November 28, 2014

Deere expects net income to drop

Deere logoIowa’s largest manufacturing employer is expecting a further decline in equipment sales. The Moline, Illinois-based Deere & Company predicts its annual net income will drop about 40% and revenue from ag and turf equipment — where it gets two thirds of its income — will fall further than it did in fiscal 2014.

The company says lower commodity prices are discouraging farmers from buying machinery. In the fourth quarter ended October 31st, the world’s largest farm equipment supplier says net income fell to $649 million from $806 million a year earlier. Revenue fell 5 percent to $9 billion. CEO Samuel Allen says the slowdown has been most pronounced in the sale of large farm machinery. Deere, which also manufactures construction equipment, is cutting jobs and production to match demand.

(Reporting by Phil Roberts, Davenport)


Governor again calling for state employees to pay part of health care cost

Governor Terry Branstad

Governor Terry Branstad

The state opened negotiations Monday with the largest state employee union and health insurance is again an issue. The president of the American Federation of State, County and Municipal Employees (AFSCME) Council 61, requested an 8-percent increase in salaries over a two-year period, and wants the state to continue paying 100-percent of health insurance.

The state is proposing a 1 percent pay increase with state employees picking up 20 percent of the cost of insurance.

Governor Terry Branstad told reporters Monday that state workers should pay part of their insurance costs. “I have been on record for a long time in feeling that everybody ought to have some skin in the game, ought to make some contribution,” Branstad says.

Branstad sought the same thing during negotiations two years ago and ultimately an arbitrator ruled the state should continue to pay 100 percent of the health insurance, but denied the employees a pay raise.

Branstad says the union representing state law officers has agreed to pick up part of the cost of their insurance, and non-contract employees do as well. He says other state employees should also contribute. “Frankly we are paying a price for it not happening,” Branstad says. “The executive council had to approve a 40-million dollar increase in cost in our health care. And I think if people have some skin in and we work in a collaborative way together, we can do a better job of controlling health care costs for state employees.”

The negotiations on the new contract will resume in January behind closed doors.


State begins contract negotiations with largest employee union

The state and the largest employee union have started salary negotiations.

The state and the largest employee union have started salary negotiations.

Negotiators for the State of Iowa on Monday presented a contract proposal that differs greatly from the one submitted earlier this month by the largest state employees’ union. Danny Homan , president of the American Federation of State, County and Municipal Employees (AFSCME) Council 61, requested an 8 percent increase in salaries over a two-year period.

“Our proposal was 2 percent (pay raises) every six months, starting January 1, 2015, and keeping the current health insurance contract language,” Homan said. Janet Phipps, director of the state Department of Administrative Services, is leading the state’s negotiating team, which is proposing a 2-percent increase in salaries over the next two fiscal years.

“The state is proposing a one-percent across-the-board pay increase for each of the (fiscal) years, beginning on July 1, 2015 and July 1, 2016,” Phipps told leaders of AFSCME Iowa Council 61 on Monday. The current contract has the state paying for 100-percent of the health insurance provided to state employees represented by AFSCME.

AFSCMEE president Danny Homan.

AFSCMEE president Danny Homan.

Phipps is suggesting those employees help cover a portion of their health care costs in the new contract. “The state is proposing that the state pay 80 percent…and the employee contribute 20 percent,” Phipps said.

Two years ago, Governor Branstad requested a similar proposal on health insurance — asking state employees to cover 20 percent. Those collective bargaining negotiations ended with an arbitrator rejecting the suggested cuts in state employee health insurance benefits, but also denying employees across-the-board pay raises.

Negotiations on the new contract, covering fiscal years 2015-16, will resume in January behind closed doors. AFSCME Iowa Council 61 represents roughly 40,000 state government employees.


Governor Branstad talks RFS, immigration and budget (audio)

Governor Terry Branstad.

Governor Terry Branstad.

Governor Terry Branstad says the delay of the EPA’s change to the rule that sets the amount of renewable fuels used in the country is a mixed decision for Iowa. Branstad says it was good to see the EPA is waiting to change what’s called the Renewable Fuels Standard. “We’re disappointed because of the uncertainty,” Branstad says. “We thought the recommendation was bad, and as you know, we testified very vigorously and resisted it strongly. We’re pleased that they didn’t implement it.”

Branstad says he would have rather seen the EPA junk the change altogether, and he’s not sure if the added delay signals good news. “Well, I think that it’s good that they didn’t implement the proposed rule, but the delay also creates continued uncertainty,” Branstad says. “If we had more certainty, I think we’d see more expansion and more ethanol and cellulosic ethanol plants built, which would be good.” Branstad says the uncertainty hurts farmers as the price of corn is now below the cost or production.

He says the price of corn had always been above the cost of production with the RFS in place. On another topic, the governor says it’s unclear how the presidents action on immigration will impact Iowa.

“Well we don’t know and we are in the process of reviewing and trying to determine that. There are also constitutional questions about whether the president of the United States has the authority to act unilaterally on issues like this,” Branstad says. “So, I expect there’s going to be a lot of unanswered questions that we need to get information about and what impact it would have on our state.”

Branstad says doesn’t know how many illegal immigrants might be in Iowa that would be impact by the president’s action. “I don’t. And the federal government has not been forthright in sharing with us information with us on the ones that have been placed in our state. So, we have no way of knowing,” Branstad says.

The governor campaigned on the notion that the state is in much better financial shape than when he took over four years ago. He says while that is the case, it does not mean there’s more room in the state budget this year. “No, it doesn’t because we have made some big commitments. One is property tax relief — it’s a $4.4 billion commitment over a decade — and we also have the teacher leadership plan, which provides an additional $50 million a year each year to reward teachers for taking on more responsibility to improve education,” according to Branstad.

He says the current economic situation continues to be a concern as they move into budget negotiations. “Revenue is falling below expectations due to the disastrously low price of corn,” Branstad says. “And so agriculture which has been an important part of the Iowa economy and has really helped us do better than other states in recent years, has been hurt by the EPA and what they have done with the renewable fuel standard. “We’re going to have to continue to be frugal and careful.”

 Branstad made his comments to reporters following the annual ceremony to pardon two Thanksgiving turkeys.

Audio: Governor Branstad meeting with reporters. 14:00



State unemployment rate drops to 4.5% in October

Workforce-DevThe state’s unemployment rate dropped in October. Iowa’s Iowa Workforce Development says unemployment dropped down to 4.5 percent in October, that’s the same rate it had held at in July and August before moving up to 4.6-percent in September.

It’s slightly ahead of the October unemployment rate one year ago of 4.4 percent. But IWD says the total number of Iowans working is nearly 35,000 higher than it was one year ago. Nonfarm employment dropped 200 jobs in October, which IWD says was the first drop since March and only the third decline this year. The agency says weaker than expected seasonal hiring in local and state government led to some of the loss.

The U.S. unemployment rate dropped to 5.8 percent in October compared to 5.9 percent in September.


AFSCME requests an 8% increase over 2 years for state employees

AFSCME president Danny Homan  (file photo)

AFSCME president Danny Homan (file photo)

The union representing roughly 40,000 state government employees is requesting an 8-percent increase in salaries over a two-year period. AFSCME Iowa Council 61 submitted the proposal to state officials Monday.

It calls for 2 percent raises on July 1, 2015; January 1, 2016; July 1, 2016; and January 1, 2017. The raises would cost the state around $523 million dollars, according to the Iowa Department of Management.

The current contract for workers represented by AFSCME, covering 2014 and 2015, does not contain across-the-board pay raises. Those collective bargaining negotiations ended when an arbitrator denied a pay increase, but rejected cuts in state employee health insurance benefits, something Governor Branstad wanted.


Creighton survey finds business economy ‘tepid’

Ernie Goss

Ernie Goss

A monthly survey of business leaders and supply managers in Iowa finds the state’s leading economic indicator fell for the 4th straight month in October. Creighton University economist Ernie Goss says Iowa’s Business Conditions Index for the month was, in a word, “tepid.” Goss says the entire 9-state Midwest region is experiencing a similar downward slide, as new export orders are dropping.

“We’ve got to separate the grain-dependent industries where prices are very weak, that would be corn, soybeans and wheat principally, and then on the beef and pork side, they’re doing better,” Goss says. “Overall, you put it all together, the ag sector is bringing down the overall economy, bringing down the growth, I should say.”

The U.S. dollar is becoming stronger though, which Goss says has an impact across the board. “When that number bounces up there, and it has been, it pushes ag prices down and pushes energy prices down,” Goss says. “Of course, that’s not all that bad. We’re now looking at gasoline prices, the best we’ve seen in a couple years.”

After rising to its highest level in more than three years in June, Goss says the overall index reading has hovered in a range pointing toward positive — but slower — growth for the regional economy over the next three to six months, with agriculture being key.

“Obviously, farm income for almost all of the nine states that we survey, very important and it’s heading in the wrong direction, unless you look at beef and pork, they’re doing better,” Goss says. “Overall, ag is weaker, probably going to be down income this year 10 to 12% from this time last year.”

Durable goods producers in Iowa, including ag equipment makers and nondurable goods manufacturers, especially food processors, reported much slower growth than earlier in the year.