Deere to Close Plants, Cut Jobs
Deere & Co. said Monday that it will close or sell several plants and cut 1,975 more jobs, bringing the total to 3,225--or 7.3% of its work force--as it struggles to boost profit in tough economic conditions.
The company will exit its Homelite consumer products business, which makes hand-held blowers, trimmers and chain saws, and restructure its construction and forestry division. It plans to take a $150 million charge, primarily in this fiscal quarter, as a result.
Deere said it is in discussions with a potential buyer for Homelite and hopes to close a deal by October, the end of its fiscal year.
The company plans to sell its Chihuahua, Mexico, plant, which has 1,200 employees, and close some or all of its operations in Greer and Columbia, S.C., and Charlotte, N.C., affecting 475 employees.
Analysts said the cuts will help Deere boost productivity, although Homelite, with about $235 million in annual sales, is a small part of the company’s $13-billion total.
Deere shares fell 4 cents to $43.91 on the New York Stock Exchange.
The latest job cuts are in addition to an early retirement program it hopes will cut 1,250 jobs, or 8% of its salaried workers.
Deere said most of the new cuts will come in its Homelite consumer business, which was purchased in 1994 and has not been profitable for some time.
Goldman, Sachs & Co. analyst Joanna Shatney said it is the first time Deere, which has expanded through acquisitions, has exited an equipment business.
Deere also plans to eliminate 300 jobs in its construction and forestry division, and close its Atlanta office.
It will close a forestry equipment factory in Alabama, and sell or shut down a fabrication operation in Ontario.
Deere told analysts on a conference call that the cuts in construction and forestry eliminate overlap that occurred after its acquisition of Timberjack Group in December.
The company said it plans to continue selling heavy-duty versions of Homelite’s hand-held and portable power equipment to commercial users through its dealer network.
Deere had announced two weeks ago that its fiscal third-quarter earnings fell more than 58% and that it expected to lose money in the fourth quarter.
