The Timken Company ( A1 ) : Timken and Poland
The Timken Company is one of the oldest and one of the universe ‘s prima anti-friction bearing company. The company had two primary purposes: foremost the company wanted a higher place and repute in the market and secondly that the company aimed to hold a beginning of bearings to export. The Timken Company was keenly interested to spread out and develop its company overseas. It wanted to capture maximal country it can by either production in place town or by exporting it in foreign topographic points. There were tonss of things which were been taken into history when they foremost thought of maintaining their pess and purchasing a company in the East Europe in 1993. The company had ever built its ain new workss instead than purchasing the pre-established concern. However due to some unpleasant fiscal state of affairs in 1990 ‘s due to fiscal crisis, the company planned to purchase a pre-owned private sector in less capital investing which can be owned and developed by the Timken company. The Timken Company had got an offer to purchase the Hungarian works which made ball bearing, cylinder bearings and tapered roller bearings but the company had to set a batch of money and the half of the works they were traveling to purchase was non deserving purchasing. The Timken was merely looking for the tapering roller bearing ( TRBs ) , so they refused the offer of the Hungarian works and started runing for some other workss in the same sector which can be more utile to accomplish their mark.
Jon Elasser, the pull offing manager for Europe, Africa and West Asia who was driving the undertaking was non certain if they were right by taking the determination of maintaining their pess in East Europe for this peculiar concern. They already were familiar with the East Europe company repute in market. The East European companies in the same sector were non been found worth for its quality. The U.S companies were non believing of puting up their concern in their concern in East Europe. But about in twelvemonth, there were batch of car companies like Fiat and Volkswagen who collaborated the company with the European companies like Polish auto makers and Skoda severally. The Timken Company had increased its opportunities of acquiring success in the field of TRBs in the East Europe due to different car companies occupying the European market. The west Europe subdivisions in Duston ( U.K ) and Colmar ( France ) of the Timken Company were confronting serious jobs with their works capacity. The companies had a medium graduated table and production capacity and the order was non being completed on clip due to over capacity of the cargos. They were botching their dealingss with many companies and because of that they were running out of concern. Even the U.S subdivision of the company was non able to assist them due to the same job been faced by them.
In average clip, Polish authorities decided to reassign its all four state-owned companies to private sector. This was a turning point for the company. There were many different companies like SKF who wanted to get all the four subdivisions, and were one of the rivals of the Timken. The Timken did non wish to allow the TRBs Company travel to some other custodies. Prema Milmet, one of the four Polish companies, who manufactured TRBs. The Timken Company should look frontward to get Prema Milmet, the Polish works.
The grounds for Timken Company to get Prema Milmet ‘s Polish works are:
§ They would capture major section of the TRBs market in Eastern Europe
§ If the Swedish house, SKF will purchase the works than they will get the most of the market and organize a monopoly in their concern
§ Once any other acquires the Prema Milmet and gets at good place than it would be really hard to vie the company with a new market place
§ All the SKF and German maker FAG history for 70 % import bearing in Poland would be stopped and would be acquired by the Prema MIlmet as it a place company and merchandise would be inexpensive because of less transit cost.
§ They will develop good relationship with the CIE Impexmetal, by which can easy manage all the goods which can be import and export
§ If the Company ( Prema Milmet ) in Poland would be successful in high production measure, than they can export it to the Duston ( U.K ) and Colmar ( France ) subdivision of the Timken Company, which would keep their good image every bit good as do some good net income out of the joint venture of subdivisions
§ The freshly occupying car companies like Fiat and Volkswagen would increase their production and maintain them good in concern
§ The purpose of the company would be achieved by acquiring maximal sum of concern through all the subdivisions
§ Due to the fiscal crisis in Poland, the company are been sold for less monetary value. Once the fiscal position of the state goes high and the market is acquired by some other TRB fabrication company than it would be really hard for the company to step in East Europe market for the concern
In beginning of 1990 ‘s it was proved to be a major point for all bearing fabrication companies. All the universes taking bearing fabricating companies like German maker ( FAG ) and SKF were confronting major jobs with their production and gross revenues. Initially at the peak clip FAG and SKF were the two taking companies of bearing fabrication who had acquired around 70 % of the Poland ‘s bearings imports which valued around $ 25 million yearly. The Prema Milmet was run by the Nipponese bearing company, NSK LTD. The company had a really high net income and was most successful till the beginning of the post-Soviet epoch. As mentioned earlier in early 1990 ‘s the Polish authorities was confronting terrible recognition crunch and sector dropped to 50 % . The bearing fabrication companies in Poland had no authorities subsidies and therefore they had deficiency of money to set in their concern for modernising and upgrading their fabrication line and therefore they started runing for any partnership company which can assist them to carry through their fiscal demands.
In 1992, the European bearing fabrication companies had faced a really critical clip. The car company had reduced its new autos gross revenues across European Union by 25 % in one twelvemonth, which straight affected the companies who supplied bearings to the car company. Timken Company had faced some minor jobs but later it was proved to be a blessing for the company. The competitory companies were confronting large quandary in that period.
Timken ‘s competitory quandary in Europe:
In 1990, there were tonss of alterations occurred in the company places, fiscal state of affairss and European car market. The car sector in Europe reduced its supply till a great extent which affected the bearing supply companies in the peculiar sector. The company had literally reduced the fabrication every bit good as supply measure to a great extend. After Berlin wall fell in 1989, the German maker, FAG was wholly downsized and Eastern European market collapsed. Due to severe fiscal crisis the company had accumulated debt of $ 1.15 one million millions and lost its market place. The universe taking repute it had was wholly lost and shattered. It had to forcefully cut down the work force by 43 % allowing 3500 workers to travel off.
Sing the other universe ‘s top taking bearing fabrication company, SKF was holding same jobs. It had downsized the work force by 1500 workers. Combined doomed of FAG and SKF reached over $ 280 1000000s in an twelvemonth ( 1992 – 1993 ) . SKF had to shut it U.K and Spain workss. The car sector wanted really high quality parts in a really low monetary value. The Timken used to provide the bearing to the Peugeot auto company. Due to downswing of the Peugeot Timken ‘s company got affected every bit good.
Timken ‘s Company started fabricating the merchandises such as “Sensor Pac” which was a bearing with electronic design. At that clip Timken Company had collaborated with Tata Fe and steel company in India and added over 40 % portion in the joint venture. Timken Company even looked frontward for venture in China which was proved to be really positive potency for them. Later the company was making really good busy and was viing the top ball bearing fabrication industries and had a really good place in market. Looking at the gross of Timken from 1992 to 1996 was about doubled to around 2250 million $ U.S. In comparing to the other companies, the net income was still far more less. It had its highest concern in automotive sector followed by general machinery and rail route. It was even providing the parts to Aerospace and excavation but it was less than the others. In 1994, Timken had acquired over 10 % of the entire market in the bearing sector which was more than INA and FAG. It was still behind the SKF which had 19 % of planetary selling.
Elsasser analysed Prema Milmet Company with his squad of applied scientists and executives from Canton and Colmar. There were assorted restraints which were attached to the company. They keenly analysed and found some advantages and disadvantages of the recent company working status. The company produced around 7 million bearings a twelvemonth, but the capacity can be increase several times higher by a proper direction. The company was profitable in future. The best thing in the company production was that they fabricated their full merchandise from the bit. From hammering to coating and even piecing all its parts was from abrasion. The works had a possible to do good concern if been decently maintained. Elsasser would personally develop this company with his few experient employees to convey it at the peak point.
There were few issues which the Timken ‘s appraisal of Prema Milmet identified, in which some could hold been resolved and some were major issues which could do problem down the route. The issues sing the company were:
§ The quality:
The quality of the merchandise the Prema Milmet company fabricated was non up to the Timken ‘s Company criterions. The pureness pf steel used in fabricating the bearings contained tonss of drosss which would do a ruinous failure of the bearing. It was likely running at low criterions which the Timken could non accept. But still the job was been able to decide. They can sell the merchandise to the local car manufacturers and aftermarket, utilizing a different trade name name and subsequently trade with the increasing the quality once the company gets decently handled by the top executives and Elsasser himself.
§ Brand Name:
Due to the hapless quality of the merchandise it was really hard to run into the demands for the company to give its premium trade name name. The Timken Company had to run into its criterion and at least have the merchandise fabrication with a legal ISO 9000 quality certification which can proudly stand for the company criterion and repute in the market. The job could be resolved by giving a different trade name name and therefore sell the merchandise at that present quality.
Elsessar, the director was wondered about the lifting in the labor cost in Poland every twelvemonth. As FAG Company faced in East Germany, they could confront the same job. The company would hold to confront immense losingss in concern and would be hard to cover with the job. This job was wholly depended on the Polish Government and the state ‘s fiscal conditions. The opportunities of the job were really less. And the labor rewards was non in Prema Milmet which can be handled by them.
§ Relationship with Impexmetal:
Impexmetal used to manage all the gross revenues work of the Prema Milmet ‘s direction, so Elsasser had no thought about the gross revenues. This was non a major issue. The Timken ‘s Company could go on good relationship with Impexmetal and therefore develop them decently within a few old ages which can assist them to pull off their complete gross revenues and even assist to increase the annual gross revenues by join forcesing with different companies.