Voronezh and Nizhniy Novgorod regions now have at least two competitors for an investment agreement with American Deere & Company, the paper reports. The company started negotiations with administrations of Oryol and Lipetsk regions regarding construction of plant producing John Deere combine harvesters. Experts find that irrespective of what Russian region Deere & Company will choose for placing its production lines, construction of the facility will start in three years at the earliest.
Oryol region confirmed that Deere & Company regards the possibility of placing John Deere agricultural equipment plant in the region. A source close to the negotiation process told the paper that Oryol administration proposed the company a site at Oryol steel-rolling plant belonging to Severstal Group having an area of 7,000 to 8,000 sq m. The enterprise is located in Severniy district of the town of Oryol. Region governor Aleksandr Kozlov participated in the negotiation process with Deere & Company, newspaper’s source said. ‘American company is gradually building up its industrial complexes in Russia. They have decided upon assembling sites in Orenburg and Moscow region’s Domodedovo. At the same time, they are looking for a full production site’.
However, he said that the administration did not manage to get an answer from Deere & Company. ‘As in other regions, Americans listened to the proposal and announced that the decision will be taken by the board of directors, though the site in Oryol is ideal. Directly speaking, you just have to wash the floors and move in the machinery’. The source added that, according to his information, Deere & Company regards also a possibility of such production in Lipetsk. ‘Not a single region which is of interest to the company will get precise answer for one more year. It will depend not only on their wishes but also on where the Russian authorities will tell them to locate production’.
This spring Deere and Company showed interest in placing production in Voronezh region. At that time, Voronezh governor Alexei Gordeev met the head of Deere & Company Robert Lane. Mr Lane underlined that their relations with Mr Gordeev, a former agriculture minister, are long and well-established and the company is glad to continue cooperation with him in his new post. The regional government, in turn, expressed confidence that the company will most probably choose Voronezh. Experts said that if the plant in Voronezh was going to be as large as in Kaluga, its construction would cost around $80-100 million. However, soon Deere & Company started talks with Nizhniy Novgorod regional government concerning possible establishment of production there.
Nevertheless, Deputy Chairman of Voronezh government Aleksandr Gusev who is responsible for industry matters said that the company did not lose its interest in the region. Moreover, he announced that the region picked three facilities with an area of 35,000 sq m, though he did not specify what particular facilities they are. A source in regional administration has recently informed that since Mr. Gordeev’s meeting with Robert Lane no progress was reached.
Experts find that irrespective of what Russian region Deere & Company will choose for placing its production lines, construction of the facility will start in three years at the earliest. ‘In such large companies just taking a decision may take several years’, Director of agricultural equipment producers union (Soyuzagromash) Evgeniy Korchevoy commented. Representatives of Deere & Company also said earlier that they will start new facility construction only after they commission their new production and logistics centre in Kaluga.
The board of the company, however, has recently approved construction of a production centre and spare parts storage in Moscow region’s Domodedovo. Deere&Company is going to produce a wide range of John Deere machinery there, including tractors, agricultural and forest harvesting and construction machines. The new project will complement planned investments in a complex in Kaluga region and production facility in Orenburg. It is known that Deere & Company will place a 45,000 sq m site in Giffels Management Russia Yuzhnye Vrata industrial park (Moscow region). Rent fee is estimated by experts in $100-105 per square meter annually. Generally, by 2015 the company is going to invest around $500 million in its Russian projects, namely in Kaluga and Moscow region ones and a joint venture with Russian agricultural machinery producers.