Friction over roller bearings. US makers ask protection against cheaper imports
An industry that considers itself a spoke in the wheel of US manufacturing and crucial to the national defense is crying foul and asking for protection against foreign competition. The Torrington Company of Torrington, Conn., one of the largest manufacturers of roller bearings, and a subsidiary of the Ingersoll-Rand Company, filed an antidumping petition in March with the International Trade Commission (ITC), charging nine countries with selling roller bearings at a much lower price in the United States than they do at home.
Roller bearings reduce friction between moving parts, allowing them to move more smoothly and quickly. Heavy machinery - farming, mining, manufacturing - as well as airplanes, trains, computers, power plants, and skateboards, depend on bearings for efficiency. An automobile contains 40 to 50 bearings.
The suit claims ``material injury'' due to underpriced imports, notably from Japan, West Germany, Singapore, Italy, and Britain, and asks that competitors' prices be forced to adjust to market value.
``There's been absolutely massive dumping going on ... they have stripped our markets in some areas,'' says Terry Stuart, trade counsel at the Washington law firm of Stuart & Stuart.
Torrington chairman Thomas Bennett says unfair pricing has eroded the market extensively, by forcing domestic producers to lower costs through cuts in hiring and capital investment. Even though the industry has received a boost in the past year, it still needs help to regain its footing, Mr. Bennett says.
So far, the ITC has agreed with Torrington. In a preliminary ruling in May, it gave the company a unanimous affirmative determination.
Since bearings are also heavily used in military vehicles and equipment, the industry is considered critical to national defense, second only in strategic importance to the semiconductor industry, according to Deputy Undersecretary of Defense Robert McCormick.
Late last week, the Department of Defense issued a federal acquisition regulation requiring the government to buy only domestic bearings. Right now, the Pentagon buys 17 percent of the bearings made in the US, either by American companies or US subsidiaries of foreign companies.
The little steel balls have been the subject of 16 investigations by federal agencies and the ITC since 1973. In 1987, the Timken Company, the largest specialty (tapered-roller) bearingmaker, won a similar dumping case.
After a Defense Department study on the $3.5 billion industry in 1986, the industry's trade group, the Antifriction Bearing Manufacturers Association, filed a petition asking President Reagan to preserve domestic bearingmakers' capacity specifically in the interest of national security. The request, which has not been made public, is currently being considered by the administration, says association president Michael Payne.
The Pentagon study found that ``as the commercial sector has deteriorated, domestic producers have been forced into the production of specialty bearings or niches, to remain in business. These niches are characterized by low profit, low volume, high cost production runs.''
But foreign importers as well as purchasers of bearings argue that the industry's attempts to shut out imports are nothing but protectionist.
Because of the Timken victory, the Japanese-owned Koyo Corporation of America has had a 36 percent penalty duty added to what it was paying before.
US manufacturers ``created a problem in the market by their action with no capability of meeting it,'' says Ralph Kraus, vice-president of Koyo, a bearingmaker in Orangeburg, S.C.
Imposing quotas in today's full-capacity operating environment, some domestic users say, will cut supplies and raise prices.
``From both a price increase standpoint and strategic standpoint, it hurts our ability to compete internationally,'' says William Lane, government affairs representative at Caterpillar Tractor Company, who testified before the ITC that his company is having a hard time getting the bearings it needs. Caterpillar sells bulldozers, tractors, and construction equipment to the Defense Department.
Indeed, a new report by the Federal Reserve Board, based on a survey of the 12 Fed district banks, says manufacturing production is so strong, it is ``taxing capacity'' in some industries and exerting pressure on the prices and availability of a number of products.
And US subsidiaries of foreign-owned bearingmakers, which account for about 26 percent of the bearing production under investigation, claim that quotas and duties could destroy the US bearing industry.
Price changes that look like dumping have been caused mainly by swings in domestic value and monetary exchange rates, says Samuel Mehta, marketing manager at FAG Bearings Corporation, a West German-owned bearings producer in Stamford, Conn.
Import restrictions will only exacerbate current supply problems, he says. ``Lead times are the longest they've been in years. ... It could take a year and a half to fill an order.''