The American farmers now have grown anxious, and the reason for this is the ongoing trade war with China. The result has been devastating for Deere and Co, which is the strongest player in the agricultural equipment arena.
The company claimed on Friday that it would be reviewing its costs in view of the affected earnings that have a root in the unending trade war between the US and China. The company was forced to trim its earnings forecast for the second time in three months.
The production in its manufacturing plants will be reduced by a 20 percent mark. The reduction is likely to be in the realm of large tractors. The company expects the reduction in the production to provide access to around $ 25 million in savings. The same strategy will be continued over a period of next three years.
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The Chief Executive Officer of the company, Mr. Samuel Allen stated that “Concerns about export-market access, near-term demand for commodities such as soybeans, and overall crop conditions, have caused many farmers to postpone major equipment purchases,”.
It isn’t only Deere that has taken this drastic steps to contain costs, but even the competitors like AGCO Corp and CNH Industrial have decided to tread the same path. The major reason for the decision has been the drop in the export earnings of the American farmers. This has been the result of the year-long tariff war between the US and China.
Deere has claimed that the agriculture & turf segment has dropped by 6 percent. The overall drop in the sale of equipment has been around 3 percent.