SKF AB, the world's largest bearings maker, postponed plans to build a 250 million-kronor ($42 million) factory in India because of faltering demand for ball bearings among motorcycle makers.
An existing plant in Bangalore is enough to satisfy the current level of orders, Chief Executive Officer Tom Johnstone said in an interview in London today.
The project in Haridwar, north of Delhi, is ``on ice,'' though the land will be retained for the future, the 52-year-old Scot said. Indian sales of motorcycles and scooters fell 8 percent in the year through March, the first decline in at least five years, as higher loan rates damped demand.
"We'll hold it, come back to it as and when we see the chance" said the CEO, who has been with SKF for more than three decades.
The maker of bearings for wind-turbines and trains has slipped 10 percent in Stockholm trading this year, valuing it at 43 billion kronor. It's the seventh-best performer on the OMX index of leading Swedish shares this year.
Second-quarter sales at SKF's automotive division were little changed and the Gothenburg-based company yesterday forecast a similar trend in the current period. Overall profit in the period climbed 8.8 percent to a record, driven by demand from the mining and energy industries in Europe and Asia.
SKF spends about 300 million kronor to 400 million kronor a year on revamping production and shifting output to lower-cost countries, Johnstone said in the interview before meeting investors in London today. Plants have already been opened in Russia, China and India to tap growing demand for wind-turbine components and train parts.
Johnstone, the first non-Swedish CEO in SKF's 100-year history, is accelerating the transfer of a plant in Glasgow, Kentucky, to Mexico in response to falling U.S. auto demand. The division, which supplies bearings and seals to Fiat SpA and Renault SA, accounted for one-third of SKF's business last year.
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