Cummins Filtration has decided to move its filter assembly operations from its Lake Mills, Iowa, plant to its facility in San Luis Potosi, Mexico,
in an effort to stay competitive amid weak sales and industry changes, the company says. Cummins will cut 400 jobs at Lake Mills by March 2010; 110 workers will keep their jobs at the facility.

"We have a number of under-used filtration plants in North America and, after considering a full range of factors, it was determined that consolidating much of our filter assembly in San Luis Potosi, which is our most modern and cost-effective facility, offers the business the best chance for long-term success," said Rich Freeland, president of the components business, which includes Cummins Filtration.

Cummins Filtration, a division of Cummins, will begin the move in November, and it is expected to take place over several months. The company may also consolidate assembly work from its filtration plan in Cookeville, Tenn., pending a final decision.

The company expects the consolidation, which involves its assembly of oil and fuel filters, to bring significant annual savings to Cummins Filtration, the largest of the four businesses that make up the Cummins Components group, which has been the hardest hit of the company's segments recently. Components sales were off 41 percent in the second quarter of this year from the year-ago period, and the segment posted a loss of $10 million before interest and taxes during the quarter. Sales within Cummins Filtration dropped 37 percent from the second quarter of 2008.

"The current recession has led to the steepest drop in sales in the 52-year history of Cummins Filtration," said Joseph Saoud, Cummins Filtration president. "Sales have fallen more than 30 percent since November 2008, and we do not expect any meaningful recovery in demand until 2011."

"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 Freeland.

The San Luis Potosi plant employs about 330 people, which assemble the same type of products as those in the Lake Mills facility. Cummins Filtration expects to add to this number over the next 10 months as a result of the consolidation.