The diesel generator market contracted by 14% in 2020
Columbus-based Cummins Inc. said Monday that it will lay off 2,000 salaried employees as the global enginemaker copes with a downturn in business.
Spokesman Jon Mills confirmed the company’s workforce reduction plans to IndyStar via email late Monday. He did not say how many workers in Indiana would be affected.
Cummins employs more than 10,000 people in Indiana and about 62,000 worldwide.
“Unfortunately, we must do more to reduce costs because the downturn is happening at a sharper pace than we experienced in the previous two cycles,” Mills said in an email. “We understand this is incredibly difficult for those directly impacted and for all employees across the company.”
Cummins’ third quarter revenues decreased 3% to $5.8 billion from the same quarter in 2018. The company in its latest earnings report said lower demand for trucks and construction equipment drove the majority of the decline.
North American sales were flat while international revenues decreased 8%, according to the report. Net income in the third quarter was $622 million, or $3.97 per diluted share, compared with $692 million, or $4.28 per diluted share, last year.
The company now expects 2019 revenues to decline about 2%.
Weakening demand is occurring in markets such as India, China’s construction and medium- and heavy-duty truck markets, global power generation and the North American truck market as well as in oil and gas.
“Most of the markets in which we participate have either peaked or are on their way down,” COO Tony Satterthwaite said during an analysts’ presentation last week.
Cummins is seeking to reduce costs by $250 million to $300 million across the company. It expects to complete the layoffs by the first quarter of next year. Mills said the company announced the workforce reduction to employees last week.
“Demand has deteriorated even faster than expected, and we need to adjust to reduce costs,” he said. “We have already taken several actions in response to declining revenues.”
Those measures include cuts in discretionary spending across the company, voluntary headcount reductions and efforts to align production with demand.
During the same analyst day presentation, CEO Tom Linebarger said that the company’s operating and financial positions remain strong and it does not plan to cut investment in technologies the company views as key to its future. The company plans to have new technology in traditional and new power trains, he added.
In May, Cummins announced a $68 million investment plan to expand along the I-65 corridor in Indianapolis, Greenwood and Columbus. Those plans included a $33 million investment that would create 75 new jobs at Cummins’ global headquarters in Columbus.
Cummins also planned to upgrade a 1.6 million-square-foot engine plant in Columbus, build a $35 million digital and innovation technology hub in Greenwood and renovate space in Salesforce Tower.
Source: https://eu.indystar.com/
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