The company recently finalized a $5.625 million economic incentive package from the state of Wisconsin that, together with a new work agreement reached with United Auto Workers last week, make it possible for the company to develop the new assembly operation. In addition, the Racine County Economic Development Corporation will provide a $400,000 loan for the project. Based upon current production levels, the operation is expected to employ approximately 125 hourly workers. However, employment would flex in accordance with production levels. The agricultural equipment market is currently in a low demand period, as a result of low farm commodity prices. The labor agreement also makes it possible for CNH to proceed with negotiations to sell its foundry, which is adjacent to the Racine tractor plant.

"I am extremely pleased that we were able to work together with the union and state and local government officials to keep Racine a source for supplying tractors," said Jean-Pierre Rosso, chairman. "This solution fits well with our industrial consolidation effort and will make CNH more competitive, while ensuring a high quality tractor for our customers, based upon a global product platform."

"We are in the midst of a multi-year integration plan that is expected to create at least $600 million in synergies for CNH and an assembly operation for row-crop tractors is consistent with our goal of lowering fixed costs and leveraging our production volume for greater efficiency," added Paolo Monferino, president and chief executive officer. "This is a positive solution for everyone."

CNH announced in June 2000 that it would close the current tractor manufacturing plant in Racine as part of a worldwide consolidation of the company's industrial operations. The company was considering several options for production of row-crop tractors, including consolidating tractor manufacturing at another CNH facility. In North America, CNH makes four-wheel-drive tractors at its plant in Fargo, North Dakota, and assembles compact tractors at its Dublin, Georgia, plant.