Though suppliers agree that flagging demand for bearings will turn around next year, there is no consensus about exactly when in 2002 a recovery will occur. The result is a confusing price forecast. Price increases have already been announced for certain bearings and several suppliers predict industry wide hikes in the first quarter. However, as suppliers continue to report soft demand, it's not clear that these increases will stick until a sustainable upturn is underway.

As in most sectors of the industrial economy, bearing suppliers have seen orders drop since the end of 2000. Mark Cuthbert, vice president, industrial products, at distributor Applied Industrial Technologies, Cleveland, Ohio, says demand has slowed from the steel, paper, and semiconductor industries. According to one bearings producer, heavy trucks, construction, and power transmission also performed poorly in 2001.

Automotive demand has slipped as well, and is expected to drop again in 2002. Despite these declines, however, suppliers say demand is still at historically high levels. For instance, Michael Arnold, president, industrial, The Timken Company, Canton, Ohio, says light vehicles demand will be active in 2002, though orders have fallen since 2000. Automotive was down 5-10% last year, but "2002 will still be a very good year," adds Jack Pangrazio, vice president, marketing and MIS, NTN Bearing Corporation of America, Mount Prospect, Ill.

Though the downtrend in key markets, such as automotive, hasn't bottomed out, a number of industry insiders voice optimism. "We had expected a turnaround in third quarter 2001, but now it appears it will take place in the first or second quarters of 2002," says Stem Malmstrom, president, SKF-USA, King of Prussia, Pa. He believes that investment confidence will return in 2002 as the economy stabilizes after the events of Sept. 11. Also, he says after implementing "dramatic inventory reductions" this year, OEMs and their suppliers will need to replenish stocks, driving up demand.

A rebound in orders next year could nudge prices up, but buyers are likely to resist price increases until then. Bearings prices overall have fallen slightly as the economy has sputtered this year. Yet, despite ongoing downward pressures from customers, certain bearing suppliers have issued increases in anticipation of a recovery early this year. Most bearing suppliers seem to be planning single-digit price hikes, depending when they expect demand to turn around.

"There has been enormous [downward] pressure on prices this year (2001)," says Timken's Arnold. He notes that downward pressure will continue if demand stays moderate. In addition, another industry insider says low-cost imports could gain market share, weakening domestic prices even further.

According to industry sources, increases could be issued at any time in 2002, depending on when suppliers see demand start to grow again. AIT's Cuthbert says a few suppliers already have issued 3-4% increases that will take effect mid-December or January. One bearings producer says tags will increase 2-3% some time in the first quarter. David Gridley, executive director, marketing services, Torrington Company, Torrington, Conn., says there is a "possibility of a modest industry increase" in the second half of 2002, if the economy shows signs of recovery.

Ample supply of bearings is also keeping prices moderate. Though a few suppliers say supply could tighten if demand expands quickly, few anticipate shortages in the next 12 months. Leadtimes remain short for most standard products.

Though certain sources say reduced inventory in a period of low demand could mean shortages when orders rebound, most say supply levels will remain stable. John Henry, bearing product manager, NMB Technologies, Chatsworth, Calif., says bearings producers added capacity when demand was high, and will be able to meet an increase in orders. As an example, David Roth, product manager, linear products, Thomson Industries, Port Washington, N.Y., says his company is running at just 65% of capacity.

Deliveries are as quick as one day or as long as 16 weeks, if the product is in high demand or is a special order. According to PURCHASING'S most recent survey, bearings leadtimes average 3.5 weeks. Over half the respondents obtain product in under a week, and a third receive bearings between 2-5 weeks.