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Cummins Power Generation enjoyed another great year with
EBIT almost doubling for the second consecutive year on modest
sales growth.
Continued strong growth is expected as the "new economy"
of high tech companies, heavily reliant on uninterrupted sources
of power, rapidly increases its demand for electrical consumption.
The fast growing Internet and telecommunication sectors continue
to rely on our unmatched high technology in the form of digital
control systems and sophisticated back-up power for immediate,
seamless solutions.
The growth in distributed power generation, which is a move
to put electrical generating capacity closer to utility customers
rather than solely in large, centralized utility plants, also
creates new business opportunities, especially in North America.
Our growth is diversified across many fronts with special
emphasis on increasing our value-added services.
Cummins is participating in a US Department of Energy project
for advanced research on ten kilowatt fuel cells, another
emerging technology. This segment of the fuel cell market
complements Cummins' small genset business.
In addition to providing traditional prime power to developing
countries, the demand has increased for Cummins to provide
entire power plants which includes all facets of the process
from buildingÉto operating and maintenance.
Sales from our PowerRent business, providing temporary rental
generator sets to a wide range of customers, more than tripled
in 2000 and product is available across all of North America.
www.funroads.com was launched to offer our recreational vehicle
(RV) customers, with whom we enjoy an 80 percent market share,
a variety of information and services from campgrounds to
cookbooks.
Newage, our United Kingdom-based alternator subsidiary, enjoyed
another impressive performance with strong profits and improved
market share. Newage's successful joint venture in China has
expanded to serve as a low cost, regional export base for
Asia.
Major process changes were another important contributor
to Power Generation's improved performance. In 2000, we capped
a three year effort to change how we deal with suppliers which
resulted in lower costs and improved quality. We also initiated
a new, three year Six Sigma quality effort and the first year's
results were even better than we expected.
The Cummins Power Generation business has emerged from our
major restructuring as an agile and profitable business, well
positioned, and taking advantage of the rapidly growing global
demand for cost effective, reliable power.
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Jack K. Edwards
Executive Vice President
President, Power Generation
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