Cummins Plans To Lay Off 2,000 Employees By Early 2020 As It Copes With A Downturn In Business

Is this a sign of what's to come in the industry?

[Photo: Cummins]

Columbus, Indiana-based Cummins Inc. announced earlier this week it would lay of 2,000 workers as it copes with a recent downturn. According to spokesman Jon Mills in an e-mail to IndyStar, “Unfortunately, we must do more to reduce costs because the downturn is happening as a sharper pace than we experienced in the previous two cycles. We understand this is incredibly difficult to those directly impacted and for all employees across the company.”

As of 2019, Cummins employs about 62,000 people globally. As its revenues drop, the announced plan means the company will lay off around three percent of its workforce. However, it’s not immediately clear exactly where it will lay off employees, or in what division.

We know Cummins well for its turbodiesel engines, including those in the current Ram HD trucks. Until recently, a 5.0-liter diesel engine also lived in the Nissan Titan XD. With the model’s 2020 redesign, it lost its diesel engine option, though. Nissan dropped the option due to slowing demand, leaving their Endurance gas engine as the only powertrain.

The 2020 Nissan Titan dropped the Cummins diesel engine. [Photo: Nissan]

Lower demand for trucks, construction equipment

Again, Cummins announced cuts across its global workforce, so there are bigger factors at play than the U.S. market. For its part, however, North American sales were pretty much flat last quarter, according to the company’s latest earnings report. Here and in other markets, demand for Cummins’ powertrains and construction equipment was weaker this year than in 2018.

“Most of the markets in which we participate have either peaked or are on their way down,” COO Tony Satterthwaite told analysts during a presentation last week. As a result of slowing demand, Cummins seeks to reduce costs by $250 million to $300 million across the company.

As truckers also face a challenging year, the end effect of weak demand is working its way up to engine suppliers like Cummins, as well. 2018 was a hot year for the industry, and Cummins commanded a 38.3 percent market share, as well as $23.8 billion in revenue. All that activity may have heralded the recent downturn, but in the wake of more stringent emissions regulations and electrification, it remains to be seen whether Cummins will continue to lay off its workers as it attempts to compete and innovate within the industry.