More than 10,000 production and warehouse workers at 14 John Deere plants in Iowa, Illinois, Kansas, Colorado, and Georgia walked off the job at midnight on Oct. 14 after the Moline, Ill.-based company failed to reach an agreement with United Auto Workers by the union’s midnight deadline.
The 10,000 unionized workers on Oct. 10 had rejected a tentative agreement by a 90 percent margin. Earlier, the workers, represented by nine locals with the United Auto Workers, voted 99 percent in favor of a strike authorization in September after receiving the initial six-year contract proposal from John Deere.
At issue are disputes over wage increases for employees after Deere & Co. posted a record $4.7 billion in profit this year and the company’s CEO compensation jumped, Bloomberg reported, creating a perception among its unionized workers that the company is holding out on wages and benefits. The rejected contract proposal would have given five percent wage hikes for some workers and a six percent boost to others.
“After weeks of negotiations, John Deere reached tentative agreements with the UAW that would have made the best wages and most comprehensive benefits in our industries significantly better for our employees,” said Brad Morris, Vice President of Labor Relations for Deere & Company, in an Oct. 10 statement. “John Deere remains fully committed to continuing the collective bargaining process in an effort to better understand our employees’ viewpoints. In the meantime, our operations will continue as normal.”
Thursday’s walkout marks the largest UAW strike since 49,000 General Motors workers walked off the job in September and October 2019, Bloomberg reported. The 10,000-worker estimate also makes it the ninth largest UAW strike since 1985, according to Bloomberg Law data.
The strike has raised concerns among farmers about whether they will have access to machinery and parts for the fall and into next year, the Des Moines Register reported. The strike also gained the attention of prominent politicians.
“Profits at John Deere have skyrocketed by some 61 percent in recent years, while its CEO’s salary has exploded by 160 percent since the start of the pandemic,” Sen. Bernie Sanders (I-Vt.) tweeted on Oct. 14. “Please do not tell me they cannot afford to pay their workers fairly.”
The jump in John Deere CEO John May’s earnings that Sanders referenced amounted to $15.6 million in 2020, compared with $6 million in 2019, Bloomberg reported. Nearly $7 million came from stock awards, according to Bloomberg data, with the company’s share price rising 39 percent over the last year.
John Deere executives in a statement pledged to maintain operations while negotiations continued. “We are determined to reach an agreement with the UAW that would put every employee in a better economic position and continue to make them the highest paid employees in the agriculture and construction industries,” said Morris.
“These are skilled, tedious jobs that UAW members take pride in every day,” Mitchell Smith, a regional director for the union, said in a notice announcing the strike. “Strikes are never easy on workers or their families, but John Deere workers believe they deserve a better share of the pie, a safer workplace, and adequate benefits.”
While Deere shares fell as much as 2.6 percent on Oct. 14, the company isn’t expected to see any meaningful headwinds to its profitability due to the strike, according to Jefferies analyst Stephen Volkmann, cited by Bloomberg. Volkmann said the impact of the strike could be moderated by the fact that Deere, along with the rest of the industrial economy, is experiencing supplier and logistics bottlenecks that can limit production.
Bloomberg reported that William Blair’s Nicholas Heymann also said that while there will be pressure on Deere to resolve the strike, from a commercial perspective, a shorter- to medium-term strike may not structurally impact its market share, because the overall market is so short of inventory that it is unlikely a competitor will be able to fill any void in the near term.
Edward Jones’ Matt Arnold also said he does not expect the strike or any resulting wage increase to impact the long-term outlook for profitability for the company, Bloomberg reported.