Engine manufacturer Cummins Inc, following through on a warning of further cost cuts, said it will eliminate at least 800 "professional" jobs by the end of February and is freezing salaries for the year. It also said it will cut company officers' 2009 salaries by 10 per cent. The maker of engines for large trucks and power generators also said it would freeze 2009 salaries for employees who are not officers. The 10 per cent pay cut applies to its top 45 officers.
The cuts represent Cummins' second round of reductions in the past month in response to the slowing global economy and will shrink its professional workforce by a total of 1,400 jobs, or 10 per cent. Cummins also has eliminated 600 hourly positions and about 2,500 contingent workers, shortened work weeks, shut plants temporarily and trimmed spending in all areas, the company said.
"It is unfortunate that after five straight years of record performance and greatly improved business fundamentals we are being forced to take these difficult actions," said chairman and CEO Tim Solso. "While these steps are very painful, they are necessary to keep Cummins competitive through this global recession so we can emerge a stronger company when the economy and our markets recover."
Cummins warned a month ago it was planning more cost cuts, as Solso said, "We do not expect market conditions to improve significantly in the immediate future." The company earlier in December announced a work force cut of at least 3 per cent, on top of already-taken steps that included temporary plant shutdowns, cutting temporary employees and enacting a hiring freeze.
At that time, Cummins reduced its 2008 forecast amid slumping fourth-quarter demand, particularly the hard-hit North American and European truck and construction markets. For months, auto-parts suppliers have felt the impact of US automakers' efforts to pare down swollen inventories and turn around their North American operations.
Cummins and rival Caterpillar Inc sell heavy-duty engines to truck makers like Navistar International Corp and Paccar Inc. The company had 37,800 workers at the end of 2007, when annual sales were $13 billion. Cummins shares closed Monday at $26.18 and there was no pre-market trading. The stock has lost two-thirds of its value the past five months.