CHICAGO Timken Co.s spinoff of its steel business has buyers of special bar quality products wondering what might develop, but none is concerned about service or quality disruption.
"We dont foresee an immediate impact for Timken or for us," a forging company executive told AMM Sept. 9. "Longer term, will the loss of the bearings business hurt the steel company, and is this getting the steel business ready for a sale?"
Canton, Ohio-based Timken would be attractive to a buyer, the forging executive said. "They are the sole-approved source for many automotive applications and should be able to command a premium for it."
An original equipment manufacturing customer said the spinoff, announced last week (amm.com, Sept. 6), was expected. "Its probably the best thing to do. It will still keep Timkens status high in the market," he said. "It would not affect any contracts we have with Timken."
The bearings operation relies on the steel business for its melted steel, one Mid-Atlantic cold drawer said. "Im sure that will continue, but will the bearings company have the same kind of control over the source material? Will the bearings company source from other steel producers?" he asked.
In that supply chain, with bearings going into critical moving parts, "its all about control through a fully integrated system, start to finish," he said, agreeing that steel supply contracts wont be affected.
Most steel bar consumers dont foresee much of a ripple. "I dont think thats a big concern to us. Business will be the same," a major Midwest bar processor and distributor said.
"I cannot imagine this would impact us negatively on the steel side. They were pushing for it (the split), and we never heard (from within the company) that it would be a problem," a Southeast bar distributor said.
A few members of United Steelworkers union Local 1123 in Canton have asked leadership about the security of their Timken pension and retiree benefits, president Joe Hoagland told AMM.
USW Local 1123 has about 2,200 members working at Timken, with 180 employed by the bearings business.
"Its in the back of your mind that the steel business could be sold. This is a concern for some of our people. Some members have asked, Should I get out now? I dont have an answer for them," Hoagland said.
The unions labor contract expires in September 2017.
Timkens steel business has been profitable and is running one to three shifts from the melt shop to casting to rolling bar and tube, Hoagland added.