| Fri 5 Nov 2004, 8:35 | | PLANS TO EXPAND AND STRENGTHEN BUSINESS RELATIONS |
|
BELL EQUIPMENT LIMITED - PLANS TO EXPAND AND STRENGTHEN BUSINESS RELATIONSHIP
Bell Equipment Limited
(Reg no 1968/013656/06)
ISIN:ZAE000028304 Share code: Bel
Bell Equipment Limited and John Deere Construction & Forestry Company
Announce Plans to Expand and Strengthen Business Relationship
Bell Equipment Limited, of Richards Bay, South Africa (`Bell`) and John Deere
Construction & Forestry Company, of Moline, Illinois USA (`Deere`), today
announced their intention to enter into a series of agreements expanding their
business relationship. Under these agreements, which are subject to the final
approval of Bell`s board of directors, Deere will license Bell to manufacture
Deere designed Tractor Loader Backhoes (`TLBs`) and Front End Loaders (`FELs`)
in South Africa, and Bell will license Deere to manufacture Bell designed
Articulated Dump Trucks (`ADTs`) in North America.
Currently, Bell supplies ADTs to Deere, a 32% shareholder of Bell, for resale
principally in North America. These new arrangements are designed to provide
significant cost reduction opportunities and leverage the advantages of local
manufacturing for both parties.
`This strategic initiative is yet another step to strengthen the business
relationship between Deere and Bell,` said Gary Bell, CEO of Bell Equipment.
`This collaboration will increase manufacturing flexibility and fundamentally
change our cost structure. Bell and Deere will continue to look for
opportunities to improve operating efficiencies and reduce costs, while
improving the quality of our products for our customers.`
`Bell and Deere are committed to providing the highest quality products at
competitive prices,` said Pierre Leroy, President of Deere. `This collaboration
will enable both companies to minimize the effects of currency exchange rates,
reduce working capital requirements, and provide increased value to our
customers.`
Under this plan, Deere will begin the manufacture of ADTs at its factory in
Davenport, Iowa, USA during the Spring of 2005, and will continue to source
various components from Bell. Bell will continue to manufacture ADTs at both of
its current facilities in Richards Bay, South Africa and Eisenach, Germany. As
capacity requires, Deere may continue to purchase ADTs manufactured by Bell at
these facilities.
Bell and Deere will collaborate on improvements to the ADTs and on cost
reduction initiatives. Deere`s considerable experience in the construction
equipment industry and significant enterprise volume will assist Bell in
reducing its cost of manufacture. The parties will together pursue global
purchasing whenever possible to enable both companies to obtain components and
parts at the lowest possible cost. Bell will utilize these improvements and
cost reductions in the ADTs it manufactures and sells throughout the world,
making it a more effective global competitor.
Under the agreements, it is anticipated that Bell will begin manufacturing Deere
designed loaders at its factory in Richards Bay, South Africa in early 2005, to
expand its current product line. The FEL project will eliminate duplication of
design by Bell and Deere and leverage Deere`s larger FEL volumes to reduce
costs. Bell will continue to manufacture a number of its current models while
the market remains viable. It is also anticipated that Bell will begin
manufacturing TLBs at its factory in Richards Bay, South Africa in mid-2005.
Based on current market requirements, Bell will be the sole manufacturer of
Deere designed side-shift TLB`s and will provide the product to both Deere and
Bell.
By manufacturing an expanded line of FELs as well as TLBs, Bell will
significantly diversify and expand it manufacturing base. As with the ADTs, Bell
and Deere will collaborate on cost reductions and in global sourcing of
components.
This increased collaboration between Bell and Deere will further increase
flexibility and accelerate the realization of various synergies within the
relationship. As a result of these steps, Bell will reduce current pressures
caused by the strength of the rand, broaden its product manufacturing base, and
improve its ability to support its customers.
Richards Bay
5 November 2004
