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Profitable segments to be promoted, enhanced; areas that can't be fixed will be put up for sale
By Jim Mackinnon
Beacon Journal business writer
Published on Thursday, Feb 21, 2008
Four words provide a basic idea on Timken Co.'s corporate strategy in the early part of the 21st century:
Fix it or exit.
There's nothing like a three-plus hour presentation to help industry analysts get their bearings on where Timken executives say they are taking the company.
The Canton manufacturer is transforming itself and refocusing the making and selling of bearings, high quality steel and other products and services to a global market, including heavy industry in Asia, senior executives told analysts at the company's ''Analyst Day'' event at corporate headquarters. The presentation followed the company reporting earlier this year a record $5.2 billion in sales and near-record earnings for 2007.
''Our industrial business has been the growth engine of the company,'' said Jim Griffith, Timken president and chief executive officer. ''It is the vanguard of our growth into Asia.''
While Timken in the 1990s successfully focused on fundamentals that he likened to a football team emphasizing blocking and tackling, the Timken of the 21st century has adopted a new offense to help it grow, Griffith said. Executives began looking at a new business model in 2000, he said.
In recent years, Timken has bought companies in industries where it thinks it can in
crease profits, while at the same time has shed unprofitable businesses, Griffith and other executives said. The result is a more customer-focused company that is operating at a faster pace of change and with increased productivity, he said.
As part of those changes, the company last year refocused into two broad-based business groups, the Steel Group and the Bearings and Power Transmission Group. Its struggling, stand-alone automobile division was folded into the Bearings and Power Transmission Group.
''We are investing in areas where we have unique capabilities,'' Griffith said. ''We either fix it or we are no longer in the business.''
He called the current transformation a ''historic turning point'' for Timken.
The presentation might have helped propel Timken stock up $1.26, or 4.1 percent, to $32.20. Shares are down 1.5 percent since Jan. 1, including reinvested dividends, and are up 10.3 percent from a year ago.
Mike Arnold, executive vice president and president of the new Bearings and Power Transmission Group, said Timken is moving from being a maker of bearings to also selling services, components and systems to companies.
Asia will continue to be a hotbed for industrial expansion for years, he said.
Also related to that will be continued global investment in the energy markets, particularly heavy equipment, where Timken can increase sales and profits, Arnold said.
Timken is refocusing its former automobile group into the more profitable aftermarket, he said.
Timken has identified the aerospace industry as another strong growth area, said Ron Menning, president of Timken's aerospace and defense business segment.
Sal Miraglia, president of the Steel group, said he thinks there will be strong global demand for steel for years to come, driven in large part by the ongoing industrialization of China and other parts of Asia.
''We're becoming a more global company,'' said Glenn Eisenberg, executive vice president, finance and administration.
Jim Mackinnon can be reached at 330-996-3544 or jmackinnon@thebeaconjournal.com.
Four words provide a basic idea on Timken Co.'s corporate strategy in the early part of the 21st century:
Get the full article here.
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