Columbus-based Cummins Inc. plans to reduce its salaried workforce by about 2,000 employees worldwide by the first quarter of next year in response to a business slowdown, and it is not clear how or if it will affect the company’s plans for a Greenwood expansion.
Cummins announced the news to its employees earlier this month, company spokesman Jon Mills told the Indianapolis Business Journal, adding that the company hasn’t yet identified which locations will be affected.
The engine manufacturer has about 62,600 employees, including about 10,000 in Indiana. The terminated employees make up about 3.2 percent of the company’s workforce.
The layoffs are part of a wider cost-cutting plan in which the company expects to reduce its annual expenses by $250 million to $300 million by the first quarter of next year in response to market forces.
Last month, Cummins lowered its full-year financial guidance after missing quarterly revenue and profit expectations. Its third-quarter revenue of $5.8 billion was down 3 percent from the same period a year earlier. Profit came in at $622 million, or $3.97 per share, down from $692 million, or $4.28 per share, in the same period a year earlier.
The company said its full-year 2019 revenue is expected to decline 2 percent, down from the previous guidance of flat revenue. It also said it expects full-year earnings before interest, taxes, depreciation and amortization to be in the range of 15.9 percent to 16.3 percent of sales, down from previous guidance of 16.25 percent to 16.75 percent.
“We’ve noticed that demand is deteriorating faster than we expected, and so we took a number of measures to adjust to that,” Mills said.
In addition to the layoffs, Mills said, Cummins has offered voluntary retirement packages to eligible U.S. and United Kingdom employees; reduced the size of its temporary workforce; restructured its supply chain; and prioritized or reduced spending on some projects and programs.
It was unclear last week how these cuts might affect the company’s Greenwood expansion. Mayor Mark Myers said the city is in constant contact with Cummins, and the company has reassured him this will have no affect on the Greenwood facility.
Cummins announced plans in May to build a 100,000 square-feet information technology and digital hub in Greenwood. The office building is expected to bring at least 500 jobs that pay, on average, $100,000, including benefits, as early as next year, with the possibility of up to 1,500 jobs if a second phase is built. Most of the initial 500 employees are being relocated from Columbus or Indianapolis, company officials said at the time.
Cummins committed to at least 500 employees. In return, the city gave the company incentives valued at more than $10 million, funded by taxpayers.
A Cummins spokesperson did not return multiple requests by the Daily Journal for comment.
Daily Journal interim editor James Vaughn contributed.
