Deere & Co. last week said it will cut costs and ramp up investment in data-driven agriculture technology and its services business to make itself more profitable.
In a pitch to investors, CEO John May said the measures are expected to boost operating profit margin to 15 percent by 2022 from 12.5 percent projected for this year.
The steps are part of a broader trend in the U.S. manufacturing sector, which is facing its deepest slump in more than a decade. In a bid to smooth earnings volatility, manufacturers such as Caterpillar are slashing costs and focusing on more profitable parts and services businesses.
May, who took over Deere’s reins in November, aims to shore up the company’s fortunes, which have taken a hit from global trade tensions and poor weather in the American farm belt.
Deere reported lower profits in the latest quarter and has warned of lower earnings this year. In response to weak demand, the company has cut production and laid off workers.
May said Deere is reviewing its overseas manufacturing footprint in markets that have peaked or where it has over-invested. He did not provide the names of those facilities.
Recent layoffs have included operations in the Quad Cities and Brazil.
Source: New York Times