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AGCO Corporation to make Valtra one of its four main brands

28/11/2006

According to an article published in the Kauppalehti newspaper on 20th November, the AGCO Corporation,  a global manufacturer of agricultural equipment and related replacement parts, is to increase production at its Valtra plant in Suolahti. Quoted in Kauppalehti, Martin H. Richenhagen, AGCO’s Chairman of the Board, President and CEO, said “Production at Valtra in Finland will grow in 2007, and the factory’s capacity may well be exceeded in the next few years. We expect to make further significant investments in Finland.”

In the last two years, according to Kauppalehti, AGCO has invested some EUR 30 million in the Valtra facility at Suolahti and the Sisu diesel plant at Linnavuori, and Richenhagen’s comments indicate that this level of investment will continue. “Valtra is a role model for all AGCO tractor production plants worldwide,” said Richenhagen, “We have a total of 15 factories, and all of them are using Suolahti’s manufacturing, assembly and logistic processes as a model. The know-how that Finnish engineers have in this field simply does not exist elsewhere.” AGCO will be producing 80,000 tractors in 2006, with 10,000 coming from Suolahti.

Valtra to become one of AGCO’s main brands

According to Kauppalehti, AGCO currently has 13 brands, but Richenhagen indicated that the number will be reduced sharply. “When I became President and CEO in 2004, we had 26 different brands. Now there’s just half that number, but the process will continue. Finally we will have just four strategic brands, each of which will be unique. These will be Massey Ferguson^®, Valtra^®, Challenger^® and Fendt^®. Each has its own strong markets – for example Valtra is strong in Finland, Scandinavia, the Baltic countries, Russia, Kazakhstan and the Ukraine.” When AGCO acquired Valtra two years ago, fears were expressed that Finland’s higher production costs would lead to closure of the Suolahti facility.

Commenting on the reasons for AGCO’s decision, Richenhagen said “Productivity at Valtra is in a class of its own. In most cases, operations in an acquisition have to be restructured, but this case is exactly the opposite. AGCO has learnt a great deal from Valtra.”

Production of SisuDiesel engines to be doubled

In the same Kauppalehti article, AGCO’s President and CEO stated that annual production at Sisu Diesel Inc.’s Linnavuori facility in the town of Nokia will soon be increased to 55,000 engines from the current level of 25,000. Sisu Diesel Inc. was acquired by the AGCO Corporation in 2004.

“The capacity of the diesel engine plant will be more than doubled, thanks once again to the skills of our Finnish engineers,” said Richenhagen. “Production based on advanced robotics signifies home-grown engineering know-how, not something copied from others. The result is a new engine manufacturing facility which is more efficient than those of Caterpillar, Cummins or Mercedes Benz.”

According to Kauppalehti, Sisu Diesel Inc. sells engines to Case, an AGCO competitor, and also manufactures motors for boats, forest machinery and combine harvesters, so the prospects for the Linnavuori facility are promising. Valtra will also open a research and development facility in Suolahti in January 2007, a development which Richenhagen said indicates his “very strong confidence” in both the company and the skills of its Finnish workforce.

Founded in 1990, the AGCO Corporation offers a full product line including tractors, combine harvesters, hay tools, sprayers, forage, tillage equipment and implements, which are distributed through more than 3,600 independent dealers and distributors in more than 140 countries. Headquartered in Duluth, Georgia (USA), AGCO had net sales of USD 5,400 million in 2005.

Further information: http://www.agcocorp.com