It’s been almost one year since Cummins first acquired Meritor in August 2022, and Heavy Duty Aftermarket Week 2024 marked the second HDAW the company attended under its new organization. But while last year’s HDAW marked the first big show the two companies did together, and thus came with its fair share of anxiety and growing pains, now Cummins-Meritor leadership emphasized the positive progress of the integration, despite operating in an aftermarket environment fraught with supply chain difficulties.
Alan Rabadi, Cummins-Meritor’s global aftermarket leader, attributed this to the company’s careful approach to integration.
“We’ve been overall slow and methodical,” Rabadi emphasized. “And that was intentional. We didn’t want to rush anyone, we didn’t want to break anything. But at the same time, there’s a lot of uncertainty and a lot of change in the environment we’re in.”
The first step in this methodical approach meant focusing on the “people side” of the business, including examining the company structure and helping employees make a smooth transition.
“We’ve got a good balance of what we call ‘Legacy Meritor, legacy company,’” Rabadi said. “We’re doing a good job of bringing the balance and perspective of both [Cummins and Meritor].”
This includes integrating Ken Hogan’s team, the current VP and GM of Cummins Meritor and former long-time executive for Meritor, and keeping an overall balance of legacy Cummins and Meritor individuals throughout the transition.
The global aftermarket team worked the same way, as Cummins Meritor has worked to hire legacy Cummins employees alongside Meritor’s expert personnel. The result of this balance, according to Rabadi, has been a positive customer response to the integration with few interruptions.
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“The test I always give has been to ask our customers and our partners ‘How are you doing?’” Rabadi explained. “’How are you experiencing [the Meritor integration]? Are we causing any interruptions or any changes to your business?’ And for the most part, the answer has been no.”
Additionally, Cummins Meritor has been working behind the scenes to adapt the nitty-gritty systems that every business needs, such as HR and IT, to the acquisition. But overall, Rabadi noted that the company is on target, or even ahead of schedule, on achieving the synergetic goals they first announced when acquiring Meritor. These included growing Meritor’s core business, investing in technology and net-zero emissions, and generating annual pre-tax run-rate synergies of roughly $130 million from SG&A savings, supply chain operations and facilities, and operations.
Based on these initial acquisition targets, Cummins Meritor has another two years to achieve these goals.
In the meantime, the company is leveraging its combined expertise to continue growing its diesel-driven business and the transition to new powertrains. Rabadi explained that they were handling this by making Cummins Meritor one of Cummins’ five sub-businesses, specifically in the components division.
“If you think about Meritor previously as it existed before Cummins, 99% of that business sits within components, whether it’s the axle, brake, or driveline business, as well as the aftermarket business, that all sits within components,” Rabadi said. “Then there’s the new power piece, which now we call Accelera. That is where the former Blue Horizon epowertrain component sits now.”
With this transition, Rabadi emphasized that Cummins Meritor brings together both the products and technical expertise necessary for a fully integrated driveline, a natural step in the company’s growth from an engine provider to a system optimizer.
“We’re already seeing a lot of innovation between the teams, [including] product plans coming together for a next-generation product that we think will continue to lead in the market,” Rabadi concluded.