Deere strike exacerbates supply chain crisis

Deere & Co. customers face week-long backlogs in ordering parts as the strike continues at the world’s largest agricultural equipment manufacturer.

The parts and components that American farmers need to keep combines running in the busiest farming season of the year take up to three weeks to reach customers, an eternity when fields need to be harvested quickly to stay ahead of winter weather, according to dealers. and industry clients.

The Deere situation adds to global stresses caused by supply chains, with global disruptions and shipping delays affecting everything from construction and car manufacturing to agriculture and ultimately the ability to bring food to consumers’ tables.

American farmers from corn and Soy They are rushing to finish their last leg of the harvest and, coupled with disrupted trade flows, delays could make it difficult to work in the fall in the fields to prepare for spring plantings.

“I would call it a double whammy, because we already had a shortage in the supply chain and now we have a strike”He said in an interview Jon Fisher, which buys and sells tractors and machinery in Columbia, South Carolina. “They have not even been able to fulfill the orders due to the problems of the supply chain ”.

Freight charge

According FisherAnother point of conflict for dealers and customers is that the company is charging for freight and shipping, something unprecedented until the start of the strike. Transportation costs are “a big problem because the parts are already expensive“, said. “What used to arrive in two or three days now takes three weeks ”.

The delays are directly related to the ongoing labor strike involving 10,000 unionized workers from Deere, which rejected a revised deal earlier this week.

Before the strike began on October 14, pieces of equipment arrived in less than a week. Now there are not enough workers assigned to load the trucks for delivery. The delays were confirmed by several John Deere dealers.

“Certainly the strike has added an additional layer of uncertainty and we continue to evaluate our business continuity plans to address the highest priority areas.“, said Jen Hartmann, a spokesperson for Deere, in an emailed statement. “This has included ensuring that parts are available to farmers who are currently in the middle of harvesting or finishing it.”.

Farmers have almost no choice if their equipment breaks down and brand-specific parts are not available or have been ordered from their local dealer. Some may salvage older pieces of equipment or borrow them from their neighbors in their desperate time.

Profitable business

The spare parts business of Deere it is very profitable and can generate up to 18% of revenue, although this figure has dropped to less than 10% in the last three years. Last year, the pieces generated $ 3.35 billion, or 9.4% of revenue.

To safeguard that income, Deere it has kept its factories running by using salaried employees. The company has said it is focusing on keeping the parts depots and its parts distribution center operational to ensure that farmers can complete the harvest.

Deere It has not said how many striking workers it has been able to replace, making it difficult for investors to know what impact it could have on Deere’s parts delivery and its ability to produce new machinery.