In 2001, about a year into his tenure as CEO of then-struggling Cummins Inc., Tim Solso did the unthinkable: He axed one of the two U.S. heavy-duty engine platforms under development, one in which the company had invested nearly three years and tens of millions of dollars.
“To kill an engine platform at Cummins back then, it was like a sacred cow,” says Jean Blackwell, who was then a vice president at the diesel engine maker. “Tim’s message was: ‘We need the right cost structure, and the customers have to want it.’ People weren’t used to hearing that.”
Automotive News reported that the recent selection of Solso as General Motors’ nonexecutive chairman didn’t come as a shock to former colleagues, given the parallels between his 12-year tenure at Cummins and the path of post-bankruptcy GM. Both involved a struggle to change the culture of a once-dominant but humbled company, whacking away at a bloated cost structure and a renewed effort to focus on the customer.
GM’s board views Solso, 66, as a steady hand to complement a capable but relatively green new executive team, according to two people familiar with the directors’ thinking. Mary Barra, 52, takes over as CEO on Jan. 15 from Dan Akerson. Her No. 2 will be GM CFO Dan Amman, 41, who will become president with broad operating oversight.
Still, it’s unclear how assertive Solso will be. Other than a brief period after GM’s 2009 bankruptcy, the company hasn’t had a nonexecutive chairman in nearly 20 years.
GM did not make Solso available for an interview to discuss his new job, which also begins on Jan. 15.
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Cummins Inc.’s third-quarter earnings edged up 0.9% as the supplier of engines for heavy-duty trucks reported weaker revenue growth than expected and cut its full-year sales outlook.
The Wall Street Journal reported that Cummins, the world’s largest engine manufacturer based on sales, now expects revenue to decline 3% from 2012. It previously expected 2013 revenue to be flat.
“Revenues were below our expectations as we continue to face an environment of weak demand for capital goods in most of our major markets,” said Chairman and CEO Tom Linebarger.
Cummins reported a profit of $355 million, or $1.90 a share, up from $352 million, or $1.86 a share, a year earlier. Excluding one-time items such as tax adjustments, earnings increased to $1.94 from $1.78 a share. Net sales were up 3.6% to $4.27 billion.
Demand for Cummins’s engines has been lower this year in response to falling demand from heavy-duty truck makers and manufacturers of mining and construction machinery. Cummins is the largest supplier of heavy-duty truck engines in North America, accounting for about 40% of the market. Results for the components segment, however, have been helped by rising demand for replacement parts and demand for exhaust treatment systems from truck-maker Navistar International Corp. (NAV).
Revenue in North America increased 11%, while international revenue fell 4% as weaker demand in India, Australia and Europe offset growth in China and Brazil.
In the engine segment — the largest contributor to the top line — sales slipped 1.4% to $2.49 billion due to lower demand in global mining, stationary power and the light duty on-highway market in the U.S.
Components sales, meanwhile, climbed 14%.
Cummins unveiled cost-cutting measures several months ago, pointing to a weakening global economy. These efforts helped gross margin in the latest period widen slightly to 26% from 25.3%.
Cummins Inc. announced Friday (Oct. 4) the ISV5.0, a new 5-liter V8 diesel engine designed to power pickup-and-delivery vehicles, other light- and medium-duty trucks, school buses and motorhomes. The ISV5.0 extends Cummins range of clean-diesel engines for North American vehicles, and features industry-leading technology that delivers performance and a low total cost of ownership to customers.
“Cummins ISV5.0 creates new opportunities for our OEM customers as a compact and lightweight engine that delivers best-in-class fuel efficiency and total cost of ownership,” Dave Crompton, Cummins vice president and general manager – engine business, said in a statement. “Many of our customers have asked for a Cummins alternative for gasoline or other small displacement automotive diesel engines. The ISV5.0 represents the next dimension in fuel economy and performance as Cummins continues to broaden our on-highway product line.”
The ISV5.0 brings together a compacted graphite iron (CGI) cylinder block, forged steel crankshaft, high-strength aluminum alloy heads, and composite valve covers to offer maximum durability in a lightweight package. These features, along with dual overhead camshafts, also contribute to the excellent noise, vibration and harshness characteristics achieved by the ISV5.0.
High injection pressures from the latest Bosch High Pressure Common Rail (HPCR) fuel system and piezo fuel injectors provide precise fuel control for optimized in-cylinder combustion, leading to better fuel efficiency and reduced emissions. With multiple injection events driven by integrated electronic controls, the HPCR fuel system, along with Cummins variable geometry turbocharger (VGT), contributes to a very impressive peak torque of 560 lb-ft and quick throttle response. Ratings from 200 hp to 275 hp are available.
The ISV5.0 has been designed to easily fit where a comparable V8 or V10 gasoline engine was previously installed. Multiple front-end accessory drive options handle the common automotive accessories required by a wide spectrum of applications, including the alternator, air compressor, A/C compressor and hydraulic pump. These available options, coupled with Cummins integration expertise, minimize OEM engineering time and vehicle retooling costs.
Cummins Inc.’s second-quarter earnings fell 12% as the supplier of engines for heavy-duty trucks reported weaker margins, offsetting a slight increase in sales.
MarketWatch reported that the Columbus, Ind.-based engine maker unveiled cost-cutting measures several months ago, pointing to a weakening global economy that it said was driving down demand for its engines. The company described a particularly sharp contraction in the North American commercial truck market — where Cummins is the largest supplier of engines for heavy-duty trucks — saying trucking companies have been throttling back on their purchases because of uncertainty about freight volumes and the strength of the U.S. economy.
Cummins reported a profit of $414 million, or $2.20 a share, down from $469 million, or $2.47 a share, a year earlier. Excluding items, earnings per share were $2.45.
Net sales edged up 1.6% to $4.53 billion. Sales rose 7% in North America and declined 4% in its international markets, due to weaker demand in Europe, India, and Mexico. Gross margin narrowed to 25.5% from 27.2%.
In the engine segment — the largest contributor to the top line — sales dropped 7% to $2.7 billion.
Cummins Inc.’s board approved an increase in the company’s quarterly cash dividend on common stock of 25% to 62.50 cents per share from 50 cents per share.
According to a press release, the dividend is payable on Sept. 3 to shareholders of record on Aug. 22.
“The increase in our dividend, combined with our current share repurchase program, reflects our confidence in the long-term prospects for the company and demonstrates our commitment to increasing returns to shareholders,” said Tom Linebarger, chairman and CEO. “With today’s announcement we have increased the dividend by a total of 257% over the last four years, while continuing to invest in products and our global footprint that will drive future profitable growth.”
For more information about Cummins Inc., visit www.cummins.com.
The Columbus, Ind., City Council agreed to a pair of requests from Cummins Inc. during its meeting Tuesday (July 2) night.
The Columbus-based engine manufacturer asked for an area next to its Walesboro facility to be designated as an Economic Revitalization Area (ERA). That parcel of land is connected to an area already designated as an ERA when the Cummins Mid-Range engine plant was built there in 1991.
Cummins plans on constructing a 428,000 square-foot warehouse on the property. The company says that 25 jobs will be created and another 80 jobs retained. Cummins also plans to spend over $15 million in capital investment over the next two years.
Cummins officials say they plan on beginning construction of the warehouse in early October, with completion scheduled for next summer. Employees currently based on operations in Seymour, Johnson County and other areas will be transferred to the new facility. The new hires are scheduled to take place upon completion of the warehouse.
The Columbus City Council also approved a request from Cummins for a tax abatement. The company purchased an office building a few years ago and says it has spent $7.1 million as an initial investment in the property with no tax abatement.
The building is currently home to 376 Cummins office workers. Company officials say conditions are very cramped and as such, plan on expanding. Doing so, they say, would give current employees more space and allow employees at other facilities to join the campus, streamlining operations. The measure would increase headcount there to 525.
The council unanimously approved Cummins request for a tax abatement on $5.6 in additional investment.
Both Cummins requests were approved on first reading. A second reading is needed before approval is official. Those second readings are expected to take place at the next council meeting on Tuesday, July 16.
Engine maker Cummins Inc. is making plans for a major remodeling of an office building and a new $15 million warehouse near its southern Indiana headquarters.
The Republic reported that the company is asking the Columbus City Council to approve property tax breaks for the two projects.
Cummins proposes remodeling the four-story former Irwin Union Bank building in downtown Columbus that the company bought in 2010. Cummins is telling city officials that it plans to update the building’s mechanical, electrical and plumbing systems.
City attorney Jeff Logston says Cummins plans to move about 150 employees from other Columbus facilities to the building.
The new warehouse planned near Cummins’ Walesboro factory could add about 25 jobs.
The Columbus City Council could consider the tax break requests this week.
Property brokers say engine maker Cummins Inc. is considering several locations in downtown Indianapolis to build an office building that would expand its presence in the city.
As reported by The Associated Press, the Columbus-based company now leases space in two downtown buildings for about 70 employees. Cummins is looking to construct its own building of about 70,000 square feet, or more than double its current leased space.
Cummins spokesman Jon Mills says the company is evaluating its Indianapolis office presence and that it’s too early to discuss details of its plans.
Property broker John Robinson says Cummins would prefer a new building rather than leasing existing space.
Cummins has expanded its Columbus headquarters operations in recent years. It has some 7,500 headquarters and factory workers in southern Indiana.
Columbus, Ind.-based engine maker Cummins Inc. reported that first-quarter revenue of $3.9 billion decreased 12% from the first quarter of 2012, according to a company media release. Revenue in North America declined by 15% and international revenues declined by 10%.
Net income in the first quarter was $282 million, or $1.49 per diluted share, compared to $455 million, or $2.38 per diluted share, in the first quarter of 2012. Earnings before interest and taxes were $437 million or 11.1% of sales, compared to $658 million or 14.7% of sales a year ago.
The company’s light-duty automotive and RV segments posted first-quarter sales of $260 million compared to $286 million the year prior.
Cummins said that slower economic growth in China and a weakening North American truck market — where Cummins supplies nearly 40% of its heavy-duty engines — have squeezed the company’s sales and profits of late.
Chief Executive Tom Linebarger said that the company expects the first quarter to mark “the low point” for revenue this year. The company also restated its forecast for revenue to be flat to down 5% this year.
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Columbus, Ind.-based engine maker Cummins Inc. topped the list of the 25 Best Companies in America compiled by The Motley Fool, a leading website for investors.
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