Carriage maker Henry Timken founded the Timken Co. in 1899 to manufacture tapered roller bearings, which he invented to make it easier for heavy-freight wagons to make sharp turns.
More than a century later, Canton, Ohio-based Timken Co. has evolved into one of the world's top producers of anti-friction bearings and alloy-steel components, employing 21,000 people worldwide and 4,700 people in Canton's Stark County.
But if that's all you know about Timken, "you really miss the essence of the story of why we're still here after 112 years," Timken CEO and President Jim Griffith said Wednesday night, and why Timken posted record sales and earnings in 2011 "while so many other companies have fallen by the wayside."
"Timken today is a fundamentally different company than we were 10 years ago," Griffith told a packed house at the Canton Civic Center, keynoting the Canton Regional Chamber of Commerce's 98th Annual Dinner.
Griffith detailed a "mega shift" that's taken place at Timken over the past decade, driven by the realization that the company's greatest lever is its knowledge, and "applying that knowledge in a way that creates value for customers."
That has enabled the company to find new markets and applications for its products, at a time when some of its core business lines have been in decline.
Griffith noted that Timken's sales to automakers -- the foundation of its growth for decades -- have fallen from 50% of the company's total revenue to 20% today.
Meanwhile, sales of Timken bearings and other products to oil-and-gas drilling customers have shot up 270%, according to Griffith, who noted that a proposed $225 million expansion of its Faircrest Steel Plant near Canton is "driven by opportunities that come out of that market."
Timken's full-year 2011 revenue jumped 28% to an all-time high of $5.2 billion, buoyed by growth in the energy market as well as strong demand in the heavy-truck, mining and industrial-distribution markets, he added.
Beyond Bearings
In an effort to become more vertically integrated, Timken built its Faircrest Steel Plant in the mid-1980s. Today, Timken's steel business sells 90% of its products outside the company, according to Griffith.
Over the past decade, the company has expanded its product portfolio in a push to become "a full-line industrial-bearing company," Griffith said.
In the past few years, the emphasis has been on moving beyond bearings into gearboxes and other power-transmission components, largely through acquisitions.
In 2011, Timken purchased Philadelphia Gear Corp., a manufacturer of gear drives and components for energy, infrastructure, industrial and marine applications; and Drives LLC, a manufacturer of drive-chains, roller-chains and conveyor augers for the mobile and industrial-machinery sectors.
Other acquisitions have helped Timken's steel business diversify. In 2008, Timken acquired Boring Specialties Inc., a Houston-based manufacturer of machines and equipment for deep-hole oil-and-gas drilling and extraction, "further extending [Timken's] strong position in the growing market for high-performance energy products," according to Timken.
"In 2011, 30% of what our steel business sold didn't exist five years ago," Griffith said Wednesday night.
The broader, deeper product portfolio "has allowed us to shift into more value-adding, more profitable markets, Griffith added" -- and it has been fueled by an expansion of Timken's global footprint.
"Fifteen years ago, we saw Asia as a place of budding growth, and we began to put the infrastructure there," Griffith said.
That includes a new factory in Xiangtan, China, that its joint venture -- Timken-XEMC Bearings Co. Ltd. -- opened in 2010 to manufacture bearings for large-scale wind turbines. Timken holds an 80% ownership stake in the joint venture with XEMC Windpower Co. Ltd.
Timken inked its first joint venture in China in 1996, Griffith said. Over the past decade, Timken's sales in China have ballooned by 1,700% -- from approximately $10 million in 2000 to $300 million today -- and the company now employs more than 4,000 people there.
China has become Timken's second-largest market, behind the United States, he added.
"The vibrantly growing middle class is creating an opportunity for us to grow, and that growth is critical to the future of our company," Griffith said.
Local Impact
With several hundred merchants from the Canton region in attendance Wednesday night, Griffith emphasized that Timken's success in China has a positive impact on the local economy.
"If you listen to the politicians," that's not the case, he said, asserting that expanding internationally is not about "businessmen who are offshoring jobs and taking jobs overseas and causing unemployment."
To make his point, Griffith noted that Timken in 2011 exported $667 million in products -- Timken's equivalent of 3,000 American jobs, he added.
"Every time we make an investment in a country overseas, it creates job opportunities right here at home," Griffith said. "Being part of a global company and having a global company in Stark County is important to all of us who live here."
While he said that "our international businesses are critically important to the company and critically important to the future," he emphasized that Timken still has a strong presence in the United States, where the company has 55% of its global workforce.
Over the past five years, Timken has sunk $200 million into the Canton/Akron area, including its investment in an 18,000-square-foot wind-energy R&D center and its new small-bar steel-rolling mill in Canton.
"Anybody who says manufacturing is dead in the United States -- that there's no future for manufacturing in the United States -- needs to come look at the Timken Co.," Griffith said, "because it's important and it's vital to us."
Would you like a behind-the-scenes look at how Timken approaches continuous improvement? IndustryWeek is hosting an Excellence in Action Series tour at the Timken Faircrest Steel Plant on Thursday, May 31. Click here for additional information or to register online.
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