UPDATE: Lower demand costs more Cummins jobs-WEB ONLY

Columbus engine maker Cummins Inc. said today it has offered voluntary retirement packages to 700 hourly employees in Indiana as it looks to trim as many as 350 more jobs.

Cummins, which reports fourth-quarter earnings tomorrow, has suffered from a drop in demand for its diesel engines and related products. Since October, it has taken a series of cost-cutting steps, including eliminating about 2,400 hourly and salaried positions throughout its global operations.

The most recent action affects Cummins’ manufacturing operations in Columbus and Seymour. Spokesman Mark Land said other plants also have made cuts in the past few months, but the sheer volume of employees in southern Indiana merited a special announcement.

Cummins has about 2,800 hourly workers in Indiana, where it employs a total of 6,200.

It already had planned to cut 1,000 hourly workers at other plants. On Jan. 20, Cummins said it will close a Wisconsin facility that makes emission control systems for trucks, affecting 180 workers there. It also has closed some sales and service operations overseas, Land said.

In Indiana, hourly employees with 30 years of service are eligible for the retirement packages, as are employees who are at least 55 years old and have a minimum of 10 years of service. Workers have until Feb. 13 to accept the offer, and the company expects most of them to depart by March 1.

Land said Cummins will accept up to 350 applications; if fewer employees apply, the company will evaluate the situation and “decide what needs to happen,” he said.

Salaried employees got similar offers when Cummins decided to trim its professional work force by 1,400 positions in December and January. The company said then that layoffs would result if enough workers didn’t volunteer.

Slowing sales amid the economic downturn have forced the company to implement its so-called “rings of defense” austerity plan – a sequential series of steps it will take to pare costs. Layoffs and plant closings are the last resort, Land said.

Salaries have been frozen for 2009 company-wide, and officers’ compensation will be reduced by 10 percent. Cummins also terminated 2,500 contract and temporary workers, initiated temporary plant shutdowns, shortened work weeks and extended traditional holiday closing periods during the fourth quarter of 2008.

“The demand for our engines and related products continues to fall, and despite the significant steps already taken to align our costs with that demand, permanent job reductions have become necessary,'” Jim Kelly, president of Cummins’ Engine Business said in a prepared release.

Cummins reduced its professional work force in Indiana by about 200 people in December through a combination of retirements and involuntary job cuts, and on Jan. 13 announced a second round of professional job reductions that will result in additional job losses in the state.