Equipment manufacturers John Deere and AGCO have reduced their workforces in the past few weeks as the agricultural economy slowdown triggered cost-cutting measures.
John Deere, the largest worldwide farm equipment manufacturer by revenue, began laying off employees at three production facilities, according to a statement from the company provided to Equipment Finance News.
The layoffs will be effective Aug. 30, according to the statement, and include:
- About 280 of the approximately 2,200 employees at John Deere Harvester Works in East Moline, Ill.;
- About 210 of the approximately 1,390 employees at John Deere Davenport Works in Davenport, Iowa; and
- About 100 of the approximately 2,700 employees at John Deere Dubuque Works in Dubuque, Iowa.
The company also developed a plan for the laid off employees to return in some capacity, according to the statement.
“Employees are eligible to be recalled to their home factory for a period equal to their length of service,” the statement said. “Those laid off are automatically placed in seniority order for openings they are qualified to perform at the factory.”
The U.S. Department of Agriculture forecasted a 25.5% decline in net farm income for 2024 in February.
Deere’s earnings contribute to cuts
Deere’s decision to cut production and jobs follows an underperforming second quarter.
“As stated in our second-quarter earnings call, industry sales are expected to further decline in the back half of FY2024,” according to the statement. “To better position Deere to meet future demand, we continue to take proactive steps to reduce production and inventory.”
While the slowdown stands out as a concern, the agriculture industry remains profitable, Cory Reed, president of Deere’s worldwide agriculture and turf division, said during the company’s May 16 earnings call.
“Obviously, [inventory] slowed down when markets are uncertain and crops aren’t in the ground, but if you look at the fleet age, you look at the technologies that are coming, and you look at how customers are adopting those technologies trend-wise over time. We look at profitability coming down, but it’s still solidly profitable in the business,” he said. “We know that it pays to adopt these technologies, and we expect those used units to move into the market.”
Also during the call, Josh Rohleder, Deere’s manager of investor communications, spoke about slowing production to shield dealers from an inventory glut.
AGCO projects 6% cut in salaried workers
AGCO launched a restructuring program that makes cuts in several areas to improve its financial performance and streamline operations, according to the company’s June 24 8-K filing with the Securities and Exchange Commission.
“The initial phase of the program is focused on further reducing structural costs, streamlining the company’s workforce and enhancing global efficiencies related to changing the company’s operating model for certain corporate and back-office functions and better leveraging technology and global centers of excellence,” according to the filing.
The first phase expects to result in a 6% reduction in AGCO’s salaried workforce by Dec. 31, 2023. While the number of salaried employees remains unknown, the workforce as of Dec. 31, 2023, totaled 27,900 workers worldwide, according to the filing.
The company projected termination costs of between $150 million and $200 million, with most coming by the end of the first half of 2025, according to the 8-K filing.
AGCO could not be reached for comment.
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