The Timken Company Business Information, Profile, and History

Company Perspectives:

We will be the best-performing manufacturing company in the world as seen through the eyes of our customers and shareholders. To grow profitably, maximize shareholder value and sustain industry leadership, our diverse team of associates will capitalize on the relationships between our businesses, emphasize applying advanced technology to products and processes and provide unmatched customer service. We will remain an independent organization with a leadership position in high-quality anti-friction bearing and alloy steel products as well as related services.

History of The Timken Company

The Timken Company is the world's largest manufacturer of tapered roller bearings. A tapered roller bearing consists of a set of rolling elements between two concentric rings. The design of these bearings, based on Henry Timken's patents from the late 19th century, allows them to virtually eliminate friction created in hauling heavy loads. Timken bearings are used by a wide variety of companies, including those in the automotive, aerospace, and railroad industries. They range in size from the tiny bearings used in disk drives to the nine-ton mother of all bearings custom made for a heavy forge.

Bearings might not seem like the most progressive of industries, yet Timken has maintained a leading 30 percent market share by aggressively investing in R&D and state-of-the-art manufacturing facilities. Timken also produces millions of tons of steel alloy each year through its Latrobe Steel unit. Among the uses of Latrobe's products are components for automobile axles and fasteners for space shuttles. The company's stock is one-third owned by the Timken family and employees.

Steely Origins

Henry Timken founded the earliest form of The Timken Company in St. Louis in 1899. Timken had entered the carriage business as an apprentice 40 years earlier at the age of 16. By the time he was 24, Timken had opened his own carriage shop. In 1877 Timken received the patent for the Timken Buggy Spring, the first of his 13 patents. His spring design became widely used throughout the country, and was produced on a royalty basis by a number of companies. As a result of the spring's success, Timken became well known across the United States, and his carriage business flourished. Around 1895 Timken took an interest in the problems created by friction in wagon design. In 1898 the patent was issued for the Timken tapered roller bearing. The new bearing was a dramatic improvement over the ball bearings and straight roller bearings that had previously been used. The following year, the founder and his two sons, William and Henry (H. H.) Timken, organized the Timken Roller Bearing Axle Company. It produced axles that used the new bearing in their design.

Within the next couple of years, the axle business began to outgrow its allotted space in the St. Louis carriage plant, and in 1902 the company relocated to Canton, Ohio. Canton was seen as an ideal midpoint between Detroit, home of the automotive industry, and Pittsburgh, a major steel-producing city. By that time, the Timkens had recognized the future importance of the automobile, and worked to develop bearings tailored to the needs of that young industry. When Henry Ford introduced the automobile assembly line and the Model T that it produced in 1908, the demand for Timken bearings and axles grew exponentially.

In 1909 the Timken brothers moved the axle division to Detroit, launching the new Timken-Detroit Axle Company with William Timken as its president. The Canton operation continued to manufacture bearings, and its name was changed to The Timken Roller Bearing Company. By 1909, the year Henry Timken died, the company was turning out over 850,000 bearings a year, and it employed about 1,200 people.

Timken began to produce its own steel in 1915 as a way to ensure an adequate supply for its manufacturing in the face of shortages created by World War I. That year, the company added a steel tube mill to its Canton facilities. A year later a melt shop was added. With the inclusion of these steel works, Timken became the first bearing manufacturer to act as its own supplier of steel for its products. The company was soon producing steel in quantities far greater than its own manufacturing needs. It therefore began marketing its alloy steel to outside buyers, with such companies as Mack Truck among its early regular customers. In 1919 the Industrial Division was organized, taking the place of the company's Farm Implement and Tractor Division. The mission of the Industrial Division was to develop bearings for a wide variety of industrial uses, including electric motors, elevators, and printing presses.

The market for Timken bearings and steel continued to expand quickly throughout the 1920s. In 1920 the company opened the Columbus Bearing Plant, its first facility outside of Canton. The same year, a waste treatment plant was built at the Canton facility. Timken stock went on sale to the public for the first time in 1922, and the company opened an assembly plant in Canada that year. Timken bearings found their way into the railroad industry in 1923, when bearings specially designed by Timken were tested first on an inter-city streetcar running between Canton and Cleveland, and later that year in a boxcar on the Wheeling and Lake Erie Railroad. By 1926, other railroads recognized that the tapered bearings would allow the speed of their trains to increase. A large order was placed by the Chicago, Milwaukee, St. Paul & Pacific railroad for use in its high-speed trains, such as the Burlington Zephyr and the Santa Fe Super Chief.

Expansion in the 1920s and 1930s

Timken began acquiring smaller companies in the mid-1920s. In 1925 the company purchased the assets of Gilliam Manufacturing Co., a Canton-based roller bearing producer. The Bock Bearing Co. of Toledo, Ohio, was acquired the following year. In 1927 Timken purchased a large interest in British Timken Ltd. from Vickers Ltd., which had been manufacturing Timken bearings and axles under license since 1909. Timken went on to acquire the remainder of the British operation in 1959. The Weldless Steel Company's Wooster, Ohio, piercing mill was purchased in 1928. That year also brought the creation of Société Anonyme Française Timken (SAFT), a French subsidiary of British Timken. In 1929 Timken purchased a 177-acre block of land adjacent to the company's existing facilities in Canton and opened two new plants, the Gambrinus Steel Plant and the Gambrinus Bearing Plant.

In spite of the Depression, Timken continued to grow steadily through the 1930s. During the early 1930s the company developed bearings for propeller drive-shafts, thereby expanding its customer base to include shipbuilders and the U.S. Navy. In 1932 Timken began manufacturing removable rock bits for construction and mining equipment. The production of the rock bits provided a much needed outlet for the company's steel in the face of a badly depressed steel market. By that year, British Timken had stretched to yet another continent, opening a manufacturing subsidiary in South Africa in 1932. In 1934 William Umstattd became president of Timken, succeeding H.H. Timken, who stayed on as chairman of the board. The company's Mt. Vernon Rock Bit Plant opened the following year. When H.H. Timken died in 1940, his son, H.H. Timken, Jr., became the chairman of Timken's board of directors.

The onset of World War II provided the momentum for Timken's continued growth in the 1940s. To meet increasing wartime demand for its products, Timken opened several new facilities in Ohio during this period. In 1941, for example, the Timken Ordnance Company was built in Canton, where about 80,000 gun tubes were manufactured over the next couple of years. The Zanesville Bearing Plant was opened in 1943. Other new locations included Columbus and Newton Falls. During the war, the company's output more than doubled its previous peak. In 1948 Timken began experimenting with automation, beginning a pilot project at a plant in Bucyrus, Ohio. The project was an instant success, and a brand new plant was built in 1950.

Meanwhile, Timken was the subject of an antitrust suit brought by the Justice Department around the same time. After several levels of appeals, the Supreme Court ruled in 1951 that Timken had conspired with its foreign affiliates (British and French Timken) in restraint of trade. The case, initiated in 1947, came about as a result of agreements between the companies regarding sales territories, price coordination, exchange of exclusive information, and other practices. The court's ruling indicated that a company must compete with other companies in which it holds a substantial interest if that company is not a legal subsidiary.

Rolling Through the 1950s and 1960s

In 1954 Timken introduced the "AP" bearing, an innovation that would have a great impact on the railroad industry. The "AP" was a preassembled, prelubricated, self-contained bearing that was inexpensive and easily integrated into nearly any type of railroad car. The new bearing was credited with dramatically reducing the number of freight car set-outs. The "AP" bearing was initially produced at Timken's Columbus plant. So quickly did demand for it grow, however, that by 1958, the new Columbus Railroad Bearing Plant was opened. In 1956 the Bucyrus Distribution Center was opened. The Distribution Center was a huge warehouse, from which bearings were shipped to customers throughout the United States, as well as to the company's foreign plants. In 1958 Australia became the fourth continent on which Timken operations took place, with the opening of a bearing plant at Ballarat, Victoria. That year, SAFT was officially merged into Timken, and its name was changed to Timken France. Timken purchased the remaining shares of British Timken the following year.

Around this time, Timken began its expansion into South America. A sales subsidiary was established in Argentina in 1959. The next year saw the opening of the Sao Paulo Bearing Plant in Brazil. Also in 1960, W. Robert Timken (another son of H.H. Timken) replaced Umstattd as company president.

Timken's sales continued to grow steadily through the first half of the 1960s, climbing from $240 million in 1961 to $393 million in 1966. In 1963 production began at the company's new Colmar Plant in France. Timken Research, a sprawling research and development center located near the Akron-Canton Airport, was completed in 1966. Railroad companies continued to grow in importance as customers during this period. By 1968, more than 90 percent of the new freight cars being built used tapered roller bearings, and more than 60 percent of those bearings were made by Timken.

During the second half of the 1960s, Timken's sales leveled off, and net income actually shrank, from $49 million in 1966 to $29 million in 1970. The portion of this income that came from foreign sales tripled between 1967 and 1970. In 1968 a continuous casting plant was added to the company's steelmaking facilities. By 1969, the plant had a capacity of 850,000 tons. The company's Ashland Plant was opened in 1969 as well. Timken had a total of 16 plants in operation by 1971, seven of which were in Ohio. Tapered roller bearings and rock bits accounted for about 80 percent of Timken's revenue that year, with specialty steels generating the rest of the company's sales. At that time, about 35 different types of roller bearings were being produced in over 11,000 sizes at its facilities.

Rising Sales in the 1970s

H.H. Timken, Jr., died in 1968, and was succeeded as chairman by his brother W. Robert Timken. The company presidency was assumed by Herbert Markley, who had joined the company as an accountant nearly 30 years earlier. In 1970 the corporation's name was officially shortened to The Timken Company. The following year, the Gaffney Bearing Plant, a highly automated facility in South Carolina, was opened. Timken was hurt in 1970 by strikes at General Motors and in the trucking industry. By 1972, however, sales were once again strong in the automotive industry, which, as a whole, was the purchaser of nearly half of the bearings sold by Timken. As a result, Timken's sales began to grow once again, reaching a company record of $470 million in 1972. In 1974 a wholly owned sales subsidiary, Nihon Timken K.K., was formed in Japan.

W. Robert Timken stepped down in 1975, and was replaced as chairman of the board by his son, W.R. Timken, Jr. That year Timken acquired Latrobe Steel Company, a Pennsylvania-based producer of specialty steel and alloys. For 1975, Timken was able to post record sales of $804 million, in spite of a terrible year in the automobile industry. In 1978 construction was completed on the company's Canton Water Purification Plant. Timken introduced the UNIPAC bearing in 1979. These pre-lubricated and pre-adjusted bearings made assembly operations much easier for vehicle, industrial machinery, and construction equipment manufacturers. Timken also opened the Lincolnton Bearing Plant that year. The Lincolnton plant, located 50 miles north of Gaffney in North Carolina, featured such advanced automation as driverless trains that transported parts between departments. Markley faced mandatory retirement as company president in 1979. He was succeeded by Joseph F. Toot, Jr., a Timken employee since 1962.

Losses in the 1980s

As the 1980s began, Timken was still the dominant force in the American bearing industry, controlling about 25 percent of the U.S. bearings market, and 75 percent of the market for tapered roller bearings. In 1981 the company earned $101 million on sales of $1.4 billion. The 1980s proved to be a difficult decade for Timken, however. The company reported a loss of $3 million in 1982, its first unprofitable year since the Depression. Part of the problem was the flood of cheap bearings entering the United States from Europe and Japan. Nevertheless, Timken did not stop investing in its facilities during this time. In 1983 an expansion project that doubled the size of Timken Research was completed. The company's $450 million Faircrest Steel Plant went into production in 1985. Upon the opening of the plant, which was situated not far from Canton, Timken's steelmaking capacity increased by 50 percent, to 1.5 million tons.

In 1986 Timken reorganized its corporate structure, cutting costs by consolidating departments and eliminating personnel. The Rock Bit Division was sold off entirely. A new division, the Original Equipment—Bearings group, was formed by combining the Industrial Division with the Automotive and Railroad Divisions. In addition, all Research and Development functions and computer operations were organized into a newly created Technology Center.

After six years of showing little or no profit, Timken rebounded in 1988, earning $65.9 million on net sales of $1.55 billion. During that year offices were opened in Italy, Korea, Singapore, and Venezuela. The following year, a 37-day strike by steelworkers prevented a significant continuation of the rally. Nevertheless, a $1 billion multi-year investment program was launched in 1989 to modernize and expand the company's plants. In 1990 Timken paid $185 million for MPB Corporation, a manufacturer of super-precision bearings (used in sensitive machinery such as aircraft, computer disk drives, and medical equipment) based in Keene, New Hampshire, with annual sales of $120 million.

Retooling: 1990s-2000s

Timken's sales declined slightly in both 1991 and 1992, largely due to reduced demand caused by the global recession. For 1991, the company recorded a net loss of $36 million. Through an active streamlining program, Timken was able to turn a modest profit of $4.45 million in 1992 without making any gains in sales. In April 1993 the company announced the formation of a steel sales unit in Europe, its first such steel operation outside of the United States. Efforts to improve manufacturing efficiency and to reduce costs throughout the corporation continued. In 1993 the company began operations at a steel parts plant in Eaton, Ohio. Latrobe Steel planned to open a new facility in Franklin, Pennsylvania, in 1994.

That same year, Timken's most advanced plant to date opened in Asheboro, North Carolina, at a cost of $120 million. Its automated features allowed the company to produce small batches of custom bearings in a matter of days, rather than weeks, reported Forbes. Another new factory was opened in Singapore to produce the minuscule bearings used in computer disk drives. Even as these facilities were being constructed, the company's annual earnings were reaching their highest levels since 1988, though the company had lost money in 1991 and 1993. By 1996, earnings had risen to $138.9 million. Analysts attributed the performance to reducing production costs and finding niches outside the company's traditional, cyclical lines of business.

In late 1997 Toot retired as president and CEO. Chairman William R. Timken, Jr., great grandson of the company founder, took over Toot's duties. After an all-time record first quarter, the Asian financial crisis resulted in reduced orders for farm equipment and less business for Timken in the second half of 1998. For the year, income fell from $171 million to $114 million, on sales of $2.7 billion. Timken's share price also fell during the year, from $41 to $13.

In February 1999, Timken postponed the launch of a new $110 million seamless tube mill, citing weaknesses in the energy, farm, and heavy industrial markets. Most pressing was the lack of suitable agreements with government agencies, suppliers, and unions to get the plant running profitably. Sites in Ohio, Georgia, North Carolina, and Virginia were being considered.

A web site, Timken Direct, debuted in April 1999. It relieved sales reps from routine availability and price questions, and gave Timken's distributor customers more power to find needed information on their own.

The company celebrated its 100th anniversary in style. A detailed company history was commissioned and provided to each of its employees around the world. A small group of Timken employees and retirees restored a rare 1904 St. Louis car, one of the first designs to incorporate Timken's roller bearings.

Timken's 50-year-old plant in Bucyrus, Ohio, continued to spit out small bearings—2.5 million of them a week—from a highly automated, finely tuned mix of vintage and computerized equipment. Other plants specialized in quick turnarounds of custom orders. In the 1990s, Timken had begun developing "bearings packages," integrating bearings with other components into modular systems.

In March 2000, Timken announced plans to cut 600 jobs worldwide—half of them at the Duston, England plant—while increasing production in Central Europe. The company had already trimmed 1,700 jobs in the previous two years, aiming to reduce costs in the face of excess industry capacity.

Plants in Australia and England were closed. Although sales of excess steel made up a third of Timken's revenues, the company was relying more heavily on outside sources as it expanded production into countries such as China and India. The company also aimed to adopt more efficient processes, opting for hot-forging over metal-cutting in some instances. There was also a trend towards smaller, more specialized factories. Among Timken's most advanced products at the beginning of the millennium were anti-lock bearings for four-wheel-drive vehicles that employed built-in sensors.

In May 2001, Timken was rumored to be in alliance talks with a Japanese rival, NSK Ltd. Timken acknowledged a long-term supplier relationship with NSK but denied any pending joint ventures.

Principal Subsidiaries: Timken Aerospace & Super Precision Bearings; Timken Aerospace & SuperPrecision Bearings-Europa B.V. (Netherlands); Timken Aerospace & Super Precision Bearings-Singapore Pte. Ltd.; Timken Aerospace & Super Precision Bearings-UK, Ltd.; Australian Timken Proprietary, Limited (Australia); Timken do Brasil Comercio e Industria, Ltda. (Brazil); British Timken Limited (U.K.); Canadian Timken, Limited (Canada); Timken Communications Company; Timken Desford Steel Limited (U.K.); EDC, Inc.; Timken Engineering and Research - India Private Limited; Timken España, S.L. (Spain); Timken Europa GmbH (Germany); Timken Europe B.V. (Netherlands); Timken Finance Europe B.V. (Netherlands); Handpiece Headquarters Corp.; Timken India Limited (80%); Timken Italia, S.R.L. (Italy); Timken Latrobe Steel; Timken Latrobe Steel Distribution; Timken Latrobe Steel-Europe Ltd. (U.K.); Timken de Mexico S.A. de C.V.; MPB Export Corporation; Nihon Timken K.K. (Japan); Timken Polska Sp.z.o.o. (Poland); Rail Bearing Service Corporation; Timken Romania S.A. (92%); The Timken Corporation; The Timken Service & Sales Co.; Timken Servicios Administrativos S.A. de C.V. (Mexico); Timken Singapore Pte. Ltd.; Timken South Africa (Pty.) Ltd.; Timken de Venezuela C.A.; Yantai Timken Company Limited (China).

Principal Divisions: Automotive; Industrial; Aerospace and Super Precision; Rail; Alloy Steel; Specialty Steel; Precision Steel Components; Emerging Markets.

Principal Competitors: Aktieboleget SKF; NSK Ltd.; USX-U.S. Steel Group.

Chronology

• Key Dates:
• 1898: Henry Timken patents the tapered roller bearing.
• 1899: Founder and his two sons, William and Henry (H.H.) Timken, establish Timken Roller Bearing Axle Company.
• 1901: Business moves from St. Louis to Canton, Ohio.
• 1909: A licensee begins producing Timken's bearings in Great Britain.
• 1915: Timken begins making its own steel.
• 1922: Timken stock begins trading publicly.
• 1948: The company builds its first automated factory.
• 1954: The revolutionary, preassembled "AP" bearing is introduced to the railroad industry.
• 1975: Latrobe Steel is acquired.
• 1988: Timken rebounds from six profitless years with income of $66 million.
• 1998: Timken begins two years of job-cutting and factory closures.