Deere & Company: Shaping Agriculture & Construction Since 1837

This article provides an overview of Deere & Company, also known as John Deere, a leading name in the agriculture and construction equipment industry. Established in 1837 by John Deere, the company pioneered the agricultural sector with its innovative self-scouring steel plow. Today, Deere & Company stands as a global entity with a market cap of $111 billion, offering a diverse range of products across various sectors. Let's take a closer look at the company's major historical milestones and examine how it significantly shapes the agricultural and construction equipment landscape worldwide.

• Rich history: John Deere founded the company in 1837 in Illinois, revolutionizing agriculture with the invention of the self-scouring steel plow, addressing the challenge of Midwestern soil.

• Growth and expansion: Over the years, the company expanded its product line beyond plows to include a variety of agricultural and construction equipment, leading to its name change to Deere & Company in 1868.

• Industry leadership: After the death of its founder, John Deere, in 1886, the company continued to flourish under new leadership, upholding its dedication to quality, innovation, and integrity. Venturing into tractor manufacturing marked a significant step toward its future growth.

• Financial performance: Today, Deere & Company is a global leader in the agriculture and construction equipment industry, with a market cap of $111 billion, significant manufacturing and dealership networks worldwide, and a strong financial performance highlighted by a consistent EPS growth over several decades.

Known worldwide for its distinctive green and yellow agricultural equipment, Deere & Company's journey from a small blacksmith shop founded almost 200 years ago to a global multi-billion corporation is proof of its continuous commitment to quality. The story of Deere & Company begins with its founder, John Deere, born in Rutland, Vermont, in 1804. After an apprenticeship in Vermont, Deere established his own blacksmith shop in Grand Detour, Illinois, in 1837. The move was motivated by economic opportunities in the burgeoning West, but Deere would find his calling in a challenge that local farmers faced: the sticky Midwestern soil.

The cast-iron plows used at the time were designed for the sandy soil of the East Coast and would clog up with the rich Midwestern soil. Farmers were forced to stop frequently to clean their plows, severely hampering their efficiency. With his blacksmithing skills and natural sense for business, Deere saw this as an opportunity to create a better plow.

Deere famously created a plow from a broken sawblade in 1837, which became the birth of Deere & Company. The polished steel of the blade was more effective at shedding the soil than the cast iron. It quickly became a game-changer for farmers, significantly reducing the labor needed to plow the fields and increasing productivity, thereby rapidly gaining popularity. By listening to farmers' needs and continuously refining his design, he established a reputation for creating reliable, high-quality products. This customer-focused approach became a core principle of the company from the start.

By 1848, Deere moved his operation to Moline, Illinois, to take advantage of the city's transportation resources, including the Mississippi River and the railroad. This strategic move facilitated the distribution of his plows across the Midwest. The company continued to innovate and expand its product line beyond plows, introducing cultivators, planters, and other agricultural tools. In 1868, the business was renamed as Deere & Company.

After John Deere's death in 1886, the company continued to expand under the guidance of capable leaders who adhered to Deere's principles of quality, innovation, and integrity. The company ventured into tractor manufacturing in the early 20th century which proved to be a crucial decision for its future growth.

From a modest beginning as a small blacksmith shop to achieving a market cap of $111 billion as a global leader in agricultural equipment, Deere & Company's evolution is a remarkable chapter of American business history. Its founding story, centered around a simple yet transformative plow, remains a powerful example of how addressing a common problem with ingenuity and perseverance can lead to lasting success.

Deere & Company operates through four main segments: Production and Precision Agriculture, Small Agriculture and Turf, Construction and Forestry, and Financial Services. The Production and Precision Agriculture segment caters primarily to grain growers, offering large and medium tractors and various harvesting and application equipment. The Small Agriculture and Turf segment serves a diverse range of customers, including dairy and livestock producers, crop producers, and those in turf and utility sectors, offering utility tractors, mowing equipment, and other outdoor power products.

In the Construction and Forestry segment, Deere provides equipment like loaders, excavators, and forestry machinery, highlighting its diversification beyond agriculture. The Financial Services segment supports the company's core operations by financing sales and leases of Deere equipment, showcasing an integrated business model akin to an ecosystem.

Deere & Company's commitment to innovation and quality has been central to its brand identity. Its history of product development and strategic acquisitions demonstrates its focus on meeting the evolving needs of its customers in agriculture and construction sectors. The company's recent agreements such as with Elon Musk's SpaceX to provide advanced satellite communications services to farmers, underline its push towards integrating cutting-edge technology with its equipment offerings.

Deere & Company's global reach is evident through its extensive network of manufacturing plants and dealerships. It operates 26 manufacturing plants in the U.S. and Canada and 45 overseas, with around 2,100 dealerships, emphasizing its strong international market presence. Its market cap of around $111 billion as of March 2024 further underscores its continuous industry leadership.

In the fiscal year 2023, Deere & Company reported revenue of $60.2 billion and net income of $10.2 billion. Even more impressive, the company has achieved a 11.7% EPS CAGR since 1990, translating to a staggering 38-fold increase. This growth trajectory underscores the company's ability to efficiently scale its operations over decades.

Visualising Deere & Company’s EPS Growth Since 1990

Visualising Deere & Company’s EPS Growth Since 1990

From its origins in a small Illinois blacksmith shop to becoming a global $111 billion leader in the agriculture and construction equipment industry, Deere & Company has maintained its commitment to innovation, quality, and customer focus for almost 200 years. Boasting a diverse portfolio that spans from precision agriculture to construction and forestry equipment, the company continues to thrive. It integrates advanced technologies and expands its global footprint, with its impressive financial performance – marked by remarkably consistent growth in EPS over several decades – further showcasing its ability to efficiently deploy capital over the long run.