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Timken plant sold to Japanese firm

Screven County’s largest employer has lost 235 jobs in the last year, but hopes are high that the sale of the Timken Co.’s needle roller bearings business to the Japanese firm JTEKT Corp. for $300 million, announced Wednesday, will turn things around.
The Japanese auto parts maker signed an agreement to acquire the assets of Timken’s needle roller bearings business, with the sale to be completed by the end of December, subject to “customary regulatory approvals and certain closing conditions,” JTEKT said.
“The transaction will secure JTEKT’s position as the leading manufacturer of automotive bearings globally and significantly strengthen its standing as a leading supplier of bearings to other industrial sectors,” the company said.
Plant Manager David Burke said he is excited about the acquistion.
“I feel this is a positive move for us longterm,” Burke said Wednesday. “This is a very good fit for us.”
This may be the boost the Sylvania Timken plant needs to return to its 500-plus employee capacity.
“It puts us in a better position to grow our business,” Burke said.
Burke said he is confident the sale will benefit Timken and JTEKT. Timken will be able to direct more investment and resources toward other strategic businesses and industrial markets that support its growth initiatives.
Officials say Timken’s needle roller bearing business fits well with JTEKT’s goals and strategy for global growth.
The Sylvania plant had 550 workers at the start of the recession, but it lost 235 jobs in the last year, bringing the current total to about 315 workers, Burke said.
All the board members of Screven County’s Industrial Development Authority reacted positively to the news about the sale, said Gayle Boykin, executive director of the authority. “The sale of a business indicates that someone in their area of expertise believes the plant is profitable and viable or they would not have purchased it,” she said.
“They’re trying this because they want to grow the business,” said Lorrie Paul Crum, the manager of global media and strategic communications for the Timken Co., headquartered in Canton, Ohio.
Despite the recent job losses, with 315 workers, Timken remains Screven County’s largest employer. The school system has approximately 300 employees. King America went from a high of about 230 workers before the recession began to about 200 employees now, Boykin said. Sylvania Yarn Systems went from about 200 employees to about 150 in the last year, she said.
Savannah River Challenge has about 155 workers and the hospital has 125 employees, Boykin said.
JTEKT said the needle roller bearings business will continue to be managed by the current management team through the acquisition process.
In addition to Sylvania, facilities included in the agreement are:
n North America: Cairo, Ga.; Dahlonega, Ga.; Greenville, S.C.; Walhalla, S.C.; and Bedford, Quebec, Canada.
n Europe: Brno and Olomouc, Czech Republic; Maromme, Moult, and Vierzon, France; Kuensebeck, Germany; and Bilbao, Spain.
n Asia: Wuxi (LiYuan), China.
The sale will complement and strengthen JTEKT’s existing product lineup, the company said. The combined operation will have an extensive global production network, spanning Asia, North America and Europe and will serve major automotive and industrial equipment customers.
Motohiko Yokoyama, president of JTEKT said, “This transaction sends a clear signal of JTEKT’s commitment to the automotive industry and enables us to achieve our goal of being the world’s leading automotive bearings manufacturer. We have known and admired the excellent team at Timken’s needle roller bearings business for a number of years and look forward to the contribution the team will bring to JTEKT in developing cutting-edge products, including technologies that improve engine fuel economy and vehicle emissions. The operational fit and future growth prospects make this an excellent transaction for our customers, employees and shareholders.”
Beyond the automotive sector, products for applications including industrial equipment and machine tools also are expected to experience steady demand growth, JTEKT said.
JTEKT Corp. is a leading Japanese manufacturer of steering systems, driveline components, bearings and machine tools. The company’s bearings are used in a wide variety of applications, including automobiles, jet engines, windmill power generators and bullet trains. Twenty percent of the company is owned by Toyota.
Headquartered in Nagoya and Osaka, JTEKT has 34,000 employees, and has operations in 70 locations worldwide, encompassing Asia/Oceania, North America and Europe.  JTEKT had sales of $10.7 billion in fiscal 2008, which ended March 2009.
Timken’s needle roller bearings business makes “highly engineered” needle roller bearings for automotive and industrial applications. Originally formed in 1912, the needle roller bearings business was acquired by Timken as part of the larger acquisition of The Torrington Co. in 2003, and has 12 manufacturing facilities and three engineering centers worldwide.
In 2008, the needle roller bearings business had about $620 million in sales, which was 11 percent of Timken’s overall revenues, Crum said. In the first half of 2009, sales were about $185 million. The business employs roughly 3,400 people.
Meanwhile, Timken Co. reported a loss Wednesday in the second quarter because of lower demand for industrial bearings and specialty steel.
The company said it expects to record a loss for the full year. Timken reported a net loss of $64.5 million, or 67 cents per share, compared with earnings of $88.9 million, or 92 cents per share, a year earlier. Revenue fell 46 percent to $828.9 million.
For the full year, Timken expects a loss of 40 cents to 90 cents per share, revised from April forecasts of a loss of 15 cents per share to a profit of 15 cents.
“The combination of a slow economy and inventory reduction throughout the supply chains we serve continues to curb demand for our products. We’re now seeing evidence that our customers’ inventory de-stocking activities may go longer and deeper than we expected,” said James W. Griffith, Timken president and chief executive officer. “We have decreased manufacturing output in response to lower demand and are on track in our efforts to right-size the company.”