WATERLOO, Iowa — These days, Loren Van Regenmorter is buying more used tractors than new, given the agricultural downturn that took hold five years ago.
But new business opportunities like chopping more alfalfa acres made a new 8370R tractor a possibility for the large northwest Iowa operation, the 62-year-old said during a tour of Deere & Co.’s Waterloo assembly operation.
Tractors and other equipment reduce the need for workers, always in short supply in rural Iowa. Larger farm equipment means “it takes fewer people to work the same number of acres,” said Van Regenmorter, whose family runs cattle and hog operations in Sioux Center and is part owner of a dairy facility.
His family grows corn, soybeans and alfalfa on 15,000 acres in Iowa, Minnesota and South Dakota.
“Farming isn’t a 9-to-5 job, especially with livestock,” said Van Regenmorter, who toured the Deere assembly plant with his son Travis, 32, and teenage grandsons Tate and Kaden.
Like Iowa farmers, the manufacturer based in Moline, Ill., has powered through the ag downturn. Deere posted $2.4 billion in earnings last year, a 10% increase over 2017.
Deere has relied on its diverse portfolio to help during slowdowns. The company produces and finances machines to grow crops, harvest trees, build shopping malls and homes, and mow golf courses and lawns.
Ernie Goss, a Creighton University economist, said Deere has also been aided by international sales in Brazil, China and elsewhere, which offsets the U.S. downturn.
Plus, farmers still need seed, chemicals, tractors and combines to put in a crop, Goss said. Big suppliers, many of them merging like Bayer-Monsanto, have a lot of power to set prices.
“Even though farmers have cut back on their purchases, they still have a lot of corn” that needs to be planted and harvested, Goss said.
And farmers can only hold off replacing worn-out equipment for so long.
“It’s like with your car. You’re going to have to replace that old Ford or Chevy eventually,” he said.
The Van Regenmorters are among 400 people who have taken Deere’s “gold key tour” this year at the Waterloo assembly plant. It’s part of Deere’s Waterloo Works, made up of six plants that encompass about 7.2 million square feet over 2,734 acres.
It’s the manufacturer’s largest production complex in the world, employing about 5,400 workers. Around 1,300 of them build tractors at the assembly plant.
Last year marked an important anniversary for the Waterloo operations. Deere bought Waterloo Gasoline Engine Co., which produced Waterloo Boy tractors, in 1918. Deere followed with its own Model D tractor in 1923, sporting for the first time its iconic green and yellow paint.
Glen Snyder, a retired Deere worker who led Van Regenmorter’s tour, said every tractor is built to order — either for dealers or individual customers. Each part is marked based on those orders and scanned before employees marry parts together.
That lets the company track the machinery throughout its assembly, built using many of the parts made in Deere’s Waterloo plant operations.
Massive tractor components are ferried by a sophisticated automated guidance system that stops and beeps loudly when people accidentally get in the way.
Stopping at an assembly station, the Van Regenmorters took turns riveting a transmission to a chassis.
The grandsons, ages 15 and 13, were able to move a suspended hydraulic drill with ease. It’s one example of the company’s effort to reduce employee injuries, said Snyder, who worked at Deere for three decades.
Later, pointing overhead, Snyder explained how the giant wheels moving into place are synchronized to show up just as the tractor appears at the assembly station. Workers on large automated platforms move the tires and bolt them in place.
Travis Van Regenmorter said he wished it was that easy to change tires on the farm. He and his father agreed it takes much more time and muscle.
Deere employees run multiple tests to ensure the equipment is working properly as each tractor rolls through the plant.
Holding a laptop, Jason Harris started a tractor for the first time and ran it through a series of electronic tests.
“Each function has its own test,” Harris said. “We’ll see if somebody missed something.”
Other employees drive the tractors for about 40 minutes on a track at the plant to ensure the equipment performs well.
Van Regenmorter said he’s pretty loyal to Deere and plans to use his new tractor, which retails for about $410,000, for field work, primarily mowing alfalfa. He’d like to replace more tractors, given the amount of use they’ve had. But he’s holding off.
Having a diverse farming operation hasn’t helped as much as it has in past downturns, Van Regenmorter said. “If dairy was bad, then usually hogs and cattle were OK and vice versa.”
His family raises about 10,000 cattle and 40,000 hogs annually.
Now, all three livestock sectors are struggling, although hog prices are rebounding thanks to increased demand in China, where herds have been hit hard with African swine fever.
Cattle prices have been strong, he said, but an extremely tough and wet winter increased the cost to feed animals, eating up potential profits.
“If you can believe it, grain is performing about the best,” Van Regenmorter said.
Trade wars between the U.S. and China, Mexico, Canada and other countries have depressed already low prices.
“We’ve done a lot of loan refinancing,” Van Regenmorter said, adding a recommendation that “You’d better get along with your banker” during tough times.
The Cedar Falls-Waterloo metro area has experience navigating farm downturns. The 1980s farm crisis cut thousands of jobs between Deere and Rath Packing Co., a meat processing company that closed.
Snyder joined Deere in 1983. “I had a two-year vacation in 1984,” said Snyder, who attended a community college, took a job with a food service company and ran a restaurant during the challenging period.
“I was fortunate enough to come back,” he said.