Duluth-based agricultural products manufacturer Agco Corp. signed a joint venture agreement Oct. 9 with a Russian heavy machinery builder to assemble diesel engines at one of its factories.
Concern Tractor Plants, or CTP, manufactures machinery for the agricultural, construction, military and railway industries. Agco specializes in heavy farm equipment like tractors, harvesters, combines and tillers.
The joint venture is to manufacture up to 20,000 Agco Sisu Power engines per year at Concern’s facility in Vladimir, Russia, near Moscow, for distribution to all of the company’s plants in the country.
The partnership will also sell engines to third-party customers in Russia and the Commonwealth of Independent States, or CIS.
The commonwealth consists of former Soviet countries Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine and Uzbekistan.
Agco plans to invest $9 million in the project over the next three years.
Concern has already ordered 750 engines from Agco’s manufacturing facility in Linnavuori, Finland, to be installed this year.
Michael Bolotin, Concern’s president, said the 50/50 joint venture will strengthen both companies’ positions in the region’s machinery industry.
“Agco will gain access to a major new market for diesel engines in Russia and CIS, and CTP’s companies, as well as other Russian and CIS companies, will obtain the opportunity to install modern, clean, fuel-efficient engines in their machinery,” he said in a statement.
Hubertus Muehlhaeuser, Agco’s senior vice president and general manager for engines, said the partnership reflects trends in the region’s machinery market.
“The introduction of new emissions requirements and the need for better economy and reliability mean that engine performance is becoming increasingly important to owners in Russia and CIS,” he said.
“We are very confident that the combination of Agco’s engine technology with CTP’s existing products and customer base will lead to a highly successful business operation that will enhance shareholder value of both companies.”
Agco officials expect the first engines from the Vladimir plant will be produced this year.