Deere Strike Set to Continue as Workers Reject Second Contract Offer

Deere employees continued their three-week-old strike on Wednesday after they voted to reject a second contract reached between the U.S. equipment manufacturer and the United Auto Workers (UAW) union that bumped up wages and bonuses.

Union workers returned to the ballot box Tuesday to reject the second contract proposal pieced together by negotiators and Deere & Co. officials. Nationally, UAW members voted down the tentative agreement with 45% for and 55% against. Members of the Waterloo–based Local 838 shot down the offer with 71% voting “no” to 29% “yes.” The labor agreement impacts 10,100 workers at 14 Deere facilities. The union directed workers to report for strike duty as scheduled.

“Deere would have invested an additional $3.5 billion in its employees through agreements reached with UAW,” said Deere Chief Administrative Officer Marc Howze. The company has forecast net income between $5.7 billion and $5.9 billion this year.

The world's largest farm equipment maker added it will execute the next phase of its "Customer Service Continuation Plan".  The company did not immediately elaborate on the details.

Deere has already implemented "cross-training" (salaried employees in production) to mitigate the loss of output due to the strike, according to a person familiar with the situation.

Reactions to the proposed contract from UAW voters leaving the polling place were mixed. “They are dangling a carrot,” said one woman who voted against the contract.

Another worker, a 13-year veteran from Waterloo, said the contract was a step in the right direction, but it still didn’t make the cut. “I’d say we’re are going on the right path. I think the problem is everybody is thinking they are going to get the post-retirement health care, and you got to be honest. That was given away, and that’s something you’re not getting back,” he said. Over 30 years have passed since Deere’s last strike, a labor dispute that lasted five months and cost the company $100 million.

Jen Hartmann, Director of Public Relations for Deere, said the tentative agreement was reached after weeks of negotiations and that it “honors our commitment to work with our employees to provide them with economic progress and a rewarding career.”  Some highlights provided by Deere:

• The typical production employee’s annual wages all-in would increase from $60,000 today under the terms of the current contract to nearly $72,000 by the end of the tentative agreement. This is the equivalent of an hourly increase from about $33 per hour to nearly $40.
• Production and maintenance employees would retain precisely the same healthcare benefits.
• While healthcare costs are expected to rise from $12 to $17 per hour over the contract term, employee healthcare costs would not go up.
• The tentative agreement is providing an entirely new retirement bonus and cash balance pension benefit. The typical employee would receive these new lump sum payments totaling nearly $134,000 at the end of a full career.

Some Iowa farmers have serious concerns about the potential parts shortages from the strike, but Jeff Frank, who grows corn and soybeans near Auburn in western Iowa, said many farmers prepared for harvest by acquiring parts in advance. “They told us before this to have stuff that you need on hand,” said Frank, who has already harvested his crops. “I don’t think it’s a real serious problem. Some guys are having to go a long way to get parts, but that was happening before the strike.”

EDITOR’S TAKE:

It is unfortunate for all parties that an agreement could not be reached. Whether it is the union members, Deere management, Deere dealers or even the farmers who own Deere equipment, there are no real winners as this drags on. Even company stockholders will be impacted by this action. We continue to trust that a resolution will be reached sooner than later. Let’s hope the third time is a charm!