While reasons like higher production costs are given, other sources blame “greed” for the mass layoffs.
A Sad Summer
The largest international seller of tractors and crop harvesters, John Deere, announced on Friday that it’s implementing another wave of staff layoffs. Over 600 people employed at three US-based John Deere plants were notified that, by the end of summer, they would be out of a job.
A Golden Oldie
John Deere is known as one of the US’ oldest companies, as it was established in 1837 – almost a quarter of a decade before the Civil War started.
Far Fewer Jobs
As per the company’s latest decision, around 280 jobs will be terminated from a plant in East Moline, Illinois. In addition, another 230 employees working at a factory in Davenport, Iowa are also being let go. This is in addition to another 100 production workers at John Deere’s plant in Dubuque, Iowa, who are also being impacted by the layoffs.
When’s it Happening?
Combined, these three factories employ about 4,175 staff members in production and maintenance. While the Illinois factory mostly produces harvesting equipment, the two Iowa factories are more focused on construction- and forestry equipment. The company has said that all layoffs will be effective from August 30th.
Any Benefits?
As per reports, workers will be offered Supplemental Unemployment Benefit (SUB) to cover about 95% of their weekly net pay for up to 26 weeks, depending on how long they’ve been employed at John Deere. In addition, they will also be provided with profit-sharing options as well as health benefits.
Thinking Ahead
In another statement, the company also said: “These changes are being made due to reduced demand for the products produced at these facilities,” and “To better position Deere to meet future demand, we continue to take proactive steps to reduce production and inventory”. Among falling agricultural revenue in the US, Deere has set out to reposition its brand as a technology company.
Moving to Mexico
Earlier this month, John Deere announced that it will be shifting production of skid steer loaders and compact track loaders from Dubuque, Iowa to Ramos, Mexico by the end of 2026. In its statement, the company also explained that the decision was because of its evolving business model, to tackle the rising manufacturing costs, and improve operational efficiencies.
The Factory Plans
According to their statement, “This includes optimizing our factories for future products, making our operations more efficient and taking advantage of locations in the U.S. and globally, with a growing labor force”.
When Did It Start?
The first wave of 225 layoffs was communicated last October at the Harvester Works plant in East Moline. In May, 34 more production staff were let go from the Moline Cylinder Works factory. In March, John Deere officials said that 150 more workers at a plant in Ankeny, Iowa (where sprayers and cotton pickers are manufactured) would be out of a job.
Remember the Strike?
In October 2021, the United Auto Workers represented over 10,000 striking workers at 14 John Deere plants in Colorado, Georgia, Illinois, Iowa, and Kansas.
All in Agreement?
That month was known as ‘Striketober’, a month of large-scale industrial actions across the US. In November of that year, the John Deere strike ended after workers ratified a new six-year union contract agreement.
Getting Greedy?
According to a longtime John Deere worker at the Harvester Works plant in East Moline, Illinois, “We get wind of more layoffs daily, it seems, and it’s causing uncertainty all over”. The worker, who asked to remain anonymous, also said: “The only reason for Deere to do this is greed”.
Billion-Dollar Profits?
The worker also referred to John Deere’s recent profits – the business reported a profit exceeding $10 billion in fiscal year 2023, while the CEO John May received $26.7m in total compensation.
Nasty Surprises
The anonymous worker added: “Our harvester plant is still in production and management has been quiet. They’re not doing the normal ‘time to talk’ meetings as they have in recent past. My belief is that they don’t want people to know they are losing their jobs until they get everything built for the year”.
The Figure Forecast
John Deere has reported slumping year-over-year revenue after a net income of $10.16 billion in 2023, but now executives have forecast the company’s 2024 income to be approximately $7 billion. The reasons given include higher production costs, lower shipment volumes, and unpredictable weather that have made customers think twice before purchasing equipment.
The Stock Stats
It was also reported that John Deere has spent more than $7.2bn on stock buybacks in 2023 while also providing shareholders with over $1.4bn in dividends.
Falling Farming Numbers?
Meanwhile, the US Department of Agriculture (USDA) has predicted that farm income would drop by 25.5% to $116.1 billion this year compared to 2023.
A Bleak Outlook
In February, the USDA also forecast that crop- and animal product sales are expected to generate $21 billion less in revenue in 2024.
Less and Less
According to the Bureau of Labor Statistics, manufacturing jobs across the US have settled at 13 million employees after recuperating from a sharp pandemic-related decline in 2020. And since the start of this year, machinery manufacturing (which includes jobs that make equipment for agriculture and construction) has declined by about 9,000 employees.
Moving House?
The latest wave of layoffs comes after reports have surfaced about CEO John May putting his 80-acre horse farm property up for sale. According to the listing, the farm’s asking price has been set at $3.925 million.
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Featured Image Credit: Shutterstock / Jonathan Weiss.
The content of this article is for informational purposes only and does not constitute or replace professional financial advice.
