Cummins reduces pay, working hours for U.S. employees

Cummins Inc. announced Friday that it will reduce the pay and hours of its employees in the United States due to lower demand and customer shutdowns in several countries related to the COVID-19 pandemic.

The reductions, which start in mid-April, are intended to be a temporary measure, and the company said it will monitor business conditions and reassess the reductions at the end of June.

In a press statement, the company said Cummins Chairman and Chief Executive Officer Tom Linebarger will take a 50% reduction in salary, director compensation will be reduced 25% and all other employees in the United States will see a 10% to 25% drop in salaries and reduced hours.

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

The Columbus-based company employs about 1,110 people in Seymour and around 60,000 globally.

“The impact from the pandemic on the global economy has been sudden and is growing, and it is imperative for us to respond quickly to maintain our strong financial position,” Linebarger said in a statement.

“These are difficult but necessary actions, and I know they will have a real impact on the lives of our employees and their families,” he said. “I appreciate their understanding and support as we work through these challenging times together. I want to thank our employees for their continued commitment to ensuring our customers receive the products and service they need to provide essential support to the global economy.”

The reductions came a little more than a week after Cummins announced it would change shift patterns and reduced hours for employees at Cummins Fuel Systems Plant and Cummins Engine Plant in Columbus and Cummins Seymour Engine Plant primarily due to Indiana Gov. Eric Holcomb’s statewide stay-at-home order.

On March 20, Cummins MidRange Engine Plant in Walesboro started a two-week shutdown due to a shutdown at all Fiat Chrysler Automobiles production facilities in North America. The facility employs around 900 people and supplies a facility in Mexico with the Dodge Ram engine.

Also March 20, Cummins withdrew its business outlook for 2020 because the company’s initial forecasts were made before the novel coronavirus pandemic spread around the world.

“Cummins’ financial results for the first quarter will be impacted by these changes in customer production plans, but a more significant concern is the growing uncertainty about demand for the remainder of 2020,” the company said in a statement last week. “As a result, the company has withdrawn its guidance for full year 2020 results, which did not factor in the effects of the coronavirus pandemic.”

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,” Tony Satterthwaite, company vice president and chief operating officer, said 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.”