farm machinery manufacturer

Agco CEO Richenhagen: "Closer to the brake"
by Gerhard Bläske (Paris)

Martin Rich Hagen, head of the U.S. farm equipment company AGCO, to
which the German tractor Fendt farmer heard about expansion in the
crisis.

Agco CEO Martin Richenhagen

WirtschaftsWoche: Mr. Rich Hagen, the economic crisis spreads. How
many tractors and combine harvesters you will sell less in 2009?

Rich Hagen: The crisis will leave us no material traces. I expect a
decline in sales of about 500 million to $ 7.9 billion and a reduction
of earnings per share of 4.09 to 3 to $ 3.25. This is a very decent
result. This decline has nothing to do with the crisis. He is due to
special factors in South America as well as to exchange rate changes.

You have decided to expand the Fendt tractor production at the Allgäu
for 170 million dollars. If the project is jeopardized by the sudden
death of Chief Hermann Fendt Merschrot and the crisis?

No, we are pushing this project forward with vigor. It's not a bad
idea to invest now because the credit conditions are good and the
suppliers are more cooperative than in good times. At Fendt we have
brought our largest single investment project on the way and want to
expand capacity by 2012 from 15,000 to previously expected 20 000
tractors per year. This will create new jobs, like many, I can not say
yet. We have created thousands of new sites in 2008 and currently
employ 15,500 people. With the exception of Brazil, where we reduce
the time workers, we plan no staff reductions.

Why do you invest in spite of the crisis?

Because the fundamental conditions for agriculture have not changed.
The population is growing, arable land is a scarce commodity, and food
habits in emerging economies adjust to those in developed countries
more and more. It added that the trend toward renewable energy.
Agricultural production must be doubled in the next 20 years. The
crowd, most people ...

... And it does not displace some that currently are the biggest
economic downturn in recent decades?

No, we only respond to the increasing worldwide demand for high-tech
farm equipment for professional farmers. We drive the same speed, but
have little closer to the foot of the brake. Also, overall, we
continue to invest heavily in research and development and build
capacity in the U.S..

Where do you see as your major markets?

In Russia is 40 million hectares broke. That can not long continue.
Wheat prices are already rising. Africa will also soon be a very
important market. They have a good climate and good soils, and demand
and need inexpensive, solid tractor. We have the product, but not
their production structure. We therefore conclude the construction of
an assembly plant in Africa is not enough. The problem is the lack of
political stability. The largest tractor market is India. There we are
involved with Massey-Ferguson in decades, with 23 percent in a joint
venture. This is not ideal, because we actually always seeking
majority stakes, but otherwise this is a model for Africa and China.

Agco is even capable of such a crisis in the expansion to drive?

I have been long accused of acting too little too aggressive, because
I've held back on acquisitions and share repurchases. Just that now
proves to be advantageous. We are in very good shape financially, are
placed solid, virtually debt free and have $ 500 million in cash.

Agco is - despite your reluctance - grown in the past 16 years, mainly
through acquisitions. Do you want to abandon them now?

Our industry has been highly consolidated since 1950. At that time
there were only 125 independent tractor producers in Germany. Case New
Holland has long been the market leader and is now one of the Fiat
Group. If Fiat needed cash, it could lead to a sale, but this is
speculative. However, there are many specialized niche or regional
family businesses with a turnover of 50 to 200 million €, who missed
the right time to sell. We are interested.