Less demand is forcing Cummins Engine to lay off at least 400 employees from the Jamestown Engine Plant at the start of the year, the company announced Monday.
Mark Land, Cummins Engine corporate communications executive director, said the company has filed a New York State Workers Adjustment and Retraining Notification, which requires employers to provide 90 days notice prior to a plant closing, mass layoff or relocation occurring.
Land said the company will lay off between 400 and 450 employees come January. Land said because of new engine emission standards going into effect in January the company expects to go from making around 500 engines a day to only a 100 a day. However, Land said once demand increases again, which is expected in the second half of 2010, Cummins will recall most of the laid off employees.
Land said most of the layoffs will occur among the workforce, which is around 1,100 at the Busti plant. He said management has discussed the layoff situation with the workforce prior to the notice being filed Monday. Cummins officials are hoping a large majority of the employees laid off will be part of a voluntary company program.
The voluntary program is when employees take a temporary leave from the plant, Land said. The workers will still have their company health care coverage while on voluntary leave.
Land said the company had to file the state paperwork if the company is expecting to lay off more than 250 employees involuntary. He said company officials don't expect to come close to that number.
''We are already getting pretty good interest in the (voluntary) program,'' Land said. ''The program allows us to do a voluntary process where some of our more senior folks may want to take some time off.''
Land said company officials are hopeful the overtime employees are working now will help when the company has to cut back its workforce.
''People who are working overtime and saving money will be in a position to take a voluntary leave because of the money they have been saving the past few months,'' he said.
Land said employees are working overtime right now to meet the orders for engines that can be produced right now at a cheaper cost. Once January comes and the new emission standards take place he said the engines will become more expensive to make and for customers to purchase.
''This happens everytime we have to upgrade the engines,'' Land said. ''Customers buy in advance, especially right now if they can afford to buy in this economy. We expect to drop to a 100 (engines produced) a day from 500 a day overnight.''
Land said company officials only expect the drop in production for the first four to six months of 2010, with production picking back up during the second half of the year.
''Our customers are going to need engines. They can't stockpile indefinitely,'' he said. ''As we get later into 2010, business well be back at levels where we will need our folks working.''
Land said Busti plant management has done a good job of communicating the situation to the workers, with no outrage shown so far.
''This is obviously not easy to do. Our folks truly understand the reality of the situation,'' he said. ''Management has done a great job of communicating to our folks, it's a testament to them that they understand what this is about. There has been no panic, no shouting. We are working closely together to get through this short-term challenge.''
Cummins stock opened the day at $45.40 and closed at $44.90. Shares rallied late after being down as much a $1.00 in the afternoon.
Cummins Engine Co., Inc., a global power leader, is a corporation of complementary business units that design, manufacture, distribute and service engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems. Headquartered in Columbus, Ind., Cummins serves customers in 190 countries and territories through a network of more than 500 company-owned and independent distributor locations and 5,200 dealer locations.
