Deere Workers Go on Strike as UAW, Company Fail to Reach Deal

Joe Deaux, Sybilla Gross and Kim Chipman
Thu., October 14, 2021


(Bloomberg) -- Thousands of workers at Deere & Co., the world’s biggest farm machinery maker, began picketing Thursday for the first time in more than three decades to demand better pay as the company heads for its most profitable year ever.

Representatives from the company and the United Auto Workers union failed to reach an agreement over a new labor contract, which ignited the strike around midnight Chicago time. Workers rejected a tentative agreement calling for a 5%-6% wage increase for this year, and are also demanding better health benefits.

The move comes amid a labor shortage in the U.S., and as pandemic-induced chaos in global supply chains upends business as usual for manufacturers. But Deere stands out because it’s enjoying boom times despite the challenges. Its shares have risen 38% in the past year amid a rally in crop prices that buoyed farmer earnings and demand for tractors. The company is set to enjoy its most successful year ever, with Wall Street analysts predicting record earnings minus items.

During leaner times, employees made concessions to the company, the union said. Now it’s time for the company to pay them back.

The 10,000 Deere employees, or about 14% of the workforce, are on strike “for the ability to earn a decent living, retire with dignity and establish fair work rules,” Chuck Browning, a vice president at the union said in a Facebook post.

White House press secretary Jen Psaki said she wouldn’t speak to individual labor actions but said the president supported union workers and called the right for workers to organize and strike a “fundamental right.” Democratic Senator Bernie Sanders tweeted his support for the workers.

Analyst Downgrade

The dispute may not end quickly. Evercore ISI downgraded the company’s stock on Thursday, citing risks for a prolonged fight. Shares rose 0.2%, trailing a 1.7% surge in the S&P 500 Index.

The strike isn’t happening in a vacuum. U.S. workers have been seeking better compensation broadly amid labor shortages. Employees at Kellogg Co. cereal plants went on strike last week.

The timing of the strike is also significant. It’s coming in the middle of the North American harvest. While that is a period of weaker production for Deere, it could disrupt the harvest if farmers experience equipment breakdowns and Deere is unable to respond speedily.

A work stoppage beyond a few days may make it tougher to get hold of replacement parts if equipment breaks during the harvest, according to Brian Strasser, a manager at Sinclair Tractor in Kalona, Iowa.

“Even though farmers are very resilient, if something breaks now, rather than taking hours it could take days to fix,” Strasser, who also farms corn and soybeans in East Central Iowa, said by phone.

The last time Deere employees went on strike was in 1986 for 163 days. The impact to financial results for the company will depend on how long it takes for both sides to reach an agreement, according to Matt Arnold, an analyst at Edward Jones. Arnold wrote in a note to clients on Thursday there likely will be a temporary affect to Deere’s operations as they will be less efficient.

Stephen Volkmann, an analyst at Jefferies LLC, said labor accounts for about 15% of Deere’s costs.

“We are determined to reach an agreement with the UAW that would put every employee in a better economic position and continue to make them the highest paid employees in the agriculture and construction industries,” Deere’s vice president of labor relations Brad Morris said in a statement. He added that the company would keep operations running while negotiations continued.

Deere & Co. workers go on strike after rejecting contract



Thu., October 14, 2021

MOLINE, Ill. (AP) — More than 10,000 Deere & Co. workers went on strike Thursday, the first major walkout at the agricultural machinery giant in more than three decades.

The union had said its members would walk off the job if no deal has been reached Wednesday. The vast majority of the union rejected a contract offer earlier this week that would have delivered 5% raises to some workers and 6% raises to others at the Illinois company known for its green tractors.

“The almost one million UAW retirees and active members stand in solidarity with the striking UAW members at John Deere," UAW President Ray Curry said.

Brad Morris, vice president of labor relations for Deere, said the company is "committed to a favorable outcome for our employees, our communities and everyone involved.” He said Deere wants an agreement that would improve the economic position of all employees.

“We will keep working day and night to understand our employees’ priorities and resolve this strike, while also keeping our operations running for the benefit of all those we serve,” Morris said.

Thirty-five years have passed since the last major Deere strike, but workers were emboldened to demand more this year after working long hours throughout the pandemic and because companies are facing worker shortages.

“Our members at John Deere strike for the ability to earn a decent living, retire with dignity and establish fair work rules,” said Chuck Browning, vice president and director of the UAW’s Agricultural Implement Department. “We stay committed to bargaining until our members’ goals are achieved.”

A handful of workers began forming a picket line outside the company's plant in Milan, a town in western Illinois near the Iowa border, about 15 minutes after strike deadline.

The union dropped off a metal barrel and firewood to keep workers warm in preparation for a demonstration that is expected to continues for 24 hours a day, the Quad-City Times reported. Workers began picketing at several other Deere plants — including at its large operation in Waterloo, Iowa — Thursday morning around when the first shift would normally arrive.

Chris Laursen, who works as a painter at Deere, told the Des Moines Register before the strike that it could make a significant difference.

“The whole nation’s going to be watching us,” Laursen said to the newspaper. “If we take a stand here for ourselves, our families, for basic human prosperity, it’s going to make a difference for the whole manufacturing industry. Let’s do it. Let’s not be intimidated.”

Under the agreement that the workers rejected, a top scale Deere production worker would make just over $30 per hour, rising to $31.84 after five years, according to summary of the proposal.

Creighton University economist Ernie Goss said workers have a lot of leverage to bargain with right now because of the ongoing worker shortages.

“Right now across the U.S., labor is in a very good strong position to bargain, so now is a good time to strike,” Goss said.

Earlier this year, another group of UAW-represented workers went on strike at a Volvo Trucks plant in Virginia and wound up with better pay and lower-cost health benefits after rejecting three tentative contract offers.

The contracts under negotiation cover 14 Deere plants, including seven in Iowa, four in Illinois and one each in Kansas, Colorado and Georgia.

The contract talks at the Moline, Illinois-based company were unfolding as Deere is expecting to report record profits between $5.7 billion and $5.9 billion this year. The company has been reporting strong sales of its agricultural and construction equipment this year.

Iowa State University economist Dave Swenson said those earnings give Deere the means to come to terms with workers.

“They can afford to settle this thing on much more agreeable terms to the union and still maintain really strong profitability,” Swenson said.

Swenson said the impact of the strike could spread further if companies that supply Deere factories have to begin laying off workers. So Deere will face pressure from suppliers and from customers who need parts for their Deere equipment to settle the strike quickly. And Swenson said Deere will be worried about losing market share if farmers decide to buy from other companies this fall.

“There is going to be a lot of pressure on Deere to move closer to the union’s demands,” Swenson said.

The Associated Press