As Cummins Inc.’s top executive celebrated the company’s first 100 years and talked about its future during the annual shareholders meeting, Chairman and CEO Tom Linebarger hinted at another big step — an announcement of the headquarters for the company’s new Electrified Power Segment.
“I’m glad to announce where we’re going to headquarter and where we’re going to manufacture all the (electric) products. We have an announcement Thursday with the governor of Indiana, and (Columbus) Mayor (Jim) Lienhoop is going to be there. We are excited about that,” Linebarger said Tuesday to about 150 people at the Columbus Engine Plant.
The announcement will be about a few investments Columbus-based Cummins, a Fortune 160 power generation and diesel engine company, is making in electrification, information technology and digital analytics, Linebarger said after the meeting.
“It’s going to be good. We’re going to talk about why we’re doing what we’re doing,” he said.
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The announcements will be made at 2:30 p.m. Thursday at the Indianapolis Motor Speedway. Gov. Eric Holcomb will be joined by Lienhoop and the mayors of Indianapolis and Greenwood for the announcement, Cummins spokesman Jon Mills said.
Cummins launched the Electrified Power Segment at the start of 2018. The segment is in a ramp-up process, but will be ready to launch its first commercial product in the fourth quarter of this year, an electrified powertrain in GILLIG zero-emissions transit buses.
Electrification represents a terrific opportunity for the company, which was founded in 1919 and capitalized on the relatively new diesel engine technology, Linebarger said.
“Our view is that innovation and technical leadership will be critical in the future, just like in the past. Diesel engines have been a leader in our industry for a hundred years, but if we go out a hundred years, they will not be the product of choice in all of our markets,” Linebarger said.
The investment teaser he shared was part of remarks outlining the success the company has achieved, and the challenges the company faces going forward.
Linebarger said the company achieved records for sales ($23.8 billion); earnings before interest, taxes, depreciation and amortization ($3.5 billion); and profits ($2.1 billion). Cummins also launched its Cummins Powers Women initiative, an $11 million investment in programs designed to empower females, advancing its long-term company commitment to equality.
He said continued innovation, technological advancements and partnerships will be important for the company’s future.
“We need to ask ourselves what we need to bring with us, and what we need to change and improve upon, in order to compete for the next 100 years and thrive,” Linebarger said.
Impressed with success
Cummins’ financial success and foray into electrified power earned the praise of two former company chairmen and CEOs who attended the annual meeting, Jim Henderson and Tim Solso — who served prior to Linebarger.
“I’m very impressed with where the company is today,” said Henderson, Cummins top executive starting in the mid-1990s.
Henderson said Linebarger and his team have followed through on the belief of longtime former chairman J. Irwin Miller that it was important for the company to make its products obsolete by developing and producing even better ones.
“It’s a tremendous step forward for having the best product and whatever it takes to serve the customer,” he said.
Linebarger and his management team have done a terrific job, said Solso, who took over as the head of Cummins in 2000 and led it through 2011.
“The financial results and share price are really, really good. But probably as important, they are looking toward the future,” Solso said.
Solso said that after the company turned around in the early 2000s after some difficult years and began enjoying record years, it was good to see that success continue.
“Tom and his team have taken it to another level,” Solso said. “That makes me feel proud, because I was involved with his development and some of the other people who are leading the company now.”
The annual meeting also included a vote on a proposal from shareholder John Chevedden, of Redondo Beach, California, for Cummins’ board of directors to adopt a policy that requires the board chairman, whenever possible, be an independent member of the board. Currently, Cummins CEO Tom Linebarger also is chairman of the board.
One reason cited for the proposed change was better oversight of the CEO, particularly in considering that person’s performance. The proposal also said shareholders have no right to elect an independent director by written consent because Cummins is incorporated in Indiana.
Caterpillar and Wells Fargo were cited as examples of companies that changed their policies and adopted using an independent board chairman.
The Cummins Board of Directors recommended that shareholders vote against the proposal, citing several reasons. Among them were:
- As currently structured, the board has served shareholders well and delivered significant value.
- The board is independent and has an independent lead director with the authority to ensure proper checks and balances.
- A fixed, inflexible rule requiring the separation of roles of board chairman and CEO is not in the best interest of shareholders.
- Shareholders rejected substantially identical proposals in 2013 and 2015.
The proposal was rejected in a vote by shareholders, corporate secretary Mark Sifferlen announced. An exact vote total was not immediately available.
[sc:pullout-title pullout-title=”By the numbers” ][sc:pullout-text-begin]
1919: Year Cummins was founded
62,610: Number of company employees worldwide
1.5: Approximate number in millions of engines Cummins built in 2018
894: Amount in millions invested in research and development in 2018
23.8: Sales, in billions, for the company last year
2.1: Profit, in billions, for Cummins last year
6: Sales, in billions, in the first quarter of 2019
— Source: Cummins