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AGCO To Consolidate South American Production

21 December 1998

AGCO To Consolidate South American Production

 Agreement to Sell Argentina Facility to Carraro Spa will Increase Efficiency

    ATLANTA, Dec. 21 -- AGCO Corporation , a major
worldwide manufacturer and distributor of agricultural equipment, today
announced that it has entered into an agreement to sell its Haedo, Argentina
manufacturing plant to Carraro Spa in a move to increase efficiency in its
South American production.  Terms of the sale were not disclosed.
    "The sale of AGCO's Haedo facility is consistent with AGCO's strategy of
efficient and lean manufacturing," according to Robert J. Ratliff, AGCO's
Chairman & Chief Executive Officer.  "AGCO will consolidate certain
manufacturing operations of the Haedo plant into our existing facility in
Canoas, Brazil.  As a result of this consolidation, AGCO will outsource the
manufacture of several capital-intensive components to a highly reliable
supplier in Argentina.  This will result in more cost-effective manufacturing
in the growing markets of South America," Mr. Ratliff continued.
    "AGCO remains committed to the important South American agricultural
market, which holds significant long-term growth potential," Mr. Ratliff
added.  "AGCO is the industry leader in South America, with over 35% market
share."
    The sale of AGCO's Haedo plant includes the complete facility, hourly and
salaried employees, all machines in Haedo related to the manufacture of
transaxles and transaxle inventory in Haedo.  Excluded from the agreement are
assets related to engine manufacturing, tools related to tractor and truck
assembly, parts and related warehousing assets.  AGCO will continue its joint
venture agreement to produce engines with Deutz AG.
    As part of the agreement, Carraro will assemble tractors and manufacture
engine components for AGCO until December 31, 1999.  The tractor assembly by
Carraro will continue until AGCO moves the assembly operation to its plant in
Canoas, Brazil.
    Also under the agreement, Carraro will supply front axles and rear axles
(transaxles) for certain AGCO tractors in South America.  Carraro will have an
option to supply additional transaxles and components to AGCO in South America
once AGCO has relocated assembly  to Brazil.  AGCO and Carraro will enter into
a long-term supply agreement for 7 years.  This will ensure AGCO an ongoing
source of quality components.
    AGCO will relocate parts warehousing, sales, marketing, service, and
related administration activities to a new site in Argentina during 1999.  The
new location has not been defined at this time.
    AGCO Corporation, headquartered in Duluth, Georgia, is a global designer,
manufacturer and distributor of agricultural equipment and related replacement
parts.  AGCO products are distributed in 140 countries.  AGCO offers a full
product line including tractors, combines, hay tools, sprayers, forage
equipment and implements through more than 8,500 independent dealers and
distributors around the world.  AGCO's products are distributed under the
brand names AGCO(R)Allis, Massey Ferguson(R), Hesston(R), White, GLEANER(R),
New Idea(R), AGCOSTAR(R), Black Machine, Landini, Tye(R), Farmhand(R),
Glencoe(R), Deutz (South America), IDEAL, Fendt(TM), Spra-Coupe(R) and
Willmar(R).  AGCO provides retail financing worldwide through its Agricredit
joint venture.  In 1997 AGCO had sales of $3.2 billion.