Deere to build Russia factory

Deere & Co., the world's largest maker of agricultural equipment, said yesterday that its board of directors had approved a plan to invest $125 million to establish a manufacturing and parts center in Russia.

The Moline, Ill., company said the facility near Moscow would be capable of making a broad range of John Deere products, including tractors and harvesting equipment, as well as construction and forestry products.

Deere has expanded globally in recent years, and more than half its agricultural sales came from outside North America for the first time in 2008.

It has said further international growth remains a priority despite the economic downturn.

The investment in Russia will total $125 million, according to Ken Golden, a company spokesman.

That includes $25 million in capital and $25 million in leases, among other amounts, he said. The plant near the Domodevedo International Airport will employ about 300 people.

Deere also said it would have several depots at the site to improve parts and customer service.

The news follows an announcement in July that Deere was prepared to invest about $500 million in its farm, forestry, and construction operations in Russia, given the right market-access conditions. That statement coincided with summit meetings between Russian President Dmitry Medvedev and U.S. President Obama in Moscow.

Yesterday, Deere president and chief executive officer Samuel Allen said the new plant was the first step in that plan.

"Russia will be a major contributor to meeting the world's future needs for food and forestry products," he said in a statement.

"Our investment in this new facility helps Deere prepare to significantly contribute to the Russian government's vision for expanding exports from Russia in these important sectors."

Deere said the project complemented its planned investment in a national operations and training center in Russia's Kaluga region and its existing seeding-equipment manufacturing facility in Orenburg.

Deere said it intended to expand its presence in Russia in current facilities and other locations around the country. Earlier this year, Deere introduced a line of construction equipment in Russia.

Deere, which has had operations in Russia for more than 100 years, has a network of 70 sales locations across the country, with employment in Russia at Deere and its independent dealerships approaching 2,000 people, the company said.

Shares of Deere slid 83 cents, or 1.87 percent, to close at $43.60 as the broader market slumped.