Engine maker Cummins Inc. is making another round of layoffs after offering Indiana-headquartered-engine-maker-cummins-offers-retirement-and-separation-packages/” target=”_blank” rel=”noreferrer noopener” data-t-l=”:b|z|k|${u}” class=”gnt_ar_b_a”>employee acquisitions last November, with the goal of reducing administrative layers and focusing on the core business, according to an internal message and a Cummins spokesperson.
The job cuts come as demand for trucks has slowed since the early years of the pandemic and as the company shifts its operations to comply with growing regulations on engine emissions.
Based in Indiana, Cummins attributed the job cuts to its effort to reach zero emissions by 2050, a goal the company has called Destination Zero. Engine makers and manufacturers around the world have been under pressure to shift to clean energy after world leaders pledged to reach zero emissions by 2050 under the 2016 Paris Agreement.
“As part of this evolution, some of our employees may experience changes in reporting, responsibilities or roles, as well as position eliminations,” spokeswoman Lauren Daniel said by email. She added that Cummins is “in the process of improving our operational and business efficiencies to better serve our customers, improve our work environment and ensure we are better positioned for success now and in the future.”
While the company has faced challenges in recent years, including a $2 billion settlement with government officials for allegedly failing to comply with emissions regulations late last year, analysts and industry observers still view Cummins as a major manufacturer of engines for the road transport industry and a leader. in the shift towards clean energy. In the company’s most recent financial report released in May, Cummins emphasized that its financial goals include reducing your debt.
Costs increase for manufacturers
Company officials did not say whether the recent cuts were related to the financial penalty, which the U.S. Justice Department called “the largest ever imposed for a violation of the Clean Air Act.”
Cummins also did not share how many positions have been cut. But a review of an internal message from CEO Jennifer Rumsey to employees exposed an internal reorganization plan focused on cutting back-office functions to reduce layers in the company’s reporting structure.
Environmental regulations have added costs for engine makers like Cummins to develop clean technologies and change production lines to meet new standards, he said. Juan Bu, professor at the Kelley School of Business at Indiana University with experience in international business and sustainability.
More recently, companies have been required to disclose climate-related greenhouse gas emissions. their production operations.
“There is a huge demand for clean technology and products,” Bu said. “(Cummins) is targeting global partners.”
Cummins environmental fine
In December, Cummins shared that it would pay about $1.7 billion, a preliminary figure, to settle a claim that the company installed devices in thousands of engines to prevent emissions monitoring and control.
Regulators alleged that illegal devices were installed in nearly 1 million RAM 2500 and 3500 pickup trucks, from the 2013 model year through the 2023 model year.
“The types of devices we allege Cummins installed in its engines to circumvent federal environmental laws have a significant and detrimental impact on people’s health and safety.” Attorney General Merrick Garland he said in a prepared statement at the time. “For example, in this case, our preliminary estimates suggest that defeat devices on some Cummins engines have caused them to produce thousands of tons of excessive nitrogen oxides emissions. The cascading effect of these pollutants can, after prolonged exposure, lead to respiratory problems such as asthma and respiratory infections.
Cummins said in its news release about the settlement that the company does not admit wrongdoing and has been working to resolve the issues raised.
“Cummins has been working with regulators and other entities for more than five years to resolve this matter and we are pleased that we are moving forward,” a Cummins spokesperson told IndyStar.
The motor business is constantly changing
The engine manufacturing industry is constantly changing as climate concerns lead to increased emissions regulations. The key for Cummins, industry observers say, will be adapting to changing standards and beating competitors trying to do the same thing.
Cummins could expand its business as it shifts to engine products that reduce emissions, especially if other engine-making companies exit the business, according to an analysis by the Chicago-based investment research firm. Morning Star. However, the trucking industry could adopt electric products, which would hurt Cummins’ business.
Despite some uncertainty and recent challenges, Cummins is expected to grow revenue, the company projected.
“This is largely due to increased emissions regulation, allowing Cummins to sell more emissions solutions, that is, its aftertreatment systems that convert pollutants into harmless emissions,” the Morningstar senior equity analyst wrote. , Matthew Young, in a June 18 report.
The report also noted that the $2 billion settlement with regulators, which initially shook confidence in Cummins’ ability to keep up with regulations, likely won’t change Cummins’ trajectory in the long term.
You can contact Binghui Huang at 317-385-1595 and bhuang@gannett.com
Keynote USA
For the Latest Local News, Follow Keynote USA Local on Twitter.