Deere and Co. (DE) - Get Free Report shares slumped lower Wednesday after union workers rejected a second contract offer, despite pay increases and improved benefits, arguing the farm equipment and construction machinery company could afford even more at a time of record profits.
The latest contract offer was voted down by margin 55% to 45%, the United Auto Workers said late Tuesday, suggesting the ongoing strike -- which began with more than 10,000 members on October 14 -- will continue at twelve plant locations, including all of Deere's US factories except for Denver and Atlanta, which approved the enhanced deal.
The United Auto Workers union, which represents Deere production workers, said it would be discussing its next move in the negotiations.
"The best-in-industry agreements reached with the UAW would have provided an immediate 10% wage increase and 30% wage increases over the term of contract; healthcare with $0 premiums, $0 deductibles, $0 coinsurance; new paid parental leave, autism care, groundbreaking retirement benefits and a ratification bonus of $8,500," Deere said in a statement Wednesday.
Deere shares were marked 5.4% lower in late-morning trading Wednesday to change hands at $336.04 each.
Deere posted stronger-than-expected third quarter earnings in late August, and lifted its full-year profit forecasts, as strong crop prices and renewed farming equipment demand boosted the group's top and bottom lines.
Net income fiscal 2021 was pegged between $5.7 billion and $5.9 billion, up from its prior forecast of $5.3 billion to $5.7 billion.
Union members have been urging their negotiators to broaden the scope of the bargaining to include work rules, scheduling and other compensation,
Union members rejected the first proposal October 10, saying the raises and other improvements to benefits offered then were inadequate when Deere’s farm and construction equipment sales are rising and other employers are boosting pay significantly to attract workers.
There is a record labor shortage in the world's biggest economy, with nearly 11 million positions left unfilled as of the end of July, the highest since December 2000, the Labor Department said in its monthly Job Openings and Labor Turnover Survey, or JOLTS report, published in September.
Wages are also surging, with third quarter employment costs rising at the fastest pace in 39 years, according to the Labor Department's most-recent Employment Cost Index.