A massive manufacturer is now laying off hundreds in Illinois as the company shifts its production to a new facility in Mexico.
John Deere announced it will lay off about 600 employees across three US factories as the Illinois-based company shifts production to a newly planned facility in Ramos, Mexico.
Effective August 30, about 310 employees will be laid off at two Iowa-based plants in Dubuque and Davenport, as well as 280 from a factory in East Moline, Illinois.
In total, the three factories have roughly 4,175 production and maintenance employees.
The Illinois factory primarily produces harvesting equipment such as combines, while the two Iowa factories manufacture construction and forestry equipment.
The decision is the latest in a string of production layoffs by the farm-equipment manufacturer over the past year.
Deere has sought to reposition itself as a technology company amid falling agricultural revenue in the United States.
“These changes are being made due to reduced demand for the products produced at these facilities,” the company told CNN in a statement Friday.
“To better position Deere to meet future demand, we continue to take proactive steps to reduce production and inventory.”
The company has reported slumping year-over-year revenue after announcing a net income of more than $10.16 billion in 2023.
In a May earnings call, executives forecast Deere’s 2024 income will be about $7 billion, citing higher production costs, lower shipment volumes and volatile weather that has made customers more cautious in their purchasing decisions.
“We do expect incremental demand decline in the back half of 2024,” Josh Beal, the company’s director of investor relations, said in the May earnings call.
“Notably, our production volumes will decline more than demand in the back half as we’re taking proactive steps to drive down field inventories.
This is true for all of our major markets, South America, Europe, and also now for North America large tractors.
We believe this approach best positions us to build the retail demand in 2025.”
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Other Economy News Today
Applications for unemployment benefits now surge to new highs, a sign that the white-hot labor market is starting to cool off.
First-time applications for unemployment benefits rose last week to 231,000, the highest level since August, per CNN.
Thursday’s data also showed that the number of continuing claims, or applications from people who have filed for unemployment for at least one week, was 1.78 million.
That’s an increase of 17,000 from the prior week, according to the Bureau of Labor Statistics.
The latest numbers come less than a week after the monthly jobs report showed the US economy added just 175,000 positions in April, less than economists expected and a steep drop-off from prior months.
US employers have now added an average of 245,500 jobs per month, versus 2023’s 251,000-per-month average.
Still, hiring remains strong. Although the unemployment rate ticked up to 3.9% last month, it’s the 27th consecutive month that the jobless rate has held under 4%, matching a streak last seen in the late 1960s.
Weekly jobless claims data tends to be volatile but, while one week’s worth of data “does not a trend make,” said Chris Rupkey, chief economist at Fwdbonds.
“We can no longer be sure that calm seas lie ahead for the US economy if today’s weekly jobless claims are any indication.”
“Company layoffs are picking up, hinting at caution on the part of companies as they weigh the outlook for the second half of the year,” he wrote in a note Thursday.
The Federal Reserve has been battling inflation by raising its key lending rate in the hopes of slowing the economy.
While the labor market has so far resisted those efforts, remaining white hot for the past 18 months despite 11 rate hikes from the central bank, Fed Chair Jerome Powell said last week that demand has “cooled from its extremely high level of a couple of years ago.”
Ian Shepherdson at Pantheon Economics said in a note Thursday: “We’d need to see at least a month of elevated readings to convince us that the trend really has turned.”
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Also Read: A Giant Company Now Announces Unexpected Layoffs in Virginia
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