Today’s Valtra tractors combine two traditions: the Finnish brand Valmet and the Swedish brand Volvo BM. The roots of the former can be found in the defence industry of Finland, which gained independence in 1917. Following the Second World War, the Finnish war material industry was converted to civilian production and consolidated under the company Valmet Oy. Tractors represented one of the most important product groups.
It seems almost incredible that the new tractor manufacturer, which had existed for less than ten years, established a tractor plant in Brazil already in 1960. This move nevertheless created a base for international growth and helped the Finnish tractor brand to survive consolidation within the industry.
A modern diesel tractor
Valmet began developing a modern diesel tractor that would be inexpensive to produce in the mid-1950s. The new model was unveiled in November 1956 and proved to be a success. Finland’s import restrictions had been abolished, and the market leaders until then had been British tractors.
Even though other brands could not compete with the Diesel Valmet, the company decided to switch tactics in order to safeguard its future. Finns after the war appreciated Western European and American products. Thought was given within Valmet to how this pro-Western orientation by consumers could be turned into a strength. Exporting Finnish tractors would provide sufficient proof of the quality of these products also to Finnish buyers.
Entering export markets
One hundred small Valmet tractors were exported to Turkey in 1955-1956. Finland’s neighbouring markets in Norway, Sweden and Denmark were explored but with little result. The company recognised that large developing nations had an enormous demand for tractors, so the Valmet 33 D model was sent to such countries as China, Poland, Spain and later Brasil for testing. In July-August 1958 a large shipment of Valmet 33 D tractors was loaded onto train carriages at Jyväskylä Station. Altogether 350 tractors were delivered to the People’s Republic of China.
When Valmet helped organise successful trade deals with Brazil concerning shipyards, the company realised that Finland was a good trading partner for Brazil, since Finland purchased a lot of coffee from Brazil. Subsequently, 1250 Valmet tractors were exported to Brazil in 1959-1960.
Valmet do Brasil founded
Exports to Brazil began promisingly, but the country was planning its own tractor industry, which would negate the need for imported Finnish tractors. “Grupo Executivo da Indústria Automobilistica” (GEIA), a unit of the Brazilian Government, had announced a bidding competition on 23 December 1959 with the aim of creating a national tractor industry.
The bids had to be submitted to GEIA by the end of January 1960, so there was little time to draw up a project plan. In addition, only companies registered in Brazil could submit bids. “Valmet do Brasil – Indústria e Commercio de Tratores S.A.” was duly registered in the São Paulo trade registry in January 1960.
GEIA announced the winning projects at the end of March 1960. Ten projects out of 20 applications were approved. Within its own category, medium-duty tractors, Valmet was ranked the highest. Other accepted applicants included Massey Ferguson, Ford, Deutz and Fendt. Valmet’s factory project anticipated annual production of 4000 tractors.
The location selected for the factory was Mogi das Cruzes, approximately 70 kilometres from the centre of São Paulo in the direction of Rio de Janeiro. A former textile plant was acquired and expanded into a tractor plant. From the start it was clear that a locally manufactured engine would have to be selected for the tractor, as the automobile industry had been nationalised just a few years prior. Perkins was considered, but it was already owned by Massey Ferguson. Other candidates included Mercedes-Benz and MWM (Motorenwerke Mannheim), and eventually MWM was chosen.
The first Valmet tractor to be manufactured in Brazil was unveiled on 14 December 1960. This represented a considerable achievement considering that Valmet had established its tractor business only nine years earlier and begun operating in Brazil just a year before.
Problems in Brazil
Inflation in Brazil began to accelerate in the first half of the 1960s. Tractor operations could only be continued by raising sales prices on a monthly basis. The domestic situation changed in 1964 following the military coup. The military government wanted to put an end to political populism and spiralling inflation.
The new government began making radical changes to economic policy by declaring a price freeze in May 1964 that also applied to the tractor industry. Despite the severe price regulations, 1964 was a successful year for Valmet do Brasil. The company posted a sales recorded of 2368 tractors.
At the start of the following year a new threat emerged when the Government ended subsidies for tractor buyers. This situation lasted for years, resulting in one half of Brazil’s six tractor plants having to discontinue operations. These included Ford, Deutz and Fendt. Ford returned in the mid-1970s, but the Deutz plant transferred to Cummins. Fendt sold its own plant in 1968 to Schuler, a manufacturer of sheet metal machinery. The three remaining plants were operated by Massey Ferguson, Valmet and CVT, a Brazilian company that had acquired the licensing rights to the old Oliver tractors.
Rapid growth in the 1970s
The first MWM diesels were equipped with prechamber engines, but in 1968 Valmet demanded that the direct injection technology found in its own engines be used in the MWM engines. In 1973 the Linha 73 series was introduced in Brazil. The series encompassed the models: the Cafeéiro 52 hp for coffee plantations, the 62 id (55 hp), the 85 id (78 hp) and the six-cylinder Valmet 110 id (116 hp), which paved the road for Valmet’s leading position among large tractors.
At the same time the traditional red colour was changed to yellow and brown. In that year the company posted a production record of 10,213 tractors. In 1977 Valmet do Brasil manufactured close to 15,000 tractors. The opening of a new assembly plant allowed the company to increase capacity.
Linha 8 launched in the 1980s
In July 1981 a new model series was introduced: the Linha 8. The series continued to feature the Cafeéiro, a 3-cylinder 68 model, a 4-cylinder 88 model and a 6-cylinder 118 model, which featured a totally new heavy-duty transmission. The most significant new model was the 118-4, the first Brazilian four-wheel-drive tractor. This model guaranteed Valmet’s market leadership among large tractors in Brazil.
Another innovation introduced on the Linha 8 was double air filtration. This filtered the air first through a traditional oil bath filter and then through a modern paper filter. This helped extend the lifespan of engines considerably in dusty conditions.
First “Nordic Tractor” in Brazil
Valmet do Brasil had secured its position in the Brazilian market by introducing the 6-cylinder 118 model with 120 hp (SAE) in 1981. Two years later Valmet’s leading position among large tractors in Brazil was sealed by the introduction of a turbocharged four-wheel-drive model based on the 118. This was the Valmet 138-4 Turbo (140 hp SAE) that was introduced in 1983. It was the first Brazilian turbocharged four-wheel-drive tractor model.
A gap had nevertheless appeared between traditional Valmet tractors and the large six-cylinder models, and competitors did their utmost to exploit this. For this reason the “Nordic Tractor” concept of Volvo BM Valmet, as the tractor was then known following the acquisition of Volvo’s tractor operations, was decided to be introduced also in Brazil. Because the network of component suppliers was completely different in Brazil than in Europe, significant changes had to be made to the Brazilian models. The engine was sourced from MWM do Brasil, which also developed a turbocharged version of its 3.9-litre four-cylinder engine.
In 1986 Valmet again made history in Brazil by introducing two new models: the 880 (81 hp SAE) and the 980-4 (95 hp SAE), which was the first Brazilian turbocharged four-wheel-drive four-cylinder tractor.
Valmet was also a pioneer in power solutions. In 1983 it introduced tractor models that could run on alcohol. These models featured two fuel injection pumps: one for diesel fuel and the other for alcohol. The alcohol was used to generate power and torque, but a small amount of diesel was injected to allow the fuel mixture to combust. Altogether Valmet do Brasil manufactured 1700 units of these alcohol tractors between 1983 and 1986.
Valmet do Brasil enters the 1990s
Having become the second largest agricultural tractor manufacturer in the massive agricultural country, Valmet do Brasil (=VdB) began to attract buyers. In order to safeguard its ownership, Valmet increased its shareholding from 72 percent to 99 percent in 1989.
Brazil’s customs regulations had eased to such an extent by 1992 that Valmet decided that VdB should begin using Valmet engines alongside MWM engines. This led to the introduction of engine assembly in Brazil two years later. The decision was a wise and farsighted solution considering the success of what is today AGCO Sisu Power.
In August 1989 Valmet do Brasil unveiled its 1780 model, which was not much smaller than the European Valmet Mega. Its turbocharged MWM engine developed 165 hp. The 12+4R transmission was borrowed from the previous 138/148-4 model. The rear axle structure was changed to a planetary design. The appearance was also harmonised with Valmet’s “Nordic” models. The company’s other six-cylinder models were similarly updated a year later. This model series was followed by the Valmet 1880 S, which was powered by a more powerful Valmet engine.
In 1991 Valmet restructured its tractor operations. Previously Valmet do Brasil had reported directly to Valmet’s head office. After May 1991, however, all Valmet plants related to the tractor business were consolidated within the new Valmet tractor division. This came to include the Suolahti factory, the Linnavuori diesel engine plant in Nokia and Valmet do Brasil S.A. The combined net sales of these units in 1990 totalled the equivalent of 320 million euros, and the number of employees totalled 3000.
Around the same time the market situation began to develop unfavourably. Nordic sales collapsed, and storm clouds appeared on the Finnish horizon. The company was renewing its model line-up at the time, and it had a large stock of unsold tractors belonging to the previous model series. At one point the Brazilian market was contracting at the same time.
Tailor-making a competitive advantage
Eliminating stocks and introducing a production philosophy based on individual customer orders and mass customisations were innovations that allowed Valmet in Finland to increase production and exports of Valmet tractors in the 1990s.
The marketing campaign for the new customer order system began in earnest in 1994. The message was adapted for each local market: “Skreddersöm, Bestem selv, Su Tractor Personal, Massgeschneidete Trakto¬ren, Tailor Made, Mittatilaus...”
The Brazilian market contracted in the first half of 1995 when the Government again cut agricultural subsidies. The agricultural machinery industry was again faced with a tough situation – the Brazilian market has indeed been quite a rollercoaster ride throughout its history. As it turned out, Valmet do Brasil was able to react to the changing situation faster than the competition.
Amidst the crisis Valmet do Brasil introduced the same methods that had been implemented in Finland in the crisis year of 1991. During times of low production it was possible to carry through a lot of internal reforms. VdB used this time to train its own organisation in the customer order system based on the Finnish model. The local term for this was “O Trator Combinado”. At the same time VdB began offering five colour options as Valmet did in Europe.
In 1998 VdB introduced production of the Valtra Valmet 100 series, which was the same as the 700 and 800 series in Finland.
Highlights since 2000
Three model series entered production in the 2000s: the light BL series, the medium-duty BM series and the heavy-duty BH series. The initial changes in ownership of the parent company in Finland did not have much effect in Brazil, but once AGCO became the owner of Valtra in 2004 significant organisational changes were made within VdB.
The tractor industry in Brazil benefited from Government stimulus package “Modafrota”, which aimed to modernise the country’s tractors in the early 2000s. By 2007 the world’s conscience had awoken to the threat of climate change, which stimulated an increase in the production of biofuels. A new tractor boom thus began in Brazil at the end of 2006. Valtra benefitted the greatest from this upswing, as it traditionally commanded around 50 percent of the tractor market among sugar plantations.
Valtra do Brasil also introduced a line of harvesters at the end of 2007. Less brands are present in the Brazilian market than in Europe, and Valtra dealers looked forward to receiving combine harvesters from the second largest manufacturer in the market. As part of AGCO, Valtra had the opportunity to source harvesters from Massey Ferguson’s Santa Rosa plant according to its own specifications.
The economic situation had begun to deteriorate in 2008, and volumes within the agricultural machinery industry collapsed in 2009. Nevertheless, Valtra’s operations in Brazil continue to expand.
Operations based on quality
The excellent precision and measuring tools required for manufacturing weapons provides the basis for the high quality of Valmet tractors. The manufacturing industry was introduced to ISO 9001 quality certification in the late 1980s. In December 1993 Valtra in Finland became the first tractor plant in the world to obtain this certification. Both the engine plant and Valmet do Brasil were involved in the same process and received the certification in 1995. Valmet do Brasil’s name was officially changed to Valtra do Brasil in 1996.
Having operated without interruption in the Brazilian market for the past 50 years, Valtra is considered a “domestic tractor”. The quality of the product and customer service is very high, and customers in Brazil value Valtra’s durability and longevity. For the past five years in a row Valtra has been awarded the Master Cana Award for the best product and service by Brazilian sugar cane producers.
In 2006 VdB received OHSAS 18001 Occupational Health and Safety Management Certification, and in 2002 it was granted ISO 1400 Environmental Management Certification. The company is one of the pioneers in environmental management in Brazil. Valtra tractors can run on biodiesel, and the company is currently exploring the use of ethanol by utilising the most advanced engine technology. One of Valtra do Brasil’s competitive advantages is that an AGCO Sisu Power engine plant is housed under the same roof as the tractor plant.
Valtra do Brasil currently exports its tractors to 60 countries around the world. It has 13 importers in Latin America alone and 150 dealers in Brazil.