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Analyst: Deere & Co. restructuring is a 'natural progression'

Analyst: Deere & Co. restructuring is a 'natural progression'

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Deere & Co. Wednesday announced a new vision and operating model company officials say will accelerate its success in integrating smart technology innovation with Deere’s legacy of manufacturing excellence.

“The new operating model will help us respond to changing market conditions with greater speed and efficiency,”  said John May, chairman and chief executive officer, in a news release.

The Deere Smart Industrial strategy is designed to help customers become more profitable and sustainable, while also revolutionizing the agriculture and construction industries through the rapid introduction of new technologies, the release said.

Actions will be concentrated on the following three focus areas:

  • Production Systems: A strategic alignment of products and solutions around Production Systems roadmaps — which capitalizes on Deere’s knowledge of its customers and how they work. The new structure enables the company to drive an integrated product roadmap and related investments that span all aspects of a customer’s jobs and to more fully meet customer needs.
  • Technology Stack: Investments in technology, research and development that deliver intelligent solutions to Deere customers through a combination of hardware, embedded software, connectivity, data platforms, and applications. Deere's offerings of “smart” machines, systems, and solutions enhances precision, automation, speed, and efficiency to a level not previously possible.
  • Lifecycle Solutions: Deere’s aftermarket and support capabilities will be integrated to more effectively manage customer equipment, service, and technology needs across the lifetime of a John Deere product, and with a specific lifecycle solution focused on ownership experience.

“As Deere businesses and those of its customers become more competitive and dynamic, Deere’s track record of technological innovation puts it in a position to anticipate, respond, and outpace those dynamics by offering cutting-edge solutions to enhance customers’ productivity, profitability, and sustainability,” May said. “The new operating model represents a leap forward in performance for the company from an already strong starting point.”

'A natural progression'

Mark Grywacheski, investor advisor with the Quad-Cities Investment Group, called the move a natural progression and evolution.

"It is a restructuring to capitalize and maximize their strength in using this smart technology," Grywacheski said. "Because it is a way that Deere differentiates its products. And then the marketing driving sales and revenues. This is just a natural progression, trying to maximize their profits and revenues, rather than something that's COVID-19-related or the U.S.-China trade dispute related."

Jenn Hartmann, Deere spokesperson, said it's too early to say if it will affect personnel numbers.

"In terms of changes to the organization, there's a shift in how we are looking at the customer," Hartmann said. "Right now, this is focused at the corporate level. We can more nimbly respond to the technology and market needs. 

"We are in a world now where technology and industry trends are changing so fast," she added. "We need to be  better equipped to respond to those shifts quickly and position Deere for our future."

Deere & Co (DE) stock was down $1.01 per share in early trading on Wednesday, trading at $157.29 per share.

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