Cummins, the world’s largest manufacturer of heavy duty truck engines, is reportedly planning to lay off approximately 2,000 of its more than 62,000 workers in the first quarter of 2020. The cuts are in response to a massive drop in truck sales in 2019 compared to the previous few years. FTR Transportation Intelligence recently published data showing that orders of heavy duty trucks in October fell by a whopping 51 percent compared to October 2018. Meanwhile, ACT Research reported that October sales of used heavy duty trucks are down 19 percent from last year. The sales numbers are the lowest the market has seen since 2016.
In an email to Business Insider, Cummins spokesman Jon Mills confirmed that the company is set to reduce its workforce in order to lower costs.
“As we communicated to our employees last week, demand has deteriorated even faster than expected, and we need to adjust to reduce costs,” Mills stated. “Unfortunately, we must do more to reduce costs because the downturn is happening at a sharper pace than we experienced in the previous two cycles.”
“We understand this is incredibly difficult for those directly impacted and for all employees across the company. Our employees are important to the success of our company and necessary actions like this are incredibly tough and disappointing. However, by taking actions now, we can navigate this downturn and emerge stronger when markets return just as we have done in the past.”
As part of a plan to boost profits, Cummins intends to cut structural costs by $300 million while investing more in fuel-cell and hydrogen-production technologies.
Business Insider reports that roughly 640 trucking companies went out of business in the first half of 2019, compared to 175 in the first half of 2018. Thousands of industry jobs have been lost as a result of what is now being termed a recession.