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Zetor tractors plowing into Poland

As the Poles enlarge their farms, Moravian tractors follow

By Michael Heitmann
Staff Writer, The Prague Post
December 19th, 2007 issue

COURTESY PHOTO
Zetor plans to construct a factory in south Moravia, increasing its yearly tractor production to 15,000.
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COURTESY PHOTO
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For a long time, it seemed that tractor manufacturer Zetor had seen its best days under communism.

In the 1990s, the company had to be bailed out by the state several times after posting operating losses in order to save jobs at its factory in Brno, south Moravia. But that was before the Slovak investor HTC Holding bought Zetor in 2002 and led the company to a surprise recovery, fueled in part by demand from Poland.
Exactly 6,492 tractors left the Zetor factory last year; this year, the number will be closer to 7,000. Zetor’s profits have been even more impressive, more than doubling in one year, from 150 million Kč ($8.4 million) to over 300 million Kč in 2007.
One of the most important markets for Zetor’s growth has been Poland. The country’s European Union accession in 2004 filled its farmers’ pockets with subsidies and gave them the means to renew their rusting vehicle fleet and expand their farms, which are tiny in size compared to the Czech Republic.
“Were it not for EU structural funds, sales would be low,” said Jaroslav Viktor, who heads the Zetor subsidiary in Poland, to the Czech News Agency. “Polish agriculture faces difficulties: farms are small and cannot compete head-on with foreign competition.”
The average farm size in Poland is a minute 12.1 hectares (29.9 acres), compared to 131.7 and 143 hectars in the Czech Republic and Slovakia, respectively — the highest average sizes in the EU, according to Eurostat, the EU statistical agency.
As Poland catches up with EU standards, its farms are expected to rise in size, creating a need for larger agricultural machinery in turn. That’s where Zetor has found its market niche.
“The EU brought money into Poland,” Viktor said. And when it comes to choosing a supplier for new tractors, its farmers often decide to go with a familiar brand.
“Zetor tractors are hugely popular in Poland. They have been around since 1948,” he said. More than 100,000 Zetor tractors have been imported since then, with many still used today, he added.
In a way, Poland is routing some of its EU subsidies to the Czech Republic. Some 90 percent of all tractor and agricultural machinery sales in Poland rely on financing that flows from EU sources, according to Viktor.
Racecar looks
During a visit by President Václav Klaus to the Zetor factory last month, Zetor’s executive director, Pavol Hubočan, announced plans to construct a new manufacturing facility. Up to 15,000 tractors will be assembled at the 10,000-square-meter (107,639 square-feet) plant only six years from now. The expansion will prompt Zetor to hire another 300 employees, Hubočan added.
Zetor still considers the Czech Republic and neighboring Slovakia to be its home markets, where its tractors have rolled their way into popular culture. The punk band Visací zámek celebrated the Zetor spirit in a widely-known 1980s song: “A tractor rides/it is a Zetor/ it drives to mountains, to plough potatoes.”
Zetor is the market leader in both countries, claiming a 22 percent and 28 percent share in the Czech Republic and Slovakia, respectively. About 820 of its vehicles will be sold in the two markets by year’s end.
Despite its local dominance, Zetor has long thrived on its exports. In Iraq, Zetor became a household name for a generic tractor in the 1950s, like Kleenex for tissues.
The company no longer exports to the Middle East, but instead has focused on conquering neighboring markets such as Poland, as it is one of only a handful of tractor manufacturers remaining in the new EU member states, according to industry observers.
Many farmers in these markets need the midsize tractors Zetor specializes in — although the company is planning a lineup of larger machines, dubbed Maxterra, for the first half of 2009. So far, the Proxima, a general-purpose tractor with an engine of up to 100 horsepower, is the company’s bestseller, leaving the factory gates at a rate of almost 5,000 a year.
“We put the most emphasis on engine power, low fuel consumption and increased torque, but also take into account safety regulations concerning steering effort, noise emissions as well as vibration and noise in the driver’s cabin,” said research and development director Jiří Koláček.
Zetor tractors sport race car looks with their trademark-protected red color, but eschew electronic controls in favor of an all-mechanical design that increases reliability and makes servicing inexpensive.
Despite its growth in other markets, Zetor’s exports to the United States have seen a sharp decline. Only 400 tractors crossed the Atlantic in 2007, down from 1,200 three years ago. At fault is the strong crown, said Hubočan.
“Exports are now limited to the more powerful product segment,” he said. “It would not pay off to export lower-powered machines to the U.S.A.”

Michael Heitmann can be reached at mheitmann@praguepost.com


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