Solved: The following discussion focuses on the change in

production and
The following discussion focuses on the change in production and

The following discussion focuses on the change in production and selling strategies of Timken
Co., the Canton, Ohio, firm that is a major producer of bearings:64

To counter the low prices of imports, Timken Co. in 2003 began bundling its bearings with other
parts to provide industrial business customers with products specifically designed for their
needs. Timken had begun bundling pre-lubricated, preassembled bearing packages for
automobile manufacturers in the early 1990s. Evidence indicated that companies that sold
integrated systems rather than discrete parts to the automobile manufacturers increased their
sales. Other industrial customers put the same pressure on Timken in the late 1990s to lower
prices, customize, or lose their business to lower-priced foreign suppliers. Manufacturers are
increasingly combining a standard part with casings, pins, lubrication, and electronic sensors.
Installation, maintenance, and engineering services may also be included.

Suppliers, such as Timken, saw this as a means of increasing profits and making themselves
more indispensable to the manufacturers. The strategy also required suppliers to remain in
proximity with their customers, another advantage over foreign imports. This type of bundling
does require significant research and development and flexible factories to devise new methods
of transforming core parts into smart assemblies. The repackaging is more difficult for industrial
than automobile

Timken has an 11 percent share of the world market for bearings. However, imports into the
United States doubled to $1.4 billion in 2002 compared with $660 million in 1997. Timken
believes that the uniqueness of its product helps protect it from foreign competition. However,
the company still lobbied the Bush administration to stop what it calls the dumping of bearings
at low prices by foreign producers in Japan, Romania, and Hungary. customers because the
volumes of production are smaller for the former. Timken also had to educate its customers on
the variety of new products available.

- What factors in the economic environment, in addition to foreign imports, contributed to

Timken's new strategy in 2002 and 2003?

- How does this strategy relate to the discussion of bundling presented in the chapter? What
additional factors are presented in this case?

The following discussion focuses on the change in production and

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