China's wind turbine market benefits US bearing companies

"Wall Street Journal" - Timken Co. (Original President and CEO James W. Griffith) said that Chinese wind turbines are the only and largest industrial bearings produced by Timken. Growth market.

Graves said in a brief interview on Thursday that the company's annual sales in China are around 50 million, and it will increase by about two times in 2011.

Graves acknowledged that China’s sales are relatively small for a company that is expected to sell about $4 billion this year, but he has confidence in China’s wind industry. He said that Asia accounts for 12% of the world's total sales, the largest share of which comes from China.

The Chinese government is promoting clean energy to replace coal and hopes to achieve 100 gigawatts of wind power capacity by 2020, which is more than eight times that of 2008. Chinese companies dominate this market, and fierce competition among them drives down the price of wind turbines.

Timken's precision bearings enable smooth operation of heavy equipment such as high-speed rotating gears when the aircraft lands. The frequently replaceable bearing system is designed to reduce the pressure, otherwise the machine will be destroyed. Extremely high-end bearing systems can cost more than $100,000.

The income of Timken, which depends on other industries, experienced great fluctuations. In 2009, the impact of the economic crisis fell from US$5.05 billion in the previous year to US$3.14 billion. As the economy recovers slowly, sales have recovered, with sales in the first nine months of 2010 reaching $3 billion. The company expects full-year sales will increase by 25% to 30%.

Timken benefits from the Chinese government's stimulus policies and its strong investments in infrastructure. Timken said in its latest annual report that China is one of the few growth markets in 2009. Graves said that the Chinese market has been open to us.

However, the counterfeit bearing market in China is also rapidly developing.

The World Bearing Association reported in its August report that in 2009, in the three anti-counterfeiting activities implemented with the assistance of the association, more than 1 million counterfeit industrial bearings were found in two provinces in China. The association is partially funded by Timken and is currently led by Graves.

Graves said that as China tries to shift its economy from heavy industry investment to consumer growth, Timken may see a change in the source of income. He did not provide specific details, but said that as long as the economy continues to grow, Timken will benefit.

He said that manufacturers of heavy equipment (such as mining trucks) in China began to export products, Timken is responding to this emerging trend. He said that Timken recently set up an office in Jakarta, partly because Indonesians are buying Chinese equipment. The bearings of these equipment will eventually need to be replaced.

Graves said, I think this is an early phenomenon, just feel it. But when he recently went to South Africa, he saw China's mining trucks and considered it a sign of "eventually happening."

Graves said that Timken has invested hundreds of millions of dollars in investing in China over the past five years. These include a joint venture company in Xiangtan City, Hunan Province, which has strengthened its ability to produce ultra-large wind turbine bearings.

Graves declined to comment on the impact of the U.S. mid-term election this week on the development policies of the U.S. bearing industry and the U.S.’s efforts to complain to the WTO about China’s trade policy on new energy markets. He said that I had given up on the prediction of U.S. wind energy policy long ago. James T. Areddy