Columbus-based Cummins Inc. this week shifted its move away from fossil fuels into overdrive with the acquisition of Michigan-based auto parts supplier Meritor Inc.
The $3.7 billion purchase was a big deal in every sense of the phrase. It’s the largest of a series of recent Cummins acquisitions of businesses that strategically align with the company’s goal of achieving decarbonization and zero net emissions by the year 2050.
Cummins is approaching this vision methodically, pouring resources into investments in electric and hydrogen-fueled industrial powertrain system technologies. These are not so much bets as indications that the company realizes that its long-term viability, as well as the planet’s, depend on it.
“Climate change is the existential crisis of our time,” Cummins Chairman and CEO Tom Linebarger told financial analysts Tuesday. “Our customers need economically viable, zero-carbon solutions for commercial vehicle and industrial applications. … The acquisition of Meritor is a unique opportunity to build out our capabilities in the transition and to provide alternative propulsion in a scalable and financially disciplined manner.”
As The Republic’s Andy East reported last week, Meritor claims it provides the only integrated electric powertrain for semi trucks in North America, including to some of Cummins’ customers. Meritor calls the engine “game-changing technology for commercial vehicles.”
The company also has deals with German automotive giant Daimler AG’s joint ventures in China and India for its “eAxles,” expected to be crucial components in battery and fuel-cell electric vehicles.
“Cummins believes that eAxles are a key integration point for battery electric and fuel cell electric powertrains, and we see significant strategic advantage and accelerating investment in eAxles in integrating Meritor’s significant capabilities with our new power technology,” Linebarger said.
What Cummins lacks, it’s finding in the marketplace and acquiring in a goal-oriented drive befitting its status as a market segment leader. This is responsible leadership that realizes what the stakes are and what the future will look like. The businesspeople who reacted to Cummins’ vision laid out in an analysts’ call agreed.
“I think it’s great because as (Cummins) looks more and more at their clean energy initiatives, they have more and more control over the entire vehicle,” said Roger Lee, senior research analyst with Columbus-based Kirr, Marbach and Co.
Something of a lesser big deal to many people locally is that the remnant of another former industrial giant, Arvin Industries Inc., will return to its Columbus roots by way of Cummins’ Meritor purchase. Meritor and Arvin merged in 2000, which was the beginning of the end for Arvin.
Craig Kessler, chief investment officer at Kessler Investment Group, realized the Arvin angle may be a footnote in what could be a game-changing development for Cummins and Columbus. Still, he was wistful that sometimes things come full-circle.
“As a lifelong resident of Columbus, it warms my heart to know that the skeleton of Arvin has found its way back to its proper resting place,” Kessler said.
That said, Lee explained why this is a big deal for our area: “The more value that Cummins can offer to the world, the greater economic development we’ll see in Columbus.”
