Cummins Filtration, a division of engine maker Cummins Inc. (CMI), Tuesday revealed plans to consolidate a significant portion of its North American filter assembly operations into its facility in San Luis Potosi, Mexico. As a result, Cummins Lake Mills workforce would be reduced by about 400. Cummins indicated the move is expected to keep the business competitive in the region.
The consolidation program will see the filter assembly operations at Cummins Filtration plant in Lake Mills, Iowa, move to San Luis Potosi, in early November. Also under consideration, is the shifting of additional assembly work from its Filtration plant in Cookeville, Tennessee, though a final decision is pending.
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.
Cummins Filtration expects to add additional jobs in San Luis Potosi. The restructuring program 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 company noted that the filtration industry has become increasingly price sensitive and the recent reduction in demand has heightened the need for it to take decisive action to make the business more cost competitive.
With a number of under-used filtration plants in North America and after considering a full range of factors, Cummins determined consolidating much of the filter assembly in San Luis Potosi offered the business the best chance for long-term success. The San Luis Potosi set up is also seen as a most modern and cost-effective facility.
Cummins Filtration currently employs approximately 330 people in San Luis Potosi and assembles the same type of products as those that will be moved to the plant in this consolidation. The Cummins Filtration operation is part of a larger Cummins Inc. manufacturing campus in San Luis Potosi that also includes engine and power generation equipment production.
Cummins has had manufacturing presence in San Luis Potosi since the early 1980s and employs approximately 2,000 people in the city. Cummins Filtration expects to add additional jobs in San Luis Potosi over the next 10 months as a result of the consolidation.
Cummins said it would assist Lake Mills community during the transition and will offer severance and outplacement services to affected workers, and in receiving Trade Adjustment Assistance from the federal government.
CMI is currently trading at $48.00 up $1.25 or 2.67% on a volume of 0.992 million shares on the NYSE.
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