Timken Enters Food & Beverage with Expanded, Premium Product Lines
October 2, 2019
When you go to the store and purchase food for your family, you expect to come home with whatever the manufacturer’s label says you should be coming home with. A baby food pouch containing wild-caught salmon and organic butternut squash, for example, better have those two ingredients and nothing else.
Yet, as populations balloon around the globe and the demand for convenient, processed food expands, the factories producing our food do so at a scale unimaginable just a couple of decades ago. One processing plant in New York state, for example, produces 100,000 cases of baby food every day. The risk of food contamination among producers of that size is huge.
Thankfully, the machines at the heart of those operations increasingly feature premium components. USDA inspectors make their rounds continuously. Plant managers follow high-grade sanitation and maintenance protocols, scrutinizing every surface that touches consumable product. If a bearing or grinding gear leaches lubricant, if pieces of rust are found to be flaking off into the food—everything stops.
In large operations, the cost of a standstill can add up to $100 a minute. When you have truckloads of perishable goods waiting outside or making their way along the factory floor, uptime is everything.
An industry primed for premium solutions
Those high stakes are one reason the industry is a great fit for Timken, says Mike Connors, vice president of global marketing for the company. Although Timken is relatively new to food and beverage, the company’s reputation for quality and engineering expertise is nevertheless opening doors at a considerable rate. “We’ve not had one equipment manufacturer refuse to talk to us when we reach out,” he says.
The conditions that can make working in a food processing plant difficult for humans often make it hard on machines, as well, which drives innovation and quality requirements. Contamination-prone processing areas, for example, can go through chemical washdowns several times a day. “Machinery doesn’t like hot, caustic water,” says Connors. Neither does it appreciate the high-heat environments necessary to produce such ubiquitous products as pasta, chips, or cookies.
Governments around the world mandate significant regulatory requirements to ensure food safety. “Those regulations require special solutions,” says Connors. “That situation fits nicely against the backdrop of our product offering.”
A new Timken Company takes shape
Food and beverage is a great example of how Timken’s growth strategy is paying off, says Connors. As team leaders leverage acquisitions and collaborate across the business, they are building a portfolio mix that offers access to new customers and delivers differentiated solutions that give customers a reason to choose Timken.
The Timken Company didn’t count food and beverage as one of its core industries until recently. Tapered roller bearings comprise a small segment of the industry’s bearing demand, so the company focused more heavily on supplying heavy capital markets where tapered roller bearings are prominent.
The Timken product line has grown, however. “Our expansion into a full range of bearing products has been lining us up more closely with the demand of the food and beverage market,” says Connors. “Acquisitions in mechanical power transmission have also brought on numerous product categories that are sold into this space.”
Meat processing equipment, for example, represents the heaviest of the heavy-duty machines found in a food processing plant. “You’ll often see spherical housed units there,” says Connors. Timken added that product line with the acquisition of QM Bearings and Power Transmission.
All three companies boosted Timken’s offering for the market, but the acquisition of EDT in 2017 was a tipping point for the company’s food and beverage product portfolio.
“EDT was a specialist in food and beverage,” says Connors. The acquisition brought EDT’s Corrosion-Resistant Poly-Round® Housed Units into the Timken product line-up, along with a food-safe grease. “To be successful in a new industry, you have to offer something that differentiates you from your competitors,” he says. “The EDT product range did exactly that for Timken.”
The next year, Timken announced the acquisition of Cone Drive, which accelerated the company’s entry into food and beverage. “They had a stainless-steel gear drive designed specifically to address the regulatory requirements and caustic wash-down environment of the food and beverage industry,” says Connors.
In 2019, Timken acquired Diamond Chain, which offers a stainless-steel product line that complements the Drives line. “We have the biggest chain portfolio in North America now,” says Dirk Wernecke, Timken global marketing manager for power transmission.
A steady, growing market
It’s investment that is serving the company well. Food and beverage sales are up 35% in the past three years, and Connors expects that growth to continue. The industry represents a huge market, with an estimated $17 billion in original equipment manufacturer (OEM) spending per year on machinery. Machinery costs for the food and beverage industry tend to be lower than in traditional Timken markets, which makes the market less cyclical.
Food and beverage is seeing steady growth at 5-6%, which is expected to continue, driven by global population growth, urbanization, and increased demand for prepared, packaged foods. The United Nations Department of Economic and Social Affairs expects 68% of the world’s population to live in cities by 2050, according to a 2018 report—up from 55% in 2018. Most of that increase will take place in Asia and Africa.
Wherever they live in the world, city dwellers live busy lives and typically don’t have the opportunity to raise their own food. “There’s never enough time, and yet we still try to seek healthy foods,” says Connors. “This industry is finding ways to fill that need, and Timken is helping them do it more efficiently and effectively.”
Playing on our strengths
Today, Timken offers the broadest range of bearings and power transmission products available for food and beverage, says Connors. In addition, the company is increasing the availability of unique solutions that help increase plant efficiency and food safety.
Small companies, such as EDT or Cone Drive, didn’t previously have the market leverage to get part numbers into the systems of a big distributor on their own. “Without a part number in the system, OEMs or plant managers had to produce a handwritten purchase order,” says Connors. Now, with Timken’s global distribution network, they can order those parts just as easily as a standard ball bearing.
Product line additions bring sales synchronicities, as well. “The power of five or six companies has a magnifying effect as we share each other’s sales teams to open up accounts,” he says. “The larger company creates many additional customer touchpoint opportunities that we wouldn’t have had individually.”
Timken is also growing its food and beverage product lines organically, launching all-new stainless-steel ball bearing and ball bearing housed unit lines.
“The combination of our acquisitions, the strength of the sales force, and the internal, organic development of the bearing business to bring new products to market in a relatively short time—all that coalesces to put us in a great position to compete in the space,” says Connors.
An uncommon aftermarket opportunity
Securing OEM buy-in is the fastest path to growth, he says. Timken is carving out positions with big manufacturers and doing well with pelletized products, such as animal feed, and baked goods processors in Europe.
The company is also leveraging its nearly 1,000 authorized distributors around the world to capture the aftermarket, which can represent up to 90% of revenue for high-risk industry segments.
“If a bearing fails, a cage breaks, and the case material lands in the meat or yogurt, the producer has to recall that product,” says Wernecke. “That is, first of all, very expensive. Second of all, it harms the brand.”
To ensure against that kind of catastrophe, plant managers have healthy maintenance budgets. “They buy premium product and replace it every six months, whether or not it shows any signs of wear,” he says.
In those plants where food safety is of utmost concern and chemical washdowns stress machinery on a regular basis, plants typically shut down twice a year during summer and winter holidays. During those shutdowns, maintenance workers replace all the bearings and power transmission components in the plant.
That practice represents huge opportunity. “Today, nearly all power train and bearing positions in a food processing plant can be converted to Timken products,” says Wernecke.
As part of Timken’s growth strategy, sales teams are collaborating with distributors to do just that. Unique products, such as Poly Round housed units or Cone Drive stainless gears drives often act as door openers. “As we deliver more uptime and solve the problems that maintenance managers lie awake worrying about the most, we start to convert the plant into less challenging applications,” he says.
A powerful growth strategy, fully expressed
Food and beverage offers an exciting glimpse into the new Timken Company, says Connors. “With this industry, we are fully expressing the value of Timken’s growth strategy across virtually every product category. Our entry into this market offers a great example of how Timken is combining the power of its core bearing business with power transmission and bearing acquisitions to extend our value proposition into new, growing markets.”
After launching in North America and Europe, where the Timken brand resonates most strongly, the team has plans to take its food and beverage offering to OEMs and processing plants in China and the southern hemisphere.
“Timken’s proven 120-year value proposition is exactly what this market wants,” says Connors. “Leaders in food and beverage value technology, equipment performance, and reliability. Anywhere you find that, we’ve shown we can be successful.”