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Cummins To Close Indiana Facility

COLUMBUS, Ind. — Cummins Inc. has suspended production at its Midrange Engine Plant in Walesboro, Ind., for two weeks in response to the decision by its customer Fiat Chrysler Automobiles to shut down pickup truck assembly until at least the end of March as a consequence of the coronavirus pandemic.

The company released the information Friday. Cummins has not announced any other plant closures or shutdowns, including at its Jamestown Engine Plant, though company officials said they cannot predict if and when further suspensions or shutdowns may arise. Possible causes for further shutdowns include changes in customer demand, shortfalls in supplier deliveries and the impact of government regulations or mandates.

Cummins’ financial results for the first quarter will be impacted by these changes in customer production plans, but a more significant concern is the growing uncertainty about demand for the remainder of 2020. As a result, the Company has withdrawn its guidance for full year 2020 results, which did not factor in the effects of the coronavirus pandemic. “Cummins is in a strong financial position, we have experienced leaders who have managed through several challenging situations in the past and we will successfully navigate through this difficult period,” said Chairman and CEO Tom Linebarger.

As of Dec. 31, 2019, the company held cash, cash equivalents and marketable securities of $1.5 billion and committed borrowing capacity of $2.8 billion under existing revolving credit facilities.

During an earnings teleconference in early February, Cummins officials said a 9% decrease in fourth quarter revenues in 2019 had led them to forecast a decrease in 2020 revenues of between 8 and 12 percent.

Linebarger said in February that the 8% to 12% revenue decrease is expected to include a decrease in heavy and medium-duty truck production in North America, Europe, China and India. Industry production for heavy-duty trucks in North America is projected to be 185,000 units in 2020, a 40% decrease year-over-year. The industry enters 2020 with a backlog of 123,000 units, less than half the 297,000 units when entering 2019, as order rates were consistently less than truck production throughout the year.

“We expect orders to remain weak in 2020, with continued weak freight activity resulting in excess capacity and lower used truck market prices,” Linebarger said.

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