The majority of the job cuts will be completed by the end of this year.
“We are taking difficult but necessary actions to lower costs in the face of weak demand in many of our markets,” said Tom Linebarger, chairman and CEO of Cummins Inc. “Global off highway and power generation markets have been weak for some time and are worsening. Industry orders in key end markets in Brazil and China are at multi-year lows and showing no signs of improvement in the near-term. Given the uncertainty in the global economy, we expect challenging conditions to persist for some time.”
Cummins says that adjustments to manufacturing capacity are already being made on a facility-by-facility basis and that it will evaluate if more significant restructuring actions are required in the coming weeks and months.
Third quarter 2015 revenues of US$4.6 billion decreased 6% on a year ago. Weaker demand in global off highway and power generation markets was partially offset by distributor acquisitions in North America. Revenues in North America increased 4% while international sales fell 18%. Within international markets, lower revenues in Brazil, Europe and China were partially offset by growth in India.
Third quarter sales were down by 10% for the Engine segment to US$2.5 billion, and by 13% for the Power Generation segment to US$659 million. The Distribution segment’s sales were up 20% in the third quarter to US$1.6 billion, with acquisitions adding 27%, while the Components segment saw sales slip 4% to US$1.2 billion.
“We are disappointed with our results in the third quarter, but we are responding quickly to softening demand,” said Rich Freeland, Cummins president and chief operating officer. “Through a combination of workforce actions and targeted capacity reduction we will position the company for stronger financial performance when market conditions improve.”