Aug 08, 2006: CEO Forum with James Griffith of The Timken Company

By Paul Hinshaw

The Timken Company’s President and CEO James W. Griffith was the featured guest at the Aug. 8 AmCham Russia CEO Forum – a speaker series designed to facilitate dialogue between high-level Russian and American executives and to enhance Russia’s profile as a prime investment destination. Following his remarks at the forum, Griffith spoke with AmCham News about his company and its plans for the Russian market.

How long has The Timken Company been working in Russia?

We established a sales office in Moscow in 1992 and have been expanding ever since, primarily through a growing network of distributors. 

What specific opportunities have led you to consider expansion of your activities in the Russian market?

Timken is a $5 billion dollar provider of highly engineered bearings and alloy steel.  You find our products everywhere things are turning, and our know-how is particularly strong in rugged environments such as those found in Russia’s heavy industries – steel, mining and energy exploration. You’ll also find our products most any where there is transportation involved – from cars to trains, or planes to bulldozers.  So, you can see our products are a good fit for an expanding Russian economy.  

We’ve seen a trend in other emerging markets that is also playing out here in Russia.  As companies begin to move beyond their local markets and compete on a global field, quality, reliability and service become increasingly important to them. 

For example, bearing customers in Russia are seeing the long-term value in replacing low-quality bearings designed to be thrown away after a couple of years with Timken’s global-standard products.  When properly serviced and maintained, quality bearings can significantly decrease the frequency and cost of replacement along with avoiding significant downtime associated with bearing failure.

Is this what has led you to make your first visit to Russia?

Many of our global customers are already here alongside Russian customers, some of which are rapidly becoming global players. We’ve made some important inroads regionally by establishing plants in Romania, Poland and in the Czech Republic. We also have two technology centers located in Eastern Europe. All of this is bringing us closer to the large base of customers in Russia.  Given the momentum I see building in key Russian economic sectors and Timken’s regional presence, it was time for me to take a closer look at this important market. 

What are some of the challenges you face in Russia and do they differ from those in other developing markets?

Similar to our experience in other emerging markets, timing is critical to success, and I think we’re at an important juncture in this market.  The challenge for Timken going forward is one of balance.  We need to make sure we maintain the right mix across time of developing local capabilities for Russian customers and using our global resources to meet the needs of our multinational customers as they grow in Russia.

As this is your first visit to Russia, have you discovered any preconceived notions you may have had to be false?

I thought we were growing our business at an acceptable clip, but now I see it is time for the company to propel our efforts forward at a more aggressive pace than we’ve set so far.  This is a vast market with attractive opportunities emerging for companies like Timken.

You spoke about several industries which you feel have great potential for Timken here. Is there one in particular that you are focusing on?

Timken’s objective is to identify those industries where we can apply our deep knowledge of friction management and power transmission to create exceptional value for our customers.  I think we have a strong potential fit in various sectors. 

As I look at the market in Russia and as I talk to people who are navigating this rapidly changing economic and political landscape on a daily basis, it appears to me that there are two successful spaces in which American companies are investing:

·         those that specifically serve the Russian market – consumers, primarily people who are purchasing products or services with global brands; and

·         those that tap the natural resources of Russia, whether it is paper, oil, mining or the servicing of those.

Timken’s best opportunity is probably as a tier supplier – that is, as a company serving the organizations that are directly harvesting and harnessing Russia’s vast raw materials.  And it seems to me that the Russian market is becoming an increasingly attractive investment for American tier suppliers.