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Cummins' global workforce reduced by 3,000 since November

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Cummins Engine Plant, pictured last year in Columbus. PHOTO BY ANDREW LAKER
Cummins Engine Plant, pictured last year in Columbus. PHOTO BY ANDREW LAKER

Cummins Inc. has reduced its global workforce by about 3,000 since late last year, a reduction of more than 6 percent.

The company had announced Oct. 9 that a global economic slowdown was prompting it to trim 1,000 to 1,500 jobs by year’s end from its worldwide workforce of 47,000. Then on Oct. 17, the Columbus-based engine maker said it would reduce its southern Indiana workforce of 7,700 by about 150.

A spokesman also said Wednesday that the company’s external hiring in 2013 would be “very limited.”

Jon Mills, director of external communications, said Wednesday that the company’s global workforce is now at about 44,000, down about 3,000 from late last year. Mills said he could not say whether the reduction in southern Indiana exceeded the initial estimate of 150.

The company announced Wednesday that sales for 2012, at $17.3 billion, were down 4 percent from 2011, primarily because of weaker demand from Brazil, China and Europe.

Mills said the company is “continuing to control costs and focus our resources on the most critical project and growth initiatives as we continue to navigate global economic uncertainty.

“Because of these factors,” Mills said, “at this point, there will only be very limited external hiring in 2013, in cases where we cannot find an internal candidate for the role.”

Cummins in July had announced that its revenues in 2012 would be lower than expected. It subsequently instituted a hiring freeze and cut workweeks from Brazil to the Columbus Fuel Systems Plant, before announcing the cuts in October.

When companies see demand for their products weakening, they generally try to reduce costs and the number of employees quickly — but they hesitate about hiring people when orders return, said Craig Kessler, president and chief investment officer of Columbus-based Kessler Investment Group.

Higher orders have to remain steady for several months before companies add employees, Kessler said, because they do not want to have to let people go again a couple of months later.

Cummins has done this very effectively, Kessler said, which is part of the reason why the financial markets have responded favorably despite lower sales and profits.

Companies incur costs both when they hire people and when they dismiss them, Kessler said.

Cummins said Wednesday that its fourth-quarter earnings per share of $2.02 were dragged down by 19 cents per share in restructuring costs. Such costs can include anything from reducing the number of employees to changing the thermostat settings in offices and production plants.

Mark Foster, chief investment officer of Columbus-based Kirr, Marbach & Co., said that the North American heavy-duty truck market provides the likeliest hiring opportunity for Cummins right now.

Cummins has seen three or four months of increasing orders in the North American heavy-duty truck market, and inventories are at their lowest level in about a year, Foster said.

If orders continue, the company likely will have to increase production — and that could mean hiring, especially in Jamestown, N.Y., where the engines are being assembled, and in Columbus, where employees make heavy-duty cylinder heads and blocks.

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