December 8, 1999
AGCO Corporation, a major worldwide designer,
manufacturer and distributor of agricultural equipment, today announced that it would
close its manufacturing facilities in Coldwater, Ohio and Lockney, Texas. This decision
comes at a time when reduced demand for agricultural equipment continues to negatively
impact the industry with lower production levels, reduced price realization and
unfavorable currency exchange. In order to remain competitive, AGCO has determined that it
is necessary to rationalize production facilities for greater efficiency and lower product
The Coldwater factory, which has been closed since October 1, 1999, will not resume
production and will be closed permanently. Details of the plan to close the operation were
outlined today to
approximately 100 remaining employees during a group meeting at the Coldwater facility.
Company anticipates that the facility will be completely vacated by April 1, 2000.
The Company will incur nonrecurring expenses of $25 to $30 million related to the closure
Coldwater and Lockney facilities. These nonrecurring expenses are primarily for employee
termination payments, write down of certain assets and costs related to closing and
exiting the facilities. Of this amount, approximately $20 to $25 million will be recorded
in the fourth quarter of 1999 with the remainder of the nonrecurring expenses being
recorded as they are incurred during 2000. In addition, the Company will also incur a
one-time charge of approximately $5 million in the fourth quarter of 1999 associated with
the write down of certain inventory values for discontinued products directly related to
the facility closures. The Company anticipates annual cost savings of approximately $10 to
$15 million as a result of the facility closures and expects to realize all of these
savings in 2000.
Products currently produced at the Coldwater facility will be relocated to AGCO facilities
America and Europe. Specifically, planters, hay tools and spreaders will be relocated to
the HFI (Hay and Forage Industries) operation in Hesston, Kansas. Also, in an effort to
further reduce costs, AGCO's Massey Ferguson®, AGCO®Allis and White brands of high
horsepower tractors will be integrated with common platform tractor production currently
in place at its Beauvais, France facility. In addition, AGCO's Farmhand® brand of loaders
will be produced for AGCO by the Soo Tractor Company located in Sioux City, Iowa.
Additional product relocations from Coldwater will be announced in the first quarter.
The Company also announced that it would cease production at its Lockney, Texas plant. The
facility has been closed periodically during 1999. Current production of AGCO's Tye® brand of seed drills and cultivation products will be
relocated to the HFI facility in Hesston, Kansas. This process is expected to be finalized
by the second quarter.
"The current global decline in industry demand for agricultural equipment, continued
consolidation of manufacturing entities and increasing production costs, make it necessary
for AGCO to seek solutions that will allow the Company to improve its viability during the
industry downturn,'' stated Robert J. Ratliff, Executive Chairman of AGCO Corporation. He
further stated, "Current inventory levels make it possible to consolidate production
during the first quarter of 2000 without the loss of sales, and we expect that production
of the effected products at their new source locations will be ready in time for seasonal
"This decision was not taken lightly. Regardless of the business conditions that
unfortunate decision, we deeply regret the impact this action will have on our associates
families. The employees at Coldwater and Lockney have always been known for delivering
high-quality work. The plants and its employees have made a significant contribution to
AGCO's success,'' Mr. Ratliff continued.
AGCO expects that the closing of the Coldwater and Lockney factories and the relocation of
various manufacturing responsibilities will maintain production capacity and reduce
production costs. In addition, the efficiency generated by the increased utilization of
AGCO's other facilities will aid the Company in avoiding higher product costs during the
prolonged industry downturn and provide measures to achieve lower product costs, which
will position the Company well when the industry recovers. "The resulting benefits of
this action will reward the Company with a more competitive group of products and the
reassurance of AGCO's long-term commitment to its brands. These operating cost savings,
together with the Company's horizontal production strategy will enable AGCO to remain
profitable in adverse market conditions,'' concluded Mr. Ratliff.
The Company currently owns the Coldwater facility. Once the closing is complete, AGCO
intends to actively market the available space of 1,490,000 square feet in an effort to
ensure its productive use in the community. The Coldwater operation was acquired in
December 1993 as part of the White-New Idea acquisition to produce hay tools and
implements. Prior to shutdown the Company employed approximately 450 employees.
The Lockney facility, currently leased by AGCO, was obtained in March 1995 as part of the
AgEquipment acquisition, which included the Farmhand®, Glencoe® and Tye® brands. The
Lockney facility staffed approximately 55 employees prior to shutdown.
AGCO Corporation, headquartered in Duluth, Georgia, is a global designer, manufacturer and
distributor of agricultural equipment and related replacement parts. AGCO products are
distributed in 140 countries. AGCO offers a full product line including tractors,
combines, hay tools, sprayers, forage equipment and implements through more than 8,500
independent dealers and distributors around the world. AGCO's products are distributed
under the brand names AGCO®Allis, Massey Ferguson®, Hesston®, White, GLEANER®, New
Idea®, AGCOSTAR®, Black Machine, Landini, Tye®, Farmhand®, Glencoe®, Deutz (South
America), IDEAL, Fendt(TM), Spra-Coupe® and Willmar®. AGCO provides retail financing
worldwide through its Agricredit joint venture. In 1998 AGCO had sales of $2.9 billion.
Company news release