AGCO reducing salaried workforce by about 6%, impact on Hesston plant unknown

WICHITA, Kan. (KWCH) - An internationally-expanded company with a large presence in Hesston confirmed plans that call for an approximate 6% reduction in its salaried workforce. AGCO did not disclose the impact by location but offered a piece of clarity with its plans.

“These reductions announced [Tuesday] are related to the weakened demand in the agriculture industry, not the shift in production to Mexico announced earlier this month,” a spokesperson from the company’s headquarters in Duluth, Georgia explained.

On June 12, AGCO announced plans to move some of its production of small balers and other machines to Mexico next year while the Hesston plant will continue manufacturing products like large square balers and combines. The company said the production-shifting move isn’t expected to require layoffs in Hesston.

On Tuesday, AGCO stated that, “Hesston will continue to manufacture Massey Ferguson windrowers, large square balers, combines and combine headers using the more than $28 million in investments made in the Kansas facility since 2021.”

“Those investments have focused on updating and modernizing Hesston’s systems and equipment. By streamlining the Hesston portfolio, our goal is to secure a profitable future for the plant,” the spokesperson said.

The company provided further information on its plans that include salaried workforce reduction in its filing with the United States Securities and Exchange Commission, copied below:

“The initial phase of the Program is focused on further reducing structural costs, streamlining the Company’s workforce and enhancing global efficiencies related to changing the Company’s operating model for certain corporate and back-office functions and better leveraging technology and global centers of excellence. The Company estimates that it will incur charges for one-time termination benefits of approximately $150 million to $200 million in connection with this phase of the Program, primarily consisting of cash charges related to severance payments, employees benefits and related costs. The Company expects the majority of these cash charges will be incurred in 2024 and the first half of 2025. Once fully implemented, the Company expects this phase of the Program to yield annual run-rate benefits and cost savings of approximately $100 million to $125 million. The initial phase of the Program is expected to result in a net reduction of the Company’s salaried workforce by up to approximately 6% as compared to its salaried workforce as of December 31, 2023.”

You can read the full filing here: https://investors.agcocorp.com/node/24851/html.