Experts have spent most of the last year watching the falling price of oil, but what about the falling price of grain? According to Manufacturing.net, the current state of the grain market in the United States has led to layoffs and reduced activity for farming equipment manufacturers.
At Deere and Company, an Illinois-based tractor manufacturer, more than 800 layoffs have been announced in Iowa, and 45 are set to take effect in Illinois. The news comes as soybeans reach record high stockpile numbers, with far too much supply to help bring costs down. As a result, farming operations have little incentive to continue producing grains at their current levels.
More significantly, farmers may have little room in their budgets to invest in new equipment. Those expenditures are most popular when revenues are more encouraging than current levels of corn, wheat and soybeans.
Temporarily reducing the size of a workforce is one way companies can get ahead of dismal industry futures. According to Iowa State University economist Chad Hart, the move by Deere and Company is strategic, aimed to help minimize the fallout of weak markets.
"Deere is probably being more aggressive in their pullback," said Hart. "They would rather cut early and conserve costs now, instead of cutting later."
Despite this setback in the farm equipment manufacturing sector, the manufacturing industry at large has shown strong confidence and potential for hiring in 2015. With slowly-but-surely improving conditions, output paces indicate this will be another year of strong net job creation for factory workers. From large manufacturing operations to machine shops, this hurdle in the grain market demonstrates another opportunity for companies to make adaptations in order to weather difficult scenarios.