MRO Magazine

Global bearing alliance puts industry on alert (April 01, 2001)

NTN Corporation, Osaka, Japan, and FAG Kugelfischer Georg Schfer AG, Schweinfurt, Germany, entered into a global strategic alliance at the conclusion of intensive negotiations mid-February in Paris. ...


April 1, 2001
By Bill Roebuck, Editor

NTN Corporation, Osaka, Japan, and FAG Kugelfischer Georg Schfer AG, Schweinfurt, Germany, entered into a global strategic alliance at the conclusion of intensive negotiations mid-February in Paris. Both companies–major players in the worldwide rolling bearing industry–have reached a Memorandum of Understanding related to the production, sales and service of wheel and rolling bearings in Europe and North America.

Rick Thomas, vice-president sales & marketing, NTN Bearing Corporation of Canada, Mississauga, Ont., commented that one of the factors that led to the alliance is that there is too much bearing manufacturing capacity in the world. “Unlike other industries, there has not been a lot of consolidation in the past among bearing manufacturers,” he said. “These companies have seen that the way to go is to use their resources more efficiently.”

The purpose of the partnership, the companies report, is to significantly improve efficiency in areas such as research and development, administration and processes, and common procurement. They plan to work as allies to jointly face the future challenges of the bearing industry, to develop innovative new generations of rolling bearing systems and to deliver more value to the customer by improving the availability and service of competitive product.

The partnership is based on the fact that NTN and FAG are ideally fit for collaboration in various fields of the business, according to a statement released jointly. Both companies product portfolio, their regional presence and strength in the market, as well as their customer base, are widely complementary. “Our different foothold in production and sales, and our respective regional strength, will enable us to leverage a maximum of manufacturing synergies, market access and customer satisfaction,” said NTN president Toyoaki Itoh.

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“Our global bearings alliance will increase our common product range, create a well-balanced regional presence and improve profitability for both companies,” added FAG chairman and CEO Prof. Uwe Loos.

The partnership intends to set up a common supplier base for raw materials, components, tools and services, and to create a joint marketplace for e-commerce applications.

Both companies also plan to establish a series of joint-ventures in Europe and North America. In manufacturing, a joint production company of wheel hub bearings in the U.S.A. and joint production companies of ball and tapered roller bearings in Portugal and Hungary are also targeted.

Also, a common new sales and marketing organization is planned in Canada to target the market for industrial bearings. It may be extended to other countries and markets later. Nevertheless, these schemes are subject to the approval of appropriate regulatory agencies, a spokesman said.

According to Bob Marshall, vice-president and general manager of FAG Canada’s national sales division, the alliance “definitely will have an impact on our production facilities, on who is going to manufacturer what, and where. But it’s too soon to understand how it will work.” He is in aggreement that the result will be beneficial to both companies, though.

NTN’s Thomas commented that NTN and FAG have approximately the same market share in Canada. “It’s like a merger of equals. We’re very complementary in Canada. I’m looking forward to working with FAG. They have an excellent reputation and make excellent products.”

Both partners will maintain their companies as economic and legal entities. The corporate identity and respective brands will remain separate and independent. No mutual equity contribution nor a share swap have been planned. Where common sales activities are earmarked the customer body will be served with a wider range of products from both brands.

Editor’s Note: A North American meeting of the partners was scheduled for early April. For updated details, check the NewsBreak section of Machinery & Equipment MRO’s website at www.mro-esource.com.

PEMAC LAUNCHES INTO YEAR WITH ENTHUSIASM

PEMAC, the Plant Engineering and Maintenance Association of Canada, based in Toronto, solidified its future direction in February with the election of David Taggart, P. Eng., as president.

Taggart, who is director of maintenance management services at Giffels Associates Limited, Rexdale, Ont., took over the reins from Bill Davison, who retired from the role of president earlier this year.

Taggart is excited about the appointment. “Do we ever have opportunities in front of us,” he exclaimed. “The PEMAC executive committee feels like the proverbial kid in the candy store. There are so many opportunities, but so little time and resources. We will have to focus on doing a few things well.”

The new president has asked each of the association’s board members to bring to the next meeting “just one good project” they would like to complete this year.

Taggart noted that industry in Canada is still crying out for skilled trades and technical people. “These are the people that can help turn the economy around and while they are doing so they will create quite a good life for themselves. PEMAC plans to be right there doing its part. The association’s MMP (maintenance management professional) program has made great strides to upgrade and improve the skills and technical capabilities of its members.

“We hope to do many more good things shortly. For example, distance learning will be on-line soon. Plant tours are one of my favourites. I always seem to learn something on a tour that is useful or I meet an interesting PEMAC person who gives me some new perspective.”

Taggart points out that people can only get something out of PEMAC if they get involved. “Do it,” he recommended.

“Our organization has a unique, all-encompassing membership, welcoming plant engineering and maintenance professionals, trades, workers, supervisors, contractors, suppliers… they don’t even discriminate against consultants like me,” he added.

For more information or details about PEMAC’s future meetings, contact Taggart directly at tel. 416-798-5516, fax 416-798-5559 or e-mail at david.taggart@giffels.com. (BR)

MEMAC CHEWS ON MERGER WITH CME

The Ottawa, Ont., based Machinery & Equipment Manufacturers Association of Canada (MEMAC) was to hold a special meeting of its members on April 11, 2001, in Toronto to discuss and vote on a proposal to merge the association with CME, the Canadian Manufacturers and Exporters association.

Membership of Canada’s machinery builders in MEMAC has been declining steadily over the past few years and the group’s financial reserves have deteriorated to a point that it would be in a deficit position in a year’s time. Currently, there are 60 regular members and seven associate members.

According to MEMAC chairman Larry Barrett, one of the reasons for the decline in membership is that many of the member organizations have merged with larger companies or have consolidated their operations, some moving back to their home country.

“The management of the smaller organizations that now make up the bulk of MEMAC’s membership has difficulty spending the time necessary to encourage the growth of the organization,” he says.

Lloyd Beverly, the association’s staff president for the past five years, recently resigned, but has continued to work with the group in a consulting role. The association’s Ottawa office was to be closed at the beginning of May, 2001.

Options for MEMAC members include restructuring the association and using the service of an outside professional to run it; purchasing administration services from another association so as to retain MEMAC’s primary identity; pursuing a merger with another organization such as CME, the Electro Federation or the Canadian Advanced Technology Alliance; carrying on until the cash reserve is depleted; or closing the association completely.

According to Barrett, the executive board views a merger with CME as having the best benefit for the members of MEMAC. In such a case, the group would retain its
identity as a separate council of CME. Currently, 19 MEMAC members are also members of CME.

The goal of the merger would be to reduce administrative costs while maintaining a number of the key benefits of MEMAC, including networking, learning and business development. Barrett notes there are several additional advantages of membership in a much larger organization.

Until the fall of 2000, CME was known as the Alliance of Manufacturers & Exporters Canada. That organization had been created in 1996 from the merger of the Canadian Manufacturers Association and Canadian Exporters Association.

“We are Canadian manufacturers and exporters,” says Perrin Beatty, president and CEO of CME. Regarding the new name, he says it is a “clearer reflection of who we are and more importantly who we represent. Our members represent 75 per cent of this country’s manufacturing output and 90 per cent of merchandise exports.

“We provide value through advocating on their behalf to all levels of government and by providing information and networking sessions designed to enhance the competitiveness of Canadian industry and expand export opportunities.”

CME has a national office in Ottawa, a corporate office in Mississauga, Ont., and divisional offices in all 10 provinces. (BR)

Editor’s Note: For the latest update on MEMAC’s future, including a report from the April 11 meeting, please check the regular industrial news updates in the NewsBreak section located at www.mro-esource.com, the web site of Machinery & Equipment MRO magazine. Details also will be published in our June 2001 issue.