Cummins Filtration, a division of Cummins Inc., last week announced that it is consolidating a significant portion of its North American filter assembly operations into its facility in San Luis Potosi, Mexico, over the next several months in order to keep the business competitive in the region.
Under the consolidation, filter assembly operations at the Cummins Filtration plant in Lake Mills, Iowa, will be moved to San Luis Potosi, beginning in November. The company also is considering moving additional assembly work from its filtration plant in Cookeville, Tenn., but a final decision has not yet been made.
As a result of the consolidation, the Cummins workforce in Lake Mills will be reduced by approximately 400 workers between November 2009 and March 2010. Other operations, which employ approximately 110 people, will remain at the Lake Mills plant.
The consolidation, which involves assembly of oil and fuel filters, is expected to result in significant annual savings to Cummins Filtration after the costs associated with the action are recouped. The move will be seamless to Cummins Filtration customers.
“The filtration industry has become increasingly price sensitive in the past several years, and the recent reduction in demand has heightened the need for us to take decisive action to make our business more cost competitive, both for the present and well into the future,” said Rich Freeland, president of the Components business, which includes Cummins Filtration.
Cummins Filtration is the largest of four businesses that comprise the Cummins Components group. The Components group has been among the hardest hit of Cummins Inc.’s business segments in recent months, as the recession has resulted in a sharp drop in global demand for diesel engines and related components over the past three quarters.
Components sales were down 41 percent in the second quarter of this year, compared to the same period in 2008, and the segment reported a $10 million loss before interest and taxes during the quarter. Cummins Filtration sales declined 37 percent from the same period in 2008.
“The current recession has led to the steepest drop in sales in the 52-year history of Cummins Filtration,” said Cummins Filtration President Joseph Saoud. “Sales have fallen more than 30 percent since November 2008, and we do not expect any meaningful recovery in demand until 2011.
Columbus, Ind.-based Cummins Inc., a global power leader, is a corporation of complementary business units that design, manufacture, distribute and service engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems.