US Bearing Industry Presentation

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ABMA Fall Meeting October 11, 2007
US Bearing Industry Presentation
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The Freedonia Group
Business Intelligence and Strategic Market
Analysis for Todays Global Business Leaders
Industry Studies n Custom Research n Focus Reports
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The Freedonia Group Mission

• The Freedonia Groups mission is to research and
  deliver unbiased views, reliable outlooks, market
  insight and forecasts to global business and
  industry decision-makers who seek to
• identify business opportunities
• develop strategies
• evaluate threats and opportunities
• make investment decisions for growth

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Industries Covered by Freedonia Group Research

• Packaging
• Industrial Components Equipment
• Automotive
• Security Electronics
• Paper Textiles
• Life Sciences

• Chemicals
• Plastics
• Construction Building Materials
• Energy
• Coatings Adhesives
• Polymers

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The Freedonia Difference

• Research Tenets
• Team Approach
• Sources of Data

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Research Tenets
Quality Research Demands Expertise

• Freedonia has an in-house team of professional
  analysts and economists
• The team creates order out of chaos
• Reconciles many conflicting sources of data
• Distills massive quantities of information froma
  variety of sources into meaningful trends
• Maintains an independent and unbiased view
• Validates data and conclusions on multiple levels

• Data Sources
• Government
• SEC Filings
• Annual Reports
• Trade Associations
• Key Trade Journals
• Industry Participants
• Freedonia Consensus Economic Forecasts

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Team Approach
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Team Approach (continued)
The Research Process

• Identify and develop key indicators from
• Government sources
• Freedonia consensus forecasts
• Develop initial numbers for size of market,
  market share, growth rates, etc.
• Interview various industry participants for
• Trends, number validation, products
• Triangulate and validate numbers for
  reasonableness and accuracy

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Off-the-Shelf Industry Study

• Study Composition
• Market Environment
• Products
• Markets
• Industry Structure
• World Markets

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Three Distinct Research Delivery Options
Freedonia Research

• Industry Studies
• US-China-World
• Custom Research
• Specific to Your Needs
• Focus Reports
• Online Access/Subscription-based

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US Bearing Industry Study
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US Bearing Industry Study
Study Objectives

• Estimate the overall size of the US bearing
  industry and market
• In 2006 (the study base year)
• Historically (1996 and 2001)
• Identify key drivers and restraints on US bearing
  production and market growth
• Develop 2011 and 2016 forecasts for
• Industry shipments
• Foreign trade (imports and exports)
• Product demand
• Identify and profile key industry players
• Estimate share of the US bearing market held by
  the largest producers in 2006

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US Bearing Industry Study
Whats Covered

• Unmounted rolling-element bearings
• Ball
• Roller
• Unmounted plain bearings
• Automotive
• Aerospace
• Other
• Mounted bearings
• Ball
• Roller
• Plain
• Bearing parts
• Balls
• Rollers
• Other ball and roller parts
• Plain bearing parts

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US Bearing Industry Study
Whats Not

• Flexure (or flexural) bearings
• Fluid (or fluid film) bearings
• Gas and hydrostatic bearings
• Hydrodynamic (or fluid dynamic) bearings
• Although pressure-oiled journal bearings are
  arguably a type of fluid bearing because the
  bearing hydroplanes on a layer of oil during
  normal operation, they are considered to be a
  type of plain bearing for the purposes of this
  study
• Magnetic bearings
• Jewel and other alternative bearing technologies

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US Bearing Industry Study
Key Information Sources

• American Bearing Manufacturers Association
• Quarterly Industry Statistics
• Annual Bearings Market Survey Sales by Market
  and Product Type
• Interviews with executives at member companies
• US Department of Commerce
• Antifriction Bearings Current Industrial Report
• Annual Survey of Manufactures and quinquennial
  Economic Census
• Foreign trade statistics
• Input-Output data
• US Department of Defense
• Procurement Awards by Federal Supply
  Classification reports
• US International Trade Commission
• Antidumping duty order reviews for ball,
  spherical plain and tapered roller bearings
• Company financial reports
• Annual Reports
• SEC filings
• Internal information resources
• World Bearings Automotive Aftermarket in North
  America studies
• Consensus Economic Forecasts

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US Bearing Industry Study
Data Issues and Challenges

• Inconsistencies between different data sources
• Antifriction Bearings Current Industrial Report
  versus Annual Survey of Manufactures/Economic
  Census
• US Department of Defense Procurement Awards
  reports versus Input-Output data
• Classification issues

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US Bearing Industry Study

• How would you classify this product?
• Ball bearing
• Roller bearing

SKF slewing bearing
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US Bearing Industry Study
Data Issues and Challenges

• Inconsistencies between different data sources
• Antifriction Bearings Current Industrial Report
  versus Annual Survey of Manufactures/Economic
  Census
• US Department of Defense Procurement Awards
  reports versus Input-Output data
• Classification issues
• Data reporting errors
• Survey sampling errors
• Data entry and analysis errors

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US Bearing Industry Study
Key Study Findings
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US Bearing Industry Study
US Bearing Industry Size, 2006
Shipments by Type (8,440 million)
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US Bearing Industry Study
US Bearing Industry Growth, 1996-2006
Shipments (Millions of Dollars)
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US Bearing Industry Study
US Bearing Industry Growth, 1996-2006
Shipments by Destination (Millions of Dollars)
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US Bearing Industry Study
US Bearing Market Size, 2006
Industry shipments 8,440 million - Exports
2,140 million Imports 2,620
million Domestic demand 8,920 million
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US Bearing Industry Study
US Bearing Market Size, 2006
Demand by Type (8,920 million)
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US Bearing Industry Study
US Bearing Market Growth, 1996-2006
Demand (Millions of Dollars)
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US Bearing Industry Study
Major Bearing Markets, 2006
Demand by Market (8,920 million)
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US Bearing Industry Study
Sales Growth by Major Market, 1996-2006
Demand (Millions of Dollars)
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US Bearing Industry Study
Dollars of Bearings Consumed Per Motor Vehicle
Produced, 1996-2006
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US Bearing Industry Study
Key Drivers and Restraints on US Bearing
Production Growth

• Domestic sales environment, including
• Output of motor vehicles, industrial machinery
  and other bearing-containing original equipment
  products
• Residential and nonresidential fixed investment
  spending, impacting both OEM and MRO bearing
  demand
• Foreign trade environment, affecting both imports
  and sales of US-made bearings in export markets,
  which is influenced by such factors as
• Currency exchange rates
• Tariffs and other trade barriers
• Investment in bearing RD and new manufacturing
  facilities and equipment, which can affect
• Relative quality and performance of US-made
  bearings
• Domestic industry capacity and productivity
• Average product price

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US Bearing Industry Study
Projected Growth in US Bearing Shipments
Average Annual Percent Change
Tapered Roller
Other Roller
Ball
Plain
Mounted
Parts
OVERALL
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US Bearing Industry Study
Projected Growth in US Bearing Shipments
Additional Bearing Shipments 2011 Versus 2006
(1,410 million)
Millions of Dollars
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US Bearing Industry Study
Key Drivers and Restraints on US Bearing Market
Growth

• Domestic output of motor vehicles, industrial
  machinery and other bearing-containing original
  equipment products
• Number of motor vehicles, industrial machines and
  other bearing-containing products in use, which
  is impacted by residential and nonresidential
  fixed investment spending
• Improvements in the quality and performance of
  bearing products, with
• Increased demand for higher value added products
  helping boost overall dollar sales
• Longer average bearing life dampening aftermarket
  product demand
• Competition from alternative bearing technologies
  such as flexure, fluid, jewel and magnetic
  bearings

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US Bearing Industry Study
Projected Growth in US Bearing Demand
Average Annual Percent Change
Tapered Roller
Other Roller
Ball
Plain
Mounted
Parts
OVERALL
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US Bearing Industry Study
Projected Growth in US Bearing Demand
Additional Bearing Demand 2011 Versus 2006
(1,480 million)
Millions of Dollars
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US Bearing Industry Study
Projected Growth in US Bearing Demand
Average Annual Percent Change
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US Bearing Industry Study
Markets With Above-Average Growth Prospects
Through 2011

• Aerospace equipment
• Nonaerospace, nonautomotive engines
• Light vehicles
• Turbines
• Mining and oilfield machinery
• Construction machinery
• Industrial trucks and tractors
• Nonautomotive transportation equipment repair

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US Bearing Industry Study
Forecast Summary

• Growth in US bearing industry shipments and
  product demand will slow modestly through 2011
• US bearing shipments will keep pace with
  increases in domestic demand, stimulated by
• Generally healthy US market conditions
• Rising bearing demand in a number of export
  markets
• Growth in US bearing demand will be fueled by
• Largely favorable economic conditions
• An acceleration in aerospace equipment output
  growth and an upturn in motor vehicle production
• A pickup in nonresidential fixed investment,
  bolstering demand for bearings used in both OEM
  and MRO applications

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Read More About It
Bearings (Industry Study 2207) A 263-page
analysis of the US ball, roller and plain bearing
industry and market, with forecasts to 2016
World Bearings (Industry Study 2081) A 337-page
analysis of the world ball and roller bearing
industry and market, with forecasts to 2015
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The Freedonia Group
Business Intelligence and Strategic Market
Analysis for Todays Global Business Leaders