Deere Announces More Layoffs

CHELSEA, Ala. (DTN) -- John Deere is announcing new layoffs amid sharp declines in equipment sales. Poor sales are not unique to Deere, a new equipment sales report shows.

Deere detailed its most recent actions in a statement released to television station KWQC in Davenport, Iowa. Here is a portion of that statement:

"Due to reduced demand for our equipment, John Deere has informed employees at three of its facilities in the Quad Cities of upcoming layoffs effective Jan. 3. These include:

-- John Deere Harvester Works in East Moline, Illinois: About 200 production employees.

-- John Deere Davenport Works in Davenport, Iowa: About 80 production employees.

-- John Deere Seeding and Cylinder operations in Moline, Illinois: Seven production employees."

Deere's Harvester Works employs 1,880; its Davenport Works counts 1,024 total employees; and Deere's Seeding and Cylinder operations currently has about 625 total employees.

Deere has laid off more than 2,000 production and salaried employees over the past year.

"It is important to note," Deere stated in its release, "(that) these layoffs are due to reduced demand for the products produced at these facilities. They are not related to production moves. As we have repeatedly stated, layoffs this fiscal year are due to the weakening farm economy and a reduction in customer orders for our equipment."

Deere reported net sales and revenue for its third quarter (which ended July 28) were down 17%, or $13.15 billion, compared to $15.8 billion at the end of its third quarter in 2023.

Deere's net income was down 42% during the third quarter of 2024, compared to the same quarter last year. For the first nine months of this year, Deere is reporting that its net income is down 25% compared to the same nine months in 2023.

All this, Deere reported in July, is the result of a soft ag economy and resulting soft sales. For example, early orders for planters and sprayers are off by double-digit percentages.

Deere's third-quarter results for production and precision agriculture sales were similarly off. Net production and precision ag sales were down 25% from the third quarter of 2023. Deere reported that its ag operating profit was down 35% in the quarter, compared to the third quarter 2023.

For the year, Deere is projecting net income of $7 billion, down from $10.166 billion in 2023. Deere has scheduled its fourth-quarter earnings call for Nov. 21.

SALES DOWN INDUSTRY WIDE

Deere is not alone in documenting sales declines. In its September 2024 Ag Tractor and Combine Report, the Association of Equipment Manufacturers (AEM) reports no good numbers.

Two-wheel-drive tractor sales were down 19.3% compared to September 2023, according to the report. And two-wheel-drive sales are down 13.6% for 2024 compared to the first nine months of 2023. Similarly, four-wheel-drive tractor sales were down 15% in September compared to September 2023 and up only 1.7% for 2024 compared to the first nine months of 2023.

Combine sales are down a sharp 40.7% in September compared to September 2023 and down 21.5% for the year compared to first nine months of 2023.

"September's sales of ag tractors and combines follows a summer that showed a cyclical slowdown in sales," said AEM Senior Vice President Curt Blades. "These declines point to the overall softness in the ag economy."

Deere blames the weak farm market for the layoffs and its financial standing. Among them:

-- USDA forecasts major row-crop cash receipts to be down 18% in 2024.

-- USDA also forecasts marketing-year average prices for the new crop to decline from last year.

-- Despite interest rate reductions, the current interest rate level remains elevated.

Deere was quick to point out that its most recent employee reduction was due to the economy, not a result of its decisions to move cab assembly and some models of its mid-frame skid steer loader and compact track loader production to Mexico.

Deere reported that more than 75% of all John Deere products sold in the U.S. are assembled at U.S.-based manufacturing facilities. Less than 5% of John Deere's U.S. sales are assembled in Mexico.

Deere this week also reported a $13.5 million expansion of its John Deere Reman Core Center facility by an additional 120,000 square feet. The expansion will break ground in mid-2025 and be completed in 2026. John Deere Reman, Strafford, Missouri, remanufactures parts and components.

John Deere also pointed out that it has committed since 2019 to spending $2.5 billion to enhance its U.S. manufacturing facilities, including a new 9RX 830 tractor line in Waterloo, Iowa, a new See & Spray Sprayer line in Des Moines, Iowa, and the X9 Combine assembly line in East Moline, Illinois.

In the U.S., John Deere employs approximately 30,000 people in more than 60 facilities across 16 states. John Deere dealers employ another 50,000 people.

Dan Miller can be reached at dan.miller@dtn.com

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