Facing declining sales in commercial and consumer equipment such as riding mowers and leaf blowers, equipment giant Deere and Co. will merge that business into its ag equipment division.
The Illinois-based company said Tuesday it will combine its agricultural and commercial/consumer equipment units into a single worldwide “agriculture and turf” division starting May 1.
The new operating model is expected to cost Deere about 200 salaried positions by Sept. 30 through “voluntary separations,” the company said, along with pre-tax charges of about US$25 million in its fourth fiscal quarter.
Deere’s agricultural equipment division has seen relatively robust performance in recent months, particularly in the U.S. and Canada, having posted an 18 per cent increase in first-quarter (Q1) sales in February.
By comparison, commercial and consumer sales fell 25 per cent in Q1 compared to the year-earlier period. Construction and forestry equipment sales fell 28 per cent; that division is not involved in this reorganization, the company said.
The company has also announced several hundred layoffs in recent months. A plant at Welland, Ont., making Gator utility vehicles and ag equipment attachments is to close by the end of this year, affecting about 800 workers.
Another 160 indefinite layoffs were announced last week at Deere’s Des Moines facility, which makes tillage, seeding, spraying and cotton harvesting equipment.
Starting May 1, the new agriculture and turf division unit will have
two presidents. David Everitt will be in charge of the tractor product and turf and utility product platforms, while Markwart von Pentz will handle the crop harvesting, hay and forage, and crop care product platforms.
Everitt will have responsibility for sales and marketing in regions including Canada, the U.S., Australia, New Zealand, China, Asia, India and part of Africa, while Von Pentz manages sales and marketing for the rest of the globe.
The current president of the commercial and consumer equipment division, James Field, will continue reporting to Deere CEO Robert Lane in a new role as senior vice-president, Deere and Co.
The new division’s operating model is meant to “leverage common processes, standards and resources” for growth and improved competitiveness and performance “at all points in an economic cycle,” the company said.
The new model has been in development since early last year, Deere CEO Robert Lane said. “Products and functions will be formally realigned to make us more responsive to customer needs and market conditions, and allow us to work smarter, more effectively, in all that we do.
“Customers, suppliers and dealers will find it easier to work with John Deere because of reduced organizational complexity.”
Deere said it expects the merged division to “extend significantly” the market reach of its turf management equipment, utility vehicles, lower horsepower and lower-spec equipment through “improved access to established global networks.”
The commercial and consumer unit includes equipment such as skid steers, commercial- and residential-scale riding mowers, golf course-scale irrigation equipment, utility tractors, air compressors, generators, gas barbecue grills, leaf blowers and other power tools such as chainsaws.
“The new agriculture and turf division and its global operating model
will allow us to work in new ways, making better and faster decisions, closer
to the customer,” Lane said. “Bold steps like this allow us to improve our
competitive position worldwide even during the current economic disruption.”
Deere in late November posted record net income of US$2.05 billion for fiscal 2008, up from US$1.82 billion in 2007, with worldwide net sales up 18 per cent. The ag equipment division had posted its “best year ever” in 2008, with a 43 per cent increase in sales.
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