John Deere strike imminent?

[JH4ISU]

Correct, if the company loses money, they will cut dividends, stock will go down and the the managers stock options could expire upside down. What doesn’t go down though is the employee wages. The employees in essence don’t get the large jumps but get the safety of having their wages and/or increasing annually. Commission or profit sharing are always the fairest way to compensate, but most employees don’t want the risk. So they trade the high potential reward for the safety.

Yep no argument here that that could happen. Or that it is a relatively fair method of compensation and risk tradeoff.

Just wanted to clear up that DE hasn't cut dividends in that way in a long time, since usually that is a sign of a company that is struggling significantly financially, like in the scenario you just shared. Always could happen though.

 

[agcy68]

Just fyi co-pays are not zero never have been.

$20 ??

 

[Urbandale2013]

But rich investors aren't the only ones benefiting from the performance of stocks. If any of your investments, 401k or otherwise, in any way contain a stock, and you make money when that stock goes up, criticizing that company's management for making the stock price go up seems hypocritical.

How the heck is that hypocritical? I own stocks and take advantage of the extreme equity increases. That doesn’t mean that I want the companies I own to just focus on that. If I had my way the companies I own would follow long term growth strategies that will create sustainable investments for the future. I’m not actively trading anything. I despise the focus on short term quarterly profits.

I’m not sure how that is anyway hypocritical. I’m going to take advantage of the opportunities that are out there in an effort to not fall to far behind. I’m not going to encourage the same mentality that is problematic.

 

[agcy68]

Which is exactly why the union would be smart to cash in on their leverage now. They aren't going to have this level of power again in 6 years, it took a once-in-a-lifetime pandemic to reach it.

There's ways to generate profit -- cutting costs other places. Now that may come to haunt some of the union and other JD employees later, but...that's the risk they're taking.

You don't think most companies are already doing that? You think they are just sitting on cost cutting opportunities in case something like this happens?

 

[agcy68]

Another philosophical thought: What is the right pay gradient between wage labor and salary - specifically the lower tiers where the majority of salary people exist.

For example, comparing the salaries of the wage people versus what an early career engineer makes? Should there be incentive to get people into 4 year degrees?

 

[MeowingCows]

You don't think most companies are already doing that? You think they are just sitting on cost cutting opportunities in case something like this happens?

They're likely operating with a certain target in mind and will take the least-aggressive cuts to get there. If labor costs go too high, they'll have to make more aggressive cuts to meet their goals. That could mean a lot of different things -- fewer employees would be the most glaring one, and is a risk being taken by the labor force.

 

[BCClone]

salaried guys may find different ways of doing things and make a few jobs obsolete. Many times changes don’t happen until necessary. If you know your position has plenty of slow time. You should be nervous.

 

[agrabes]

That's for JD to assess and figure out. Labor negotiations are a snapshot in time, and that snapshot is right now. Sure, it's not a one-year deal, but it's not a twenty-year deal either. It's on JD to perform their own forecasting and know what they can sustainably work with.

Also, if we're being real, I don't exactly see JD collapsing any time soon.

Oh - I agree. All I'm saying is maybe JD has crunched the numbers and this latest offer is the most they feel they can responsibly offer if their profits, etc come back to a typical year next year. I agree that they should pass on their profits to the employees, just not more than they can do without risking the financial wellbeing of the company.

 

[MeowingCows]

Oh - I agree. All I'm saying is maybe JD has crunched the numbers and this latest offer is the most they feel they can responsibly offer if their profits, etc come back to a typical year next year. I agree that they should pass on their profits to the employees, just not more than they can do without risking the financial wellbeing of the company.

It's entirely possible that this is what they can reasonably offer. We don't know either way. The Union thinks it's not. They're on their own now to figure that out, 'cuz I'm sure public opinion of them is dropping a bit after that latest offer was declined.

 

[CascadeClone]

Another philosophical thought: What is the right pay gradient between wage labor and salary - specifically the lower tiers where the majority of salary people exist.

For example, comparing the salaries of the wage people versus what an early career engineer makes? Should there be incentive to get people into 4 year degrees?

I think this is one of the great debates of the times.

Whether it's college FB coaches making $8M while players get free food, or CEO's making $50M while low level workers make $15/hour. What's the "fair" ratio? Reasonable people can have different opinions. But I would posit that the people who are loudest about the topic are also the least reasonable.

Personally, I think stock-option type compensation (which drives probably 80-90% of the really crazy pay) should be based on longer term results, maybe 3, 5, 10 years down the road. Boards and institutional investors could drive those kinds of changes - so much money is long-term invested you would think that would be in their best interests.

WRT "normal" salaried vs hourly employees I think the difference is small enough that the market takes care of it. Should accountants make $45k or $95k? Should welders make $15 per hour or $50 per hour? Those differences are not insignificant, but they are small enough that local conditions and supply/demand for different types of labor can adjust over time to make it work. Honestly, right now I think we are seeing an oversupply of BS/BA degree workers and an undersupply of trade/skilled workers. And society is trying to figure out how to encourage more of the latter. Certainly pay & benefits are a big part of that, but so is perception and esteem.

I think the bigger challenge for office workers vs physical workers is that physical labor is hard on folks and they should be able to retire earlier. You can be an accountant and work til you're 70 if you want. But you can't be a roofer and do that.

 

[JM4CY]

salaried guys may find different ways of doing things and make a few jobs obsolete. Many times changes don’t happen until necessary. If you know your position has plenty of slow time. You should be nervous.

This is absolutely true. I talked to a couple of salaried guys who have talked about this general thing. I don't know if it comes to fruition though. They also, both funny and predictably, are not a big fan of some of the work they're being asked to do.

 

[CascadeClone]

Oh - I agree. All I'm saying is maybe JD has crunched the numbers and this latest offer is the most they feel they can responsibly offer if their profits, etc come back to a typical year next year. I agree that they should pass on their profits to the employees, just not more than they can do without risking the financial wellbeing of the company.

If I owned Deere, I'd set up some kind of profit sharing deal. Your pay package is fair, but you get X% of the profits. So if we make a boatload of money because corn goes to $25 a bushel, you get an extra billion to share. If we don't, then you don't. Puts the owners and workers more in the same boat, aligned goals and rewards.

 

[VeloClone]

I think the bigger challenge for office workers vs physical workers is that physical labor is hard on folks and they should be able to retire earlier. You can be an accountant and work til you're 70 if you want. But you can't be a roofer and do that.

Now for the most extreme of anecdotes:

My grandpa was a carpenter and he retired at 80. He was climbing roofs and doing the full job until the day he retired.

Retiring was the worst thing he could have done. At 80 he looked like a youthful 60 year old. Within two years he was in the hospital with all sorts of issues and he looked every day of 82. That is what often happens when someone who is very active just stops doing anything.

Yes, I know this is an extreme outlier. Heck, I was working as a stagehand out of college but I got out of it because I knew what some of that work was going to do to my body over the years.

 

[isufbcurt]

Somebody along her lineage did though. They weren’t just given that land from the government unless they were original settlers to which they took a risk.

Yeah someone paid $200 for an acre that is now appraised at $8500 per acre, but that was along time ago and they are long gone. None of us that will reap the benefits worked or took a risk.

 

[SEIOWA CLONE]

Actually Deere has cut their dividends hard over the last 5-6 years. Was just at 3% back in 2015 and now is just in the low to mid 1%s last I saw. So the stockholders have been giving back money they were getting.

Receiving less is not giving back anything. JD dividends were at 3% return for the last 2 quarters of 2015 and the first of 2016, so lets not act like it was 3% and above for years and they have started cutting back lately, when they were making record profits.
Dividend History for Deere & Co. (DE) (streetinsider.com)

 

[agcy68]

If I owned Deere, I'd set up some kind of profit sharing deal. Your pay package is fair, but you get X% of the profits. So if we make a boatload of money because corn goes to $25 a bushel, you get an extra billion to share. If we don't, then you don't. Puts the owners and workers more in the same boat, aligned goals and rewards.

I thought there was a few thousand of profit sharing they get every year if warranted. But, if not, good idea. And, do the workers want guaranteed pay or variable. Right now, it would appear they want guaranteed pensions...

On the downside, part of the question becomes how much? Right now, Deere commented they are rolling $3.5B into the new contract. That's a pretty good profit share right there. But how much? I don't think you can expect healthy companies to give away all their profits.

 

[isufbcurt]

Another philosophical thought: What is the right pay gradient between wage labor and salary - specifically the lower tiers where the majority of salary people exist.

For example, comparing the salaries of the wage people versus what an early career engineer makes? Should there be incentive to get people into 4 year degrees?

I think there is already incentives inherently build in to getting 4 year degrees. One and the biggest one in my eyes that a lot of people don't even think about is "wear and tear on ones body"

I have plenty of clients (welders, construction guys, etc.) who charge more than I do an hour, but they are also abusing the hell out of their bodies to make those few extra $ per hour. While I sit here on the comfort of my couch not beating up my body.

 

[agcy68]

Yeah someone paid $200 for an acre that is now appraised at $8500 per acre, but that was along time ago and they are long gone. None of us that will reap the benefits worked or took a risk.

And with the proposed tax law changes, you might end up having to sell that just to pay the tax bill when you get it.

 

[DSMCy]

I think there is already incentives inherently build in to getting 4 year degrees. One and the biggest one in my eyes that a lot of people don't even think about is "wear and tear on ones body"

I have plenty of clients (welders, construction guys, etc.) who charge more than I do an hour, but they are also abusing the hell out of their bodies to make those few extra $ per hour. While I sit here on the comfort of my couch not beating up my body.

Haven't you heard?! Sitting is the new smoking!

You are right on here. Those guys are much more likely to have knee, hip, etc issues.

 

[isufbcurt]

And with the proposed tax law changes, you might end up having to sell that just to pay the tax bill when you get it.

Gonna sell it anyways as soon as we get it. We have no interest in managing land a couple hundred miles away from us when we can get the cash.