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Ball and Roller Bearing Manufacturers Focus on Improvement in 2016

April 30, 2016 / , , , , ,


So far, 2016 hasn’t been a stellar year for the manufacturing industry. Not that anyone expected it to be. Like most industrial manufacturers, ball and roller bearing manufacturers anticipated little to no growth in 2016, and unfortunately, market data has confirmed those suspicions. With longer-term forecasts looking hopeful, industry leaders are focusing on optimizing internal operations to stay profitable and edge out the competition.

Disappointing Data
As we reported in our 2016 Industrial Metal-Cutting Outlook, expansion in the industrial manufacturing sector has been slow moving. The market is—in a word—flat. Monthly data on manufacturing activity has been up and down for the last several months, which has pretty much canceled out any real growth.

For example, the monthly Purchasing Manufacturers’ Index (PMI) from the Institute for Supply Management (ISM) showed no growth in January and February, but then increased by 2.3 percentage points in March. This put the index above the 50% growth threshold for the first time in 2016, offering manufacturers some hope. Unfortunately, April’s PMI declined by 1 percentage point to 50.8%, barely above the 50 level that indicates stagnation. According to IndustryWeek, challenges such as lax global demand and the fallout from a weakened U.S. energy industry continue to stifle manufacturing growth.

Short-term forecasts expect the market to remain flat. According to the Manufacturers Alliance for Productivity and Innovation (MAPI), industrial manufacturing industrial production will likely register zero growth in the first half of 2016, with 1% to 2% growth in the third and fourth quarters. For the entire year, the research firm forecasts only 1.1% growth.

Long-term forecasts are a little brighter. MAPI predicts growth in industrial manufacturing of more than 2 percent for both 2017 and 2018. Demand for ball and roller bearing manufacturing in particular is also expected to improve. According to an industry analysis from research firm IBISWorld, slowly growing exports and relatively low metal prices have limited revenue growth over the last five years. However, IBIS anticipates that “persistent demand for roller and ball bearings promises to buoy industry revenue in the five years to 2020.” While growth is likely to remain moderate because of heightened import competition, IBIS believes that slowly recovering metal prices should help operators raise their selling prices.

Focused on Improvement
While no one is happy about the sluggish market, industry leaders weren’t anticipating major growth. In its annual report, Sweden-based SKF estimated that the global roller bearing market’s size in 2015 grew by only 0 to 1% year-on-year. Entering the first quarter of 2016, Alrik Danielson, SKF’s president and CEO, said the global bearings company expected macro-economic uncertainty to continue. “As a result, we expect demand to be relatively unchanged sequentially but slightly lower year-on-year,” he stated.

North Canton, OH-based Timken reported a similar forecast for 2016 after releasing its first-quarter results. “During the quarter, we executed well and delivered first-quarter results in line with our expectations even though market conditions globally remain weak, particularly in commodity-related sectors,” said Richard G. Kyle, Timken president and chief executive officer. “Looking ahead, we expect continued challenging market conditions in 2016.”

To weather the current conditions, Timken said it was focused on winning new business and delivering on its cost-reduction initiatives, while SKF said that it planned to invest in “improving and optimizing its existing production capacity.” This falls in line with what many others are doing as well. As described in the white paper, The Top Five Operating Challenges Ball and Roller Bearing Manufacturers Face in Industrial Metal Cutting, staying competitive in today’s global market requires manufacturers to find new ways to both differentiate themselves and minimize costs.

“This means continuous improvement is critical,” the paper states. “To keep costs low and production efficient, best-in class companies are optimizing every aspect of their operation, including basic shop floor processes like metal cutting. From getting the most out of their circular saw blades to enforcing daily preventative maintenance checks, today’s top executives know that even the smallest improvement has a bottom-line implication.”

Although no one can truly predict what the rest of 2016 will bring for ball and roller bearing manufacturers, it seems safe to say that growth will be minimal in the short-term. However, leaders that remain focused on optimizing operations can survive current market conditions and, more importantly, prepare for growth in the future.

How are you preparing for growth? What continuous improvement activities is your manufacturing operation focusing on in 2016?