Timken Co. executives on Friday said the energy industry drove demand for its steel products and helped set up the Canton company’s record-setting $5.2 billion year in 2011.


But Timken’s plans to capitalize on the oil and gas industry’s needs in upcoming years smacked into a big steel beam this month.


The company’s hourly United Steelworkers employees in Canton rejected a proposed five-year contract that would have led to Timken spending $225 million on its Faircrest steel mill to expand production in 2014.


Now the company and the union have agreed to “discussions” following a meeting Friday, Timken said.


The bearings and steel company released a short statement:


“Representatives from The Timken Co. and USW met today to resume talks. Discussions focused on issues surrounding the vote on January 15th in which the USW membership did not ratify a tentative agreement that was reached in December. The parties agreed to continue discussions next week.”


The union did not release a statement about Friday’s meeting.


Steelworkers Local 1123 on Jan. 15 rejected the proposed contract 917-608. Union officials said the pact was rejected in part because of the current two-tier wage and benefit system and the proposed elimination of a $5,000 retirement bonus. The local has about 2,300 members.


Timken and the union opened early negotiations on the contract, with the current pact due to expire in 2013.


Timken responded to the vote by saying it wanted to talk with the union to understand why the new contract was rejected.


In a conference call Friday with industry analysts, Timken President and Chief Executive James W. Griffith briefly touched on the dispute.


“Just yesterday, company and union negotiators agreed to continue discussions on the labor agreement,” he said in an opening statement. “They are meeting today to discuss the vote and related issues.”


Timken continues to keep the Faircrest expansion in its capital outlay plans “at this point,” Griffith said. Because of the strong energy and mining demand for its steel, Timken is “capacity constrained,” he said.


“More than anywhere else in the company, energy was the headline of our steel segment growth,” he said. “Sales volume from the oil and gas sector rose 80 percent for the year.”


Steel sales of $468 million in the fourth quarter were up 23 percent from a year ago, said Glenn Eisenberg, Timken’s chief financial officer.


For the year, Timken earned $454.3 million, or $4.59 a share, on revenue of $5.2 billion. That compares with $274.8 million, or $2.73 a share, on revenue of nearly $4.1 billion in 2010. The company released its earnings after the stock market closed Thursday.


The company said it expects earnings to grow to $4.90 to $5.20 a share this year and that revenue will increase 5 to 8 percent.


Shares of Timken rose $1.37 in Friday trading to $49.04.


Shares are up 27 percent since Jan. 1, including dividends, and are up 1.5 percent from a year ago.


Jim Mackinnon can be reached at 330-996-3544 or jmackinnon@thebeaconjournal.com.