I have an alternative explanation. What's happening with JD isn't exclusive to JD and not caused by capitalism. It's MBA centric thought that has taken over capitalism. You're seeing very short term strategies due to quarterly profit reports. You're seeing extensive price gauging when they can make it work. Then when things start going downhill literally all they know how to do is cut costs. Reducing prices is frowned upon by shareholders so that's not happening. Innovation isn't a priority because that costs money that shareholders don't like to see spent and it doesn't serve the short term quarterly profit focused strategy. The other issue is with nearly all businesses being publicly traded nearly all the focus is on profit instead of quality, innovation, durability, loyalty etc. Gone are the days of the owner taking a yearly salary in rough times of 1 dollar to keep people on and put more money into the business. With publicly traded companies they are legally bound to give shareholders the most return possible.
Yup, let's juggle the numbers to make things look better next quarter so we get a bonus and the stock goes up. Companies no longer make money by making a good product or service. They make money by beating last quarter's stock performance.
Spent my whole life in a factory. It was the best I could do in my area with my High school education. The work was hard, hot, dirty, and dangerous. Not to mention, degrading. Thanks mostly to the latter, my mission in life over that 35 years of service, was to empower my kids to be better than me. Thank God it worked. The advanced degree people ( management/engineers) ALWAYS looked down on us as a control tool. We politely warned them to no avail, so here they are with no new blue collar talent. Arrogance created this problem 25 years ago. BTW , Mike , love what you do. Watch every video!
Yanmar was a contract deal. JD had had factories in several countries for decades. Ford had a ton of British parts on tractors since the late '60's. Massey F was half British made on many models. AGCO built their name from the KHD Dueatz buyout of Allis Chalmers/Gleaner lines in the 1980's. AGCO was originally "Allis/Gleaner Corporation before it was AGCO with all the other companies under it's umbrella. CNH Global is the old Ford Ag, New Holland, JI Case, and International brands under one umbrella. Color doesn't matter anymore, the local dealership does. If they will get you the parts, send a Tech asap, or try to help you fix it over the phone, that's who you deal with.
I retired from John Deere. I was talking to a HR manager a while back and he was telling that absenteeism typically exceeded 20%. Another problem was hiring sober workers. Despite giving the new hire getting plenty of time to prepare a large precentage still flunked the drug test.
Zustimmung, vergleichbar mit dem Opiumkonsum um 1900 in China angezettelt durch England. Nun fördert China in Verbreitung von Drogen in der ganzen westlichen Welt.
That's the main problem. It's not the availability of workers, it's the availability of quality workers. People these days tend to have a poor work ethic and drugs is a big problem.
@@Flaaaaanders John Deere factories use team based incentive systems. A substandard employee not only cost Deere money they also cost their team money. Nobody at any level wants to work next to a druggie.
Mike, I’m like you, worked in and managed Massey, Ford, New Holland, and Kubota dealerships. No particular love for Deere either. But as a businessman (retired), I do admire them. I watched a video with one of John Deere’s senior management folks explaining a lot of the story behind the jobs news. A lot of what drives the market for John Deere is the commodity prices of corn and soybeans which affects the total farm income. As you are aware, crop prices are down and total farm income is expected to be down about 25% this year, so the farmers are cutting back on purchasing new equipment. This is reflected in Deere’s 2nd quarter sales figures which are also down in the 20+% range. Most of us work and understand that if it takes 100 people to build 10 of your product that you are selling, what happens when you can only sell 7 of them and only have work for 70 of those 100 people. Do you continue paying those other 30 people who are just standing around? What has also been left in the dust has been the expansion of John Deere’s labor force over the last 5 years or so; and now they are cutting “1,000s of jobs”, which is really about 2% of their worldwide workforce. John Deere is investing in a new production line in Iowa where they will be making a 9R series tractor with up to 800 hp. I wish I could find that video detailing some of this but I cannot at the moment. I appreciate you speaking common sense facts. If I remember correctly, all of my ancestors were immigrants, a lot of whom didn’t speak English when they got here. I bet yours were also, Mike. Immigration over the millennia is what has built this country. Think about it: the ones who were lazy stayed home; the ones who had some spunk and risk-taking ability walked away from their home to somewhere where they could better themselves. I grew up on a small Missouri farm that had been in our family since 1875. I’m currently living on my mother’s family farm which they moved to in 1845. Anyhow, the overall economic picture has so many complicated, interacting relationships that todays 15 second sound bites cannot possibly explain.
@johnhelbig7110 Take a look at the most recent videos of "poor, downtrodden families" crawling to our southern border, looking for a better job, a better life. Haha! No, they are cleanly dressed, all with backpacks, cell phones, fresh off a bus just off camera range, younger women and men of military age. These are not job seekers! So the immigrant picture you paint of the 1850-1920s doesn't exist today. Our country is not being built by immigrant sweat...it is being drained by immigrant greed and government permissivity.
My fathers family came to the USA from Ireland 1850's and spoke english, my mothers family came from Holland in the 1750's, if they did not speak english they learned it........
@@wilburfinnigan2142I remember my Great grandmother, who came over from Bohemia before WW1 as a teenager, only read the German issue of the St. Louis newspaper she subscribed to.
I think we need to encourage the trades more. My oldest son has a business degree and works on the assembly line for a car parts manufacturer. My youngest quit college after one year and now has his own business as a professional body builder and coach to body builders and normal fitness. My nephew has a business degree, tried that for a while, and decided to apprentice as a plumber. He is now a licensed plumber and is working on his masters license. Some college degrees make financial sense: engineer, medical, etc. We need less people with soft college degrees and more people with trade skills.
I was reading a blurb from years ago talking about this. Students going for s 5 year accounting degree, and having to study hard all the time watching business majors screwing off, going home every weekend, graduating a year earlier than them. Then when these guys graduated and went looking for jobs, they were being interviewed by vo-tech students, high school graduates, FFA kids etc. all owning or running the businesses- and the accounting degree types worked FOR them, lol. A real kick to the head- not to mention their pride. Yes, its an in demand skill that wont be going away, soon. But you trade that security for a mid level job. The folks that really figured out the game, and rose to the top, took a very different path. Kind of makes you wonder WHY we were all pushed so hard to go to college right out of high school...
In the UK,and here the students get big loans from the government, to pay for degrees from university,.Loans have to be paid back,when save readers a preset level.Many never pay. Our one time great education system has been destroyed, by the crazy "must have a degree" idea. Good tradesman are in great demand, but over in with journalists and hairdressers!
@@charlesperry1051 25 years ago the pressure was on that everyone had to sit behind a screen and do computer. It was frowned upon if you did a job and got dirty or you had sweat on your brow. Lost a whole generation of plumbers welders carpenters electricians etc etc cause of the darn computer
At the 4:50 point in the video, he says that there is a "labor shortage" in the USA. That is incorrect and dishonest. In Rockford, Illinois, the area in which I worked my entire adult life as an industrial electrician, there was a manufacturer of high-quality hand tools. They had put an ad in the local paper, advertising for an electrician. I was in between jobs at the time and applied for the job. I was one of the TWENTY QUALIFIED PEOPLE who applied for the job and one of the six that was interviewed. I did not get the job, as I was informed that my robotics skills were weak, which was true. Before leaving, I thanked them for their honesty and left. Rockford, like THOUSANDS of other cities in the USA, is now an industrial ghost town. Tens of thousands of manufacturing facilities have been moved to China or Third World countries, resulting in MILLIONS of Americans being thrown out of work. We are told all the time that the reason for this is because Americans do not want to work, they are lazy or do inferior work. That is absolute NONSENSE. The reason why work is being offshored is because of the GREED of the parent corporations. They want higher profits, any way they can get them and American workers be damned. Two of the more recent "fatalities" here in the USA are Carrier refrigeration and Hershey's chocolate. The production was moved to Mexico, NOT because Americans were lazy, non-productive, did shoddy work or that the manufacturing operations were not profitable. The Americans WERE productive, did excellent work and the operations were profitable. But the parent corporations figured out that they could obtain higher profits by moving their facilities to Mexico, cutting their labor costs.
I grew up in a GM factory town in the 70s and early 80s. It was government over regulation and Union antics that made it make sense to move factories out of our Country.
@@bryangill7736 I worked at Delphi, ending upon the carbon canisters It was a huge headache when they started manufacturing in Mexico. They could duplicate our testing, quality control was a challenge, Safety off-site was an issue. Good luck for John Deere..
We all want American made products including me however with all the regulations and labor unions and lawyers it raises the cost astronomically! I spent 18 years in the car business and we had the same problem! America wants American made but wants to pay Walmart prices for it , then complain about Jin’s moving out of country!!!! Just me view from the deer stand! Great points Mike
In 1982 my wage after 3 year after graduation in engineering was 1X in Southern California..and a unionized floor sweeper at a steel plant in the mid west usa was 1.5X. So my uncle who worked at that steel plant said the floor sweeper guy just had a high school education and already had bought a house.. So that guy had 5 years more full time working than I did since didn't half to take 7 semesters of math 3 physics a dozen labs differential equations.. Fortran senior projects on solar panels senior projects on MIE scattering of light for particle size determination. I am not knocking the unionized sweeper at all. Just amazing how his job allowed massive wealth of buying a house and having kids with just 12th grade education.
Yeah that’s all fine and good but when a company makes 10 billion in profit and then says “costs are too high we have to move labor to Mexico” that’s a bit dishonest.
I work in the appliance industry, and much of what you state is accurate. I deal with people from all over the planet working in a multinational company. Being an engineer, I was required to get a college degree, but do not see the value of studies that are not STEM. Unfortunately, this type of educational malpractice is being experienced by man whom have degrees that have no application to a vocation. If you can afford a degree in something that has no application to a vocation, fine that is no problem. To most this is not an option, and have been lied to as it pertains to the value of the degree. As an aside we are tightening up out supply chain to include more readily available suppliers that do not require a boat trip to get here. Nice job.
premium? Nope its about saving money for the corp/stock holders/etc. No different when they send IT positions to India.. Its not saving money for the end users, its saving money for the top guys get big bonuses.
Also, they are not making $18 an hour in Mexican factories. I can assure you that........ An engineer in Mexico makes $20,000 a year a skilled mechanic in Mexico makes $8,000 a year. I know the numbers well.
Mexican workers will be hired through an intermediary company so that JD doesn't have to give much in terms of benefits. Mexicans will still be making minimum wages. That is exactly the cost saving strategy GM uses at their SILAO plant.
You're pretty spot on. I don't even talk about stuff like this anymore. People will regurgitate talking points from their favorite news outlet and that's about as far as their minds take them. I've always had a knack for research, doesn't take me long to get through the weeds and find the truth. Looks like you've blown past the weeds.
We definitely need to encourage our kids to get into some type of a trade. Everyone is encouraged to go to College. If no one can do the work there will not be a need for the College educated. They won’t have anyone to supervise. It’s sad to see John Deere move some of its production to Mexico. Great video Mike. Thanks
Don't recommend encouraging college, bastions of socialist propaganda, then there'll be no one to work. Trades are where it's at, too many college grads with useless degrees flipping burgers at McDonalds whining about $15/hr minimum wage. A lot of the problem rests with JD as well, with all the computerization on all the equipment and tractors in particular, they refuse to willing release repair information citing proprietary information rights. Farmers work on a fairly small profit margin, can't pay for that pricey equipment and provide for their families so priorities have to be set. New equipment is low priority if they can't repair it themselves and minimize that cost. So the bean counters being in charge, worrying about shareholders concerns more than consumers, have shot themselves in the foot, kind of like Boeing.
I'm sick of hearing my local JD dealer slam TYM for being built in Korea. I lived in Korea, I have much respect for their work ethic. JD has no room to criticize other manufacturers when they likewise abandon U.S. manufacturing and assembly.
I worked for Ford and Hyundai ( car manufacturers) in my 37 year professional career in the automobile industry. South Korea builds great products and most definitely has state of the art research and development, design and manufacturing. Very impressed with Hyundai having been and to their research center in Nam Yang, South Korea. Koreans are very hard working.
Mike, I'll be honest I clicked on this video thinking oh great another person that is against John Deere spreading BS but I was completely surprised when I heard you tell true unbiased facts about what was going on. This is the first video I have ever seen of you and it popped up on my feed. With 100% transparency, I am in the farm equipment industry and have worked for a John Deere Dealership for over 20 years as well as a Kubota dealership that owned both dealerships for 5 of those years. I am now a new subscriber to you and look forward to watching all of your videos. Thank you for your honesty
Good video as always. I'm Mr USA and it's hard to find made in USA on many things. I've screamed about this for 40 years. I've also paid 3 times the price on many items. It is usually worth it. Many companies have operations in Mexico. It is a lot better than oceans away.
Yeah, I think that your video is spot on. By moving a lot of jobs to Mexico, we actually address a lot of problems. The U.S labor problem, the dependency on China, we are helping our neighbor (Mexico) be a better country to live in, immigration, and the list goes on. I strongly believe that if I want to live in a better neighborhood, then I should be a good neighbor. After all, Mexico IS our next door neighbor
People still need a good job to survive in this country (USA). John Deere.isnt the only company reducing blue collar workers here. Those people won't be buying JD consumer products when they don't have a job..
I too, will leave politics out. But Mike, you've done a fabulous job of "dumbing down" a big piece of our Economic "Puzzle". And I'm afraid 3 or 4 end pieces fell off the table and were eaten by the dog. China will not "stop becoming China in the next 15 yrs but you are really onto something with your supposition of the labor issues they are facing. And building factories in areas of Mexico do have quite a few positive features. I also bemoan the loss of jobs in the US, and I feel badly for those immediately impacted. But we, Until last month, had low unemployment nationally and as you mentioned great demand for labor. I feel it in my business, THE MORTGAGE FARMER. Very well laid out thoughts. $18/hr is a lot in Mexico, based upon cost of living.... And the Union jobs here in the US are well above that threshold. Time will tell. Much like most things... the solution may be a combination of many things.
tHE chinese are building factories in other countries that have available labor. One problem is that in modern factories there ain't too many folks, a large number of droids with tongs and hammers stamping out the products, the few people around are busy changing diapers on the droids or whatever. A big dimension \ to chinese labor problems is they don't have social security or pension programs for werkers, that means when the chinaman gets too old to work he has to depend on his kids to support him so his parents and her parents move into their home and eat their food, not a happy family. They wanted cheap food for their factory workers so they depressed farm incomes resulting in the few kids of the farm families moving to the cities to take manufacturing jobs and now they don't have enough farmers.
Everyone worries about China. MEXICO is the new China .Kansas City Southern railroad was bought by Canadian Pacific and we can run trains from Canada through the US to MEXICO to Panama. Who needs the Panama canal or stinking cargo ships.
“Low unemployment nationally” Please don’t believe this. The “unemployment rate” is a joke. The real numbers you need to look at are the workforce participation rates which hover around 60%. Some of the other 40% work under the table or are criminals or deadbeat slackers. Unfortunately the welfare state we live in allows these folks to live comfortably enough that they don’t have to work.
The wage rate factor, as I read it and I will stand corrected if I'm not reading it correctly, is that ~40-45% of a vehicle must be produced in factories that paid at least that much for a vehicle to qualify under the new agreement. That doesn't mean a production worker in Mexico is going to see that rate. Some of the commentaries on the agreement say that is more about keeping as much production in the US as possible. For example, build 50% in the components in US or Canada with their higher wage rates and ship them to Mexico for assembly. Next I'd like to comment on cost. I spent 31 years in manufacturing plants. Part of that on the factory floor but most in cost accounting. The last 11 were spend in a US plant for a Japanese company. The overwhelming percentage of what we would regard as factory controllable cost was labor. Workers could try as hard as they wanted saving on small things here and there only to have any savings wiped out by having to run production on overtime. Before that I worked for a company making small appliances. Time and time again I did "make vs. buy" calculations of what we could build it for versus buying from China or Turkey. Based on manufacturing cost alone we never had the favorable calculation, hence Walmart is chock full of Chinese made products and the plant I worked has been empty for over a decade. Oh, that for the US side of that calculation this was a low cost area. Before that I worked for a US Electrical Motors plant that shipped all of its jobs in Mexico in the early 2000s. Labor, and this I will agree in anecdotal. While I was at the car company (rhymes with Rhonda) the old hand line workers would often complain that new workers just didn't want to work. Turn over for new people was high. These were good paying jobs with good benefits. But they are jobs where people are expected to show up everyday on time, put away the cell phone, and do a job as instructed. Senior workers would grow tired of training new people they knew would quit in short order. The company has continued to raise labor rates to try and get/keep enough people to run the plants(s). Next time you have sticker shock that will be part of it. I'll grant that factory work isn't for everyone. But I think the case extends beyond the walls of a factory. Okay, hit me with the "OK, boomer". I do agree with a lot of what you young folk have to say. I loved working in manufacturing. I hope the laid off workers can land on their feet. They are welcome to come south for better weather and better football. Maybe I should have left that last part out. lol
Mike, my dad sold Allis back in the day. We never drank the green cool aid either. Only AC orange, Ford blue, and Farmall red was on the farm. Hay equipment was new Holland, a 60 AC combine was replace by several Gleaners, and of course an old Van Brunt grain drill that's still in the shed. Pop did bring home on trade a Case or a Deere here and there, and we used them, but green was not our thing. Your points are well taken. I don't like it but that's the way it is. We all go to Harbor Freight but complain that nothing is made here. Still don't have a Deere here and don't plan on one. The blue 6610 and 1720 are just fine.
Thanks for answering my letter Mike. Your explanation makes perfect sense. I’m a Deere owner so I was curious. A lot of people are bashing Deere, but sometimes tough business decisions have to be made. Something you didn’t mention is that not ALL Deere manufacturing is going to Mexico. Only select equipment like skid steers & truck loaders. My tractor was and still is made in Augusta, Georgia (a plant that will remain open), something foreign-made tractor owners can’t say. Thanks again for the informative video….Craig
This move to Mexico was created by the last strike. The wheels were set in motion because of the strike. Design of the factories in Mexico started immediately after the strike ended.
@@davidmicalizio824no its the unions. They were great in their day but those wages are insane. No fork lift driver should make 38 dollars an hour. 39 years in a large aluminum foundry making tractor and over road casting non unions
I don't think that the shipping costs from China, or anywhere else, increased due to a container (Conex box) shortage because they were being used to transport N95 masks during Covid. The primary cause was the bottlenecks at ports which in turn was due to restrictions on the dockworker, truck drivers, ships crew, the six foot rule, exposure isolation, etc. You may recall that in 2020 ships were waiting up to three weeks to unload outside of the Port of Los Angeles. That created the shortage of available ships and Conex boxes, ie the turnover decreased dramatically when the unloading time went from days to weeks. That in turn caused shipping costs to increase dramatically. For example in 2018 in my small business I paid approx $2.75/kg for airfreight and in 2020 I paid $7.50/kg. In 2024 with Covid behind us my cost is back down to $2.75/kg. As to John Deere moving some manufacturing to Mexico I haven't read exactly what processes are being moved. As a whole John Deere is profitable (16% net profit) but I don't know what the profit margins are for each of their product lines. Though the details are likely confidential I suspect that the processes being moved are for product lines that are not meeting the profit goals for John Deere. So you either reduce costs (lower labor and overhead) or get out of that business, ie close factories, because otherwise John Deere is not prudently using the capital (investments) entrusted them with. As to comments about corporate greed. John Deere is not a 501 (c)3 non-profit or a social welfare organization, but a for-profit corporation with a chartered purpose to legally maximize shareholder value and the Board of Directors are legally obligated to make sure the management is working to achieve that goal. The largest shareholders are mutual funds and investment companies who are investing money deposited with them from State and local pension funds (teachers, firefighters, government employees,, etc.) and individuals like myself. In general a return on our investment of at least 12% annually is expected, and many of these pension funds rely on these returns to pay their retirees.
Yep it’s hilarious when politicians or people in general talk about the “evil corporations”, or like the left says corporations need to pay their fair share. First off a corporation is just a tax status. Secondly as you stated if these so called evil corporations don’t make money no one will have a retirement because that’s what all of the 401s and pensions are based on.
This is exactly the issue. You can run a business that is not beholden to shareholders and make a lot of money. A 12% return annually is unsustainable in the long term. But if a public company does not do everything in it's power to increase the wealth of the shareholders, then the board can get sued. This leads to all anti consumer practices like, raising prices, lowering quality, subscriptions, digital sales you don't actually own, moving manufacturing, cutting workforce during slow times, and so much more. There are plenty of examples of private companies out performing publicly traded companies. Chick fil A v. McDonald's is one of the best examples. McDs has saturated tge market and is struggling to maintain growth. With a fraction of the store fronts and sales chick fil a has managed to pull in profits comparable to McD, all while having the best customer satisfaction and much higher employees retention. Unlimited growth is not possible. Eventually you hit a ceiling, and when you do so as a publicly traded company, it is no longer about making a good product for a decent price.
Yeah, I think that they should employ one of the Ronald reagan.. force people to return to work or they will be replaced simples that and discussion problem solved. There’s a lot of people that want jobs out there so I don’t know what the problem is. If these strike workers don’t wanna work give them 48 hours to return or forfeit their positions.
A common sense view on the subject. You also brought up some facts I wasn't aware of. Nice to hear honest facts and not political guesswork. Keep 'em coming.
Secure paying jobs available in Mexico will also take some pressure off the number of people wanting to swim the river too. We were strongly encouraged to go to university. My sister has a masters degree in science, but for most of her career has had to beg for funding every 3 years and when it stops raining, research funding also dries up. I dropped out and got a trade. Aircraft sheet metal, aviation welding and composite repair. Only been out of work for 2 months in 30 years, and that was only because I wanted a holiday. Some really good money to be had as a lowly tradesman these days as the old guys are retiring and not enough apprentices were taken on in the past (airline cost cutting) or those that were trained haven't kept up to date with changes in their industry.
Garbage its corporate greed John dere moves for more profit a worker in mexico gets 15%of what a usa worker gets .These companies mover to cheap labour country but still charge the same price as when the product was made in a western country.
Yes they did with the last John Deere contract. I instead of a really big wage increase they should have bargained for more job security. The second thought is that the 7% wage increase got them Nothing due to the inflation of the last two years! Net loss.
@@edwardliszka837 john dere would go to mexico for more profit you cant compete againts a mexican getting 20%of the wage of a american .But john dere will still chatge the same price for the product made in mexico as if it was made in the usa.Its corporate greed
All good points there Mike & truthfully, probably spot on too. You & many of the commenters are correct, the younger generations need to be encouraged to look closer at the "Blue Collar" or "Trades" type jobs out there. Thanks for sharing you views on the situation with not only John Deere but, with CaseInternational, Bobcat, & other manufactures that look to be doing the same things at some point. Take care.
There is some really good points for helping Mexico boost their manufacturing. As a neighbor to us, the better they do, the better we do. The stronger they are, the safer and stronger we are. Also, I rather see Mexico get stronger than China. Lets support our neighbors in becoming a better, healthier country while decreasing our dependence on a potential enemy. On another note, Mexicos manufacturing has proven better quality over China for the last two decades of products I have seen. Sure it sucks Americans are losing jobs, but I rather those jobs go to Mexico and not China.
I live in an East Tennessee city which has at least 13 manufacturers of well-known products. If John Deere is paying $18.00/hr in Mexico, then workers here are getting royally screwed for wages, yet this is why manufacturers move out-of-country, because American workers demand too much? Deere should have set up here...they'd get away with paying $12.00/hr easily. Sad commentary, but I think John Deere doesn't build tractors for farmers. They sell tractors for stockholders.
This is the more objective opinion that Ive heard from someone outside the big corporate. Lets remember that is better to have an strong aly (mexico) than a strong hater (china)
Hi Mike, you are spot on with all your points. I agree 100% with all your comments. Great job explaining it in an factual, non-confrontational manner 🤙🏻 I’m the end of the baby boomer generation and retired recently from a mechanical trades job and during my exit interview HR asked for my advice on finding my replacement, I said good luck, you’re not going to find anyone, they all took the “college track” not the apprenticeship track. The education system in this country has done a huge disservice to millions and millions of young people by convincing them college was the only option unless you’re less than. Again, great video!
You make many great points. I have a JD 6115D tractor that was built in Mexico. It should be a different shade of green so that long time JD owners can recognize them and avoid them on sight. I grew up on John Deere tractors and combines and am 62 years old still owning them. This 6115D is a P O S. I would have been way better off with another rebuilt 4020. I think that it was built to compete with Kubota. Avoid them if you expect a JD field quality machine.
I think you might be wrong on wages from what I know. I worked Eaton corp. I worked at the belmond ia. Eaton plant. It started moving equipment down to Mexico around 2018. I know when they started to hire people down in Mexico to train with people from our plant they were only paying those employees from Mexico a $1.38 a hour.
You make valid points. I grew up on John deere, but went with a different brand because of there proprietary crap and not allowing farmers to work on their own equipment. John deere not having skid steer attachment without having to add their adapter and ultimately needing to add weight to do it. I think think they build a good product, but believe their are equally good products with better features for the same money. Anyway, yes, we all want our dollar to go further, but anything we own has parts from foreign countries.
The way you put it makes sense. My grandfather had John Deere and dad had ford new holland and all tractor brands do the same job. I recently got 2 1952 ford 8n and they serve me well. Great content Mike keep up the good work
It is more sensible to keep our industrial infrastructure here in the U.S. and import Mexican (or other) labor. The hysteria over Hispanic labor coming here has caused economic dislocations in many sectors. It's one of the reasons food prices spiked. My experience has been that Hispanic laborers work hard, they are very adept at what they do, they are reliable, and they often willingly take jobs no American citizen wants. When America refuses to compete, personally or nationally, we are not in a good place.
Thank you for contributing to the problem. When you're state becomes forever leftist (they vote as a block over 70% leftist) then you'll only have yourself to blame.
Agreed. Where I'm from, latinos- mainly from Mexico- do the majority of hands on labor jobs. Esp in agriculture. The reasons are essentially as you said, because American young people today won't do that sort of work, or those kinds of hours, for the wages farmers can afford to pay. Sad, but true. Nobody is going to pay $20-25/hr for dairy farm help, veggie and fruit picking. Etc etc. and few youngsters are willing to do that kind of work. That's the other half of why family farms went away- the kids had ZERO interest in being married to a herd of cows and a patch of dirt for peanuts. Everyone wants dirt cheap food prices, but never stop to think about what it costs to produce, or how much work it is. AND they want top dollar and minimum effort required for even the most basic unskilled work. Something has to give.
There appears to be a lot of confusion regarding John Deere's moving some work to Mexico. When evaluating that decision keep in mind that the UAW went on strike at Deere for the first time in three decades in 2021. This was a very vulnerable time for Deere while they were trying to deal with Covid and supply chain problems. The union was able to negotiate a very generous settlement that raised Deer's US labor costs substantially. The equipment business is very cyclical; some years you can make a profit and some years you can't. If the market allows they can try to raise prices or they can look to reduce cost. Also keep in mind that across it's product lines Deere has higher US content than their competitors so switching manufacturers would not create more jobs in the US.
Deere doesn't make their money selling equipment, they make it on parts and service. The parts and service on a large piece of equipment are 3-6x more profitable over the life of the unit than the unit itself. If people keep old units running longer, JD still gets paid.
@@OtisFlint Very true and your comment is applicable to all the equipment manufacturers not just John Deere. In fact almost all equipment manufacturers, from office printers to jet airplanes make a significantly higher margin on parts than they do on their primary equipment. John Deere and most AG equipment suppliers work through independent dealers who buy parts from the manufacturer, mark them up and resell them. They also provide service work independently from the manufacturer.
My son and Cousin both work for Deere. They tell me that the UAW really screwed up with the strike. To keep things running management and engineering were running the factories.. they were able to do the job and put out more than the UAE workers with considerably less people. They identified a considerable amount of redundancy that Deere has been able to eliminate. They also said that Deere is letting people go who have been written up for contract infractions. Also demand is down by over 30 percent. Add those things up and there's plenty of room for layoffs.
I’d love to hear specifically what price point American workers have to work for to keep the manufacturing here. There’s still a demand for the products, the products are still being produced, they’re just gonna be produced by somebody else then sent here. Labor costs are most likely the single biggest difference. Every time some union promises to get you drastically higher wages, that may be true. But they’d only gonna last until the replacement factory is built somewhere else.
Great commentary about the issues around manufacturing in the US. One of the issues facing labor around the world is the lack of trades training to fill the gap. The idea of having a university education is not for everyone and the mindset needs to change in the education arena that not all students are ready to get the degree and sit behind the desk.
Everything you said, makes perfect sense us as Americans just don’t wanna hear the hard truth how our country is slowly falling to its knees in the truth needs to be heard
You make some good points. My VW Jetta was made in Mexico. In 2012. And it is built as well as anything is built these days, maybe a bit better. Several of my larger trucks were Hecho en Mexico. This has been going on for a long time and I guess we cannot fault JD for doing it. Still don't like them. But there isn't a big company out there today that doesn't put profit and stock value above quality products, customer service, and employee welfare. In my opinion.
Mike, you've given a very reasoned and knowledgeable explanation of an issue that was a "hot button" issue for me. (and I am a guy who has been aware of "demographics", "supply line" issues, and the "educational" miss-match.) But listening to you put it all together has been good. (But I still like my Korean Tractor.)
Good video and explanation. This has been going on a long time. I had a 1982 Ford Ranger with the 2.3L engine. The engine was assembled in Mexico. The transmission was from Japan. I look for things made in the US. I have Roundhouse Jeans made in Oklahoma and SAS shoes made in San Antonio. Both are very good products in my experience. I also just purchased Channellock pliers, made in the US. When I cannot find a US product, I look for one made by one of our allies, not China. Recently I purchased a pair of pliers made in Vietnam, and did not chose the Chinese ones. Even things you think might be made overseas may have US made parts. One example is Samsung phones. Samsung has a large integrated circuit factory in Austin, Texas and is building another in Taylor, Texas. As all this moving stuff to Mexico, it has affected me directly. The interstate near Austin where I live (I35) is truck city. I wish they would ship more stuff by train!
you were going along very well Mike until you got to two points ..... first, labor shortage in US is because unemployment payout rates are too high and workers won't work for real wages when they get paid more to not work. My family ran a trucking company for three generations. At the end before we shuttered the business, we couldn't keep enough drivers, because they would say they'd found a new job if they didn't get a raise, but then they'd file an unemployment claim against us and go on unemployment. We couldn't pay them more than they could get in unemployment, because shippers would not pay us enough to give drivers a pay raise. We actually had drivers coming to us in the summer time, volunteering to be laid off. They wanted a free summer vacation, paid for by government. And the 2nd point you made that's wrong was about China. Their reaction to overpopulation is the very thing the whole world needs to begin doing, and soon, because we do not have the energy resources or food to keep up with growing overpopulation on the planet. btw, China was shutting down industrial production, because the demand was down, not because they had a shortage of workers in China. John Deere builds good product, but even their best equipment is now so overpriced due to accelerated inflation, few farmers can afford to buy it.
As an example, my friend works as a skilled tradesman- doing custom tile installation and such. When my state increased minimum wage to $20+/hr, he was making less than a kid busting suds at the local diner... Really pissed him off. Why work that hard, earn the qualifications, etc- when you could make more at an easy, unskilled job?
Regarding John Deere. The first tractor that I bought was a sub-compact 1025R with a backhoe and a loader. I still own and use that tractor quite frequently. I like the machine, but the major thing that I don't like about John Deere is their proprietary loader attachment system, rather than a standard "skid steer" type. I don't wish to get political either, but I think that another part of the problem is unions and union demands. Yes unions had/have a place, but I think that in recent years (over the last couple of decades) the demands were just too much. I don't blame Deere, GM, Ford, etc. for trying to cut operating costs. It appears to me that labor cost seems to be a common denominator among all of these companies.
I’m no Deere fan either, but they do deserve respect. Hope this goes better than when they moved compact tractor production out of Horicon. That first series after the move was absolutely garbage.
Another good video Mike!! Well that seems reasonable to me. I personally don't care for Deere as far as some of the people that's in management. I had a mahindra tractor and a Branson I been hearing good things about kioti I went to a dealer not far away Well didn't go very well. Then I realised the dealer where you worked sold the kioti tractors I called them lady transferred me to young man by the name of Riley Dodson was super told him what I wanted he told me what he had I sent him pics of my tractor he told me what he would do last Friday I was proud owner of a ck3520se shuttle kioti seem like really good folks there. Thanks for sharing be safe
I've heard it said by many, that Mexico is likely going to be the new "China" when it comes to maunfacturing. Honestly, I don't really see a big downside to that. Having a booming economy as our Southern neighbor isn't a bad thing. Eliminating a 6000+ mile ocean voyage, the massive bottleneck this causes at our west coast ports, and not needing to be so deeply entwined financially with a hostile government, are all good things. As far as the grousing about outsourcing- that ship sailled long ago.
OUTSTANDING INDIVIDUAL’S PLAIN TALK EXPRESSING COMMON SENSE OF A GLOBAL PERSPECTIVE FROM A MISSOURIAN. People are amazing, even from the state of misery, that ranks lowest in all USA social/economic/race equality perspectives/policies but produces quality intellectuals like Mike who does drill down to fundamentals perfectly. I am a long term channel subscriber and get stuff from Mike from time to time. YOU SHOULD TOO!
I agree with 100% of what you're saying. I don't know the percentage that the vast majority of the automotive industry has been in Mexico for decades so this is nothing new
@@perrym6937 This is caused by the immature leaders In the company. Keeping small towns thriving with not only the people employed but the communities are not a care to them!
All your points are correct Mike. They can build products in Mexico so much cheaper! As for the Latino population in the US, they are doing most of the blue collar labor now because American kids don't want to do it! All the subcontractors that built my house in 2022 have Latino labor. Most of them can't even speak English! They will get paid minimum wage here in the US and are happy to get it. Most of them are very nice folks and do work hard. Don't get me wrong, many American kids are hard workers but they are rare. Folks like Ford, Chevrolet, John Deere just to name a few do not want to pay an American worker $30+ an hour when they can pay workers in Mexico far less. Just how it is. 😕
The other thing a lot of people don't add into the equation is how much companies like Deere will pay for benefits. I seem to recall that around 20 years ago or longer it cost GM about 70 dollars an hour for an assembly line worker after all the employee benefits such as pension and insurance etc. were factored in.
There teck is questionable. And they will not let 3rd party people work on it as the car industry does. You can have your local garage scan you car but not your JD.
Very good explanation mike. I dont own a tractor in fact my yard is a push mower .25 acre. But I enjoy watching your tractor mowing, implements, and commentary about farm equipment. My personal favorite are those highway batwing mowers, and old school sickle bar mowers
Although I posted a different comment, I agree with a lot of your points and at the end of the day you’re right I think Canada and Mexico could help the US and the US can help Canada and Mexico really we should all be working together as a North American team that I strongly believe in
JD's negative press reminds me of the bad press GM has gotten over several years. GM built a few plants in Mexico and the American press pounced. Ford has 5 plants in Mexico, Chrysler has 6, Honda, and last but not least.... Toyota, the Tacoma has been built exclusively in Mexico for over 25 years. Hardly one negative word mentioned about them. Just sayin. P.S. Tacoma competitors Canyon/Colorado trucks are all exclusively built in Wentzville, MO.
Hey Mike thanks for posting this. I think your analysis is sound, and it resonates with what I’m hearing from other geopolitical analysts (e.g. Peter Zeihan).
Corporate always is concerned with the bottom line. Stockholders want more. Unfortunately, if American manufacturing wasn’t penalized by its own government, it would move operations outside the United States.
There's always a beginning to a company selling out their customers. You just miss that moment for JD a decade or more ago. This is JD's way of punishing "right to repair" The house never loses
If I read the news right, JD is moving some cab production to Mexico. JD already had cab production down there so this move would appear to consolidate cab manufacturing.
Hot take here speaking as a 22 year old as to why we are outsourcing jobs: We as a country are no longer innovating. At least in the same way that we used to in the 20th century, let me explain. 100 years ago, the assembly line was a relatively new concept, and as a result, required thousands of people to partake in the newly innovative way of making products. Because they were on the cutting edge of innovation at the time, large numbers of people were paid like engineers. Today, that technology is 100 years old, is mostly automated, slashing the number of people needed, and is no longer cutting edge. But people today require cutting edge pay to survive. This applies mostly to my generation (Z) because we are of the age where we have to buy our own assets, but have to do so at a point in time when our currancy is inflated to record levels. Most people over the age of 45, or those who own a house are shielded from this reality, and as such can make do on a lower wage since their biggest expense is paid for. Younger people require more money to buy the same items older people did and as a result go into higher paying professions to make up the difference. Combine this with very little innovation from the agriculural industry and you have a market that is high cost (for both employee and employer) and low margin. At the end of the day, a tractor is an engine attached to a transmission and an axle, possibly a cab. That's all there is to it. Unless we innovate and reinvent the tractor, more people will lose their jobs and only very few will be needed to further refine the processes that have been in place now for 100+ years.
@@redneck-l4w Yes, I think it did, and there are many metrics that reflect this. Ranging from the average age of marriage, house purchase cost to income ratios, and to average prices for cars. People in the past could do things in life earlier because they could afford it. According to the inflation calculator, a person in 1960 making minimum wage has 32% more purchasing power than a person today. And those are just the numbers they want to tell you about. Since the 1980's, items like homes, and car prices have been removed from the inflation index, making the real number considerably higher. Coincidently, those are the 2 biggest purchases in most people's lives. Circling back to tractors, we can see the effects of inflation in the products they sell. My Case IH 395 cost $16,000 new in 1991. Today, that would be about $37,000, the same price as an equivalent Case IH Farmall 50 sold today. While it sounds good on paper, drastic cuts were made to keep the prices comparable. In 1991, this tractor was made in England, a first world country, that paid its workers living wages. Now, a similar machine in made in India, a third world country, and pays its workers substantially less, to make the "same" product. On the Case 395, the entire tractor was made of metal except the front grill, side panels, and dash. It had a 2.7L engine making 35 PTO hp and had a heavy-duty transmission and rear end used on 100 hp tractors. Now, the entire hood, parts of the fender, and the dash are made of cheap, and much thinner plastic, the rear end is only used up to 75hp because the components are made cheaper and has less metal, and the engine displacement has been cut by half to 1.3L trying to make the same power, killing any engine life, or fuel efficiency gains because it has to work harder to move the same loads. In the end, the first step to solving any problem is to acknowledge that there is one, and that problem is that we are working more, to buy less.
Even with record profits JD still wants even more $. Yes, I know what capitalism is. I don't think JD cares much about the workers. I don't care about this continued whining about US labor. And, look at some of the overpriced crap they make. Can you imagine making a plastic gearcase on a riding lawnmower? I had JD for years--- but no more "green" for me!
Large Corp has no loyalty just a work employee concept they have something you want????? As a boss told me don’t let the door hit me on the way out I retired he was asked to leave he was ok not an asshole just being truthful
Made in the U.S. is pretty much a nebulous concept now. Nothing is 100% made in the U.S., the parts come from all over. Many of the Asian tractors are assembled at facilities in the U.S., some almost as much as Deere. I remember reading something a few years ago that the most “made in U.S.”vehicle considering all the components was actually a Toyota. Go figure. So the “buy made in U.S.” people may want to consider how they define that. Want something from a U.S. company? Or something made with the most input from U.S. workers? Those two things are not necessarily going to be the same brand.
Hey Mike, I kinda agree with you. The internet and cell phone changed our young people. As everyone else in the world. You explained my question.thanks
One of the items going to Mexico are the skid loaders that have been built in Dubuque. I don’t know if it’s quality control issues or poor engineering but everybody around here in the Midwest buying skid loaders are buying Kubota or cats.
Local 838 here. The company has spent $43.6 billion on stock buybacks and dividends over the past two decades. There is no question that there is enough profit to go around, and Deere can afford to keep good jobs in Iowa and Illinois. Quoted from UAW newsletter. I work in waterloo at tractor cab operations. With all due respect to your opinions. This is corporate greed dont try to sugar coat reality.
They have to pay dividends because they borrowed money (in the form of stocks) from investors. Buying back the stocks reduces the amount of dividends they have to pay out.
@mikeingeorgia1 Moving manufacturing to Mexico after the billions were made using the ones who lost their jobs in the United States. Not the John Deere I grew up with.
Haven't looked at it this way before. Thanks for the perspective. I honestly have less trust in China politically than I would in Mexico. Didn't like the idea that the auto makers were looking at moving some production to Mexico but it makes more sense to me now. 👍
I work in the oilfield and a floor hand with no experience starts at $22/hr and all you have to do is show up and don’t do drugs. Still can not keep enough hands to work.
One of my Dad’s friends owns a shortline railroad. He’s always advertising help wanted ads, but finding people that can pass a drug test is extremely difficult
The problem is that Deere's quality has gone down hill I bought a brand new tractor that needed a repair right after I got it, 4 years later, bought another brand new tractor and again, issues..Then the first tractor had a major issue at 614 hours. Come to find out, Deere was aware of the issue, had done a "product improvement program" on 2 parts inside of the tractor but yet did NOT notify us. Instead, the month the warranty runs out, the tractor gets sent to the shop for repairs that total over $6k and took 8 weeks. Both of these are compacts that I am pretty sure were made in Augusta GA. and to just add more insult to the injury, they found a plate out of specs. The dealership, did get Deere to cover half the cost but it still burns because they KNEW this part was going to fail and they didn't bother to man up and recall the tractor. I am really debating trading this tractor in for a different brand because I am so freaking disgusted with Deere. If you have any suggestions on a good brand that is dependable and EASY to work on, would love to know what you would recommend.
Hey Mike, I don't know how true it is but I have heard from a few economist that have said we are seeing the beginning of Mexico being the new China. Said its been in the makings for a while and companies have slowly been shifting to Mexico away from China but your starting to see it done now at a faster pace and more companies shifting away from China. As you stated China is in a downfall and Mexico is on the beginnings of manufacturing boom. All the manufacturing jobs that were on China and other parts of the world are shifting to Mexico. Many many many companies are moving parts of their company if not the whole thing to Mexico and leaving China.
According to Peter St Onge, one out of every three dollars in existence was printed in the last six years. Inflation (currency depreciation) isn't just affecting us at the grocery store but manufacturers and employers too.
Deere is a global company with production all over the world. Same thing goes with Cat and Cummins, they have large production in countries like China and India. This is how these 3 players has become market leaders globally In their respective fields, something that would have been impossible with only production in the US.
I have an alternative explanation. What's happening with JD isn't exclusive to JD and not caused by capitalism. It's MBA centric thought that has taken over capitalism. You're seeing very short term strategies due to quarterly profit reports. You're seeing extensive price gauging when they can make it work. Then when things start going downhill literally all they know how to do is cut costs. Reducing prices is frowned upon by shareholders so that's not happening. Innovation isn't a priority because that costs money that shareholders don't like to see spent and it doesn't serve the short term quarterly profit focused strategy.
The other issue is with nearly all businesses being publicly traded nearly all the focus is on profit instead of quality, innovation, durability, loyalty etc. Gone are the days of the owner taking a yearly salary in rough times of 1 dollar to keep people on and put more money into the business. With publicly traded companies they are legally bound to give shareholders the most return possible.
Truth teller.
Yup, let's juggle the numbers to make things look better next quarter so we get a bonus and the stock goes up.
Companies no longer make money by making a good product or service.
They make money by beating last quarter's stock performance.
Profits
Profits over people 😢
Only a blue collar communist would think that way.
Spent my whole life in a factory. It was the best I could do in my area with my High school education. The work was hard, hot, dirty, and dangerous. Not to mention, degrading. Thanks mostly to the latter, my mission in life over that 35 years of service, was to empower my kids to be better than me. Thank God it worked. The advanced degree people ( management/engineers) ALWAYS looked down on us as a control tool. We politely warned them to no avail, so here they are with no new blue collar talent. Arrogance created this problem 25 years ago. BTW , Mike , love what you do. Watch every video!
No matter what industry, engineers think they are better than everyone else, and still can’t do their job properly
I’m sure you did wrestling heavy parts Now they stand back and watch machines apply caulk and tighten bolts in air conditioning buildings
Good post and so true!
You are easily replaced. Simple as that.
It is not true of everyone. I grew up poor and could never get a trade. In my thirties I went to Uni to get a degree.
Many John Deere tractors were made overseas by Yanmar for years and they still charged a premium as if they were made in the U.S.A.
Exactly... nothing will change.
Kubota as well
And some of those are legend
If they are Japanese the premium is warranted, if it is China or Korea it is not. Japan makes quality products, in every industry.
Yanmar was a contract deal. JD had had factories in several countries for decades. Ford had a ton of British parts on tractors since the late '60's. Massey F was half British made on many models. AGCO built their name from the KHD Dueatz buyout of Allis Chalmers/Gleaner lines in the 1980's. AGCO was originally "Allis/Gleaner Corporation before it was AGCO with all the other companies under it's umbrella. CNH Global is the old Ford Ag, New Holland, JI Case, and International brands under one umbrella. Color doesn't matter anymore, the local dealership does. If they will get you the parts, send a Tech asap, or try to help you fix it over the phone, that's who you deal with.
I retired from John Deere. I was talking to a HR manager a while back and he was telling that absenteeism typically exceeded 20%. Another problem was hiring sober workers. Despite giving the new hire getting plenty of time to prepare a large precentage still flunked the drug test.
well said... same situation in Australia and NZ... anyone younger than 50 is practically hopeless today...no work ethic whatsoever!
Zustimmung, vergleichbar mit dem Opiumkonsum um 1900 in China angezettelt durch England. Nun fördert China in Verbreitung von Drogen in der ganzen westlichen Welt.
That's the main problem. It's not the availability of workers, it's the availability of quality workers. People these days tend to have a poor work ethic and drugs is a big problem.
Da fuq? You need to drug test to work in a tractor factory?
@@Flaaaaanders John Deere factories use team based incentive systems. A substandard employee not only cost Deere money they also cost their team money. Nobody at any level wants to work next to a druggie.
Ross Perot was right!
Finnish the thought. Right about what?
Yes he was." The giant sucking sound of jobs leaving this country" He was right about a lot of things.
@@michaelvrooman5681yes he was
@@Mike-zw7fq You will hear the sucking sound of jobs going to Mexico
That's why the Democrat party threatened him to drop out of the presidential race.
Mike, I’m like you, worked in and managed Massey, Ford, New Holland, and Kubota dealerships. No particular love for Deere either. But as a businessman (retired), I do admire them.
I watched a video with one of John Deere’s senior management folks explaining a lot of the story behind the jobs news. A lot of what drives the market for John Deere is the commodity prices of corn and soybeans which affects the total farm income. As you are aware, crop prices are down and total farm income is expected to be down about 25% this year, so the farmers are cutting back on purchasing new equipment. This is reflected in Deere’s 2nd quarter sales figures which are also down in the 20+% range. Most of us work and understand that if it takes 100 people to build 10 of your product that you are selling, what happens when you can only sell 7 of them and only have work for 70 of those 100 people. Do you continue paying those other 30 people who are just standing around? What has also been left in the dust has been the expansion of John Deere’s labor force over the last 5 years or so; and now they are cutting “1,000s of jobs”, which is really about 2% of their worldwide workforce. John Deere is investing in a new production line in Iowa where they will be making a 9R series tractor with up to 800 hp. I wish I could find that video detailing some of this but I cannot at the moment. I appreciate you speaking common sense facts. If I remember correctly, all of my ancestors were immigrants, a lot of whom didn’t speak English when they got here. I bet yours were also, Mike. Immigration over the millennia is what has built this country. Think about it: the ones who were lazy stayed home; the ones who had some spunk and risk-taking ability walked away from their home to somewhere where they could better themselves. I grew up on a small Missouri farm that had been in our family since 1875. I’m currently living on my mother’s family farm which they moved to in 1845. Anyhow, the overall economic picture has so many complicated, interacting relationships that todays 15 second sound bites cannot possibly explain.
@johnhelbig7110 Take a look at the most recent videos of "poor, downtrodden families" crawling to our southern border, looking for a better job, a better life. Haha! No, they are cleanly dressed, all with backpacks, cell phones, fresh off a bus just off camera range, younger women and men of military age. These are not job seekers!
So the immigrant picture you paint of the 1850-1920s doesn't exist today. Our country is not being built by immigrant sweat...it is being drained by immigrant greed and government permissivity.
Where did you get condescension? I didn't read that at all, but I'd be willing to entertain your perspective.@ComommonlyCensored
My fathers family came to the USA from Ireland 1850's and spoke english, my mothers family came from Holland in the 1750's, if they did not speak english they learned it........
@@wilburfinnigan2142I remember my Great grandmother, who came over from Bohemia before WW1 as a teenager, only read the German issue of the St. Louis newspaper she subscribed to.
Excellent reply that matches my sentiments. Thank you.
I think we need to encourage the trades more. My oldest son has a business degree and works on the assembly line for a car parts manufacturer. My youngest quit college after one year and now has his own business as a professional body builder and coach to body builders and normal fitness. My nephew has a business degree, tried that for a while, and decided to apprentice as a plumber. He is now a licensed plumber and is working on his masters license. Some college degrees make financial sense: engineer, medical, etc. We need less people with soft college degrees and more people with trade skills.
I was reading a blurb from years ago talking about this. Students going for s 5 year accounting degree, and having to study hard all the time watching business majors screwing off, going home every weekend, graduating a year earlier than them.
Then when these guys graduated and went looking for jobs, they were being interviewed by vo-tech students, high school graduates, FFA kids etc. all owning or running the businesses- and the accounting degree types worked FOR them, lol. A real kick to the head- not to mention their pride.
Yes, its an in demand skill that wont be going away, soon. But you trade that security for a mid level job. The folks that really figured out the game, and rose to the top, took a very different path. Kind of makes you wonder WHY we were all pushed so hard to go to college right out of high school...
In the UK,and here the students get big loans from the government, to pay for degrees from university,.Loans have to be paid back,when save readers a preset level.Many never pay. Our one time great education system has been destroyed, by the crazy "must have a degree" idea. Good tradesman are in great demand, but over in with journalists and hairdressers!
@@charlesperry1051 25 years ago the pressure was on that everyone had to sit behind a screen and do computer. It was frowned upon if you did a job and got dirty or you had sweat on your brow. Lost a whole generation of plumbers welders carpenters electricians etc etc cause of the darn computer
This is one bullshiter
At the 4:50 point in the video, he says that there is a "labor shortage" in the USA. That is incorrect and dishonest. In Rockford, Illinois, the area in which I worked my entire adult life as an industrial electrician, there was a manufacturer of high-quality hand tools. They had put an ad in the local paper, advertising for an electrician. I was in between jobs at the time and applied for the job.
I was one of the TWENTY QUALIFIED PEOPLE who applied for the job and one of the six that was interviewed. I did not get the job, as I was informed that my robotics skills were weak, which was true. Before leaving, I thanked them for their honesty and left.
Rockford, like THOUSANDS of other cities in the USA, is now an industrial ghost town. Tens of thousands of manufacturing facilities have been moved to China or Third World countries, resulting in MILLIONS of Americans being thrown out of work.
We are told all the time that the reason for this is because Americans do not want to work, they are lazy or do inferior work. That is absolute NONSENSE. The reason why work is being offshored is because of the GREED of the parent corporations. They want higher profits, any way they can get them and American workers be damned.
Two of the more recent "fatalities" here in the USA are Carrier refrigeration and Hershey's chocolate. The production was moved to Mexico, NOT because Americans were lazy, non-productive, did shoddy work or that the manufacturing operations were not profitable. The Americans WERE productive, did excellent work and the operations were profitable. But the parent corporations figured out that they could obtain higher profits by moving their facilities to Mexico, cutting their labor costs.
The Mexico job move has been happening since the first nafta agreement. I worked for a gm supplier that got moved to Mexico back in 2000
Delphi?
@@phillipgriffin3901 it was a subcontractor of Delphi for wire harnesses
We had manufacturing in Mexico in the 1960s and 1970s in the computer industry ..sister plants to southern California plants
I grew up in a GM factory town in the 70s and early 80s. It was government over regulation and Union antics that made it make sense to move factories out of our Country.
@@bryangill7736 I worked at Delphi, ending upon the carbon canisters
It was a huge headache when they started manufacturing in Mexico.
They could duplicate our testing, quality control was a challenge, Safety off-site was an issue. Good luck for John Deere..
We all want American made products including me however with all the regulations and labor unions and lawyers it raises the cost astronomically! I spent
18 years in the car business and we had the same problem! America wants American made but wants to pay Walmart prices for it , then complain about Jin’s moving out of country!!!! Just me view from the deer stand! Great points Mike
In 1982 my wage after 3 year after graduation in engineering was 1X in Southern California..and a unionized floor sweeper at a steel plant in the mid west usa was 1.5X.
So my uncle who worked at that steel plant said the floor sweeper guy just had a high school education and already had bought a house..
So that guy had 5 years more full time working than I did since didn't half to take 7 semesters of math 3 physics a dozen labs differential equations.. Fortran senior projects on solar panels senior projects on MIE scattering of light for particle size determination.
I am not knocking the unionized sweeper at all. Just amazing how his job allowed massive wealth of buying a house and having kids with just 12th grade education.
You are exactly right
Yeah that’s all fine and good but when a company makes 10 billion in profit and then says “costs are too high we have to move labor to Mexico” that’s a bit dishonest.
They’re money horny Crooks!
I work in the appliance industry, and much of what you state is accurate. I deal with people from all over the planet working in a multinational company. Being an engineer, I was required to get a college degree, but do not see the value of studies that are not STEM. Unfortunately, this type of educational malpractice is being experienced by man whom have degrees that have no application to a vocation. If you can afford a degree in something that has no application to a vocation, fine that is no problem. To most this is not an option, and have been lied to as it pertains to the value of the degree.
As an aside we are tightening up out supply chain to include more readily available suppliers that do not require a boat trip to get here. Nice job.
premium? Nope its about saving money for the corp/stock holders/etc. No different when they send IT positions to India.. Its not saving money for the end users, its saving money for the top guys get big bonuses.
Also, they are not making $18 an hour in Mexican factories. I can assure you that........ An engineer in Mexico makes $20,000 a year a skilled mechanic in Mexico makes $8,000 a year. I know the numbers well.
But the product is made with low cost but the product price is still very high
@@charleslong1284 says who? You, give examples
Doesn"t matter how much a mexican worker makes per hour.Its all about the relevance of the buying power in the country for his dollar or peso earned.
Mexican workers will be hired through an intermediary company so that JD doesn't have to give much in terms of benefits. Mexicans will still be making minimum wages. That is exactly the cost saving strategy GM uses at their SILAO plant.
@@aaad01 shame because if they are properly trained in the job and are a citizen they shouldn’t be screwed over! No mater the color of the skin.
You're pretty spot on. I don't even talk about stuff like this anymore. People will regurgitate talking points from their favorite news outlet and that's about as far as their minds take them. I've always had a knack for research, doesn't take me long to get through the weeds and find the truth. Looks like you've blown past the weeds.
We definitely need to encourage our kids to get into some type of a trade. Everyone is encouraged to go to College. If no one can do the work there will not be a need for the College educated. They won’t have anyone to supervise. It’s sad to see John Deere move some of its production to Mexico. Great video Mike. Thanks
Don't recommend encouraging college, bastions of socialist propaganda, then there'll be no one to work. Trades are where it's at, too many college grads with useless degrees flipping burgers at McDonalds whining about $15/hr minimum wage. A lot of the problem rests with JD as well, with all the computerization on all the equipment and tractors in particular, they refuse to willing release repair information citing proprietary information rights. Farmers work on a fairly small profit margin, can't pay for that pricey equipment and provide for their families so priorities have to be set. New equipment is low priority if they can't repair it themselves and minimize that cost. So the bean counters being in charge, worrying about shareholders concerns more than consumers, have shot themselves in the foot, kind of like Boeing.
I'm sick of hearing my local JD dealer slam TYM for being built in Korea. I lived in Korea, I have much respect for their work ethic. JD has no room to criticize other manufacturers when they likewise abandon U.S. manufacturing and assembly.
I worked for Ford and Hyundai ( car manufacturers) in my 37 year professional career in the automobile industry.
South Korea builds great products and most definitely has state of the art research and development, design and manufacturing.
Very impressed with Hyundai having been and to their research center in Nam Yang, South Korea. Koreans are very hard working.
@@DouglasMix-o7hamericans can be considered LAZY, but want High Salaries.
Especially with some of the quality issues I have personally dealt with on 2 of my John Deere tractors!
Mike, I'll be honest I clicked on this video thinking oh great another person that is against John Deere spreading BS but I was completely surprised when I heard you tell true unbiased facts about what was going on. This is the first video I have ever seen of you and it popped up on my feed. With 100% transparency, I am in the farm equipment industry and have worked for a John Deere Dealership for over 20 years as well as a Kubota dealership that owned both dealerships for 5 of those years. I am now a new subscriber to you and look forward to watching all of your videos. Thank you for your honesty
Good video as always. I'm Mr USA and it's hard to find made in USA on many things. I've screamed about this for 40 years. I've also paid 3 times the price on many items. It is usually worth it. Many companies have operations in Mexico. It is a lot better than oceans away.
Better quality too.
Yeah, I think that your video is spot on. By moving a lot of jobs to Mexico, we actually address a lot of problems. The U.S labor problem, the dependency on China, we are helping our neighbor (Mexico) be a better country to live in, immigration, and the list goes on. I strongly believe that if I want to live in a better neighborhood, then I should be a good neighbor. After all, Mexico IS our next door neighbor
But so is Canada? 🤔
College educated fools.
Karma. I don’t feel sorry for china .
People still need a good job to survive in this country (USA). John Deere.isnt the only company reducing blue collar workers here. Those people won't be buying JD consumer products when they don't have a job..
I too, will leave politics out. But Mike, you've done a fabulous job of "dumbing down" a big piece of our Economic "Puzzle". And I'm afraid 3 or 4 end pieces fell off the table and were eaten by the dog. China will not "stop becoming China in the next 15 yrs but you are really onto something with your supposition of the labor issues they are facing. And building factories in areas of Mexico do have quite a few positive features. I also bemoan the loss of jobs in the US, and I feel badly for those immediately impacted. But we, Until last month, had low unemployment nationally and as you mentioned great demand for labor. I feel it in my business, THE MORTGAGE FARMER. Very well laid out thoughts. $18/hr is a lot in Mexico, based upon cost of living.... And the Union jobs here in the US are well above that threshold. Time will tell. Much like most things... the solution may be a combination of many things.
tHE chinese are building factories in other countries that have available labor. One problem is that in modern factories there ain't too many folks, a large number of droids with tongs and hammers stamping out the products, the few people around are busy changing diapers on the droids or whatever. A big dimension \ to chinese labor problems is they don't have social security or pension programs for werkers, that means when the chinaman gets too old to work he has to depend on his kids to support him so his parents and her parents move into their home and eat their food, not a happy family. They wanted cheap food for their factory workers so they depressed farm incomes resulting in the few kids of the farm families moving to the cities to take manufacturing jobs and now they don't have enough farmers.
Everyone worries about China. MEXICO is the new China .Kansas City Southern railroad was bought by Canadian Pacific and we can run trains from Canada through the US to MEXICO to Panama. Who needs the Panama canal or stinking cargo ships.
“Low unemployment nationally”
Please don’t believe this.
The “unemployment rate” is a joke. The real numbers you need to look at are the workforce participation rates which hover around 60%.
Some of the other 40% work under the table or are criminals or deadbeat slackers. Unfortunately the welfare state we live in allows these folks to live comfortably enough that they don’t have to work.
The wage rate factor, as I read it and I will stand corrected if I'm not reading it correctly, is that ~40-45% of a vehicle must be produced in factories that paid at least that much for a vehicle to qualify under the new agreement. That doesn't mean a production worker in Mexico is going to see that rate. Some of the commentaries on the agreement say that is more about keeping as much production in the US as possible. For example, build 50% in the components in US or Canada with their higher wage rates and ship them to Mexico for assembly.
Next I'd like to comment on cost. I spent 31 years in manufacturing plants. Part of that on the factory floor but most in cost accounting. The last 11 were spend in a US plant for a Japanese company. The overwhelming percentage of what we would regard as factory controllable cost was labor. Workers could try as hard as they wanted saving on small things here and there only to have any savings wiped out by having to run production on overtime. Before that I worked for a company making small appliances. Time and time again I did "make vs. buy" calculations of what we could build it for versus buying from China or Turkey. Based on manufacturing cost alone we never had the favorable calculation, hence Walmart is chock full of Chinese made products and the plant I worked has been empty for over a decade. Oh, that for the US side of that calculation this was a low cost area. Before that I worked for a US Electrical Motors plant that shipped all of its jobs in Mexico in the early 2000s.
Labor, and this I will agree in anecdotal. While I was at the car company (rhymes with Rhonda) the old hand line workers would often complain that new workers just didn't want to work. Turn over for new people was high. These were good paying jobs with good benefits. But they are jobs where people are expected to show up everyday on time, put away the cell phone, and do a job as instructed. Senior workers would grow tired of training new people they knew would quit in short order. The company has continued to raise labor rates to try and get/keep enough people to run the plants(s). Next time you have sticker shock that will be part of it. I'll grant that factory work isn't for everyone. But I think the case extends beyond the walls of a factory. Okay, hit me with the "OK, boomer". I do agree with a lot of what you young folk have to say.
I loved working in manufacturing. I hope the laid off workers can land on their feet. They are welcome to come south for better weather and better football. Maybe I should have left that last part out. lol
Mike, my dad sold Allis back in the day. We never drank the green cool aid either. Only AC orange, Ford blue, and Farmall red was on the farm. Hay equipment was new Holland, a 60 AC combine was replace by several Gleaners, and of course an old Van Brunt grain drill that's still in the shed. Pop did bring home on trade a Case or a Deere here and there, and we used them, but green was not our thing. Your points are well taken. I don't like it but that's the way it is. We all go to Harbor Freight but complain that nothing is made here. Still don't have a Deere here and don't plan on one. The blue 6610 and 1720 are just fine.
Thanks for answering my letter Mike. Your explanation makes perfect sense. I’m a Deere owner so I was curious. A lot of people are bashing Deere, but sometimes tough business decisions have to be made. Something you didn’t mention is that not ALL Deere manufacturing is going to Mexico. Only select equipment like skid steers & truck loaders. My tractor was and still is made in Augusta, Georgia (a plant that will remain open), something foreign-made tractor owners can’t say. Thanks again for the informative video….Craig
I got four boys, 22, 27, 37, and 42. All are gainfully employed w/o a. College degree.
Do they like what they do?
I see lots of people have “good” jobs but hate it.
Thanks for the insight Mike. You always are very informative! Appreciate your views!
This move to Mexico was created by the last strike. The wheels were set in motion because of the strike. Design of the factories in Mexico started immediately after the strike ended.
Nope. It's corporate greed.
I bet the wheels were already in motion. The strike just accelerated them
Exactly.. when you strike a company this the end result.
General motors will be next
@@davidmicalizio824no its the unions. They were great in their day but those wages are insane. No fork lift driver should make 38 dollars an hour. 39 years in a large aluminum foundry making tractor and over road casting non unions
I don't think that the shipping costs from China, or anywhere else, increased due to a container (Conex box) shortage because they were being used to transport N95 masks during Covid. The primary cause was the bottlenecks at ports which in turn was due to restrictions on the dockworker, truck drivers, ships crew, the six foot rule, exposure isolation, etc. You may recall that in 2020 ships were waiting up to three weeks to unload outside of the Port of Los Angeles. That created the shortage of available ships and Conex boxes, ie the turnover decreased dramatically when the unloading time went from days to weeks. That in turn caused shipping costs to increase dramatically. For example in 2018 in my small business I paid approx $2.75/kg for airfreight and in 2020 I paid $7.50/kg. In 2024 with Covid behind us my cost is back down to $2.75/kg.
As to John Deere moving some manufacturing to Mexico I haven't read exactly what processes are being moved. As a whole John Deere is profitable (16% net profit) but I don't know what the profit margins are for each of their product lines. Though the details are likely confidential I suspect that the processes being moved are for product lines that are not meeting the profit goals for John Deere. So you either reduce costs (lower labor and overhead) or get out of that business, ie close factories, because otherwise John Deere is not prudently using the capital (investments) entrusted them with.
As to comments about corporate greed. John Deere is not a 501 (c)3 non-profit or a social welfare organization, but a for-profit corporation with a chartered purpose to legally maximize shareholder value and the Board of Directors are legally obligated to make sure the management is working to achieve that goal. The largest shareholders are mutual funds and investment companies who are investing money deposited with them from State and local pension funds (teachers, firefighters, government employees,, etc.) and individuals like myself. In general a return on our investment of at least 12% annually is expected, and many of these pension funds rely on these returns to pay their retirees.
Excellent comment! You explained it very well.
Yep it’s hilarious when politicians or people in general talk about the “evil corporations”, or like the left says corporations need to pay their fair share. First off a corporation is just a tax status. Secondly as you stated if these so called evil corporations don’t make money no one will have a retirement because that’s what all of the 401s and pensions are based on.
This is exactly the issue. You can run a business that is not beholden to shareholders and make a lot of money. A 12% return annually is unsustainable in the long term. But if a public company does not do everything in it's power to increase the wealth of the shareholders, then the board can get sued. This leads to all anti consumer practices like, raising prices, lowering quality, subscriptions, digital sales you don't actually own, moving manufacturing, cutting workforce during slow times, and so much more.
There are plenty of examples of private companies out performing publicly traded companies. Chick fil A v. McDonald's is one of the best examples. McDs has saturated tge market and is struggling to maintain growth. With a fraction of the store fronts and sales chick fil a has managed to pull in profits comparable to McD, all while having the best customer satisfaction and much higher employees retention.
Unlimited growth is not possible. Eventually you hit a ceiling, and when you do so as a publicly traded company, it is no longer about making a good product for a decent price.
Doesn’t make it right.
Yeah, I think that they should employ one of the Ronald reagan.. force people to return to work or they will be replaced simples that and discussion problem solved. There’s a lot of people that want jobs out there so I don’t know what the problem is. If these strike workers don’t wanna work give them 48 hours to return or forfeit their positions.
A common sense view on the subject. You also brought up some facts I wasn't aware of. Nice to hear honest facts and not political guesswork. Keep 'em coming.
Secure paying jobs available in Mexico will also take some pressure off the number of people wanting to swim the river too.
We were strongly encouraged to go to university. My sister has a masters degree in science, but for most of her career has had to beg for funding every 3 years and when it stops raining, research funding also dries up.
I dropped out and got a trade. Aircraft sheet metal, aviation welding and composite repair. Only been out of work for 2 months in 30 years, and that was only because I wanted a holiday.
Some really good money to be had as a lowly tradesman these days as the old guys are retiring and not enough apprentices were taken on in the past (airline cost cutting) or those that were trained haven't kept up to date with changes in their industry.
The unions have priced their members out of these jobs
Garbage its corporate greed John dere moves for more profit a worker in mexico gets 15%of what a usa worker gets .These companies mover to cheap labour country but still charge the same price as when the product was made in a western country.
Yes they did with the last John Deere contract. I instead of a really big wage increase they should have bargained for more job security. The second thought is that the 7% wage increase got them Nothing due to the inflation of the last two years! Net loss.
@@edwardliszka837 john dere would go to mexico for more profit you cant compete againts a mexican getting 20%of the wage of a american .But john dere will still chatge the same price for the product made in mexico as if it was made in the usa.Its corporate greed
Very well said Mike and you did it without involving politics.
All good points there Mike & truthfully, probably spot on too. You & many of the commenters are correct, the younger generations need to be encouraged to look closer at the "Blue Collar" or "Trades" type jobs out there. Thanks for sharing you views on the situation with not only John Deere but, with CaseInternational, Bobcat, & other manufactures that look to be doing the same things at some point. Take care.
There is some really good points for helping Mexico boost their manufacturing. As a neighbor to us, the better they do, the better we do. The stronger they are, the safer and stronger we are. Also, I rather see Mexico get stronger than China. Lets support our neighbors in becoming a better, healthier country while decreasing our dependence on a potential enemy. On another note, Mexicos manufacturing has proven better quality over China for the last two decades of products I have seen. Sure it sucks Americans are losing jobs, but I rather those jobs go to Mexico and not China.
I live in an East Tennessee city which has at least 13 manufacturers of well-known products. If John Deere is paying $18.00/hr in Mexico, then workers here are getting royally screwed for wages, yet this is why manufacturers move out-of-country, because American workers demand too much? Deere should have set up here...they'd get away with paying $12.00/hr easily. Sad commentary, but I think John Deere doesn't build tractors for farmers. They sell tractors for stockholders.
Stock buybacks
Also live in E T . Labor is cheap here. JD plant in Greeneville taking advantage of thier employs.
This is the more objective opinion that Ive heard from someone outside the big corporate. Lets remember that is better to have an strong aly (mexico) than a strong hater (china)
Hi Mike, you are spot on with all your points. I agree 100% with all your comments. Great job explaining it in an factual, non-confrontational manner 🤙🏻
I’m the end of the baby boomer generation and retired recently from a mechanical trades job and during my exit interview HR asked for my advice on finding my replacement, I said good luck, you’re not going to find anyone, they all took the “college track” not the apprenticeship track.
The education system in this country has done a huge disservice to millions and millions of young people by convincing them college was the only option unless you’re less than.
Again, great video!
Agree that supply chains should be in North America. Deere will not pass any savings on to the end customer, unfortunately.
You make many great points. I have a JD 6115D tractor that was built in Mexico. It should be a different shade of green so that long time JD owners can recognize them and avoid them on sight. I grew up on John Deere tractors and combines and am 62 years old still owning them. This 6115D is a P O S. I would have been way better off with another rebuilt 4020. I think that it was built to compete with Kubota. Avoid them if you expect a JD field quality machine.
I think you might be wrong on wages from what I know. I worked Eaton corp. I worked at the belmond ia. Eaton plant. It started moving equipment down to Mexico around 2018. I know when they started to hire people down in Mexico to train with people from our plant they were only paying those employees from Mexico a $1.38 a hour.
You make valid points. I grew up on John deere, but went with a different brand because of there proprietary crap and not allowing farmers to work on their own equipment. John deere not having skid steer attachment without having to add their adapter and ultimately needing to add weight to do it. I think think they build a good product, but believe their are equally good products with better features for the same money. Anyway, yes, we all want our dollar to go further, but anything we own has parts from foreign countries.
The way you put it makes sense. My grandfather had John Deere and dad had ford new holland and all tractor brands do the same job. I recently got 2 1952 ford 8n and they serve me well. Great content Mike keep up the good work
It is more sensible to keep our industrial infrastructure here in the U.S. and import Mexican (or other) labor. The hysteria over Hispanic labor coming here has caused economic dislocations in many sectors. It's one of the reasons food prices spiked. My experience has been that Hispanic laborers work hard, they are very adept at what they do, they are reliable, and they often willingly take jobs no American citizen wants. When America refuses to compete, personally or nationally, we are not in a good place.
Thank you for contributing to the problem. When you're state becomes forever leftist (they vote as a block over 70% leftist) then you'll only have yourself to blame.
Agreed. Where I'm from, latinos- mainly from Mexico- do the majority of hands on labor jobs. Esp in agriculture. The reasons are essentially as you said, because American young people today won't do that sort of work, or those kinds of hours, for the wages farmers can afford to pay. Sad, but true. Nobody is going to pay $20-25/hr for dairy farm help, veggie and fruit picking. Etc etc. and few youngsters are willing to do that kind of work. That's the other half of why family farms went away- the kids had ZERO interest in being married to a herd of
cows and a patch of dirt for peanuts.
Everyone wants dirt cheap food prices, but never stop to think about what it costs to produce, or how much work it is. AND they want top dollar and minimum effort required for even the most basic unskilled work. Something has to give.
I personally agree with your statements 100 %. Facts. Thanks Mike for making it clear to your followers.
There appears to be a lot of confusion regarding John Deere's moving some work to Mexico. When evaluating that decision keep in mind that the UAW went on strike at Deere for the first time in three decades in 2021. This was a very vulnerable time for Deere while they were trying to deal with Covid and supply chain problems. The union was able to negotiate a very generous settlement that raised Deer's US labor costs substantially. The equipment business is very cyclical; some years you can make a profit and some years you can't. If the market allows they can try to raise prices or they can look to reduce cost. Also keep in mind that across it's product lines Deere has higher US content than their competitors so switching manufacturers would not create more jobs in the US.
Deere doesn't make their money selling equipment, they make it on parts and service. The parts and service on a large piece of equipment are 3-6x more profitable over the life of the unit than the unit itself. If people keep old units running longer, JD still gets paid.
@@OtisFlint Very true and your comment is applicable to all the equipment manufacturers not just John Deere. In fact almost all equipment manufacturers, from office printers to jet airplanes make a significantly higher margin on parts than they do on their primary equipment. John Deere and most AG equipment suppliers work through independent dealers who buy parts from the manufacturer, mark them up and resell them. They also provide service work independently from the manufacturer.
My son and Cousin both work for Deere. They tell me that the UAW really screwed up with the strike. To keep things running management and engineering were running the factories.. they were able to do the job and put out more than the UAE workers with considerably less people. They identified a considerable amount of redundancy that Deere has been able to eliminate. They also said that Deere is letting people go who have been written up for contract infractions. Also demand is down by over 30 percent. Add those things up and there's plenty of room for layoffs.
I’d love to hear specifically what price point American workers have to work for to keep the manufacturing here. There’s still a demand for the products, the products are still being produced, they’re just gonna be produced by somebody else then sent here. Labor costs are most likely the single biggest difference. Every time some union promises to get you drastically higher wages, that may be true. But they’d only gonna last until the replacement factory is built somewhere else.
Thanks Mike. This speaks volumes to your character!
Great commentary about the issues around manufacturing in the US. One of the issues facing labor around the world is the lack of trades training to fill the gap. The idea of having a university education is not for everyone and the mindset needs to change in the education arena that not all students are ready to get the degree and sit behind the desk.
Everything you said, makes perfect sense us as Americans just don’t wanna hear the hard truth how our country is slowly falling to its knees in the truth needs to be heard
You make some good points. My VW Jetta was made in Mexico. In 2012. And it is built as well as anything is built these days, maybe a bit better. Several of my larger trucks were Hecho en Mexico. This has been going on for a long time and I guess we cannot fault JD for doing it. Still don't like them. But there isn't a big company out there today that doesn't put profit and stock value above quality products, customer service, and employee welfare. In my opinion.
That was very fair and accurate sir. I agree with you on all points especially the demographics and the inevitable shift in labor.
Mike, you've given a very reasoned and knowledgeable explanation of an issue that was a "hot button" issue for me. (and I am a guy who has been aware of "demographics", "supply line" issues, and the "educational" miss-match.) But listening to you put it all together has been good.
(But I still like my Korean Tractor.)
Best explanation I've ever heard about the current labor shortage situation! Thanks, Mike!
Good video and explanation. This has been going on a long time. I had a 1982 Ford Ranger with the 2.3L engine. The engine was assembled in Mexico. The transmission was from Japan. I look for things made in the US. I have Roundhouse Jeans made in Oklahoma and SAS shoes made in San Antonio. Both are very good products in my experience. I also just purchased Channellock pliers, made in the US. When I cannot find a US product, I look for one made by one of our allies, not China. Recently I purchased a pair of pliers made in Vietnam, and did not chose the Chinese ones. Even things you think might be made overseas may have US made parts. One example is Samsung phones. Samsung has a large integrated circuit factory in Austin, Texas and is building another in Taylor, Texas. As all this moving stuff to Mexico, it has affected me directly. The interstate near Austin where I live (I35) is truck city. I wish they would ship more stuff by train!
you were going along very well Mike until you got to two points ..... first, labor shortage in US is because unemployment payout rates are too high and workers won't work for real wages when they get paid more to not work.
My family ran a trucking company for three generations. At the end before we shuttered the business, we couldn't keep enough drivers, because they would say they'd found a new job if they didn't get a raise, but then they'd file an unemployment claim against us and go on unemployment. We couldn't pay them more than they could get in unemployment, because shippers would not pay us enough to give drivers a pay raise. We actually had drivers coming to us in the summer time, volunteering to be laid off. They wanted a free summer vacation, paid for by government.
And the 2nd point you made that's wrong was about China. Their reaction to overpopulation is the very thing the whole world needs to begin doing, and soon, because we do not have the energy resources or food to keep up with growing overpopulation on the planet. btw, China was shutting down industrial production, because the demand was down, not because they had a shortage of workers in China.
John Deere builds good product, but even their best equipment is now so overpriced due to accelerated inflation, few farmers can afford to buy it.
As an example, my friend works as a skilled tradesman- doing custom tile installation and such. When my state increased minimum wage to $20+/hr, he was making less than a kid busting suds at the local diner... Really pissed him off. Why work that hard, earn the qualifications, etc- when you could make more at an easy, unskilled job?
@@pyroman6000 politicians are ruining the economy, for sure
Unemployment pay is the Biden administration, nothing JD can control.
@@pyroman6000That’s the fault of the State for incentivizing unemployment. These benefits were supposed to be a temporary safety net - not a hammock.
Thanks Mike. I think you are right on target.
Regarding John Deere. The first tractor that I bought was a sub-compact 1025R with a backhoe and a loader. I still own and use that tractor quite frequently. I like the machine, but the major thing that I don't like about John Deere is their proprietary loader attachment system, rather than a standard "skid steer" type.
I don't wish to get political either, but I think that another part of the problem is unions and union demands. Yes unions had/have a place, but I think that in recent years (over the last couple of decades) the demands were just too much.
I don't blame Deere, GM, Ford, etc. for trying to cut operating costs. It appears to me that labor cost seems to be a common denominator among all of these companies.
Makes sense to me
Global business is facinating! Thank you for your insights.
Also, I'm diggin' the cicadas. Just out talking about tractors in their native habitat ;)
I agree 100 per cent with you. Only a person who has worked in products like J D understands this issue.
i wonder if 16k to 18k per acre land prices have had any effect on machinery buying trends ?
China doesn’t mind that cost nor does Bill Gates
I’m no Deere fan either, but they do deserve respect.
Hope this goes better than when they moved compact tractor production out of Horicon. That first series after the move was absolutely garbage.
Another good video Mike!! Well that seems reasonable to me. I personally don't care for Deere as far as some of the people that's in management. I had a mahindra tractor and a Branson I been hearing good things about kioti I went to a dealer not far away Well didn't go very well. Then I realised the dealer where you worked sold the kioti tractors I called them lady transferred me to young man by the name of Riley Dodson was super told him what I wanted he told me what he had I sent him pics of my tractor he told me what he would do last Friday I was proud owner of a ck3520se shuttle kioti seem like really good folks there. Thanks for sharing be safe
I've heard it said by many, that Mexico is likely going to be the new "China" when it comes to maunfacturing. Honestly, I don't really see a big downside to that. Having a booming economy as our Southern neighbor isn't a bad thing. Eliminating a 6000+ mile ocean voyage, the massive bottleneck this causes at our west coast ports, and not needing to be so deeply entwined financially with a hostile government, are all good things.
As far as the grousing about outsourcing- that ship sailled long ago.
OUTSTANDING INDIVIDUAL’S PLAIN TALK EXPRESSING COMMON SENSE OF A GLOBAL PERSPECTIVE FROM A MISSOURIAN. People are amazing, even from the state of misery, that ranks lowest in all USA social/economic/race equality perspectives/policies but produces quality intellectuals like Mike who does drill down to fundamentals perfectly.
I am a long term channel subscriber and get stuff from Mike from time to time. YOU SHOULD TOO!
As a Navy Veteran, I only buy USA if possible. Also, JIT is a terrible idea. I've been saying that for 40 years. Outsourcing is not good for America.
I agree with 100% of what you're saying. I don't know the percentage that the vast majority of the automotive industry has been in Mexico for decades so this is nothing new
wont buy another john deere product
@@perrym6937 This is caused by the immature leaders In the company. Keeping small towns thriving with not only the people employed but the communities are not a care to them!
All your points are correct Mike. They can build products in Mexico so much cheaper! As for the Latino population in the US, they are doing most of the blue collar labor now because American kids don't want to do it! All the subcontractors that built my house in 2022 have Latino labor. Most of them can't even speak English! They will get paid minimum wage here in the US and are happy to get it. Most of them are very nice folks and do work hard. Don't get me wrong, many American kids are hard workers but they are rare. Folks like Ford, Chevrolet, John Deere just to name a few do not want to pay an American worker $30+ an hour when they can pay workers in Mexico far less. Just how it is. 😕
The other thing a lot of people don't add into the equation is how much companies like Deere will pay for benefits. I seem to recall that around 20 years ago or longer it cost GM about 70 dollars an hour for an assembly line worker after all the employee benefits such as pension and insurance etc. were factored in.
Very true. Healthcare costs especially are crazy expensive!
I think you are spot-on Mike...except for not being a John Deere fan! Keep up the good work.
We bought a 4430 to pull our 12 row Max Emerge planter. What a disappointment. I told Dad, " You bought it, you drive it."
There teck is questionable. And they will not let 3rd party people work on it as the car industry does. You can have your local garage scan you car but not your JD.
Blame the salesman for mismatching the tractor to your needs.
Pretty sure the product isn’t going to be cheaper moving to Mexico. Just more money for blackrock
And John Deere posted record profits last year
Very good explanation mike. I dont own a tractor in fact my yard is a push mower .25 acre. But I enjoy watching your tractor mowing, implements, and commentary about farm equipment. My personal favorite are those highway batwing mowers, and old school sickle bar mowers
Although I posted a different comment, I agree with a lot of your points and at the end of the day you’re right I think Canada and Mexico could help the US and the US can help Canada and Mexico really we should all be working together as a North American team that I strongly believe in
Great video Mike, your 5 points were right on
JD's negative press reminds me of the bad press GM has gotten over several years. GM built a few plants in Mexico and the American press pounced. Ford has 5 plants in Mexico, Chrysler has 6, Honda, and last but not least.... Toyota, the Tacoma has been built exclusively in Mexico for over 25 years. Hardly one negative word mentioned about them. Just sayin.
P.S. Tacoma competitors Canyon/Colorado trucks are all exclusively built in Wentzville, MO.
My 2019 Tacoma was built in Texas.
Hey Mike thanks for posting this. I think your analysis is sound, and it resonates with what I’m hearing from other geopolitical analysts (e.g. Peter Zeihan).
Corporate always is concerned with the bottom line. Stockholders want more. Unfortunately, if American manufacturing wasn’t penalized by its own government, it would move operations outside the United States.
There's always a beginning to a company selling out their customers. You just miss that moment for JD a decade or more ago.
This is JD's way of punishing "right to repair"
The house never loses
If I read the news right, JD is moving some cab production to Mexico. JD already had cab production down there so this move would appear to consolidate cab manufacturing.
Hot take here speaking as a 22 year old as to why we are outsourcing jobs: We as a country are no longer innovating. At least in the same way that we used to in the 20th century, let me explain.
100 years ago, the assembly line was a relatively new concept, and as a result, required thousands of people to partake in the newly innovative way of making products. Because they were on the cutting edge of innovation at the time, large numbers of people were paid like engineers. Today, that technology is 100 years old, is mostly automated, slashing the number of people needed, and is no longer cutting edge. But people today require cutting edge pay to survive. This applies mostly to my generation (Z) because we are of the age where we have to buy our own assets, but have to do so at a point in time when our currancy is inflated to record levels. Most people over the age of 45, or those who own a house are shielded from this reality, and as such can make do on a lower wage since their biggest expense is paid for.
Younger people require more money to buy the same items older people did and as a result go into higher paying professions to make up the difference.
Combine this with very little innovation from the agriculural industry and you have a market that is high cost (for both employee and employer) and low margin.
At the end of the day, a tractor is an engine attached to a transmission and an axle, possibly a cab. That's all there is to it. Unless we innovate and reinvent the tractor, more people will lose their jobs and only very few will be needed to further refine the processes that have been in place now for 100+ years.
DO you think a $1/hr job in 1960 bought more than a $20/hr job today will buy?
@@redneck-l4w Yes, I think it did, and there are many metrics that reflect this. Ranging from the average age of marriage, house purchase cost to income ratios, and to average prices for cars. People in the past could do things in life earlier because they could afford it. According to the inflation calculator, a person in 1960 making minimum wage has 32% more purchasing power than a person today. And those are just the numbers they want to tell you about. Since the 1980's, items like homes, and car prices have been removed from the inflation index, making the real number considerably higher. Coincidently, those are the 2 biggest purchases in most people's lives.
Circling back to tractors, we can see the effects of inflation in the products they sell. My Case IH 395 cost $16,000 new in 1991. Today, that would be about $37,000, the same price as an equivalent Case IH Farmall 50 sold today. While it sounds good on paper, drastic cuts were made to keep the prices comparable.
In 1991, this tractor was made in England, a first world country, that paid its workers living wages. Now, a similar machine in made in India, a third world country, and pays its workers substantially less, to make the "same" product. On the Case 395, the entire tractor was made of metal except the front grill, side panels, and dash. It had a 2.7L engine making 35 PTO hp and had a heavy-duty transmission and rear end used on 100 hp tractors. Now, the entire hood, parts of the fender, and the dash are made of cheap, and much thinner plastic, the rear end is only used up to 75hp because the components are made cheaper and has less metal, and the engine displacement has been cut by half to 1.3L trying to make the same power, killing any engine life, or fuel efficiency gains because it has to work harder to move the same loads.
In the end, the first step to solving any problem is to acknowledge that there is one, and that problem is that we are working more, to buy less.
Thanks for making sense!
Mexico is our largest trade partner now, I don't see problems with Mexico. We should support them, we need them
Even with record profits JD still wants even more $. Yes, I know what capitalism is. I don't think JD cares much about the workers. I don't care about this continued whining about US labor. And, look at some of the overpriced crap they make. Can you imagine making a plastic gearcase on a riding lawnmower? I had JD for years--- but no more "green" for me!
Kioti FTW
Shareholders
Absolutely
Stock buybacks
Large Corp has no loyalty just a work employee concept they have something you want????? As a boss told me don’t let the door hit me on the way out I retired he was asked to leave he was ok not an asshole just being truthful
Very educational, many issues I had no clue about, thanks for the enlightening video.
Well thought out! I am sure there will be many naysayers but agree with you analysis. Thank you!
Made in the U.S. is pretty much a nebulous concept now. Nothing is 100% made in the U.S., the parts come from all over. Many of the Asian tractors are assembled at facilities in the U.S., some almost as much as Deere. I remember reading something a few years ago that the most “made in U.S.”vehicle considering all the components was actually a Toyota. Go figure. So the “buy made in U.S.” people may want to consider how they define that. Want something from a U.S. company? Or something made with the most input from U.S. workers? Those two things are not necessarily going to be the same brand.
Hey Mike, I kinda agree with you. The internet and cell phone changed our young people. As everyone else in the world. You explained my question.thanks
One of the items going to Mexico are the skid loaders that have been built in Dubuque. I don’t know if it’s quality control issues or poor engineering but everybody around here in the Midwest buying skid loaders are buying Kubota or cats.
Local 838 here. The company has spent $43.6 billion on stock buybacks and dividends over the past two decades. There is no question that there is enough profit to go around, and Deere can afford to keep good jobs in Iowa and Illinois. Quoted from UAW newsletter. I work in waterloo at tractor cab operations. With all due respect to your opinions. This is corporate greed dont try to sugar coat reality.
They have to pay dividends because they borrowed money (in the form of stocks) from investors. Buying back the stocks reduces the amount of dividends they have to pay out.
@mikeingeorgia1 Moving manufacturing to Mexico after the billions were made using the ones who lost their jobs in the United States. Not the John Deere I grew up with.
Haven't looked at it this way before. Thanks for the perspective. I honestly have less trust in China politically than I would in Mexico. Didn't like the idea that the auto makers were looking at moving some production to Mexico but it makes more sense to me now. 👍
Less trust????? NO TRUST
I work in the oilfield and a floor hand with no experience starts at $22/hr and all you have to do is show up and don’t do drugs. Still can not keep enough hands to work.
One of my Dad’s friends owns a shortline railroad. He’s always advertising help wanted ads, but finding people that can pass a drug test is extremely difficult
The problem is that Deere's quality has gone down hill I bought a brand new tractor that needed a repair right after I got it, 4 years later, bought another brand new tractor and again, issues..Then the first tractor had a major issue at 614 hours.
Come to find out, Deere was aware of the issue, had done a "product improvement program" on 2 parts inside of the tractor but yet did NOT notify us. Instead, the month the warranty runs out, the tractor gets sent to the shop for repairs that total over $6k and took 8 weeks. Both of these are compacts that I am pretty sure were made in Augusta GA. and to just add more insult to the injury, they found a plate out of specs. The dealership, did get Deere to cover half the cost but it still burns because they KNEW this part was going to fail and they didn't bother to man up and recall the tractor. I am really debating trading this tractor in for a different brand because I am so freaking disgusted with Deere. If you have any suggestions on a good brand that is dependable and EASY to work on, would love to know what you would recommend.
Hey Mike, I don't know how true it is but I have heard from a few economist that have said we are seeing the beginning of Mexico being the new China. Said its been in the makings for a while and companies have slowly been shifting to Mexico away from China but your starting to see it done now at a faster pace and more companies shifting away from China. As you stated China is in a downfall and Mexico is on the beginnings of manufacturing boom. All the manufacturing jobs that were on China and other parts of the world are shifting to Mexico. Many many many companies are moving parts of their company if not the whole thing to Mexico and leaving China.
I think the main problem with JD is that farmers can't repair there own paid for tractors but is forced to use JD.
You make so much sense, thank you sir!
According to Peter St Onge, one out of every three dollars in existence was printed in the last six years. Inflation (currency depreciation) isn't just affecting us at the grocery store but manufacturers and employers too.
Deere is a global company with production all over the world. Same thing goes with Cat and Cummins, they have large production in countries like China and India.
This is how these 3 players has become market leaders globally In their respective fields, something that would have been impossible with only production in the US.
Yea, I read somewhere that JD operates 109 manufacturing facilities.
Those cicadas are real singers. 😊