- The Washington Times - Tuesday, April 14, 2009

PITTSBURGH (AP) - Deere & Co. said Tuesday it plans to combine operations that make its iconic green and yellow tractors with another unit that manufactures products like chain saws, resulting in about 200 job cuts.

The world’s largest maker of farm machinery said the restructured unit will help it better meet customer needs, cut costs and boost global sales of products like riding mowers. Sales of such products have tumbled as the global economic downturn has slowed spending and made it harder to get loans. And while Deere’s farm machinery sales have been strong, the company has slashed its 2009 earnings outlook.

The company’s agricultural equipment division, with sales of about $3.26 billion, accounted for about 63 percent of total revenue for the first quarter ended Jan. 31, while sales of $558 million from its commercial and consumer equipment unit represented some 11 percent.

As a result of the units’ combination, the Moline, Ill.-based company expects to record pretax charges of about $25 million, mainly in the fourth quarter of 2009.

The new unit, which has been in planning stages since early 2008, will be called the agriculture and turf division and will have two presidents. David C. Everitt will be responsible for tractors and turf and utility products. Markwart von Pentz will oversee crop harvesting, hay and forage and crop care products.

The job cuts, involving salaried workers, are expected by the end of September and will be made through voluntary separations. As of March 29, Deere employed about 55,000 people, about half of them salaried positions. The divisions to be combined employ a total of about 38,000 people, including 15,000 salaried workers.

The cuts will be the latest at Deere, which has laid off more than 1,000 workers since the beginning of the year as the world financial crisis saps demand for its products, particularly construction and forestry equipment.

Deere spokesman Ken Golden said the company will decide which 200 salaried jobs will be let go as the two operations start to merge.

No factories are expected to close and Deere’s product line will remain unchanged, but the company said it would consolidate its six U.S. sales branch offices to two locations in Lenexa, Kan., and Cary, N.C.

“This should make it easier to do business with Deere,” Golden said, referring to the anticipated streamlining of communication between the company and Deere customers.

Those customers may own Deere products made by the different divisions and may have to contact different sources for parts and services.

Deere’s worldwide agricultural equipment sales _ its biggest operation _ leaped 18 percent during the company’s first fiscal quarter ended Jan. 31 as higher prices and volumes offset greater raw material costs and a stronger dollar.

But sales of commercial and consumer equipment _ including products like riding mowers and chain saws _ slumped 25 percent, hurt partly by lower volumes amid the continued housing slump. Its construction and forestry sales slid 28 percent.

Shares of Deere fell 45 cents to $37.02 Tuesday.

___

AP Business Writer Bree Fowler in New York contributed to this report.

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