In a bid to improve efficiency,
AGCO Corporation
(
AGCO
) is spending $20 million on its tractor manufacturing facility in
Beauvais, France. The facility will build a new tractor cab
production line. Moreover, the facility will also house the new
Massey Ferguson International Sales Training Centre.
AGCO has decided to increase its efficiency level and cut down
manufacturing costs at its Beauvais facility. The facility produces
the most modern tractors and exports more than 70% of the
production to countries globally.
The move fits well with AGCO's long-term commitment to invest on
its manufacturing facilities as well as product lines across the
globe. The company focuses on innovation, quality and performance
of the product lines to improve their efficiencies and provide
high-tech solutions to the farmers.
Earlier, the company announced the $220 million multi-year
investment plan at the Marktoberdorf plant in Germany. It produces
Fendt tractors and CVT transmissions at the facility.
AGCO is spending on the Marktoberdorf facility to improve the
production capacity and efficiency. In addition, the company
intends to lower the fuel consumption by utilizing more efficient
AGCO engines in its equipment. The company, in 2011, produced more
than half of all tractors that were equipped with AGCO engines.
Recently, AGCO introduced Tier 4 Final/Stage IV engine emissions
strategy for its POWER diesel engines. Tier 4 Final/Stage IV will
provide farmers with an efficient technology to reduce nitrogen
oxide (NOx) and particulate matter (PM) emission from diesel
exhaust. With the introduction of Tier 4 Final engines, customers
will get just what modern agriculture requires - emission and cost
efficiency as well as reliable performance.
AGCO is investing heavily on its product line to meet the growing
demand for agricultural products globally. Moreover, its decision
to spend on facilities outside the U.S. will benefit the company.
This is because part of the U.S. agriculture market has been hard
hit by drought. Accordingly, the U.S. Department of Agriculture has
lowered its forecast for the nation's drought-damaged corn crop.
The U.S. Department of Agriculture has reduced the estimate of corn
production for the 2012-13 season to figures that represent the
lowest production since 2006. Moreover, according to the report,
average yield per acre is predicted at its lowest point since 1995.
AGCO retains a short-term Zacks #2 Rank (Buy). We have a long term
Outperform recommendation on the stock.
AGCO CORP (AGCO): Free Stock Analysis Report
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