CHELSEA, Ala. (DTN) -- Deere & Company announced early Wednesday morning employment cuts across its salaried employee workforce. After a delayed 15-minute virtual meeting with senior executives Wednesday morning, the two-century-old equipment manufacturer began informing affected employees by email that their time with Deere had come to an end.
As of late Wednesday afternoon, Deere had not disclosed how many employees were let go or from which facilities. The manufacturer already has laid off nearly 2,000 workers this year. Most worked at Deere production facilities in Iowa and Illinois, but the company also made cuts at its highly touted tech center, the Intelligent Solutions Group in Urbandale, Iowa.
Deere issued a statement on Wednesday addressing its reduction-in-force activities.
"As the largest global manufacturer of agricultural equipment, John Deere, like many others in our industry, faces significant economic challenges, rising operational and manufacturing costs, and reduced customer demand, including a 20% decline in sales from 2023 to 2024," the company stated. "This reduction in product demand and increased operational costs have unfortunately forced us to make tough decisions including layoffs at John Deere production facilities and reductions in our global salaried workforce."
Deere has offered severance packages to those affected by the layoff of up to 12 months based on years of service.
As a reason for the layoffs, Deere pointed to income declines both at Deere itself and among its farmer-customers.
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 May-released second-quarter 2024 financial statement, 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.
Deere pointed out that it has continued to make investments in production capacity. "Since 2019, John Deere has invested more than $2 billion in our American factories, including our new See & Spray line at Des Moines Works in Des Moines, Iowa; the X9 combine assembly line at Harvester Works in East Moline, Illinois; a new excavator factory in Kernersville, North Carolina; and new tractor line assemblies in Waterloo (Iowa)."
In the U.S., John Deere employs approximately 30,000 people in more than 60 U.S.-based facilities across 16 states.
Deere's stock price closed down a bit more than 2% on Wednesday, extending a generally downward direction over the last five days. Deere's third-quarter earnings call is scheduled for Aug. 15.
Dan Miller can be reached at dan.miller@dtn.com
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