At first, the board of directors at the Timken Co. objected strongly to the idea of splitting into separate companies, one making bearings and the other steel. By Thursday, the board had decided to change course, unanimously agreeing with the company’s largest shareholder, California-based Relational Investors, that two stand-alone companies would offer a clearer picture to investors, bringing added shareholder value.
Ward Timken, the company chairman who will become the new steel firm’s chief executive, cited the careful analysis, including listening closely to shareholders. In the end, company executives realized that delivering the full value of an integrated operation was a longer term proposition than they initially thought. The market agreed, company shares rising after the split was announced.
A presence in Stark County for 114 years, the Timken Co.’s commitment to technology and high quality in bearings and steel has made it an anchor of the local, and regional, economy and an example of how heavy manufacturing can adapt and survive in a global economy. Fortunately, for Stark County, little likely will change, both new companies remaining invested in the community.
More, the new companies will not be separated entirely. Executives are exploring ways to share technology, and the new bearings business is expected to purchase steel from the new steel firm. Executives noted that some outside steel purchases have been made for over a decade, depending on the quality needed and price.
Although the push came from the outside, and appeared threatening, the board performed its job, gathering the information needed to make the right decision for the company’s shareholders. Two strong, world-class companies now will operate in Stark County, the Timken Co. name intact as the name for the new bearings company. The steel company will likely retain the Timken name in some way. Ward Timken emphasizes that the core values that made the company a leader in steel and bearings haven’t changed.
If shareholders are happy, residents of Stark County and Northeast Ohio should be, too. Two well-equipped and well-positioned companies will take the place of one, continuing a commitment to be the best in the business in bearings and steel.