Tyler Jett
Des Moines Register
Following the end of a five-week-long strike by the United Auto Workers on Nov. 17 that resulted in pay bumps and enhanced retirement benefits for the union employees, the company announced Tuesday that its salaried staff will receive 8% raises.
"The future success of our company depends on our ability to retain and recruit the best talent in an increasingly competitive global marketplace," spokesperson Jennifer Hartmann said in a statement. "To do that, we’re committed to putting every one of our employees in a better economic position."
When the UAW's production and warehouse employees went on strike Oct. 14, the company sent salaried staff like supervisors, engineers and financial services employees on to the floors.
More: UAW members won big gains in their strike of John Deere. Will other Iowa workers follow?
The company particularly focused on staffing the warehouses to keep parts shipments flowing to farmers with broken machines. Deere also put salaried workers in factories to make some higher-margin products, such as sprayers at the Ankeny plant.
The union workers returned to their old jobs as early as 10:30 p.m. on Nov. 17, about 2 1/2 hours after the UAW International announced that 61% of members ratified a new six-year contract with the company.
More: John Deere's new offer to striking UAW, explained: How new contract would change pay, retirement benefits and more
The contract gives workers an immediate 10% raise. Hourly wages for workers on the low end of the pay scale increased from $20.12 to $22.13. Among workers on the high end, such as electricians, the hourly pay went up from $30.04 to $33.05.
Deere also promised 5% wage increases in 2023 and 2025, as well as quarterly cost of living adjustments, an old element of the UAW contracts that the union conceded under the last deal in 2015.
The union received a better offer from the company after 90% of members rejected the first contract Oct. 10. At the time, Deere offered immediate 5% and 6% pay bumps, depending on the position. The company offered 3% increases in 2023 and 2025.
Workers received an $8,500 ratification bonus under the contract approved last week, up from an offer of $3,500 on Oct. 10.
More: Pandemic-era strikes at Deere, Kellogg echo labor movement's spate of strikes after World War II, experts say
Jefferies analyst Steve Volkmann projects that the first-year raises and the ratification bonuses cost Deere about $235 million. That amounts to 4% of the low-end of the company's projected profit for the fiscal year that ended Nov. 1.
Driven by high corn prices and a period of time in which many farmers needed to replace machines, Deere executives told analysts in August that they expect the company to earn $5.7 to $5.9 billion in the fiscal year — 62% above 2013 profits, Deere's previous record year.
The 10,100-worker strike across Illinois, Iowa and Kansas disrupted production. Executives will offer their first peek into how the walkout impacted Deere's bottom line Wednesday morning, when the company releases its annual report and shows how close it came to hitting its previous profit target.
But Wednesday's release will only show part of the strike's financial impact on the company. The walkout started with only two weeks left in the fiscal quarter.
Tyler Jett covers jobs and the economy for the Des Moines Register. Reach him at tjett@registermedia.com,
Deere climbs as end of monthlong strike eases sales concern
, Bloomberg News
Deere & Co. shares climbed the most in two weeks with the end of a monthlong strike at its U.S. plants easing concern about the company’s ability to supply farmers with equipment.
Late Wednesday, union workers United Auto Workers members voted 61 per cent to 39 per cent to ratify a new labor contract with the company, putting an end to their first strike since 1986. The deal will increase pay and boost retirement benefits over a six-year agreement. The union said the work stoppage “captured the mood of a nation” wanting fair wages and benefits for workers. The company said in a message that operations would resume Wednesday night with many reporting to the third shift.
The strike had thrown several of Deere’s businesses into turmoil. Software engineers and computer programmers left their desks to assemble sprayers and combines in manufacturing plants instead. Serious delays in replacement parts threatened farmers, who rely on functional machines and speedy repairs at the peak of harvest. Used farm equipment prices were hitting record highs amid shortages.
“What it does, ultimately, is reduce the uncertainty that was starting to emanate into the market,” Larry De Maria, an analyst at William Blair & Co., said in a phone interview. “Deere’s farming customers are clearly in need of parts and new equipment to be delivered as soon as possible.”
Deere shares rose as much as 3.5 per cent, the most since Nov. 1, and were up 2.2 per cent at 12:19 p.m. in New York. Deere outperformed the broader market, with the S&P 500 Index up 0.3 per cent.
The union action set “a new standard for workers not only within the UAW but throughout the country,” Chuck Browning, vice president of the UAW, said in a statement.
The agreement brings an end to the work stoppage that took some 10,000 workers off the job for just over a month. The last time Deere workers picketed 35 years ago, it lasted 163 days. The strike is part of a broader worker movement in the U.S. with employees successfully pushing for higher compensation as the economy emerges from a pandemic-induced slump.
The deal, which follows two other failed ones, is a six-year contract that will increase worker wages by 10 per cent in the first year and then 5 per cent in the third and fifth years. A 3 per cent bonus will be paid in the even years of the contract based on prior-year earnings, and each worker will receive an US$8,500 signing bonus.
There are still no adjustments to a contentious two-tier compensation system, in which workers hired after 1997 receive less generous benefits than those who started working there earlier.
The strike was squeezing the company. Last week it sent an email to gauge the interest of even more salaried information technology workers to volunteer in factories if the situation continued.
“It says a lot about the new determination and solidarity of John Deere workers that they have forced the company - and top UAW leaders and negotiators - to return to the bargaining table time and again to resolve the strike with a better contract,” said historian Nelson Lichtenstein, who directs U.C. Santa Barbara’s Center for the Study of Work, Labor and Democracy.
Nearly 30 years ago, Deere’s historic Midwest rival, Caterpillar, almost destroyed a union that picketed during a bitter battle.
“Those days seem past,” Lichtenstein said.
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