Asian Bearing Shuts Down Operations

Troubled Asian Bearing Ltd. (ABL, India) abruptly but not unexpectedly shut down its operations yesterday, throwing more than 700 people out of work, after running out of funding options. Management said it continues to seek strategic alternatives. Founded in 1982, ABL is a joint venture involving the Tamil Nadu Industrial Development Corporation (TIDCo). The company's plant is located in Belathur, near Hosur, in southern India. ABL manufactures ABL brand ball bearings, tapered roller bearings, cylindrical roller bearings, ball thrust bearings, and has its own closed-die forging shop and ball production. Its primary product is a deep, broad line of over 125 ball bearing sizes; approximately 50 different tapered roller bearings are in the mix. Bearings can be produced in sizes from 12mm ID through 900mm OD. 52100 chrome steel balls are produced in metric and inch sizes, 3/16" through 13/32", grades 10 and 16. After several years of mounting problems, ABL's final setback apparently came December 20, when its entire staff of more than 700 workers went on strike. Reportedly, none had been paid since at least September. The workers, represented by the Asian Bearings Staffs and Employees Union (ABSEU), staged walkout was more difficult than previous strikes, as everyone, including management, was prevented from entering the facility. Managing Director, P.L. Muthu, said: "Our company is facing an acute financial crisis for the past few years and our company is reeling under huge cash losses. The management is trying its best to arrange funds from outside sources for the revival." ABL said it had been producing up to six million bearings per year, and was on track to build capacity for up to ten million bearings per year. Even though ABL produces its own hot-forged rings, the ongoing financial crunch translated to declining vendor shipments of raw materials; in recent months, the plant was running at only a very low level of activity to fill some contractual obligations. Management, operating and cash flow troubles have plagued ABL almost since its start. With control eventually seized and turned over to the Board for Industrial and Financial Reconstruction (BIFR), ABL's various rehabilitation efforts were termed a "failure" more than ten years ago, and it has had a negative net worth for several years. Although admitting a "competitive disadvantage," and pricing disadvantages versus its competitors, ABL has been kept alive through bailouts, loan forgiveness and through several management teams. In regulatory filings, ABL management said problems were caused as, "intense competition in domestic markets and availability of imported bearings at low prices have had a considerable effect on the prices." The strike, plant closing, loss of jobs and incomes are a particularly hard blow for the Hosur area, where workers' opportunities are limited and India's emergence as a manufacturing economy is not yet in evidence the way it is in other more developed areas.