John Deere and Hitachi partner in Brazil

John Deere plans to build two new construction equipment factories in Brazil, one of which will be a joint venture partnership with Hitachi to manufacture hydraulic excavators.

John Deere said it had invested US$ 125 million in the overall expansion, while Hitachi said it had committed US$ 50 million to the joint venture factory.

The Japanese manufacturer will provide its technology for the local production of hydraulic excavators, while John Deere will market the machines manufactured by the joint venture, which will be known as Deere-Hitachi Màquinas de Construção do Brasil and will be based in Indaiatuba, São Paulo.

The joint venture will manufacture mid-sized excavators weighing between 15 tonnes and 40 tonnes, and will also import and sell mini excavators and hydraulic excavators weighing less than 100 tonnes.

The two companies are building on a partnership that began in 1988 when they formed Deere-Hitachi Construction Machinery Corporation, a joint venture based in North Carolina, US, that also manufactures and markets hydraulic excavators.

'Full-fledged entry'

Hitachi said the joint venture was part of its "full-fledged entry" into the Brazilian market, where demand for construction equipment is growing rapidly.

Groundbreaking for the 200000 m² production facility is scheduled for January, 2012, and while the sale of imported units will start in April next year, local manufacture is due to begin in July, 2013. The joint venture facility will be able to produce around 2000 units per year.

Separately, expansive John Deere also plans to build a second, solely owned factory in Brazil. Also based in Indaiatuba, Sao Paulo, this factory will manufacture backhoe loaders and four-wheel-drive loaders. Construction is set to begin in early 2012, and manufacturing is scheduled to start in late 2013.

Significant opportunities

Michael Mack, president of John Deere's worldwide construction and forestry division, said there were significant opportunities in the region.

"Over the long term, Brazil has sustained a positive business environment. In addition, the country wants to significantly enhance its infrastructure. This provides us confidence that we can expand our construction equipment business through these investments."