By Brenda Showalter, The Republic
bshowalter@therepublic.com
Cummins Inc. has cut about 200 white-collar jobs in Indiana, with the majority being in Bartholomew County.
The job reductions, due to the recession and slumping automotive industry, first were announced Dec. 5.
Cummins originally said at least 500 professional workers would be cut worldwide, but increased the number to 600.
Tom Linebarger, Cummins president and chief operating officer, told The Republic Friday that 135 employees opted for the early-retirement package offered by the company.
The remaining roughly 465 cuts are involuntary, with most effective by the end of the month.
The cuts include such salaried professional workers as engineers, lawyers, technology and sales staffs.
No other layoffs have been announced this month, but Cummins leaders are preparing for a difficult year ahead.
"2009 will be a tough year," Linebarger said. "We just have to brace ourselves."
Walesboro impact
Cummins has diversified this decade and still is posting strong sales in other markets, including power generation and distribution.
Hurting the company is the credit crisis and slumping auto sales, particularly for trucks.
"Our participation in the automotive sector has grown with the biggest single piece the Dodge Ram pickup," Linebarger said.
Cummins' Midrange Engine Plant at Walesboro is the exclusive maker of the diesel engine for the Dodge Ram, which has seen a significant drop in sales this year.
Cummins' peak production of the Dodge Ram engines came in 2006 and 2007 with about 160,000 units sold.
Linebarger said this year's sales would be about 55,000.
"It's a very, very dramatic effect for us," he said.
Linebarger could not say whether any layoffs of factory workers would happen in 2009 at the Walesboro plant.
It would depend on demand for the product, he said.
Cummins already has implemented its "rings of defense" system that limits the potential for layoffs.
Already announced have been temporary plant shutdowns, extended holiday closings, cutting contract workers, restricting hiring, cutting discretionary spending and eliminating overtime.
"We'll do pretty much everything we can before we'll do a layoff, but I'd say we've used a lot," Linebarger said.
Chrysler connection
Chrysler still is placing orders for engines from Cummins, but it recently announced it is extending its holiday shutdown from two to four weeks.
"That's a month off with dropped orders," Linebarger said. "That's a pattern we're seeing - dropping orders abruptly."
Linebarger was pleased to see that President Bush had approved an emergency bailout for the auto industry that included a $4 billion loan for Chrysler.
He said Cummins is watching Chrysler's situation very closely for several reasons. One being that Cummins extends credit to Chrysler that typically is between $80 million and $100 million.
Cummins also is watching how its suppliers are affected by the auto downturn and potential bankruptcy of any of the Big 3 automakers or their suppliers.
"We try to have multiple suppliers, but not in every case do we have someone who can do it quickly, so it's a risk," Linebarger said.
He added that Cummins' light duty diesel project at Plant 1 on Central Avenue is still planned, although the launch of production could be delayed.
Work also is continuing on the new office building downtown with workers scheduled to move in about April.