John Deere doubles wage increases, boosts retirement benefits in second offer to striking UAW workers

John Deere doubles wage increases, boosts retirement benefits in second offer to striking UAW workers

In its latest offer, Deere & Co. executives doubled wage increases and boosted future retirement payments for United Auto Workers members.

An outline of a new contract between the company and the union released Sunday afternoon shows that 10,100 striking UAW members will receive 10% wage increases, compared to what they made earlier this year. That's up from a 5% or 6% increase that Deere offered in an earlier proposal, which nine out of 10 union members rejected Oct. 10.

The company will also continue its pension program for new hires, which Deere was going to cut under the prior agreement. And, compared to that agreement, the new proposal pays a higher rate for future retired workers. A 25-year employee would see an extra $150 a month.

The company also added lump sum payments that can reach six figures for future retired employees.

Chris Laursen, a 19-year painter at Deere's Ottumwa plant and the former UAW Local 74 president, said he expects to vote in favor of the contract after rejecting the Oct. 10 proposal.

"It's a hell of a lot better than what (the union) got us the first time," he said. "After two weeks-plus of strikes, we definitely made some gains on this."

The UAW's members will vote on the contract at 10 a.m. Tuesday. Union leaders said in a statement that Deere workers will remain on strike at least through the contract ratification.

The contract represents workers at 12 Deere locations in Illinois, Iowa and Kansas. The Iowa plants include factories in Ankeny, Davenport, Dubuque, Ottumwa and Waterloo. The UAW also represents Deere workers in Colorado and Georgia under a separate contract.

The strike, which began Oct. 14, is the first that the UAW has called against Deere since 1986. The action came as the company celebrates record profits, with executives expecting Deere to earn $5.7 billion to $5.9 billion for the fiscal year that ends Monday. CEO John May's pay increased 160% in 2020, to $15.6 million.

At the same time, several UAW members said they felt the company owed them big raises after they worked through the COVID-19 pandemic, with executives telling them they were "essential" employees. The strike also comes as Deere and other manufacturers struggle to find enough workers.

The lowest level Deere employees covered in the contract, such as foundry product, would see their hourly wages immediately increase from $20.12 to $22.13. The highest level workers, such as electricians, would see hourly wages rise from $30.04 to $33.05.

The company will also give workers 5% raises in 2023 and 2025, and Deere will reinstate quarterly cost of living adjustments that workers lost in their 2015 contract. Overall, UAW officials expect that workers will see a 30% increase in wages from the beginning of this year through 2027, when the contract ends.

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The contract also promises lump sum payments to workers when they retire. Employees who stay with the company for 10 to 24 years will get $37,500. Workers who stay at least 25 years will get $50,000.

In addition, Deere agreed to put another five-figure sum in an account for workers when they retire. If workers approve the new contract, the company will give employees an extra $2,000 for each year they've worked at the company. A 25-year worker will see an extra $50,000.

Laursen, the Ottumwa worker, said Deere told union officials this is their "last, best offer." If workers reject the contract, he said the company has informed the union they won't be back at the table for several months.

"That's a scare tactic," Laursen said. "I can’t see them going without production for four or five month. Maybe they’ll bring in (nonunion workers) from down south. It’s a big enough (expletive) show when we’re in there, and we know what we’re doing."

Dave Schmelzer, a 24-year quality control inspector in Milan and former UAW Local 79 chair, said he expects to vote for the contract after rejecting the last one. The boosted retirement benefits sold him.

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He said he is worried the majority of members will reject the contract Tuesday, though. He believes some workers think Deere executives will put forth another, better offer. He pointed out workers are currently taking a pay cut, receiving $275 a week while on strike. He doesn't know how long they will be able to stay strong if the strike stretches through the end of this year.

"There's no guarantees that you get more if you just keep striking," he said. "There's a substantial loss for striking for three, four months. You can’t get that back. You can't work at a high enough hourly rate to chip away on that loss. It's just gone."

Jon Root, a 16-year assembler in Waterloo, said he still plans to reject the new contract Tuesday. He said Deere can afford to pay higher wages than what executives offered.

Root said he knows cashiers who make as much as some workers at the factory. He has circulated a petition among UAW members, demanding across-the-board, $10-an-hour pay raises. That would come out to hikes of 33% to 50%.

He said union members should be especially motivated to push for better wages because of the death of Richard Rich, a Deere employee in Milan, Illinois, who died last week when a car hit him as he walked across the road from his picket line.

"We want (better) pay," Root said, "or that union member died for nothing. The whole country is looking to us to set the new standard for skilled assembly labor."

Tyler Jett covers jobs and the economy for the Des Moines Register. Reach him at [email protected], 515-284-8215, or on Twitter at @LetsJett.