A year ago, Columbus diesel-engine maker Cummins recorded its best-ever second quarter. This year, the company is reporting an 81 percent drop in its profits, year-over-year. But company officials say there’s a silver lining in the cloud hovering over their dark earnings report.
Cost-cutting measures allowed Cummins to report better earnings than the first quarter – which found the company burdened at times with high production costs and little to produce
“When you take a look at how we did from the first quarter of this year, the second quarter our results improved significantly. So a lot of things we’ve been doing to reduce our costs over the past several months can be seen in this quarter’s results,” Cummins Spokesman Mark Land said.
In real terms, that has meant layoffs – and lots of them. Cummins has shred thousands of employees, either temporarily or permanently, in the year since the company hit its peak.
The job cuts, coupled with halting some capital projects, reduced costs enough for the company to report a net income of $58 million. Still, that number is considered small for a Fortune 500 company that only a year ago saw net income numbers more than five times that size.
Land says the company depends on consumers making big ticket purchases, meaning there’s little Cummins could do to avoid taking a sales hit. Land says while this year’s second quarter marks improvement in the company’s bottom line, he says it’ll be awhile before the engine maker is out of the woods.
“We don’t expect it to get a lot better quite frankly on until late next year. We are seeing some signs of strength in a few markets – China and India, for example, are a little bit better. But by and large we don’t expect the economy to get much better between now and the end of next year,” Land said.
Land says the company’s forecasts are conservative and he acknowledges many economists expect an economic turnaround to be underway by the end of the calendar year.
Still, Land says the company remains cautious as the year’s third quarter rolls along, avoiding calling back many employees back to work.