The economic effect of Columbus-based Cummins has reached $17 billion a year nationally, according to the engine maker’s latest internal study, and the spin-off benefits are showing up from downtown Columbus to the state of New York.
Sometimes the money lands in unexpected places.
Consider Lisa Abendroth’s butcher shop in the 400 block of Washington Street.
It gets a sales boost as Cummins’ employees who work downtown spend a sliver of their salaries on cuts of meat and specialty wines to-go, or buy the $3.99 lunch special at noon.
Direct spending, overall economic impact of Cummins’ operations in 2011
Direct: $1.8 billion
Overall: $6.5 billion
Direct: $396 million
Overall: $1.7 billion
Direct: $719 million
Overall: $1.6 billion
Direct: $517 million
Overall: $583 million
Direct: $245 million
Overall: $510 million
Direct: $343 million
Overall: $378 million
Direct: $253 million
Overall: $326 million
Source: Cummins, Inc.
“The other day Cummins’ head chef was out of chicken. His supplier didn’t show up, so we filled his order. Or groups of engineers come in for lunch.
“Or a single employee might drop in and buy a New York strip and a bottle of wine on the way home from work,” said Abendroth, who opened The Savory Swine butcher shop seven months ago.
Or, there’s Mike Gorday, director of the ABC-Stewart School on State Road 46. As recently as the 2010-2011 school year, three families that needed help paying tuition at the Montessori-style elementary school were able to tap a portion of a $10,000 Cummins charitable grant.
“The gift provided a tremendous benefit for the families and the school,” Gorday said. “We do have a lot of families that work at Cummins who send their children to school here. Some come from other countries.”
Or consider David Weed, a recent Cummins hire who moved to Columbus from Wisconsin a few weeks ago.
The 37-year-old Weed, his wife and two children have been living with family members while building a four-bedroom house in Westbrook subdivision.
They’ll move into the new place next week.
“I grew up here and have family in the area, and the job with Cummins is a great opportunity,” said Weed, hired as a global compensation manager.
The move means the Weeds will spend thousands of dollars on move-in expenses, new furniture and kitchen appliances — all part of how his salary seeps into the broader economy.
Cummins’ latest financial analysis — a 2011 report being used to market the company nationally — reveals a spreadsheet filled with big numbers, primarily in Indiana, New York, South Carolina, North Carolina, Tennessee, Minnesota and Wisconsin, where manufacturing plants or other company operations are clustered.
The company, which ranks No. 150 on the Fortune 500 list, employs 46,000 people worldwide.
That includes about 7,700 in Indiana, most of those working in or near Columbus. Cummins expects sales of $17 billion this year, down slightly from $18 billion a year ago. In 2011, it had $1.85 billion in profit.
Cummins’ products include diesel and natural gas engines for industrial, power generation and the automotive markets.
Biggest impact in Indiana
The company’s biggest economic effect has been in Indiana, where Cummins estimated it had $1.8 billion in direct spending and an overall economic effect of $6.5 billion this year.
Cummins’ headquarters is in Columbus, with a core group of manufacturing plants also in southern Indiana.
Dollars that make a direct effect include employees’ salaries, payments to suppliers, health care spending, payments on any leases, and donations to charities, among other things.
An indirect impact occurs when the people or companies paid by Cummins turn around and spend that money on their own needs.
Direct effects tallied for 2011 included $1.3 billion in salaries paid across the seven states where the engine maker does most of its business, $8.65 million in charitable giving, and $2.4 billion spent in those seven states for supplies, everything from materials for engine assemblies to fabricated parts.
The latest fiscal analysis also covered such things as tax payments by Cummins to governments and maintenance costs for the company’s vast array of offices, plants and warehouses.
Here are other major
Cummins’ employees in Indiana were the most generous of any in the company this past year, contributing $846 per worker, more than double the average in any other state where Cummins operates.
Total direct spending in all 50 states hit $8 billion this past year.
Top spending categories in 2011 included payments to suppliers, $5.8 billion; salaries, $1.36 billion; facility costs and maintenance, $246 million; retiree costs, $147 million; and health care expenses, $142 million.
Much of the credit for compiling the economic analysis goes to Anne Trobaugh, who generally works on global emissions compliance at Cummins.
But at least twice in the past five years she has been called upon to gauge the manufacturer’s economic clout.
“Our biggest customer for the data is in the government relations arena, state Senates and House members or governors who want to know the economic impact of projects in their state,” she said.
Trobaugh led a 19-member team that gathered direct spending information from Cummins’ facilities in the U.S., and then applied broad economic mulitipliers to estimate the indirect financial punch, basically the trickle-down effect as employees spend part of their paychecks around town, buy homes or go shopping at local stores.
For example, Abendroth of The Savory Swine said Cummins’ international flavor — with employees recruited from around the globe — has been a boost for her business.
United Kingdom expatriates ask for bangers (a British sausage) and some Latin Americans want carne asada (thinly cut grilled beef).
Her office wall is sprinkled with Post-it notes carrying special requests from Cummins’ employees and others for international food favorites.
Additionally, Weed said he dines out with his family at such Columbus hot spots as Zwanzig’s Pizza and Zaharakos ice cream parlor near Cummins’ downtown office space.
The bulk of Cummins’ direct spending takes place in Indiana and the six other states where the company has most of its offices and factories. But other states benefit from the company’s purchases, too.
Chief among those are Michigan, where Cummins paid suppliers a total of $1.24 billion in 2011.
Illinois, where Cummins has banking and finance relationships, received $1.03 billion in direct dollars, the study found.
Home of Cummins’ headquarters, plus three southern Indiana manufacturing operations, the Fuel Systems Plant in Columbus, the Columbus MidRange Engine Plant here and the Seymour Engine plant.
Operates a filtration center in Cookeville and a major parts distribution center in Memphis. Nashville has the company’s business services unit, which handles accounting, IT and human resources functions.
The Cummins power generation manufacturing operation in Fridley makes generator sets and electronic controls. There are related operations in Minneapolis.
The Jamestown engine plant employed roughly 1,200 people at last report and makes the ISX/ISM engines which are being used in on-highway applications.
A major plant in Rocky Mount builds mid-range electronic and mechanical diesels, natural gas and propane engines and other components.
Charleston has manufacturing and design operations of high-speed marine diesels and advanced propulsion systems, plus other mid-range and heavy duty engines. Turbo technologies also are there.
Cummins closed a Wautoma plant that made emission-control devices for diesel engines nearly four years ago, but the company still has a technical center in Stoughton, plus other locations working on filtration, emissions and exhaust systems.
Source: Cummins, Inc.