Heavy equipment builder Deere & Co. has marked $124 million for two new plants in Brazil’s São Paulo state, where it will build construction equipment for Brazil and the rest of South America. Construction will start early next year and manufacturing will begin in late 2013.The company has three manufacturing plants for agricultural and forestry equipment in Brazil, and a parts-distribution center for South America. It also operates a bank through the John Deere Financial Services arm, and an irrigation plant through the John Deere Water subsidiary.
"Brazil is one of the world's fastest-growing markets for construction equipment," stated Deere & Co. chairman and CEO Samuel R. Allen. "Today's announcement represents another step in our strategy to serve construction equipment customers in key markets around the world."
Earlier this year Deere outlined a $100-million plan to expand production of tractors and harvesters in India.
The Brazilian investment is projected at $180 million in total, with Hitachi Construction Equipment joining Deere as co-owner of one of the plants, manufacturing excavators. The other factory will produce backhoe loaders and four-wheel-drive loaders and will be solely owned by Deere.
Deere will continue to import products from manufactured elsewhere to Brazil and the region, and it plans to set up a distribution network to sell and service the equipment.
"There are significant opportunities to serve customers with Deere construction equipment in this region of the world,” according to Michael Mack, president of Deere's Worldwide Construction & Forestry Division. “We believe Deere can gain momentum by leveraging the considerable assets and capabilities that Deere has already established in the region."
Michijiro Kikawa, president, CEO, and director of Hitachi Construction Machinery Co., Ltd., said the new joint venture would allow Hitachi and John Deere to expand the relationship they established first in 1988. They manufacture excavators at a joint venture in the U.S., and they have a marketing agreement covering North and South America.