Donnelle Eller, Des Moines Register
Fri, June 3, 2022
Farm and construction equipment manufacturing giant Deere & Co. said Thursday it's moving tractor cab production from its Waterloo plant to Mexico, given a tight labor market and the need to make way for new products at the northeast Iowa plant, its largest.
The company said it plans to transfer the operations to its components plant in Ramos Arizpe, Mexico, in 2024.
"The decision to move cab production ensures the company can balance workforce needs within the tight labor market, while also ensuring Waterloo can open up floor space to manufacture new products," the company said in a statement.
Deere declined Thursday to say what kind of new products might be produced at the Waterloo plant.
The number of employees affected will depend on production volumes and employee attrition over the next two years, as well as new product program needs, the statement said.
More: John Deere introduces Iowa-built driverless tractor, touted as the next revolution in agriculture
Without attrition, about 250 workers could lose their jobs. The plant employs about 1,500 people, including 1,100 production workers.
Leaders at United Auto Workers Local 838, which represents about 3,000 workers in the Waterloo metro area, many of them Deere employees, could not be reached for comment Thursday.
Any possible job loss, especially high-paying positions like those at Deere, worries Iowa Rep. Ras Smith, a Democrat who represents Waterloo.
"It's disappointing to see jobs leave the state, let alone the country," Smith said.
Deere is a major Waterloo and Iowa manufacturing employer. Based in Moline, on the Illinois side of the Quad Cities, it has more than 6,600 workers in Iowa, with large plants in Ankeny, Davenport, Dubuque, Ottumwa and Paton, in addition to Waterloo.
Smith, who's not seeking reelection, said Deere has provided many Iowa families, including his own, a pathway to a better life.
"Many of us grew up playing with green tractors because our moms and dads worked there," said the lawmaker, whose father, L.C. Smith, worked 43 years for Deere before retiring.
"It's helped a lot of families move into middle class," he said.
He said he hoped the UAW's five-week strike at Deere plants last fall played no role in the company's decision.
MORE: John Deere employees approve third contract proposal, ending their five-week strike
About 10,100 striking UAW members shut down production in Iowa, Kansas and Illinois before workers approved a new six-year contract in November. They had rejected two earlier offers in the largest labor action in Iowa in decades.
Union members gained improved hourly wages and retirement benefits. At the low end of the pay grade, workers earn about $22 an hour, and at the top end, they're paid $33.
Deere said in an email that the strike — the first at the company since 1986 — was not a factor in its decision.
Access to a ready supply of workers was likely a key concern in Deere's decision to shift production, said Peter Orazem, an Iowa State University labor economist.
A year ago, Deere said it would hire dozens of workers at its Iowa plants if the company could find them, given booming farm and construction economies and increased equipment demand.
Orazem said the percentage of Iowans willing to work has failed to recover at the same rate as the nation's since the 2020 global pandemic hit. Iowa had roughly 61,000 fewer people either working or looking for work in April compared to October 2019, U.S. Bureau of Labor statistics show.
In that month, before the COVID-19 pandemic, Iowa's labor participation rate was at a decade high of 70.6%, compared to 67.4% in April.
Iowa's unemployment rate was 3% in April, 15th in the nation, when the overall U.S. unemployment rate for the month was 3.6%.
Iowa employers have looked to immigrants to help boost a workforce that skews older than the nation's, Orazem said. But that's been difficult, both because of COVID-19 restrictions on movement of people and goods across borders and tighter U.S. immigration policies.
Smith, the state lawmaker, said Iowa also may not seem welcoming to workers, with a new law that reduces unemployment benefits and restrictive social legislation, such as another new law that forbids participation by transgender girls in female school sports teams. "Parents aren't going to want to come here if they have a trans daughter or son," he said.
He said Iowa will need to work harder to attract workers to the state or face the possibility that more companies may look to move operations.
"The pool of workers is shrinking. That doesn't bode well for companies that want to expand," he said.
But Debi Durham, the Iowa Economic Development Authority's director, said a tight labor market is "not unique to Iowa."
"But we’re in a better position than most states. Our economy is growing and we’re seeing more people return to the workforce," Durham said in an email.
She credited Gov. Kim Reynolds for "turning our unemployment system into a re-employment system" as well as supporting worker training and businesses' adoption of technology that improves productivity.
This article originally appeared on Des Moines Register: Deere plans to move tractor cab production from Iowa to Mexico in 2024
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