2010 Sustainability Report - Cummins.com

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Letter from the chairman Cummins Stakeholder: Over the past year, Cummins has continued to focus its efforts on keeping the Company strong during the global recession, which began late in 2008. Our work to reduce costs, align manufacturing capacity with demand and serve customers well when they need us the most has allowed us to meet our goals of earning a solid profit and generating the cash necessary to invest in critical technologies for the future. In these challenging economic times, I also am pleased to say that Cummins has not lost sight of the importance of delivering on our commitments to customers, shareholders, employees, government and the communities in which we operate. In fact, the stakeholder model first introduced at Cummins 40 years ago by then-Chairman J. Irwin Miller, remains a critical component to our long-term success. As we look to a future that offers significant growth prospects, our ability to create a sustainable global organization that is responsive to the needs of our stakeholders has never been more important. Our response to the complex challenges facing Cummins today is rooted in the values that define Cummins. Acting with integrity. Doing our part to improve the communities where we live and work. Embracing diversity. Operating with a global vision. Striving to always exceed the expectations of our customers. Being first to market with innovative products and services. These statements represent Cummins’ core values, and our 36,000 employees worldwide continue to demonstrate their commitment to bringing these words to life every day. Cummins’ seventh annual Sustainability Report highlights the progress we have made in the past year around these values. As in past years, this year’s report contains a significant emphasis on the Company’s corporate responsibility work. Broadly speaking, Cummins operates under the philosophy that corporate responsibility is not simply something that is “nice to do,” but is a way of doing business that contributes directly to the financial health of our company over the long-term. Building successful, vibrant communities leads to stronger markets for our products. Being seen as a company that cares about all its stakeholders is essential to our efforts to attract and retain the most talented workers from around the world, which is critical to the success of any global company. In a similar fashion, part of Cummins’ Mission demands that everything we do leads to a cleaner, healthier, safer environment. That commitment drives our work as a worldwide leader in emissions technology, which provides Cummins with a significant competitive advantage. It also is behind ongoing efforts to reduce the environmental impact of our facilities, strengthen our voice in the public policy debate around issues such as climate change and to engage our employees on ways they can make a difference. This year’s Sustainability Report also focuses on the global nature of Cummins’ operations, and the challenges and opportunities that come with doing business in 190 countries worldwide. More than half of Cummins’ employees work outside the United States, and approximately 60 percent of the Company’s revenues are generated from international markets, which offer some of our strongest future growth prospects. 4 Cummins Inc. Sustainability Report 2010
To address the global challenges we face, we must have processes in place to ensure that our values effectively translate across the range of cultures in which we operate. It also is more important than ever that we embrace and respect the diverse perspectives of our employees and use those differences to strengthen our business. The global nature of our approach to sustainability is highlighted throughout this year’s report. Here are just a few examples: Our “signature” Corporate Responsibility partnership with EARTH University in Costa Rica, which is profiled starting on page 14. In addition to being the recipient of funds from The Cummins Foundation, EARTH is receiving significant help from Cummins employees across several areas of expertise in support of its mission to provide world-class education in sustainable agricultural techniques. In addition, we have included stories about other significant Corporate Responsibility partnerships throughout the report. Work by Cummins engineers to provide power to a rural village in India by converting a Cummins generator to run on vegetable oil extracted from the inedible seeds of a local tree. The project was one of five “President’s Award” winners in the Company’s first-ever Environmental Challenge held in 2009. All five projects are profiled beginning on page 70. The significant investment made in the Cummins Power Generation plant in Craiova, Romania, over the past year to create a more efficient and safer workplace. More than $700,000 was spent to replace old equipment, create a new walkway for employees and improve lighting throughout the plant. A Q&A with Cummins’ newest Board member, Dr. Franklin Chang-Diaz, which starts on page 56. Dr. Chang-Diaz, Cummins’ first non U.S.-born Director, is a former NASA astronaut and renowned rocket scientist who is leading an ambitious longterm effort to transform Costa Rica’s economy. His commitment to the environment, the community and technical leadership aligns well with Cummins’ sustainability goals. Just as we are constantly looking for ways to better serve our stakeholders around the world through our actions as a Company, we also have raised the bar this year on our sustainability reporting efforts. For the first time, this year’s report contains a section devoted specifically to employee relations, and we have expanded on our safety and diversity discussions from past years. Perhaps most exciting, though, is the launch of our new Sustainability Web site. The site will contain links to both the full and summary printed reports, and visitors will be able to quickly access material of their choosing through links to individual sections of the report. The site also will offer additional stories, data, multimedia content and links to social media tools. I hope you will read our current Sustainability Report and visit the Sustainability site at www.cummins.com to learn more about our work to remain a responsible global corporate citizen that is responsive to the needs of all our stakeholders. Tim Solso Chairman and Chief Executive Officer Cummins Inc. Introduction 5
Page 1 and 2: Cummins Inc. Sustainability Report
Page 3 and 4: Who we are Vision Making people’s
Page 5: Table of contents This year’s Sus
Page 9 and 10: Environment 9,000 tons of CO 2 emis
Page 11 and 12: The Cummins Operating System The Cu
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
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Robert J. Bernhard Vice President f
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Dr. Franklin Chang-Diaz Title: Chai
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Cummins started an Internet-based c
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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
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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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