Cummins (CMI) has revealed that it will recall about 270 production employees at its Columbus Midrange Engine Plant (CMEP) in Walesboro, Indiana. A temporary increase in orders for the Dodge Ram turbo diesel pickup truck engines made at the plant has led to the recall. The workers had been laid off or transferred to other Cummins facilities over the last year.

Dodge Ram pickup – manufactured by Chrysler – is powered by Cummins’ 6.7-liter turbo diesel engine. The orders have increased as Chrysler seeks to build inventory for its 2010 Dodge Ram pickup.

Consequently, Cummins plans to temporarily add a second production shift at CMEP on Oct. 19 that is expected to operate through the end of 2009. The recall will boost the plant’s workforce to 600 hourly workers. The company began production of the 2010 Dodge Ram engines in mid-September with approximately 340 production employees working on a single shift.

The Columbus, Indiana-based company served more than 190 countries through its network of 500 company-owned as well as independent distributor facilities and more than 5,200 dealer locations. Cummins sells its products to original equipment manufacturers, distributors and other customers worldwide.

Cummins’ customer base comprises leading manufacturers in the markets, including Chrysler, Daimler (DAI), Volvo, PACCAR (PCAR), Navistar International (NAV), CNH Global N.V., Komatsu, Scania AB , Ford Motor (F) and Volkswagen.

We recommend the stock as Neutral with a target price of $49.00.

Zacks Investment Research
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