Just last week I was stopped on the street by a Cummins’ employee seeking my advice about pursuing an open position at our engine plant in Seymour. Her anxiety about doing so stems from the recent news, some of which cites Cummins, regarding the impact of tariffs on our business. And when one person voices that understandable concern, it’s important to address it in a larger way.
Her concern is valid. International trade has been the single most important contributor to our growth and hiring at Cummins, especially U.S.-based hiring, for more than a decade. Our continued success is largely dependent upon our ability to access the 95 percent of the world’s consumers who live outside of the U.S. We also must be able to access the most advanced and reliable suppliers around the world. It’s all interconnected, and when one is impacted, so are the rest.
That goes for our local communities as well. Let me provide an example I know well, using that very engine plant in Seymour I referenced earlier. As the leader of the Cummins Power Systems business, the people and products at that plant are my responsibility. Nearly 80 percent of the products made at our Seymour plant are exported. Our ability to export and grow has enabled us to invest more than $300 million directly into our facility through plant improvements and the addition of our technical center there. We’ve added many jobs in Seymour and we have enriched the existing ones. When we retain and add good-paying jobs, there is a direct impact on the larger community.
This is a policy and people issue, not a political one. Our leaders are, and have been, vocal about the importance of trade to our continued success in a similar way that we are vocal about other important issues that affect our employees and our communities such as health, safety, education and social justice.
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There is definite room for improvement in our international trade agreements, and we understand that to achieve a level playing field with our trading partners we have to conduct strong negotiations to achieve trade deals that work.
However, implementing unilateral tariffs is not the right approach and not the right solution. A tariff is a tax. The impact of tariffs on steel and aluminum, as well as retaliatory tariffs imposed on products we export to other countries, will be difficult to mitigate.
We are still analyzing exactly what this means for Cummins, but estimate that for the rest of this year alone, the tariffs will have about a $100 million negative impact on Cummins. If the tariffs remain and more are implemented, this could eventually hinder our ability to compete with manufacturers that produce their products outside of the United States — particularly those foreign-based competitors in Europe or Asia.
I assured the Cummins employee who stopped me on the street that we are doing all we can to understand the effect of the tariffs and identify ways to mitigate the impact to our workers and customers in every country and community in which we operate. I want to relay that message to all of our local stakeholders — shareholders, customers, employees and community members. I also want to ask you to help share our story and support our efforts to ensure that we can trade and export our products so we can continue to create jobs and strengthen our communities in cities and towns like Columbus and Seymour.
Norbert Nusterer is Cummins Inc.’s president of its Power Systems business segment.
