Hit by inflation and plummeting demand as agricultural prices turn down, John Deere is continuing layoffs, announcing Monday it will cut 813 employees from plants in Iowa and Illinois.
Iowa's Worker Adjustment Retraining and Notification website showed 211 being eliminated at the company’s Davenport plant and 99 in Dubuque, effective Aug. 30. The WARN site in Illinois listed 503 workers being laid off from the East Moline plant, effective Sept. 30.
Deere is based in Moline, one of the Iowa-Illinois Quad Cities.
The new announcements add to Deere’s 835 layoffs earlier this year from its plants in Waterloo, Ankeny, and Ottumwa and its tech center in Urbandale.
Deere did not respond to a request for comment from the Register, but in a statement to Fox Business, the company said, “We can confirm Deere leadership recently communicated that rising operational costs and declining market demand requires enterprise-wide changes in how work gets done to achieve our goals and best position the company for the future."
The company told Fox Business that workers will be offered supplemental unemployment benefits. which will cover about 95% of their weekly net pay for up to 26 weeks, depending on their years of service. They also are being given profit-sharing options and health benefits.
In May, Josh Beal, Deere's investor relations director, told analysts the company expects farmers around the world to spend less money over the next six months. U.S. Department of Agriculture economists projected in April that corn, wheat and soybean prices would drop this year, sending farm income down 26% compared to last year.
Beal said the company will produce fewer machines than the market demands, a strategy he called "planned underproduction."
Deere listed 82,200 employees at more than 100 locations globally in 2023, according to the company’s website.
Deere seeking to cut labor costs, ISU economist says
In one of its remarks to Fox Business, Deere said, “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.”
It's a sign the company "is reorganizing to gain labor cost efficiencies,” said Iowa State University economist Chad Hart, pointing to a 2021 strike that resulted on sizable concessions from Deere.
When it announced other layoffs earlier this year, Deere indicated some of the production would be shifted to plants in Mexico.
Another Iowa State University economist, Peter Orazem, said Iowa has had a very slow labor supply recovery from the pandemic that has posed a challenge to every firm wanting to hire.
“And anti-immigrant sentiment does not help in a state where 38% of the population growth since 2000 is due to immigration,” Orazem said.
But he said labor supply issues are more of long-term problem and not the reason for Deere’s current layoffs. Instead, he said, “John Deere has too many workers at the moment.”
Hart said Deere’s second-quarter report shows a general slowdown across several sectors of the company including agriculture, residential and forestry.
But while the ag sector has seen a significant drop in income starting last year, Iowa’s overall economy is still growing, Hart said, with non-farm employment up 1.5% from a year ago helping cushion the drop in the ag economy.
High interest rates also are slowing sales in the ag sector, Orazem said.
“Customers typically do not pay cash for combines, construction equipment and tractors, and borrowing costs are as high as they have been in 35 years,” he said.
He said John Deere has 4,400 suppliers, “so the shadow cast by Deere cutbacks is pretty extensive.”
Manufacturers of after-market parts for Deere equipment may benefit, however, as owners look to extend the work life of existing equipment rather than buy new, he said.
Kevin Baskins covers jobs and the economy for the Des Moines Register. Reach him at kbaskins@registermedia.com.
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