By Boris Ladwig, The Republic
bladwig@therepublic.com
Cummins Inc.'s sales are increasing faster than the company projected last year and are on pace to break the $20 billion mark as early as 2011.
As late as May, the Columbus-based company said it expected to reach $16 billion in sales by 2010.
But in September, company officials told analysts they expected an annual growth rate of 12 percent, which would push sales to more than $18 billion by 2010 and to $20.5 billion by 2011.
"The growth continues to be very strong," said Mark Land, director of public relations.
"We're very comfortable with that 12-percent-a-year growth figure."
In 2007, despite lower heavy-duty truck sales, all business groups posted sales gains.
Power generation sales rose 27 percent to nearly $3.1 billion.
Components group sales increased 29 percent to $2.9 billion.
Distribution sales gained 11 percent to $1.5 billion.
Engine business sales increased nearly 9 percent to about $8.2 billion.
Heavy-duty truck engine sales fell 22 percent, partially because of new federal emissions standards - but other Engine Business segments posted significant gains: Sales of industrial, stationary and medium-duty bus and truck engines rose about 30 percent each.
However, shipments of the Dodge Ram diesel engine, which is produced exclusively at the Columbus Midrange Engine Plant near Walesboro, fell more than 12 percent last year.
Due to sluggish Ram sales, Chrysler idled production late last year, and Cummins reacted with a roughly month-long layoff of temporary workers and by idling the midrange plant longer than usual over the Christmas break.
"There was some softness in the pickup truck market," Land said.
Cummins expects that softness to continue, projecting another roughly 12 percent decline in sales of Dodge Ram engines for this year as part of an overall decline in the heavy pickup truck market because of an overall economic slowdown and higher fuel prices.
Strong market share
What that slowdown will mean for employment locally is unclear, but Land said the company will do its best "to minimize the impact on the permanent work force."
Cummins has improved its staffing flexibility, partially through temporary workers, to quickly adjust, upward or downward, to changing demands.
Land said, Columbus Midrange Engine Plant "remains among the most productive of our plants. Defect rates are among the lowest in the company, and the plant ranks at or near the top in our internal efficiency measures."
As the Chrysler business has declined, Cummins has brought back into CMEP some work for Freightliner and Ford that had been done at Consolidated Diesel Co. in North Carolina. A few years ago, strong demand from Chrysler forced some of that work to be moved out of CMEP.
The Cummins engine's share in Dodge trucks remains strong, Land said.
More than 80 percent of Dodge Ram 2500 and 3500 series are powered by Cummins, he said.
Among heavy-duty pickups, the Dodge Ram had 33 percent of the sales in the 2007 model year. That was behind General Motors with 34.3 percent but ahead of Ford with 32.7 percent. In 2006, Dodge ranked third.
Cummins also is selling the engine more in Chassis Cab models, which are trucks for which the bed portion is designed for specific, mostly commercial, purposes.
Last year, Ford led the market, but Dodge outsold GM, said Land, citing data from R.L. Polk. And in the last two months of the year, the Dodge outsold both competitors.
"A strong showing in the first year of the product," Land said.
Last week also brought good news on the heavy-duty truck engine market: Navistar International Corp. President and Chief Executive Officer Dan Ustian said Thursday at the Chicago Auto Show that the North American truck market had hit bottom and would expand this year, according to Reuters.
The news outlet also reported that according to ACT Research, orders for heavy-duty diesel trucks exceeded 20,000 for the fourth-consecutive month, which led some analysts to believe that the market was rebounding.
Cummins shares have risen 8.6 percent since Feb. 1, closing at $50.96 on Monday. During the same time, shares of rival Caterpillar Inc. lost 3.3 percent, while the Dow Jones Industrial Average declined 3.9 percent.