Dive Brief:
- Machinery parts manufacturer Timken plans to lay off 97 workers from its Springfield, Missouri, belt plant, according to a Jan. 7 company notice.
- The job cuts make up roughly 40% of the facility’s workforce, according to a company spokesperson, with the decision based on long-term capacity planning and consumer demand.
- Despite the workforce reduction at the Springfield facility, the site will continue to produce belts, the spokesperson said. The layoffs follow cuts at another belt facility in Fort Scott, Kansas, which is expected to shutter by the end of Q2 2025, according to the company’s Q3 2024 securities filing.
Dive Insight:
Timken’s belt products are under its industrial motion segment, which saw a 1.4% dip in net sales in Q3, down to $362.1 million, according to the filing.
“The decrease reflects lower volume across most platforms, with linear motion, lubrication systems, belts and chain, and drive systems experiencing the largest decline, partially offset by higher industrial services revenue and favorable pricing,” the company said in the filing.
The company implemented plans to cut costs last year through integration and productivity initiatives, then-CEO Richard Kyle told analysts in a Q2 call in July 2024. In addition to the pending Fort Scott belt plant closure, Timken closed and sold a bearing facility in Gaffney, South Carolina, in Q4 2023 for $16 million, according to the securities filing. The closure impacted 225 employees.
Timken is ramping belt production in Mexico. Its San José Iturbide facility, which opened in December 2020, began producing belts last year and is set to take on full manufacturing capacity for the product, EVP and CFO Philip Fracassa said on a Q3 earnings call.
“That should be a nice improvement for us from a margin standpoint as the cost of operating that Mexico facility will be significantly lower than operating similar capacity,” Fracassa said.
While Timken is reducing its U.S. belt production capacity, the company is expanding its drive systems platform in the automation and robotics space under the same business, according to a Q3 2024 presentation. The machinery part maker bought precision drive system maker CGI Inc. in September 2024 for $167.4 million, according to the Q3 securities filing.
The deal included CGI’s 130 employees and manufacturing facilities in Carson City, Nevada, according to the securities filing. The CGI addition will focus on growth in the medical robotics sector and is expected to generate around $45 million in sales in 2024, according to the September release.
