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SKF’s sales drop is `fastest since World War II`

20 May, 2009

SKF has experienced its fastest decline in sales since the Second Word War, with a bigger drop in nine months than during three years of recession in the early 1990s, says president and CEO, Tom Johnstone. In the first quarter of 2009 alone, SKF’s sales plummeted by 18.4% with Europe, which represents more than half of its €6.5bn sales, showing the sharpest decline.

In response to these events, SKF has reduced its global workforce by around 4,000 (about 10% of the total) and put 18,000 workers on short time working. Johnstone warns that further cuts may be needed but adds that “we will use every tool to avoid losing people – lose people and you lose competence”.

Speaking in the Netherlands last month, Johnstone (above) said “it is easy to get into a pessimistic mood, but this is a chance to do things that make changes – an opportunity to put the right structure in place”.

As well as improving productivity and moving some production to lower-cost plants, SKF is also diversifying into new areas such as mechatronics. Johnstone stresses that the group is continuing to invest, with six new factories opened recently and three more under development. Since 2003, it has invested around €2.5bn in organic expansion and acquisitions. And last year, it boosted its r&d budget by more than 30%.

SKF is also establishing a global network of “solutions factories” that combine its five technical platforms – bearings, seals, service, lubrication and mechatronics – and give customers access to its wide application knowledge under one roof. Five of these factories have opened already and a further ten are planned for this year, including one in the UK. In some cases, they are based on existing facilities; in others, they are completely new operations.

• SKF has signed a five-year contract with Cambridge University’s Department of Materials Science and Metallurgy to set up an SKF University Technology Centre on Steels in Cambridge. The centre will pioneer research, directed by SKF, on steels and heat treatment associated with advanced bearing technology. The aim is to improve SKF’s knowledge of the physical metallurgy of bearing steels, leading to new and improved products.

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