John Deere continues to invest in new technologies, including software

John Deere tractor.

“John Deere 8345 R” by HCQ. CC BY-SA 3.0.

Farming and agricultural are industrial sectors which are crucial to the overall American economy. About 15 percent of the total U.S. workforce are employed in the production of food and fiber products from crops according to the American Farm Bureau Federation. This is a vast improvement over a November 1981 report from the U.S. Bureau of Labor Statistics which pegged agricultural employment at 4 percent of the entire American workforce. Technological innovations have enabled farmers to produce about 262 percent more food than farmers in 1950 while utilizing 2 percent fewer inputs such as fertilizer, labor and seeds.

Yet there are significant challenges being faced by America’s farmers and the overall agricultural industry. Today’s farming workforce may be larger but it is also getting older as the average age of the American farmer has risen from 31 years of age in 2000 to about 37 years as of August 2013. Economic uncertainties caused by lower commodity prices and federal tax break reductions has negatively impacted farm equipment manufacturers who have found their clientele unwilling to invest in tractors and grain harvesters which can cost hundreds of thousands of dollars. Last summer, Deere & Company (NYSE:DE) announced that reductions in its operating profits, caused by weak sales, would result in the layoff of 1,000 U.S. factory employees. Corporate investment into research and development at John Deere has also fallen slightly, although the company did manage to maintain a $341.1 million R&D investment during the most recent fiscal quarter.

The agricultural industry is also being dealt a poor hand by a four-year drought in the state of California which is having deleterious effects on agriculture and other industries. About 80 percent of California’s water is used on a food industry that produces more than 90 percent of the nation’s tomatoes and broccoli as well as nearly three-quarters of America’s lettuce, among many other crops. Reductions to federal water programs for farms has sparked fears that unemployment will rise sharply in farm communities.

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Given all of these reasons for pessimism in the farming industry, the most recent quarterly earnings report released by John Deere comes like a breath of fresh air, albeit a small one. There’s no overlooking the fact that the company’s $690.5 million in quarterly net income represented a sharp drop from the $980.7 million taken in during the same period last year. The company has, however, improved its profit outlook for 2015 to $1.9 billion, up from the $1.8 billion that the company forecast as of February. Earnings per share also beat predictions by nearly 50 cents; the second quarter’s $2.03 earnings per share was lower than last year’s $2.65 per share but was still far greater than the expected $1.56 per share. In the earnings report, Deere & Co. CEO Samuel R. Allen stated that he expects the company to be solidly profitable throughout 2015, “with the year ranking among our stronger ones in sales and earnings.”

Net equipment sales showed another serious decline in business for John Deere. Compared to last year’s second quarter, worldwide equipment sales dropped by 20 percent and U.S./Canadian equipment sales saw a reduction of 14 percent. However, U.S. census data through 2015 has shown that wholesale farm equipment shipments are down 55 percent so far this year. John Deere’s second quarter also showed a slight 2 percent improvement in sales of construction and forestry equipment. This may be a sign that the company is finding profitable new avenues for equipment sales; there have been reports that John Deere equipment is being more heavily utilized by sewer and water contractors in recent years.

Financial analysts seem to be split on the actual implications of the earnings report. Both Baird and JPMorgan downgraded Deere & Co.’s stock as of this May but others argue that the stock is currently undervalued. As of May 28th, Deere’s stock was trading at 0.95 times revenue, meaning that investors are receiving $1 of the company’s business for every 95 cents of investment. The company is also enjoying a better price/earnings ratio than many other large players in this field, including Caterpillar (NYSE:CAT) and Joy Global (NYSE:JOY).

Deere 2015 Text Cluster

Since the beginning of 2015, Deere & Company has received a total of 92 patents from the U.S. Patent and Trademark Office. According to Innography’s text cluster (see left), much of Deere’s innovation is focused on work vehicles, tractors and harvesters. We were intrigued to note, however, that a sizable chunk of Deere’s recent inventions relate to a display screen with icon, indicating a healthy amount of software development at the company. John Deere’s constant innovation is what has made the brand so popular even in the second hand market for used John Deere tractors

We’ve been covering a lot of developments in the field of autonomous vehicles this year here on IPWatchdog so we were piqued to see a recent Deere & Co. patent situated squarely in that sector of innovation. U.S. Patent No. 8989972, titled Leader-Follower Fully-Autonomous Vehicle with Operator on Side, discloses a method for improved vehicle leader-followercontrol that involves receiving a power-up command and a selection of a side following mode, planning a path and moving the vehicle along a path so that an operator can remain at the vehicle’s side. The invention also has a system for identifying obstacles and avoiding them before resuming travel along the planned path. The pursuit of this innovation reflects the fact that work environments are trending towards the use of automated equipments. Autonomous systems for mobile robots are discussed within U.S. Patent No. 8996171, which is titled Pheromone for Robotic Boundary. The John Deere patent claims a method for a mobile machine that detects an emitter located within an operating environment. The mobile machine performs a function in the operating environment in response to detecting the emitter. The innovation would be used on lawn mowing equipment so that robotic mowers could operate within a boundary without deterioration in signals received from the emitter.

seeding machineInvestments into the development of farming equipment are reflected in U.S. Patent No. 8942894, titled Seeding Machine for Planting Multiple Seed Varieties and Prescription for Multiple Varieties Seeding Machine. The prescription for operating a seeding machine disclosed here utilizes a seed delivery system with a switching mechanism that provides at least two varieties of seed to a meter. A controller operates the switching system based on a prescription of which seed variety to plant within a given area of land. Seeding prescriptions are based upon environmental conditions, such as wetness or low-lying fields, which helps to optimize the number of crops grown within an area of land. More improvements to agricultural vehicles were explained by U.S. Patent No. 9037346, entitled Steering Control for Vehicle Trains. The steering control system for a vehicle train with a tow vehicle claimed here involves a steering assembly and a series of sensing devices that determines the orientation of one or more towed vehicles during operation of the vehicle train. This system applies steering corrections during vehicle train operations such as harvesting so that heavy vehicles can be towed without adversely affecting the operation of the tow vehicle.

Improved hydraulic systems for a variety of work machines are the subject of U.S. Patent No. 9037355, which is titled Control Assembly for Auxiliary Hydraulics. The patent protects a ground engaging vehicle which contains a tool with a moving member and a control system for controlling the speed of the moving member. An adjustable proportional control of the control system creates a signal that can control the speed and direction of the moving member. This improved hydraulic control system for work vehicles allows for the repeatability of a hydraulic unit’s motion, improving the ease of operating and controlling auxiliary systems attached to a work vehicle.

debris guardFinally, we noticed upgrades to forestry vehicles which have been recently protected for John Deere through U.S. Patent No. 9016335, which is titled Debris Guard Connected to a Boom. This patent discloses a forestry vehicle with two structures mounted on either side of a pivoting boom and connected via a channel within which the boom travels as it pivots. The assembly also involves a debris guard which is pivotally and slidingly coupled to the boom. This debris guard is designed for feller/buncher forestry vehicles and is designed to reduce the amount of debris which enters the channel running along the sides of the debris guard.

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