John Deere announced it will lay off about 600 employees across three US factories as the Illinois-based company shifts production to a newly planned facility in Ramos, Mexico.
Effective August 30, about 310 employees will be laid off at two Iowa-based plants in Dubuque and Davenport, as well as 280 from a factory in East Moline, Illinois. In total, the three factories have roughly 4,175 production and maintenance employees. The Illinois factory primarily produces harvesting equipment such as combines, while the two Iowa factories manufacture construction and forestry equipment.
The decision is the latest in a string of production layoffs by the farm-equipment manufacturer over the past year. Deere has sought to reposition itself as a technology company amid falling agricultural revenue in the United States.
“These changes are being made due to reduced demand for the products produced at these facilities,” the company told CNN in a statement Friday. “To better position Deere to meet future demand, we continue to take proactive steps to reduce production and inventory.”
The company has reported slumping year-over-year revenue after announcing a net income of more than $10.16 billion in 2023. In a May earnings call, executives forecast Deere’s 2024 income will be about $7 billion, citing higher production costs, lower shipment volumes and volatile weather that has made customers more cautious in their purchasing decisions.
“We do expect incremental demand decline in the back half of 2024,” Josh Beal, the company’s director of investor relations, said in the May earnings call. “Notably, our production volumes will decline more than demand in the back half as we’re taking proactive steps to drive down field inventories. This is true for all of our major markets, South America, Europe, and also now for North America large tractors. We believe this approach best positions us to build the retail demand in 2025.”
Diminishing demand comes as US farming has faced significant headwinds over the past several years. According to the Department of Agriculture, in 2023 there were 1.89 million farms in the United States, a decline of 7% from the 2.04 million in 2017.
In February, the USDA forecast net farm income in 2024 will fall by $43 billion, about 27%, after reaching a record high in 2022. Crop and animal product sales are also expected to generate $21 billion less in revenue this year, according to the USDA.
At the same time, manufacturing jobs across the country have plateaued at 13 million employees after recovering from a sharp pandemic-related downswing in 2020, according to data from the Bureau of Labor Statistics. Specifically, machinery manufacturing, which include jobs that produce agriculture and construction equipment, has seen a decline of about 9,000 employees since the beginning of the year.
Read the full article here