Deere's $100 Million Facelift

Deere's $100 Million Facelift

Deere's $100 Million Facelift

Illinois-based, Deere & Co. (DE), announced a $100 million investment in its John Deere Foundry in Waterloo, Iowa. The investment is intended for modernization of the foundry in order to reach customer satisfaction with high-quality, innovative castings.

John Deere Foundry is a gray and ductile iron operation producing large drive-train components (including engine blocks) for John Deere agriculture as well as construction equipment. The investment is anticipated to meet customer needs with more sophisticated designs of large tractors, manufacturing flexibility and responsiveness to market demands. The company claimed that completion of the modernization work will take the next 4 to 5 years, allowing the heavy equipment maker to enhance manufacturing capacity and flexibility.

In 1999, Deere completed a reconstruction of melting operations at the foundry. In 2000, the company also unveiled a $125-million redevelopment plan that streamlined the foundry and tractor operations at Waterloo, and in 2008 it outlined plans to increase manufacturing capacity in the same operation.

The investment announcement by Deere coincides with a decision made by the Iowa Department of Economic Development. The department agreed to give $14.8 million in tax credits for the project that would hold on to 295 jobs at the plant.

Deere forecasts capital expenditures of about $900 million for 2010. The expenditures will mainly relate to Tier 4 emission requirements and modernization and restructuring of key manufacturing facilities, as well as the development of new products.

Deere is the largest manufacturer/distributor of agricultural equipment worldwide, with leading market shares in large farm-equipment segments. The integrated approach in the design and manufacturing of large row crop and four-wheeled-drive tractors gives the company a competitive advantage. With the new investment plan, Deere appears on track to achieve its restructuring objectives.

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