10 QUESTIONS WITH TOM LINEBARGER OF CUMMINS
we don’t know, but they will definitely offer some and so we’ll
offer components for those and engines for where they would
like to use ours and that will continue.
VII. Cummins Power Generation recently launched
some new small gen-sets that target light commercial
and home standby, which is one of those “holy grail”
kind of segments for gen-set manufacturers. Where do
you see that market going and can Cummins be a significant player there?
I’ll be honest, I think we’ve struggled to be successful in
the home standby market. Part of it is that we’re a commer-cial-oriented company. We think a lot about trying to add
value to businesses and how do we help them profitably
grow. When it comes to some of the nonfinancial and noneconomic concerns of consumers, it takes us longer to figure that out sometimes than someone who’s really good at
the consumer business.
The second thing is our dealers are oriented largely toward
commercial business. We have a very good light commercial
business — it’s one of our strongest — and we are continuing
to leverage that. That lower end of the commercial market has
also been moving more toward how can you get more controls and electronic features? They’re not as concerned with a
bigger, more robust engine — they’re not going to run it that
much. What they really want are all the protection features the
gen-set offers and a whole bunch of other features and controls. So we need to be good at that and that’s what we’ve
been putting a lot of effort into.
We are targeting to improve our position in residential.
We’ve got some really good products, but the challenge remains figuring out how to access how to have the right distribution to access that. Today the way Cummins services is
we have a dealer network that is basically electricians, that is
managed by our distributors. That’s a model that can work, if
we manage it effectively.
I’m feeling more confident about our product line and our distribution service network than I ever have. I still think for Cummins
it’s a growth opportunity, but it’s not the main growth opportunity.
VIII. It seems that Cummins is making its distribution
“company stores” rather than independent businesses.
What’s behind that and is there any worry about losing
the entrepreneurism that independent distribution can
As you’d guess, with any change like that there was, and continues to be, a healthy debate about what are the trade-offs?
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