Assembly of combine harvesters at Saratov

Published: 6/12/2000

Saratov Aviation Plant, which produces the Yak-42, has signed an agreement with US producer of agricultural equipment Case New Holland concerning the development of a new joint venture. Discussions regarding the deal have been going on for over two years according to reports, but stalled with the financial crisis of late 1998. The deal was in two stages, the first stage concerning the lease of machines to the region and the second to produce them locally from US parts in a co-production deal. Despite the crisis, 100 leased harvesters were delivered by Case New Holland in 1998 and in May of this year, the deal was concluded for the local assembly of Case New Holland combine harvesters at the Saratov facility. This is in an effort to bring the cost of the equipment, currently priced at $250,000, within an affordable range for Russian farmers and make them competitive with domestic products. According to Alexander Ermishin, General Director of Saratov, the plant will initially assemble the combines from imported US parts worth $85,000, but will seek to increase local content within five years to 38%, with the goal of 50% in the longer term. The plant is currently looking for component producers, but it is believed the enterprise could create as many as 2000 jobs in the region. The issue of financing of the new venture remains undisclosed, but it appears that Case is actively seeking for investors for the $2 billion investment and is looking for the involvement of the Russian government.

Article ID: 1855