Swedish firm finds its bearings(2)

Makhija cited one of the company's clients, a coal mine in North China, that replaced all its bearings in its production lines with E2 models. Essentially it got back its investment quickly because the mine uses a lot of power and the energy reduction successfully offset the initial input.

Another such example involved replacing metal-to-metal camshaft bushings with roller bearings, an innovation first used in high-performance racing cars. Some studies show that crankshaft roller bearings can yield fuel savings of up to 5 to 6 percent, as a result of less friction and the fact that only a small oil pump is required.

During the celebration of its centennial in China in September, the company vowed to put more resources into the country's automotive market by establishing a new SKF campus in Shanghai's suburban Jiading district to support growth in China and across Asia.

The 700 million krona ($104.5 million) investment includes the founding of a new automotive factory that produces hub-bearing units for passenger cars and also the relocation and expansion of the Global Technical Center China, SKF Solution Factory and an SKF College campus.

The technical center includes product development, engineering services, global metallurgy and chemistry laboratories, manufacturing process development, testing and product investigation.

"Because you often see a lot of compact cars in Asia, we are designing all bearings specifically for these applications," he said.

Likewise, the technical center aims to primarily feed local Chinese needs while also meeting standards that apply in markets such as Japan and South Korea.

Also in September, SKF inaugurated a plant in Jinan, Shandong province. The operation will double the capacity of tapered roller bearings and truck hub units to serve truckmakers.

The factory uses new technology that is designed to make Chinese trucks more competitive and reliable, and help them improve the overall industry standard.

In a separate factory in Wuhu in East China's Anhui province, SKF is adding capacity to mass produce a product line of bonded piston seals, designed for a new generation of automatic transmissions. These parts will result in reduced friction and improved fuel efficiency.

The Chinese market also guided the company to move into new areas of growth. As the country has been heavily investing in high-speed rail, it infused new momentum into industries such as off-highway vehicles, precision tools and related businesses.

To bolster business in China, SKF broke ground with a new regional distribution center located in Shanghai's Waigaoqiao Free Trade Zone to shorten delivery times for customers in China and elsewhere in Northeast Asia.

The Chinese bearings market is highly fragmented. The main international bearing companies, such as Schaeffler AG, Timken Co Ltd and NSK Ltd, account for about one-third, while a host of local manufacturers such as Zhejiang Tianma account for the other two-thirds.

The "In China for China" stance apparently propels SKF to compete with local rivals. To this end, in April the company acquired New York-based General Bearings Corp, which has operations in Shanghai.

The purpose is to diversify the portfolio and "create a second brand" for the group, Makhija said. "The SKF brand focuses on energy-saving performance and aims at the premium markets. The second brand will help us tap into areas where performance requirements are lower."

While SKF has been a supplier of all bearings to Ferrari Formula One since 1947, it does not go for prominent publicity events, so not many individual customers are familiar with the brand, even though the cars they drive use SKF bearings.

But according to Makhija, it's not really necessary for a B2B firm to build a household name. Rather, SKF should be known in the right places and for the right reasons.

Despite popular concerns that industrialization is to blame for many environmental problems, Makhija argued that it is in fact a substantial part of the solution.

One endeavor is a recent partnership with the World Wide Fund for Nature, in which it pledges aggressive targets for reducing greenhouse gas emissions for SKF, its suppliers and logistics operations.

It started the BeyondZero portfolio including 12 products and solutions that will both improve energy efficiency and support more environmentally friendly energy production.

The goal, according to Makhija, is to reduce carbon dioxide for all transport managed by SKF by 30 percent in 2016 below 2011 levels and reduce energy use per unit of output by 5 percent year-on-year during that period.

That translates into financial input of 10 billion krona by 2016, quadrupling its current budget in 2012.

In addition, SKF is devoted to other corporate social responsibility activities.

Each year, it funds young soccer players from China's poverty-stricken areas to participate in the world's largest youth soccer tournament, the Gothia Cup in Gothenburg, Sweden.

It also sponsors students from Shanghai's Tongji University and the Beijing Institute of Technology to participate in the annual eco-marathon contest to see whose designs could travel the farthest distance using the least amount of fuel.

By providing energy-saving bearings to all youth teams and lending a hand in drafting engineering design, SKF not only creates a strong presence in the sector but, more importantly, educates future stakeholders through the use of energy-efficient ideas in designing critical components in automobiles.

"It is necessary for employees to be sensitive and engaged with the local community. Simply put, we want to be Chinese in China. This is the philosophy with which we do business worldwide."