The credit crunch’s impact on Russia had a surprising result for the workers in a Winnipeg tractor factory. They get four-day weekends all summer.
It’s one of the more positive sides to the financial crisis that has gripped much of the world since last fall and messed up Buhler Industry Inc.’s Versatile tractor sales and manufacturing plans.
Sales to Russian farmers eager to increase their productivity had been the cornerstone of the 2009 marketing strategy, but that was derailed by the financial crisis. The Versatile plant in Winnipeg is now operating only Tuesday, Wednesday and Thursday each week to deal with reduced sales.
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“There’s a huge demand for farm equipment (in Russia), but without credit there’s just nothing moving over there,” said Adam Reid, Buhler Industry’s marketing manager.
“The Russian economy’s tanked. We’re waiting for capital to start flowing again. The farmers over there have no access to credit.”
Versatile tractors have been sold to Russians since 2002, but major involvement in the market really began in 2006, when the company was bought from local investor John Buhler by Russian manufacturer Combine Factory Rostselmash Ltd.
The new owners were keen to boost production and thought 2009 would be a banner year. But since the credit crunch, the company has reduced its sales expectations to Russia by 600 to 800, which is a big chunk of the 16 acre plant’s 2,000 unit 2009 expected production.
In a surprise for the company, an old, discontinued-for-North-America line of tractors being built for the Russian market has found an eager market on the Prairies this year.
“We sold them as a bare bones, scaled back farmer tractor,” said Reid about his company’s recently ended sales promotion of 2000 Series tractors that it had intended to ship to Russia before the crisis struck.
“This is for the guy that doesn’t want everything. He doesn’t want power shift. He doesn’t want electric-over-hydraulics. They sold like mad. We actually tripled what we thought we would sell of them.”
This mini-boom in prairie sales has meant that the company has had to reduce its expected 2009 production by only 300 tractors.
There’s still not enough work to keep the employees busy all week, so the company took advantage of a federal government program that allows companies to reduce work hours but keep workers’ wages high enough to retain staff.
With the Monday and Friday shifts cancelled, employees only work a 60 percent work week, but the government program means they receive about 75 percent of their full-time wage.
“As a management team, we were prepared for the worst, but the worst didn’t happen,” said Reid about employees’ reaction to the work slowdown.
“To have four-day weekends all summer and know you’ve got a job, it’s not all doom and gloom.”
The 2000 Series of Versatile tractors has been popular with Russian farmers, because they can be fixed in the field and are more reliable and powerful than most Russian equipment, Reid said.
Buhler Industry’s Inc. is hoping that credit access will ease in Russia so that farmers there can once more buy Versatile tractors, but doesn’t know when that will happen.
“We’ve seen pockets moving again, but it could be tomorrow, it could be a year from now,” said Reid, who said his company also expects to import Russian equipment.
“When the credit crunch hit the world, (Russia) got hit really hard and really fast. Overall we see a really good long term fit for Russia and we’ll probably see their combines over here at some point and we’re looking to expand the North American product line to better serve the Russian market.”
