Central regions | Industry, manufacturing

Deere runs to Russia to beat high import tarrifs

31 Mar '09
US agricultural, construction and forestry equipment manufacturer John Deere has announced plans to build an $80m production complex in Kaluga region, Marchmont reported on March 18, 2009.

Deere joins a number of foreign manufacturers who find it more cost-efficient to invest in production within Russia rather than face stiff customs duties to export their products here.

It was only last summer that the head of the companyís Moscow rep office Sid Bardwell said that a John Deere tractor produced in Russia would cost more than one imported from the US.

However, in February this year RF Government tripled customs tariffs on imported grain and fodder harvesters from 5% to 15%, causing foreign manufacturers to re-consider investing into new plants within the RF.

Although the global financial crisis is reducing demand for expensive John Deere equipment, the company reportedly offers its buyers attractive loans in partnership with Sberbank and Rosselkhozbank.

Reportedly, the loans are secured with the purchased machinery. VIP buyers are eligible for up-to-five-year terms, provided by international export credit agencies, such as Export-Import bank of the United States (EXIM) and Germanyís Germes, according to the firmís website.

The company confirmed to Marchmont they were building the center, however they refused to provide any further details on the project. When first announced, the plan was to build the new plant on a 40-hectare production center, to be located in the regionís Vorsino industrial park.

The first phase of the project will consist of warehouses to store machinery and car parts and a training center for dealers. Later the company will invest in assembly line installation and launch of production, the firmís official website reports.

John Deere currently owns 13 dealerships in Russiaís top agricultural regions. It has rep offices in Moscow and St. Petersburg and a seeding machinery assembling plant in Orenburg.
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