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Deere prospers on quality, innovation, integrity
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Photo:
John Deere
Photo:
John Deere Harvester Works, circa 1917.
MOLINE -- A "smithy" in the 1800s was more than a strong back. He was a problem solver, an innovator, forging solutions from scarce resources. Working dawn to dusk, he made tools, repaired broken chains, clevises and worn-out wagon tongues.

John Deere, the man, was such a blacksmith. His dream of a better life for his family was the impetus in a series of events that led to the creation of a global giant that celebrates its 175th year in 2012.

Deere began his apprenticeship at the age of 17 and honed his skills throughout his native Vermont. He turned out polished hay forks, shovels, hoes, horseshoes and metal parts for stagecoaches, carriages and wagons until the downturn of the New England agriculture economy in 1836.

Seeking a better life for himself and his young family, he relocated to Grand Detour, Ill., where he rebuilt his blacksmithing business. Solving the plow problem the prairie farmers had was a task in want of a solution. And Deere was known for his "indomitable determination … to work out what he had in mind," one of his later partners said.

The problem was the heavy, sticky soil of the rich Midwest prairie. Plowing it was an impossible, backbreaking job. Pioneer farmers carried paddles to scrape off the sticky dirt from their cast-iron plows, plows that were designed for the light, sandy soil of the East Coast.

Deere cut and shaped a plow moldboard from a shiny steel millsaw blade, shaped a beam from a log using an ax and drawknife and fashioned handles from the crooks of tree roots. It was a crude device, but able to cut through the heavy black soil along the banks of the Rock River.

Farmer Lewis Crandall, whose field was the first to be tested, not only liked the John Deere plow, he bought the prototype and ordered two more just like it. John Deere, the blacksmith, evolved into John Deere, the manufacturer, making 10 plows in 1839, 75 in 1841 and 100 in 1842, according to Deere's biography.

Deere's growing plow business moved to Moline in 1848 for the advantages the city's water power and transportation offered. Deere and his partner, Robert Tate, set up their three-story blacksmith shop with 16 employees and built 2,136 plows in their first year together.

Deere, the manufacturer, also became a marketer and sales manager. He advertised extensively and backed his products with his name, according to the corporate history, "Genuine Value: The John Deere Journey."

When times were tough and the fledgling company faced bankruptcy, Deere transferred control of the daily operation of the Moline Plow Manufacturing Co. to his son, Charles. Together -- and separately -- they built the farm implement company with a vision of making farm products built on quality, innovation, integrity and commitment. Those same principles have carried the company through difficult economic times as well as prosperity.

From after the Civil War until the turn of the 20th century, the company grew through product development and acquisitions of smaller farm-equipment companies. By 1910, John Deere was a small conglomerate of 12 manufacturing entities and 25 sales organizations in the United States and Canada. William A. Hewitt, the last CEO related to the Deere family, carried the company overseas. Deere's first small-tractor assembly plant in Mexico came in 1956, followed by a major interest in a German tractor- and harvester-making operation with a small presence in Spain.

Soon, Deere agricultural equipment transformed farm markets in France, Argentina and South Africa. Successor leaders would carry the John Deere name into the Soviet Union, and later into its breakup countries, and into Japan and China.

The Deere legacy never was forgotten. Former CEO Robert A. Hanson, who led the company through a prolonged farm recession in the 1980s, once said, "I believe all of our present strengths have been built on the foundation of achievement, integrity and momentum that we have inherited from our predecessors."

2012 is a banner year for Deere & Co. as it celebrates not only the company's 175th year, but also 100 years for the John Deere Harvester Works plant in East Moline.

Built on the banks of the Mississippi River in 1912, the harvester factory became John Deere's single largest combine plant, served by generations of John Deere employees. There, Deere built its first grain binders -- the predecessor of the combine -- in rented buildings on the site of the John Deere Harvester Works. Its workforce assembled 500 binders for the 1911 harvest season and began making mowers and rakes.

Deere introduced its first combine in 1927 and its first self-propelled combine 20 years later.

During World War II, a mostly all-woman workforce produced agricultural and war-time products, including airplane wing sections, engine mounts and other airplane components.

The East Moline Harvester Works has undergone numerous factory remodelings and renovations over the years. Its latest, a $32 million capital improvement renovation, started in 2006, and included reorganizing the assembly production operation. It also created a new Visitor Center inside the building.

Today, Deere & Co. continues its tradition of innovations. The company introduced a record number of products in 2011. Deere's worldwide net sales and revenues increased 23 percent to $32 billion in 2011, including nearly $29.5 billion in net sales from equipment operations.

While the majority of company sales come from the United States and Canada, the company's growth comes from emerging markets elsewhere in the world. Deere recently announced plans for six new factories in China, Brazil and India.

Chairman and chief executive Samuel R. Allen attributed the company's recent record performance to its quality products and efficient operations.

"Our success reflects a continued pattern of strong customer response to our innovative lines of equipment coupled with the skillful execution of business plans aimed at expanding our global competitive position," he said.

"John Deere's record performance is a further tribute to our operating model, which stresses rigorous cost management and asset efficiency," he said. "As a result, we are achieving unprecedented financial results and generating healthy levels of cash flow. These dollars are funding growth throughout the world and also are being shared directly with investors in the form of dividends and share repurchases."

Demand for John Deere products is expected to remain strong this year. The company forecast a 15 percent increase in agriculture- and turf-division equipment sales over 2011. Company profits are expected to reach $3.2 billion.

"We have great confidence in the company's future and our role in helping feed, clothe and shelter the world's growing population," Mr. Allen said. "These developments in our view hold great promise, which should prove rewarding to our investors and other stakeholders in the future."




Remembering the dream

Who: John Deere, the man and the company, which celebrates its 175th year in 2012
Quote: “I believe all of our present strengths have been built on the foundation of achievement, integrity and momentum that we have inherited from our predecessors.” -- Robert A. Hanson, John Deere CEO, 1982-89



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