2010 Sustainability Report - Cummins.com

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Our commitment Cummins has recognized its commitment to a broad group of stakeholders for more than 35 years. Longtime Chairman and CEO J. Irwin Miller laid out his philosophy in the 1972 Annual Report: “ While some still argue that business has no social responsibility, we believe that our survival in the very long run is as dependent upon responsible citizenship in our communities and in the society as it is on responsible technological, financial and production performance. Cummins strives to responsibly and effectively serve all stakeholders, including customers, employees, shareholders, business partners, suppliers and the communities in which we operate. The Company understands that its actions affect a broad range of constituents and works hard to engage them when making business decisions. Cummins is committed to financial excellence, environmental stewardship, creating a great place to work, community engagement and fair competition. Customers Our goal is to care as much about our customers’ success as they do, especially during difficult times such as those we have endured during the recent global recession. Cummins works with key customers during development and production to ensure our products are manufactured to meet their needs. The Company uses tools like Six Sigma to help both Cummins customers and suppliers improve quality, reduce costs and improve profitability for all involved. Each business unit is responsible for developing projects to meet the needs of its customers and is expected to develop customer-focused Six Sigma projects to tackle problems facing individual customers. Our Customer Support Excellence training includes a different approach to meeting customer needs by looking at a situation through the customer’s perspective. Cummins’ “Through the Lens of the Customer” training initiative has trained more than 25,000 employees. Employees Cummins has a long history of being an employer of choice, offering competitive salaries and benefits, training and career development opportunities and a positive work environment. Benefits were made available to non-spousal domestic partners in 2000. The Company places a premium on its workers treating one another with respect and dignity. Treatment of Others at Work is a key component 8 Cummins Inc. Sustainability Report 2010
The Cummins Operating System The Cummins Operating System helps develop common practices and approaches to improve customer satisfaction and profitability. Here’s a quick look at the 10 practices: 1 Put the customer first and provide real value 2 Synchronize flows (material, physical and information) 3 Design quality in every step of the process 5 Ensure equipment and tools are available and capable 6 Create functional excellence 7 Establish the right environment 8 Treat preferred suppliers as partners 9 Follow common problem solving techniques 10 Use Six Sigma as the primary process improvement method 4 Involve people and promote team work of Cummins’ Code of Business Conduct and is the subject of mandatory training for all new hires. The policy applies to everyone who enters a Cummins facility with the goal of creating an atmosphere where everyone is treated with dignity and respect. Cummins offers its employees opportunities for growth within the Company as their skills and interests dictate. The Company has a history of “growing its own” leaders, and employees regularly move freely from one part of Cummins to another. Business partners and suppliers Cummins has been able to build strong bonds with its business partners whether the Company is acting as a supplier of components or working with one of its 56 joint venture partnerships in 18 countries. A key principle at the Company is to treat all preferred suppliers as business partners. Cummins regularly shares key practices such as Six Sigma and Lean Manufacturing with those suppliers to help our partners reduce costs and improve quality. Critical suppliers to Cummins must meet specific Six Sigma performance requirements because Cummins quality is heavily dependent on the quality of our suppliers’ products. If our suppliers and business partners succeed, Cummins will succeed and so will our customers. Shareholders Beyond returning value in terms of profits, rising stock prices and dividends, Cummins believes it owes investors transparency in financial reporting. Top executives hold quarterly teleconferences with industry analysts to discuss financial results. Company representatives also attend or host a number of investor events during the year. To learn more about Cummins’ governance practices, please see the Governance and Risk Management section that starts on page 50. Introduction 9
Page 1 and 2: Cummins Inc. Sustainability Report
Page 3 and 4: Who we are Vision Making people’s
Page 5 and 6: Table of contents This year’s Sus
Page 7 and 8: To address the global challenges we
Page 9: Environment 9,000 tons of CO 2 emis
Page 13 and 14: Clessie Cummins was known for his b
Page 15 and 16: Social issues, diversity and people
Page 17 and 18: The university’s emphasis on educ
Page 19 and 20: Cummins is a major participant in t
Page 21 and 22: Chairman and CEO Tim Solso (fourth
Page 23 and 24: Challenges ahead: The environment I
Page 25 and 26: Global on-highway standards 4.5 4.0
Page 27 and 28: Remanufacturing Cummins products Re
Page 29 and 30: Non-road useful life emissions tota
Page 31 and 32: ReCon plant opens in India Cummins
Page 33 and 34: Partnering with others Our own prod
Page 35 and 36: Environmental objectives and target
Page 37 and 38: 25% Percent change in revenue Since
Page 39 and 40: Cummins and climate change Here are
Page 41 and 42: Cummins accepted into U.K. Carbon T
Page 43 and 44: In December 2009, Cummins became a
Page 45 and 46: Combined heat and power 45% 85% ene
Page 47 and 48: India campus wins Chairman’s Awar
Page 49 and 50: Inside a classroom at Cummins Colle
Page 51 and 52: Partnering with Purdue, Rose Hulman
Page 53 and 54: Indiana Gov. Mitch Daniels (left) a
Page 55 and 56: Challenges ahead: Governance and Ri
Page 57 and 58: Robert J. Bernhard Vice President f
Page 59 and 60: Dr. Franklin Chang-Diaz Title: Chai
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Cummins started an Internet-based c
Page 63 and 64:
Flu outbreak puts pandemic plan int
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Cummins has been working with Ithem
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Employees from the Dongfeng Cummins
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Challenges ahead: Corporate respons
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Audit Committee Chairman Marsha Hu
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A generator set operating on vegeta
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Lokesh Agrawal, Customer Interface
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Cummins employees regularly visit P
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Other Environmental Challenge grant
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GRANTEE ORGANIZATION COMMUNITY GRAN
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GRANTEE ORGANIZATION COMMUNITY GRAN
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Mary Kate (left), can only move her
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The Cummins Power Generation Plant
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“Satisfaction has increased withi
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Create a workplace population with
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Cummins’ definition of diversity
Page 95 and 96:
Taking diversity to the next level
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Council plays key role The Diversit
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Smaller diverse suppliers can play
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Cummins workforce Here’s a quick
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President and COO Tom Linebarger sp
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The investment is paying off. Becau
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Pat Ward, Vice President - Chief Fi
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Six Sigma delivers for Cummins Ten
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Our new strategic principle Cummins
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Components Sales: $2.4 billion EBIT
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Production Notes Design and writing
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