Deere announces restructuringMOLINE, ILL (August 27, 2001) – Deere & Company today announced plans to exit the Homelite consumer products business and restructure its Construction and Forestry Division as part of a sweeping effort to improve financial and operating performance. The actions will result in a pretax charge of up to $240 million, or $150 million after-tax, primarily in the Company’s fiscal fourth quarter.
“These decisions are part of a comprehensive strategy aimed at achieving a substantial improvement in our business performance,” said Robert W. Lane, chairman and chief executive officer. “They underscore our commitment to building an organization that consistently delivers higher levels of profitability and superior shareholder value.” Previously, Deere had announced additional equipment-production cutbacks for the fourth quarter and a program targeting an 8 percent reduction in the U.S. salaried work force.
Today’s announcement affects consumer products such as blowers, trimmers and chain saws marketed by Deere under the Homelite brand. The John Deere line of professional handheld and portable power equipment for commercial users will continue to be available through the Company’s extensive dealer network.
Affected by the Homelite decision are John Deere consumer-product operations and employees primarily in the southeastern United States and Mexico. Deere said it intends to sell the 1,200-employee Chihuahua, Mexico, operation and close some or all operations in Greer and Columbia, S.C., and Charlotte, N.C. Approximately 475 U.S. employees would be affected beyond the previously announced salaried work force reduction.
Deere is engaged in active negotiations to sell Homelite and expects to finalize a transition of these operations before the end of October. On a pretax operating basis, Homelite incurred losses of approximately $70 million in 2000 and $30 million through the first nine months of fiscal 2001.
Also today, Deere announced plans to reduce manufacturing and marketing costs in the Worldwide Construction and Forestry Division. These plans will reduce employment levels through the elimination of about 300 positions in addition to the salaried work force reduction previously announced. In this regard, Deere said it would close a forestry-equipment factory in Bessemer, Ala., and sell or shut down a fabrication operation in Woodstock, Ontario. Other activities in Woodstock will continue. Further, Deere said it would make a significant reduction in its worldwide construction and forestry marketing and manufacturing staffs, including the closure of an office in Atlanta, Ga. As a result of these steps, annual operating costs are expected to be reduced by about $15 million.
“These actions send a clear signal that we are not content to simply wait for the economy to improve in order to make our businesses more profitable,” Lane commented. The Company’s overall strategy remains focused on delivering consistently superior levels of shareholder value, he noted. “To do so, we must improve our financial performance and concentrate our efforts where we have a clear competitive advantage. Today’s actions are important steps along this journey.”