Engine maker Cummins appoints new CEO with a view to reducing emissions

Ms Rumsey will become the seventh CEO of Cummins, aged 103, and the first woman to lead the company created by Clessie Cummins, a self-taught diesel engine innovator. She has been the company’s chief operating officer and president since last year.

The 48-year-old replaces CEO Tom Linebarger, who is stepping down after nearly 11 years at the helm of the company. Mr. Linebarger, 59, will remain chairman of the company’s board.

Ms. Rumsey will support the Columbus, Indiana-based company as it ramps up the development and production of electric powertrains with lithium-ion batteries or hydrogen to reduce the company’s reliance on diesel fuel.

Cummins executives said they expect efforts to curb global warming in coming years to include tougher regulations on carbon dioxide from engine exhaust, which would end by decreasing demand for Cummins internal combustion engines.

Ms Rumsey, who will assume the role of CEO on August 1, said the pace of change will be uneven and complicated, with manufacturers of trucks, buses, agricultural and construction equipment and other customers looking for different options to reduce their emissions that work. better for them. Cummins is also doubling down on its diesel engines, confident that there will remain strong demand for cleaner versions of diesel engines, as well as those powered by natural gas and propane.

“There’s no one solution that will work for everyone,” Ms. Rumsey said in an interview with The Wall Street Journal. “Companies that focus on a single solution or a single market will struggle to be profitable. »

A wire harness being manufactured at the Cummins New Power Integration Center in Columbus, Indiana.

Photo:
Kaiti Sullivan for The Wall Street Journal

By the end of the decade, Cummins predicts alternative energy sales could account for up to 28% of annual revenue, up from less than 1% last year.

Cummins, which posted revenue of $24 billion last year, is counting on its legacy businesses in diesel engines, vehicle components and power units to generate strong sales and profit growth in the years to come, and offset spending on nascent energy technologies that are not yet there. profitable. Cummins said it has invested about $1 billion in recent years in acquisitions, research and development and capital expenditures to establish its new energy business.

Cummins expects revenue from its established businesses to grow about 42% by the end of the decade and generate about $30 billion in cash from operations during that time. The company is expanding its components business with this year’s acquisition of Michigan-based Meritor. Inc.,

a maker of braking systems and axles, for $3.7 billion.

Ms Rumsey said Cummins’ mature business will allow it to outlast alternative energy competitors, especially startups. “We have the capacity to continue to invest,” she said.

Mr. Linebarger said Ms. Rumsey brings a deep knowledge of the engine market to her new position, and he credits her with mitigating supply chain bottlenecks and parts shortages related to the business pandemic. “She delivers results no matter how dire the circumstances,” he said.

Ms. Rumsey grew up in Columbus, Indiana, and joined Cummins in 2000 as an engineer after working for a fuel cell start-up in Massachusetts. She received a bachelor’s degree in mechanical engineering from Purdue University and a master’s degree in engineering from the Massachusetts Institute of Technology.

Ms. Rumsey held various engineering positions at Cummins before serving as chief technical officer from 2015 to 2019 and then president of the components business until 2021.

Among companies in the Standard & Poor’s 500 stock index, women currently hold 32 CEO positions, according to the Catalyst research group.

Cummins estimates that the eventual size of the alternative energy market could reach approximately $100 billion by 2030, with more than a third coming from the commercial truck market alone.

So far, business gains for Cummins have been weak. The company said it has supplied battery power kits for more than 300 school buses and 2,000 hydrogen fuel cells for trucks, ships and passenger trains.

Engine maker Cummins appoints new CEO with a view to

Cummins BP74E battery pack production line. The company estimates that alternative energy sales could reach 28% of annual revenue by the end of the decade, up from less than 1% last year.

Photo:
Kaiti Sullivan for The Wall Street Journal

Industry analysts expect market momentum for diesel alternatives to increase over the next 15 years, especially with regulatory incentives. But turning promising technologies into profitable businesses depends on reducing costs by increasing production volumes and increasing service.

Cummins’ biggest bets are in hydrogen technology, where commercial truck makers, such as Volvo Group and Daimler Truck,

General Motors car manufacturers Co.

and Hyundai Motor Co.

and startup truck builders Nikola Corp.

and Hyzon engines Inc.,

are also trying to commercialize years of hydrogen research.

For the long-haul trucking industry wary of the added weight and limited range of battery-powered electric trucks, Cummins said hydrogen holds the most appeal. Vehicles store hydrogen gas in on-board tanks. Hydrogen is converted into electricity through a chemical reaction with oxygen in fuel cells, powering a vehicle’s electric motor.

Some of the world’s largest companies are exploring hydrogen as a potential solution to growing energy needs. Neanda Salvaterra du – explores whether the exploitation of the most abundant element in the universe can truly mark the end of the age of fossil fuels. Photo/Video: Jaden Urbi/The Wall Street Journal

Since fuel cells create electricity continuously, heavy battery packs are not needed to store electricity, Cummins said heavy trucks can stay on the road as long as there is light. hydrogen in their tanks. Hydrogen is traditionally produced from natural gas in a heat-intensive process that generates carbon dioxide.

Cummins invested in zero-emission electrolysis equipment that separates hydrogen from water in 2019, when it bought electrolyzer maker Hydrogenics Corp. production, reinforced its confidence that the refueling infrastructure will be available to support the widespread use of hydrogen trucks.

“In the next five years, we’re going to see a shift in hydrogen production,” she said.

Write to Bob Tita at [email protected]

Copyright ©2022 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8

Leave a Comment