There’s never a good time to lay off U.S. factory workers while adding jobs in Mexico or other foreign countries. But Moline-based Deere, the top farm equipment maker in the U.S., is discovering that doing so during a presidential election is a particularly lousy idea.
Former President Donald Trump, speaking in Pennsylvania early last week, said that if elected he would slap Deere with 200% tariffs on goods made in Mexico and sold into the U.S. if they moved domestic manufacturing jobs south of the border.
Trump was reacting to news reports of steady layoffs over the past year in Deere’s plants, including hundreds of job losses in Illinois, combined with the expansion of Mexican production of some Deere products.
The company, whose agricultural customer base tends to lean conservative in their political views, suddenly found itself the center of a political firestorm. It responded two days later by denying the narrative on which Trump had seized.
“We are not ‘moving production’ to Mexico as continues to be reported, instead, we’ve strategically leveraged our footprint in Mexico for cab production (that transition was announced in 2022 and is being completed this year) and now mid-size skid steers and CTLS — by 2026,” a spokeswoman said. The company added that it’s had a presence in Mexico since 1952 and that 75% of the equipment sold in the U.S. is made in the U.S. as well.
Pierce through the corporate-speak and it sounds like Deere is moving some existing production in the U.S. to Mexico. And that is indeed what the company has been doing over the last several years. The additional 600 layoffs, as announced at plants in East Moline, Illinois, and Davenport, Iowa, which touched off the political fireworks, were a response to substantial recent declines in the sales of the machinery made at those plants. But those 600 represent just a portion of deeper Deere job cuts over the past 12 months. Scores more have been a consequence of the production shifts to Mexico.
The criticism isn’t coming only from the GOP. Democratic Rep. Eric Sorensen, who represents the district including Deere’s Moline headquarters, accused Deere of being less than upfront about what it’s doing. “I don’t believe we’re at the end of Deere and Company’s layoff period,” he told NAFB News Service. “We need to know where the future of Deere and Company is going and we need to know that the future of agriculture in our country has an American-made John Deere being a part of that.”
Trump’s threat of tariffs is particularly rich because as president he negotiated the 2018 trade deal with Mexico and Canada under which Deere is shifting some production to Mexico. That pact attempted to address organized labor concerns regarding the old North American Free Trade Agreement by imposing minimum wage requirements for U.S. manufacturers who build things in Mexico and sell back into the U.S., as well as other labor standards.
There’s no allegation that Deere is doing anything in violation of Trump’s trade deal.
Trump’s off-the-cuff threat was disturbingly like many of the other pledges the Republican nominee has made to win votes. He’s promised to end taxes on tips, on overtime pay and on Social Security benefits, among other budget-busting ideas, including yet another reduction in corporate income taxes — promises that likely would balloon an already-unsustainable deficit.
Deere isn’t the only farm equipment maker moving some work to Mexico, and it’s coping with a significant agricultural downturn that is dampening demand for its products. It’s entitled, like any company in a free market, to adjust its production in response to lower sales volumes and reduce costs.
But that doesn’t mean Deere or any other major U.S. manufacturer should be immune from criticism or scrutiny when it makes decisions that harm the many communities in the Midwest and elsewhere which depend heavily on the company for employment. In moving U.S. jobs to Mexico, Deere must anticipate the potential negative effects of, say, Trump broadsides in an era in which businesses cannot divorce themselves from emotional political debates over jobs, immigration and trade, no matter how much corporate jargon they sling around.
In essence, there’s a cost-benefit analysis companies like Deere must perform that goes beyond number-crunching. Deere must remain cost competitive, yes, but it also must account for the potentially negative effect on sales when politicians put the company in an unwelcome spotlight.
Many farmers think highly of Trump; his words carry weight with them. Deere’s competitors just got an unexpected gift from the ex-president, even if many of them are taking similar measures to Deere.
That’s not fair. But it is reality. Running a Fortune 100 company these days is a lot more complex than it used to be.
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