U.S. tractor maker John Deere will invest $125 million in a manufacturing and parts center in the Moscow region, the company said Monday.
The factory will begin producing tractors, combines and forestry equipment in the first quarter of 2010, company representative Andrei Rogov said. The facility, to be located 17 kilometers from Domodedovo Airport, is the company’s first step in its Russian expansion plan, which was announced on the sidelines of U.S. President Barack Obama’s visit to Moscow in July. The company then announced its intent to invest $500 million in Russia over the next six years.
“Russia will be a major contributor to meeting the world’s future needs for food and forestry products,” president Samuel Allen said in the statement.
The production center and warehouse will be located in the South Gates industrial park and will require about $125 million of investment, Rogov told Interfax. The company chose the site because of easy access for transportation and its proximity to the M-4 highway, which is southbound and goes through Russia’s main farming regions. Obama and President Dmitry Medvedev discussed the project in July, Rogov said.
The John Deere plant will occupy 42,000 square meters at South Gates, said Chris Van Riet, managing director of Giffels Management Russia, which is developing the industrial park. John Deere is already developing facilities in the Orenburg and Kaluga regions.
The factory’s method of assembly will allow it to import components on favorable terms, the company said.
The Industry and Trade Ministry said last week that combine components can be imported with no import tariff and tractor components require a tariff of less than 5 percent if the importer produces at least 1,000 units in Russia.