A professor at the Indiana University Kelley School of Business says the announced layoffs at Columbus-based Cummins Inc. (NYSE: CMI) are a signal of the continuing impact of a trade dispute between the U.S. and China.
“We’re seeing a significant slowing in the global economy,” said Phil Powell, professor of business economics. “What we need to realize is that Cummins is a global company, and a lot of their sales are in the faster-growing economies in emerging regions of the world, including China.”
Powell says China’s economy is forecast to grow 5-6% in 2020. While that appears strong compared to other countries, including the U.S., Powell says China’s economy had been growing by 10% annually.
And he warns that other Indiana manufacturers that rely on the export market could feel the same pain if the trade conflict doesn’t resolve soon.
On Monday, Cummins announced it was laying off 2,000 salaried workers worldwide in a cost-cutting move.
Efforts to reduce discretionary spending, optimize optimization and encourage voluntary attrition through retirements were apparently not enough to compensate for the downturn.
“Demand has deteriorated even faster than expected, and we need to adjust to reduce costs,” said the company in a statement.
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