JOHN DEERE’S WOES
ROB MILLS
PERRYVILLE, MISSOURI
In today’s business world, how you tell your story is the order of the day. How you want your audience to understand today’s present economic situation and just what the reality is on the ground for your business, is the battleground for the public’s mind.
According to the August 16th New York Times, there’s one story nationally that the facts speak for themselves...Deere & Co., the premier name in agriculture is reeling financially. After decades of market domination in ag machinery, buyers are looking elsewhere for their tractors.
Layoffs totaling over 2,000 workers in recent months have been the company’s response to continued plunging income. With a 42% downfall in their second quarter money flow, brought about by a sales plunge of 20%, their elimination of 15% percent of the company’s workforce since November 2023 hasn’t been the answer for Deere’s bottom line. Current available numbers place their current employment at 34,000 for their U.S. and Canada workforce.
The cloud hanging over Deere & Co., is encompassing all of U.S. agriculture. According to the USDA, anticipated 2024 U.S. net farm income is expected to be 116.1 billion dollars, down a projected 25% from 2023. The USDA admits that government support payments are not keeping up with surging farmer operational costs. Falling prices for soybeans and corn, combined with stagnant Farm Bill aid that was set six years ago and hasn’t been increased since, are combining to pressure American agriculture.
According to The Times there is also growing dissension within the Deere workforce, not just due to the layoffs they’ve been hit with, but also because Deere is moving some of its manufacturing output from Iowa to Mexico.
According to company CEO John May, the current moves made by Deere have sprouted from lessons learned. “We are acting more quickly, taking out excess costs and restructuring,” he said adding “In the past it might have taken us a couple years to react.”
One area Deere must address is the price of their product. Farmers who bought combines for $100,000 in the recent past, now are paying up to $450,000 for machinery. Hopes for an improved bottom-line are based on projections of strong corn and soybean crops in the Midwest this fall…creating cash for farmers and in theory, enabling them to buy Deere’s machinery.
In the January 12th edition of MAFG, Justin Littleton, a Parma, Missouri farmer, was quoted as saying “You have less than handful of companies that control the tractor market. If their price hikes don’t stop, it will kill the little guy.” The recent economic figures indicate that the practice of continual price hikes implemented by Deere isn’t just hurting the little guy… Deere is feeling the sting of seeing their customers go elsewhere.
It’s a trend they must stop. Being a legacy company and number one in your industry doesn’t mean you can’t fail. Does anyone remember TWA? ∆
ROB MILLS: MidAmerica Farmer Grower Staff Writer