The Timken Company Case 46

3969 Words Jun 11th, 2011 16 Pages
THE TIMKEN COMPANY
In 2002, The Timken Company was considering acquiring The Torrington Company from Ingersoll-Rand. The acquisition would make a clear statement to the market about Timken’s commitment to remain a worldwide leader in the bearing industry as it would result in the combination of more than 100 years of bearing manufacturing and development experience.
Because the two companies shared many of the same customers but had few products in common, customers would surely appreciate the ability to have more of their needs met by Timken’s sales representatives. Moreover, Timken’s potential annual cost savings from consolidating manufacturing facilities and processes were estimated to be more than $80 million.
If the price paid for
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NSK, Ltd., based in Tokyo, Japan, produced bearings for the automotive, information-technology, and electronics industries. In 2002, NSK’s sales reached $3.62 billion and employment topped 22,000, spread across 50 subsidiaries worldwide. In 2002, Timken reported a net income of $38.7 million on sales of $2.55 billion (Exhibit 1) and assets of $2.75 billion (Exhibit 2). Two-thirds of Timken’s sales came from bearings and about 20% of its sales were from outside the United States. Timken had operations in 25 countries and employed nearly 18,000 workers.
The Timken Company
In 1898, veteran St. Louis carriage-maker Henry Timken patented a design for tapered roller bearings (bearings enclosed between a pair of concentric rings) to facilitate the motion of carriage axles. The following year, Timken and his sons, William and Henry (H. H.), founded The Timken Roller Bearing Axle Company, which was the beginning of what was to become a global manufacturer of highly engineered bearings, alloy and specialty steel, and related components. In 1902, the company moved to Canton, Ohio, to be near the growing steelworks in Pittsburgh and the new automobile factories in Buffalo, Cleveland, and Detroit. In 1908, with the debut of the Ford Model T, the Timkens’ business soared. In 1917, the company began making its own steel for bearings.
Timken stock was sold to the public for the first time in 1922. World War II created increased demand for Timken’s products, and the

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