Deere executives said Wednesday that the company wouldn't return to the bargaining table with striking workers because it wouldn't offer a better contract than one they rejected that included immediate 10% raises.
Marc Howze, the chief administrative officer of Deere & Co., said the deal the United Auto Workers union rejected on Tuesday represented the most it could offer and still keep its costs competitive.
Howze declined to discuss how much the ongoing strike is costing Deere, which will release its next earnings report later this month. The disputed contract would cover more than 10,000 Deere workers at 12 facilities in Iowa, Illinois and Kansas, who make the company’s iconic John Deere green tractors and other equipment.
The company plans to reach out to employees directly now to stress the virtues of its offer while it tries to keep its plants running with salaried employees and other workers to meet customer commitments. Other Deere plants globally are also working to pick up the slack.
“We want to make sure they understand the value of the agreement, to make sure they understand that there is nothing to be gained by continuing to hold out,” Howze said. “To some degree, because we were able to come to a resolution as quickly as we were, I think there’s some folks who believe there must be some more available.”
In addition to the initial raises, this week’s offer included 5% raises in the third and fifth years of the six-year deal, and it would have provided an $8,500 ratification bonus, preserved a pension option for new employees, made workers eligible for health insurance sooner and maintained their no-premium health insurance coverage.
UAW spokesman Brian Rothenberg said union leaders were meeting to discuss their next moves. With a majority of workers voting against the latest offer, union officials face demands to deliver more but that might be difficult given the Moline, Illinois-based company’s stance. And pressure to reach a settlement will mount the longer workers go without pay.
The vote Tuesday was much closer than when 90% of the workers rejected the company's first offer last month, but 55% of the workers still rejected the latest offer. Workers have been encouraged to seek more now because of the current worker shortages and Deere's strong profits.
“It seems general membership feels emboldened by this current political moment of labor power. They’re pushing things further than the union leadership apparently wants to go,” said Victor Chen, a sociologist at Virginia Commonwealth University who studies labor. “It’s a gamble, but the economic wind is against their backs, given widespread supply chain problems and the current worker shortage.”
Deere officials, who have predicted that the company will report record profits of between $5.7 billion and $5.9 billion this fiscal year, don’t want to miss out on sales to farmers who are ready to buy thanks to strong crop prices. The U.S. Department of Agriculture predicts that farmers’ net income will increase by nearly 20% this year, to $113 billion.
Observers say the rejection of the deal shows pent-up anger among Deere workers over how much of its profits the company has been willing to share with workers.
“Although the proposed contract was a significant improvement over the previous offer, the Deere workers evidently felt that the company could afford more,” Fordham University sociologist Chris Rhomberg said. “For decades, wages across the economy have lagged behind productivity growth, and workers may be tired of seeing the gains from their efforts go predominantly to corporations making record-breaking earnings.”
Now the challenge for the UAW and Deere will be finding a way to resolve their differences in a way that workers will accept, said Todd Vachon, a former member of a carpenter's union who now teaches about labor relations at Rutgers University.
“There is always the risk of overplaying one’s hand — on both sides, really,” Vachon said. “It appears the final mile will likely involve some changes to work rules and working conditions in addition to just wage increases.”
The longer the strike continues, the more painful it will become for everyone, Creighton University economist Ernie Goss said.
“During the dragging on, both sides lose,” Goss said. “Workers are looking at lost income. John Deere is looking at lost sales. So they both have sort of guns pointing at each other’s heads, economically speaking.”