Agricultural equipment manufacturer AGCO Corp. has been given the green light by the U.S. government to keep its factories and distribution centers running during the coronavirus pandemic, thanks to its role in supporting the country’s food supply.
Employees at the Duluth corporate headquarters are working remotely, and other AGCO facilities are protecting in-person workers by heeding social distancing guidelines with initiatives like remote or staggered shifts and increased sanitation efforts.
“We are fortunate in that we can continue to support our customers during this critical time in the season. We will continue to make our employees’ safety and health a priority as we continue to supply our dealers and customers with the essential equipment to feed Americans,” Bob Crain, senior vice president and general manager for AGCO North America, said in a news release.
The designation came as the U.S. Department of Homeland Security named agricultural production and related inputs as “essential critical infrastructure” during the Covid-19 pandemic.
AGCO, which in 2018 started a light assembly operation in Bryan County with imported parts from Europe, announced the DHS’s move just before publishing another news release outlining difficulties in European factories due to supply shortages as the pandemic slams the continent.
Most of the tractor giant’s manufacturing operations are outside the U.S, with a significant footprint in hard-hit countries like Italy and France.
“Production has been significantly reduced or suspended in several of the company’s European facilities, largely due to material shortages and constraints in the European supply chain,” reads the notice, which warned of disruptions elsewhere in the near future.
As such, AGCO said its previous earnings guidance has been withdrawn; the company will provide an update with its first-quarter earnings report but does not expect to provide more information until then.
In its annual reported filed with the Securities and Exchange Commission Feb. 20, the company cited disruptions from the potential spread of the virus as key risk factors:
“We have factories and suppliers in China and Italy, where the early outbreaks have been significant and where production of our products could be directly impacted by actions taken to contain the virus. The virus could spread to areas in other countries where we have other factories and suppliers,” it reads.
The company told Global Atlanta in a statement that the factory in Changzhou, China, closed for three weeks amid the initial outbreak there but has now reopened as business slowly picks back up. No employees tested positive for the virus there.
The company is also basing its long-term strategy on expansion to global emerging markets like China, Africa and India, the latter of which was just put on a 21-day lockdown of 1.2 billion people.
“Recently there have been circumstances of freight channels being interrupted and increases in the freight prices, which also could impact our business. While we do not anticipate a significant impact upon demand for our products, in the event that the virus spreads widely, or there are negative impacts to economic conditions and resulting farmer confidence, there could be a reduction in market demand or delays in sales,” the report adds.
The World Health Organization didn’t declare the virus a pandemic until March 11, more than two weeks after this was filed in the report.
AGCO posted $8.3 billion in revenues during 2019 and has about 21,000 workers around the world, including 4,650 in the U.S. and Canada.