According to the agriculturedive.com, the company notified 500 employees that their jobs would be cut at its manufacturing plant in Waterloo, Iowa, since March this year.
In an email to the website, a spokesperson for the company confirmed that management had informed a further 190 production workers at the Waterloo operation that they would be laid off on 20 May.
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This announcement was made just days after the company lowered its outlook for its 2024 earnings, which was thought to better reflect declining demand. This was communicated during an earnings conference call between the company, analysts, investors, and the media to discuss Deere’s financial results.
The company stated that it was intentionally slowing down production output “as high interest rates was making it difficult for farmers to finance tractors, lawnmowers and other farming equipment”.
Agriculturedive.com reported that some of the company’s largest tractors were manufactured at the Waterloo plant, including the 7, 8 and 9 series models, as well as diesel engines and drive trains.
“Currently, Deere has about 5 200 employees, with about 3 300 working on production and maintenance jobs in the city,” the website said.
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The company had also recently laid off 150 workers from its Des Moines Works facility, as well almost three dozen from a plant in Illinois.
Speaking during the conference call, company executives said equipment sales had totalled US$13,61 billion (about R250 billion), reflecting a 15% decline, over the past year.
“In response to growing levels of retail inventory, Deere will strategically underproduce machinery in the second half of the year,” the executives said.
Josh Jepsen, Deere’s senior vice president and chief financial officer, said that although operating margins were at healthy levels, there was “always opportunity to do better, and we’ll continue to take action on costs throughout the remainder of the year while still investing in our future”.
In addition to high interest rates, volatile weather and other factors were weighing on demand for tractors and lawnmowers, the company said.
Agricultural companies had encountered challenges during the first quarter of the year as farmers delayed planting due to weather concerns, which resulted in many producers cutting back on discretionary spending on almost everything ranging from pesticides to machinery, the website said.
“Uncertainty has caused a decline in farmer sentiment. As a result, we are seeing a softer retail environment today than we did just six months ago,” Josh Beal, Deere’s director of investor relations, said during the conference call.
“Deere expects declining demand to continue throughout the year, leading to a US$750 million (R1,34 billion) downward revision to its full-year outlook.”
Following the earnings update, Deere shares fell nearly 5%.
