NSK Receives $1 Million Grant

NSK Americas, Inc. (USA, a subsidiary of NSK Ltd., Japan) has received a $1 million grant from the Iowa Values Fund of the Iowa Department of Economic Development (IDED). The funds are to help NSK "realign" its manufacturing facility in Clarinda, Iowa, not only to keep the 373 workers but also add 150 full-time jobs there. Clarinda is being expanded as the result of NSK's early 2005 decision to shutter its troubled ball bearing plant in Ann Arbor, Michigan. At the time, NSK acknowledged to eBearing that it would be moving Ann Arbor's production to Clarinda, but gave few details. Built in 1959, the Ann Arbor plant -- formerly Hoover Ball and Bearing -- recently employed approximately 250 union workers represented by the United Auto Workers. Ann Arbor produces automotive size bearings such as fan clutch bearings, for automakers, industrial manufacturers and the automotive aftermarket. All surviving production will be shifted to Clarinda. Both Ann Arbor and Clarinda have been hard-hit by low-priced commodity import ball bearings. Although Ann Arbor was extensively retooled in the late 1980's, structurally high costs have left it uncompetitive. Ann Arbor is also a union facility, its workers represented by the United Auto Workers, while Clarinda is a non-union plant. As production is shifted to Clarinda, Ann Arbor will wind down operations and stay active no later than April 2007 when the current labor contract expires. NSK built the Clarinda plant in 1975, just after buying out Hoover. Expanded numerous times over the years, it includes not only the NSK bearing plant but also a 1988 joint venture, NSK-AKS (Amatsuji Steel Ball Mfg. Co. Ltd.) Precision Ball Company. Clarinda is well-positioned in southwest Iowa, near Kansas City, Des Moines, and Omaha. Clarinda, however, faces the same general competitive challenges as Ann Arbor, its product line dominated by commoditized, high-volume, small ball bearings such as 608 and 6203. Clarinda's bearings are used in automotive applications, by industrial component manufacturers, power tool makers, and in lawn and garden equipment. Particularly since 1999-2000, Clarinda has been fighting a losing battle against foreign-manufactured bearings. NSK testified in the Chinese ball bearing dumping investigation that 608 sales fell by 2/3 between 2000 and 2003, while 6203 sales fell by half. From a high of almost 500 employees in the late 1990's, Clarinda's production workforce is now around 350. Over the past two years, NSK has been thinning out Clarinda's shop floor, partly in anticipation of absorbing Ann Arbor, but also in response to steadily dropping demand. In that time, NSK auctioned off almost 60 6-spindle and 8-spindle automatic screw machines producing sizes from 5/8" / 16mm to 1-1/4" and 1-5/8". Some of the 8-spindle Mitsubishi and National Acme screw machines were as new as 1999, and few were older than 1995. While adding Ann Arbor's volume will help Clarinda more readily cover its fixed costs, it remains to be seen if the company can profitably operate a semi-commodity ball bearing manufacturing operation in the United States in the face of fierce foreign competition. Adding 150 workers as 250 are lost from Ann Arbor would seem to indicate some production will not be making the transition, but the company did not elaborate on its production planning. A statement accompanying the $1 million Iowa Values Fund award confusingly referred to it as a response to Iowa being in a competitive situation with unnamed other states. Mary Lawyer, IDED Director, said: "The growth at NSK is a result of the investment made through the Iowa Values Fund." An NSK spokesman noted there were, "three different states competing for this expansion," but did not indicate what states those might have been. Ignoring the fact that Ann Arbor's production shift from Michigan to Iowa has been a foregone conclusion for more than a year, NSK's only other vaguely related facilities are in Indiana, produce wholly unrelated products and are not reasonable competitors to Clarinda. "Clarinda has been proud to have NSK Corp. here and we're delighted that NSK Corp. is staying here," said IDED Board member John Lisle, during the presentation at NSK. Since its creation in 2003, the Iowa Values Fund has "assisted" almost 370 projects in 83 of Iowa¡¯s 99 counties, claiming to produce $4 billion in new capital investment. IDED said the new jobs thus "created" pay more than $39,000, well above the state's average.