2 March 2001

Tractor buyers to benefit from big two merger

By Stephen Howe

FARMERS could soon benefit from a $600m (£430m) cost-saving package, after the merger of two of the worlds largest tractor makers.

CNH, formed in November 1999 by combining the assets of Case and Ford New Holland, will ultimately pass savings on to its farmer customers, said CNH chairman Jean-Pierre Rosso, speaking at the Sima show in France.

"Admittedly, the merger had a sort-term (adverse) impact on CNH because of the uncertainty created. But we have now complied with the anti-trust legislation, the disposal programme is complete and we are on target to benefit from $600m of cost savings," said Mr Rosso.

CNH benefited to the tune of $155m last year and expects to save a further $300m this year, he said. The savings have resulted from sourcing common components for the two separate brands, the improvement in the companys purchasing power and improvements in manufacturing efficiency.

"The reduction in production costs and our greater flexibility will enable us to be much more competitive and keep our multiple brands and multiple distribution outlets," said Mr Rosso.

The tractor plant in Basildon, Essex, is scheduled to play a critical role in the companys development plans. "I am optimistic about new and expanding markets for CNH. Consequently, our tractor plants, including the one Basildon, will see their volumes rise."

But Mr Rosso added a word of caution about manufacturing in Britain. He would prefer the country to be in the euro-zone which would enable it to benefit from stable exchange rates.

"If the £:$ exchange rate remains stable, it is acceptable. But if the $ should weakens on the back of a slowing US economy, and the £ strengthen against the $ and the k, it could put the Basildon plant in a difficult position." &#42