With record profits, Deere & Co. offers wage, retirement boosts. Will it be enough to avoid a strike?
David Schmelzer knew quickly that his union was in deep trouble.
A Deere & Co. quality control inspector in Milan, Illinois, Schmelzer served as the United Auto Workers Local 79 chair four years ago, when federal prosecutors indicted the union's top officials for embezzling members' funds and accepting bribes from automakers.
Even though he was more than 400 miles from the UAW International's Detroit headquarters, and even though federal prosecutors never mentioned any of the union's interactions with Deere, Schmelzer sensed fury among rank-and-file members. A co-worker shouted at him from across Deere's massive warehouse.
"You're sleeping with the company!" he recalled hearing.
Schmelzer wonders how much of that distrust of UAW leaders still lingers. Deere employees from nine locals in Illinois, Iowa and Kansas will hold meetings Sunday morning to vote on a new six-year collective bargaining agreement that union leaders negotiated with the agriculture and construction equipment giant.
The contract will cover more than 10,000 workers, 7,200 of them in Iowa, where Deere ranks among the state's largest manufacturers.
Rank-and-file members are often leery of their own union during contract negotiations, wondering whether leaders really got them the best deal possible. But the environment in Deere's factories feels even more tentative this year, Schmelzer and other union members said.
Talk of staging the first Deere strike since 1986 is more frequent, the members said. And waves of workers are criticizing the union and the company on social media, to the point where leaders at Local 838 in Waterloo and Local 450 in Des Moines have disabled comments on some Facebook posts.
In addition to the embezzlement scandal, members say they're still bitter about concessions UAW leaders made in 1997, when new hires began to earn about half of what Deere employees previously had made. Union leaders were worried at the time that 55% of members were about to become eligible for retirement, and Deere agreed to hire more workers, but on a lower pay scale.
Some current Deere employees say they're frustrated the UAW hasn't clawed back those losses over the last two decades.
Last contract barely passed, document indicates
When union leaders presented the current collective bargaining agreement in 2015, members barely approved the deal, 51%-49%, separated by 180 votes across the nine locals, according to a filing one member provided the Des Moines Register. The vote is not a public record, and a UAW spokesperson declined to comment on the veracity of the document, as well as questions about the more frequent public criticism from members this year.
Local 838 in Waterloo, the largest unit, with about 3,000 employees, rejected the contract, 68%-32%, according to the document. Local 74 in Ottumwa also voted against the deal, with 66% of members in opposition.
Schmelzer, whose local voted in favor of the last contract, with about 79%, said he believes his co-workers have changed their minds this year. He said many are still angry about having to work through the early months of the COVID-19 pandemic, when some other manufacturers shut down or slowed production.
They also see Deere reporting that it's on track for by far its most profitable year ever, beating its previous record by 61%. At the same time, the company has struggled to find enough workers.
"The company owes us," Schmelzer said. "They've owed us for a long time. If there was ever a time to stand up and tell the company, 'No,' this is it."
Proposed contract would raise pay, reinstate cost-of-living adjustments
Under its proposed contract with the union, Deere will offer new factory and warehouse hires starting pay from $20.10 to $30.30 an hour, depending on their positions.
For the lower-end jobs, the bump is about 96 cents an hour over what they were getting earlier this year. For the higher-end jobs, the increase is $1.71 an hour. On both spectrums, the single-year hike is slightly more than anything the union received since the old contract took effect in 2015.
The company would provide a couple other key boosts, according to an outline of the agreement that the locals shared online Thursday night. Employees would see 3% wage increases in 2023 and 2025. The company would reinstate the quarterly cost-of-living adjustment that it stopped in 2015, and it would provide two weeks of paid parental leave to members for the first time.
The company also would maintain its health insurance plan. Workers do not have to pay premiums for the plan.
Deere agreed to boost some retirement benefits, as well. A 25-year veteran would get about $100 more a month at retirement, about a 9% increase.
Employees also could retire at 60 without taking a penalty on their pension, two years earlier than they can under the current contract. And they would get lump-sum payments for five straight years following retirement, totaling $20,000 to $50,000.
At the same time, the company would end the pension program for employees hired after Nov. 1 of this year, with workers instead relying solely on the company's 401(k) program for retirement benefits.
UAW International leaders did not return an email seeking comment on the deal. UAW International Vice President Chuck Browning, the lead negotiator, said in a statement on Oct. 1 that “substantial hard-fought gains and protections were achieved due to the efforts of the UAW negotiators supported by the solidarity of our members.”
A Deere spokesperson declined to comment.
Workers weigh size of pay increases, 401(k) changes
Chris Laursen, a painter at Deere's Ottumwa plant, said he doesn't think the proposals will be strong enough to win over the majority of workers. After the locals posted the highlights of the new contract online, a Deere-UAW members Facebook page launched a poll about whether they would approve the deal. As of 3 a.m. Friday, 462 people had voted "Hell No!" Three people voted "Yes,"
Laursen, a former president of Local 74, said the wages still are simply not high enough, even though the increase slightly outpaces the rate of inflation since the last contract.
"It's not a premium wage," Laursen said of the offer. "And that's really what pissed people off. They're making millions of dollars in record profits. There is an expectation from workers: Distribute that wealth a little bit more equally."
Jimmy Hyde, a tool and die maker at Deere's massive Tractor, Cab & Assembly Operations plant in Waterloo, said the mood was "relatively calm" in the factory Friday morning. He and co-workers were trying to understand the proposal's language about changes to the 401(k) plans.
Hyde, who joined the company in 2007, said Deere currently provides a match of 60 cents for every $1 that workers contribute to their retirement accounts. The matching stops after workers put more than 6% of their earnings in the account.
Deere is now creating a 401(k) plan for new hires who won't be eligible for the company's pension plan. Under that plan, according to the proposal, Deere will match contributions dollar for dollar up to 6% of a worker's earnings.
Hyde, who will receive benefits through both the pension and older 401(k) plans, is unsure whether the company also is raising contribution matches for him.
He won't decide how to vote until Sunday's meeting, when Local 838 leaders clarify what the contribution change means.
“That could be a dealmaker," he said. "Or a deal breaker, you know what I mean. If it’s 100% match, that’s a big deal. That’s going to swing my vote for sure. I’d like to be out of here in another 10 years.”
In Milan, Schmelzer said the frustration among workers toward the union worries him. Norwood Jewell, the former UAW International vice president who pleaded guilty to misusing union members' funds and taking bribes from Fiat Chrysler Automobiles (now Stellantis), was the union's lead negotiator with Deere before the 2015 contract.
Schmelzer pointed out that federal prosecutors didn't accuse Jewell of any impropriety in his dealings with Deere, and said he "has to believe" the contract was clean.
Even with the federal probe in Detroit, he said, some union members who are critical of the deal are missing the bigger picture. UAW International has a staff of trained negotiators, he said, and he doesn't believe a manufacturing job would have landed him such good health insurance or a pension without the UAW.
"I might fall on the angry side right now," he said. "I am. I'm bitter with the rest of the guys. The company owes us. They've owed us for a long time. But I don't blame the union for that."
Separately, UAW also considering big change in its structure
Sunday's vote comes in the midst of a potentially broader change for the UAW International. In the wake of the embezzlement and bribery scandal, a court-appointed monitor has scheduled a referendum on Oct. 17, when members can decide whether to alter how the union appoints top officials.
The UAW International currently relies on a delegate system. Each local elects a certain number of representatives to go to a constitutional convention every four years, with bigger locals getting more representatives than smaller ones. Those delegates then elect the UAW International's leaders.
The administration caucus, a group of union insiders, has dominated the elections at the conventions since the 1940s. Wayne State University management professor Frank Goeddeke a former UAW member and experimental auto assembler for General Motors Co., said the constitutional conventions are legendary for their stories of old-school deal-making.
He said some delegates believe they can secure jobs at the International if they vote the right way. When delegates give speeches endorsing outsider candidates, others drown them out with boos and noisemakers. In the case of Jerry Tucker, a legendary activist organizer, UAW leaders brought two non-delegates to the floor to vote against his candidacy for a regional director position in 1986, keeping him out of office until a judge ruled in Tucker's favor on appeal.
"There's just so many ways that they can do this," Goeddeke said. "And then there have been people that could be good union leaders — and they are good union leaders — but their union career is more or less destroyed if they lead or participate with opposition caucuses. They're just not going to go anywhere."
The Oct. 17 referendum proposes to shift the UAW's elections to a one-member, one-vote system.
Supporters of the delegate system say it is more stable. Goeddeke said UAW leaders worry that moving to a one-member, one-vote system will result in bitterer campaigns, cutting down on solidarity among members and making it easier for companies to divide the UAW.
The union's structure has long been considered one of its strengths. Local leaders stick together, don't leak much information during negotiations and reward loyalty with promotions.
During an online hearing about the referendum Thursday, retired Local 659 member Craig Leavitt, of Flint, Michigan, said the delegate system keeps "dark money" out of campaigns. He said he worries that corporations and political action committees would try to influence union leaders the way they do politicians.
"“We should be cleaning up our own problems on the constitution floor," Leavitt said. "We just need to have faith and trust in each other. That is what unions and union memberships do: They trust each other.”
The majority of speakers Thursday supported the change, however. Goeddeke said backers of the delegate system lost credibility with the embezzlement scandal, when federal prosecutors charged that Fiat Chrysler was able to bribe some of the union's most veteran leaders.
"If that's not outside influence," he said, "I don't know what is."
He added: "They just had such tight control for so many years without ever really having to be accountable to people outside the organization or even inside the organization that were rank and file. The culture just kind of took off on its own. The corruption was one aspect of this."
Dan White, who served as president of Local 94 in Dubuque for 21 years before he retired in 2019, said he doesn't know why workers at the different factories responded so differently to the last contract.
He said a lot can happen in the room during the ratification meetings. He heard workers in Waterloo were angry on that day six years ago. In Dubuque, he thought the leadership team did a thorough job of explaining the rationale of the 2015 contract, how the small gains seemed to be the best they could do at the time.
He said the local's leadership team is strong this year as well. He believes they will be able to clearly outline the significant gains in the new agreement.
But, he added, he's worried. Members seem to be venting on Facebook more than they did six years ago.
"Somebody posts something," White said, "and someone has to top it. I wonder how deep it is. It seems to be the same names all of the time. I guess we'll find out Sunday."
- Increased wages. UAW-Deere members would see pay increase by 5% or 6% upon ratification of the contract.
- Guaranteed pay bumps. Deere promised to raise wages by 3% in 2023 and by 3% again in 2025.
- Cost-of-living adjustment. The company will raise wages every quarter in step with inflation, based on the U.S. Bureau of Labor Statistics' Consumer Price Index. The company removed the adjustment in the 2015 agreement, employees said.
- Parental leave. The company will provide members with two weeks of paid parental leave for the first time
- Extra holidays. Employees will get Veterans Day off, as well as two non-recurring holidays
- Increased pension. The company and union tweaked a formula to determine how much retired members will receive every month. The change would equate to an extra $100 a month for retired workers with 25 years of experience.
- Retirement bonuses. Anyone who retires before October 2027 will receive extra, annual lump-sum payments from the company for five years. Depending on their years of service at the time of retirement, workers will get a total of between $20,000 and $50,000.
- Pension elimination. Employees who join the company after Nov. 1 of this year will not be eligible for the pension plan, instead relying on a 401(k) with matching contributions from Deere.
Deere & Co. annual profits
2013: $3.54 billion
2014: $3.16 billion
2015: $1.94 billion
2016: $1.52 billion
2017: $2.16 billion
2018: $2.37 billion
2019: $3.26 billion
2020: $2.75 billion
2021: $5.7-$5.9 billion (company's estimate)