Cummins Inc. will implement at least 150 layoffs by year’s end in its southern Indiana workforce, the Columbus-based engine maker announced Wednesday.
The layoffs will affect workers at the Fuel Systems Plant in Columbus, Columbus MidRange Engine Plant or the Seymour Engine plant, Cummins’ spokesman Jon Mills said.
The company also announced Cummins would transfer 126 employees from the Fuel Systems Plant and Seymour Engine Plant to the Columbus MidRange Engine Plant.
Mills said he could not say definitively whether these job actions would be the only effects for Cummins’
employees in the Columbus area for the balance of 2012.
Cummins has made a number of announcements this year that have indicated a weakening global economy:
July 10: Cummins said its sales will be about 9 percent lower this year than it expected because of a weakening North American market and because sales in China, India and Brazil are increasing more slowly than anticipated.
July 31: Cummins reports a slight sales decline in the second quarter, primarily because of weakness in overseas markets.
Aug. 24: Because of slowing demand, Cummins cuts the workweek of about 35 employees at the Fuel Systems Plant to four days.
Sept. 5: Cummins institutes a global hiring freeze through at least the end of the year because of continuing global economic uncertainty.
Oct. 4: Slowing demand prompts Cummins to cut the workweek of 350 employees at the Columbus Fuel Systems Plant to four days.
Wednesday: Cummins announced 150 layoffs from among three southern Indiana production plants to take effect by year’s end.
“Determinations are being made. We need to look at that and go through a thoughtful and careful process,” Mills said.
“These actions are difficult and will impact a number of people who have worked for Cummins for many years but are necessary to respond to the current deteriorating global economic conditions and ensure the long-term success of Cummins and all its stakeholders,” he said.
Among the affected operations:
The Seymour Engine Plant, at 800 E. Third St. in Seymour, which employs about 450 and makes high horsepower engines, including the recently unveiled 95-liter Hedgehog.
The Fuel Systems Plant, at 1300 N. Marr Road in Columbus, employs more than 500 and makes fuel systems, including the XPI, which is used in all C- (8.3-liter) and L-series (9-liter) engines and the flagship 15-liter ISX that powers heavy-duty trucks.
The Columbus MidRange Engine Plant, on County Road 450S near Walesboro, which employs about 600 and produces the 6.7-liter engine used in the Ram truck.
The company on Oct. 9 announced plans to reduce its global workforce by 1,000 to 1,500 jobs by the end of the year using a variety of methods. Cummins said it was considering “planned workweek reductions, shutdowns at some manufacturing facilities and some targeted workforce reductions” to cope with an uneven economic landscape.
The company said it currently has about 47,000 employees, including about 7,700 in southern Indiana, with most of those in Columbus.
Craig Kessler, president and chief investment officer of Columbus-based Kessler Investment Group, said Wednesday’s announcement of job cuts was not a surprise.
“I think there was a lot of expectation that it would be felt here in Columbus or south-central Indiana pretty soon, and that seems to be the case,” Kessler said.
But the stock analyst said Cummins’ modest debt levels and other smart management in recent months kept layoffs to a much lower number than otherwise might have occurred.
“This isn’t pleasant for those affected. But anyone who has lived in the Cummins ecosystem for any amount of time knows these things can happen with the business cycle,” Kessler said. “Cummins is hanging in there very well and maintaining a strong ship so they can weather the storm and get through to the other side of this.”
Mark Foster, chief investment officer at Columbus-based Kirr, Marbach & Co., said the company’s workforce adjustments were necessary because engine production for Cummins has been running higher than demand. “From the numbers we’ve looked at, (sales in) Brazil looked particularly weak, and that had been a strong region.”
“But you are also seeing a slowdown in orders in North America, as well. A gap between production and orders has been evident for the past four or five months, at least,” Foster said.
Still, Foster praised Cummins executives’ methodical, disciplined approach to business.
“When things get soft, they recognize they have to adjust the cost structure,” he said. “We all understand that isn’t pleasant to do, but from a shareholders’ perspective it’s a pretty good way to conduct business.”
Cummins earlier forecast weaker-than-expected sales for this fiscal year, trimming its forecast a week ago from $18 billion in annual revenues to $17 billion.
The company’s shares on Wednesday rose $1.03, or 1.13 percent, to close at $92.41. The Dow Jones industrial average gained 0.04 percent.
The company will conduct a conference call to discuss its third-quarter earnings Oct. 30.
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