By Boris Ladwig, The Republic
bladwig@therepublic.com
Cummins Inc. will reduce its local work force by 460 by the end of the week as part of previously announced worldwide cuts and early retirements.
Cummins announced Tuesday that it will cut 225 salaried workers in southern Indiana. The reduction is part of 985 salaried workers who will be let go worldwide. The company had said Jan. 13 that it would cut "at least 800" by the end of February.
Also, 235 hourly workers will leave the Columbus-based engine maker by the end of the week. Cummins on Feb. 3 had offered early retirement packages to certain blue-collar workers and said it would accept 350 retirements.
After 120 took early retirement, the company cut another 115 jobs to bring costs in line with demand, said Mark Land, director of public relations.
Most of the cuts will occur by the end of the week, Land said.
In the last three months, the Columbus-based engine maker has reduced its full-time work force by 660 locally and about 1,820 worldwide, as the global recession has resulted in plunging orders.
Although Cummins has recorded record sales and profits in five consecutive years, fourthquarter earnings fell by about 55 percent from a year earlier. In terms of profit, it was the weakest performance in 18 quarters and the weakest fourth quarter since 2003.
Details
The reduction of 985 salaried workers included members of all disciplines, including engineers, sales and marketing staff and attorneys.
The bulk of the 225 cuts in southern Indiana will occur in Columbus.
The employees will receive standard severance packages, Land said, the benefits of which will be determined in part by how long the employees have been with Cummins.
Of the 120 hourly workers who took early retirement, 100 were members of Diesel Workers Union, and 20 were members of Office Committee Union.
Land said the company was pleased with how many took early retirement, and that 120 was at the top end of what the company expected.
Nonetheless, he said the retirements were not enough to align costs with demand, so another 115 employees have to be laid off involuntarily.
Those cuts will affect 75 workers at Fuel Systems Plant and 40 at Cummins Industrial Center in Seymour.
Land said though the company had said it would accept 350 early retirements, it determined that a reduction of 235 (120 retirements and 115 involuntary layoffs) would suffice.
Hope resident Zach Garrison, who has worked at Fuel Systems Plant since July 2007 and who will retain his job, said employees were not surprised by Tuesday's announcement.
Shorter weeks
Volumes have been declining across the board, Garrison said, and some employees have been working only three or four days a week.
The level of anxiety remains high especially among the most recently hired workers, Garrison said, although employees expect orders to ramp up no later than the fourth quarter in anticipation of new heavy-duty emissions requirements.
Although no involuntary layoffs occurred at Columbus Engine Plant, Land said CEP is offering voluntary shortterm unpaid leaves of absence.
Land commended DWU and OCU leaders for their flexibility and said the cuts were necessary to bring costs in line with demand.
"If we have to make more changes down the road, we will," he said, "but we hope we are where we need to be."
Shares jumped 7.6 percent Tuesday, closing at $21.95. The Dow Jones Industrials Average gained 3.32 percent.
Painful but necessary
Corey Carr, executive director of Columbus Economic Development Board, said although the cuts are painful, particularly for the families who are losing income, Columbus is faring better than many other communities.
Carr also said he welcomed Cummins' efforts to minimize the cuts' impact by offering early retirements.
Ultimately, Carr said, Cummins' actions today will protect the shareholders and remaining jobs and will allow the company to flourish when the economy rebounds.
Diesel Workers Union could not be reached.