Presentation on theme: "The Timken Company 2006 Profile"— Presentation transcript:
1The Timken Company 2006 Profile Where You TurnThe Timken Company2006 ProfileGreet those in attendance.Make introductions.Thank you for inviting me to talk about The Timken Company. As you are about to find out, Timken helps keep the world turning by using innovative ways to make customers’ products run smoother, faster and more efficiently. Our highly-engineered bearings, alloy steels and related products and services turn up everywhere – on land, sea and space. In fact, we’re WHERE YOU TURN – whether you’re a manufacturer, distributor, end-user or consumer – for better performance.*Speaker’s Note: You can customize a couple examples here based on the audience:Students/General YOU Consumers Use TKR products in cars, appliances, etc.Engineers YOU Technical User Use TKR R&D, engineering capabilities, etc.Aftermarket YOU Distributor Rely on TKR quality, supply chain, etc.Original Equipment YOU Manufacturing Full range of TKR solutions to help your products perform, etc.
2The Timken Company Industrial technology company A leading provider of friction management and power transmission solutions to diverse markets, including:Aerospace, Mining, Energy, Rail, Construction, Truck, Automotive and Distribution$5.2 billion in sales in 200527,000 associates in 27 countriesGlobal network of 13 technology centersWe are an industrial technology company providing customers all around the world with friction management and power transmission solutions. We serve a variety of markets, from aerospace and automotive to energy and construction.With sales of $5.2 billion and operations in 27 countries, we have 27,000 associates worldwide who work to maintain our competitive edge and exceed customer expectations.We also have 13 technology centers throughout the world that are focused on delivering value through new product and process innovation and applications development.Technology centers in:Canton, OH, USALebanon, NH, USAKeene, NH, USATorrington, CT, USAWatertown, CT, USANorcross, GA, USALatrobe, PA, USABangalore, IndiaColmar, FranceVierzon, FranceBrno, Czech RepublicPloiesti, Romania
3Our History Founded in St. Louis in 1899 by Henry Timken Relocated to Canton, Ohio in 1901Invented the first tapered roller bearingBegan steel production in 1917Traded on the NYSE since 1922We have a 107-year history of adapting to changing customer needs and market conditions. Our company was started in St. Louis, Missouri in 1899 by Henry Timken, a carriage maker who invented the tapered roller bearing. In doing so, Henry created customer value for generations to come by solving a critical technical issue: reducing friction in order to improve productivity. In the last part of the 19th century, Henry was dealing with friction management issues on horse-drawn carriages and early automobiles. While we now deal with much more advanced applications, his early work in antifriction solutions paved the way for the technologies we develop today.Our early steel production helped us evolve into a leading specialty steel producer. The Timken Company began producing its own steel during WWI, when most steel was reserved for wartime manufacturing of military equipment. Originally started to give Timken a continuous supply of steel for bearing manufacturing, our steel operation now sells to customers worldwide, with more than 90 % of our steel going to customers other than Timken.In 2003, with Timken’s acquisition of The Torrington Company, we substantially broadened our core products and technologies and became a much larger company.
4Our VisionWe are dedicated to improving our customers’ performance by applying our knowledge of friction management and power transmission to deliver unparalleled value and innovation all around the world.Our success over the years has been due to the success of our customers, and that is one reason why they are at the center of everything we do. Today, they are at the core of our company’s vision. Our vision is to improve customer performance all around the world by applying our knowledge of friction management and power transmission. In short, it’s all about innovation.Our vision is more inclusive than being a worldwide leader in bearings and steel. We are still that. But we are much more. We are expanding our brand beyond bearings and steel. We’re a friction management provider. A technology provider. A solutions provider. Everywhere wheels, shafts and anything that moves, turns, we’re there.We are dedicated: Our associates work together to achieve our vision globally.To improving our customers’ performance: We put both our customers’ product performance and business performance first. This strategy has a positive impact on our own company’s performance.By applying our knowledge of friction management and power transmission: We are technical experts in managing friction and transmitting power.To deliver unparalleled value and innovation: We not only strive to develop the best new technologies, but we offer our customers solutions that create value for them over the long-term.All around the world. We are global, and we serve customers no matter where in the world they are.
5Where Vision Takes Us Europe $820m Sales 24 Facilities 2 Joint venturesNorth America$3,850m Sales60 Facilities4 Joint venturesAsia Pacific $290m Sales 8 Facilities1 Joint ventureAnd when we say “all over the world,” we really mean it.Our operations include:13 global technology centers, where engineers work to create new innovations and technical solutions that change the way people work and live.64 manufacturing plants (53 bearing and 11 steel) that produce quality products.Nearly 100 (92) sales offices that serve customers in different regions of the world.23 distribution centers that warehouse and ship orders to customers.9 strategic joint ventures in 5 countriesSpeaker’s Note:Joint Ventures Include:Advanced Green Components, LLC – Winchester, Ky., U.S.A.Bardella Timken International Services – São Paulo, BrazilCoLinx, LLC – Greenville, S.C., U.S.A. (PTplace.com)Endorsia.com International AB – Gothenberg, SwedenFriction Management Services, LLC – West Chicago, Ill., U.S.A.Industria Cuscinetti S.p.A (ICSA) – Turin, ItalyInternational Components Supply Limitada - São Paulo, BrazilS.E. SETCO Service Co. – Norcross, Ga., U.S.A.Timken-NSK Bearings (Suzhou) Co., Ltd. – Shanghai, ChinaLatin America $150m Sales 5 Facilities2 Joint venturesNote: Excludes sales offices.
6Our CustomersWe’ve used our global presence and innovative spirit to constantly expand the capabilities we offer to our customers. Working with our customers’ product design engineers, we develop friction management and power transmission solutions that can include everything from vibration analysis to surface finishes and precision steel components. Here is just a sampling of our long list of customers worldwide.
7Market Scope$500 billion friction management and power transmission market$500 billion$30 billion anti-friction bearing and alloy steel market#3 Global Bearing#1 Tapered Roller Bearing#2 Needle Roller Bearing#1 Seamless Mechanical Tubing#1 Bearing SteelTo better understand Timken and its opportunity for growth, let’s take a look at global markets. This diagram illustrates the relative size of global markets for tapered roller bearings and bearing steel ($5B); antifriction bearings & alloy steel ($30B); and power transmission and friction management ($500B).Timken is the third largest bearing manufacturer in the world (in sales), with major competitors in Europe and Japan.Timken is # 1 or # 2 in key product areas:In Bearings, Timken is:# 1 in North American bearing sales# 1 global tapered bearing company# 2 globally for needle bearings (behind INA-FAG)# 2 global industrial bearing aftermarket sales (behind SKF)In Steel, Timken is:Largest manufacturer of seamless mechanical steel tubingLargest manufacturer of steel used in bearing production (Timken sells steel to other bearing manufacturers)By applying our in-depth knowledge of friction management and power transmission, we have more opportunities for growth in the $500B market for friction management and power transmission.$30 billion$5billion$5 billion tapered roller bearing and bearing steel market#1 Tapered Roller Bearing#1 Bearing SteelSource: Company estimates, Freedonia Group and external financial reports.
8Our Strategy Innovation Expansion Execution Products Distribution and servicesExpansionGrow globallyGrow distribution and servicesAcquire complementary products for industrial marketsExecutionLeverage synergies across CompanyContinuously drive improvementOur company strategy is directly linked to our Vision. In order to create value for customers all over the world, we focus on:Innovation in products, processes, distribution and services – by applying our knowledge of friction management and power transmission. Timken innovations are developed to help customers improve the performance of their products and their companies.Expansion of our markets globally with special focus on aftermarket opportunities and services. We are building our competencies around our core businesses by acquiring or introducing products and services that complement our existing lines.Execution of plans that ensures we leverage the synergies between our businesses and continuously drive improvements throughout the company..
9Our 2005 Accomplishments Posted record sales and net income Earned a spot on the S&P MidCap 400 listRecognized as a “Midcap Star” on Forbes 100 list of rising midcap stocksAchieved record productivity and safety performanceIncreased bearing capacityExpanded in emerging markets, particularly ChinaIntroduced new products and servicesAttained position as #1 aerospace bearing repair supplierHonored with quality and supplier awardsIn 2005, we were recognized by the investment community, earning a spot on the S&P MidCap 400 list, which is comprised of 400 U.S. companies and is selected based upon mid-range market capitalization, liquidity and industry representation. And, Forbes recognized us as a “Midcap Star” on their Forbes 100 list of rising midcap stocks.We posted record sales in 2005 of $5.2 billion, up 15% from the prior year, and record net income of $261.5 million, nearly double the prior year. We also set records for both productivity (measured by sales per associate) and safety performance, with lost-time accidents at an all-time low.Most important are the achievements that directly impact our ability to serve customers. In 2005, we:Increased capacity in the U.S., Romania and China for bearing production.Expanded in Asia, opening new offices in Shanghai and Chengdu and opening the China Logistics Center (Shanghai.) We also relocated industrial bearing manufacturing in Wuxi, China to a newer, much-larger facility.Attained position as #1 aerospace bearing repair supplier through an acquisition.Added new friction management products, including industrial seals, machine tools and more condition monitoring systems and programs.Received customer awards, including GM’s Supplier of the Year Award and a Quality Award from Renault, one of only three suppliers to receive it.
102005 Sales by Business Group AutomotiveGroup$1.6 BillionTimken is organized into three business groups: Industrial, Automotive and Steel. The Industrial Group accounts for 37% of company sales, Automotive accounts for 33 % and Steel accounts for 30%.IndustrialGroup$1.9 BillionSteel Group$1.7 Billion$5.2 Billion
11Industrial Group Sales by Market Aerospace & Defense8%Consumer/Health & Positioning Control8%Power Transmission26%Our Industrial Group provides one of the broadest lines of industrial bearing products and services in the world and it covers the largest variety of markets, including… [*NOTE: Industrial aftermarket is included in the market segments]Power transmission, which includes gear drives, pumps, compressors, textile and food processing and material conveyors.Off-highway, this segment covers agriculture, construction, hydraulics, mining, industrial trucks and power drivesHeavy Industry, which includes metals, aggregate, cement, oilfield, power generation, wind energy and pulp and paperAutomotive AftermarketRail, which provides bearing products, reconditioning and friction management services to freight, passenger, transit and locomotive applicationsConsumer/Health & Position Control, which includes recreational vehicles, machine tools, health care, lawn and garden, household appliancesAerospace and Defense, provides parts and services to OEM and aftermarket customers within avaiation and defense industries in market segments such as engines, gearboxes, accessory power systems, landing gear, instruments & weapons systems.We serve both OEM and Distribution / AM channels which are split roughly 50/50. We continue to grow globally across the group and invest for the future by:Growing our capabilities through strategic acquisitions and alliances (such as Bii, an aerospace service company)Growing our aftermarket product and service offerings.Growing our presence in Asia by building our manufacturing, distribution and sales presence there, particularly in China.Adding capacity at plants throughout the world to meet strong customer demand.Rail11%Automotive Aftermarket11%Off-Highway22%Heavy Industry14%2005 Sales: $1,927 Million
12Automotive Group Sales by Market Heavy &Medium Truck19%Our Automotive Group serves OE manufacturers all around the world who produce a variety of vehicles, including passenger cars, light trucks and SUVs, medium- to heavy-duty trucks and trailers.Timken is involved in 9 of the Top 10 selling U.S. platforms. And in Europe, we provide customers like Renault, Saab and Volkswagen with friction management and power transmission solutions, ranging from bearings to engine components to steering columns. In 2005, we were awarded transmission programs for three of largest Japanese automotive companies.We are focused on aligning our automotive design centers with our customers needs. In 2005 we began construction of a new Powertrain & Innovation Center of Expertise at Clemson University’s International Center for Automotive Research, which is scheduled to open in summer 2006.Our Automotive Group is dedicated to improving performance through:PricingAligning automotive design centers with customer needs.Managing the automotive product portfolio to drive customer performance while improving profitability of the Automotive group.Restructuring operations.Light Truck50%PassengerCar31%2005 Sales: $1,661 Million
13Steel Group Sales by Market Energy8%Automotive21%Aerospace9%Our Steel Group manufactures high-end alloy steel bars, tubes and specialty steel used in a variety of markets, including energy, aerospace, tooling, automotive and industrial. We differentiate Timken steel products not only by the quality of steel but by the technical services we provide and our applications knowledge.In 2005, our Steel Group:Achieved record shipments of alloy and specialty steel.Achieved record productivity in alloy steel production.Established an alloy steel marketing group and continued to expand international sales, including sales of steel in China.Tool Steels11%Bearing21%Distribution14%Industrial – 16%2005 Sales: $1,760 Million
14Precision Manufacturing Our CapabilitiesFriction ManagementPower TransmissionOur corporate capabilities in technology, materials science, manufacturing and distribution enable us to seize opportunities to improve customer performance and grow our business.Materials SciencePrecision ManufacturingGlobal Distribution
15Friction Management & Power Transmission Our technical knowledge in friction management and power transmission gives us a leading edge in the latest product and service innovations.
16Turn to Us for Innovation We’ve grown beyond traditional bearing and steel products to include:Condition monitoring products, like StatusCheck. These products help industrial maintenance personnel monitor the performance of the bearings and provide warnings before unexpected downtime can occur…reducing unplanned system maintenance.Sensor-equipped wheel hubs for light trucks and SUVs. Our hub innovations reduce weight, space and system costs.We’ve developed surface enhancement technologies that reduce wear, fatigue and frictional performance in power transmission applications.We’ve expanded our aerospace line with aerospace gears and components that are competitively priced and deliver proven performance.condition monitoring solutionssensorized wheel hub bearingsengineeredsurfacesaerospace accessories & gear boxesAddedcustomervalueAddedcustomervalueAddedcustomervalueAddedcustomervalueMaximize uptime, safety and profitability in heavy industry applicationsIntegrated package reduces weight, space and system costs for automotive wheel-end applicationsSurface enhancement technologies that improve wear, fatigue and frictional performance in power transmission applicationsReplacement components deliver proven performance, availability and competitive pricing
17Turn to Us for a Full Industrial Line Sensor productsGrease and single-point lubricatorsTimken® sealsBearing, chock and roll repair and refurbishing servicesOnline services, such as the Timken Store at PTplace.com and Endorsia.comTimken offers one of the broadest ranges of friction management products and services in the world. In addition to a wide range of bearings, we offer a full line of sensor products, grease and single point lubricators, and seals…as well as other related components, such as maintenance tools and condition monitoring technologies.Our services also include industrial repair and refurbishing services for bearings, chocks, rolls and aerospace engines.We continue to grow our on-line presence with sites like the Timken Store at PTplace.com and endorsia.com.A growing number of distributors are using our Web-based resources, such as the Timken Store at PTplace.
18Turn to Us for a Full Automotive Line Integrated wheel endsFuel-efficient productsEngine/transmission productsSteering solutionsSensor-equipped productsOur involvement in the transportation industry extends back to Henry Timken’s first manufacturing experience…making horse-drawn carriages. The invention of the tapered roller bearing began a century-long progression of continued product innovation aimed at helping vehicles of all types travel with less friction, better reliability and improved performance.As fuel costs have risen in recent times, we’ve contributing to improved fuel efficiency through engine and steering products that go beyond bearings. For example, one of our inventions is an engine component called the lobe switching finger follower, which has the potential to contribute up to a 7% increase in fuel economy when paired with other engine enhancements.We’ve also developed enabling technologies for electric power assisted steering (EPAS) systems, which are projected to become the dominant steering control technology in Europe and Japan by EPAS reduces engine drag and vehicle weight, contributing to fuel efficiency. Timken’s patented Application Specific Integrated Circuit (ASIC) helps EPAS work effectively, providing the vehicle driver with superior steering input.Timken’s proprietary automotive technologies are increasing engine performance and improving fuel-efficiency .
19Turn to Us for New Products & Services Expanded European maintenance tool line into North AmericaAdded more solutions to our condition monitoring lineEnhanced aerospace inspection and reconditioning servicesOur technical know-how, combined with our ability to understand the needs of our markets, also gives us the opportunity to develop new products and services. And, our reputation has allowed us to partner with other technical experts to add even more options to the Timken portfolio. In 2005, we continued this tradition by:Expanding our portfolio by adding new friction management solutions to our offering. For example, we expanded our maintenance tool line from Europe into the U.S. and Canada, bringing a whole new group of customers Timken products like induction heaters, hydraulic pullers and impact fitting tools.Adding to our condition monitoring line with a machine evaluator, new monitoring devices and online systems to measure vibration, temperature, etc.Enhancing aerospace services with our acquisition of Bearing Inspection, Inc., which makes us a leader in aerospace bearing inspection and reconditioning services.Essentially, we are continuing to create value to our customers as a “one-stop” shop for their friction management and power transmission needs.Our StatusCheckTM condition monitoring equipment was voted 2005 Product of the Year by Plant Engineering magazine.
20Turn to Us for New Products & Services Repair services that help customers extend the life of their productsCapabilities that improve our customers’ supply chainOur strategy for growth is to capitalize on Timken’s core strength - providing total solutions that improve our customers’ product and business performance. Sometimes that means providing traditional products and services. Other times, it means helping customers through process improvements or new capabilities that create value.For instance, we’ve entered an alliance with Rolls-Royce to supply them with parts and component repair for their Model 250 helicopter turbo shaft engines.Our supply chain services are also making a difference. In 2005, we helped a small forging customer in Mexico take a step out of their supply chain by providing them with Timken® steel blanks for their forgings for the automotive industry. Previously, the customer used another steel supplier who would deliver steel tubing, which the customer would then ship back out to another supplier that made them into blanks. Due to our capabilities in producing precision steel components, we were able to save this customer both time and money while enhancing the quality of their forgings.As you can see from these examples, we take the same care with smaller customers as we do with large, global customers. Everywhere we look, we see opportunities where we can apply our knowledge to make things better and easier.In 2005, we announced an alliance withRolls-Royce Corp. to supply parts and componentrepair for their Model 250 helicopter turbo shaft engines.
21Materials ScienceOnce we’ve recognized these opportunities, the journey to turning them into profitable solutions that create customer value begins with utilizing our knowledge and capabilities in friction management, power transmission and materials science.
22Turn Knowledge into Power Materials science, including:Alloy steel bars and tubingPrecision steel componentsSpecialty steelAt our technology facilities, engineers analyze materials to determine which types are best for certain applications, and develop new ones. For instance, Timken® alloy steel is used to manufacture many products that help transmit power, such as bearings; aircraft engine main shafts, landing gear and high-strength fasteners; oil and gas drilling tools and perforating guns; hydraulic cylinders, axles and crankshafts for construction and agriculture applications; and an array of automotive components, including gears, shifter sleeves, crankshafts and constant velocity joint components. Each application has its own requirements for strength and durability, and Timken engineers are able to match the right steel to the right application for high performance.Our technology and manufacturing experts work together to develop semi-finished and finished precision steel components for powertrain applications such as internal ring gears, sun gears, races, hubs, clutch shafts, axle shafts, CV joint cages and outer race prop shafts.Timken’s in-depth knowledge of materials science provides a base for applications development and technical services matching materials to applications.
23Turn Science into Performance $60 million last year in research, development and testing13 technology facilities worldwideFocus on products, materials, processes and emerging technologiesOur technology organization is dedicated to materials science, product innovation and improving performance.In 2005, Timken spent more than $60 million on research, development and testing.Timken has 13 technology facilities worldwide that focus on products, materials, processes and emerging technologies that create customer value.Engineering associates focus on improving materials, processes and technologies to revolutionize the way things move and turn.Technology centers in:Canton, OH, USALebanon, NH, USAKeene, NH, USATorrington, CT, USAWatertown, CT, USANorcross, GA, USALatrobe, PA, USABangalore, IndiaColmar, FranceVierzon, FranceBrno, Czech RepublicPloiesti, RomaniaThe Timken Company is committed to its globaltechnology network. The Bangalore, India, technologyfacility is one of 13 technology centers worldwide dedicatedto product innovation and improving customer performance.
24Precision Manufacturing Because we are a manufacturer ourselves, we have a special ability to understand the processing requirements of our OEM customers. Our manufacturing expertise enables us to design products and processes that can contribute to the performance of our customers manufacturing operations.
25Global ManufacturingSpainEnglandFranceUnited StatesNetherlandsGermanyCanadaItalyIndiaCzech RepublicPolandChinaRomaniaWe continuously improve processes at our plants worldwide. Our global manufacturing network enables us to serve customers all over the world. Our precision manufacturing expertise allows identical products to be made to global standards.53 bearing plants include: Brazil (2), Canada (2), China (3), Czech Republic (1), England (2), France (4), Germany (1), India (1), Italy (1), Netherlands (1), Poland (1), Romania (1), South Africa (1), Spain (1), U.S.A. (31)6 JV bearing plants include: 1 – Advanced Green Components: Winchester, Ky. 1 – Bardella Timken: Sao Paulo, Brazil 1 – International Components Supply, Sao Paulo, Brazil 1 – ICSA: Turin, Italy 1 – SETCO: Norcross, Ga. 1 – Timken-NSK: Shanghai, China11 steel plants include: USA (7), England (1), Brazil (1), France (2)BrazilSouth Africa
26At Every TurnMade process improvements in bearing manufacturing operationsOpened new industrial operations in Wuxi, ChinaInvested in expansions in the U.S., Romania and ChinaNowhere are opportunities more abundant than in the world’s emerging markets. As these markets continue to grow and develop their infrastructure, we see a number of opportunities for our company. We think of this as going beyond boundaries as we expand our manufacturing presence in emerging markets and capture new business for traditional Timken product lines. Recently, we’ve:Made process improvements in our bearing manufacturing operations to improve manufacturing capabilities, quality and customer service.Opened a new plant in Wuxi, China to supply industrial bearings and other products to industrial customers throughout Asia.Invested in bearing capacity expansions at plants in Romania, the United States and China.And in established markets like the U.S., we continue to make improvements that benefit customers as well, such as:Launched $27 million expansion in Asheboro, N.C. to increase large-bore bearing production by 2007.The Ploeisti, Romania, plant produces large-bore bearings for many industrial applications.
27Global DistributionOnce our products are manufactured or acquired, we have a distribution network in place that brings bearings, steel and related technologies to customers all around the world.
28Distribution and Services We offer one of the broadest lines of bearings and related components in the world, and we continue to increase our range of products and services. We’re providing a growing number of non-bearing & steel products, such as lubricants, condition monitoring devices and machine maintenance to provide one-stop shopping for friction management solutions.
29Innovation – Distribution and Services Our sales to industrial and automotive distributors have more than doubled in over the past three years as we’ve added new products, expanded our global distribution network and improved customer self-service tools, like PTplace and Endorsia.com – joint venture, online marketplaces where customers can learn about new Timken products and services and order them.In addition to our delivery and customer service, we also provide valuable aftermarket services through our distributor network, including end-user training for industrial maintenance personnel.
30As you can see, Timken is where customer turn for innovation, quality, value and performance. We have built a solid foundation for growth, we have a commitment to improve performance and we have the drive to take an advantage of the opportunities we are creating.*Next time you are driving in a car, or you turn on a light switch in your home, think of how Timken is helping customers all over the world – including you – reduce friction and transmit power.*Speaker’s Note: You can customize the closing and the application examples here here based on the audience (bringing it full circle back to the into):Students/General YOU Consumers Use TKR products in cars, appliances, etc.Engineers YOU Technical User Use TKR R&D, engineering capabilities, etc.Aftermarket YOU Distributor Rely on TKR quality, supply chain, etc.Original Equipment YOU Manufacturing Full range of TKR solutions to help your products perform, etc.