UK bearing suppliers are suffering a three-pronged attack from cheap imports from the Far East, the difficulties of competing internationally due to the continued strength of sterling, and static or declining European markets.
Leading suppliers such as SKF and NSK-RHP are struggling to cut the costs of standard, high-volume ball bearings to compete with a flood of cheap, often poor-quality imports from China, Taiwan, Korea and India. They are fighting back by concentrating on higher-quality, more specialist products.
At shopfloor level, costs are being reduced by improved production techniques and pressure is being increased on hard-pressed raw materials suppliers.
Risks can be high for industry users who put lower price before quality when they source such apparently simple components.
‘Far East cheap imports are mainly attacking the low-cost, standard end of the bearings catalogue range,’ says Gerald Rolfe, SKF engineering manager.
Far East supplies, priced at less than half the cost of European products, pose a significant threat to European producers of small, high-volume bearings.
These bearings, considered to be a commodity product, are used for a wide range of simple applications, including conveyor rollers, domestic equipment and some power tools. Typically, low-cost bearing manufacturers produce a limited set of sizes, which are generally smaller diameter bearings of unsophisticated design.
Though low-cost bearings have been around for years, they made little impact on the European market until a world shortage of bearings occurred in the mid-1990s, as the world came out of recession and many companies re-engineered and revamped.
‘This opened the door to the low-quality Far East brands, where tolerances are wider, materials are poorer and designs second-rate,’ Rolfe says. ‘There is a constant problem in the market today as some customers persist in using low-cost bearings which are barely adequate.’
There is a growing catalogue of disaster. A German steel mill bought a range of Far Eastern spherical roller bearings which promised to be 30% cheaper than European products. Subsequently, a large number of bearing failures in their continuous casting machine line was estimated to cost the company more than 10 times the savings originally envisaged.
SKF tells of similar problems when companies use sub-standard taper roller bearings for industrial gearbox applications. In a traditional taper roller, the rollers come up against an internal flange and have to be run in carefully before being subjected to heavy loads, so the flange can attain the optimum shape.
‘Low-cost taper bearings tend to suffer a high level of warranty failures,’ says Rolfe. SKF has developed a range of taper roller bearings with optimum flange profiles which allow them to use heavy loading from the start without running in.
The paper industry has also experienced a significant failure rate by buying low-quality brands to cut costs. Typically, the industry operates lines under arduous conditions where bearings are run hot, wet and at high pressure. ‘One bearing failure can cost up to £6,000 an hour in downtime. It’s a high price to pay for using cheap bearings,’ says Rolfe.
There are three main markets for bearings. First, the high-volume, low-price but not necessarily low-quality market for automotive and electrical/electronics suppliers. ‘Being a highly competitive market, there is precious little profit for bearings suppliers in this area,’ Rolfe admits. Electric motor makers tend to buy good-quality, low-cost bearings in high volumes. And strict quality controls in the domestic appliance and electronic industries means there is little opportunity for the market to be swamped by inferior imports.
Second, there is a medium-volume market for manufacturers of equipment for the quarry, steel and mining industries. These demand a broad spectrum of products for use in a wide variety of high and low performance applications, and many consider bearings to be ‘bread and butter’ products.
Here, constant pressure to cut costs makes small and medium- sized manufacturers willing to buy low-cost bearings. ‘Unfortunately, low-quality purchases often result in high failure rates. There is no doubt that the strength of sterling is also encouraging manufacturers to buy cheaper imports,’ Rolfe says.
Third, there are after-market bearing distributors providing spares for rebuild or maintenance purposes. Most distributors handle multiple brands through numerous branches. Whereas authorised distributors will have access to marketing and service back-up, small or regional independent outlets often trade in imported, low-cost bearings with no technical back-up.
Rolfe claims SKF is holding its ground by providing a high level of service and quality products. But he admits: ‘There is a lot of pressure on prices. The paper industry, for example, is trying to sign pan- European supplier deals to drive down costs. Generally, lower priced brands just force everything down to the lowest common denominator.’
NSK-RHP takes a different view. ‘The main issue for us is the strength of the pound,’ a spokesman says. ‘It’s making life very difficult for us as an export business, considering that 90% of our European production is made in the UK.’ But with manufacturing facilities in Japan, Taiwan, China and Korea, NSK-RHP may be tempted to import from cheaper sources.
‘In the UK, we are stepping up cost-cutting activities and are reviewing certain sourcing policies. Previously, we concentrated on localised European steel supplies to maintain standards of quality and consistency, due to the previous high cost of Japanese steel imports.
‘But to be competitive, we will be increasing Japanese steel supplies, which have fallen in price, and are building pressure on European steel suppliers to be more competitive.’
Making cost reductions
Within the company, cost reductions have driven down scrap rates and encouraged low rework rates. NSK-RHP’s Peterlee plant recently won a Michelin award for a quality initiative which saved £500,000 on a hub unit manufacture line producing integrated bearing units for Rover, Nissan and Toyota. It also won an award from Toyota for achieving zero parts per million defects for three years.
NSK-RHP claims that most of the cheap imports are aimed at popular ranges of metric deep-groove bearings, targeted for use in domestic equipment such as vacuum cleaners, washing machines and power tools.
The spokesman adds: ‘Strategically, this is not such a big problem for NSK-RHP because we manufacture these bearings in other parts of the world as well as Europe. But we manufacture higher-quality, high-speed, lower-friction bearings than the Asian competition.’
This year is proving difficult for the industry and there has been a slowdown in the European market. ‘The bearings market is depressed compared to a year ago, and there is a general reduction in demand in Germany and France,’ says NSK-RHP’s spokesman.
Despite the market problems, the group continues to introduce new products. A new ‘Ultra’ high speed machine tool spindle bearing, with a high-speed capability of up to 2.5×106 DmN (mean diameter x rpm) has just been launched at the Chicago Machine Tool exhibition and will be available in the UK later this year.
A new S-lock device for mounted bearings is to be introduced, to avoid shaft damage and allow easier fitting or replacement, as part of the NSK-RHP range of self-lubricating transmission products. And the latest EA series of spherical roller bearings incorporates a pressed steel cage, rather than a traditional guide ring, and is claimed to exceed the load capacity of conventional bearings by up to 20% and provide between 30% and 80% longer bearing life.
‘The bearings market is fairly static, but innovation still holds the key for market growth,’ says Tony Cuff, NSK-RHP engineering manager. ‘There is a great deal of development in terms of enhancing toughness and improving the life-span of products with new self-cleaning systems.’