AGCO Invests EUR 70 million in AGCO Power Facility in Linnavuori, Finland to Increase Sustainable Product Offerings and Support Future Growth
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Insights
The investment by AGCO in its Linnavuori plant represents a strategic move towards enhancing environmental sustainability within the agricultural sector. By focusing on the development of a clean energy laboratory, the initiative is poised to explore the viability of fuel cells and electric drives as alternatives to conventional fossil fuel-based machinery. This transition is in line with global efforts to reduce carbon emissions and aligns with the increasing demand for sustainable farming practices.
From an environmental perspective, the adoption of alternative fuels and electric drives by a major player in the agricultural machinery industry could lead to a significant reduction in greenhouse gas emissions from farming operations. The long-term benefits include not only a smaller carbon footprint but also potential cost savings for farmers as they shift away from volatile fossil fuel prices. Additionally, the investment in a training and visitor centre indicates a commitment to educating stakeholders about these new technologies, which is essential for widespread adoption.
The EUR 70 million investment by AGCO is indicative of the broader industry trend towards precision agriculture and the integration of advanced technologies into farming equipment. The focus on clean energy innovations, particularly in the development of Continuously Variable Transmissions (CVTs) and remanufactured engines, suggests a significant step towards increasing the efficiency and productivity of agricultural machinery.
CVTs offer seamless speed variations without the need for manual gear shifting, which can enhance the operational efficiency of farm vehicles. The production of components for automated CVTs is likely to meet the growing demand for smarter, more responsive machinery that can adapt to various farming conditions and tasks. Moreover, the remanufacturing of engines aligns with the circular economy model, reducing waste and extending the life of machinery components, which is economically beneficial for both the manufacturer and the end-users.
The announcement of AGCO's investment in clean energy innovations may have a positive impact on the company's financial performance over the medium to long term. By expanding its research and production capabilities, AGCO is positioning itself as a forward-thinking player in a market that is increasingly sensitive to environmental issues. The investment in new technologies could lead to the development of proprietary systems, potentially giving AGCO a competitive edge and opening up new revenue streams.
Investors should consider the possible implications of this investment on AGCO's operating costs and revenue potential. The initial capital outlay is substantial and the return on investment will depend on the commercial success of the technologies developed. Moreover, the expansion of production capacity indicates confidence in future market growth for sustainable agricultural machinery, which could be a positive signal for the stock's performance. However, it is important to monitor the adoption rate of these new technologies by the farming community, as it will directly influence the financial outcomes of this investment.
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The picture shows AGCO Power's Linnavuori factory area. New investments are marked in the picture. Photo by: AGCO Power. Photo is in free use.
The extensive investment will allow the building of a clean energy laboratory to test fuel cells for alternative fuels and select electric drives that will reduce farmers’ fleet emissions. Improvements also include a training and visitor centre, a production hall for machining cylinder heads and manufacturing components for automated Continuously Variable Transmissions (CVTs), a paint shop and testing capabilities for remanufactured engines. The new buildings totalling 11,000 square metres and will be completed throughout 2024 and 2025.
“We are investing in the future of clean energy, Linnavuori and, ultimately, AGCO. By adding production capacity and research capabilities, AGCO Power is building capabilities to better serve our workforce and all farmers who are sustainably feeding the world,” said Juha Tervala, Managing Director of AGCO Power.
The AGCO Power Linnavuori plant employs about 1,000 employees; these investments lay the foundation for future growth. The latest additions illustrate a history of growth in
Testing new technology
In addition to diesel engines, AGCO is expanding its product technology portfolio by developing engines utilising alternative fuels and various electrical solutions that reduce emissions. The new research laboratory in Linnavuori is a natural extension of AGCO Power’s product development responsibility.
“The clean energy laboratory will house several cells for testing the combustion engines running on alternative fuels, as well as a range of electric solutions, such as hybrids, fuel cells and high-voltage battery technology,” said Mr. Tervala.
Circular economy since 1990
AGCO Power products are built to last, and even after years of heavy use, their value and life can still be extended through remanufacturing. Restoring engines to a like-new state goes well beyond repair; remanufactured products are stripped down to their individual components, inspected, cleaned and fully rebuilt. The improvements in reman testing capabilities in Linnavuori are part of AGCO’s global investments in remanufacturing.
“We have remanufactured used engines toward a circular economy since 1990. The product improvements are based on the latest revision, and the repaired, tested and painted engine is granted a full factory warranty. The investments in our Linnavuori plant will allow us to grow our reman capabilities to serve global customers,” continued Mr. Tervala.
Growth in machining volumes
AGCO is centralising its transmission components’ manufacturing operations in Linnavuori to maximize the facility’s history of quality and expertise. The investments will now allow the facility to expand the manufacturing of CVT components for AGCO’s leading brand tractors with plans to produce more high precision transmission components in this location.
“Currently, we produce approximately one million gear wheels and axles annually, but this number is expected to double after the investments,” said Mr. Tervala.
The new production hall will also house a new machining line with a high degree of automation for manufacturing the cylinder heads of AGCO Power CORE engines.
About AGCO Power
AGCO Power in Linnavuori, Nokia, is one of the world’s leading manufacturers of diesel engines. Together with its production plants operating in
About AGCO
AGCO (NYSE: AGCO) is a global leader in the design, manufacture and distribution of agricultural machinery and precision ag technology. AGCO delivers customer value through its differentiated brand portfolio including core brands like Fendt®, GSI®, Massey Ferguson®, Precision Planting® and Valtra®. Powered by Fuse® smart farming solutions, AGCO’s full line of equipment and services helps farmers sustainably feed our world. Founded in 1990 and headquartered in
View source version on businesswire.com: https://www.businesswire.com/news/home/20240320982805/en/
Communications Manager Vilja Pylsy
Vilja.Pylsy@AGCOcorp.com
Source: AGCO Power
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