Sergei Oposhnyansky
Yevgeny Khokhlov

Sweden’s SKF, the world leader in manufacturing of rolling bearings, opened the Industrial service center in Moscow and held the Day of SKF. On this occasion the Russian capital was visited by Tom Johnstone, president & CEO of SKF. Along with other managers he presented the strategy of his joint-stock company to Russian public.

Founded as far back as 1907, SKF today is a strong well-organized business structure. Tom Johnstone was proud to report that his Group owns 80 plants in 24 countries and its personnel numbers 39,000 persons. In 2003 the sales volume reached $5.5 billion.
It is obvious that SKF maintains the growth potential and has big ambitions. As Tom Johnstone stated, the company has the clearly set financial goals: to raise its operation margin to 10% and increase sales by $1 billion. This will be achieved in 2006.
Being the leader in manufacturing bearings the Swedish firm offers products of a very high quality. In the words of the company’s president, the life of bearings made by SKF is 3 times as high as most others. They are successfully used in all units and products with rotation: vehicles, machine tools, household appliances, ships and yachts, roller skates. New ideas as well as new structures of SKF help its customers build up their production efficiency.
At the same time, as Tom Johnstone stressed, SKF is not about bearings only. Today the Group supplies components for medical equipment, develops unique technologies of electromechanical drives for aircraft and automotive industries, works out new lubricants.
Sales of SKF products are on the rise in all most important regions of the world. However, both Central and Eastern Europe, where the president of SKF places Russia as well, account for a comparatively small share of only about 4% of the total sales. Tom Johnstone noted the desire to increase this volume: "We regard Russia as a growing market, which is playing an important role in our development. That is why we are glad to be here and to take such an important step as opening a new service center".
Mr. Johnstone turned to the history and reminded that for the first time SKF emerged on the Russian market in 1914, just 7 years after its foundation. In 1916 the company built Russia’s first bearings production plant in Moscow and was managing it till 1928, when the enterprise was nationalized by the Soviet government. This enterprise keeps working today, though under a different name given in the Soviet times. Now it is called Shabolovsky Bearing Plant (exGPZ-2, i.e. the Second State Bearings Plant).
"We, of course, had to leave the Russian market for a short time but in 1991 we came back", tactfully said Tom Johnstone. In that year a subsidiary was set up, with the Swedish firm having a 100% stake.
Its head Anatolij Oussov, who, in his words, happened to be at the outset of establishing the company’s Russian branch, notes with satisfaction that he and his team that numbers 50 staff members in Russia and 20 persons in other CIS countries managed to create a professional, reliably operating distribution network. Thanks to this network, sales of SKF products in the CIS increased 8 times, their rates in the last five years continuing to grow by more than 20% a year. The well-developed logistics scheme made it possible to reduce terms of supplying the most required products and components from between 2 and 3 weeks to between 1 and 3 days.
"Every second bearing, which is brought to Russia and other CIS countries is a bearing made by SKF", stresses Oussov. Geographically, sales are distributed according to markets’ potential: Russia accounts for 74% of them, Ukraine for 18%, Belarus for 6%, 2% goes to Kazakhstan and other States of Central Asia. In the nearest future the company intends to open its office in Azerbaijan.
Listing clients Anatolij Oussov names Russia’s largest integrated iron & steel works MMK, Severstal, NLMK and the Iljich Mariupol integrated iron & steel works in Ukraine.
Developing the distribution network has been recognized as a priority direction of SKF operations on the territory of Russia and other CIS countries. At the same time, this activity is not limited solely to arranging sales. It is constantly expanding and at present includes a number of special programs that the company implements jointly with its distributors and permanent customers.
"There are many manufacturers of bearings in the world, including Russia, but we are trying to be unique", says Anatolij Oussov. "We want to offer not just the traditional product but to offer complex solutions of problems to our clients". For example, in the opinion of SKF, many machines now made in Russia, are unjustifiably bulky and heavy. They can be radically modified through applying design ideas of SKF.
The logo of the Swedish company reads "TO EQUIP THE WORLD WITH SKF KNOWLEDGE". In the words of president Tom Johnstone, this knowledge makes consumers of the company’s products and services more competitive, more profitable and more successful in business. In Tom Johnstone’ s opinion, the example of a successful application of the ‘SKF knowledge’ is the design of a new reduction gear, which is by 20% lighter than the ordinary ones. It consumes lubricants by 19% less and requires energy by 15% less, while having the same capacity and efficiency. There is no doubt that solutions of this kind not only give financial effect but also result in reduced consumption of natural resources.
So, what knowledge is SKF bringing to Russia?
As Tom Johnstone explained, solutions that the company offers are based on five fundamentals:
– bearings and bearings’ units;
– seals;
– mechatronics, including a drive control systems;
– lubrication systems;
– services, including Assets Efficiency Optimization ™.
The company suggests a wind power industry as an area where all these five fundamentals can be realized. "We have all of them: bearings, seals, system to monitor operating conditions, services", says Tom Johnstone. "In addition, there are supplies of lubrication systems that SKF also has after it has acquired assets of largest company in this field – Vogel, Germany.
In Johnstone’s words, the Industrial service center that SKF opened in Moscow has two operating directions: renovation (up to being like the new ones) spindle units of machine tools of any complexity as well as renovation of large-size bearings, including those for continuous casting machines used in the steel industry.
Commenting on this event head of the SKF office Anatolij Oussov stresses that he regards the opening of the Industrial service center as being very important for the Russian market. "This step is aimed at changing the psychology of our clients", says Oussov. Usually, bearings that have served their time are discarded. But it is a technically complex and expensive product having up to half a meter in diameter and being made of high-quality special steel. "We are the first, who will be repairing and restoring them", says Anatolij Oussov. In his opinion, at the same time, a customer is to have a double benefit: he will get a solution of his problem for a price that is half the cost of a new bearing and, besides, in many cases a repaired bearing will work better than a new one because it would have already passed through lapping processes.
As is expected, the Moscow service center will deal with the steel industry in the first place. In Anatolij Oussov’s words, SKF regards companies like MMK and Severstal as worthy clients: "We are seeing how the attitude to bearings is changing in practice, we are seeing the desire of those, who use the equipment, to work with us in order to raise reliability, reduce costs, etc.". He notes that at ̀̀Ê in particular two or three serious projects have already been developed with participation of SKF.
Anatolij Oussov also considers restoring spindle units in metal-cutting machines a very timely kind of services as regards the Russian market. Russia’s mills are still using a large stock of old equipment that owners cannot replace because they do not have sufficient funds so far. But spindles require repairs. Therefore, to all appearances, the new service center will not lack orders.
It is obvious that the leader in bearings’ production is finding not only interested customers in Russia but difficulties as well. "The problem is that our bearings are too good and that is why they are costly", says Anatolij Oussov noting that local manufacturers offer bearings for motor vehicles for a price that is three to five times lower than the one for products of SKF. Unfortunately, Russian makers of motor vehicles are not ready yet to spend money on quality. Nevertheless, in the words of Oussov, the company has an agreement with AVTOVAZ, the leading Russian maker of passenger cars, cooperates with KAMAZ, the maker of trucks, and it would like to develop these projects further, especially with respect to new models of motor vehicles.

It would be only logical to ask, what step in Russia SKF will take next. For example, to ask whether after opening the service center the company is going to make investments in establishing its own enterprises to manufacture bearings. Especially so, as there are already five SKF plants now in China, where SKF also started operations soon after its founding, then stopped the activity because of revolution-related events and emerged again in 1988.
When responding to this question the company’s president Tom Johnstone was rather cautious:
"We are, of course, making plans with respect to Russia and we know, how important it is to have production facilities precisely here. But there is no final decision on this question as yet. In any case we are examining all possibilities to consolidate our presence on this market, to share our know-how and provide our knowledge".