John Deere Combines Agriculture and Consumer Divisions

Deere & Co. last week announced a new global operating model that will combine the technology, expertise, experience, channels and investments of the Worldwide Agricultural Equipment Division and the Worldwide Commercial & Consumer Equipment Division into a single unit called the Worldwide Agriculture and Turf Division, effective May 1. Through the new operating model, this combined organization will be positioned to achieve the alignment and efficiency necessary to develop a more complete portfolio to meet worldwide customer needs — while reducing overall costs, the company said.

The new division’s global operating model will leverage common processes, standards and resources to develop solutions more quickly, Deere said. It is designed to enable the division to grow profitably across many geographic markets, increase its competitiveness, and achieve and sustain exceptional operating performance — at all points in an economic cycle.

“The new operating approach has been in development since early 2008 and is an extension of many of the successful efforts resulting from the implementation of the Shareholder Value Added model, in place since 2001,” said Robert Lane, chairman and CEO. “Products and functions will be formally realigned to make us more responsive to customer needs and market conditions, and allow us to work smarter, more effectively, in all that we do. Customers, suppliers and dealers will find it easier to work with John Deere because of reduced organizational complexity.”

Effective May 1, the Agriculture and Turf Division unit will have two presidents: David Everitt, responsible for the tractor product and the turf and utility product platforms; and Markwart von Pentz, responsible for crop harvesting, hay and forage, and crop care product platforms. In addition, Everitt will have responsibility for sales and marketing in the regions that include U.S., Canada, Australia, New Zealand, China, Asia, India and a portion of Africa. Von Pentz will have responsibility for sales and marketing for the rest of the globe including Europe, CIS, the Near and Middle East and Northern Africa, South America, Central America, and Mexico.

James Field, current president of the Commercial & Consumer Equipment Division will continue reporting to Lane in a new role as senior vice president, Deere & Co., with a focus on identifying additional efficiencies and opportunities across the enterprise.

Deere said it expects this combination of business units to extend significantly the reach of turf management equipment, utility vehicles, lower horsepower and lower-spec equipment through improved access to established global networks. A regional approach also will enable the company to more closely target specific customer segments effectively and share best practices. In a related move, the company further announced it will be transitioning its six U.S. sales branch offices to two offices based in Lenexa, Kan., and Cary, N.C.

“The new Agriculture and Turf Division and its global operating model will allow us to work in new ways, making better and faster decisions, closer to the customer,” Lane said. “Bold steps like this allow us to improve our competitive position worldwide even during the current economic disruption.”

Implementation of these changes is expected to result in pre-tax charges of approximately $25 million to be recorded primarily in the company’s fourth quarter of 2009. This amount was not reflected in the company’s earnings forecast for 2009 issued last February. As a result of this new operating model and the combined organization, by Sept. 30, the company anticipates reducing approximately 200 salaried positions through voluntary separations.

A week ago, Deere & Co. announced that 160 employees of the John Deere Des Moines Works would be placed on indefinite layoff later this month because of reduced market demand for the factory’s products.

Deere said the layoffs affect production workers with the least seniority and that employees were told of the plans in meetings at the factory. The layoffs are effective April 27th. The John Deere Des Moines Works manufactures tillage, planting, spraying and cotton harvesting equipment for agriculture.

Headquartered in Moline, Ill., Deere & Company is an international provider of products and services for agriculture, forestry, construction, lawn and turf care, landscaping and irrigation. John Deere also provides financial services worldwide and manufactures and markets engines used in heavy equipment.

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