Farmer bid for plant

28 April 2000

Farmer bid for plant

By Peter Hill

FARMERS in Western Canada will have the opportunity to invest in the tricky business of tractor production if Canadian company Buhler Industries wins its bid to buy the Versatile tractor plant in Winnipeg, Manitoba.

Farmers of North America Inc, a Saskatchewan-based business organisation with some 1400 farming members, is publicly backing the Buhler bid. If the company is successful, FNA members have indicated they would be interested in investing in the business.

The plant and the tractors it makes are up for sale because of US Department of Justice competition concerns regarding last autumns merger of Case and New Holland. It stipulated that the merged concern – CNH Global – must sell the Winnipeg plant and two of its product lines.

The 170hp to 240hp New Holland "Genesis" G/70 tractors are sold world-wide and command a strong share of their market sector in the UK and elsewhere in Europe. They also form the basis of Caterpillars smaller Challenger rubber track tractors. The Versatile four-wheel drive models, at up to 425hp, sell most strongly in North America.

Only two bidders

Although industry sources suggested that Caterpillar might be interested in the facilities and products, just two US Department-approved bidders have emerged – AGCO and local company Buhler Industries.

Although little known in Europe, Buhler is familiar in North America for its Allied tractor loaders and Farm King range of implements and grain handling machinery. The company is also distributor for German wheeled loader manufacturer Weidemann, which is also backing the bid with a view to manufacturing for the North American market there.

"Buhler already has facilities, including a factory in Winnipeg the same size as the Versatile plant, and has a good reputation for its products," says Steve Nixon, FNA general manager. "For farmers, this sale represents a rare and unique opportunity to invest in a value-added business related to agriculture, while also helping secure manufacturing jobs in Canada."

Mr Nixon emphasises that FNA, formed just two years ago, would not itself invest in the business, but would act as a facilitator for members wishing to do so. The organisations role is to negotiate collective purchase of inputs and marketing of produce on behalf of its members. With an average of 2500 acres each, they represent some 3.5 million acres of farmland in Western Canada.

"Canadian farmers want to see the Versatile name re-established as an independent manufacturer," suggests Steve Nixon. "They are concerned about the increasing lack of competition in the market as tractor and implement manufacturers continue to consolidate."

For AGCO, buying the Winnipeg plant would add a stronger four-wheel drive tractor marque to its existing AGCOSTAR line, while a Versatile-branded "Genesis" G/70 line would complement its existing Massey Ferguson 8200-series and spin-off AGCO-Allis and White-branded models in North America.

Move elsewhere

Canadians who want to see tractor manufacture continue at the plant long-term, however, are concerned that AGCO would eventually move production elsewhere. It has already stopped assembling all but its low-volume articulated four-wheel drive tractors in North America, having transferred production of MF 8200 (and equivalent) models to Beauvais in France (see farmers weekly 21 January, 2000).

Also open to question, however, is Buhlers ability to sustain production and development, however well it is backed by its German partner and Canadian farmers, given its lack of an established distribution network in an increasingly competitive and global tractor market.

The parties concerned will soon know which is to be tested on these concerns. The US Department of Justice has already granted a one-off 30-day extension to the original deadline, so negotiations should soon come to a conclusion.

Above:Negotiations surrounding the sale of CNH Globals Versatile tractor plant in Winnipeg could result in Canadian farmers investing in the business.

Right:New Holland Genesis G/70 tractors – one of two product lines that must be sold to meet US Department of Justice competition concerns.

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