Engine maker Cummins Inc. (NYSE: CMI) will lay off 2,000 workers in the first quarter of 2020, the latest impact of a trucking sector recession that is claiming jobs up and down the supply chain.
Major truck makers have announced hundreds of layoffs in recent months as orders for new equipment dropped for 10 consecutive months before a slight uptick with the opening of the traditional ordering season in October.
Volvo Trucks North America on Friday became the most recent to act, confirming 700 layoffs at its assembly plant in Dublin, Virginia, on Jan. 20, 2020.
Cost cutting
“As we communicated to our employees last week, demand has deteriorated even faster than expected, and we need to adjust to reduce costs,” Cummins spokesman Jon Mills said.
The job cuts at Columbus, Indiana-based Cummins follow voluntary buyouts and other cost-saving moves. The furloughs are part of $250 million to $300 million in structural cost savings that Cummins told analysts last week were coming in response to a softening truck market.
“Our goal is not just to take out costs, but to make structural improvements to the ways we operate, to improve the overall health of the company and prepare us better for when volumes come back,” Tony Satterthwaite, Cummins’ president and chief operating officer, told analysts during a Nov. 21 investor day presentation in New York.
‘Incredibly difficult’
Reports of the job cuts began appearing last week on TheLayoff.com, a site that allows anonymous postings. More than 30 mostly negative comments had been added by Nov. 25.
“We understand this is incredibly difficult for those directly impacted and for all employees across the company,” Mills said in a statement. “Our employees are important to the success of our company and necessary actions like this are incredibly tough and disappointing.”
Cummins’ last major layoff, also about 2,000 employees, occurred in 2015. But it made many new hires in the intervening years, growing global employment from 54,000 in 2015 to 62,000 this year.
Cummins executives told analysts the company’s track record of returns to investors will continue. The company has returned nearly $12 billion to shareholders in the past decade.
“Nothing is new about this downturn,” Cummins CEO Tom Linebarger said. “We know how to manage through these. The thing we will not do during the downturn is, we will not cut our investments in the key technologies that are going to help us win in the future.”