Running with the great Deere


In an effort to maintain its enviable 34-year labor peace period, Deere & Co. and United Auto Workers recently announced a deal to raise workers’ wages by 20% over five and six years, Deere said, in order to keep the iconic green and yellow machines coming out of its 11 assembly lines and three distribution centers.

The manufacturing partners, after all, had a pretty good gig. Revenue for Deere’s first three quarters of this fiscal year was estimated at $ 32.7 billion, up 11% from before the 2019 pandemic, and net profit hit a record 4.7 billion dollars, up 84%.

Deere’s UAW workforce was also thriving; Since November 1, 2020, the number of union jobs at Big Green has increased by 19%.

So imagine the shock of corporate and UAW negotiators when, like lightning, 90 percent of the union base summarily rejected the proposed contract. The two were shocked again four days later when Deere’s 10,000 unionized workers left work.

On October 18, the very day the two sides would return to the negotiating table, the Wall Street Journal viewed the stalemate – and other recent strikes – as a new round in secular labor capital. fight: “Unions… workers demand more from their employers and businesses are grappling with labor shortages and booming supply chains. ”

However, by most corporate metrics, Deere and its shareholders are not struggling, even compared to last year’s weakened Covid numbers: 2021 results show the company’s revenue rose 29%, net profit up 106%, and net profit up 60%. .

This rapid recovery made Deere a Wall Street darling. On March 20, 2020, the company’s shares were worth $ 112 each. Less than 14 months later, stocks hit a stratospheric level of $ 394. Prices have retreated slightly since, but on October 19, trading closed at $ 343 per share, up 28% for the year.

One of the main beneficiaries of this increase is one of Deere’s largest shareholders, Cascade Investments LLC, the investment sidecar of Microsoft founder Bill Gates. According to the May 6 online edition of thewealthadvisor.com, “Cascade held more than 31 million shares of the farm equipment maker” worth about $ 10.4 billion today. (Deere isn’t Cascade’s only farming-related investment. Last May, it was widely reported that then-married Bill and Melinda Gates owned “242,000 acres of farmland. [mostly in the South] valued “over $ 690 million”. “)

Farmers and ranchers continue to view Deere as the premium, high-priced farm equipment maker in the United States. Investors and Deere, however, have a broader view of its lawn and garden, farm, forestry, landscaping and highway equipment.

In a five-minute video on its website, the company repeatedly notes how its rapidly evolving technology, not diesel power, will help Deere customers around the world make better and faster decisions to “optimize operations.” And maximize profits.

This positioning has caught the attention of other investors like ARKQ, an exchange-traded fund. ARKQ’s largest stake is Tesla, Inc., the world’s leading manufacturer of electric vehicles.

Interestingly, its second largest stake, at $ 180 million, is Trimble, Inc., the Silicon Valley company specializing in “geospatial engineering” – think of anything that is driven or connected by GPS, like tractors, combines and construction equipment.

Another great ARKQ holding is, yes, Deere; she owns $ 76 million in Deere shares.

In short, Wall Street is betting that the biggest and most autonomous of tomorrow – a $ 10 word for robotics – will be Deere. In fact, YouTube is full of videos of several self-contained versions of driverless John Deere tractors. And, as difficult as it may sound, some are electric and none have a cabin, seat, steering wheel, or driver.

So tomorrow’s agriculture, like today’s manufacturing, will have even more robots and even fewer people. Neither, after all, can strike.

The Farm and Food File is published weekly in the United States and Canada. Columns, events and past contact details are published on www.farmandfoodfile.com.

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