workers represented by the United Auto Workers union went on strike after an agreement over wages and benefits couldn’t be reached with the agricultural equipment giant.
The strike began around midnight Central time.
Workers earlier this week rejected a new, six-year collective bargaining agreement. The UAW said 90% of its members voted against the contract proposal, which would have provided workers with immediate raises of 5% to 6%.
The contract, which also included improved benefits, would have covered more than 10,000 workers at 14 facilities across the United States, according to Deere (ticker: DE).
“Our members at John Deere strike for the ability to earn a decent living, retire with dignity and establish fair work rules,” said Chuck Browning, UAW international vice president, in a statement. “We stay committed to bargaining until our members’ goals are achieved.”
The strike at Deere—the first since 1986—follows earlier stoppages at Kellogg (K) and Mondelez International ‘s (MDLZ) Nabisco, and by Hollywood production workers. Experts say these strikes portend a coming wave of labor action as workers have gained more leverage during the pandemic.
Deere said operations would keep running while talks with the union continued, but added it couldn’t estimate when the strike might end.
“We are determined to reach an agreement with the UAW thatwould put every employee in a better economic position andcontinue to make them the highest-paid employees in theagriculture and construction industries,” said Brad Morris, Deere vice presidentof labor relations, in a statement early Thursday.
Analysts at William Blair said they believe the stock’s “fundamental picture will not change” much if the strike is resolved in the short to medium term.
“There will, of course, be an unquantified, temporary financial impact, which we believe Deere can handle, and believe that weakness will be used as good buying opportunities, as history would suggest,” the analyst added.
William Blair maintained its Outperform rating on the stock.
Deere shares have risen almost 23% so far in 2021 and more than 38% over the past 52 weeks amid an increase in crop prices, which have boosted sales of agricultural equipment. Deere has forecast earnings in fiscal 2021 of between $5.7 billion and $5.9 billion.
The stock was up slightly on Thursday, after dropping 2.2% in the premarket session. The
Dow Jones Industrial Average
have gained 1.5% and 1.6%, respectively.
Write to Joe Woelfel at [email protected]