AGCO Corp.'s plan to build more of its farm tractors in the U.S. as part of its ongoing campaign to raise its profile and profit in North America will also help reduce the company's exposure to foreign exchange rates volatility, the world's third largest agricultural equipment manufacturer's chief executive Martin Richenhagen said Sunday.
"We are organizing ourselves not to be too dependent on foreign exchange rates in a volatile environment, by having production flows both ways between the United States and France," Richenhagen said during a conference in Paris on the second day of the 2011 Paris International Agricultural Show, or Sima.
North America accounts for 20% of AGCO's total sales, but profits from the region have been minuscule, at best. AGCO lost money in North America in three of the past six years. The Georgia-based company, whose brands include Massey Ferguson and Challenger, imports most of the high-horsepower tractors it sells in North America from France.
Shipping costs and a stronger euro against the U.S. dollar add to the cost of AGCO's tractors, forcing the company to trim its profit margin to remain competitive in the market.