In the past four months, Deere & Company has begun restructuring its business to become leaner, more nimble and more focused on the use of technology in agriculture. It's just the latest evolution for the Moline-based equipment manufacturer, company officials said.
In a wide-ranging interview, two Deere executives spoke about the restructuring, the continued investments in technology, called precision agriculture, and what it means for Deere employees.
“If you go back 183 years, what you would see is we continue to evolve and acquire the next generation approach, whether that was 100 years ago, acquiring Waterloo Tractor Works, or whether that was 20 years ago with the acquisition of NavCom,” which jump-started Deere’s technological advancements with the use of geospatial positioning (GPS), said Cory Reed, president of Deere’s ag and turf division and large and precision ag.
“You think of 1848 to today, that same core footprint of Deere has gone through multiple generations of technology creating new opportunity for folks all across the board. We’re adding the next generation capabilities into what Deere can offer.”
Reed points to a 24-row planter. With today's technology, it can plant 2,000 seeds per second per field.
“To know where every one of (those seeds) is so that we can optimize the growth of that product throughout its life," Reed said. "That technology is incredible, and I think the exciting part is Deere keeps going to the next level.”
The precision ag team started in Moline in 1993, grew with the 1999 acquisition of NavCom. It made two more leaps in the past decade — in 2011, Deere began to install cellular connectivity in large ag equipment like tractors and in combines in 2012. That meant Deere could wirelessly connect farmers and dealers, offering support and remote management capabilities. And in 2017, they acquired Blue River Technologies, based in Silicon Valley.
In the late 1990s, innovation was yield maps for farmers. Today, Deere helps farmers precisely control seeding and how much fertilizer or herbicide is used to maximize the output and yield of their harvested crop.
Jahmy Hindman, chief technology officer, said increased cellular connectivity, 4G LTE today; onboard computers; and advanced machine learning drove innovations in the last five to seven years. In essence, farmers can now use Deere equipment to manage a 60-acre field as if they were managing one million plots the size of pizza boxes.
While Deere could have developed its See & Spray technology — when a camera can look at a plant, determine if it’s a weed or crop, and spray it with the right product — in-house, acquiring Blue River accelerated its capability, Hindman said.
“It really gave us access to some talent and capability and ideas in and around machine learning and artificial intelligence technologies,” Hindman said.
Deere officials have said See & Spray technology can reduce the use of herbicides by up to 90% — boosting profitability by reducing the cost of herbicides, while also improving the environmental sustainability of a farmer’s land.
“See & Spray is not our ultimate goal; it’s just the beginning. John Deere engineers and technologists see opportunities to leverage artificial intelligence throughout our product portfolio to deliver enhanced productivity, precision and automation to our customers,” Deere’s 2019 sustainability report said.
But what does all this innovation mean for line workers in Deere’s factories in the Quad-Cities and across Iowa? Deere Harvester Works in East Moline shifted to produce the new X9 combine last year for 2020’s production capacity.
East Moline workers had been assembling the STS model, which had less technology than the X9 yet is “literally taking 1% additional power and delivering 40-50% more productivity,” Reed said.
Working on that type of machine becomes a point of pride for workers, Reed said.
“Our workforce gives us the idea on the line of how to improve it, putting their ideas on a board that says ‘if we do this, we can create higher productivity in our facilities’ and what you see is every year those facilities getting better and better, and the workforce is a major part of it," he said.
And while Deere facilities, like many employers, had reports of COVID-19 cases, production kept moving forward, with some brief interruptions.
“During this crazy time of COVID, we’ve been able to put people in as safe, or safer, condition when they come to work as they are anywhere in the community," Reed said. "So we produced right through one of the most challenging times because we’re able to safeguard folks, and that safeguarding certainly is important with COVID, but it’s even more important day in and day out as people come to work."
GROWTH IN PARTS SALES
While producers can’t control the weather, technology can help them reduce costs by controlling practically everything else. That’s the aim of an exact emerge machine.
Yes, the price tag is higher, but Deere officials said technology results in enough cost savings that a Deere machine “pays for itself,” Reed said.
On earnings calls, Deere officials have said the used parts department is growing, as farmers buy a piece of technology as an add-on to their existing equipment.
Deere leverages its position as market leader by offering new technology for older lines of Deere equipment, rather than restricting it to the newest machines. And farmers are responding. Reed noted during Deere’s August 2020 earnings call that nearly all of the company’s advanced precision features saw higher customer take rates than previous years.
“It’s a tremendous opportunity for Deere because we are the market leader that has the largest installed base of equipment out there, and we can help those customers unlock value faster by not having to buy a new machine; they can buy a fraction and get significant portion of the value of the newest machines,” he said.
SMART INDUSTRIAL REDESIGN
Restructuring, which Deere calls smart industrial redesign, breaks from Deere's historical operating model where workers oftentimes reported to more than one boss while also working on projects and tasks.
There have been two rounds of voluntary buyouts in the past year, and layoffs. But Deere officials said by eliminating positions and some middle management positions, and forming small working teams, employees were more empowered and could pivot and respond quicker to the marketplace.
“Be empowered but also be accountable … as they go forward for making the decisions and moving quickly and we’ve seen it work. We’ve seen the flow of work improve as a result of making these kinds of changes,” Reed said.
Hindman said in addition to legacy skills, workers “need to accelerate and take up a step function change in our technology … a skill set we need that we may not have had and may not have had at the right quantities in order to address some of those technology opportunities for us moving forward.”
That’s also because technology will continue to speed up in nearly all sectors and every aspect of life.
Hindman said looking forward, Deere’s technology “is going to make our producers the most efficient and the most sustainable at their craft and their business as possible. That’s a win for them. If we’re successful with that, it’s successful for us as a company and a community.”