Cummins takes steps in anticipation of 2020 downturn

Cummins, Inc. is preparing for an expected downturn in business next year.

At a meeting with analysts and shareholders Thursday in New York City, members of the company’s leadership team shared plans to effectively manage through what they are calling a cyclical downturn by lowering structural costs by $250  to $300 million in 2020.

President and COO Tony Satterthwaite explained the cost-cutting will include reducing discretionary workers, employee shifts and overtime.

He said the company is also saving by reorganizing its North American distribution network.

Satterthwaite reiterated that while battery and fuel cell technologies have been a clear focus of Cummins, its investments in diesel and natural gas platforms would continue. He says that “diesel will be the primary source of energy in commercial vehicles for many years to come.”

Chairman and CEO Tom Linebarger explained that the management team has experience in making it through downturns.

At the meeting, called the Cummins Analyst Day, Chief Financial Officer Mark Smith reminded investors that Cummins has a strong track record of improving cycle-over-cycle profitability and cash flow.

You can read more from the company’s announcement here.