John Deere Laying Off 600 Workers in Flagship Dubuque Factory for Mexico | Hacker News Reader

John Deere Laying Off 600 Workers in Flagship Dubuque Factory for Mexico

entrepreneur.com

35 pointsalephnerd38 comments

Imagine you already live in aplace like Illinois, and you think well, at least I'm cheaper than somebody in California so I'll be employed.

Then after the company makes 10 billion dollars last year, they decide to cut 600 whole people in Illinois just to take a little extra profit in a move to Mexico.

Fuck these absolute parasites in charge; they do not care at all about American anything and we should be penalizing them for caring so little. This is a bunch of horse shit.

>Imagine you already live in aplace like Illinois, and you think well, at least I'm cheaper than somebody in California so I'll be employed.

Did you forget what happened to Detroit and the rest of the rust belt back in the 2000s? Being slightly cheaper than California was never going to protect you from competition from Mexico or Asia.

>Then after the company makes 10 billion dollars last year, they decide to cut 600 whole people in Illinois just to take a little extra profit in a move to Mexico.

When you're working at the scale of a multinational company with $61 billion in revenue and 83k employees, every single decision is going to be like this. Sure, you could easily fund that one factory with 600 employees with a tiny fraction of your overall profits, but you probably have dozens of such factories. You can't keep all of them, and there's no reason to privilege any particular factory.

> Imagine you already live in aplace like Illinois,

> decide to cut 600 whole people in Illinois

Do you think all the Deere employees live across the Mississippi in East Dubuque, IL? Not likely.

Dubuque is in Iowa.

Iowa thanks you for your concern about our Illinoisan neighbors, costal people!

Hehe thank you I’ll edit that.

Guess I can’t. Either way, same sentiment stands. Fuck these people.

The shareholders will not be denied

Maybe we should all move to Mexico then, I'm sure the government won't mind, so long as corporations get to do whatever they want

For what purpose? Given how many people are literally dying to sneak into the US and live an undocumented existence (ie. menial jobs paid under the table), I'm going to go on a limb and say even the bottom decile of Americans are better off staying here than trying to sneak into Mexico. Maybe you want to move to Cancun (and continue working your remote desk job) for a few months as some sort of protest against the corporations/government, but it's not a prudent or even realistic option for most people.

Mexico has the same big metros like the US does, just look at Monterey and CMX

> but it's not a prudent or even realistic option for most people.

It may not be right now. But at the current rate of letting corporations do whatever the fuck they want, I wouldn't hesitate to do it if it makes economic sense. And if it ever gets to that point, shame on the US government

> I'm going to go on a limb and say even the bottom decile of Americans are better off staying here than trying to sneak into Mexico.

Citation needed. A lot of the people who enter illegally aren't even originally from Mexico. Also the economic climate of the US has changed since the 20th century

>Mexico has the same big metros like the US does, just look at Monterey and CMX

The claim isn't that mexico doesn't have any big cities, it's that it's not an attractive place to live in compared to the US, as evidenced by migrant flows.

>It may not be right now. But at the current rate of letting corporations do whatever the fuck they want, I wouldn't hesitate to do it if it makes economic sense. And if it ever gets to that point, shame on the US government

What makes you think the same pro-corporate forces won't happen to Mexico, when the state there can barely keep a lid on drug cartels, and in fact the ruling party accepted bribes from drug gangs?

https://www.propublica.org/article/mexico-amlo-lopez-obrador...

>Citation needed. A lot of the people who enter illegally aren't even originally from Mexico. Also the economic climate of the US has changed since the 20th century

https://www.cbp.gov/newsroom/stats/nationwide-encounters

There's 515k encounters from people with mexican nationality. I doubt the reverse direction has anywhere near that amount.

Everywhere is a terrible place to work because the companies don't give a shit. Its bullshit they want access to sell in our market, but aren't employing Americans, especially for being Deere.

You can draw a straight line from NAFTA to MAGA. But nobody in charge cares, as it's been great for our 401ks. The pitchforks are coming, and it's not gonna be pretty. January 6th was just a taste.

The alternative is allies like Canada and Mexico decide to switch allegiances without NAFTA - especially because they have FTAs with economies like China, ASEAN, and the EU. Also the economic ramifications on the US would be horrid.

The answer is subsidizing the ability to commercialize R&D with PLIs aimed at keeping some production within the US (or allies). This is what the CHIPS Act and IRA are doing for Semiconductors and GreenTech respectively.

> The answer is subsidizing the ability to commercialize R&D with PLIs aimed at keeping some production within the US (or allies). This is what the CHIPS Act and IRA are doing for Semiconductors and GreenTech respectively.

Yes that is indeed the correct take on this if you see our society as an optimization problem on a spreadsheet.

But tell it to the 600 voters (and all of their family/friends) who just got laid off from jobs they've held for 30 years and staked their entire lives on. All of our previously purple states have turned into fascist hellholes due to this kind of attitude from those in power.

CAT's factories are barely 2 hours away from John Deere's and they haven't had a similar layoff in almost a decade.

John Deere's leadership is just uniquely incompetent in the agtech industry.

They ain't selling enough, with worldwide sales decreasing rapidly [0].

The tractor industry has become commoditized at the lower market segments with Kubota, Kioti, and Mahindra, and the upper market segments are too specialized for John Deere with competitors like CAT.

Ik some friends in the drone and agtech industry in the 2010s, and John Deere was already far behind on the innovation front compared to Bayer-Monsanto, Corteva, CAT, Skydio, or DJI on applications like agricultural drones, autonomous farming, CV applications for soil analysis, etc.

The answer is simple - innovate (or M&A) or die.

[0] - https://www.deere.com/assets/pdfs/common/news/deere-2q24-ear...

Nice to see their anti-consumer business practices are blowing up in their face. Imagine how well their sales would be if they hadn't made an enemy out of their customer base.

Their harsh IP stance would have made sense if they were also constantly innovating. They just weren't. You were paying a premium and facing litigation for tinkering with a better branded Kubota.

John Deere was also nowhere near as diversified as most competitors locally (CAT) and globally (Kubota), who invested in defense, construction, drones, EVs, chemicals, and other segments.

I'd question a few of your claims. Deere has an entire construction division and it's huge. Deere has had its hands in the defense industry for decades - they sell military gators, guidance systems for predator drones, etc. They've had electric gators and lawn tractors for a few years now (admittedly they're late electrifying their larger equipment). I don't know where your information is from, but it seems patently incorrect.

I'm not denying that they don't have all the above, but they are much smaller portions of their business than at CAT, Kubota, Mahindra Group, etc.

Just look at the earnings call for CAT [0] versus John Deere [1].

Q1FY25 revenue for CAT in construction was $6.4B compared to $3.21B in John Deere.

Q1FY25 revenue for CAT in Energy was $6.7B versus non-existent for John Deere.

Ik about the whole "John Deere Operations Center" vision (and imo it is very cool - I knew some of the Blue River guys), but they had to opportunity to acquire Granular and Climate Corporation as well, and consolidate the FMS space.

Alternatively, they could spin out the FMS and experimental portion of John Deere away from the more legacy AGCO/Kutoba competitor SKUs to better support profitability and R&D (sort of an HP/HPE kinda situation).

My callout about EV and Defense was moreso a jab at Mahindra being an Indian Chaebol that manufactures (crummy) EV cars and (half decent) Israeli ballistic missles, along with CAT's longstanding Power Generator and Military Construction SKUs.

[0] - https://s25.q4cdn.com/358376879/files/doc_financials/2024/q1...

[1] - https://www.deere.com/assets/pdfs/common/news/deere-1q24-ear...

High worker wages and cheap goods are incompatible. The companies can’t do anything especially since places with cheap labor can now put out mid to high quality tier goods themselves. For a while it seemed like Germany et al were able to maintain a moat with their high quality goods but Asia has caught up. The only hope for American manufacturing is fully automated facilities but that isn’t happening quickly enough. Alternatively we would have to have some sort of communist like top down profit sharing/UBI but I don’t see the US going down that path either.

> cheap goods

john deere isn't known for being cheap

Which is why their sales are falling. My point is it needs to be cheaper to be competitive and they can’t seem to do that while still manufacturing in the US.

They had $10B in 2023 profits. This is simply not true. They are maximizing profits at the cost of other business inputs, just like Boeing.

You can make a profit and still lose market share

Here's John Deere's Q2FY25 earnings report [0]

Sales have dropped 10-20% in just about every market they are in (they have hidden the Asia figures which are probably even worse due to intense competition by dozens of local and multinational competitors like Sinomach, Kubota, Mahindra, Daedong, etc). And overall Net Sales have fallen 20-25%.

[0] - https://www.deere.com/assets/pdfs/common/news/deere-2q24-ear...

Will executives reduce their compensation packages accordingly?

Depends on investor sentiment.

Most investors in any company are institutional investors (hedge funds, pension funds, sovereign wealth funds, etc).

They tend to have longer holding periods (years instead of days), and most are still riding high from John Deere's 3x'ed share price from 2020.

Executives will still earn roughly what they earned before, assuming John Deere pivots the same way CAT did around a decade ago when faced with a similar problem.

Investing much more in R&D along with diversifying away from the Farn Machinery sector will also help.

I wonder if Mexican executives are also cheaper

Maybe we should just buy from Mexican tractor companies instead if that's the case?

I suppose that China stealing the IP and selling cheap knockoffs is an option; at least farm equipment consumers then receive consumer excess via lower prices versus US execs soaking up the profits from offshoring manufacturing.

Most of the commodity Ag Machinery market in the US is already been taken over by a multitude of American, Japanese, European, and Indian vendors already (and as I previously listed)

> I wonder if Mexican executives are also cheaper

The cream of the crop (UNAM, ISTEM, Ibero) end up earning roughly comparable to Canada or work in the US.

For example, Associate Consultants (entry level w/ MBA or MS/PhD) at McKinsey CDMX earn around US$108,000-US$163,000 [0], which is similar to McKinsey Toronto for the same role (US$120,000-US$185,000) [1]

Mexicans working white collar jobs are TN Visa eligible as well, so there is upwards salary pressure because someone who's good enough to be a Consultant at McK CDMX or a PM at IBM Guadalajara can land a job at McK Dallas or IBM Austin.

That said, even mid-level management roles are moving abroad now that R&D and Product teams are getting offshored as well (speaking from personal experience)

[0] - https://www.glassdoor.com/Salary/McKinsey-and-Company-Mexico...

[1] - https://www.glassdoor.com/Salary/McKinsey-and-Company-Associ...

> john deere isn't known for being cheap

Just non-repairable.

> The only hope for American manufacturing is fully automated facilities but that isn’t happening quickly enough

It's happening, but unions like the UAW oppose it [0][1].

There's a reason most battery factories have shifted to Red States like Georgia, Tennessee, Kentucky, and Indiana [2] at the expense of previously established Michigan and Ohio.

> Germany et al were able to maintain a moat with their high quality goods but Asia has caught up

Due to lack of innovation.

[0] - https://www.axios.com/2023/09/15/uaw-worker-strike-electric-...

[1] - https://www.nytimes.com/2023/09/16/business/electric-vehicle...

[2] - https://www.edf.org/media/analysis-finds-us-electric-vehicle...

I'm not sure that really sells the UAW one way or the other on it. The companies would probably like people to think the union wants so much it'd impede being able to switch to good thing™. The UAW would probably like people to think electric production can be done with better wages than companies want to push for without having a big impact on the output and just eating at evil management profits™.

The 0th article more or less says that and gives that outright as the reason Tesla is ahead. GM is behind in electric vs Tesla for lots of reasons and that may be one meaningful one but it doesn't really support why it just asserts it should be so. If it were that direct and simple then the unionized brands in the US would be long gone by now.

The 1st article does an even worse job summarizing the situation, leaving the description of what the UAW wants to the manufacturer management.

The 2nd article actually has some good data but it seems to say things like Michigan still has the most production and lacks information like "GM caved and all of their plants are in the other states in that list".

I'm not saying the UAW is great for electric production or the UAW is bad for it, I'm just saying none of those sources really backs what you set out to say with them in the first place.

Cheap goods and no middle class with discretionary income is also incompatible. "Buy now, pay later" will only last so long.

That's how most trade works, isn't it? If I buy clothing from the EU, does that mean they must make it in the US? Forcing domestic employees is normally for vital functions.

Trade between equal-ish partners is fine and should be free and unencumbered except for a few things where you want to make sure you're also self-sufficient (like defense and ensuring your local food production can cover your population)

Trade between unequal partners (or whatever you want to call companies offshoring manufacturing) needs friction. Some amount is good to equalize global economies, too much makes your local poor suffer for the benefits of your local wealthy. It is especially bad when offshored labor is being done to avoid local environmental restrictions, worker protections, etc. i.e. manufacturing which is only cheap by being irresponsible to your workers and the world.

The winners in this case are Japanese (Kubota), American (CAT, AGCO, New Holland/CNH), European (CNH, Kioti), and Indian (Mahindra) manufacturers - all diversified conglomerates from countries allied or aligned with the US.

Trade works however we collectively, through policy, make it work.

Neoliberals were telling everyone it’d be fine to offshore manufacturing, because there was plenty of other high value work to be done, and then surprise, that gets offshored too. Corporations would sell you for parts of it earned an extra penny per share.

https://www.youtube.com/watch?v=BHUGVEThmsg

> The company [John Deere] brought in $2.37 billion in net income during the quarter, down from $2.86 billion in the same period last year. Worldwide net sales and revenue also decreased 12% quarterly.

> In 2023 the company made more than $10 billion in profit.

Reply on news.ycombinator.com