The Light Is Green

John Deere big in China

Deere & Co. has finalized its purchase of Chinese tractor manufacturer Ningbo Benye Tractor & Automobile Manufacture Co. Ltd.

Deere's goal with this acquisition is two-fold:

1. Expand their product line for Chinese farmers
2. Enhance worldwide capacity to produce low horsepower tractors.

Deere already builds 60-120 horsepower tractors through their John Deere Tiantuo Company joint venture with China's Tianjin Tractor Manufacturing Company. Deere owns 51 percent of that.

Ningbo Benye manufactures tractors in the 20-50 horsepower range. They are largest tractor-maker in southern China and sell 95 percent of their units within China, although they've already exported to 70 countries.

Deere says they will use their newfound capacity to address other markets in Asia, Africa and the Commonwealth of Independent States.

Tags: Deere, John Deere, Deere and Co., Ningbo Benye Tractor & Automobile Manufacture Co. Ltd., Ningbo Benye,  John Deere Tiantuo Company, Tianjin Tractor Manufacturing Company, Tianjin Tractor, agricultural equipment, tractors

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Volvo and Ingersoll Rand take opposite paths: Part 5 - Bobcat sold

Ingersoll Rand sells Bobcat

A recent series of posts talked about how Volvo and Ingersoll Rand, two of the world's major construction equipment manufacturers, were taking completely divergent paths in their quest for improving results.

Volvo's decision has been to consolidate and focus on their two main divisions, trucks and heavy equipment. Meanwhile, Ingersoll Rand has decided the opposite as they try to diversify and shift to a diversity of industrial activities, such as refrigeration equipment, security, and others.

Now Forbes reports that Ingersoll Rand has sold off their Bobcat construction vehicle division, to Doosan Infracore of South Korea. The price? $4.9 billion.

That includes Bobcat plus Ingersoll Rand's utility equipment and attachments units, that make mini-excavators, skid-steer loaders, compact track loaders, telescopic tool handlers, portable air compressors, generators and light towers.

Doosan is a family controlled company that started in the construction equipment industry when it bough a controlling stake in faltering South Korean giant Daewoo Heavy Industries & Machinery, which they renamed Doosan Infracore.

With this acquisition, Doosan breaks into the top seven global construction equipment makers. Their goal is top five by 2015.

Bobcat employs 5,700 people worldwide, and had 2006 revenue of $2.6 billion. Doosan Infracore says their overall yearly sales should now reach $7.4 billion.

Ingersoll will use the money to make acquisitions, fund product development, and finance its share repurchase program.

Posts in this series:

• Volvo and Ingersoll Rand take opposite paths: Part 1

• Volvo and Ingersoll Rand take opposite paths: Part 2

• Volvo and Ingersoll Rand take opposite paths: Part 3

• Volvo and Ingersoll Rand take opposite paths: Part 4

• Volvo and Ingersoll Rand take opposite paths: Part 5 – Bobcat sold

Tags: Ingersoll Rand, Bobcat, Doosan, Doosan Infracore, construction equipment

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Deere moves in China

In order to address the growing internal demand for small tractors in China, Deere and Company will acquire Chinese manufacturer Ningbo Benye Tractor & Automotive Manufacture Co. Ltd.

Ningbo Benye has a plant in southern China that builds 20 to 50 horsepower tractors.

Deere already builds 60 to 120 horsepower tractors in China through their John Deere Tiantuo Co. joint venture. In fact, Deere has a long history in China. They´ve been providing products and services to the Chinese agricultural market since 1976, and began manufacturing equipment there in 1997 via a joint venture combine factory, which they now wholly own.

Said Deere CEO Bob Lane of the acquisition:

   

"Our objective is to distinctly serve those who work the land. The acquisition of Benye will allow us to better serve customers in China with a more complete product line, as well as to provide tractors from China to other locations in the world. This action is an example that John Deere continues to seek opportunities for global growth."

Tags: agricultural equipment, Deere, John Deere, Deere and Co., Ningbo Benye, China tractor, China, Bob Lane, Robert Lane

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Volvo and Ingersoll Rand take opposite paths: Part 4

As mentioned in a prior post, Ingersoll Rand recently sold its road construction division to Volvo Construction.

Now Ingersoll Rand is looking to sell their iconic Bobcat skid-steer loaders unit (as well as other construction-related businesses) before the end of the year..

The reason? The same that prompted them to sell their Road Development division: Bobcat no longer fits the company's long-term strategy of diversification. Once enamored with construction, the company has clearly opted to get out of that industry.

Volvo, on the other hand, is clearly moving along the path of consolidation and focus. They are pulling out all the stops in their quest for dominance in their two leading divisions: trucks, and heavy equipment.

Bobcat employs 2,600 people in North Dakota, USA, and also has operations in the Czech Republic and China.

Paul Dickard, an Ingersoll-Rand spokesman, had this to say: "We're moving toward businesses that provide a more consistent growth stream for us."

Experts estimate the sale of Bobcat and other construction-related businesses could net Ingersoll between $3.2 and $3.6 billion dollars. Potential suitors are Ingersoll Rand's main competitors, Komatsu, Kubota, Terex and of course, again, Volvo. Several years ago, rumors had John Deere, and then Volvo, buying the Bobcat unit from Ingersoll Rand, but that never happened.

Posts in this series:

• Volvo and Ingersoll Rand take opposite paths: Part 1

• Volvo and Ingersoll Rand take opposite paths: Part 2

• Volvo and Ingersoll Rand take opposite paths: Part 3

• Volvo and Ingersoll Rand take opposite paths: Part 4

• Volvo and Ingersoll Rand take opposite paths: Part 5 – Bobcat sold

Tags: Ingersoll Rand, Bobcat, Volvo, Volvo Construction, construction equipment

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Volvo and Ingersoll Rand take opposite paths: Part 3

A recent post talked about how Volvo and Ingersoll Rand, two of the world's major construction equipment manufacturers, were taking completely divergent paths in their quest for improving results.

Volvo's decision has been to consolidate and focus on their two main divisions, trucks and heavy equipment. Meanwhile, Ingersoll Rand has decided the opposite as they try to diversify and shift to a diversity of industrial activities, such as refrigeration equipment, security, and others.

In trucks, Volvo has been making many acquisitions over the past few years. Recent Volvo Truck activity includes:

• Acquisition of Renault's Truck Division (Renault Vehicules Industriels), a well-positioned truck maker in Europe (2001)
• Acquisition of Mack Truck, the famed American truck maker, as part of the Renault deal (2001)
• Joint venture with Shanghai Automotive Industry Corporation (SAIC) to create new bus company in China (2000)
• Acquisition of interest in Mitsubishi Fuso Truck and Bus Company (2001)

Earlier this year, Volvo bought Nissan Diesel, formerly owned by the Japanese carmaker, for $1.07 billion (2007), in order to bolster their operations in Asia. Nissan Diesel has 9,000 employees with 2006 sales of $2.9 billion and a very strong presence in that continent.

Of the Nissan deal, Volvo said:

"... a joint study identified gains amounting to $263 million annually for the next five years, mainly as a result of increased purchasing volumes, but also from product development and access to each other's dealerships and service networks."

Volvo got out of the car industry in 1999 when they sold their auto division to Ford. With those funds tried to buy their main Swedish rival Scania. The deal was stopped for competition reasons by the European Union. Volvo sold their 20% stake in Scania to Volkswagen.

Posts in this series:

• Volvo and Ingersoll Rand take opposite paths: Part 1

• Volvo and Ingersoll Rand take opposite paths: Part 2

• Volvo and Ingersoll Rand take opposite paths: Part 3

• Volvo and Ingersoll Rand take opposite paths: Part 4

• Volvo and Ingersoll Rand take opposite paths: Part 5 – Bobcat sold

Tags: Volvo, Volvo Truck, Renault Vehicules Industriels, Scania, Nissan Diesel, Mack truck, Shanghai Automotive, SAIC, truck industry

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Volvo and Ingersoll Rand take opposite paths: Part 2

A recent post talked about how Volvo Construction and Ingersoll Rand, two of the world's major construction equipment manufacturers, were taking completely divergent paths in their quest for improving results.

Volvo's decision has been to consolidate and focus on their two main divisions, trucks and heavy equipment. Meanwhile, Ingersoll Rand has decided the opposite as they try to diversify and shift to various industrial activities, such as refrigeration equipment, security, and others.

So now, it should come as no surprise to see that Volvo Construction is buying the Road Development division of Ingersoll Rand for $1.3 billion in cash.

Ingersoll's Road division currently makes dump trucks, loaders, excavators and graders. "What we are adding here is compactors, pavers and milling equipment, which makes us a full-range provider,'' said Volvo CEO Leif Johansson recently. "We are now in a clear No. 3 position.''

Ingersoll's Road Development business unit employs 2,000 people worldwide, and 2006 revenue was $850 million.

The deal includes plants in Pennsylvania, USA; Hameln, Germany; Wuxi, China; and Bangalore, India. Also included are Ingersoll Rand's 20 existing dealer relationships in the United States.

The two sides had this to say about the aptness of the transaction:

• Says Herbert L. Henkel, president and CEO of Ingersoll Rand: "... the business' markets and products do not fit within our transformed portfolio of diversified industrial businesses. I am confident that Road Development will benefit by joining a company sharing similar competencies and offering complementary products and services."
• Tony Helsham, president of Volvo Construction Equipment: "Strategically, the acquisition of Ingersoll Rand Road Development fits exceptionally well with Volvo's current operations within motor graders and positions Volvo as a full-range manufacturer of heavy road construction equipment."

In addition, Volvo says the transaction will save it $85.2 million dollars over the next five years. "The acquisition gives Volvo Construction Equipment a world-leading position within heavy road construction equipment," said Volvo CEO Leif Johansson.

The sale is subject to government regulatory approvals but should finalize in the second quarter of 2007.

More info here.

Posts in this series:

• Volvo and Ingersoll Rand take opposite paths: Part 1

• Volvo and Ingersoll Rand take opposite paths: Part 2

• Volvo and Ingersoll Rand take opposite paths: Part 3

• Volvo and Ingersoll Rand take opposite paths: Part 4

• Volvo and Ingersoll Rand take opposite paths: Part 5 – Bobcat sold

Tags: Ingersoll Rand, Volvo, Volvo Construction, construction equipment

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Volvo and Ingersoll Rand take opposite paths: Part 1

    vs.    

Volvo and Ingersoll Rand have long been staples of the construction equipment business. But their vision for growth is taking them down diametrically opposite paths.

Volvo

Chosen path: Consolidation.

Volvo AB left the car business in 1999, and has since been focusing on their two main divisions:

• Trucks. They are #2 in the world behind DaimlerChrysler AG.
• Construction equipment. Here they compete with Caterpillar and Komatsu, the world's two largest makers of heavy equipment.

Volvo thinks the global market for road construction equipment is worth $4 billion a year, and that it will grow as governments spend more money on infrastructure. So they have been investing very heavily in their construction division.

Volvo recently obtained approval from the Chinese government to buy a 70 percent stake in Shandong Lingong Construction Machinery Co.

Ingersoll Rand

Chosen path: Diversification.

Ingersoll Rand has for many years been known around the world as a construction and mining equipment manufacturer. As IR themselves proudly state, their technology "... has been instrumental in creating many of the world's most remarkable engineering feats and enduring symbols of economic progress, from Mount Rushmore and the Hoover Dam to the English Channel and China's Three Gorges Dam."

And though this claim will never cease to be true, it will soon be irrelevant as the company firmly moves away from the construction business.

(You probably didn't know that Ingersoll Rand also makes refrigeration equipment, biometric security systems, locks, tools and even golf carts.)

Ingersoll Rand recently stated that they want to move away from cyclical businesses, and shift towards climate control, industrial and security businesses. Part of this entails selling off their well-known construction equipment divisions, which we'll talk about in upcoming posts.

Posts in this series:

• Volvo and Ingersoll Rand take opposite paths: Part 1

• Volvo and Ingersoll Rand take opposite paths: Part 2

• Volvo and Ingersoll Rand take opposite paths: Part 3

• Volvo and Ingersoll Rand take opposite paths: Part 4

• Volvo and Ingersoll Rand take opposite paths: Part 5 – Bobcat sold

Tags: Ingersoll Rand, Volvo, Volvo Construction, construction equipment

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Brazil shadows China

Fact: China has pledged $5 billion in investments in infrastructure throughout Africa, to ease access to that continent's copper, iron, manganese, oil and natural gas reserves.

Fact: Brazil is a fast growing economy, one of the BRIC countries (a term created by Goldman Sachs to describe Brazil, Russia, India and China, four economies they think will surpass the G6 in 40 years). Brazil has a very strong focus on the agricultural industry.

So now Brazil’s state farming research company, Embrapa, is doing something very interesting in remora-like fashion, by following China into Africa to “gain a slice of the staff training, technical assistance, consulting, associated survey and technology transfer markets in Sub-Saharan Africa.”

As Macaub reports, Embrapa believes that China’s investments will lead to a strong increase in demand for food goods in the African market, thus allowing the entry of Brazilian goods such as agricultural machinery and equipment, seeds, production systems and even raw materials (soy, maize, rice, cotton) and meats.

Embrapa will initially focus on Mozambique, South Africa, Namibia, Zambia, Cameroon, Liberia, the Sudan and the Seychelles. At a later stage they will address on Angola, Egypt, Ghana, Congo, Tanzania, Uganda, Nigeria and Kenya.

Tags: China, Brazil, Embrapa, Africa, BRIC

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Caterpillar raising prices

Caterpillar will raise prices by up to 7% on its equipment and engines, starting in January 2007.

Underlying factors include a worldwide surge in construction and mining, high commodity prices, and the strengthening of economies in emerging markets around the world, most notably China.

Orders for CAT's biggest mining trucks (see photo) have doubled since 2004, due to the continuous increase in copper, coal and mineral prices.