RBC Sues SKF Over Nice Contracts

RBC Bearings Inc. (USA; NASDAQ: ROLL) has filed suit against SKF USA, Inc. (a division of SKF AB, Sweden). The complaint was filed in Connecticut Superior Court, Ansonia-Milford Judicial District, and is a "contracts" case against SKF by RBC's Nice Bearings. No detailed information about the case is available yet, but SKF and RBC have had a direct relationship over the Nice Bearing business for almost a decade. In 1997, RBC acquired Nice Ball Bearing Division and its sole Kulpsville, Pennsylvania manufacturing location. Since then, Nice bearings have been sold exclusively by SKF/MRC, via a reported ten-year exclusive distributorship agreement which runs through 2007. Nice manufactures a full line of precision ground, semi-ground and unground bearings and bearing assemblies. The company focuses on special and standard inch dimension ball bearings for automotive, industrial, lawn equipment, conveyor, material handling, medical and semiconductor equipment, bicycles, automotive strut and steering column applications. In recent years, sales of Nice bearings have been eroding in the face of dramatically increased foreign competition. Consequently, production and employment at the Kulpsville Nice plant has also eroded, as orders from SKF slowed. In 2005 to early 2006, RBC began to explore the possibility of selling the entire 16-acre Nice operation, then leasing back half of the 132,000 square foot building. RBC's Nice overhead would be reduced, it would be saved from an expensive equipment-moving exercise, but would maintain its proximity to SKF's operations in Kulpsville. Once it began looking into the situation, RBC quickly found the Nice plant is a far more valuable property than originally imagined. Consequently, RBC decided to sell the entire Kulpsville facility and shift Nice bearing production to other RBC plants. Kulpsville has been the scene of some labor unrest through the years, and workers there have repeatedly said that they never had a good working relationship with RBC after working for SKF. In 2003-2004, union workers at Nice were on a contentious four-month strike over wages and benefits.