Timken was established by Henry Timken, in St. Louis, Missouri, in 1899 and included in the Timken Roller Bearing Company axis. A year earlier, in 1898, and obtained a patent for the Timken tapered roller bearing for the company that would become known.
Tapered roller bearings were released in the late 19 because of bearings used in wheel hubs have not changed much since ancient times. Relied on the bearings enclosed in a case that held lubricants, this was called friction bearings "and" depends on the lubricant to work. Without proper lubrication, these trends fail because of the intense heat caused by friction. The Timken able to dramatically reduce the friction on the bearings to use a "cup" and "cone" design of the integration of tapered bearings that have rolled in fact, leading to the load placed on the bearings by distributing weight evenly and downloaded over the cups, cones, and bearings.
Timken looking forward to acquisition Prema Milmet's Polish plant to use it in manufacturing its products and provide the local and European market with these products but this acquisition is good for the Timken from many points such that it will create new market with low competence due to the lowest price and higher quality but also it will be risky and this due to many factors such as the assest and the machinary in the Prema Milmet's Polish plant is old and need to renew and also the steel that used in this plant doest met the Timken requiremnts which will affect its quality
Here in this report, the decision of the acquisition of the Prema Milmet's Polish plant will be discussed in details also the Timken's competitive predicament in Europe will be discussed in addition to the unresolved issues that has Timken's assessment of Prema Milmet identified
Should Timken acquire Prema Milmet's Polish plant? Why? Why not?
Such this decision is not simple and couldn't be taken within a minute and this is for many reasons and should be studied well before any more steps
From my opinion there are many points that encourage Timken to invest in the Prema Milmet's Polish plant and I think it has to go a head even there are also pints may slow and make the investment in Prema Milmet's Polish plant risky regarding to Timken
Encouraging points for investment:
The acquiring and investing in the Prema Milmet's Polish plant will provide the Timken its position and rights to serve the east Europe market and provide it with its well known and good reputation products specially at this time where the potential in the region for the growth Is very high due to increasing the automotive suppliers in this region
there are no presence of other American manufacturing executives because they decided to don't going to eastern Europe for industrial production also Timken hasn't industrial presence in Poland and just it based on very little sales or distribution agencies
the amount of sales in the field of bearing in Poland's may get to $ 25 million annually where 70% of Poland's bearings are imported from outside Poland (either Japanese bearings, German or Swedish) valued at about 25milion $ annually
Timken bearings has very good reputation in the Europe and this may facilitate Timken presence there and will give it marketing advantages
the production cost in the eastern Europe is lower than US which can lead to lower price and more profit low cost production sites in eastern Europe and the Poland steel is 30% cheaper than the steel coming from western European material because its protected from exchange rate fluctuations and it didn't have to be shipped far
the declination that happened to the Japanese bearing market lead to less exporting to the Europe which will increase the opportunities for Timken to increase its sale there
the level of employee's (mechanical and technical stuff)of the Prema Milmet plant are comparable with those are working in the French Timken in the Colmar and many of those workers are high educated
the products type of the Prema Milmet plant is the same as that produced in Timken US which is called "TRBs" tapered roller bearings also fabricated the differential bearing which is the same that the Timken sold to Peugeot and this will help Timken in its new investment In Poland because its product types and specialization will not be changed
the volume and the capacity of production of the Prema Milmet plant are huge where its equipped with grinding and turning machines that similar to that installed in Timken US plants with capacity is more than 7 millions bearing per which are totally integrated and are assembling all bearings parts from scratch or from basically the row material where the only thing it needed from outside Poland are the steel to make bearings
Discouraging points for investment:
Prema Milmet plant construction and equipments was recent and needs modernizing and upgrading because it's too old and lacking from the preventive maintenance
Prema Milmet plant location is in badly pot holed road which will affect the traffic from and to plant
the market problems and the poor performance of the Europe relative to the US could affect the presence of Timken in Poland and in the Europe
Prema Milmet plant uses hardened not carburized steel and this doesn't comply with the Timken standards of the steel purity and impurities
What is Timken's competitive predicament in Europe? What does the possible acquisition in Poland contribute?
Of course the acquiring of polish plant will contribute in increase the competition level between all bearings manufacturing companies and there are many points will help Timken if it acquired the polish plant such as the reorganization that was mad by the SKF of its distribution was lead to closing 19 of 24 warehouse and centralizing deliveries trough a new centers and lead to closed plants in Spanish and UK and this is very important for Timken because it will open new opportunities for its products if it acquire the polish plant
also the good reputation of Timken products will help and contribute the acquiring of the polish plant positively and this because that the Timken bearings outlast and survives more than that do the other bearings from other brands in addition to that it characterized by higher power density
But also there are many points that may affect and could be considered as problems for the Timken competition there such as the followings:
the eastern Europe bearings manufacturers manufacturing completely different products which will make the competition hard and should Timken to specialize in specific product to be able to get role in this market
there many competitors in eastern Europe and in Poland and those are strong and well known brands such as the Swedish firm (SKF) which is considered ad the most greater competitor with 20% of global bearings industry sales , the German manufacturer (FAG) where (SKF) and (FAG) together contributes 70% the bearings that had been sold in the Poland annually with value of 25 $ million in addition to the Japanese bearings companies (NSK)
the increasing in the numbers of the Japanese competitors 1991 because of the increasing in the demands from the automotives suppliers will increase the competition there and will be issue for Timken if It didn't supply the market with the required bearings
the increasing of the (SKF) prices with value less than the inflation rate by 1% annually is big competition issue for Timken because it will be forced to decrease its prices more and more to be able to sell and compete SKF and this will be hard but I think it will be able because that as mentioned above the production cost will be lower in the Poland
the automotive industries moved to the metric size in the bearing systems but the Timken and also Prema Milmet plant are moving slowly to this system and it still using the inches systems while the other competitors (SKF,FAG and the others ) did well and moved directly to the metric system and this is the biggest problem because if it didn't moves in the new polish plant to the new system it will not be able to compete and will lose everything simply because no one will buy its products
What unresolved issues have Timken's assessment of Prema Milmet identified?
To see the situation of the Prema Milmet plant on its actual status Timken team went to Poland to assess the plant and to find its status regarding to its construction, workers ,equipments, machines ,production methodology and product types
The results were there are many problems in this plant, from these problems which company can solve easily and also there are many of them might cause trouble down the road and needs high investment and effort from the company to solve it. All of these types of issues will be listed below:
Issues company can solve but needs high investment and effort
The solution
The machines and equipments of the Prema Milmet polish plant was old
To solve this problem new machines and equipments should be purchused and installed to enhance the work in the plant and avoiding the stoppage for maintenance and any break down could occur
Prema Milmet manufacturing plant uses steel in bearing production which contains big amount of impurities and also less purity than the steel used in Timken plants and using such steel cause castrophic failure in bearings
To solve this problem new sources of steel should be found but this will increase the cost and will make the unit cost of the product is high and this will affect the competition
the sizing system that used in the polish plant is the inches and all industries of automotives which is the main consumers to the bearings converted to the metric in 1960 which is very important issues
To solve this problem, Timken should move directly to the metric system but this may need major changes in the machines and the methods of production there
there is no idea about the amount of sales that could be made in Poland and eastern Europe for the product of the new polish plant nor the prices that should be put for these products
This very important issue and to solve its serious assessment to the market should be made to get clear idea and feasibility vision about investing in this plant or not
It will not be able to work remotely from US
To solve this problem is has to allocate technical team to European region but this will be costly
The steel used in the polish plant is hardnedd not carburized
To solve this problem ,huge investmenst should be made in changing the production lines to produce carburized steel
Issues company can solve easily
The solution
Guaranty of no layoff guaranty for five years
This may cost the company more and more specially it hasn't clear idea about the market status and to solve this it shouldn't adopt this decision
changing the brand name from Timken to R-circle
This could affect the reputation of Timken and to solve this the
The low quality of the product of this polish plant
To solve this ,the plant should adopt many quality standards such as ISO 9001 and others to ensure that the quality level is good
