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John Deere paralyzed by biggest strike in 35 years
More than 10.000 employees at XNUMX John Deere plants in the United States have been laid off for two weeks. It is the largest strike in more than thirty years. While the green-and-yellow giant is heading for its best financial year ever, according to them, employees are getting off to a bad start. That goes down the wrong way.
The last time Deere & Co had to deal with such a major strike was in 1986. It ended up lasting no less than five months. Whether that will be repeated remains to be seen. Work in fourteen factories has now been stopped for more than two weeks. They demand better pension conditions that have been massively rejected by the workers.
The drop
The meager salary increase and meager retirement plan come at a very unfortunate time. Deere & Company is heading for its best financial year ever. Dividend per share rises 17% and CEO gets a raise of 160%. It was the proverbial last straw for 10.000 employees. The factories in Europe are not affected. These are factories in Iowa, Illinois and Kansas where all kinds of parts and machines are made.
The previous agreement that the UAW union made with Deere in 2015 came with the heels over the ditch. Many employees were very dissatisfied at the time. The new proposed contract could count on even less support. No more paid overtime, no salary scale based on years worked and 20% personal contribution for health care (still free). Negotiations got off to a bad start with this package and the situation has not improved since then. An employee says in the American press that she has an annual salary of $20.000 (€17.170) even though she has been working there for ten years.
Office staff on the line
Employees who are not affiliated with the union, and who often work in the office, are now deployed to man the production lines. The global agricultural machinery industry is facing huge shortages and production backlogs due to the coronavirus. A all out strike is the last thing John Deere needs right now. Moreover, the harvest is in full swing. The company is therefore trying to keep the parts supply and service department running.
The union and Deere are now negotiating the demands again. That has to happen quickly because on October 31, the financial year for Deere & Co ends. The union had hoped to reach a deal before the financial year 2022. The chances of this happening now are minimal. UAW has more than $700 million in its war chest to continue paying its members' salaries. What strengthens their case is that there is a large labor shortage in the industry. Deere & Co simply cannot do without their people. There is a price tag on that.
Share value rising
Remarkably enough, the share price of Deere & Co has recovered quite nicely. Just before the strike, it hit its lowest level since mid-June. In August and September, the price recovered strongly after it used 2020 to appreciate sharply. Since the low in March 2020, the price has increased in value by 164%. Investors see Deere as a 'safe haven' and stable factor in these turbulent corona times.
What John Deere customers will notice from the strikes is still uncertain. At the very least, it means that deliveries of tractors, harvesters and implements will be further delayed. According to insiders, the delivery time in our country is now about nine months for a new tractor.
Production issues
The other two full-liners in the 'big three' of the agricultural world (CNH Industrial and Agco) also have to take draconian measures because of the parts shortage. CNH Industrial (the parent company behind New Holland, Case IH and Steyr) closed its doors in Europe for eight days in mid-October. A shortage of semiconductors is the direct cause of this. Agco also has problems with parts deliveries. Tires in particular are a problem, but also the aforementioned semiconductors and microchips.
Niels van der Boom
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