Legacy tractor maker John Deere has announced layoffs at three Midwestern facilities as the company grapples with declining sales and the effects of tariffs on its bottom line.
“The struggling ag economy continues to impact orders for John Deere equipment,” the company said in a media statement regarding the layoffs. “This is a challenging time for many farmers, growers and producers, and directly impacts our business in the near term.”
Newsweek has contacted John Deere for further comment via email.
Why It Matters
While the full implications of tariffs on the U.S. economy are still being established by economists and lawmakers, representatives of the agricultural sector have warned that the new duties could increase their costs and threaten footholds in key export markets. As John Deere, whose products are primarily aimed at farmers, said in its announcement, difficulties in the agricultural sector will continue to ripple through its operations and finances.
What To Know
The layoffs were first disclosed in a series of Worker Adjustment and Retraining Notification (WARN) notices that were later proved to be erroneous. However, John Deere later confirmed that there would be layoffs affecting 238 workers across three factories:
- Harvester Works in East Moline, Illinois: 115 workers. Last day of work August 29.
- Seeding and Cylinder in Moline, Illinois: 52 workers. Last day of work September 26.
- Foundry in Waterloo, Iowa: 71 workers. Last day of work September 19.
John Deere said the workforce reductions were due to “decreased demand and lower order volumes.”
On Friday, the company released its third-quarter results, which showed a 26 percent year-over-year drop in net income to $1.3 billion and a 9 percent decline in net sales and revenues to $12 billion. In a subsequent earnings call, the company attributed many of these difficulties to lower commodity prices and the effects of tariffs.
“Tariff costs in the quarter were approximately $200 million, which brings us to roughly $300 million in tariff expense year to date based on tariff rates in effect as of today,” said Director of Investor Relations Josh Beale.
Beale added that John Deere’s forecast for the pretax effect of tariffs in the current fiscal year was now “nearly $600 million.” This compares to a previous forecast of $500 million. Beale said the “primary drivers” of this increased estimate were increased tariff rates on the European Union and India, as well as the tariffs on steel and aluminum imports that the Trump administration increased to 50 percent on June 4.
U.S.-based competitors AGCO and CNH Industrial likewise saw sales weaken during the period, both also pointing to muted industry demand and the effect of tariffs.
However, these effects have not proved to be economy-wide. According to recent analysis by Goldman Sachs strategists, cited in Bloomberg, aggregate second-quarter earnings per share for companies in the S&P 500 are up 11 percent from 2024, surpassing expectations of a 4 percent gain.
John Deere has unveiled plans that could mitigate some of the tariffs’ effects. Earlier this year, the company announced that it would invest $20 billion into its domestic manufacturing capabilities over the next decade.
What People Are Saying
Josh Beale, the director of investor relations at John Deere, said: “Recent ag policy legislation has been positive and potential developments in trade agreements and demand for renewable fuels could also be supportive. However, until there’s more stability in the industry, we’d expect customers to continue to take a measured approach to capital investment.”
The White House, reacting to the Goldman Sachs report on S&P 500 earnings, said: “Under President Donald J. Trump’s bold pro-growth policies, American businesses are thriving like never before—shattering earnings forecasts and propelling the stock market to continued record highs.”
CFRA Research analyst Jonathan Sakraida, quoted in Reuters, said: “Tariff uncertainty and deflated commodity prices have made farmers increasingly cautious in spending decisions and more hesitant to accept higher machinery prices.”
What Happens Next
John Deere said employees affected by the layoffs were eligible to be recalled to their home factories and would be entitled to receive employment and health care benefits depending on their length of employment.
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