COLUMBUS

Cummins Inc.’s top executive said the message he will tell shareholders today is that despite challenging markets globally, the company has a clear response strategy and is executing it.

The Columbus-based Fortune 500 company’s annual shareholders meeting is 11 a.m. today at the Columbus Engine Plant.

Cummins on May 3 reported first-quarter revenue of $4.3 billion, a 9 percent decline compared to the first quarter of 2015, largely because of ongoing weakness in international markets.

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Linebarger noted that sales in all of its large engine markets — mining, oil and gas, power generation — are at levels not seen since the bottom of the Great Recession, which started in December 2007 and ended in June 2009.

Slumping sales in international markets, the negative effect of a strong U.S. dollar in international markets and growing weakness in the U.S. truck market prompted Cummins to announce in October that it would reduce the company’s global workforce by 2,000 salaried employees, representing about 3.7 percent of the 54,600 workforce at the time — of which about 8,500 workers were then employed in southern Indiana. Those reductions were completed by year’s end.

More recently, the company restructured aspects of its businesses, such as combining the Power Generation segment and High Horsepower engine business into the Power Systems segment.

“We’re going to do better than anybody else in a tough environment. We’re going to restructure faster. We’re going to be more agile. We’re going to lean into markets where other people are stepping back or struggling,” Chairman and CEO Tom Linebarger said during a Monday interview with The Republic.

Cummins’ strategy is to launch new, compelling products for customers even when markets are down so that the company gains market share and is positioned to reap the benefits when markets improve, he said.

The company will review adding growth platforms that are consistent with the company’s core strengths, including through partnerships and acquisitions, Linebarger said.

Combining Power Generation and High Horsepower wasn’t a new idea. The company had considered the restructuring twice before, the first time in the mid-2000s, Linebarger said.

The amount of overlap between the two business units made combining them a sensible decision, he said. When market conditions were good and the company was growing, making the change at the time would have been more difficult, he said.

“Both have seen declining demand, so their overhead structures we really too large for the business size we’re in,” Linebarger said. “So we combined them.”

Cummins has also been making other changes to improve operational efficiency.

It closed two plants that were underutilized and will close a third in Kent, England, in order to align manufacturing with demand levels, Linebarger said. Operations at Kent will move to another existing location, resulting in fewer plants will produce the same amount of product, he said.

By the third quarter of this year, Cummins plans to have purchased the last of 15 independent distributors — a multi-year process. What used to operate as 15 separate companies now will function as one national network, Linebarger said.

“What I think we ended up with was an organization that was more nimble, more efficient and more able to grow effectively when markets return,” Linebarger said.

The U.S. passenger car market has been one of Cummins’ few good markets lately, so Linebarger said he was optimistic about sales of diesel engines for the Ram and Nissan Titan trucks.

The company plans to produce about 25,000 engines for Titan this year at the Columbus Engine Plant, he said. The trucks are in the field and dealers are well stocked, see it’s important to see how consumers respond, Linebarger said.

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What: Cummins Inc. annual shareholders meeting

When: 11 a.m. today

Where: Columbus Engine Plant

Why: To elect board members, vote on compensation of officers and hear about the current state of the company from its officers.

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Health center opening soon

Cummins plans to open its new LiveWell Center in Columbus on June 28, Cummins Chairman and CEO Tom Linebarger said.

The 28,000-square-foot center will be located just north of the company’s world headquarters on Jackson Street. It will be open to all Indiana Cummins employees and their family members who are at least 2 years old.

About 12 to 16 Cummins wellness employees will staff the center, along with about 40 practicing physicians. The center will offer primary care, rotating visits from specialists, nutrition and health coaching, and physical therapy.

The focus is on lifestyle medicine — the combination of nutrition and exercise and mental health — and to treat the root causes of problems, not just the symptoms, Linebarger said.

“One of the other big challenges we’ve been facing is to make sure we can provide high-quality health care to our employees in an environment where health care costs have been rising and the health care system hasn’t been helping us very much, in terms of making sure we provide quality outcomes to our folks,” Linebarger said.

“We decided some years ago … to be more proactive in making sure we can provide the benefits we want to employees,” he said.

Importance of trade

Cummins exported nearly $3 billion worth of its products to other countries last year, an example of the importance trade plays in the U.S. economy, Linebarger said.

Trade with other countries in turn drives growth and employment locally, he said.

“The reason Columbus has new restaurants and new places to walk around for a lot of young professionals here is because of trade,” Linebarger said.

The Trans-Pacific Partnership, a free-trade agreement, would be a huge stimulus to the economy, Linebarger said. Also, the idea that trade deals with foreign countries leave the U.S. less competitive isn’t borne out by the results, he said, because Cummins has done fine while having its headquarters in a smaller Indiana community.

Linebarger said he has been discouraged by talk from Republican presidential front-runner Donald Trump about redoing trade deals the U.S. has with other countries.

“That’s not so good for me,” Linebarger said.

Hybrid project

Cummins Inc. received earlier this year a $4.5 million U.S. Department of Energy grant to develop a Class 6 commercial plug-in hybrid electric vehicle that can reduce fuel consumption by at least 50 percent over conventional Class 6 vehicles.

Typical examples of a Class 6 vehicle would be school buses or single-axle work trucks weighing 19,000 to 26,000 pounds when fully loaded.

Linebarger said the project is a big deal for Cummins, currently the largest engine supplier to hybrid buses, and also a supplier of diesel engines for delivery trucks and buses.

“We think hybrids and electric vehicles generally are going to play a bigger role, especially in urban environments in the future,” Linebarger said, noting how they could reduce noise and pollution.

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