Deere Moving Portion of Its Loader Production to Mexico, Signals New Layoffs (2024)

CHELSEA, Ala. (DTN) -- Deere & Company has announced plans to purchase land in Ramos, Mexico, for the construction of a new facility that will produce mid-frame skid steer loaders and compact track loaders.

It is a new manufacturing capacity that will be relocated from its Dubuque (Iowa) Works production facility. Deere expects the new facility in Ramos to be operational in 2026. The number of U.S. employees affected has not yet been announced.

"Friday's announcement at Dubuque Works reflects John Deere's commitment to evolving its business model, products, and processes to address rising manufacturing costs and improve operational efficiencies," Deere stated in a news release. "This includes optimizing our factories for future products, making our operations more efficient, and taking advantage of locations in the U.S. and globally, with a growing labor force."

The move adds manufacturing flexibility for John Deere's Construction & Forestry business by establishing a new, globally competitive manufacturing operation, Deere said. The company expects to begin ramping down production of the mid-frame skid steer loaders and compact track loaders in Dubuque in early 2026. Dubuque Works will continue to manufacture large-frame skid steer loaders and compact track loaders; backhoes; utility, construction and production-class crawler dozers; crawler loaders; and knuckleboom loaders.

Two years ago, Deere announced it was moving its Waterloo, Iowa, tractor cab production line to Ramos. Deere wanted to complete that move by this year. The company has not commented on the progress of that manufacturing move.

In Ramos, Deere already operates plants for the manufacture of hydraulic cylinders, front loaders for agricultural and utility tractors, as well as components.

Deere's announcement of the new Ramos facility is more bad news for Deere employees in Iowa. So far this year, Deere has announced plans to lay off 650 Iowa employees there. The most recent layoffs were announced on May 20, affecting 192 employees. Their last day at Deere is June 21.

Expect more layoffs to come, Deere said.

A statement last Friday signed by Deere CEO John May and other top executives said: "We are committed to our strategy and are investing in our top priorities to achieve these goals. However, our economic reality and that of our customers has changed. Rising operational costs and declining market demand mean that we must make enterprise-wide changes in how work gets done to achieve our goals and best position the company for the future."

The release said cost-cutting measures already in place include a hiring freeze and adjustments in production and inventory levels. But further actions are necessary, Deere said, including:

-- Aligning Deere's workforce to its strategic priorities while simplifying the organization and reducing overlap and redundancy in roles and responsibilities.

-- Ensuring Deere factories are optimized for future products and are operating more efficiently across Deere's global footprint.

-- Eliminating low- and non-value-added tasks, activities, and expenses.

"Unfortunately, this means parting with some of our talented and dedicated colleagues across our global production and salaried workforce," the company stated in the release.

In the release, May said he anticipates Deere will finalize adjustments to its salaried workforce by the end of its third quarter. Deere's fiscal year begins Nov. 1.

The global economy has had an impact on Deere's income, its sales performance and its more than 82,000 employees. High interest rates and declining U.S. farm income are also affecting the company.

USDA forecasts that farm sector income will continue to fall in 2024 after reaching record highs in 2022. Net farm income rose to $185.5 billion in calendar year 2022 but fell to $155.9 billion in 2023. Net income is forecast to be $116.1 billion this year.

Those numbers are reflected in Deere's performance. In its second-quarter 2024 financial statement released in May, Deere reported worldwide net sales and revenue were down 12% in the second quarter of this fiscal year, compared to sales during the same quarter a year ago.

Net sales in Deere's production and precision agriculture segment declined 16% in the second quarter of 2024 compared to the second quarter of 2023. Deere is projecting net sales in its production and precision ag segment to be down 20%-25% for all fiscal year 2024 with declines in sales projected across nearly all its markets -- U.S., Canada, Europe and South America.

Net income attributable to Deere & Company for fiscal 2024 is forecast by the company to be approximately $7.0 billion. That's compared to $10.166 billion in fiscal 2023 and $7.131 billion in fiscal year 2022.

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

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