Deere layoffs rooted in expected lower farm income
John Deere is laying off about 460 workers at its Waterloo tractor factory just a week after it said it would lay off more than 600 employees at factories in East Moline and Moline, Illinois, as well as Ankeny, Iowa, and Coffeyville, Kansas. Here's why the company says it needs to lay off workers and why it's significant for Iowa.
- The layoffs are in the farm equipment manufacturing division, as farm income is expected to drop this year on lower corn and soybean prices, discouraging farmers from buying expensive equipment. It reverses significant hiring in recent years as Deere saw sales grow because of increasing farm profitability. Deere said last week that operating profit from its agriculture and turf sales fell 30 percent in the third quarter from a year ago. Sales from that business in the U.S. and Canada are expected to be down 10 percent for the year.
- Iowa exported $1.2 billion worth of tractors and nearly $1 billion in other heavy equipment and parts in 2013 made by Deere and other manufacturers. Manufacturing jobs are 13.8 percent of the state's total employment and Deere is one of the state's largest manufacturing employers, so significant job cuts in the sector will have an economic impact.
-Deere has about 14,000 workers in Iowa, and a global workforce of about 67,000. Factories in Ankeny, Ottumwa and Waterloo are tied closely to the farm economy, while the Dubuque and Davenport plants make construction and forestry equipment, a sector that climbed 81 percent in operating profit in the third quarter, due in part to a rebounding housing industry. Sales in construction and forestry are expected to climb 10 percent this fiscal year.
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