Cummins Suspends Production At Walesboro Plant, Withdraws FY20 Guidance

Cummins (CMI) provided a business update in light of recent changes in customer demand and a weaker outlook for the global economy. Today, March 22, the company suspended production at its Midrange Engine Plant in Walesboro, IN, for two weeks in response to the decision by its customer Fiat Chrysler Automobiles (FCAU) to shutdown pickup truck assembly until at least the end of March, as a consequence of the coronavirus pandemic.

This news follows recent communication of lower commercial truck production rates by some of its customers in North America and other plant shutdowns by various OEMs in Europe over the past few days. While the company is not announcing any other production suspensions or plant shutdowns at this time, the company cannot predict if and when further suspensions or shutdowns may arise. Possible causes for further shutdowns include changes in customer demand, shortfalls in supplier deliveries and the impact of government regulations or mandates.

Cummins' financial results for the first quarter will be impacted by these changes in customer production plans, but a more significant concern is the growing uncertainty about demand for the remainder of 2020. As a result, the company has withdrawn its guidance for full year 2020 results, which did not factor in the effects of the coronavirus pandemic. The company will comment on its 2020 outlook during its First Quarter 2020 earnings call scheduled for April 28, 2020.

Disclosure: None.

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