SKF's President Johnstone Positive about Future

Though SKF Group's sales have taken a hit by the recentdownturn (down 18.4 percent in 1Q09), President and CEO Tom Johnstone is optimisticabout the $8.5B U.S. company's future prospects.

Speaking to reporters at SKF's Technical Press Day in Philadelphia, Johnstone described how the global company,headquartered in Sweden,is positioning itself to be ready to take advantage of opportunities when theeconomy comes back.

"We see this as a definite opportunity for SKF, as we'retaking this time to get our house in order, engage with customers and take theknowledge that we've gained and funnel that into new applications and productdevelopment," said Johnstone.

In fact, SKF has broadened its product line well beyond thetraditional roller bearings it got its start with over a century ago. Today,it's a major player in such diversified areas as wheel assemblies for railways,fly-by-wire systems for aircraft and mechatronics solutions for medicaldevices and agricultural equipment.

Wind energy is another core focus, which now accounts forsome 5 percent of SKF's turnover. "It's the fastest growing market for SKF today,"said Johnstone, pointing out that SKF technology is helping wind farms preventrandom failures by monitoring conditions such as unbalanced propeller blades,shaft deflections and mechanical looseness in wind energy transmissionsystems.

Energy efficiency is somewhat of a preoccupation for SKF,with new offerings such as a line of energy-efficient bearings that consume 30 percentless energy and operate at lower temperatures, all while carrying the sameload.
These developments would not have been possible, emphasized Johnstone, withoutthe company's ongoing commitment to an aggressive R&D investment that hastotaled $3.5B U.S. since 2003. In 2008 alone, the company increased its spendingby more than 30 percent over the previous year.
"Even in a downturn, we do not intend to dramatically change our spend onR&D, because it is these efforts that sow the seeds for the future," saidJohnstone. "It's not something you can simply switch on and off."

He went on to say the main focus of the company's R&Dis aimed at the development of environmentally friendly technologies, extensionsto its core product lines, and wholly new products to feed the innovationpipeline. It also plans to strengthen links with universities and high schools.

In addition to focusing on internal development, SKF ismaking acquisitions to complement its product line, like the 2007 purchase ofS2M, a manufacturer of magnetic bearings.

And the company is staying close to its customers. In factJohnstone said activity levels are actually increasing today, withmany engineering teams focusing on re-engineering of existing designs anddevelopment of next-generation designs. Some companies, he said, are focusingon reducing costs, while others are concentrating on designs that will befaster, more efficient and more environmentally friendly.

"This is where we definitely see the opportunity," saidJohnstone. "And that's because we have lots of new technologies that we canbring to them."