Deere & Co. (DE) is back on track to construct a new marketing and sales center in Olathe, Kansas at an estimated cost of $25 million. The new 126,150 square-foot facility will host approximately 500 marketing professionals and provide support and service to John Deere’s sales branches and agriculture and turf dealerships in the United States, Canada, Australia and New Zealand. Construction begins this month and is expected to be completed in August 2011.
In September 2008, the company had announced its intention to build the center but the plans were stalled due to the economic recession.
Presently, Deere’s Equipment Operations distribute equipment and service parts in the United States and Canada through two agriculture and turf equipment sales and administration offices located in Lenexa and Cary, North Carolina. The new building will replace Deere’s current North American marketing headquarters in Lenexa, Kansas.
These facilities market Deere’s agricultural and turf equipment to roughly 1,557 dealer locations in the United States and Canada. There are about 606 dealers who deal with only turf equipment. In the rest of the world, agriculture and turf equipment is sold to distributors and dealers for resale in over 100 countries.
Deere is making this move to sustain the future growth in sales and market share of agricultural equipment throughout the United States and Canada. City officials are working on projects to bring hotel and other convention center facilities to the chosen area to supplement development and business growth. This location was preferred, given the benefits of transportation access and proximity to the greater Kansas City area, including the Kansas City International and Johnson County airports.
Deere’s agriculture and turf segment is the world’s leading manufacturer of farm equipment. The segment also produces and markets North America’s broadest line of lawn and garden tractors, mowers, golf course equipment and other outdoor power products.
The competitive environment for the agriculture and turf segment includes the likes of AGCO Corporation (AGCO), CNH Global N.V. (CNH), Kubota Corporation (KUB) and The Toro Company (TTC), and many regional and local competitors.
Deere’s agriculture and turf segment has recently adopted a global operating model designed to enhance the segment’s competitive position by reducing complexity, implementing standard processes and increasing customer focus, speed and flexibility, while building on the segment’s broad global reach and deep understanding of the agriculture and turf care markets.
During the earnings call in May, Deere projected its worldwide sales of the agriculture and turf segment to increase by 9% – 11% for fiscal 2010, with a favorable currency-translation impact of about 3%.
Deere maintained its capital expenditures estimate of about $900 million for the year. The company had put forward that the expenditures will relate primarily, to Tier 4 emission requirements and the modernization and restructuring of key manufacturing facilities, and will also relate to the development of new products.
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