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Deere workers are struggling with fallout from Trump's trade war



EAST MOLINE, Illinois (Reuters) – Devin Spencer has been on the edge ever since Deere & Co. laid off dozens of their colleagues at the Harvester Works facility in western Illinois because of diminishing farm demand.

A flag flies outside John Deere's Harvester Works facility in East Moline, Illinois, USA November 7, 2019. Photo taken November 7, 2019. REUTERS / Daniel Acker

He considers himself lucky to have escaped the indefinite the layoffs, but have been moved to a lower level with a pay cut. The 29-year-old welder blames the US trade war with China, which has hampered US agricultural exports and in turn slowed the sale of equipment, for his situation.

Spencer, who is married to a small son, fears the worst if sales continue to decline and Deere cuts more workers. He is not alone. Hundreds of workers at Harvester Works face an uncertain future as a result of the 16-month-old tariff war.

"The orders have dropped so low that I'm lucky to have a job," he said. "What happens if we don't get orders? I'm out the door."

Deere, the world's largest tractor manufacturer, said last month that it had indefinitely laid off 50 employees at Harvester Works, part of 163 layoffs across Iowa and Illinois, adding that each factory balanced the size of its workforce with demand for its products.

Harvester Works' union manager David Thompson told Reuters that the company later extended temporary layoffs for an additional 100 workers at Harvester Works in early January. The workers would return to work in November, he said.

Another 300 employees have been downgraded to lower levels, Thompson added.

Deere has not announced the extension of the temporary layoffs or the layoffs of workers. this story, citing a quiet period before quarterly earnings on November 27.

All layoffs Jobs and jobs, which Thompson says have affected about 41% of the factory's roughly 1,100 workers, show how trade wars hit the operations of some manufacturers such as Deere, considered a watchmaker for American agriculture and industry.

Last week, Deere told 12 workers at a plant that makes plant equipment just a 15-minute drive from Harvester Works that they would be laid off indefinitely from early January, factory head of union Heather Keag told Reuters.

President Donald Trump's trade war, combined with bad weather in the US farm belt, has plunged the company's revenues and forced it to cut production, as well as trim annual profits and sales forecasts.

Retail sales of Deere's combine harvesters in North America have fallen since May, according to the company, which reports figures on a three-month rolling basis. The rivals are also fighting for lower sales.

"LOT OF ANXIETY, FEAR"

Trump accuses China of hollowing out US production, saying his tariffs are necessary to force a change in the way Beijing does business.

He says that his measures will ultimately benefit American companies and workers by not only opening the Chinese market, but also bringing production jobs back to the United States.

Thompson, who did not vote for Trump, a Republican, agreed that some measures were needed, but said workers at his facility are carrying the fall to the fallout.

"There's a lot of anxiety, a lot of fear," he said.

The mood was different at the beginning of 2018. An initial improvement in demand had led to healthy growth in orders for Deere's plants and combine harvesters. Harvester Works began hiring new workers, Thompson said.

But as the trade war began to take a toll on the farm economy, Spencer said the peasants were beginning to cancel the orders.

"We could all see the writing on the wall," he said.

Deere is not alone. Rival Caterpillar, the world's largest heavy equipment manufacturer, has decided to let go of 120 workers in Texas, for example, while United States Steel Corp. has had layoffs in Michigan.

U.S. Federal Reserve reports show that US factories are well below their long-term average level of production and that companies are delaying capital expenditure due to trade policy uncertainty. US manufacturing activity fell to more than ten decades in September.

However, Trump said Tuesday that industries had not been hurt by his administration's trade actions.

Harvester Works is in Illinois, a highly democratic state. But some industrial swing states like Pennsylvania, Wisconsin and Michigan that Trump narrowly won in 2016 are now losing thousands of jobs.

These states are on hold for 2020.

SWEEPING THE FLOOR

Deere's shares have gained about 2% since Trump announced a "phase one" trade agreement with Beijing in the hope that more agricultural sales to China would encourage farmers to resume buying. However, the agreement is still laid on paper.

Thompson worries that the deal will not be enough to lift demand for the factory's combine harvesters.

Meanwhile, the welder Spencer is sweeping the floor of the plant.

Aside from the psychological effect of doing a less skilled job, the change has reduced his earnings by more than a third. Spencer says he can no longer afford a vacation.

When Trump first declared a war on the global trade order last year, he said: "Trade wars are good and easy to win."

Slideshow (29 Images)

However, Harvester workers have not yet seen any positive results, according to Josh Saunders, who has been moved from a higher-paying welding role to a mounting job.

The 37-year-old, who has a wife and two step-sons, is worried about losing the job of one of the better employers in the area could force him to sell his house and move away.

"I don't know where this win comes from because we have layoffs, and orders are not there," he said.

Reporting by Rajesh Kumar Singh; Editing by Caroline Stauffer and Pravin Char

Our Standards: The Thomson Reuters Trust Principles.

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