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Record Profit Aside, Cummins Could See More Layoffs And Slow Sales

Cummins Warehouse, Columbus, IN

Photo: Daniel Robison/ WFIU

Diesel engine manufacturer Cummins saw sales of $3.40 billion in the last quarter of 2009, a record. But overall 2009 sales of $10.8 billion were down 25 percent from 2008.

Columbus-based engine maker Cummins released details Tuesday of the largest fourth quarter profit in company history. While the company actually earned less money in 2009 than 2008, the record profit, at least in part, can be attributed to reduced overhead costs generated by shedding thousands of employees.

But the earnings report, however strong, isn’t enough for the company to commit to calling back thousands of still-idle workers.

Swings in sales leave Cummins officials constantly unsure how many employees will be needed to meet demand.

“[It’s] very difficult to turn the spigot on and off on demand like we have and remain profitable and to do it well is a real challenge,” Land said.

Cummins spokesman Mark Land says the company has met that challenge and remained profitable – netting the most money ever for a year’s final three months. Land says demand in emerging overseas markets like China and India led to a strong sales hike toward the end last year.

In response, Cummins recalled some of the thousands it had laid off, but further callbacks are in question. Land says more employees could even lose their jobs.

“Too early to say whether we will have to temporarily lay some folks off in the first part of this year,” he said. “We’re going to wait until we are comfortable that it’s going to be sustained demand before we jump back in and start bringing back lots of people, right?”

Just weeks ago, Cummins accepted $54 million in federal stimulus funds to develop more fuel-efficient engine technologies. Land says accepting taxpayer money – even following the company’s most profitable of the year — still represents a good use of federal funds.

“It’s not like we took a bailout. We are not asking for a handout. This was not money to help keep us afloat or keep us strong. This was purely an investment in the government seeing a need to help business create products that are more environmentally friendly,” Land said.

For 2010, the company forecasts $11 billion in sales. Nonetheless, Land says the company expects its sales to dip in the first quarter of 2010.

Daniel Robison

Daniel started as WFIU's Assistant News Director in July 2008. He graduated with a B.A. in history in 2007 and earned an M.A. in journalism two years later. Daniel hosts Ask the Mayor weekly and the occasional Noon Edition. He also hosts Morning Edition on Thursdays, sleepily. Daniel's beats include everything News Director Stan Jastrzebski wants him to cover. And it feels strange to type biography of myself in the third person like this. So that's that.

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