Brief Strike Would Aid Deere, 3 Analysts Say

Deere & Co., which idled production at all plants after three were struck by the United Auto Workers, will benefit from the labor dispute by depleting bloated inventories--unless the dispute drags on--Wall Street analysts said Tuesday.

Analysts interviewed agreed that Deere had more to gain than lose from a short strike--but they disagreed on how they defined “short.”

David Sutliff of Salomon Bros. said a two-week strike would help Deere but a longer walkout would hurt. Karen Ubelhart of Oppenheimer & Co. said Deere would benefit from a strike lasting up to three months. Alexander Blanton of Merrill Lynch Capital Markets said a short strike would help Deere, but he didn’t know exactly what he would consider short.

Deere, the world’s foremost manufacturer of farm tractors and implements, announced Sunday that it had halted production at 10 Illinois and Iowa factories and turned away more than 8,000 UAW workers, a day after 4,300 UAW members went on strike at three other facilities.

“Deere’s lockout action (at the 10 plants) raises a serious question of whether management is shutting down its production . . . to reduce inventory but attempting to blame labor,” UAW Vice President Bill Casstevens had charged Monday from Detroit.

Company spokesman Bob Shoup denied that the company had sought the strike or was using it to reduce a glut of tractors and other implements on dealers’ lots.

“We never have and never would take a strike to reduce inventories,” Shoup said, adding that the dispute was at a stalemate and no new bargaining was scheduled.

Last week, in reporting a third-quarter loss of nearly $40 million to put fiscal 1986’s nine-month loss at $107 million, Deere Chairman Robert A. Hanson said that North American production so far this year was 22% below 1985.

And he said fourth-quarter production would be cut even further to reduce inventories and keep production below projected retail sales.

“If you can cut production 100% in one week or maybe two, you get something for nothing with a short walkout,” Sutliff said. “Beyond that, they’re going to begin to lose more money than they make.”

All three analysts said Deere suffers the combined pressures of a slumping agricultural economy, steep price discounts on machinery and excessive manufacturing capacity.