Updated: This story has been updated
Cummins announced this morning that it will be cutting pay and hours for its employees in the face of the COVID-19 pandemic.
The company says it will be cutting pay and hours between 10 and 25 percent for salaried and office employees in the United States. There will also be a reduction of 50 percent in the salary of the CEO and 25 percent directors compensation.
Jon Mills, spokesman for the company, explains:
In essence, the company is reducing pay but also reducing the hours employees are being asked to work by a commensurate amount, Mills said.
Mills says that the announced cuts will not affect factory workers, but they are also facing cuts of their own as demand decreases:
Columbus area workers at the mid-range engine plant have been off with pay for two weeks while Fiat-Chrysler is shut down.
The company said the move is in response to lower demand and customer shutdowns in several countries. The company will be taking similar actions outside the United States based on local regulations and collective bargaining obligations.
Company officials said the pay cuts are meant to be temporary.
The full announcement:
Today, Cummins Inc. (NYSE: CMI) provided an update on the actions it is taking in response to the impact of COVID-19.
The impact from the pandemic on the global economy has been sudden and is growing, and it is imperative for us to respond quickly to maintain our strong financial position, said Tom Linebarger, Chairman and CEO, Cummins Inc.
In response to lower demand and customer shutdowns in several countries, the company is taking the following temporary actions to lower costs:
- A reduction of 50 percent in the salary of the CEO
- A reduction of 25 percent in Director compensation
- A reduction in salary for all other employees in the United States of between 10 and 25 percent and a reduction in working hours
The company will take similar actions outside the United States based on local regulations and collective bargaining obligations. These reductions in pay are intended to be a temporary measure; the company will continue to monitor business conditions closely and reassess the program at the end of the second quarter.
These are difficult but necessary actions and I know they will have a real impact on the lives of our employees and their families, added Linebarger. I appreciate their understanding and support as we work through these challenging times together. I want to thank our employees for their continued commitment to ensuring our customers receive the products and service they need to provide essential support to the global economy.