Cummins forms partnership with Eaton

Companies will work together to build heavy-duty commercial vehicle transmissions

Cummins Inc. has formed a joint venture with a global power management company in its effort to become the top powertrain supplier worldwide.

Cummins and Eaton have created a 50-50 joint venture, called Eaton Cummins Automated Transmission Technologies. It will design, assemble, sell and support automated transmissions for heavy-duty and medium-duty commercial vehicles, according to a news release.

“Our growth strategy includes expanding our product offerings and extending our global footprint by becoming the world’s leading powertrain supplier,” Tom Linebarger, Cummins chairman and CEO, said in the news release.

“Our JV (joint venture) with Eaton will deliver the most advanced automated transmissions and develop an integrated powertrain and service network that supports our customers like never before,” Linebarger said.

Eaton provides a long history of transmission expertise while Cummins offers about a century of engine and component expertise, Cummins spokesman Jon Mills said.

“We will also be leveraging each others’ service and support networks globally that we think will be unmatched,” Mills said.

Eaton, which has its headquarters in Dublin, Ireland, recorded sales of $19.7 billion in 2016. The company makes electrical, hydraulic and mechanical power products, including automated truck transmissions.

The company will contribute its current designs for the next generation of automated heavy-duty and medium duty transmissions, and assembly assets for the next generation of automated transmissions, Eaton chairman and CEO Craig Arnold said in a conference call with analysts.

Cummins, a global company with headquarters in Columbus that makes diesel engines and power systems, had net sales of $17.5 billion in 2016.

Cummins will include the joint venture results in its Components business segment, the news release said. The segment includes emissions solutions, turbo technologies, filtration and fuel systems.

“Customers are focused on powertrain solutions that provide the best combination of technology, performance and quality,” Arnold said. “Our joint venture with Cummins will leverage the technical strengths and experience of two industry leaders with long histories and deep industry expertise to provide superior automated transmission technology for our global customers.”

Arnold said in the conference call with investors that the expertise of both companies will help them meet more stringent fuel and emissions standards, and grow globally.

Cummins and Eaton had a previous relationship before the joint venture. They partnered on a powertrain product called SmartAdvantage. Success with that product and a desire to expand its global footprint and product offerings factored into Cummins partnering with Eaton on the joint venture, Mills said.

Terms of the agreement include Cummins paying Eaton $600 million in cash for 50 percent in the joint venture, the news release said.

Cummins has about 60 joint ventures, Mills said. The joint venture with Eaton will begin in the third quarter, and the transmissions will be made in San Luis Potosi, Mexico, where Eaton has a production facility, he said.

About Cummins

Cummins Inc., a global power leader, is a corporation of complementary business segments that design, manufacture, distribute and service diesel and natural gas engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems.

Headquarters: Columbus, Indiana.

Employment: About 55,400 worldwide

Sales: $17.5 billion in 2016.

On the web: More information about Cummins can be found at cummins.com.

About Eaton

Eaton is a power management company that provides energy-efficient solutions to help customers effectively manage electrical, hydraulic and mechanical power more efficiently, safely and sustainably. Eaton is dedicated to improving the quality of life and the environment through the use of power management technologies and services.

Headquarters: Dublin, Ireland; North American regional headquarters in Cleveland.

Employment: About 95,000 worldwide

Sales: $19.7 billion in 2016.

On the web: More information about Eaton can be found at eaton.com.

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Kirk Johannesen is assistant managing editor of The Republic. He can be reached at johannesen@therepublic.com or (812) 379-5639.