After visiting Italy last week on a machine tour via the Italian Trade Commission, the consistent theme of Italian OEM exports was loud and clear. When I talked to Italian management about exports and specifically about Russia, they smiled. The smile and explanation went like this: We are always looking for opportunities in Russia but setting up shop is not on the horizon yet. Translation: Russia is a big headache.
So when I came across this story about John Deere in Russia, "From Iowa to Russia, Tractors Build Economic Bridge," it was intriguing. The story details how John Deere took a leap of faith and pursued an export strategy to Russia and central Europe. Their strategy included exporting agricultural tractors to Russia, but with a manufacturing twist. The engine, drive train and tractor are built in Waterloo, Iowa, and then crated and sent to the John Deere plant in Russia. From there, the plant performs local assembly of those three main components. And the story cites, "local assembly means lower tariffs than for importing a finished tractor."
What rang true was this pseudo- "near sourncing" model allows for a finished product to be sold in Russia and Central Europe without being "lost." Disparate, tractor parts are not nearly as sexy as whole tractors for the black market in Russia is my guess.
The NPR story goes on to say that John Deere had access to some high-level government types in Russia and this helped expedite the 240 certifications and inspections. It took only nine months to build the plant.
So the question is their more manufacturing opportunities in Russia using this model?
