Lean Approaches Make Deere a Global Success

At a time when outsourcing to countries with cheaper labor is all the rage, and when many people believe we are or soon will be in a recession, it is nice to hear about a company that is expanding an existing facility in the U.S.

Deere & Company, a well-known name in heavy equipment, announced last week that it will invest an additional $90 million in its facility in Waterloo, Iowa, which makes large tractors.

Deere is a company with a history of embracing lean strategies. We once sold a video about lean supply chain at John Deere.

Perhaps the best evidence of this is what Deere expects to achieve with its new investment. According to the company news release,

Although the investment will not add floor space to current Deere facilities, it will increase the company's Waterloo capacity to build large, high-horsepower tractors by about 25 percent. The improvements will be substantially completed by early 2010, the company said. The investment will include additional machine tooling, new manufacturing technology, and improved work processes as well as replacement of the current paint system.

Think about that: a 25 percent increase in capacity with no new floor space. Fantastic!

Deere is by no means just a U.S. manufacturer; it is a global company. In fact, the day after announcing the Waterloo expansion, Deere announced a new joint venture in China to build construction equipment there. (Deere already builds agricultural equipment in China.)

Deere has positioned itself well, with complex, expensive products in high demand globally. But it also has been able to expand with growing demand in an efficient way because of lean strategies.