Deere slowdown means problems for some suppliers

WATERLOO, Iowa (AP) - When John Deere put 462 workers on indefinite layoff, it sent a signal to some of the company's suppliers they, too, might have to scale back their employment rolls.

It already has happened at Blackhawk Engineering, a Cedar Falls manufacturer that produces differential housing for drive trains that go into heavy agriculture and construction equipment manufactured by Deere & Co. and Caterpillar Inc.

"That's affecting us because they're a major customer," said John Oltman operations manager at Blackhawk Engineering.

The fallout includes layoffs, Oltman said, noting a third shift is being eliminated beginning Feb. 5.

"There will be some indefinite layoffs associated with that change," he told the Waterloo-Cedar Falls Courier (http://bit.ly/1smp99o). About 30 workers will be affected.

The company is trying to make the transition as smooth as possible for all concerned.

"We're getting quite a bit of help to relocate people," Oltman said. "We are spending quite a bit of time helping them to seek new employment, providing training, working on resumes, working with them on how to find new jobs. We've had three or four classes."

The cutback is a reversal of sorts for Blackhawk Engineering, which has added 70,000 square feet of space to its Cedar Falls plant in the last couple of years.

"Boy, I guess," Oltman said. "We just finished our new addition and diversified into new business opportunities, which was our plan, and then business slows down with the ag economy. You could see it coming with the low commodity prices."

Blackhawk isn't waiting for things to turn around. The company recently hired a new business development manager, Rick Doerr, and may hire somebody else to recruit new customers, Oltman said.

"We're looking to transportation, energy, things not associated with agriculture," Oltman said. "That could include construction and forestry."

Diversification has helped Cedar Falls-based Iowa Laser Technology, which supplies metal fabrications to Deere, to avert a layoff scenario of its own, said Joe Barber, plant manager.

Iowa Laser, which employs 185 workers, now is part of Birmingham, Alabama-based O'Neal Manufacturing Services, which has 10 locations across the U.S. That has cushioned the impact of the Deere cutbacks, Barber said.

"Obviously, the Deere slowdown impacts our overall business; however, we've been able of offset that decrease by demand in our other customer base," Barber said. "We've been able to collaborate with some of our sister plants across the country and remain at a nice business level. I know that's probably a lot more fortunate situation than others in the area that have that same relationship with Deere that we have."

A diversified customer base has been a boon, Barber said.

"Obviously, industries outside the ag industry are kind of on a different trend in terms of their ramping up," he said. "Given our current business outlook, I wouldn't say we have a lot of concern."

There's some concern for Kryton Engineered Metals Inc. in Cedar Falls, said Kevin Harberts, president and CEO.

"Indirectly we're going to feel it because some of our main customers supply Deere with products, so it is going to trickle down to us," Harberts said. "Initially, we're not feeling it too bad, but later in the year we'll see a slowdown."

Kryton, which employs 74 people and manufactures filtration systems, primarily for Minneapolis-based Donaldson Co. Inc., laid off five workers in October, which coincided with Deere's cutback, but the two are unrelated, Harberts said.

"It was just in general we were struggling with orders coming in, not with Deere per se, but the whole economy was catching us a little bit," Harberts said. "Quite honestly, we're doing things a lot more efficient right now, so we work through them quicker, and that's had a main effect on our employment."

George Lake, director of Buchanan County Economic Development, said he had reached out to companies he thought might be affected by the Deere layoffs but received no feedback.

Lake said there's a positive aspect of the situation for idled workers to consider.

"The other impact is there are companies that see the John Deere layoffs as opportunities for them to hire good employees," Lake said. "I firmly believe regardless what happens there are always positives. I do know there are several companies in Buchanan County that have hired laid-off John Deere workers."

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Information from: Waterloo-Cedar Falls Courier, http://www.wcfcourier.com