According to a news release, John Deere is laying off approximately 600 employees across three manufacturing facilities in the United States as the Illinois-based company prepares to shift production operations to a Ramos, Mexico facility amid declining agricultural revenue.
According to CNN, approximately 330 employees will face layoffs at the Dubuque and Davenport, Iowa plant, and 280 employees from a factory in East Moline, Illinois, starting August 30. These three factories employ around 4,175 workers involved in production and maintenance. The East Moline facility primarily manufactures harvesting equipment like combines, while the Iowa plants specialize in construction and forestry equipment.
John Deere Grappling with Slowing Demand
This decision is part of a series of production layoffs undertaken by the farm equipment manufacturer over the past year as John Deere repositions itself as a technology company.
The company told CNN last Friday that it is implementing measures to scale back production and manage inventory to more effectively align Deere with future demand, prompted by decreased demand for the products manufactured at these facilities.
The company has reported a decline in year-over-year revenue following an announcement of a net income exceeding $10.16 billion in 2023. During a May earnings call, executives projected Deere's income for 2024 to be approximately $7 billion. This decline was attributed to increased production costs, decreased shipment volumes, and unpredictable weather conditions.
Josh Beal, the company's director of investor relations, stated that they anticipate an incremental decline in demand in the latter half of 2024, noting that production volumes will decrease more significantly than demand as they actively reduce field inventories. This strategy applies to all major markets, including South America, Europe, and now North America, for large tractors, believing this approach will effectively position them to enhance retail demand in 2025.
Laid Off Employees Support
Employees who are laid off will have the opportunity to be recalled to their home factory, with priority based on seniority for return or new openings.
Monetary benefits include:
- Supplemental Unemployment (SUB) pay covers approximately 95% of their weekly net pay for up to 26 weeks, depending on their years of service.
- Transitional Assistance (TAB) pay, providing 50% of their average weekly earnings for up to 52 weeks after SUB pay runs out.
- Profit Sharing is calculated based on their hours worked, average earnings, and the company's profit margin for employees with at least one year of service by the end of the plan year.
Healthcare benefits include:
- Healthcare coverage will continue for affected employees for at least six months or when they remain eligible for SUB pay, whichever period is longer. Afterward, they can extend coverage for another 12 months at their own expense.
- Weekly Indemnity benefits are available for employees who become disabled while on layoff, up to 26 weeks, if eligibility requirements are met. These benefits are available for the same duration as SUB pay.
- Employee Assistance Program (EAP) services offer employees and their household members access to therapy sessions, both in-person and virtual, throughout their recall rights period.
Deere's leadership has recently communicated with News8 that increased operational costs and decreased market demand necessitate comprehensive changes across the enterprise to align with its goals and strategically position the company for the future.
