Cummins to Reduce Workforce Amid Economic Slowdown

December 5, 2008 – Columbus, Ind.-based Cummins Inc. announced today that it will reduce its professional workforce worldwide by at least 500 employees – or approximately 3.5 percent – by the end of 2008 as a result of the continued deterioration in the U.S. economy and many other key markets around the world.

The employee reductions will come from all parts of the company. In order to minimize the impact of involuntary employment actions, the company will offer voluntary retirement packages to certain employees in the United States. Those employees will have the opportunity to accept compensation packages, which include salary and continuation of benefits, including health care, for nine months following their retirements.

 

The remainder of the reductions will be involuntary. Employees affected by these job actions will, in most cases, be notified by Dec. 18 and the reductions are expected to take effect by Dec. 31.The costs associated with the employee reductions will be recognized in the company’s fourth quarter earnings.

 

“Cummins already has taken a number of actions across the company to try to bring costs in line with our reduced current demand and to meet the expected challenges of 2009,” said Tim Solso, Cummins chairman and CEO. “Despite those efforts, we have now reached a point where we will have to take more significant steps to reduce our professional workforce around the world.”

 

Cummins has deployed its “rings of defense” approach to reducing costs at manufacturing and logistics locations worldwide. The actions taken so far include initiating temporary plant shutdowns, shortened work weeks and extending traditional holiday closing periods; reducing by several hundred the number of contingent workers in manufacturing and logistics locations around the world; eliminating overtime in many locations; eliminating nearly 100 hourly positions in the company’s Fuel Systems plant in Juarex, Mexico, and another 85 hourly employees in the Mid-Range engine plant in Darlington, UK. 

 

“We are committed to doing what is necessary to emerge from this downturn a stronger company and resume our recent history of strong growth once our markets begin to improve,” Solso said.