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The Timken Company (USA) announced it has reached a preliminary agreement to sell its Standard Plant airplane bearing business assets to Roller Bearing Company of America Inc. (RBC, USA). The sale includes some of the production assets at Timken's Standard Plant in Torrington, Connecticut, but not the facility itself. Although it is still in active negotiations, the deal is expected to be complete in 60 days, by mid-December.
Timken inherited the massive, turn-of-the-century Torrington Standard Plant -- all 500,000 square feet and six stories of it -- and the Fafnir division housed there, when it acquired The Torrington Company from Ingersoll-Rand earlier this year. But the Standard Plant's product line for airplanes is not a good fit with Timken's other aircraft and aerospace bearing business. Timken officially announced plans to divest the operation in August 2003.
Michael Arnold, Industrial Group President, said, "The fixed-wing airframe product line is not a strategic business for Timken. Selling it to a buyer that is better positioned to compete in just that product line offers the plant and its associates the best chance to stay competitive and preserve jobs. The sale takes us out of the catalog aerospace market and allows us to concentrate on bringing greater value in specialty, precision aerospace products for engines, gearboxes, auxiliary power units, landing wheels and instrumentation and all helicopter bearing applications."
The long-expected announcement comes even as negotiations continue and, according to Timken, the deal has yet to reach its final form.
The deal as currently structured with RBC is somewhat complex, and indicates the extraordinary lengths to which Timken had to go in order to make the transaction work for RBC.
As it now stands, by mid-December, Timken will terminate the 190 Standard Plant employees currently working in the airplane bearing segment, taking on the separation and severance expenses.
The remaining 100 or so Standard Plant employees are unaffected and will continue to work for Timken in the unleased portion of the facility. They are involved in other types of aerospace and precision bearings, including automotive and outboard marine bearings.
Also by mid-December, RBC is to acquire the plant's airplane-bearing-related assets from Timken. Reportedly, that includes various production assets, including machining, grinding, assembly, and other related equipment. There was no direct word yet on whether it includes the heat treat or extensive testing facilities.
For personnel, RBC will begin interviewing and hiring back people for its own workforce. Neither company has indicated if current employees have preferential standing in the rehiring process.
The separation/rehire arrangement works well for RBC, allowing it to adjust staffing, pay scales, and initiate health care coverage as RBC employees. The alternative, handling workers as Timken employees coming via acquisition, could have been far more expensive and restrictive.
The Standard Plant remains Timken-owned. In that cavernous facility, RBC is leasing only the floorspace it needs to pull the airplane bearing business assets together. What portion of the buildings this represents, and the cost, are both still under negotiation, according to Timken. Timken will continue to run production in other areas of the Standard Plant with its 100 remaining employees.
eBearing spoke to Timken spokesperson Carol Titus, who said the company must decline to offer many specifics at this point, such as the future of the Fafnir brand, the impact of the disposition on Timken's sales, and the impact on CDSOA payouts, among other questions we raised. Timken will disclose those details once a final agreement with RBC has been worked out.
As clear as the reasons for Timken wanting out of the Standard Plant's overhead and product lines, so too are several reasons for RBC's interest.
First is RBC's senior management direct experience and comfort level with the Fafnir products and the markets for those products produced at the Standard Plant. Second is the probability RBC was the only acceptable acquirer to Timken; it did not want to strengthen any direct competitors or necessarily divulge competitive information by selling the aircraft bearing segment to SKF or INA, for example. Third, RBC can easily leverage the airplane bearing business to help its other related aircraft and aerospace business segments. Acquiring the airplane bearing operation brings with it, for example, much-needed vendor approvals for RBC from customers such as Boeing and Airbus.
Dr. Michael Hartnett, RBC's President and CEO, said, "We are the right company to buy the airframe business at the Standard Plant. The business compliments our own line of products for the aerospace industry. We are committed to making the Standard Plant competitive and profitable."
The last point is key. Even under Ingersoll-Rand, Torrington had plans to shut down the Standard Plant because it had not been profitable and Torrington was having no success in that direction. A Torrington executive once told eBearing, "The Standard Plant is a piece of history, but the overhead is enough to stop your heart." Many believe the only reason Ingersoll-Rand agreed to keep the Standard Plant open was because closing it would have produced a lower selling price for Torrington.
While Timken is ill-equipped to take the Standard Plant's products into the fixed-wing marketplace, RBC takes on risks of its own. Primarily, the concern is that RBC runs a risk of spreading its limited corporate and financial resources too thin. Some of that risk is blunted, however, by RBC senior management's intimate familiarity with the Standard Plant's products and customers.
One industry observer told eBearing, "It is safe to say RBC negotiated from a position of strength. They surely know far more about the Standard Plant, its products and customers, than Timken ever will."
As the press release pointed out, "RBC focuses on the kind of higher volume, catalog product made at the Standard Plant. The plant manufactures aircraft control bearings, aircraft rod ends, radial bearings and aircraft track rollers."
Because of the Standard Plant's history and because so much of its product line overlaps existing RBC operations -- from Nice to Heim to Industrial Tectonics -- most people we talked to think it's unlikely RBC will stay in Torrington for long. Instead, most believe production will be gradually shifted out to existing RBC facilities. "In other words," said one, "the short term need is to ensure production, while the long term need is to ensure profitability." RBC is now in a position to do both.
| Product Model | Inside Diameter | Outside Diameter | Thickness |
| CH9VUU IKO | 14.288 | 11.1 | |
| CH9VBUU IKO | 14.288 | 11.1 |