Truck & Off-Highway Engineering - June 2021 - 8

EXECUTIVE VIEWPOINTS
No shortage of challenges
Supply chain struggles join perennial challenges for Cummins' off-highway
business, namely meeting shifting global emissions standards and satisfying
emerging technology trends.
by Ryan Gehm
Neal said. " We are not taking our foot off the throttle in
terms of our technical investments. "
Cummins is indicating to its shareholders that 2021
could be up 8-12%. But... " There's a big asterisk by
that - as long as we can get material to build engines, "
Neal said. " We've got lots of demand right
now that can certainly support that growth and maybe
more actually. "
Many regions are driving this growth, including locations
such as South America that have been down for
a long time. Most of Cummins' revenue increase in
2020 came out of China for both on-highway and offhighway.
India also came on very strong. " China really
was the superstar last year, " Neal said. " When every
other region was in paralysis mode, China was sort of
coming online before anyone else did. "
Global emissions
regulations have been
" a moving target " in
recent years, Neal said,
which poses challenges
to product-plan
implementation.
T
he semiconductor shortage making headlines
largely because of its impact on global
automakers' production and profits is also
adversely affecting off-highway equipment
and diesel engine manufacturers. If the supply disruption
- not just for semiconductors but other
components as well - isn't keeping executives up at
night, it certainly is occupying an outsized portion of
their waking hours.
" While Cummins has done a decent job, we have
not gotten through it unscathed. I'm spending a
pretty good chunk of my daily work now on updates
with our supply chain, " Eric Neal, executive director
of Cummins' off-highway business, shared during a
recent virtual press event to discuss industry challenges
and trends. " It literally changes on a day-today
basis, where we'll be told that our supply for
such and such component is out through such a period
of time, then the next day we get a nice surprise.
And some days we get bad surprises. "
No surprise, however, is that despite a challenging
2020 due to the COVID-19 pandemic, R&D investment
has remained strong at Cummins. " Last year, we spent
over $900 million just in research and development, "
8 June 2021
Supply chain resilience
Cummins was among a select group of companies
invited to the White House in April to discuss the administration's
infrastructure plan and the global semiconductor
shortage. Following the meeting attended
by Cummins chairman and CEO Tom Linebarger, a
company statement acknowledged
that its markets' " rapid rebound " from
the pandemic-induced low point resulted
in supply chain constraints,
" with the most pronounced being the
chip shortage. "
Continued strong demand through
Eric Neal, executive director of
Cummins' off-highway business.
" There's not a
whole bunch of
microprocessor
chip manufacturers
out there that
meet the standards
for our business. "
the first quarter of 2021 perpetuates
the problem. " The demand for the
off-highway business is coming in at
a much stronger rate than anybody
could have predicted, " Neal said. " As
a result, the forecast that we get
from all of our customers was off
pretty drastically. "
Competition among industries -
consumer electronics, aerospace,
automotive, etc. - also constrains
the supply chain. " A lot of the same
microchips that are used in [control
modules], whether it be for a pickup
truck or a television or even a diesel
engine, we are now competing for
the same amount of capacity, " Neal
said. He added that " there's not a
TRUCK & OFF-HIGHWAY ENGINEERING
BOTH IMAGES: CUMMINS
Truck & Off-Highway Engineering - June 2021

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