Hostile takeovers have dominated agricultural news in Western Canada recently, but two Manitoba companies are taking a different approach to expand their market reach.
Buhler Industries and Westeel are forming a global alliance, in which the two companies will jointly market their grain handling and storage products.
In the first phase of the alliance, Buhler will manufacture grain augers, grain vacs and grain cleaners with the Westeel brand, which will be sold at Westeel dealerships in Canada.
The new arrangement means Westeel can provide more than storage bins to its customers, said national sales and marketing manager Jim Weeda.
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“It allows Westeel … to offer a complete grain storage solution. That allows us to get grain out of a bin and into a bin,” he said.
“Whereas before people had to go outside and buy (that equipment) from Buhler or others in the marketplace.”
Buhler already manufactures a line of grain handling equipment under its Farm King brand, but Adam Reid, the company’s marketing manager, said the alliance helps it maximize productivity at its manufacturing plants.
“The benefit for us is that it really allows us to stabilize production and increase capacity at our facilities, particularly the one in Morden and the new one we acquired in Salem, (South Dakota),” he said.
“At this point there’s no increase in jobs … (but) that kind of stability translates into job security.”
Reid said such an arrangement is fairly common in agribusiness.
“Sometimes strategic alliances make more sense than actually doing a company buyout. We still have our own business plan and we have our own way of operating, but in certain situations it makes sense for us … to walk in the front door together,” he said.
“We look at where we’re doing business and where they’re doing business, and we’re selling our products to a lot of the same customers.”
Buhler operates seven manufacturing plants in the United States and Canada and employs more than 800 people.
Westeel has manufacturing plants in Winnipeg, Saskatoon, Regina andOlds, Alta.
The two companies plan to release further details on their strategic alliance in the near future.
Buhler Industries Inc.
CEO:Yury Ryazanov
Location:Headquarters in Winnipeg. Factories in Morden, Man., Winnipeg, Fargo, North Dakota, and Salem, South Dakota
History:Established in 1932 and bought by John Buhler in 1969. In 2007 Combine Factory Rostselmash of Russia bought 80 percent of shares
Products:Maker of Versatile tractors and Farm King equipment
Earnings:2009 revenue $219 million, net earnings $11.67 million. Trades on TSX under symbol BUI
Westeel
CEO:Colin Osborne
Location:Headquarters in Winnipeg. Factories in Olds, Alta., Saskatoon, Regina and Winnipeg
History:Established in 1905 and reincorporated in 1926 as Western Steel Products. Became wholly owned subsidiary of Vicwest Corp. of Oakville Ont., in June 2004. In 2005 Vicwest became Vicwest Income Fund
Products:Westeel makes grain and fertilizer storage bins and industrial tanks for petroleum industry. Other Vicwest holdings make metal roofing, siding and other building product.
Earnings:2009 Vicwest revenue $392 million, net income $34.48 million. Westeel division revenue $152 million, net income $26.77 million. Trades on TSX under symbol VIC.UN
