|
|
|
|
The eBearing News
December 15, 2000
SKF Acquires Roller Bearing Industries in U.S.
copyright © 2000 eBearing Inc.
SKF AB (Sweden) has acquired Roller Bearing Industries (RBI), a family-owned
business employing approximately 100 people in Elizabethtown, Kentucky. This acquisition,
though small for SKF, has - according to rail experts we spoke to - the potential to
change the North American railroad bearing market.
Egon Ekdahl of SKF Railway said, "This acquisition will allow us to strengthen our
position in North America and further develop SKF's global leadership in this
industry." But it will do far more than that.
SKF is the world's largest manufacturer of railroad wheel set bearings, but the company
has had no real presence in the huge North American marketplace since the late 1970's.
SKF withdrew, citing the added costs of dumping duties as pricing them out of the
market. RBI (founded in 1980) claims to be the only remaining independent reconditioner/remanufacturer
of those same tapered journal roller bearings.
The market for new railroad journal bearings, estimated at 500,000 units per year in the
U.S., is currently split among three manufacturers. Timken and Brenco have 98% of
the market, while General Bearing's Hyatt division (in this market since 1994)
holds onto the remaining 2%.
In 1990, the railcar industry passed rules requiring that all new railcars use only new
bearings. But maintenance operations are still free to use reconditioned bearings if they
choose. Due to the extremely high cost of new bearings and the advent of advanced
reconditioning techniques, the use of reconditioned/rebuilt bearings has become common;
reconditioned bearings are 60% to 70% less expensive than new ones. In fact, the
estimated market for reconditioned railcar journal roller bearings is now over 1,000,000
units annually, roughly double the market for new bearings.
In that reconditioned bearing market, divisions of Timken and Brenco again have the
largest market share, with 85%. RBI claims the remaining 15%.
Barriers to entry in the railroad bearing market are extremely high, with multiple levels
of certification required, testing procedures which can last many years, extensive quality
and performance criteria and evaluations to meet before certification is awarded.
IMPORTANT NOTE
The following sections contain serious allegations made publicly by RBI in filings
and prehearing statements to the U.S. International Trade Commission during their
Sunset Review of antidumping duties in early 2000.
It is important for the reader to remember that these allegations were unsolicited
by the USITC and unsubstantiated.
They are repeated here as part of the USITC public record on the subject and because
they help to illustrate RBI's attitude toward their competitors. Finally, and more
significantly, they provide a unique public record insight as to why RBI took the
seemingly counterintuitive position that removing dumping duties would help their
own domestic competitive situation.
|
For years, RBI has charged that Timken and Brenco have engaged in a wide variety of
predatory market practices, abusing their market share and access to materials to threaten
RBI's existence, exclude RBI products from the market via their control of the bearing
certification committees, block RBI's membership to the Roller Bearing Manufacturing
Engineering Committee, lying to customers about the quality of RBI products, and other
anticompetitive market, supply and certification practices. At one point, Brenco
representatives were telling RBI customers that RBI's reconditioning was in violation
of industry practices. RBI then sued Brenco for defamation and won.
In March 2000, RBI submitted a prehearing statement to the U.S. International Trade
Commission during its Sunset Review of the antidumping duties on bearings.
RBI's statement strongly supported revoking the antidumping orders. At the same time,
it illustrated RBI's future market strategy.
In its prehearing statement to the USITC, RBI alleged Timken and Brenco's market dominance
was artificially created by the late-1970's dumping duties on imported bearings. RBI
said the resulting high prices on all foreign-sourced bearings essentially eliminated
them from the marketplace.
RBI went on to claim that since that time, Timken and Brenco have teamed up against
competitors, and that the absence of competition has resulted in the U.S. now being
behind the rest of the world in the introduction of new rail bearing technologies and products.
The RBI filing goes on to say that, in order to compete with Timken and Brenco and
to assure access to the components it needs to stay in business, RBI must now set
up a factory and become a bearing manufacturer itself.
RBI's President Daniel Conway said, "...my company must obtain its own supply of new
bearings and component parts to stay in business. It needs new bearings to respond to the
strategy of Timken and Brenco bundling new bearings with reconditioning work in an effort
to drive RBI out of business."
The USITC's June 2000 decision to eliminate dumping duties on these bearings, which
many claim sealed SKF's interest in acquiring RBI, would seem to settle all of these
issues for both RBI and SKF.
Being acquired by SKF solves RBI's problems and gives SKF an instant presence in the
U.S. marketplace.
|
|
|
printer-friendly version
|
|
- by Bruce A. Carr
from individual research,
tips and commercial sources.
Unauthorized reproduction is prohibited.
|
|
eBearing.com ... for everything that moves™
Entire contents Copyright 1999-2008, eBearing Inc. All rights reserved.
eBearing.com and "... for everything that moves" are registered
trademarks of eBearing Inc.
|
|
|
|
|
| |
eBearing.com ... for everything that moves™
Entire contents Copyright © 1999-2008, eBearing Inc. All rights reserved.
eBearing.com and "... for everything that moves" are registered trademarks of eBearing Inc.
|
|
|
