If Gary Anderson’s predictions hold true, Ag Growth International (AGI) will focus a lot of its attention on Eastern Europe over the next few years.
Including recent acquisitions, AGI now has close to a dozen production facilities in Western Canada, the United States and Europe, specializing in the production of grain handling equipment, augers, conveyors, dryers, corrugated bins and grain storage equipment.
Anderson, chief operating officer of the Winnipeg-based manufacturing company, sees a promising marketing opportunity in Eastern Europe. He is particularly high on Russia, Ukraine and Kazakhstan, where modernization of the agricultural sector is expected to take place at a breakneck pace, creating huge demand for grain handling equipment at farms, country terminals and port facilities.
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The land base in Eastern Europe is large and agricultural productivity over the next few years is expected to dramatically increase as mechanization increases, farming practices improve and capital investment continues.
AGI wants a piece of that action. The recent move to acquire Finnish grain drying system manufacturer Mepu Oy in Ylane, Finland, is the first step. AGI bought the company last year for $11.9 million.
“The main strategic reason for the purchase was to use Mepu as a beachhead for further development of the CIS (Commonwealth of Independent States) region, with the concept being: work in Russia, sleep in Finland,” Anderson explained.
Along with the manufacturing facility, about 200 kilometres northwest of Helsinki, AGI also gained access to Mepu’s existing distribution network in Scandinavia and Russia.
Anderson said he was happy with AGI’s performance in the 2010 fiscal year despite troubling economic conditions, a smaller than expected North American grain crop in 2010, and a stronger-than-expected Canadian dollar that adversely affected results.
Sales in the 12 month period ending Dec. 31 were $262 million, up from $237 million a year earlier.
Net income was 36.2 million, down from 45.3 million in 2009, due mostly to interest costs on a $115 million debenture issued October 2009 to fund growth.
“We had set out at the start of the year with two goals in mind,” said Anderson. “One was to sustain the growth that we had achieved in 2009 … and the second goal was to make some investments that would provide some building blocks for years to come in the development of the company.”
“From our perspective we were very pleased with 2010.”
AGI also acquired Franklin Enterprises, a Winnipeg-based manufacturer and Tramco, a conveyor company based in Wichita, Kansas.
The company expanded its Westfield operations at Rosenort, Man., and moved Westfield’s Winnipeg operations to the expanded Rosenort facility.
In Alberta, the company is nearing completion of a new $20 million manufacturing plant at Nobleford and an existing Twister plant, also at Nobleford, has been expanded.
The new and expanded facilities at Nobleford will allow the company to consolidate Twister and Edwards operations at one location, improving efficiencies.
Anderson said the expansion and consolidation project, known as the Twister Greenfield Expansion, went off without a hitch.
Production at the new plant is expected to begin in about a month.
Twister’s original plant was geared toward production of bins for on-farm storage in Western Canada.
The new facility will produce a line of grain bins for farm and commercial use, with capacities ranging from a few thousand bushels up to 300,000 or 400,000 bushels.
“The equipment has the capability of producing larger bins than that (but) … that’s the broad range that we’re looking at for now,” said Anderson. “We have to have these larger bins in these new markets.”
In Saskatchewan, the company recently consolidated the Wheatheart manufacturing operations, a move that resulted in about 20 layoffs in Saskatoon.
Wheatheart products, including grain augers, binsweeps, drive-over pits, auger transport kits, post hole augers and fence post drivers, will now be manufactured in Manitoba and shipped to Saskatoon for assembly and regional distribution.
Anderson said Wheatheart’s 34,000 sq foot production plant in Saskatoon will likely be sold pending the acquisition of another property that can facilitate assembly, warehousing and engineering functions.
The Edwards plant in Lethbridge will also be sold once the move to Nobleford is complete.
Anderson said about 67 percent of the company’s sales are derived from the U.S. market. The remaining 33 percent is split between Canada and offshore markets.
AGI currently employs more than 1,200 people, up from 860 on Dec. 31, 2009.
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