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The eBearing News
October 22, 2003
RBC Will Acquire Timken's Standard Plant
Airframe Bearing Business
copyright © 2003 eBearing Inc.
The Timken Company (USA) announced it has reached a preliminary agreement to sell its Standard Plant
airplane bearing business assets to Roller Bearing Company of America Inc. (RBC, USA). The sale includes
some of the production assets at Timken's Standard Plant in Torrington, Connecticut, but not the facility itself.
Although it is still in active negotiations, the deal is expected to be complete in 60 days, by mid-December.
eBearing reported at length on the Standard Plant's potential sale back on
August 5, 2003, including its history and an in-depth analysis of RBC as
the leading candidate to acquire it.
• article: Timken pursuing Standard Plant sale
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Timken inherited the massive, turn-of-the-century Torrington Standard Plant -- all 500,000 square feet
and six stories of it -- and the Fafnir division
housed there, when it acquired The Torrington Company from Ingersoll-Rand earlier this year.
But the Standard Plant's product line for airplanes is not a good fit with Timken's other aircraft and
aerospace bearing business. Timken officially announced plans to divest the operation in August 2003.
Michael Arnold, Industrial Group President, said, "The fixed-wing airframe product line is not a strategic
business for Timken. Selling it to a buyer that is better positioned to compete in just that product line
offers the plant and its associates the best chance to stay competitive and preserve jobs. The sale takes us out
of the catalog aerospace market and allows us to concentrate on bringing greater value in specialty,
precision aerospace products for engines, gearboxes, auxiliary power units, landing wheels and
instrumentation and all helicopter bearing applications."
The long-expected announcement comes even as negotiations continue and, according to Timken, the deal
has yet to reach its final form.
The deal as currently structured with RBC is somewhat complex, and indicates the extraordinary lengths
to which Timken had to go in order to make the transaction work for RBC.
As it now stands, by mid-December, Timken will terminate the 190 Standard Plant employees currently
working in the airplane bearing segment, taking on the separation and severance expenses.
The remaining 100 or so Standard Plant employees are unaffected and will continue to work for
Timken in the unleased portion of the facility. They are involved in other types of aerospace and precision
bearings, including automotive and outboard marine bearings.
Also by mid-December, RBC is to acquire the plant's airplane-bearing-related assets from Timken.
Reportedly, that includes various production assets, including machining, grinding, assembly, and
other related equipment. There was no direct word yet on whether it includes the heat treat or
extensive testing facilities.
For personnel, RBC will begin interviewing and hiring back people for its own workforce. Neither company has
indicated if current employees have preferential standing in the rehiring process.
The separation/rehire arrangement works well for RBC, allowing it to adjust staffing, pay scales,
and initiate health care coverage as RBC employees. The alternative, handling workers as Timken employees
coming via acquisition, could have been far more expensive and restrictive.
The Standard Plant remains Timken-owned. In that cavernous facility, RBC is leasing only the
floorspace it needs to pull the airplane bearing business assets together. What portion of the buildings
this represents, and the cost, are both still under negotiation, according to Timken.
Timken will continue to run production in other areas of the Standard Plant with its
100 remaining employees.
eBearing spoke to Timken spokesperson Carol Titus, who said the company must decline to offer many
specifics at this point, such as the future of the Fafnir brand, the impact of the disposition on Timken's sales,
and the impact on CDSOA payouts, among other questions we raised. Timken will disclose those details
once a final agreement with RBC has been worked out.
As clear as the reasons for Timken wanting out of the Standard Plant's overhead and product lines,
so too are several reasons for RBC's interest.
First is RBC's senior management direct experience and comfort level with the
Fafnir products and the markets for those products produced at the Standard Plant. Second is the
probability RBC was the only acceptable acquirer to Timken; it did not want to strengthen any direct
competitors or necessarily divulge competitive information by selling the aircraft bearing segment
to SKF or INA, for example. Third, RBC can easily leverage the airplane bearing business to help
its other related aircraft and aerospace business segments. Acquiring the airplane bearing
operation brings with it, for example, much-needed vendor approvals for RBC from customers
such as Boeing and Airbus.
Dr. Michael Hartnett, RBC's President and CEO, said, "We are the right company to buy the airframe business
at the Standard Plant. The business compliments our own line of products for the aerospace industry.
We are committed to making the Standard Plant competitive and profitable."
The last point is key. Even under Ingersoll-Rand, Torrington had plans to shut down the
Standard Plant because it had not been profitable and Torrington was having no success in that direction.
A Torrington executive once told eBearing, "The Standard Plant is a piece of history, but the overhead is
enough to stop your heart."
Many believe the only reason Ingersoll-Rand agreed to keep the Standard Plant open was because closing it
would have produced a lower selling price for Torrington.
While Timken is ill-equipped to take the Standard Plant's products into the fixed-wing marketplace,
RBC takes on risks of its own. Primarily, the concern is that RBC runs a risk of spreading its
limited corporate and financial resources too thin. Some of that risk is blunted, however, by
RBC senior management's intimate familiarity with the Standard Plant's products and customers.
One industry observer told eBearing, "It is safe to say RBC negotiated from a position of strength.
They surely know far more about the Standard Plant, its products and customers, than Timken ever will."
As the press release pointed out, "RBC focuses on the kind of higher volume, catalog product made
at the Standard Plant. The plant manufactures aircraft control bearings, aircraft rod ends, radial
bearings and aircraft track rollers."
Because of the Standard Plant's history and because so much of its product line
overlaps existing RBC operations -- from Nice to
Heim to Industrial Tectonics -- most people we talked to think it's unlikely RBC will stay
in Torrington for long. Instead, most believe production will be gradually shifted out to
existing RBC facilities. "In other words," said one, "the short term need is to ensure production, while
the long term need is to ensure profitability." RBC is now in a position to do both.
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- by Bruce A. Carr
from individual research,
tips and commercial sources.
Unauthorized reproduction is prohibited.
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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.
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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.
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