Ag Equipment Intelligence

Kubota Raising Its
Stake in U.S.; Reports Solid 3Q Results

Kubota is expanding its U.S. manufacturing presence by spending a little over $73 million on a new plant designed to assemble 30-50 horsepower compact tractors. The facility will be located on an existing site in Jefferson, Ga., where Kubota Industrial Equipment Corp. builds tractor implements.

The new 22,000 unit a year facility will create around 200 jobs, adding to the 500 currently employed at the site. It will complement the sub-compact, riding mower and utility vehicle operation of Kubota Manufacturing of America at Gainesville, Ga., where there are some 950 employees.

In a statement, Kubota Corp. notes that the North American market is one of the largest sales areas for Kubota compact tractors and further business growth is expected, mainly in the hobby farming and landscaping sectors. While meeting Kubota’s globalization objectives, establishing a local production base will also reduce currency exchange risks.

Kubota reached a big milestone last July when its U.S. tractor retail sales reached 1.5 million units over the 40 years it has been engaged in the U.S. market.

F&I Sales Up

Aggressive sales promotion activities helped increase North American tractor sales during the first 9 months of the 2011 financial year, contributing to a 13% improvement in revenues from Kubota’s export markets despite a strengthening yen. In its third-quarter results statement, the corporation also reports that the Farm & Industrial Machinery (F&IM) unit achieved a 9.6% increase in revenues to $6.7 billion for the period.

Tractor, farm equipment and diesel engine sales accounted for 86% of the division’s revenues; the rest came from construction equipment. Operating income increased 11.3% to a fraction under $1 billion thanks to a successful cost reduction program and the revenues increase.

For the full 12 months to the end of March 2012, Kubota now forecasts revenues of more than $8.75 billion for the division, which would represent 70% of total group revenues.

Kubota clearly hopes to improve on the North American contribution to those figures in subsequent years once the new Jefferson plant is up-and-running in a year’s time. At 500,000 square feet, it will be 14% bigger than its implements manufacturing facility.

Key components will continue to be sourced from Japan as well as from Kubota’s manufacturing facilities in Thailand where it also started building compact tractors in 2009 in a factory with the capacity to manufacture 50,00 units.

— Ag Equipment Intelligence, February 2012