Cummins loses important Chrysler contract-WEB ONLY

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Columbus-based Cummins Inc. has
lost a major contract to produce diesel engines for a new line of pickup trucks
for Chrysler, the Cleveland Plain Dealer reported today.




Cummins anticipated producing the engines for the automaker’s Dodge Ram 1500
line starting next year, but Chrysler canceled the contract as part of its
bankruptcy reorganization and upcoming acquisition by Italy‘s Fiat, according to court papers filed today.


Cummins hasn’t disclosed how
much the contract was worth, but the company had expected to reopen a plant in Columbus and make $250
million in upgrades, the newspaper


The company announced in
2007 that it would develop the new light-duty diesel engine for Dodge and other
customers. Chrysler said in January that it would delay introduction of the
1500 Ram pickup with Cummins’ new engine until 2011.


Cummins spokesman Mark Land told the Plain Dealer that the cancellation was expected. The
companies have been renegotiating with the new Chrysler group, and the engine
could still make it into Dodge vehicles, he said.


Last month, Land told IBJ, “We
also have other customers for that engine.” Cummins previously announced a
deal with Nissan, and Land said the company is working on others.


Chrysler’s ongoing struggles
have been bad news for Cummins. Cummins announced May 7 that it would temporarily close its Columbus MidRange Engine Plant and
idle at least 610 workers as a result of the automaker’s reorganization.

The plant in Walesboro, just south of Columbus,
is the sole manufacturer for the 6.7-liter turbo diesel engine used in the
heavy-duty Dodge Ram pickup truck. The facility closed May 15.


engines we produce for Chrysler make up virtually all the demand at CMEP, and
without the Chrysler production it is not economically feasible to operate the
plant,” Jim Kelly, president of Cummins’ Engine Business unit, said in a
written statement to IBJ at the time of the closing.

Chrysler said in its bankruptcy filing late last month that it owed Cummins
$43.9 million, placing Cummins among its top unsecured creditors.

Cummins expects 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.

Sales for the Dodge Ram declined
throughout 2008. Cummins shipped more than 66,000 heavy-duty engines for the
Ram last year, compared with about 170,000 in 2006.

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