Timken: from Missouri to Mars–A Century of Leadership

Published by EH.NET (June 1999)

Bettye H. Pruitt. Timken: from Missouri to Mars–A Century of

Leadership.

Boston, Mass.: Harvard Business Scholl Press, 1998. xvii + 514 pp. Tables,

figures, photographs, appendices, notes, and index. $39.95 (cloth), ISBN

0-87584-887-7.

Reviewed for H-Business and EH.Net by Roberto Mazzoleni, Department of

Economics, University of Vermont.

Continuity and Change in the Growth of a Family Controlled U.S.

Manufacturing Firm

Established in 1899 by Henry Timken to commercialize tapered roller bearings

axles for carriages, the Timken Company today is a multinational corporation

with sales of about $2.6 billion (1998), 21,000 employees,

engaged in the manufacture and sales of bearings and alloy steel products that

find application in a wide variety of industries. To celebrate its

centennial, the Timken Company commissioned the Winthrop Group Inc. to write a

history of the firm. Timken: from Missouri to Mars–a century of leadership

in manufacturing is the result of historian Bettye H. Pruitt’s research

(with the assistance of Jeffrey R. Yost and others). Pruitt uses a variety of

sources, including internal corporate documents, personal correspondence of

several members of the company, as well as interviews with numerous individuals

from the company itself, its affiliates, and outsiders. The book’s rich detail

testifies to the quality and thoroughness of the author’s research. While

primarily focused on the business aspects of Timken’s life, the book also

discusses the firm’s relationship with the surrounding communities, its

philanthropic activities, and provides biographical sketches of many

individuals

associated with the firm,

including Timken family insiders as well as outsiders. These sections

contribute to establishing a link between the personalities of the firm’s

leaders and the culture of the organization. This is an important element in

the author’s assessment of Timken’s evolution. Pruitt emphasizes the firm’s

identity and sense of purpose as an anchor of stable values enabling the

strategic and organizational adaptation that allowed it to survive and

prosper. These cultural factors are linked to the Timken’s family continuing

control of the firm after a century of activity.

While the family ownership and control constitutes a distinctive feature of the

firm, the events in Timken’s history are in many respects quite representative

of U.S. manufacturing industries more generally, not only from a technological

and economic viewpoint but also from a cultural one,

as the author acknowledges in the book’s early pages. The chronological

sequence of chapters is punctuated by two focus chapters that describe the

company’s establishment of new production plants (see infra). These, Pruitt

argues, symbolize the technological and cultural differences between the mass

production

and the flexible manufacturing eras in Timken’s corporate history.

The origins of the Timken company can be traced as far back as 1855, to a

carriage business set up by Henry Timken, the son of German immigrants in

St.Louis, Missouri. During the 1890s,

Henry became involved in the development of anti-friction bearings and,

together with his nephew Reginald Heinzelman, he invented a tapered roller

bearing for which they received a patent in 1898. One year later, the Timken

Roller Bearing Axle Co. was incorporated for the commercialization of carriage

axles mounting their patented bearings. The growth of the bearing business

followed that of the automobile industry, although since the 1910s Timken began

to develop other markets for its products. Timken bearings were sold at a

premium over competing products, but over time, increased competition and the

possibility of vertical integration by car manufacturers threatened the

company’s future growth. Under the stewardship of Henry Timken’s son, Henry H.,

the

firm committed itself to competing on price and quality to sustain revenue

growth, a strategy that prompted Timken to seek cost savings by establishing an

in-house facility for steel production.

Pruitt suggests a transaction cost rationale for integration related to

Timken’s steel quality requirements which resulted in high steel prices,

monitoring and testing costs. Timken was also experiencing difficulties in

securing reliable supplies of high quality steel from electric arc furnaces.

These factors pushed Timken (and its main rival, Swedish firm SKF) to invest

in a facility for steelmaking. The decision was based on fairly inaccurate

estimates: the final investment costs exceeded the initial forecast by a full

order of magnitude (p.74). As a result, Timken was forced to seek external

finance from banks first, and to offer part of the company’s stock to the

public in 1922. In spite of the earlier reference to transaction and

manufacturing costs, Pruitt’s account indicates that the internal capability i

n steel production proved to be of fundamental value for the innovative

performance of the firm as it provided Timken with control over the interface

between bearing design and steel quality. Thanks to the learned capabilities in

product, process, and sales engineering, Timken experienced profit and revenue

growth throughout the 1920s.

Until the Great Depression, Timken’s policy of paying high wages had succeeded

at keeping unions out of its production plants. Only in the 1930s efforts by

the United Steel Workers to unionize the company’s plants in Canton, Ohio,

succeeded. The firm’s relationship with the union was marred by hostility. The

management spurned any interference with its control of shopfloor activities.

Timken was committed to a managerial style informed by hierarchical command

and control, a practice whose continuity inside the firm was facilitated by

recruiting executives through internal promotions.

The management’s anti-union stance played a role in 1950 when a

state-of-the-art production plant was set up in Bucyrus, Ohio, a rural area

that Timken hoped could provide a union-free environment. The new plant

featured extensive automation of the manufacturing process and focused on the

mass production of standardized products. Timken’s management could benefit

from vastly improved information systems and hoped that its control over the

production process would be unfettered by conflict with its labor force.

Generous employee compensation was expected to avert the unionization of the

plant.

At the same time, the firm intended to provide workers with the training needed

to realize job rotation programs and with team-based performance incentives.

The scale economies realized at the Bucyrus plant were the basis for Timken’s

retention of a firs t-mover advantage in the market for standardized tapered

roller bearings. In contrast with competitors whose product lines encompassed

alternative bearing designs, Timken remained committed to its time-honed

strategy of competing on price and quality in the tapered roller bearing

segment. The same conservatism was also visible in the company’s structure,

where the organization continued to be along functional lines. Pruitt

identifies these facts as symptoms of the incipient divergence of Timken’s

business

strategy and structure from the pattern typical of U.S. manufacturing firms.

These differences notwithstanding, Timken enjoyed a prolonged period of growth

and profitability. It developed a network of international affiliates whose

integration became an

important focus of managerial attention. Driven by the objective to coordinate

sales and production on a worldwide basis,

efforts were made to establish uniform quality and dimensional standards that

could realize interchangeability of products across plants. Whereas Timken’s

management effectively addressed these operational needs, it was not quite as

successful at developing an appropriate business strategy model for its

international affiliates. The business model behind the Bucyrus plant that

succeeded in the U.S. did not enjoy the same fate in other markets, partly

because the firm did not have a first-mover advantage vis-a-visits

competitors.

The competitive pressures in the U.S. bearing market increased during the

1960s. In the usual pattern, Japanese entrants first targeted the low-cost end

of the ball bearing business. Having succeeded in that market segment,

the Japanese firms began to aim at the low-end of the tapered roller bearings

market. Timken’s ability to withstand their competitive threat was the result

of its continuing commitment to modernize manufacturing facilities and expand

capacity. New plants were set up in Gaffney, South Carolina, in 1971 and in

Lincolntown, North Carolina, in 1979. To be sure,

competition put a squeeze on pro fit margins in the bearings business during

the 1970s, but Timken weathered the storm satisfactorily thanks to the

profitability of its steelmaking division. In that area too, Timken upgraded

and expanded manufacturing facilities (notice the acquisition of Latrobe Steel

in 1975) and developed other markets for its steel products in addition to

bearings.

By the late 1970s the firm’s ability to sustain continuous improvement in

bearings’ performance was diminishing. Problems had emerged in regard to the

quality of internal steel supplies. The response to this crisis,

initiated in 1978 as the Clean Steel Program, included a benchmarking exercise

conducted at steelmaking plants in Europe and Japan which revealed that Timken

needed to catch up with the industry’s best practice in order to secure its

competitive standing in the bearings business. In 1981 Timken decided to build

a new steel plant at Faircrest, Ohio.

These events were a watershed in the firm’s history. A prolonged period of

internal change ensued that wrought radical transformations in Timken’s

organization of shopfloor work as well as its corporate structure and culture.

Existing organizational practices had created an inward-looking culture that

failed to absorb useful managerial and technological knowledge from the

outside. The outcomes of the benchmarking exercise shook the management’s

confidence in the organization’s ability to identify and solve problems

internally and to generate the technological and organizational improvements

needed

to sustain the competitive position of the firm.

Outside consultants from McKinsey & Co. collaborated with insiders to

restructure the company. Even more important, they facilitated the overhaul of

the corporate culture, and particularly the abandonment of the strict top-down

approach to management that had characterized Timken since its early years. The

book’s final chapters portray Timken as an organization alert to the need for

strategic adaptation and willing to embrace change in response to external

events. In what may be considered a radical departure from the company’s

conventional wisdom, Joseph Toot Jr. described the Timken Company as having

moved from “a strict , traditional, product orientation toward the application

of certain skills which we

believed we possessed in an exceptional way” (p.393).

The book’s strength is without a doubt in its detailed account of the corporate

history, which a reader without an all encompassing interest in the matter may

find dizzying at times. While I found the

book pleasant and engaging to read for the most part, occasionally, the

author’s attempt to provide details ends up clouding the story line more than I

thought desirable, particularly toward the final chapters of the book. Perhaps

inevitably, the book touches only briefly upon events and issues that

interested readers will want to know more about. For example, Pruitt tells us

that while British Timken had been using Statistical Process Control

(SPC) after World War II, the U.S. headquarters’ efforts at standardizing

procedures across plants were responsible for its elimination. Pruitt says that

British Timken promptly conformed to the orders from Canton

(pp.232-234), but there is no way to tell whether British Timken benefited from

SPC, and if so, why did it simply conform to the orders? Considering that

quality control processes were resumed twenty years later, it would have been

interesting to learn more about the circumstances of SPC’s demise.

While the book rarely attempts to generalize from Timken’

s experience on specific issues, the introductory chapter places Timken’s

corporate history in a broader perspective provided by the scholarly debate

concerning the factors promoting corporate success and longevity. Pruitt lays

out two views, contrasting

Chandler’s [1] emphasis on a firm’s strategic focus on core businesses and

investments in organizational capabilities, with the cultural approach found in

Collins and Porras [2] and de Geus [3]

emphasizing a core ideology that “guides and inspires people

throughout the organization and remains relatively fixed for long periods of

time”

(p.xiii). This contrast does not receive much analytical attention in the rest

of the book. As Pruitt reckons, both themes appear in Timken’s history. This

suggests that the views presented as mutually exclusive need instead to be

integrated with one another. In fact, I would argue that Pruitt’s own narrative

supports the broad proposition that an organization’s culture (intended as a

constellation of values and norms of interaction) is an important determinant

of its capabilities. While the rich evidence discussed in the book clearly

bears on the nexus between culture and capabilities, the nexus is not

adequately developed. Pruitt’s recurring references to the legacy of “a

compelling sense of purpose and a cohesive corporate culture” (p.31), or the

“timeless importance of corporate purpose and identity” (p.xvi) seem to

identify these cultural factors as the key determinant of Timken’s longevity

and success. These emphases

are not supported, in my opinion, by adequate analytical arguments clarifying

the relationship between these concepts and corporate success.

Pruitt’s book provides interesting insights on a much broader range of themes

than my review suggests. Among them

, I would mention the discussions of patent litigation, the effects of

antitrust restrictions on its relationships to foreign subsidiaries, lobbying

for antidumping tariffs,

the development of internal R&D programs, technological developments in steel

and

bearing technologies, the firm’s relationship with standard-setting

organizations, as well as its marketing efforts with respect to particular

customers or industries. As a result, the book deserves the attention of a wide

audience of scholars, from business and economic historians to scholars of

industrial organization, strategic management, and technological innovation.

Notes:

[1] Chandler, Alfred D. Jr., Scale and Scope. The Dynamics of Industrial

Capitalism. Cambridge, Mass.: Belknap Press, 1990.[

2] Collins, James C. and Jerry I. Porras, Built to Last: Successful Habits

of Visionary Companies. New York, N.Y.: HarperCollins, 1994.

[3] de Geus, Arie, The Living Company: Habits for Survival in a Turbulent

Business Environment. Boston, Mass.: Harvard Business School Press, 1997.