Deere to Cut 10% of Workforce at Brazil Factory

Deere & Co. said it will lay off nearly 10% of its workers at a factory in southern Brazil, citing falling equipment sales in South America and “the volatility of the Brazilian market,” reported Nasdaq.com.

The Horizontina factory, where the layoffs will take place, has roughly 1,800 workers and produces mechanical harvesters and planters. Deere has four other factories in Brazil.

The move came as farmers, faced with lower prices for sugar cane and grains, hold off on buying new machinery. Prices for soybeans, Brazil’s biggest agricultural export, have fallen almost 30% since the beginning of the year.

In recent years, Brazil has been a key growth market for U.S.-based farm equipment manufacturers looking for sales expansion beyond mature markets in North America and Western Europe. Brazil’s climate allows many farmers to plant crops year-round, putting greater demands on machinery than in the U.S. Rising commodities prices in Brazil, combined with a government-supported loan program for equipment purchases, fueled a robust demand for tractors and harvesting combines.

Deere’s farm machinery sales in Brazil account for about 10% of the company’s annual sales, according to analyst estimates. Its overall share in the Brazilian tractor market is about 21% of total units sold. Brazil is the continent’s biggest market for such equipment.

Recently, Deere has said it expects sales of agricultural machinery in South America to decline 15% from 2013, and industry-wide farm machinery sales in Brazil to be flat in 2015 compared with 2014. S