UPDATE: Bankrupt Chrysler owes Cummins $43.9M-WEB ONLY

Chrysler LLC said in its bankruptcy filing today that it owes Cummins Inc. $43.9 million, placing the southern Indiana company among its top unsecured creditors.

A Cummins spokesman said some of that money will be covered by the U.S. Treasury Department’s new Supplier Support Program, which the company entered earlier this month.

“It’s our belief a large percentage of that is going to be covered,” spokesman Mark Land said. “That program is working. Some of it’s already coming our way.”

Chrysler’s bankruptcy raises big questions for Cummins, which less than two years ago counted the troubled automaker’s Dodge Ram pickup as its single-largest customer.

Cummins is the exclusive provider of diesel engines for the heavy-duty Dodge Ram, and it’s been working on a new light-duty line.

The company announced in 2007 that it would develop the new light-duty diesel engine for Dodge and other customers. The deal with Chrysler led to what the company called a “significant” investment in its Columbus manufacturing line.

Chrysler said in January that it would delay introduction of the 1500 Ram pickup with Cummins’ new engine until 2011.

Despite the bankruptcy, Land said the company won’t cancel its light-duty diesel program. “We also have other customers for that engine,” he said. Cummins previously announced a deal with Nissan, and Land said the company is working on others.

Sales for the Dodge Ram declined throughout 2008, and Cummins has been preparing for the possibility of Chrysler’s bankruptcy. Cummins shipped more than 66,000 engines for the Ram last year, compared with about 170,000 in 2006.

The company said in its 2008 annual report that if there are “significant” modifications to the light-duty program and it’s unable to find alternative customers, it would have to take a charge against assets.

Today, Cummins reported a first-quarter profit of $7 million – down 96 percent from the same period a year ago. Revenue fell 30 percent, to $2.4 billion, and sales declined in all four of the company’s business segments, with the diesel engine and components divisions taking the biggest hits.

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