Forty-five billion dollars is a hard number to argue with at the bargaining table.
UAW president Shawn Fain made sure no one forgot it Sunday when he announced that roughly 10,000 Deere workers had voted down the company’s proposed two-year contract extension. The rejected proposal would have stretched the current collective bargaining agreement from its October 2027 expiration through 2029. Deere had sweetened the offer with 4 percent wage increases effective Nov. 1, 2026 and Nov. 1, 2027 plus a $3,000 acceptance bonus. The union said no.
Fain’s framing was deliberate. He said Deere earned $45 billion in profits over the last five years and that the company returned 56 percent of those profits to shareholders through dividends and share repurchases. He also cited CEO pay as a contrast, but the specific dollar figure and time window in the draft could not be verified from public filings, so this claim is left at the level of his broader point. Meanwhile, about 1,600 workers remained on layoff and Fain said the company continued to outsource work.
The timing sharpened the contrast. Just days before the vote, Deere reported fiscal Q3 2026 net income of $1.379 billion and raised its full-year profit outlook to $4.75 billion to $5.00 billion. Construction and forestry drove results, with operating margin expanding to 12.1 percent from 7.7 percent a year earlier. Management called 2026 the probable bottom of the agricultural equipment cycle. The company is, by most measures, performing well through a downturn, which is precisely the point the UAW is making.
The investment lesson here is not about one contract negotiation. It is about a structural dynamic that any honest long-term analysis of capital-intensive industrials must account for: durable competitive advantages tend, over time, to be shared. When a business earns extraordinary returns for long enough, labor, regulators, or customers eventually claim a portion. The question for investors is never whether that happens but when and how much.
Deere’s moat is genuine. Precision agriculture technology, dealer networks built over decades, and switching costs that make farmers reluctant to mix equipment brands create real pricing power. Deere says it has about 60 U.S. factory and office locations across more than 16 states and cites a $25 billion economic impact in its U.S. hometown communities , a footprint that creates both competitive scale and political exposure. AGCO and CNH face similar structural dynamics with less pricing leverage, which arguably makes the labor question more acute for them when ag demand recovers.
Deere said it expects to return to negotiations before the current agreement expires in October 2027. That gives both sides more than a year to watch the cycle turn, and for workers to watch profits rebound. By the time formal bargaining opens, Deere may be reporting considerably stronger numbers than today’s trough. That is not a favorable backdrop for management seeking labor cost restraint.
Disciplined investors in industrials should weigh this carefully. The businesses with the strongest moats are often the ones that attract the most sustained labor pressure precisely because the profits are visible and defensible. Owning exceptional industrials over decades means accepting that the workforce will periodically renegotiate its share of the surplus. That is not a reason to avoid these businesses. It is a reason to buy them at prices that already reflect it.
