By STAN MADDUX Indiana Correspondent EAST MOLINE, Ill. — Deere & Co., citing trade uncertainty and a slumping agricultural economy, has announced layoffs at two of its manufacturing plants in the Midwest. The farm and construction equipment manufacturer said about 50 employees in East Moline will be laid off indefinitely on Oct. 28. Another 113 production workers in nearby Davenport, Iowa, will be laid off Nov. 18. “Concerns about export market access, near-term demand for commodities such as soybeans, and overall crop conditions have caused many farmers to postpone major equipment purchases,” said CEO Sam Allen, in the company’s third quarter earnings report. Deere, pointing to lower consumer demand, reduced its full-year income forecast from $3.6 billion in February to $3.2 billion in August. Deere’s net income during the third quarter fell 1 percent to $899 million. Agriculture and turf equipment sales were down 6 percent, while construction and forestry equipment sales were up 1 percent in the third quarter, the company stated. “Despite uncertainties of current market conditions, we remain confident in our business strategy and long-term future,” said Ken Golden, a spokesman for the firm. Jim Mintert, an agricultural economist at Purdue University, is not aware if any other major farm equipment maker has recently scaled back its workforce, but he wouldn’t be surprised if others at some point follow suit. He said tight profit margins the past few years and tremendous uncertainty about the future have farmers cutting back on major purchases. Mintert said the uncertainty is not just from the ongoing trade war with China. Farmers have been relying heavily on federal payments to offset tariff-related losses, but it’s not known whether those payments will continue in 2020. The impact on yields from spring planting running so late this year also remains uncertain. “Some people are telling me they’ve got good yields so far. Some people are telling me the yields are pretty disappointing, so there’s a tremendous amount of uncertainty out there on what the income is going to be this year,” Mintert explained. Vernon Schmidt, executive vice president of the Farm Equipment Manufacturers Assoc. of St. Louis, Mo., said the proposed new trade agreement among the United States, Mexico, and Canada (USMCA) being approved would help increase optimism and spending among farmers. “I think they’d be a lot more willing to invest in new equipment if they had a better idea where they’re going to sell the crops,” he said. The association has about 675 members. Close to half of those are manufacturers of much smaller and less costly farm implements like sprayers, post-hole diggers, and tillage equipment. The rest of its members are suppliers and marketers. Typically, Schmidt said members employ anywhere from about 25-250 people as opposed to thousands employed at plants operated by John Deere and other major farm equipment manufacturers. He also said a vast majority of the businesses, being privately owned, don’t publicly disclose financial data. They are feeling some pain but haven’t shed light on any need to reduce workforce, Schmidt said. A bigger concern for members is finding enough qualified people to fill job openings. He said “help wanted” signs are up in many of their plants. “If I surveyed our members today, they would still tell me that workforce development is higher on their list of things that keep them awake at night than the possible need to lay off employees,” he noted. He said small ag equipment makers can better withstand hard times because their products cost less and often increase efficiency, making it worth the struggling farmer’s expense. |
