Deere’s Ottumwa site plans temporary closure amid demand slump

DAILY Bites

• The agricultural sector sees challenges as John Deere scales back operations amid a 4.4% farm income decline in 2024.

• John Deere’s Ottumwa Works plant faces a temporary shutdown in December, citing reduced equipment demand.

• Deere’s 2024 layoffs affected 26,000 employees, including 2,500 in Iowa, impacting local economies.

DAILY Discussion

The agricultural sector faces growing challenges, with major industry players such as John Deere decreasing farm income and experiencing workforce reductions.

Marc Roe, John Deere’s Executive Director of Greater Ottumwa Partners in Progress, expressed concern over these developments, emphasizing the economic ripple effects with news outlets. “It’s really unfortunate. You’ve seen several of the implement dealers and manufacturers scale down their operations,” he said.

According to the U.S. Department of Agriculture, net farm income is projected to decline by 4.4 percent in 2024, amounting to a $6.5 billion drop compared to 2023. This decline stems from sluggish demand and market fluctuations that have already prompted significant industry adjustments.

John Deere’s Ottumwa Works plant in Iowa, known for producing hay and forage equipment, announced a temporary closure that will go from early December to early January. This follows a similar three-week shutdown in August and is attributed to what the company calls an “inventory adjustment shutdown,” where production is aligned with projected demand. Employees will receive close to their regular pay during the closure, according to United Auto Workers Local 74, which represents the plant’s workforce.

In a statement shared by KYOUTV, Deere cited demand for its products as the reason for the shutdown:

In September, employees at John Deere Ottumwa Works returned to work following a three-week inventory adjustment shutdown. Production has continued as usual at the factory through October and November, building hay and forage equipment.

The factory is planning a temporary inventory adjustment shutdown from early December through early January, reflecting reduced customer demand for ag equipment. Each John Deere factory balances its work schedule with the projected demand for the products it builds.

The Ottumwa Works employs fewer than 400 workers, and while this shutdown is temporary, it adds to a challenging year for the company. Deere has already laid off approximately 2,500 workers in Iowa alone, with an additional 103 Ottumwa employees opting for early retirement. Across its operations in Iowa, Illinois, and other locations, Deere has reduced its workforce by approximately 26,000 employees in 2024.

Not all layoffs are tied to outsourcing, but the decision to move mower production from Ottumwa to Mexico has contributed to local job losses. The company also reported a 17 percent drop in net sales and revenues during its third quarter. Despite these challenges, Deere expects to report a $7 billion profit for fiscal year 2024, highlighting its global scale and diversified operations.

Roe also noted the broader implications of these economic shifts, particularly for Ottumwa. “It’s not a shock that John Deere and some of those companies are reducing their workforce temporarily,” Roe said, adding that fluctuations in household incomes can affect local spending habits and hinder efforts to attract new businesses to the area.

The agricultural equipment giant remains a significant economic player, with an estimated $27 billion impact on local economies across its U.S. operations. Deere employs around 30,000 workers across 60 facilities in 16 states and supports an extensive dealership network employing 50,000 people.