If anyone has ever wondered where CNH’s baby tractors come from, then they need wonder no more, for the company has just signed a deal with LS Mtron of South Korea to provide 28,500 Boomers for the US and European markets.
The deal is worth $387 million and it is to cover production for the next three years.
Partners for 46 years
LS Mtron may be unfamiliar over here, but the company is well established in Korea, being known originally as Korea Heavy Industries and Construction Company (KHIC).
In 1977, it formed a partnership with Fiat to produce tractors under licence, just as many other companies did around the world, in a bid to enter the tractor market.
This relationship has continued since, and it is now the supplier for CNH’s smaller tractors, mainly for the European and north American markets.
LS Mtron has supplied compact tractors of under 60hp to CNH since 2009, when the first products were directed to Australia and south east Asia.
CNH shifts its eastern focus
CNH already has a tractor production facility in India, and earlier this year, it announced its intention to increase component supply from the country to $300 million by 2024.
This represents a tripling of its present purchases from India and it may be raised to $500 million in future.
The company has stated that this is part of its China Plus policy, although quite what that policy actually is, does not seem to be immediately apparent.
However, it has also announced that it is to end all sales of construction equipment in China from the end of this year, saying that it is part of its plan for a turnaround of its construction equipment division.
Total sales for 2021 were $88 million in a market that is presently valued at $50 billion, which, once more, underlines the difficulty of doing business in China, unless you are buying.
