26 November 1999

CNH Global confident of selling Doncaster plant

By Peter Hill

DESPITE continued over-capacity in the farm tractor trade, CNH Global, the new world-wide manufacturer of farm machinery created by the merger of Case and New Holland (Machinery, Nov 19), is confident it can sell the Doncaster tractor assembly plant as a going concern.

Speaking at a press conference in the New York Stock Exchange to mark the companys first day of share trading on Monday, chief executive, Jean-Pierre Rosso, said: "There has been wide interest across the industry in these assets. Doncaster is a very modern plant and we are looking for a solid buyer to continue the supply of products to dealers."

In return for allowing the $6bn merger to go ahead, the European Commission has insisted that CNH Global sells the Case plant, as well as the 50hp to 100hp CX and MX-C tractor lines made there. The aim is to reduce the companys dominating share of certain markets.

With a surfeit of tractor making resources in the world, few if any manufacturers are in need of extra capacity. But the fact Case spent $16m (£10m) upgrading the Doncaster plant to the most modern standards less than three years ago could be its saviour.

A successful sale should also secure production and parts support for the CX and MX-C tractors. These were introduced as successors to the popular 3200 and 4200 ranges just two years ago, with further improvements unveiled at the Agritechnica exhibition. The EC ruling says CNH Global must not hinder Case-IH dealers from continuing to sell the tractors if they wish and negotiations may see the tractors continue in the Case-IH colours.

The Doncaster plant is the smallest of three major tractor making complexes in Britain. But, with an output of between 13,000 and 15,000 units a year, of which more than 80% are shipped overseas, it still makes a significant contribution of an estimated £197m to the UKs positive trade balance in farm tractors.

Although CX and MX-C production is most likely to remain in Britain, CNH Global has yet to decide where to source the 120hp to 170hp MX Maxxum tractors, which Doncaster also builds for many world markets.

The company could relocate production to another European factory – New Hollands Basildon plant or the Steyr operation in Austria are the most likely candidates – or it may decide to concentrate production at CNH Globals flagship plant in Racine, Wisconsin where MX Maxxums for North America are built alongside the big MX Magnum.

Some uncertainty also surrounds another tractor popular with UK arable growers, since CNH Global has to sell the New Holland G/70 range of 170hp to 240hp models, along with the Winnipeg plant in Canada where they are made.

But CNH Global joint chairman, Umberto Quadrino, emphasised at the New York press conference that the merger agreement with the US Department of Justice allows the company to negotiate an OEM deal with the Winnipeg plants new owner to ensure continued supply of the range to New Holland dealers for a time. &#42