Cummins sets production record
BY COREY DAVIS
Sunday, August 5, 2018
Cummins Rocky Mount Engine Plant is enjoying an unprecedented, record-setting year as plans are for the facility to receive more than $20 million in improvements, according to company officials.
John Judd, who has been plant manager since May 2016, said 2018 will be the plant’s strongest volume of producing diesel engines ever. Judd said Cummins Rocky Mount Engine Plant, which is the highest producing Cummins plant in North America, is estimated to build between 182,000 and 190,000 diesel engines this year.
Cummins Rocky Mount Engine Plant has built more than 95,000 engines during the first half of the year, Judd said.
He said Cummins built 20,095 engines in April, which is about 838 per day, which was an all-time record. However, Judd said, the company elevated that production in June and produced more than 866 engines a day. The local plant’s component manufacturing department, which builds heads and blocks, also has produced record volumes this year, Judd added.
“We’ve also posted record levels in terms of our safety and quality performance in the first half of the year at the plant,” Judd said. “We have a .40 incident rate for the first half of the year, which is clearly one of the best in the industry, especially in Cummins. Our community involvement participation was set at an all-time record. With all the good work our employees are doing, they’re also finding time to go out in the community and work.”
Katie Zarich, manager of external communications at Cummins, said the Rocky Mount plant is one of several of the company’s plants experiencing record-setting years because of the success of the industry. Company officials reported second quarter revenue of $6.1 billion, an increase of 21 percent over the same quarter in 2017 and a new quarterly record.
Sales in North America improved by 22 percent, while international revenue increased by 18 percent, led by growth in China, Europe and Latin America.
“We are on track to deliver record full-year sales, earnings and cash flow,” said Tom Linebarger, chairman and CEO of Cummins. “The company now plans to return 75 percent of operating cash flow to shareholders in the form of dividends and share repurchases in 2018, up from our previous plan to return 50 percent.”
Judd said more activity at the Rocky Mount plant will take place in 2018. The company will invest $23 million to make improvements to the plant’s manufacturing processes and make facility upgrades.
“This will give us efficiency improvements, so we will be able to run product even more efficient than what we do now,” he said. “It will also enhance our quality processes, and we’re also re-investing in our facility. Currently, we’re doing a new roof on our facility and upgrading facility pieces to the plant.”
Cummins Rocky Mount Engine Plant has hired 100 new employees this year, Judd said. The plant is implementing a partial third shift for engine manufacturing, which will bring on an additional 145 workers in jobs predominantly in engine manufacturing, logistics and material handling, he added.
Judd said the additional workers will bring the plant to around 2,000 employers by the end of the year. Cummins is one of the largest employers in the Twin Counties.
“What is significant about that is the surrounding companies like OIC, Tri-County Industries, AEL-Span and Falcon that support the plant will also be bringing on employment that will exceed the 145, and there will be upward of 200 new jobs in our area for the remainder of the year,” he said.
Zarich said the company is paying close attention to the tariffs being imposed by President Donald Trump, which will directly impact the production costs of Cummins Rocky Mount Engine Plant as well as Cummins’ facilities in Indiana, Minnesota, New York and South Carolina.
“Due to the unique nature of our business, very few suppliers exist for certain components,” she said. “This includes items like large casting cylinder blocks, cylinder heads and camshafts and forgings like connecting rods and electronic controls. Our markets are much smaller than the U.S. auto market, and the suppliers needed to support these businesses are not always based in the U.S.”
Zarich said Cummins could be subject to pass-through tariff costs from its second-tier suppliers that could also be significant. She said company officials feel the only way to create a level playing field for U.S. businesses in China is for the country to seek commitments from China on lasting market reforms in key areas through meaningful discussions.
“Increasing Chinese purchases of U.S. goods to reduce the U.S. trade deficit was a good step to getting parties to the table, but it doesn’t address the systematic issues some companies face when trying to access the Chinese market,” Zarich said. “We should work with our allies to address the market barriers of greatest concern in the Chinese market.”