, the company started erecting a production center in the Kaluga region. The company intends to invest $80 million into its construction. The center will commence operations in 2010. The facility will initially include a spare parts warehouse, a science center for dealers and a storage facility, as well as a demonstration center. The Kaluga center will lately feature assembly line production.
In Orenburg, John Deere has an assembly facility (OOO John Deere Orenburg) rented from OJSC Volf Lad. The decision to develop the production facility was made in January 2005 based on the recommendation of the Agriculture Ministry and marketing research.
John Deere's partners in Russian also include Moscow-based Universal-Spetstekhnika and Krasnodar-based Agro-Stroitelniye Tekhnologii. John Deere chose these companies out of 30 contenders. Both Russian companies sell equipment and provide product servicing.
John Deere produces agricultural equipment, as well as construction and forestry technologies. The company's annual turnover tops $20 billion. John Deere has plants in Europe, Asia, North and South America. The company sells its production in over 130 countries.
According to statistics provided by the Union of Agricultural Technology and Equipment Producers for Rosagromash, in January-April 2009 a total of 39 John Deere combines worth $5.576 million and 158 tractors worth $12.271 million. In comparison with the same period of 2008, imports of combines in monetary terms fell by 82.1%, as did for tractors, down 86.4%.