The top guy at Cummins is spending a lot more of his time trying to convince investors that restructuring and cost-cutting measures have the company poised to rebound.

Chairman and Chief Executive Officer Tim Solso told investors and equity market analysts in San Francisco this week that a diversified business means growth despite a sluggish economy.
Solso also discussed the Columbus, Ind.-based manufacturer’s role in a number of its key markets. Though he admits that production volumes have dropped as much as 60 percent in many U.S. markets, he emphasized that the business structure has been realigned to reflect the downturn and protect cash flow. Restructuring implemented in December 2000 will produce savings of $55 million per year by the end of 2001, he said.
In discussing the future, Solso said, "Our various business segments hold a number of exciting growth opportunities -- growth in revenue, profitability and cash generation. In addition, we are positioned as a global power leader through a unique combination of integrated technologies and global partnerships that no one competitor can match."
Cummins' power generation business accounts for $1.4 billion and has doubled profits in each of the last two years. Solso said he expects this segment to grow 10-15 percent per year for the foreseeable future, due to new products and the company’s power-rent service business. The company’s filtration business accounts for more than $1.2 billion, Solso said, with roughly 60 percent in the aftermarket and 40 percent in products sold directly to truck manufacturers. After 2001, Cummins expects this business segment to see 10 percent growth annually, due in part to new OEM and aftermarket contracts in excess of $60 million per year to begin this year or in 2002.
Solso said the company’s engine business will meet projections in five of the six market segments it serves, provided market conditions are average. The company is a player in the industrial, high horsepower, medium-duty, parts and aftermarket, and light-duty automotive segments of the engine market, and expects to remain strong in those areas. The exception, Solso said, is the heavy-duty truck segment.
Cummins terminated the development of a new engine platform and will leverage the strength of the ISX and Signature products. The company will focus on existing platforms to meet the changing emissions regulations.
The company also will turn its attention to debt reduction and investment in other business segments.
Cummins expects the last three quarters of 2001 will bring progressively improved profitability in a time of very difficult market conditions in most of its North American end markets. Cummins estimates earnings for the year at 20-35 cents per share.