According to several media outlets, AGCO will reduce its workforce at its Hesston facilities.
A memo from the Human Resources department at the plant said, “AGCO is continuously monitoring the marketplace and adjusting our production output to meet demand. Due to reduced commodity prices in 2014, the entire agricultural equipment industry is experiencing reduced sales volume and AGCO is no exception.
“This week we announced a reduction in workforce for our hourly positions in Plants 1 and 2.”
KSN.com reported that at least 24 workers at AGCO will be laid off as early as next week, according to a news release, but representatives for the United Steelworkers union Local 11228 say they have been told to expect up to 80 layoffs in the month of September, according to union representative Danny Hawkins.
“Anything involving grain, which includes the combines and the headers that we build in Hesston, has caused a shortage of orders, and so the company was forced to do a reduction of manpower,” he said.
A Russian embargo on U.S. farming machinery, which was issued in retaliation to economic sanctions the U.S. imposed on Russia for its activity in Ukraine, is partially being blamed for the workforce reduction, but the bigger reason is a drop in crop prices, prompting farmers to put off upgrading their machinery.
“A new tractor costs anywhere from $350,000 to $400,000, a new combine is over a half-million dollars, and so it’s very difficult to trade every year and upgrade every year,” John Jenkinson of The Ag Network said. “With depressed crop prices, farmers don’t want to spend money, and large equipment dealers like John Deere, like AGCO, are starting to see the effects, and they’re being proactive.”
AGCO employs about 1,500 people at the Hesston facility. Despite the layoffs, Hawkins says he is hopeful that workers could return when the market improves.
“There’s still room for growth and the prospects are good there, so right now, while there is a layoff, moving down the road, it’s a golden opportunity for people that want to make their careers there,” he said.
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