Saturday, May 18, 2019

Last Call For The Perfect Storm

Midwest farmers are getting destroyed by the twin grinders of climate change and Trump's trade war with China, and this is where Democrats need to come in and make the case they are better on both issues.  In Iowa as farmers deal with the Mighty Mississippi flooding and soybean and corn prices hitting rock bottom as China is no longer buying, John Deere's tractor plants are cutting production and possibly jobs.

Deere & Co. is scaling back production at some of its major North American plants, with heightened trade tensions and harsh weather hurting farmers' incomes and lowering equipment demand.

Moline-based Deere on Friday cut its full-year profit forecast. The agriculture-equipment manufacturer reported second-quarter earnings of $1.13 billion, or $3.52 per share. That's lower than the $1.21 billion, or $3.67 per share, reported during the same quarter last year.

The revised forecast is another indicator that farmers, and those in the Midwest in particular, are suffering the brunt of the Trump administration's trade battles. On Friday, the president sought to ease fears over the escalating trade confrontations by lifting tariffs on industrial metals with Mexico and Canada, and he has pledged another aid package for farmers hurt by tariffs.

Deere said it lowered its forecasts because farmers aren't buying as much equipment. Farmers are worried about plummeting crop prices, international trade disputes and extreme weather events that have delayed planting, including here in Iowa.

Deere's earnings were lower than Wall Street expectations, causing shares to drop more than 7 percent in afternoon trading.

"Ongoing concerns about export-market access, near-term demand for commodities such as soybeans and a delayed planting season in much of North America are causing farmers to become much more cautious about making major purchases," Chairman and CEO Samuel Allen said in the report.

On a Friday morning call with analysts, Josh Jepsen, director of investor relations, said in response to market dynamics Deere is reducing production in its agriculture business to levels below retail sales. Production will be lower at some of its large North American plants for the remainder of the year.

He said the changes are mostly affecting the production of large agriculture equipment, with its major plants shipping around 20% less than the previous year.

Locally, Deere manufactures large agriculture equipment, such as combines and tractors, at its factories in East Moline and Waterloo.

Deere spokesman Ken Golden said the company is not specifying where production cuts are being made, only that it plans to under-produce market demand in the second half of the year.

"Production changes can be accomplished without changing the size of the workforce," Golden said in an email. "We have not announced any change in workforce."

The job cuts won't come until next year, I figure.  Just in time for 2020 campaign season, too.  But they are coming.  Trump's trade war with China is about to get a lot worse for America's economy across the board as the real effect of tens of billions in new tariff taxes raise prices across the board for everyone.

Like I keep saying, Trump wins as long he keeps his campaign promise of making everyone else other than rural white voters more miserable. The second that misery comes home to farmers and ranchers and Crystal at Wal-Mart and Ricky at the Speedway, he's done.

That's the problem with a "white supremacy/economic anxiety" platform. If you don't deliver on the economic side of it, you're toast.  The economy is going to crater and soon, especially if there's war in Iran.

And then the Democrats have a real shot.

No comments:

Related Posts with Thumbnails