Deere Plans to Shift Production Amidst Midwest Manufacturing Slump

Since January 2024, John Deere has laid off 650 workers between locations in central and eastern Iowa and more could be on the way as KWWL reports the company is in the process of purchasing land in Mexico to build a new production plant.

According to the report, John Deere plans to move production of mid-frame skid steer loaders and compact track loaders from the current plant in Dubuque to Mexico.

“Those are very attractive jobs,” Creighton University economist Ernie Goss said. “Those are jobs you don’t like to lose.”

Those jobs likely won’t come back with new land being purchased and a facility being built to produce the line of equipment, Goss continued.

The sentiment was echoed Monday in the Mid-America Business Conditions report for the month of May showing manufacturing companies below growth-neutral for the past three out of four months.

“Manufacturing is weak and getting a bit weaker, not a recession yet, but it’s certainly moving in that direction. Farmers have cut back significantly on their purchases of agricultural equipment (thanks to) obviously lower commodity prices and higher interest rates,” said Godd.

Higher interest rates are increasing the value of the dollar and creating a very difficult environment for companies to price products competitively, Goss said.

“Long term I think we’ll be okay, but short term is a real struggle,” added Goss.

Goss remains optimistic about the strength of the Midwest economy, saying places like Iowa are able to weather economic downturns better than our neighbors to the east and west thanks to our ability to produce products more efficiently and land values that continue to rise.