Smart routes to survival

Manufacturers are trying to improve profit margins with new products such as smart bearings. The problem is justifying the development costs when returns are low, reports Douglas Friedli

These are tough times for the UK bearings industry. Demand is flat and prices have fallen by up to 10% annually for the past two years. The standard bearing, despite being a highly engineered precision product, is in danger of becoming a commodity. The problem for manufacturers is whether investing in new bearings can be justified when the returns are so uncertain.

Tony Herraty, engineering manager at German-owned FAG in the UK, says competition is harming manufacturers. `Falling prices have created a crisis in the bearings industry. Compared to the motor industry, there are far too many brands with too few clear-cut differences between them.’

Herraty draws a distinction between new products, which manufacturers are increasingly unable to invest in, and new variants on standard products. `It’s rare that there is only one way of doing a job. As a manufacturer you promote the particular thing you are good at – for example, FAG is at the big end of the market.’

Unlike some well-known manufacturers, FAG managed to avoid making a loss last year. But its profit margins are low, and the emphasis is on increasing them. `Investment in new products tends to be quite small,’ says Herraty. `Most investment is in factories to cut production costs.’

Manufacturers which find themselves unable to cut costs any further are simply getting out of unprofitable markets. Gerald Rolfe, engineering manager at SKF (UK) says: `We are trying to reduce our dependence on high-volume bearings and move more towards services, special products and new products.’

SKF’s highest-profile new product is the compact aligning rolling bearing (Carb), which is reported to enable industrial machinery to run 15% faster. Development costs were high, and SKF will need to move the Carb into large-scale production in order to make it worthwhile.

It will have to compete against lower-priced rivals, often from Eastern Europe or the Far East. Established Western manufacturers will say that their products are more reliable. But they may need to highlight what their customers are getting for their money. `SKF offers a high level of technical support along with the product. We have to learn to make money out of that. Customers may soon have to pay for every piece of advice that they get,’ says Rolfe.

Investing in new products carries a risk, but that can be reduced if manufacturers co-operate with customers in developing new product lines. This is common in the automotive sector, where car makers can guarantee the large number of sales which makes development worthwhile.

Smart bearings are one example of a product developed between manufacturers and their customers. Although bearings with in-built sensors have been around since the late 1980s, growth in their use has been slow. But the market could be set to expand rapidly as new technologies and applications are developed.

The first smart bearings were developed to work with anti-lock braking systems on cars. A Hall-effect sensor inside the bearing housing detects wheel speed. This data is fed back to the brakes to reduce spinning in slippery conditions, or locking.

As well as detecting speed and speed-related data such as acceleration, the new generation of sensors can check temperature, torque, load and bearing condition. Another recent development is the active-speed sensor, such as that used in Timken’s Sensor-PAC bearing. This can react to much smaller variations in speed than the traditional Hall-effect sensor, which is generally unable to detect speeds of less than 1-2mph.

More functions and greater sensitivity will broaden the potential market for smart bearings. But going to the trouble of placing the sensor inside the bearing housing may not always be worthwhile.

Robert Maren, technical service manager at NTN, says: `There isn’t often a lot of room. You can’t compromise the strength, the rigidity or the life of the product. Sometimes it is easier to pick up things like vibration levels and temperature using a little probe which touches the outside of the bearing.’

Nevertheless, most bearing manufacturers, including NTN, are working on smart bearings, in co-operation with motor manufacturers. Lessons learned from the motor industry may be used in industrial machinery and construction equipment.

The industry will continue to develop products like the smart bearing because customers want new features and packaged products. These will be the top end of the market, while competition gets harder at the other end.

So will manufacturers transfer volume production to the Far East or Eastern Europe? SKF’s Rolfe says this is unlikely. `You would make more putting your money into a building society than into the bearings industry. But you need an indigenous bearings industry – its strategically important.’