Cummins, Wartsila to Divide Joint Venture
December 17, 1999
Cummins Engine says it has agreed to split the operations and assets of Cummins Wartsila with joint venture partner Wartsila NSD of Finland.
The company was created in 1995 to design, develop and manufacture a new generation of heavy duty, high speed diesel and natural gas engines. In 1997 the mission scope was expanded to include marketing, sales, engineering and service.
"Cummins and Wartsila continue to believe in these products and their potential in the marketplace," said Cummins chairman/CEO Jim Henderson. "However future growth can best be achieved by focusing each of our existing sales and distribution networks on the engines that have the best opportunities for each partner."
Cummins will take over the manufacture, global sales and service of the CW 170/180 product line, including the operations and assets of the factory in Daventry, England. A Cummins' facility in Ramsgate, England, will upfit the engines for power generation customers. Wartsila NSD will assume responsibility for the CW 200/220 engines, as well as the factory in Mulhouse, France, which produces them.
Cummins' share of the loss in the joint venture is estimated at $35 million in 1999. It will take a pretax charge of approximately $60 million in fourth quarter for costs associated with the split. The company said it expects the restructured business to be operating at break even by the end of 2000.