John Deere Workers Strike After Failed Contract Talks

Some 10,000 unionized workers at the agriculture equipment maker Deere & Company went on strike early Thursday after overwhelmingly rejecting a contract proposal worked out with the company by negotiators for the United Automobile Workers union.

“Our members at John Deere strike for the ability to earn a decent living, retire with dignity and establish fair work rules,” Chuck Browning, the director of the union’s agricultural department, said in a statement. “We stay committed to bargaining until our members’ goals are achieved.”

Deere said it was “determined to reach an agreement” that would benefit workers. “We will keep working day and night to understand our employees’ priorities and resolve this strike, while also keeping our operations running for the benefit of all those we serve,” Brad Morris, the company’s vice president for labor relations, said in a statement.

The strike deadline was announced on Sunday after the union said its members had voted down the tentative agreement reached on Oct. 1 with the company, which makes the John Deere brand of tractors. Union negotiators had said the proposal would provide “significant economic gains” and “the highest-quality health care benefits in the industry.”

But workers, who are spread out across 14 facilities, primarily in Iowa and Illinois, criticized the deal for insufficiently increasing wages, for denying a traditional pension to new employees and for failing to substantially improve an incentive program that they consider stingy.

“We’ve never had the deck stacked in our advantage the way it is now,” said Chris Laursen, a worker at a John Deere plant in Ottumwa, Iowa, who was president of his local there until recently.

Mr. Laursen cited several sources of leverage for workers: the profitability of Deere & Company — which is on a pace to set a record of nearly $6 billion this fiscal year — as well as relatively high agricultural commodity prices and supply-chain bottlenecks resulting from the pandemic.

“The company is reaping such rewards, but we’re fighting over crumbs here,” he said.

Deere, long known to farmers for its green-and-yellow product line, is a publicly traded company valued at more than $100 billion. After a brief plunge early in the pandemic, its shares have tripled, far outpacing the overall market. They rose slightly on Thursday.

Steve Volkmann, an analyst with the investment bank Jefferies, acknowledged that Deere was doing well. “Crop prices have increased with every other commodity,” he said, “and when farmers make money, they tend to buy equipment.” And he said Deere’s leadership in agricultural technology had helped make it more profitable.

Mr. Volkmann said the financial damage from the labor dispute, if it was settled quickly, would be limited. The company’s bigger challenge, he said, comes from the pandemic’s disruption to the worldwide supply chain, which has caused shortages and raised prices for some components.

“Deere is already under some stress,” he said. “They’re not producing at full capacity anyway — they just don’t have the parts.”

As many employers grapple with worker shortages, workers across the country appear more willing to undertake strikes and other labor actions.

Last week, more than 1,000 workers at Kellogg, the cereal maker, went on strike, and Mondelez International, which makes Oreos and other Nabisco snacks, experienced a work stoppage this summer. Coal miners in Alabama have been on strike for months. Workers have also waged prominent union campaigns at Amazon and Starbucks.

Those on strike elsewhere in the country have raised similar complaints as the Deere employees, pointing out that they put in long hours as essential workers during the pandemic but are not sharing much of the profits that their companies reaped during that time.

“There was no reprieve — everyone was working seven days a week,” said Dan Osborn, the president of a Kellogg workers local in Omaha.

Mr. Osborn said his members were upset over a two-tier compensation system that they worry puts downward pressure on the wages and benefits of veteran workers. “Divide and conquer, it’s an age-old adage,” he said.

The Facebook pages of some U.A.W. locals on Thursday encouraged workers to turn out for picketing, which one said would qualify them for strike pay and health insurance.

Union members at General Motors walked off the job for almost six weeks in 2019 before agreeing to a four-year contract that included substantial wage increases and closed disparities in a two-tier wage structure.

Under the tentative deal at Deere, wages would have increased 5 or 6 percent this year, depending on a worker’s pay grade, and then an additional 3 percent each in 2023 and 2025.

Pension benefits would have increased but would have remained substantially lower for workers hired after 1997, and many workers were disappointed to see benefits eliminated for new hires, Mr. Laursen said.

Other workers are perturbed about the lack of health care benefits for retirees, which also ceased for workers hired after 1997.

Analysts suggested that Deere might be wary of taking on additional long-term obligations because its current level of profitability is unlikely to last.

“It’s a very cyclical business,” said Ann Duignan, an analyst with J.P. Morgan. “They may be having record profits this year, but we believe we are close to a peak.”

Many workers were frustrated with similar elements of the last contract that the union negotiated with Deere, in 2015, and had been anticipating a showdown ever since.

“I’ve been saving since the last contract,” said Toby Munley, a Deere electrician in Ottumwa, where U.A.W. members voted to reject the previous contract, as did another local in Iowa. “People were feeling it then.” That contract was narrowly approved overall.

Looming over the negotiation is suspicion among rank-and-file workers toward the international union after a series of scandals in recent years involving corruption in the union and illegal payoffs to union officials from executives at the company then known as Fiat Chrysler.

The scandals led to more than 15 convictions, including those of two recent U.A.W. presidents.

Mr. Munley said he had worried that the U.A.W. would try to negotiate a marginally better deal and sell the membership on it before the strike deadline Wednesday night, but said he was encouraged that the union had held firm.

“I was happy to see we didn’t come back with a tentative agreement,” he said. “It restored some of my faith in my international.”

Nelson D. Schwartz contributed reporting.