Tr__p Tariffs, Manufacturing, and Labor – Farm Equipment
“John Deere Maintains Profits and Shareholder Value by Whacking Labor,” Angry Bear
August 13, 2024 and Kevin Baskins at the Des Moines Register reports on the Deere & Company layoffs across the state of Iowa. Layoffs happen when the economy turns down, companies make mistakes, or when a new competitor hits the market. Just about anything can prompt a company to cut labor. Easiest thing in the world to do with Labor even though a company may have to kick into the Iowa’s unemployment funding for its present 22,000 employees. Neither are there plans to move Deere outside of the North American continent. Technically, John Deere will remain in North America. However, it will open up a facility in Ramos, Mexico for production of mid-frame skid steer loaders and compact loaders.
Janet Yellen likes to call this type of move “friend-shoring.” I am sure labor would disagree with her.
Gov. Kim Reynolds in 2023 signed a revisionary law reducing unemployment benefits to 16 weeks from 26 weeks. The new law requires affected workers to accept lower-paying jobs sooner. The outcome for X-Deere workers more likely anyway as Deere is near the top of the wage scale for Iowa manufacturing employers. It is adding insult to injury as Labor is more than likely not the cause of the loss of business or lower profits.
Speaking of which . . .
“For the third quarter, Deere reported net income of $6.29 per share, compared with an estimate from analytics firm LSEG of $5.63, while net sales and revenue decreased 17% to $13.2 billion. CFRA Research analyst Jonathan Sakraida . . .
‘Deere’s pricing power was reflected well in Q3 as price helped to dampen impacts from contracting volumes.’
Though sales in one of Deere’s agriculture segments, which includes larger farm equipment, fell 25% to $5.1 billion due to lower shipment volumes, the impact was partially offset by better pricing.
Deere said it expects an improved favorable price realization in its agriculture segments in 2024 compared to its previous targets. CEO John C. May . . .
‘In response to weak market conditions, we have taken steps to reduce costs and strategically align our production with customer needs.’”
AB: Fast forward to August 2025, About one year later. What was a labor cost issue has now migrated to a tariff issue as Tr__p plays with implementing them, changing the size of them and then reneges on them. Just enough uncertainty to play havoc with the economy and companies. Another lay off of labor. This time the result of Tr__p playing economist.
“Mass Layoffs at John Deere Follow Depressed Sales Caused by Trump Tariffs”
US President Donald Trump has pitched his tariffs on foreign goods as a way to bring more manufacturing jobs back into the United States.
However, it now appears as though the tariffs are hurting the manufacturing jobs that are already here.
As reported by Des Moines Register, iconic American machinery company John Deere announced on Monday that it is laying off 71 workers in Waterloo, Iowa, as well as 115 people in East Moline, Illinois, and 52 workers in Moline, Illinois. The paper noted that John Deere has laid off more than 2,000 employees since April 2024.
In its announcement of the layoffs, the company said that “the struggling [agriculture] economy continues to impact orders” for its equipment.
“This is a challenging time for many farmers, growers, and producers, and directly impacts our business in the near term,” the company emphasized.
According to The New Republic, Cory Reed, president of John Deere’s Worldwide Agriculture and Turf Division, said during the company’s most recent earnings call that the uncertainty surrounding Trump’s tariffs has led to many farmers putting off investments in farm equipment. He explained . . .
“If you have customers that are concerned about what their end markets are going to look like in a tariff environment, they’re waiting to see the outcomes of what these trade deals look like.”
Josh Beal, John Deere’s director of investor relations, similarly said that “the primary drivers” for the company’s negative outlook from the prior quarter “are increased tariff rates on Europe, India, and steel and aluminum.”
AB: This is the risk you take when you source overseas can be in the sourced country, transportation longshoreman strikes, trucker strikes, bad weather, etc. Who would have thought Tr__p playing around with the economy using tariffs would come to pass. John Deer is not the only company in trouble.
The news of the layoffs drew a scathing rebuke from Nathan Sage, an Iowa Democrat running for the US Senate to unseat Sen. Joni Ernst (R-Iowa), who has praised the president’s tariff policies.
“John Deere is once again laying off Iowans—a clear sign economic uncertainty hits the working class hardest, not the CEOs at the top,” he wrote in a post on X. “Cheered on by Joni Ernst, Republicans in Washington want to play games with tariffs and give tax cuts to billionaires while Iowa families continue to struggle. It’s time to stop protecting the top 1% and fight for the working people who keep our economy strong.”
Rep. Jim McGovern (D-Mass.) also ripped Trump’s trade policies for hurting blue-collar jobs. He stated:
“Because of Trump’s tariffs, farmers can’t afford to buy what they need to make a living. Equipment manufacturers like John Deere have lost millions, but let’s remember working people are hit hardest by the president’s disastrous economic policies. Tired of ‘winning’ yet?”
John Deere is not the only big-name American manufacturer to be harmed by the Trump tariffs, as all three of the country’s major auto manufacturers in recent months have announced they expect to take significant financial hits from them.
Ford last month said that its profit could plunge by up to 36% this year as it expects to take a $2 billion hit from the president’s tariffs on key inputs such as steel and aluminum, as well as taxes on car components manufactured in Canada and Mexico.
General Motors last month also cited the Trump tariffs as a major reason why its profits fell by $3 billion the previous quarter. Making matters worse, GM said that the impact of the tariffs would be even more significant in the coming quarter when its profits could tumble by as much as $5 billion.
GM’s warning came shortly after Jeep manufacturer Stellantis projected that the Trump tariffs would directly lead to $350 million in losses in the first half of 2025.