Agco said Thursday that it plans to invest $40 million into its agricultural machinery plant in Hesston.
Plant manager Bill Kaltenberg expects work on the 200,000-square-foot painting and finishing building to start this month and be completed by 2013. It will be built on a gravel lot to the east of the main row of production buildings.
The new facility will free up space on the production floor, Kaltenberg said. The plant builds haying machines, combines and planters under several brand names.
Duluth, Ga.-based Agco has seen strong sales growth in the past two years and expects that to continue. It needs the room to continue that growth, Kaltenberg said.
"It frees up a lot of capacity for assembly and production," he said. "We're in growth mode now and we're also planning for the future."
Kaltenberg said he doesn't expect additional hiring because of the paint operation. It has more than 900 production workers and about 1,300 employees overall in Hesston.
That's well up from the dark days of 2008 and 2009 when the company laid off about 150 production workers.
Agco, the smallest of the big three global farm machinery makers, has prepared for the return to growth with a multi-year reinvestment and realignment of its global manufacturing system.
The company foresees that long-term population and income growth in the developing world will keep demand for food high. That means high farm incomes, and high demand for farm machinery, Andrew Beck, Agco's senior vice president and chief financial officer, told analysts at a recent conference.
In recent years, Agco has instituted a new production system to boost productivity and lower costs, with new machinery, welding robots and new procedures.
Beck told analysts that the company expects high North American farm incomes this year to increase Agco's sales by 5 to 10 percent.
The company also has large shares of the European and South American markets. It is also beginning to move into China, with lower-powered farm machinery.