Lessons for Management from the John Deere Strike

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The John Deere Co. Strike – Sign of the Times?

In case you missed it, a major battle between labor and management is playing out in the heartland.   On October 14, over 10,000 UAW-represented workers at John Deere Co. plants in Iowa, Illinois and elsewhere walked out following the expiration of their collective bargaining agreement.  Workers overwhelmingly rejected the Company’s first proposal for a new contract, with approximately 90% voting against it.   In subsequent bargaining, the Company sweetened its offer and presented to include an eye-popping 10% wage increase in the first year of the contract, 5% wage increases in alternate years, no-premium health insurance and employee signing bonuses of $8,500, which the Company presented as its “best and final offer.”  On November 2, workers again voted to reject the Company’s proposal, but by a much narrower margin – 55%-45%, according to media reports.

Management has vowed to continue production and has implemented a “Customer Service Continuation Plan” to continue supplying customers.  In this regard, Deere does have several production facilities in the U.S. and overseas not affected by the strike, and the Company reportedly has been using salaried workers and other nonunion personnel at the struck plants.

Management insists that it will not improve its contract offer.  So, what are the Company’s options at this point?

  • Hire replacement workers. During an economic strike, an employer may hire new workers to permanently replace striking employees.   There are media reports that Deere is hiring “strikebreakers,” which is an unflattering term for employees willing to cross a picket line.  However, in the current labor market, it is unlikely that Deere would be able to hire several thousand skilled workers to replace most of the striking employees, even if it wanted to.  Clearly, the Union is betting that the Company will not permanently replace its striking members.
  • Relocate or outsource production work. During a strike, an employer typically may relocate struck work to other facilities or outsource the work to other producers.   While Deere does have significant manufacturing capacity overseas, given the current snarls in the supply chain, sourcing production to Asia does not seem like an ideal solution.
  • Persuade striking employees to return to work. Employers have a legal right to communicate with union-represented employees during a strike.  While the Company cannot bargain or “deal with” its striking employees to the exclusion of the Union, it is may educate employees about the details of its contract proposal, and media reports indicate that Deere is doing just that.  As the strike enters its fourth week, undoubtedly, many striking employees are beginning to feel the bite of going without a paycheck, although wage losses may be offset by strike benefits paid by the Union.  Deere may be calculating that some of the employees who voted to accept its last offer are willing to come back.

This strike is emblematic of a broader pattern of labor unrest throughout the economy.   Recent data show that workers are quitting their jobs in record numbers – the so-called “Great Resignation” – and the overall job participation rate remains low.  Workers are becoming ever more assertive in their demands, not just for higher wages and benefits to keep up with inflation, but increasingly with record to social and political issues.   Indeed, Cornell University reports that over 25,000 workers walked off the job in October, more than double the average over the previous three months.   One thing is certain:  the John Deere strike is one of the highest profile labor actions in recent memory, but it certainly won’t be the last.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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