Bearings Company Finds Profit from Automotive NeedMon, 09/01/2014 - 11:08
Q: How does Timken organize its operations in the Mexican market?
A: Timken has been operating globally for 114 years and has been established in Mexico for 61 years. During that time, Mexico has become a source of global growth for us. Historically, Timken was focused on industries such as oil and mining, but the automotive sector has now become a strategic business area. The revenue that comes from our automotive division represents a significant part of our total business operations. The automotive division is divided into three big segments: original equipment, steel, and aftermarket. The latter is further divided into two subdivisions: automotive and industrial, which have comparable levels of business. The industrial side is typically more profitable because of the high specification of those products.
Q: What specific growth opportunities has Timken identified in the automotive sector?
A: There are great growth opportunities across all business segments. Timken is one of the most profitable bearings companies in the world, and in line with this, we have considerably grown our portfolio and product availability in Mexico. We have doubled our part-number availability in important and basic line-ups like bolt bearings. Timken has also been acquiring new external companies to complement its portfolio. One recent purchase was Interlube, a British company providing technological lubrication solutions for vehicles and industrial machinery. New products help us better penetrate the Mexican market and take advantage of the new investments coming from OEMs and Tier 1 and 2 suppliers. Our focus is to help these companies improve their profitability. To achieve this, we created the biggest authorized distribution network in Mexico. Our strategy is also to focus on premium solutions since we are not interested in the volume business. We create tailored solutions that address challenges that had previously not been solved by other products. Timken strives to provide integral solutions with high quality and performance, which means price will always be the last of our considerations.
Q: Is the Mexican market more oriented toward quality and profitability or volume and cost?
A: There is a market for everything here as Mexico is seeing huge demand for high-spec and high-quality products. Investment in high-tech products has been growing since industries like aerospace and automotive require these for their machines. Historically, Timken has been a leader in the quality and performance of tapered bearings with a market share of 46%. However, this brings up a challenge as introducing new products does not necessarily see them being used at a high level of sophistication. To counter this, Timken goes to potential customers and helps them identify problems or areas with higher maintenance costs. We then develop an integral solution and proposal, as well as conducting one-month trials with our product. If the product outlasts the competition by a month and solves the problem then we charge for it, if it is unsuccessful then it remains free. We do not approach business with a price list solution as we tackle problems and offer unique solutions. We do not use this business approach openly, just with larger companies. This process goes ahead every time we launch a new product. As the global authority on bearings, Timken has the ability to go back and improve its bearings so they always outlast our competition.
Q: How are your R&D and innovation efforts impacting the Mexican automotive industry?
A: Innovation is a source of growth for Timken and we make large investments in technology development. The focus of our recent innovation investments has been to continuously offer new products for mid-range and heavy duty trucks. Offering new products that provide integral solutions is how Timken has seen its revenue grow in Mexico. These innovations for trucks have led to a reduction in maintenance time, an increase in performance, an improvement in load capacity, as well as a decrease in CO2 emissions and fuel consumption. OEMs appreciate these advantages and they have delivered positive results in the aftermarket business as well. Technicians and end-users appreciate the lack of unnecessary adjustments to our products as they save money and improve the lifecycle of their vehicles. Other important innovations to Timken’s product portfolio have been a 10% capacity increase for tapered bearings and an automated lubrication system that improves maintenance by automatically lubricating gears and bearings.