Bloomberg News

Deere Sees BRIC Demand Improving to Rival U.S. in Construction

October 19, 2011

Oct. 20 (Bloomberg) -- Deere & Co., the world’s largest manufacturer of agricultural equipment, said demand for machines used in construction will grow in Brazil, Russia, India and China to collectively rival the U.S.

Deere, which is based in Moline, Illinois, gets almost all of its construction equipment revenue from the U.S., Aaron Wetzel, the chief executive officer of John Deere Brasil, said yesterday. Deere plans to increase sales in other countries and said Oct. 3 it will build two construction equipment plants in Brazil in a joint $180 million investment with Hitachi Construction Machinery Co. Ltd.

“Just the sheer volume of the market opportunity outside” the U.S. “is a significant opportunity for us,” Wetzel said in an interview at Bloomberg News’s Sao Paulo bureau.

Brazil’s economic growth and infrastructure projects under way in advance of the country hosting the 2014 FIFA World Cup and 2016 Olympics provide opportunities for Deere, Wetzel said. Deere sees more room in Brazil than in more developed countries such as the U.S. to improve crop yields and that presents opportunities for the company’s farm-equipment business, he said.

Deere’s construction and forestry unit accounted for 16 percent of its $8.37 billion sales in the third quarter. In Brazil, Wetzel expects Deere to get a “meaningful” share of local revenue from that segment, though he doesn’t see it surpassing the farm equipment business.

Agriculture and turf was Deere’s largest business unit overall in the last quarter with 77 percent of sales. Deere has three factories in Brazil making tractors, harvesters and planters, according to the company’s website.

Deere isn’t considering building more farm equipment plants in Brazil, Wetzel said.

--Editors: Simon Casey, Tina Davis

To contact the reporter on this story: Jose Sergio Osse in Sao Paulo at josse1@bloomberg.net

To contact the editor responsible for this story: Helder Marinho at hmarinho@bloomberg.net


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