July 13, 2014

Deere to begin building larger tractors in Brazil

Quad Cities-based Deere and Company is planning a major expansion in Brazil. The company announced Monday it will spend $40-million to add production of another line of tractors, the 8R, at its plant in the city of Montengro.

Spokesman Ken Golden says demand is growing in Brazil for higher horsepower models like the 8R. “This is true across the world as far as high-production agriculture uses our larger tractors — the 8R, the 9 series — for the real workhorse activity that goes on in high production farming,” Golden says.

The 5-year old plant in Brazil already manufactures three smaller models, the 5,000/6,000 and 7,000 series. Making the larger horsepower tractors in the country opens up a new financing option for Brazilian growers. Golden says it will allow for a public financing program that subsidizes their interest rates. “Until you manufacture the product in Brazil, the product does not qualify for that kind of financing,” Golden says.

He says this expansion in Brazil will not affect production or employment at the Waterloo (Iowa) plant where several lines of tractors, including the 8R, are now being made. “It’s not competitive right now to build a tractor in Waterloo and move it over to Brazil. Because of the financing package, the tariff cost, we’re not cost competitive in Brazil with the 8R tractor,” according to Golden. “By building them there we will increase our capacity for building the 8R tractors around the world, and we will be cost competitive in Brazil.”

Production of the 8R in Brazil should begin in 2015. John Deere first came to Brazil in 1979, when it invested in a joint venture in the country. In 2008, it announced plans to build its own factory there.