Economist: John Deere workers likely to prevail with strike

The 10,000 Deere & Co. workers who went on strike Thursday have a strong negotiating position and are likely to succeed in getting more pay and better retirement benefits in their next contract, predicted Dave Swenson, an economist at Iowa State University.

“They’re not striking from a position of weakness,” Swenson said. “From what I can tell, I don’t see how this strike lasts a long time.”

The company produces John Deere tractors and other heavy equipment and is synonymous with farming. Its union workers have been negotiating a new six-year contract for the past two months. But a tentative agreement was overwhelmingly rejected this week by United Auto Workers (UAW) union members. About 90% voted against it, the union said.

Subsequent negotiations failed to reach a new deal, and the workers’ strike began at midnight. Their current contract is set to expire Friday.

Under the rejected proposal, a typical production worker’s compensation would increase about 20% over the next six years, new employees would be eligible for health benefits after a month rather than seven months, and retirees would receive additional payments that would total more than $100,000, Deere & Co. has said.

It’s unclear what additional compensation and benefits are desired by workers to end the strike.

“Our members at John Deere strike for the ability to earn a decent living, retire with dignity and establish fair work rules,” said Chuck Browning, vice president of UAW. “We stay committed to bargaining until our members’ goals are achieved.”

The last Deere strike was in 1986 and lasted for about five months, which is a long strike by historical standards, Swenson said.

That strike yielded settlement bonuses, increases in retirement and pension benefits and better job security for workers in exchange for a wage freeze, according to the Quad-City Times. 

“In the longer run, the company prevailed,” Swenson said. “Workers were bargaining in 1986 from an extraordinary position of weakness, during a time when Iowa’s economy was just barely recovering from the farm crisis. If you got fired, there wasn’t another job to be had.”

This time, there is a shortage of skilled manufacturing workers, and Deere is set to post its largest single-year profit of nearly $6 billion. That haul is thanks to recent high commodity prices and a windfall in subsidies for the agriculture industry that came as a result of the coronavirus pandemic and the country’s recent tariff and trade war with China, Swenson said.

Also, the strike’s timing during the fall harvest might imperil the flow of parts to repair tractors and combines if they break down.

Jen Hartmann, director of public relations for Deere, declined to comment about the anticipated effects of the strike but provided a prepared statement that said, in part: “Employees and others will be entering our factories daily to keep our operations running.”

The company said it does not have an estimated timeline to finish negotiations and end the strike.

“We will keep working day and night to understand our employees’ priorities and resolve this strike, while also keeping our operations running for the benefit of all those we serve,” said Brad Morris, Deere’s vice president of labor relations.

Deere dealers anticipate possible disruptions

At the local dealership level, the impacts of the strike have yet to surface.

“We’re still rolling as we did yesterday,” said Calvin Pudenz, the store manager of Van Wall Equipment in Carroll, which is a Deere dealership. “We have gotten some word that we could see some disruptions here, but they’ve said that they do have staff on-hand at the parts distribution warehouse. … We’re still placing orders just as we did yesterday.”

With harvest in full swing, Pudenz said his store gets daily requests from farmers for parts to repair their equipment. The store usually has the requested parts in its local inventory, and orders to the distribution warehouse replenish its stock.

“What this looks like two weeks from now, we don’t know,” Pudenz said.

A long-term strike has the potential to affect other companies, too, especially those in the Quad-Cities region of southeast Iowa that produce components of Deere products.

“For some of them, John Deere is their only customer,” Swenson said. “If the strike drags on … you get a ripple effect. They’re going to start laying off workers.”