Deere Strike Delays Delivery of Parts to Farmers Scrambling to Finish Harvest -Breaking
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© Bloomberg. Workers display signs outside John Deere Regional Parts Distribution Facility in McDonough (Georgia) during the strike on November 5.(Bloomberg) — Deere (NYSE:) & Co. customers are facing weeks-long delays for parts orders as a strike at the world’s biggest farm-equipment maker continues.
According to customers and dealers in the field, parts and components U.S. farmers require to maintain combines in peak season can take up to three weeks before reaching customer hands. This is a long time when the fields must be harvested quickly to avoid freezing weather.
Deere’s situation compounds global stresses brought on by snarled supply chains, with worldwide disruptions and shipping delays impacting everything from construction and automaking to farming and, ultimately, the ability to get food to consumers’ tables. U.S. soybean and corn farmers are on the verge of finishing their last stretch of harvest. Due to disruptions in trade flows delays may also impact fall field work for spring plantings.
“I would call it a double whammy, because we already had a supply-chain shortage and now we have a strike,” Jon Fisher, who buys and sells tractors and other machinery in Columbia, South Carolina, said in an interview. “They couldn’t even fulfill the orders because of the supply-chain issues.”
Freight Charge
A major problem for customers and dealers is the fact that the company charges freight and shipping fees — something Fisher says was unheard-of before the strike. The freight charges are “a big deal because parts are already expensive,” he said. “What used to be there in two to three days is three weeks.”
These delays can be directly attributed to the continuing labor strike that involves 10,000 Deere union employees, who rejected an earlier version of this week’s agreement. Equipment parts were delivered in under a week before the strike started on October 14. Now there aren’t enough workers meant to load up trucks for delivery. Multiple John Deere dealers confirmed the delays.
“Certainly the strike has added an additional layer of uncertainty and we continue to assess our business continuity plans to address areas of highest priority,” Jen Hartmann, a spokeswoman at Deere, said in an emailed statement. “This has included ensuring parts are available for farmers currently in the midst of or wrapping up harvest.”
When equipment fails or parts for a specific brand are out of stock, it is often the only option available to growers. In the worst case, some may borrow parts from their neighbors or salvage older equipment.
Beautiful Profits
Deere’s parts business is highly profitable, and can bring in as much as 18% of revenue, though that figure has dropped to less than 10% in the past three years. Last year, parts accounted for 9.4% of the revenue at $3.35Billion.
Deere used salaried workers to keep its factories going in order to save those millions. The company has said it’s focusing on keeping parts depots and its parts distribution center operational to ensure farmers can complete the harvest.
Deere hasn’t said how many striking workers it has been able to replace, making it difficult for investors to know how far-reaching the impact could be to Deere’s parts delivery and ability to produce new machinery.
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