John Deere announced last week that it would be building its popular 8R tractors at the company’s facility in Montenegro, in the southern state of Rio Grande do Sul, in a bid to enhance the company’s ability to serve its Brazilian customers.
The iconic Moline, Ill.-based company will invest approximately $40 million in the effort and expects that the 8R will be eligible for FINAME financing (the public program that targets investment in Brazil’s economic development. Deere’s sales in South America are projected to be up about 20% for the year as a result of strong market conditions and the impact of government financing programs in Brazil.
Deere’s customers in Brazil are investing in higher horsepower tractors in the range offered by the 8R model, said Mark von Pentz, president of the company’s Worldwide Agriculture & Turf Division.
John Deere’s history in Brazil dates back to 1979, when it first invested in a joint venture there. Five years ago the company announced its decision to construct the Montenegro factory to increase its capacity for tractor production in the country.
“Our customers are finding productivity gains in using the significant technology designed into the 8R and we want to continue to meet our customer demand as Brazil enhances its position as one of the breadbaskets of the world,” added von Pentz. In its second-quarter earnings, Deere cited “strong market conditions and the impact of government-financing programs in Brazil” as the reasons it expects its South American sales to rise by 20% this year.
The facility that currently manufactures 8R tractors in Waterloo, Iowa, will continue to do so. The reconfiguration of the facility in Brazil will begin later this year and production is set to begin by late fall of 2015. The increased investment in Brazil, Deere said, will also increase the company’s use of suppliers in the region.
Photo by Charles & Hudson, cc via Flickr; article originally published in our previous website, Brazil in the Midwest.