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Deere closes Welland plant citing high loonie value

After announcing increased spending to cover its expansion, Deere & Co. announced Tuesday it will be closing its plant in Welland, Ontario by the end of 2009, marking a close to nearly 100 years of manufacturing in Canada.


September 3, 2008
By National Post

September 3, 2008

Welland, ON -After nearly 100 years of manufacturing farm equipment in Canada, the world's No. 1 tractor maker is finally calling it quits.

Blaming the high Canadian dollar, Deere&Co. yesterday announced it will close its utility vehicle plant in Welland, Ont., — its only one in this country — with the loss of about 800 jobs.

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In a statement yesterday afternoon, the Moline, Ill. -based company said production of its Gator utility vehicles and various tractor attachments will be moved to existing facilities in Wisconsin and Mexico.


"Manufacturing in Canada has been financially challenging," said company spokesman Ken Golden. "The exchange rate is a large problem, especially when most of the stuff is sold in the U. S. We had to take a look at what was happening and make this tough decision."


Over the past few years the loonie has soared against the greenback, causing huge pain for companies that sell their products abroad.


Deere & Co. is only the latest of a string of manufacturers that have fled to more competitive jurisdictions, transforming what was once the country's manufacturing heartland into a region of vacant factories and high unemployment.


The company's Welland factory, which it has been operating since 1911, is the largest private-sector employer in Southern Ontario's Niagara Region.


"This is a long-time factory for us so this was not an easy decision to make," Mr. Golden said.


With 52,000 employees worldwide, the maker of the John Deere tractor is not only the world's leading farm-equipment manufacturer, it is also a major player in construction and forestry equipment.


Over the past two years its shares have soared to record highs on the back of the agricultural commodities boom. Amid growing signs of economic slowdown in the United States and Asia, many of those commodities have come back to earth, leading some analysts to declare the boom is drawing to an end.


On Aug. 13, the company reported a third-quarter profit of US$575.2-million, up 7% from the same period last year. But the rosy profit was overshadowed by a warning from the company that future results might be squeezed by rising fertilizer and fuel costs.


A spokesman for the Canadian Auto Workers, which represents about 750 of the jobs in Welland that are to disappear, said the union plans to try to convince Deere & Co. to change its plans.


"We've got a good relationship with the company and we're going to try and see what we can do," said Hemi Mitic, a special assistant to Buzz Hargrove, the outgoing union president.


The rise of the dollar has been "a real killer" for us," he said, noting it has been a key reason for the departure of many CAW employers.


"It doesn't do a thing for this country and we have tried to make that argument to politicians from all the parties, but it just seems to fall on deaf ears," he said.

For other perspectives on this story, go to the following links:
www.niagarafallsreview.ca/ArticleDisplay.aspx?e=1182702
www.canada.com/ottawacitizen/news/bustech/story.html?id=4648042d-45b3-4346-bf7b-f3d0bf23f6c1