The goal of the venture is to manufacture low-cost, high-volume automotive size single-row tapered roller bearings. Construction of the new facility will begin in late 2002; it is scheduled to come online in early 2004. Initial production capacity is estimated to be in the neighborhood of 15 million bearings per year.

The new factory's equipment will primarily come from Timken's plant in Duston, England, which is in the process of closing. NSK will supply machinery from existing plants in Japan.

Jim Griffith, Timken's President and CEO, said, "This initiative continues the transformation of the Timken Company. It positions us to work more effectively with our global customers by establishing manufacturing capacity in Asia for small-size automotive product. It also continues our efforts to reduce our manufacturing costs by adding a low-cost source for these products. This joint venture with NSK will help both of us grow profitably as independent companies."

Tetsuo Sekiya, NSK Ltd's President and CEO, said, "Both Timken and NSK are bearing industry leaders, and this joint venture will help both companies maintain their worldwide competitiveness. This partnership will enable us to combine our technical and management strengths in the production of bearings that are used widely."

While manufacturing will be combined, the finished bearings will be marketed and sold independently by both Timken and NSK.

Most of the world's largest bearing manufacturers (including Timken and NSK) already operate in China, but quality and perception issues have kept these products out of North American and Western European markets. Apparently, this will still be true as none of the bearings from Timken-NSK are expected to be brought into North America. In an emailed response to several questions, a Timken spokeswoman indicated to eBearing that, "The U.S. is NOT a primary target for this initiative. We are focused on our long-term goal of growing our business in Asia and around the world."

Until recently, a venture in China involving two non-Chinese companies would have been impossible. China's entry into the World Trade Organization and relaxation of rules requiring partial domestic ownership have made joint ventures such as this possible and less risky. General Bearing, for another example, has taken the changes as an opportunity to buy out the domestic partners in its Chinese facilities.

As to why Timken and NSK chose each other, the Timken spokeswoman told eBearing, "WIth regard to choosing our partner...Let me first say that we have several ventures with other industrial companies, including competitors, that offer the opportunity for profitable growth. NSK was an ideal partner in this venture because they offer a good fit... they are a world leader in bearings...we are the largest tapered roller bearing manufacturer in the world. This venture positions Timken to operate more competitively by giving us a total lower cost source for common industry part numbers. And that strengthens our position as an independent company."

Mr. Sekiya said, "The markets for these [small automotive] bearings are fiercely competitive. To meet the demands of our customers, we must manufacture them in a total low-cost environment."

Mr. Griffith concluded, "We are on track to achieve our cost-reduction goal. This joint venture will further contribute to reducing costs and increasing our global competitiveness. Our fundamental goal is to create additional value for both our customers and shareholders, and this joint venture will do precisely that."

Last May 2001, Timken and NSK were denying rumors of a merger or joint venture. Mr. Griffith said at the time, "We have explored several limited ventures with NSK, and none has come to fruition. We are planning no further discussions with NSK."

However, since that time, Timken and NSK have suffered financial difficulties and losses. Both are in the midst of deep, wide-ranging restructuring efforts which extend internationally. In addition, INA has since acquired FAG, creating an even more competitive world marketplace.

In August 2001, Timken and NSK announed a joint venture to supply tapered roller bearings to Toyota worldwide. In that case, the venture involves deploying joint "customer satisfaction teams" comprised of sales, marketing and engineering representatives from both companies. The parent companies are jointly supporting the teams, from application engineering to order fill and manufacturing support.

The two companies are still strong competitors in the marketplace, however, evidenced by Timken recently snatching away NSK's front hub assembly business for DaimlerChrysler's popular PT Cruiser.
(Adopted From eBearing.com)