Deere & Company (NYSE: DE) could be facing a strike from its unionized workers after union members overwhelmingly voted down a tentative contract.
"The tentative agreement reached by the UAW and John Deere was rejected this evening by a majority of 90% of the membership." United Auto Workers (UAW) President Chuck Browning said on Sunday. "The UAW negotiating team will report immediately to Moline on Monday. A strike deadline has been set for 11:59 p.m., Wednesday, October 13th."
The last time the John Deere brand faced a strike was in 1986 when factory workers represented by UAW picketed for 163 days. The strike was devastating for the firm, which posted record losses and slashed dividend payments to investors as a result. The strike looms large over the company and the 10,100 workers currently represented by the UAW as negotiations continue in a last-ditch effort to avert Wednesday's deadline.
The steep margin of loss for the tentative agreement contrasts starkly with the UAW negotiating team's initial optimism, which itself contrasts with the first signs of worker dissatisfaction that had begun to surface as early as 2015 when the previous contract passed only by a slim margin. The rejected contract drew concern for proposed wages that didn't keep pace with inflation and a dissatisfactory alternative to requests for post-retirement healthcare.
The coronavirus pandemic has caused a dramatic shift in bargaining power to labor amid profound supply line disruptions, market volatility, and a generally unstable global economy. As illustrated by last week's strike by workers at Kellogg's (NYSE: K) cereal factories and the preceding strike at Nabisco (parent company Mondelez International, (NASDAQ: MDLZ)) factories, many unionized workers are leveraging their newfound bargaining power to secure long-sought concessions in negotiations. As illustrated by the "we all quit" incident, non-union workers in low-wage, high-stress jobs are simply departing for better paying work, which has prompted the ever-visible scramble for workers at many restaurants and shops.
The Union's Sunday announcement didn't cause a pre-market drop, but the strike still looks to be weighing heavily on John Deere stock. Shares lost 3% during trading on Monday, but appeared to have bottomed out during Tuesday trading, regaining a modest 0.2% by noon.