'Let's Put a Wrench in Things Now': Deere Workers Strike as Company Rakes in Record Profits. By: Jonah FurmanRead Now
Members of UAW Local 74 at John Deere's Ottumwa Works are among 10,000 workers on strike at the farm equipment maker. Photo: Chris Laursen
Ten thousand John Deere workers in Iowa, Illinois, and Kansas launched an open-ended strike October 14.
The strike came after workers overwhelmingly voted down a first tentative agreement negotiated by the Auto Workers (UAW). Among the over 90 percent of members voting, 90 percent voted no.
Members’ frustrations ranged from inadequate wage increases to an end to the pension for new hires, switching to a “Choice Plus” plan that many felt was scant on details. And they feel emboldened by a tight labor market and pandemic-related parts shortages that have made it hard for Deere to build up inventory.
At Deere’s Tractor Cab & Assembly Operations in Waterloo, Iowa, the 8000 tractor line—which workers refer to as the “money-maker”—was already over 800 units behind schedule at the start of the strike, according to Dana Thibadeau, a third-shift steward. That line produces tractors that can cost up to $800,000.
“When you factor in the pandemic, being deemed essential workers, and in our case, having a company turning a record profit, the CEO giving himself a 160 percent raise, and giving a 17 percent dividend raise, we kinda feel like we’re left to kick rocks,” said a UAW member at Iowa's Davenport Works who asked for anonymity for fear of retaliation.
Deere is in the midst of its most profitable year ever. The farm and construction equipment manufacturer expects to rake in $5.7 to $5.9 billion in net income this year, far exceeding its previous high of $3.5 billion in 2013.
This is the first strike for nearly all current Deere workers, though some recall walking the picket lines with their parents and grandparents during the last Deere strike, a five-month walkout that began in 1986.
GOT TO SEE THE CONTRACT
A tentative agreement was initially announced October 1, hours after the contract expiration was extended. Members had been expecting to strike that night, and many were frustrated with an agreement that they felt would just allow Deere to build up more inventory before a potential strike.
Workers have long been dissatisfied with the union’s secretive bargaining process. The last contract, in 2015, passed by fewer than 200 votes. Many members were frustrated at the time that they only got to see the details—in a highlights document—during their two-hour ratification meetings.
“Everything is always a damn secret with them,” said Trever Bergeron, an iron pourer with Local 838 at the Waterloo foundry. “We are the last thing they think about.”
Since then, according to Chris Laursen, former president of Local 74 in Ottumwa, Iowa, some local presidents had pushed amendments at the UAW’s Deere Council (made up of all the Deere locals) to guarantee that members would get to see the full contract—not just highlights—well in advance of the vote. Laursen himself put forward a resolution in 2019 to release the contract at least a week before a ratification vote. It failed, but eventually, a motion was passed guaranteeing members would get to see the contract three days ahead.
Members also got to hear the company’s initial offer, which contained a host of concessions, at strike authorization meetings in September. Deere proposed ending the plant closure moratorium, doing away with overtime pay after eight hours, eliminating seniority-based wage progressions, forcing workers to pay 20 percent of their health insurance premiums, and many other draconian concessions.
“That was a slap in the face,” said the Davenport member. “Some company folks were trying to rationalize it: this is just the first offer, you never accept the first offer. If someone were selling a home for $160,000, and your first offer was $40,000, that would break down the good-faith negotiations.”
Members voted 99 percent to authorize a strike.
A THIRD TIER
Deere backed down from most of these concessions at the bargaining table. The agreement members rejected on October 14 would have maintained the current premium-free health insurance plan. It also would have reinstated the cost-of-living adjustment, which was eliminated in the previous contract.
But it introduced a new major concession: no pensions for new hires.
Deere already has two tiers of workers: “pre-97” and “post-97.” In 1997, Deere lowered wages, health care benefits, and pensions for all new hires and eliminated their post-retirement health care. This division of the workforce has for many defined their work experience; the most active hub of rank-and-file communication is the “Post 97” Facebook group. Many of those hired after 1997 have long hoped to win back retiree health care.
The tentative agreement would have created a third tier, a concession many workers are unwilling to accept. “We’ve been fighting against this pre-97, post-97 bullshit for years,” said Thibadeau. “And then we're going to do it again? To the new hires? What on earth?”
The new tier wasn’t the only clause that got members fired up. The tentative agreement included an 11 percent raise over six years, including a 5 percent raise in year one. In 2022, 2024, and 2026, workers would have received 2 percent lump sums instead of wage increases.
That wasn’t enough for most Deere workers, who are fed up with watching the company’s profits, dividends, and executive pay soar while their own wages stagnate. “Maybe it looks like, ‘Hey, five percent seems somewhat reasonable, but it’s just over a dollar an hour, and it’s comparable to what people in 1997 were making,” said Brad Lake, a 14-year Deere employee with Local 838.
Under the 2012 contract, pre-1997 hires in the most common pay grade were making a base wage of $20.86. In the current offer, the company is offering post-1997 hires in the same pay grade a base wage of $20.80, nine years later.
At the ratification meeting in Milan, Illinois, Local 79 education chair Dave Parkin emphasized the divergence between the company’s profits and workers’ incomes: “In 1997, Deere reported a net income of $817 million. In 2021, they are projected to make $5.7 billion.” Meanwhile, the starting wage at Deere has gone from just under $15 in 1997 to just over $20 in the current offer. “While Deere profit has grown almost 700 percent since 1997, our buying power has shrunk by 35 percent,” Parkin told members.
In a flyer distributed at the plants just before the strike, headlined “Making the Best Wages BETTER,” Deere claimed that workers typically make $60,000 a year, and that the new contract would bring workers up to almost $72,000 per year. But that figure assumes year-round full-time work—ignoring Deere’s common seasonal layoffs, which can range from weeks to months.
Workers’ compensation is also dependent on a complicated piece-rate system known as the “Continuous Improvement Pay Plan” (CIPP, pronounced “kip”). Deere’s figure assumes that workers are performing at a rate of 120 percent of the target set by management—but many departments are failing to reach their quotas, given parts shortages and the fact that management wants productivity to increase by 2 percent every six months, making targets harder to hit.
One worker shared their annual pay with Labor Notes: they made less than $40,000 in 2020, and have worked at the company for over a decade. For some, CIPP provides big payouts that can take workers past the $60,000 figure. But many see little to no CIPP money at all. “What you can potentially make on paper versus what is guaranteed and what you come home with are three different numbers,” said the Davenport member.
CALL AN AMBULANCE
Deere is attempting to run the plants with salaried employees—some engineers but many white-collar office workers as well. According to one of these workers, some had to buy steel-toed boots in preparation for their strikebreaking deployment.
Just hours into the strike, an ambulance had already been called at the Drivetrain Operations in Waterloo. At the Tractor Cab and Assembly Operations across town, a salaried worker crashed a tractor into a pole on the first day. In Coffeyville, Kansas, members on the picket line reported hearing alarms repeatedly going off in the plant, and it was rumored that a salaried employee attempting to operate the furnace had been calling members and retirees for advice.
White-collar Deere workers, who are not union members, have their own gripes. Deere cut hundreds of salaried jobs in 2020 and forced some of the remaining employees into lower pay grades and contractor status, according to salaried workers. Now, hundreds of these workers find themselves working 12-hour days, six days a week, in jobs they are not trained for and did not sign up for. About 650 were reassigned to the Parts Distribution Center in Milan, Illinois.
“If Deere wanted to piss off all of their employees simultaneously, they've done a very good job of doing so,” one white-collar worker wrote to Labor Notes.
Since they went on strike, members have been maintaining 24/7 picket lines. Locals have printed shirts that read “DEEMED ESSENTIAL IN 2020. PROVE IT IN 2021. CAN’T BUILD IT FROM HOME.”
On October 18, the strike's fifth day, several locals made a push for large morning pickets. In Waterloo, members reported a three-hour backup of salaried workers and management employees attempting to cross the line; in Davenport, two and a half hours. A mass “show of force” last night by Local 865 at Deere’s Harvester Works in East Moline, Illinois, drew 1,000 picketers and stretched for 15 blocks, according to one striker’s estimate.
Wall Street sounds worried. Bank of America’s analysis on day one of the strike was headlined, “Deere likely has limited appetite for extended strike.”
Workers were conscious of the financial implications as well. “The fiscal year for Deere ends October 31, so this puts a real cramp on them at the end of the quarter and end of the year.” said Lake. “That was a huge issue of why we wanted to do it now. Because if we give them another extension they’re going to finish out their fiscal year, and this’ll be all on their 2022 books, so let’s put a wrench in things now.”
“The quicker we can put a financial dent on them, the better off we are when it comes to showing them that we mean business,” said the Davenport worker.
The company plans to cut off workers’ health insurance by the end of October. The UAW, which has a $790 million strike fund, is picking up COBRA payments and providing strike pay of $275 per week.
The union and Deere resumed negotiations this week.
The Deere contract is the biggest deal negotiated by the UAW since the resignation of President Gary Jones over corruption charges in November 2019. Former Vice President Norwood Jewell, who led bargaining on the last Deere contract, was sentenced to 15 months in prison for taking illegal payments from Fiat Chrysler. While there’s been no evidence connecting the Deere negotiations to the corruption scandal, many members mistrust the International.
Yesterday, the UAW’s 400,000 active members and 600,000 retirees began voting in a mail-ballot referendum on whether to move to direct elections for the union’s top officers, rather than the delegate system that has maintained one-party control over leadership positions for the past seven decades. Anger over two-tier contracts and secretive bargaining will impact that vote.
UAW members with the Unite All Workers for Democracy reform group, who are pushing for a “yes” vote in the referendum, organized a solidarity fund to bring supplies to the Deere picketers. In the first 24 hours, they raised $45,000 from supporters.
For updates on the strike, follow @JonahFurman on Twitter.
This article was produced by Labor Notes.