Cummins Inc. announced Tuesday, Jan. 13, that it will reduce its permanent professional work force worldwide by at least 800 employees by the end of February and freeze salaries for the year.
Also, the Columbus, Ind.-based company reaffirmed Monday, Jan. 12, that its entire on-highway product range, including its ISX, will be ready to meet the new U.S. Environmental Protection Agency regulations for the North American market beginning in 2010. EPA says it soon will start testing Cummins’ 2010 engines because of health concerns raised by the company’s technology.
As part of the latest work force reductions, Cummins will offer a second voluntary retirement package to certain active professional employees in the United States. The remainder of the reductions will result from involuntary terminations from Cummins’ operations around the world.
The company also will reduce the salaries of its officers by 10 percent for 2009. In addition, Cummins will continue to monitor production volumes at individual manufacturing plants and take whatever actions are necessary as dictated by customer demand for its products.
This is Cummins’ second round of reductions in response to the worsening global economic crisis and its impact on the company’s markets and sales. In addition to job reductions, Cummins aggressively cut costs, reduced spending in all areas and initiated temporary plant shutdowns, shortened work weeks and extended traditional holiday closing periods during the fourth quarter of 2008.
Combined with its previous actions taken in December, the company will have reduced its professional work force by more than 1,400 people or 10 percent. In addition, Cummins will have reduced its hourly work force by more than 600 and cut about 2,500 contingent workers.
“It is unfortunate that after five straight years of record performance and greatly improved business fundamentals, we are being forced to take these difficult actions,” says Tim Solso, Cummins chairman and chief executive officer. “While these steps are very painful, they are necessary to keep Cummins competitive through this global recession so we can emerge a stronger company when the economy and our markets recover. It is our expectation that these work force reductions will align our cost structure with our projected business levels, and allow us to meet customer requirements and preserve our ability to invest for the future.”
