Cummins Inc. and Eaton said they are stepping up an existing partnership with a joint venture to develop future generations of automated medium-and heavy-duty transmissions for global markets.
The $600 million, 50-50 joint venture announced Monday includes full powertrain design, development, assembly, sales, support, and service. The deal is expected to close in the third quarter, pending regulatory approval.
Craig Arnold, Eaton’s chairman and CEO, said in an investors call on Monday that Cummins is paying the $600 million for Eaton’s designs of next-generation automated transmission products. The deal includes the Eaton Procision dual-clutch automatic transmission for the medium-duty market and certain assembly assets. The funds are also expected to spur “accelerated growth around the world” as Arnold said Eaton taps into Cummins global economies of scale.
Arnold explained that the partnership builds on lessons learned from a strategic partnership between the two companies on the SmartAdvantage automated powertrain launched in 2013 that targets improved fuel economy, and was also predicated by increasing regulations on both commercial vehicle fuel economy and emissions standards, as well as the need to meet increased performance needs of customers.
“We think this particular JV absolutely strengthens the case for our vehicle business,” he added.
Cummins Chairman and CEO Tom Linebarger echoed those sentiments in a statement.
“Our growth strategy includes expanding our product offerings and extending our global footprint by becoming the world’s leading powertrain supplier,” he said. “Our JV with Eaton will deliver the most advanced automated transmissions and develop an integrated powertrain and service network that supports our customers like never before. Just as we've done for the past 100 years, we will use our experience in partnerships and technological expertise to ensure our customers' success.”