Bob Tita of The Wall Street Journal reports that Deere & Co. revealed deep cuts to production and payrolls to avoid prolonged pain from the market slump. Tita writes:
Deere & Co., the world’s largest tractor manufacturer, is racing to shrink as it contends with a slowing farm economy.
Demand for Deere’s tractors, crop harvesters and other farming equipment has plunged after years of generating record profits from robust sales. As a result, the company has slowed activity at assembly plants, laid off more than 2,000 production workers and trimmed hundreds of salaried employees.
Deere has reacted to past downturns by trying to wring revenue out of a softening market with sales incentives or equipment leases. But this time around, the company is aggressively shedding expenses and bracing for a hard landing in a U.S. farm economy that had been buoyed in recent years by high prices for farm commodities and federal payments to farmers.
“We are acting more quickly,” Chief Executive John May said during a Thursday conference call with analysts. “It’s all about taking out excess costs and restructuring the business. In the past, that might have taken us two years to two and a half years to react.” […]
One hope for increasing sales: a bumper corn crop and record soybean harvest in the Midwest this year. Dealers said a big harvest will likely convince some farmers to invest in equipment even if the harvest holds down commodity prices.
“More bushels will help sell equipment,” said Tom Sloan, chairman of Illinois-based Sloan Implement.
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