Cummins off-highway business on the Covid rollercoaster: -16% in 2020, recovery expected in 2021

During a digital press conference, Eric Neal, Executive Director of Cummins Off-Highway, outlined the moment that the US company has lived and is currently experiencing, discussing strategies and scenarios with specialized journalists from all over the world. The analysis of Cummins’ Off-Highway business in the year 2020 deals with a 16 percent drop compared to 2019, mainly due to the paralysis of the market following the outbreak of the pandemic. But the last quarter of 2020 showed an encouraging 5 percent up on the previous quarter. According to Neil, the trend of incoming orders is also a sign of recovery.

Cummins off-highway. The issue of the supply chain

While India and China (above all) are the markets that are driving the recovery, Cummins – like many other manufacturers – is now having to deal with great uncertainty in the supply of key components in the value chain. The latter has been put indeed to the test by Covid and is, according to Eric Neal, «the biggest question mark for the recovery. Today we see changes, positive or negative, day in and day out. It’s getting quite complicated to schedule and organize production in order to meet customer demands».

Not surprisingly, we asked Cummins’ Executive Director Off-Highway whether what’s happening now might turn into an opportunity to rethink the supply chain itself, perhaps making it more ‘local’ and therefore less prone to the uncertainties. The answer was yes, although Neil pointed out that, today, it is precisely the more structured companies, and therefore those with supply chains that are often larger and more global, which are proving to have sufficiently broad shoulders to withstand the shocks.

Trade fairs, bye bye to 2022

The overall scenario is one of great uncertainty which, according to the Cummins management, will continue in the coming months, featured by the continuation of smart working («the health and safety of our employees and collaborators, especially in the manufacturing area, has been and continues to be an absolute priority for us») and the reduction of unnecessary travel to a minimum.

In addition to this, Cummins has officially decided not to participate in all the trade fairs scheduled for 2021. An absence that joins other equally well-known ones. «I’m pretty sure we’ll get ready for Bauma Munich 2022», said Steven Nendick, Cummins’ Off-Highway Marketing Manager, who was asked how inevitable and painful it was to make such a decision. «The development of the pandemic has left us with no choice – he said – but we are confident that we will be able to resume in safer conditions next year». Uncertainty is therefore increasing for the two main agricultural exhibitions still scheduled for the second half of this year, Eima and Agritechnica.

Expected growth in 2021 between 8 and 12%.

So, what could happen this year, in terms of volumes and turnover? The idea expressed by Cummins for the off-highway business is clear: a recovery in terms of 8 to 12 percent compared to what was achieved in 2020 is expected. «What we see in this last period in terms of recovery in demand is comforting to us. We hope to solve the issues and slowdowns that are currently affecting our own supply chain», said Eric Neal, while identifying the main trends that will drive Cummins’ actions in the near future. «Emissions advancements as well as the downsizing push that doesn’t seem to be dying down, but also product rationalization through a series of mergers and acquisitions. And finally, the development and implementation of digitalization related to products like ours».