General Bearing Corporation

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General Bearing Corporation

44 High Street
West Nyack, New York 10994
U.S.A.
Telephone: (845) 358-6000
Toll Free: (800) 431-1766
Fax: (845) 358-7414
Web site: http://www.generalbearing.com

Public Company
Incorporated: 1958
Employees: 727
Sales: $59.39 million (2000)
Stock Exchanges: NASDAQ
Ticker Symbol: GNRL
NAIC: 332991 Ball and Roller Bearing Manufacturing; 333513 Machine Tools, Metal Forming Type

General Bearing Corporation manufactures, sources, assembles, and distributes a variety of bearing components and bearing products, supplying original equipment manufacturers and the industrial aftermarket, principally in North America, under the Hyatt and General trademarks. Chinese joint ventures manufacture some of these components and products. A Romanian joint venture produces a variety of machine tools for boring, turning, milling, and grinding metalwork pieces.

Growing Manufacturer: 1958-85

Seymour Gussack worked for Grant Pulley and Hardware, his father’s hardware manufacturing business, until 1958, when he and his brother Milton each invested $2,500 to found General Bearing Corporation in Mineola, New York. The company began as an engineering-oriented supplier designing bearings for a variety of special industrial applications. Its clients included Chrysler and AMF. General Bearing’s search for supplies led to profitable overseas alliances with Japanese and Polish firms. The company began marketing standard precision bearings to original equipment manufacturers in 1965 and added miniature unground bearings to its product line the following year. These miniature bearings were being made for rotary solenoids, tuning controls for high-fidelity record player systems, potentiometers, and business machines, in quantities of 10,000 to 100,000 per order. The company’s costs for making bearings were reduced by foregoing the grinding step. General Bearing also was producing ball transfers. In Mineóla, Swiss-made machines, engaged in the fine-blanking process, were press-forming steel parts such as levers and cams, producing close tolerances and relatively smooth edges. Company headquarters were in West Nyack, New York, which was also the site of the bearing plant.

General Bearing’s sales came to more than $8 million in 1967, up from about $4 million in 1962. More than half of the company’s bearings were being made in the United States, with the rest imported chiefly from Japan and England. Its four divisions were Genbearco International, which was marketing the unground miniature bearings, standard precision bearings, and pillow block; Global Ball & Bearing, which handled sales of balls made overseas; BMB, the exclusive U.S. distributor of English-made BMB miniature and instrument bearings; and Monarch Die, where the Mineola plant was press-forming steel parts.

General Bearing moved its domestic manufacturing operations to a new, company-built facility in Wilson, North Carolina, in 1969. Bearings and bearing components produced at this plant were sold primarily to the automotive market. The company, in 1975, formed a distribution division that sold General Bearing’s line of products, both manufactured and imported, to industrial distributors throughout the United States, thereby supplementing its marketing to original equipment manufacturers. A Mexican subsidiary was established in 1977.

In 1979 General Bearing completed a new one-story, $2.6 million, 100,000-square-foot factory in Wilson that replaced the older five-story facility. The new plant had the capability to increase bearings output by 50 percent and included automatic assembly equipment, an automatic scrap-processing system, and an automated energy control system. Also installed was a totally integrated online business information control system at the West Nyack headquarters. In 1983 the company moved its distribution center and bearing assembly operations to Blauvelt, about five miles south of West Nyack.

Turning to China for Manufacturing: 1986-2000

General Bearing sold its Wilson plant to Nucor Corporation in 1986. It was replaced by an 80,000-square-foot leased facility in Union, New Jersey. In 1987 the company expanded its field of operations by purchasing Hyatt-Clark Industries Inc. Formerly a division of General Motors Corporation, Hyatt-Clark, before its recent liquidation, had been primarily a manufacturer of tapered roller bearings for the automotive and railroad industries. This purchase allowed General Bearing to acquire a large amount of equipment to establish new domestic manufacturing capabilities, utilize the well-known Hyatt trademark, and gain entry into the tapered roller bearing market and the railroad market.

The Hyatt-Clark acquisition also became the foundation of a multinational manufacturing organization producing ball and roller bearing components in China for finishing and distribution by the Union plant and an Israeli joint venture. Using most of the equipment obtained from acquisition of the million-square-foot Hyatt-Clark factory in Hyatt, New Jersey, Shanghai General Bearing Co., Ltd. was established as a joint venture in 1987 to serve automotive original equipment manufacturers in the United States, Europe, and Asia. One Shanghai installation was a 72,000-square-foot plant utilizing about $10 million in Hyatt-Clark manufacturing equipment. The other was a 55,000-square-foot complex performing assembly and secondary operations on components made at the first plant. General Bearing’s Chinese partner provided the workforce and facilities.

The output from the Chinese plants was sent mainly to General Bearing’s Union facility, where the company installed new computer numerical-control machining centers, grinders, and turning machines, as well as assorted machining, heat-treating, grinding, and assembly equipment from Hyatt-Clark. In addition to upgrading its finishing and assembly capabilities for automotive bearing lines, the Union plant reestablished production of Hyatt-Clark’s railroad products, including journal boxes and traction motor bearings. The Israeli operation was established as a joint venture with Delek Investment & Properties Ltd., a unit of a major oil firm. This unit was charged with finishing bearing products for North American and European customers.

General Bearing’s expansion was the result of antidumping rulings and a Department of Defense directive requiring U.S.-made bearings in military-related products. These developments combined to create a greater need for bearings and other industrial parts production for the automotive industry. By 1990 the company had experienced an increase in production volume of 150 percent. Its operations were enhanced by the implementation of a cost-effective materials-handling system for distribution operations in its 35,000-square-foot warehouse. This system allowed order pickers to pick, sort, and pack orders in one step. Travel time to deliver completed orders to the packing station was virtually eliminated.

All was not well at General Bearing, however. The company had borrowed $12 million for the Hyatt-Clark purchase and, before establishing its Union plant, had attempted to reopen the massive Hyatt-Clark factory—with the staff maintained for this purpose—but had been unable to do so because of potentially incurring liability under applicable environmental laws. A subsequent attempt to establish a plant next to a company warehouse in Orangetown, New York, was blocked by local opposition.

With General Bearing unable to fulfill orders for Hyatt-Clark’s output, the company incurred a combined net loss of $5.5 million in 1991 and 1992. World Machinery Company, a private firm controlled by the Gussack family that held 77 percent of General Bearing’s shares of stock, filed for chapter 11 bankruptcy reorganization of General Bearing in 1991. The company reemerged from bankruptcy in 1993 after World Machinery paid off the loan, receiving in return General Bearing notes and the remainder of the company’s shares. Seymour Gussack’s son, David, became president of the company in that year.

In 1994 Shanghai General Bearing was certified as a supplier of wheel bearings to Shanghai Volkswagen, but in 1995, despite an operating profit, the parent company incurred a net loss because of recalls of 10,000 bearings to the railroad industry due to defects. General Bearing fared better in 1996, when it recorded a net profit of $1.36 million. That year the company returned to West Nyack, locating on an 18-acre site with a 155,000-square-foot industrial area—chiefly for assembly rather than production—and 35,000 square feet of office space.

General Bearing became a public company in 1997, when it raised $5.3 million from its initial public offering of common stock. That year the company opened its third joint venture for the production of bearings in China, the Ningbo General Bearing Co., Ltd. Also in 1997, General Bearing won a $54 million contract to supply wheel and axle bearings to General Motors over the next three years. General Bearing allowed its union lease to expire in 1998. That year Chinese joint ventures provided 72 percent of the company’s bearings and 82 unaffiliated manufacturers provided the remainder. The year 2000 began with the acquisition of a controlling interest in Jiangsu General Ball & Roller Co., Ltd., a leading Chinese ball bearing manufacturer, to manufacture high-precision steel balls and rollers in Rugao City, Jiangsu Province.

Company Perspectives:

Through flexibility in manufacturing and sourcing, as well as attentive customer service, the Company strives to be a reliable, innovative and cost effective provider of bearing components and products to the approximately $5 billion per year U.S. bearing market.

General Bearing, according to a company executive interviewed in 2000, reduced its cost structure by 25 percent by transferring the majority of its operations to China while maintaining—and even improving—the quality of its products. Every lot received in West Nyack was being inspected prior to acceptance, using, with few exceptions, a zero-defect acceptance plan that required the entire lot to be placed on hold if any part failed to meet specifications. A new inspection center had been established in China, and General Bearing planned to gradually shift most inspection from West Nyack to Yuyao City, China, so that shipments would ultimately go directly from “dock to stock” when arriving in the United States. According to a Tooling & Production article in 2000, “A visit to any of the factories reveals modern production equipment and management systems equal to those in Japan, Europe, or the U.S. All will be soon ISO 9002 certified.”

General Bearing, in July 2000, acquired World Machinery Company, which just prior to the acquisition owned 75 percent of the outstanding common stock of General Bearing. Principally owned by members of General Bearing’s board of directors and senior management, World Machinery was mainly involved with the manufacture and sale of machine tools. A 60 percent owned subsidiary had, in 1998, purchased 51 percent of a privatized factory in Bacau, Romania, and had, with minor exceptions, the exclusive right to market its products. World Machinery lost money in 1998 and 2000.

General Bearing in 2000

General Bearing’s sales (including World Machinery) came to $64.34 million in 1999 and $59.39 million in 2000. The company attributed the 2000 drop in revenue mainly to a decrease in orders for railroad bearings due to the slowing U.S. economy and to a slump in its machine tool business. Its net income for the two years was $2.24 million and $1.88 million, respectively. The OEM Division accounted for 63 percent of sales in 2000, the Distribution Division for 22 percent, and the Machine Tool Division—that is, World Machinery—for 15 percent. The former two were profitable, but the Machine Tool Division sustained an operating loss of $2.7 million. Sales outside the United States accounted for 11 percent of the total. General Bearing’s long-term debt was $16.45 million at the end of 2000. Members of the Gussack family owned about half of the company’s common stock in June 2001.

General Bearing’s products included ball bearings, tapered roller bearings, spherical roller bearings, and cylindrical roller bearings, both to the industrial aftermarket and, under the Hyatt and General trademarks, to original equipment manufacturers. These products were being used in a broad range of applications, including automobiles, railroad cars, locomotives, trucks, heavy-duty trailers, office equipment, machinery, and appliances. Original equipment customers included 8 of the top 12 U.S. manufacturers of heavy-duty trailers, Visteon Corp., Burlington Northern/Santa Fe Railroad Co., Pitney Bowes Inc., and Eastman Kodak Co. Industrial aftermarket customers included the two largest industrial distributors in the United States, each of which had more than 400 outlets. General Bearing was obtaining 76 percent of its bearings and components from various Chinese joint ventures and the remainder from about 50 unaffiliated manufacturers working under short-term contracts.

General Bearing’s machine tools included horizontal boring mills, bridge and gantry mills, vertical turning lathes, heavy-duty lathes, roll grinders, belt grinders, and vertical grinders. These were being produced by W.M. Works, formerly known as Masini Unelte, Becau, S.A. A subsidiary of the works was selling most of these products in the United States and also marketing its own product lines of WMW HECKERT production milling machines and WMW Radial Drills, manufactured by independent suppliers abroad. This subsidiary also was importing and distributing CETOS grinding machines from the Czech Republic. Machine tool customers included Boeing and Chrysler.

Principal Subsidiaries

World Machinery Company; World Machinery Group, BV (60%); WMW Machinery Company, Inc.

Principal Operating Units

Distribution Division; Machine Tool Division; OEM Division.

Principal Competitors

American Koyo Corp.; FAG Holding Corporation; NSK Corporation; NTN Bearing Corporation of America; SKF USA Inc.; Timken Corporation; Torrington Company.

Key Dates:

1958:: General Bearing is founded by Seymour Gussack.
1967:: The company’s annual sales pass $8 million.
1987:: General Bearing purchases Hyatt-Clark Industries Inc.; the company founds the first of several Chinese manufacturing joint ventures.
1991-93:: General Bearing is operating under Chapter 11 bankruptcy protection.
1997:: General Bearing becomes a public company with its initial stock offering.
2000:: The company acquires World Machinery Co., a machine tool manufacturer.