US diesel engine maker Cummins Inc plans to slash its global workforce by up to 2,000 in response to slowdown in global markets and weak demand for the company's products.
The planned job cuts which are anticipated before the end of the year represent about 4 per cent of the company's total workforce of 54,600.
The company said that it is resorting to restructuring, and cost reduction and adjustments to manufacturing capacity to tide over the uncertainties in the global market.
Cummins chairman and chief executive officer Tom Linebarger said, ''We are taking difficult but necessary actions to lower costs in the face of weak demand in many of our markets. 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,'' he said.
The planned actions are expected to yield annualised savings of about $160-$200 million.
The company expects to incur $70-$90 million in costs associated with the job cuts.
Cummins' third quarter revenue fell 6 per cent to $4.6 billion compared to a year ago primarily due to a strong US dollar and weak demand for off highway and power generations markets. International sales dropped 18 per cent, particularly in Brazil, Europe and China.
Engine segment, which constitutes over half of the company's revenue reported 10 per cent drop in sales, while power generation sales fell 13 per cent and components 4 per cent.
Net income was down 10 per cent at $380 million from $423 million a year ago.
In its full year outlook, Cummins has lowered its revenue to be flat to down 2 per cent, against 2 to 4 per cent predicted earlier. Earnings have also been revised down to 12.75-13.0 per cent of sales from 13.5-14.0 per cent.
Expressing his disappointment over the quarterly results, Cummins president and chief operating officer Rich Freeland said, ''Through a combination of workforce actions and targeted capacity reduction we will position the company for stronger financial performance when market conditions improve.''
Columbus, Indiana-based Cummins is a global diesel engine manufacturer and power generation systems and other equipment. The company operates in 190 countries and reported sales of $19.2 billion in 2014.
Shares in Cummins fell 9 per cent to close at $102.27 yesterday in New York.