Since 2007, company’s realignment has meant moving away from markets where tapered roller bearings might be seen as a commodity item and expanding into power transmission business.

JACKSON TWP. Timken Co. has been developing its power transmission business and adding to its bearings offerings for several years, but the strategy accelerated earlier this year as the company announced four deals in as many months.

It started in April when Timken added Torsion Control, a small Michigan company that makes couplings used in construction, farming and mining equipment. Four weeks later came the announcement that Medina County-based PT Tech, a maker of clutches and brakes used in heavy machinery, would become part of Timken.

The biggest announcement came in June when Timken said it had agreed to buy Groeneveld Group, a leading provider of automatic lubrication solutions used in on- and off-highway equipment. The Netherlands-based company was purchased for approximately $280 million.

Still pending is the July announcement that ABC Bearings, based in India, would become part of Timken. The deal for the maker of tapered, cylindrical and spherical roller bearings is expected to close early next year.

Growing through acquisition has been part of Timken’s strategy for the past 10 years. The maker of tapered roller bearings decided to avoid price wars over easily commoditized parts and focus on growing its line of highly engineered bearing packages. From 2007 through 2011, the company reduced its presence in the automotive industry and started work to broaden its power transmission position.

Diversifying

The first move came in July 2010 with the addition of QM Bearings and Power Transmissions, a small, international business based in Ferndale, Wash. The next year brought the addition of Philadelphia Gear and Drives, two operations that have been the base for the company’s transformation.

Since then Timken has spent more than $1 billion to acquire businesses. The result is diversification that makes Timken a better investment and a better place to work, said Rich Kyle, president and chief executive officer.

The strategy started before Kyle — who became CEO after an investors group forced the spinoff of Timken’s steel business — took the company’s helm. Timken has built on that strategy, and averaged a several purchases per year from 2011 through 2016.

The recent spurt comes because of opportunities and years of work, Kyle said.

Bearings reduce friction and help parts move freely, which makes them a key component in power transmission systems. Timken has looked at the different parts that make up a mechanical power transmission system — chains, belts, couplings, gear boxes, brakes and clutches — and engineered bearing packages and services for those systems.

Timken executives have met with companies that make components or provide services tied to power transmissions systems and cultivated relationships within the industry, Kyle said.

Time has been spent knocking on the doors of family businesses.

“We are a good home for a family business,” Kyle said. Timken’s history is a family-owned and managed company for five generations. The companies that sell to Timken are familiar with the company’s family background and realize the company can be a good place for their employees.

In some instances, the family-owned businesses have sold because there is no line of succession. Companies also have sold because of challenges tied to remaining independent or because they sought assistance expanding.

Kyle cited Lovejoy, a company that makes couplings and universal joints, acquired in 2016. The Hennessey family operated Lovejoy through four generations. It had been looking for ways to expand globally, with had operations in Canada and Germany, but faced larger competitors. Selling to Timken proved the best option for growth.

More opportunities

Some acquisitions have opened new doors for Timken, and in other instances joining Timken has opened doors for the company being purchased. Examples include Timken’s purchase of EDT Corp. in 2016 and Torsion Control earlier this year.

EDT makes polymer and stainless steel ball bearings used in the food and beverage industry. The purchase opened a new business segment for Timken, Kyle said. Torsion Control makes engineered couplings, with much of the product being sold to Caterpillar. Timken wants to pair the Torsion Controls line with Lovejoy and offer it to a larger group of customers.

Kyle said the power transmission industry offers more opportunities for acquisitions. There are more small companies supplying products and services in that segment, which means there are more viable candidates. The bearings industry, on the other hand, is dominated by six major companies, with Timken being the largest U.S.-based manufacturer.

Expanding in the power transmission business segment also helps Timken maintain and strengthen connections with customers. The company now has a portfolio of well-known brand names — Lovejoy, Drives, Gorenveld, Philadelphia Gear, InterLube — to share with customers.

Kyle noted that in 2002, before Timken began focusing on a broader range of markets, tapered roller bearing sales accounted for nearly 95 percent of the business. The segment has grown over the past 15 years, but the company’s portfolio has changed. Today tapered roller bearings account for 55 percent of the business.

Changes have helped the company’s revenue grow during the past year. Through the first half revenue has increased 7 percent over last year. The company has projected revenue could rise 10 percent over the $2.67 billion posted last year.

Advancements made by the company, increased demand for products and recent acquisitions have helped fuel growth.

Timken invested in acquisitions and technology during difficult times for the global market, Kyle said. Now the company has an opportunity to show what it can do in a healthier economy, he said.