The United Auto Workers (UAW) and Deere & Company are entering negotiations as the union seeks to address worker compensation amid significant sales growth linked to the artificial intelligence (AI) sector. Union leaders are advocating for labor protections in response to the financial gains seen by equipment manufacturers like Deere and Caterpillar, which have benefited from increased demand for construction machinery from data center developers.
The UAW announced on August 20, 2026, that its members rejected a contract extension offer from Deere that would have extended their current collective bargaining agreement until 2029. This offer included a 4% annual wage increase and $3,000 bonuses each year, with no changes to pensions and health care. UAW President Shawn Fain criticized Deere for recent layoffs and expressed that the union is seeking a more favorable deal given the company's improved financial situation.
Deere expressed disappointment over the rejection and stated it plans to return to negotiations before the current contract expires in October 2027. The company noted that it proposed the extension to provide stability and certainty for employees, customers, and the business.
In 2026, Deere's stock price increased by 40%, driven by a reported 18% rise in sales in its construction and forestry segment, amounting to $3.62 billion. The operating profit for this segment rose by 84%, with operating margins improving from 7.7% to 12.1%. Despite this growth, Deere indicated that overall demand remains below 2021 levels and competition is intensifying, creating uncertainty about future recovery.
Additionally, Fain's leadership in the labor movement has gained attention, particularly following a significant strike against major automotive companies in 2023. Analysts suggest that Fain's strong bargaining position could influence the upcoming negotiations with Deere, especially in an election year.
The labor movement is positioning itself to counterbalance the influence of AI companies, as the sector remains largely non-unionized. A disruption in the availability of construction equipment could impact AI data center construction, particularly as companies like Deere and Caterpillar face order backlogs.