Kharkiv Plant Targets Rail Bearings With Aggressive Investments

Kharkiv Plant Targets Rail Bearings With Aggressive Investments The Kharkiv Bearing Plant (HARP, Ukraine; since 2000, majority owned by Ukrainian Industry Energy Company; website) announced several aggressive initiatives to gain sales in the rail bearing segment, simultaneously ramping up rail bearing capacity and quality initiatives. Founded in 1947, HARP is one of the largest eastern European bearing manufacturers, after the European Bearing Company (Russia) and Samara Bearing Plant. It manufactures ball and roller bearings, primarily for industrial, agricultural, mining and rail applications. With a range of approximately 500 items, HARP's overall capacity is approximately 30 million sets per year, in sizes ranging to 320mm OD. Rail bearings include roller bearings for traction motors, bogey wheels, wheel ends, and other miscellaneous applications. Installed capacity for all rail bearings is approximately 800,000 sets per year, with actual production currently hovering between 600,000 and 700,000. Since it took over majority ownership in 2000, Ukrainian Industry Energy Company has poured more than USD $28 million into HARP -- which until that commitment had been allowed to decay as only former Soviet facilities can, eventually producing few bearings and mostly scrap as unused and often-unpaid employee theft of equipment and materials was rampant. UIEC's commitment has created a strong, successful turnaround, with the help of government help in securing much-needed materials and sales contracts. Kharkiv Bearing Plant has just completed a two-year expansion and modernization program focusing on rail bearings, a major equipment investment, and is about to institute another two-phased program running through 2009. The most recent phase of the company's rail bearing capacity buildout began in 2004 and ran through late 2006. One of the final steps of that program involved installation of $1 million of equipment from a company in Wuxi, China for large cylindrical roller bearings. The equipment reportedly adds grinding capacity for 120,000 bearings per year. The new equipment also allows Kharkiv to expand its rail bearing range up to 400mm OD, from its current limit of 320mm OD. The company has also contracted for the installation of seven large roll grinding machines, five CNCs and two flange grinders by the end of 2007. New annealing capacity, scheduled to be online now, will be delayed until September. Now a two-phased program is beginning, with the first phase scheduled to be online by September 2007 and the second phase by 2009. The program's total investment will be in excess of $14 million and push rail bearing capacity from its current 800,000 to over 1 million sets per year. Industrial bearing capacity will increase by an additional 500,000 sets. With those programs in place, the Russian Railroad authority has given Kharkiv a major contract to supply railcar bearings, locomotive drive bearings, and replacement components. By the end of June, shipments under the contract will have totaled more than $4.6 million. While approximately 50% of the Ukraine's bearings are imported from Russia, Kharkiv management said it believes the new initiatives will allow it to gain significant market share -- not only in Ukraine but also in the rest of the CIS market of former Russian states. To that end, the company appointed HARP Trading as the official distributor of its rail bearings. In turn, HARP Trading has established a new HARP Railway Products Department. This arrangement replaces the previous government-backed Railway Products Sales Directorate.