Cummins extends pay and hour cuts

Cummins Inc. will extend temporary reductions in pay and work hours for its U.S. employees through the end of September due to the COVID-19 pandemic.

In mid-April, Cummins Chairman and CEO Tom Linebarger took a 50% reduction in salary, director compensation was reduced 25% and all other employees in the United States saw a 10% to 25% drop in salaries and reduced hours, the company said then.

The reductions are intended to be a temporary measure due to lower demand and customer shutdowns in several countries related to the COVID-19 pandemic, the company said.

Cummins said it planned to take similar actions outside the United States based on local regulations and collective bargaining obligations, the company said in April.

The company, which is based in Columbus, employs more than 60,000 globally.

“The reductions will continue through the end of (the third quarter), but not beyond,” said Cummins company spokesman Jon Mills.

The extension of the temporary reductions comes nearly two months after Cummins reported a 17% drop in first-quarter revenue compared to the same period last year as company officials prepared for a challenging second quarter and weak levels of demand until global economies start to recover from the COVID-19 pandemic.

The Columbus-based company pulled in around $5 billion in revenue during the January-to-March quarter, compared to just over $6 billion during the first quarter last year. Lower truck production in North America and weaker demand in global construction, mining and power generation markets drove the majority of the revenue decrease, the company said.

While some customer operations had started to resume as of late April, the company expected a “significant impact” on its second quarter results due to disruptions across customer and supplier operations and lower demand, which they projected could “persist for some time.”

Mark Smith, Cummins vice president and chief financial officer, told analysts in April that the company is focusing on employee safety during the pandemic and has taken actions to reduce costs, protect profitability and remain committed to investing in new technologies that company officials believe will drive future company growth.

Many of the coronavirus-related shutdowns — besides China — occurred in the latter half of the first quarter, and Cummins officials told analysts that they were uncertain to what extent business would be impacted during the second quarter, which runs from April through June.

Cummins officials, however, have expressed confidence that the company is in a strong financial position to weather potential economic fallout from the virus.

“Cummins has had a history of weathering economic storms,” said Tony Satterthwaite, company vice president and chief operating officer, told The Republic in a previous interview. “We live in a cyclical business and we’ve survived in that business for 101 years now, and we have seen difficult times come and better times come later.”