Interview: Wacker Neuson gears up for John Deere excavator production

Wacker Neuson is gearing up for production of mini and compact excavators for John Deere, as part of a 13-year manufacturing agreement signed in 2022, and things are on track for the new models to ship as soon as next year.

That’s according to Gert Reichetseder, president and CEO of Wacker Neuson Group’s Americas operations, whom we recently spoke with to discover how progress is coming in the partnership which will see Wacker Neuson producing excavators under 5 tonnes for John Deere.

Also under the agreement, John Deere will develop and manufacture 5- to 9-tonne excavators using designs acquired from Wacker Neuson, which will produce the sub-5 tonne excavators at its facilities in Menomonee Falls, US, and Linz, Austria, mainly for North America.

The new machines, including electric models, will be distributed under the John Deere brand through John Deere’s global dealer network. Wacker Neuson machines in the same range will continue to be distributed under the Wacker Neuson brand through its own dealer network.

Following is an excerpt from our conversation with Reichetseder.

Rental Briefing: How are things progressing in the manufacturing agreement with John Deere?

Reichetseder: We signed the agreement in mid-2022. This is exciting for us because the agreement not only gives us more credibility in the compact equipment market, working with a partner like John Deere on the excavator side for the John Deere brand, as well as for the Wacker Neuson brand, it puts us in a position to localize certain size models here in the US.

We are still in the staging phase, and the teams are working together well. What I’ve seen in the last year or so is very positive. At the end of 2025, we will start shipping the first machines out of the factory in Linz [Austria].

For the machines coming from the factory in Menomonee Falls [US], the staging time will take a little longer. The plan remains to start shipping those in 2026.

Rental Briefing: Have there been any challenges in the staging process?

Reichetseder: The most important thing is to build up the supplier base here in the US, which is a challenge we’ve had to face. The economy is helping us now; we just finished a very successful year in the Americas. It has been a great ride.

We also see that 2024 is going to be a very challenging year because the competition in the market is much tougher. On the supplier side, however, there are choices again for sourcing components, which helps us with the staging for our John Deere endeavor here for the Americas.

But in a nutshell, it’s going very well, our teams are working well together, so we’re on track with what we were shooting for and we’re still excited on both sides to get the ball rolling.

Rental Briefing: What does the staging process look like in the Linz (Austria) and Menomonee Falls (US) plants?

Reichetseder: We need to get the products ready that will be manufactured here, which comprise the 3.5- and 4-ton models. These will be brand new machines, so we need to finish the

Gert Reichetseder, president/CEO of Wacker Neuson Group's Americas operations

engineering work, the design work, and also, the sourcing.

We’re working to find the right suppliers, which is a huge endeavor and needs staging time, but it is not something you see right away in our facility.

However, we are also currently revamping the [Menomonee Falls] facility because we will still be using the same footprint. We’ll start changing our assembly area, because we will need to realign our assembly lines, which optimizes our future material flow.

Down the road, we’ll install the excavator line, and we’re already beginning with the construction work there. We want to be ready in time to optimize our flow for all the other products, including skid steers, compact and utility track loaders, rollers, generators, and light towers, which are still going to be manufactured here.

We will also start painting components in-house again. We have a powder coating facility here in this factory, which has been dormant for a year or two because we didn’t have the parts or component portfolio to utilize it properly. Now, with this incoming new line, it makes sense again to fire it up. So, we are in the process of re-starting this facility for the existing Wacker Neuson products we make here.

We’re doing this now so it will be fully operational when we need it for the excavators. It requires an investment, because we are adding a new blasting facility into the paint process, and we need to change certain things in the factory to make it work efficiently.

We will start with the outside area of our campus this year with the construction of a finished goods lot and the [pre-delivery inspection] and shipping area, which we need for the Wacker Neuson-branded machines. These are all the stages we need to complete to be ready by the end of the year when we start building and assembling excavators.

Rental Briefing: How much of an investment is being made in the two manufacturing plants?

Reichetseder: We said a year ago that our planned investment was $10 million. What I can tell you right now is that we will spend a little more than that, because everything got a little bit more expensive. In addition, we also decided to include space to warehouse the components for the new assembly, which we will now build on our campus. Consequently, our investment has kicked up a notch.

This shows Wacker Neuson’s commitment to our [Menomonee Falls] location, and our positive development of what we continue to do with John Deere.

Talking about the Linz side, they are continuously expanding their facility, not only because of John Deere, but also because of all the other products which are manufactured there. The volume that we do for John Deere fits in well there.

Rental Briefing: Will there be any delays in production during the retooling process?

Aerial view of Wacker Neuson’s plant located in Menomonee Falls, Wisconsin (US)

Reichetsder: Our plan is doing this switchover seamlessly. However, changes like this are always a challenge. While 2024 looks positive, especially in the US, it’s going to be a challenging year. We have finished goods inventory available that we want to sell this year. So, even as we shuffle the lines around, we can still serve our customers at a high level. There should be no interruption in supply, so we can still fulfill all of the demand.

Rental Briefing: What are some of the challenges you see coming this year?

Reichetseder: Last year was one of our most successful years in the Americas, top line and bottom line, which is very good. I still believe there will be a good market this year, however, if you drive through the country, you can look at the various equipment dealerships and see that the lots are full.

On the other hand, is the end customer demand still there? Will it be growing like it has been growing the last two years? No, because we were coming out of a supply vacuum caused by Covid. However, I think at least in the US and Canada, the demand is still on a high level, but due to the full dealer lots and ever-present competition, the fight for customers and orders will be tougher.

Still, if you compare the current situation in the Americas region to Europe, and we see how incoming orders are developing there, 2024 is going to be tougher for all of us.

All OEMs need to learn to live with lower backlogs than we have experienced over the past couple of years, which was not healthy anyway.

It’s an election year in the US, but at the end of the day, no matter who wins, there’s so much investment going on in infrastructure. That means that demand is still here. Let’s see how the interest rate develops for housing.

The Wacker Neuson Group is counting on the Americas region. We came a long way last year and it still will be positive this year, but if the pipeline and inventories are full, it’s a different story than when you’re coming out of a vacuum.