Cummins Inc. designs and manufactures diesel and natural gas engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems. It employs approximately 54,600 people worldwide.

Cummins to Drop 2,000 Jobs in Cost-Cutting Strategy

Oct. 29, 2015
Falling global demand for diesel, natural-gas engines hits workforce; will save up $200 million Demand in Brazil, China shows no sign of improvement Job cuts in effect by year’s end Full year outlook revised down

Cummins Inc., the diesel and natural-gas engine designer and manufacturer, plans to reduce its workforce by up to 2,000, or almost 4% of the total, in a restructuring and cost-reduction strategy intended to offset the effects of slowdown in global markets. Columbus, Ind.-based Cummins also lowered its earnings outlook for 2015.

The engine builder said its third-quarter revenue fell 6% versus Q3 2014, to $4.6 billion, and while its North American revenues for the third quarter are up 4%, international sales fell 18%.

Cummins said it expected full-year revenue to be flat or down 2% versus 2014.

The factors cited by Cummins are similar to those cited by Caterpillar Inc. in its September announcement of job cuts and cost-cutting measures.

Most of Cummins’ job cuts will take effect by the end of this year.

“We are taking difficult but necessary actions to lower costs in the face of weak demand in many of our markets.” stated Tom Linebarger, chairman and CEO. “Global off highway and power-generation markets have been weak for some time and are worsening.

He continued: “Industry orders in key end markets in Brazil and China are at multi-year lows and showing no signs of improvement in the near-term. Given the uncertainty in the global economy, we expect challenging conditions to persist for some time.”

Cummins stated the workforce reduction would reduce its operating costs by $160 million to $200 million, and it said it would record pre-tax costs of $70 million-$90 million in connection with the layoffs.

“Adjustments to manufacturing capacity are already being made on a facility-by-facility basis and the company will evaluate if more significant restructuring actions are required in the coming weeks and months,” the company stated.

Linebarger expressed confidence that Cummins’ “very experienced leadership team” would manage the weak demand cycle, and that the company would be stronger, more profitable, and with improved positions in its largest markets, as result of the restructuring.

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