Moline-based Deere said Tuesday that it has opened negotiations with the United Auto Workers union over a labor deal covering 10,000 manufacturing jobs.
But the timing, on the back of China’s “Black Monday” stock market crash, couldn’t be worse for the UAW.
Low commodity prices were already slowing demand for farm equipment. And the uncertainty caused by the faltering Chinese economy only makes negotiations harder for the union, according to University of Illinois at Chicago School of Labor and Employment Issues professor Bob Bruno.
“Some things are just out of your control,” Bruno said of the tough hand dealt to UAW negotiators. “Clearly this is a tough context, but it makes it hard for both sides.”
Deere’s six-year deal with the UAW — covering workers at a dozen plants — expires at the end of September.
Both sides declined to discuss the negotiations Tuesday, but UAW President Dennis Williams acknowledged in a news release that “in the last year, we have gone through some tough times,” while describing setbacks that have seen Deere lay off 1,900 workers in the last year and a half as “cyclical.”
“We know from history that the key to a good contract is one in which UAW members prosper, John Deere prospers and customers prosper with our products,” he said.
According to Bruno, the union has a “pretty good” relationship with Deere and is pushing hard to end a two-tier wage system under which new hires are paid less than long-standing employees, but Deere’s desire for flexibility will only increase given the current uncertainty about where the economy is heading.
“You make decisions now, but you’re doing it based on your estimates of where you’re going to be,” he said. “When things are volatile that can make it pretty challenging.”
Both sides will have to work extra hard to develop a shared interpretation of the economic data, he added.
One of Illinois’ largest employers, Deere has faced a slump in sales and is beginning its contract talks just four days after it revised downward its outlook for the year. On Friday it said weak agriculture and energy sectors are hurting sales.
Deere laid off 910 employees at plants in Iowa and Illinois earlier this year, on top of 1,000 workers it let go across the Midwest last year.
Several Illinois locations, including facilities in East Moline, Milan and Moline, are among those covered by the deal up for renewal, and rank-and-file union members have been preparing. UAW Local 865 in East Moline, which represents Deere workers, took a vote earlier this month on whether to approve strike action, should the talks break down.
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