WATERLOO | Despite challenges, John Deere, entering its 97th year in Waterloo, is still the economic engine that drives the Cedar Valley -- in every sense of that phrase.
Nowhere is that more evident than the Deere Engine Works on West Ridgeway Avenue, 40 years old this year. It has seen numerous recent improvements and added production capacity as part of the company's multi-year reinvestment in its Waterloo facilities. It has modernized its crankshaft machining operations, automated engine assembly and upgraded its electrical infrastructure.
The engine works produces 9-liter and 13.5-liter engines for large agricultural equipment -- including large row-crop tractors -- as well as construction and forestry equipment. It also produces industrial, generator and marine engines for original equipment manufacturers outside the company.
"The 9.0 liter goes into some of John Deere’s most famous products: combines, loaders and 7R and 8R/8RT series tractors," said Curt Cline, factory manager of the engine works.
The engine works improvements are part of a massive five-year investment in Deere's Waterloo operations.
"At Waterloo Works, Deere invested $915 million from 2010 to 2014," said Dave DeVault, factory manager of the John Deere Waterloo Works. That investment includes the improvements at the engine works, as well as recent modernizations at the foundry and Waterloo Works operations on Westfield Avenue and East Donald Street.
More improvements are in process at Deere's Product Engineering Center in Cedar Falls.
"The investment at PEC is proceeding on schedule, and the majority of upgrades will be online mid-2015," DeVault said. "This investment supports the engineering operations and will improve operating efficiencies, institute the latest technology and support the continued evolution to larger agricultural equipment.
"While we believe the PEC project will finalize our current major investments in Waterloo facilities, our team is always looking for new and innovative ways to improve our processes," DeVault said.
Despite recording the second-best year in company history, with earnings of $3.1 billion for the year ending Oct. 31, fourth-quarter earnings were down 21 percent, with company equipment sales expected to be down by a similar percentage for the first quarter of this year and 15 percent for the full fiscal year.
The company is about to enter into a second wave of layoffs. It indefinitely laid off about 460 Waterloo workers in the fall. It announced in January another 560 workers will be idled this spring. It also will be negotiating a new labor agreement with the United Auto Workers in 2015.
"The coming year is projected to have some challenges, but our goals have not changed," DeVault said. "We are committed to our customers and plan to provide them quality products to feed the world’s growing population.
"We continue to have a strong employment base in the Cedar Valley," DeVault said. It will be about 5,500 employees across the Waterloo operations after the layoffs this coming spring. DeVault said that includes "our salaried and qualified manufacturing work force that engineer, test and assemble tractors, engines and other components."
Despite challenges, there are several bright spots on the horizon for Deere in 2015. While agricultural and turf equipment sales is projected to be down, "Deere's worldwide sales of construction and forestry equipment are forecast to increase by about 5 percent for 2015," Cline noted. "The gain reflects further economic recovery and higher housing starts in the U.S. as well as sales increases outside the U.S. and Canada. Global forestry sales are expected to hold steady with the attractive levels of 2014."
Also, the company is anticipated to fully implement "Final Tier 4/Stage IV" air emissions standards in its engines in 2015.
"John Deere takes its responsibility to the environment very seriously," Cline said. "We have been working on lowering engine emissions since 1967, years before government standards were set. We have taken an integrated approach to cleaner air while improving fuel economy and engine performance."
Additionally, the company will continue to invest in new product research and development at the Product Engineering Center and companywide, DeVault said.
"Deere has historically supported product research and development through all market fluctuations," he said. "The ongoing investment in the Product Engineering Center supports the continued development of our new products that benefit our customers."
Also, the company's volunteer and philanthropic investments in the Cedar Valley continue, DeVault said.
"Our employees are vitally concerned with investing time and resources in their community. Waterloo Operations employees completed over 12,000 hours of volunteering in 2014," DeVault said.
The company sponsored an Honor Flight of World War II and Korean War veterans from Waterloo to Washington, D.C., on May 6. Deere Waterloo volunteers packed more than 118,000 meals for the needy in November for World Hunger month. And Deere workers contributed $1.3 million to the Cedar Valley United Way.
Additionally the John Deere Foundation donated $1.55 million locally, including $300,000 to Northeast Iowa Food Bank; $200,000 to Greater Cedar Valley Alliance; and $145,000 to Junior Achievement of Eastern Iowa.
"As a corporation and locally we are increasing our focus and support for STEM (science, technology, engineering and math) education and outreach," DeVault added. That includes the Cedar Valley STEM Festival last November, Engineers Week and Introduce a Girl to Engineering in February and a STEM Day at the Engine Works in March.
"We want to help grow the next generation of students pursuing STEM education and career paths," DeVault said. "Forty percent of the (Deere) salaried work force works in STEM functional areas, primarily engineering and information technology. STEM literacy is increasingly important for all students, regardless of career choice. Eighty percent of jobs in the next decade will require technical skills."
Deere also added a community attraction, the John Deere Tractor and Engine Museum, which opened in December.
"There has been a very good response" to the museum, DeVault said. "We’ve seen many local visitors, as well as people from throughout the United States and several other countries."