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Capitalizing on booming demand for agricultural machinery, Duluth, Ga.-based AGCO (NYSE: AGCO ) is expanding its business in Russia.
On Tuesday, AGCO announced that it is forming a 50-50 joint venture with Russian partner Basic Element group's ("BasEl") Russian Machines subsidiary to manufacture and distribute agricultural equipment and spare parts in Russia. Beginning in 2014, and continuing over the next three years, AGCO and BasEl plan to invest $100 million in building out a new manufacturing facility in Golitsyno, Moscow Region.
Featuring 27,000 square meters of production facilities spread across nearly 12.5 hectares, the facilities will include a modern factory, as well as a product show room and agricultural technology training center.
AGCO CEO Martin Richenhagen called the new JV "a very significant step in AGCO's growth strategy for the Russian market," which he said "has significant potential but needs modernization and efficiency gains." In its 2012 annual report, AGCO experienced some of its largest sales gains worldwide in the Russian market.