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Workers standing by a John Deere combine in Lipetsk region. Deere has pledged to invest $500 million in Russia.
Deere & Co., PepsiCo and Boeing are among the major U.S. businesses providing the economic backdrop for U.S. President Barack Obama’s visit this week, with executives meeting government officials and talking up their Russian investment plans.
And while companies oozed confidence in Russia’s market on Monday, neither John Deere nor Pepsi have indicated what exactly they are planning to do with the combined $1.5 billion they are planning to spend here in the next few years.
John Deere will invest up to $500 million in Russia in the next six years, CEO Samuel Allen said at a news conference Monday. The money will be spent on “organic growth” rather than acquisitions or mergers, he said, declining to elaborate.
The company is considering expanding their manufacturing capacity in Russia beyond an existing combine facility in Orenburg and a 40-hectare multifunctional complex being built in Kaluga region. John Deere is looking at the Voronezh, Ulyanovsk and Nizhny Novgorod regions, but it “will look at all propositions,” Alexei Kuznetsov, John Deere’s manufacturing development manager for Russia, said at the same news conference.
The company also hopes to provide an “attractive value proposition” to develop Russia’s timber industry by selling forestry and road-building equipment, which could be used to make the country’s vast but still inaccessible forests more available, Allen told The Moscow Times after the news conference.
John Deere’s Russian sales are expected to dip by 20 percent this year because of higher import tariffs and the overall economic climate. But the company is “ready to continue our long presence here” and meet “as many government officials as possible” in the next few days, Allen said.
Perhaps to get on the government’s good side, Allen also said John Deere was planning to use GLONASS — Russia’s long-delayed answer to the GPS satellite navigation system — and to align its plans with Russia’s national projects.
U.S. beverage giant PepsiCo also announced plans Monday to invest $1 billion in Russia over the next three years along with its largest bottler, Pepsi Bottling Group, bringing their total long-term Russia investment plans to $4 billion.
The decision was a reflection of “great confidence in Russia and our long-term commitment to this very important market,” PepsiCo chief executive Indra Nooyi said in a statement. Pepsi is opening its eighth Russian facility Wednesday in Domodedovo, just outside Moscow.
Also planned this week is the belated start of a joint venture between Boeing and , a titanium producer owned by state corporation Russian Technologies.
The venture, called Ural Boeing Manufacturing, was created in 2007 but has not begun production. The companies are having two opening ceremonies Tuesday — one in the Sverdlovsk region city where the facility is located and one in Moscow, a VSMPO-Avisma spokeswoman said.
Dmitry Krol, Boeing Russia’s spokesman, could not be reached on his cell phone. Boeing executive vice president Scott Carson is part of the U.S. business delegation.
Other U.S. chief executives attending a business summit Tuesday include Coca-Cola’s Muhtar Kent, Alcoa’s Klaus Kleinfeld, Chevron’s David O’Reilly, ConocoPhillips’ James Mulva and International Paper’s John Faraci.
