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CNH gears up to tackle Cat and Komatsu

Plant: Case/New Holland merger set to grow through acquisition

CNH GROUP, the newly-formed combination of New Holland and Case Corporation, is planning acquisitions to bring it up from its place as the world's number three in construction equipment.

Chairman Jean Pierre Rosso said that the company, which started trading on the New York Stock Exchange last week, would not be satisfied merely to consolidate its position behind Caterpillar and Komatsu.

'We will seek to move up the ladder, in organic growth and, potentially, by acquisition,' he said.

However, the meshing together of New Holland and Case will lead to signif icant cutbacks in production capacity over the next three to four years.

The plan is for similar products to be manufactured in the same factory, with specif ic brand features added in what CNH is calling a 'global product platform'.

'There will be signif icant reduction in capacity across the group, as we seek consolidation on a worldwide basis,' said Mr Rosso.

'There is no question about the potential for value creation.'

The company, which has a combined revenue of £7.5 billion, is seeking to make £250-£300 million a year in savings.

This will initially be through economies of scale in purchasing components, combining research and co-ordinating distribution and sales - the group has 10,000 dealers and distributors.

In the new set-up, Case's president, Steven Lamb, has been named president and chiefoperating of ficer, while New Holland's Fausto Lanfranco has been appointed president of the worldwide construction equipment business.

Mr Rosso and co-chairman Umberto Quadrino confirmed that the joint ventures with Japanese partners Hitachi and Sumitomo were continuing in the medium term.

However, Mr Rosso said future arrangements were still being discussed.

The future of Manchester subsidiary Fermec is still uncertain, with no specif ic date disclosed for the sale of its backhoe line.

The company said there had been a number of expressions of interest for the backhoes and that the Manchester-built mini lines would definitely be redeployed within CNH factories.

Reported suitors range from Volvo to Czech plant importer Earthforce, although CNH will not comment on the prospect.

While Earthforce has declared its interest primarily in the factory, Volvo is remaining tight-lipped, despite speculation that it is developing its own backhoes.