SKF India Ltd. (a publicly-traded division of SKF AB, Sweden) has stopped work on a new bearing factory being built in Haridwar, Uttarakhand, while another in Gujarat remains on track.

Haridwar's Rs 1.5 billion facility was originally slated to be brought online by the end of 2008. All non-critical work has stopped.

Tom Johnstone, SKF's President and CEO, said: "We have decided to postpone work at the Haridwar plant due to a slowdown in market demand. We expect to commission the plant in the first quarter of 2010 although we are yet to make a final decision."

Another bearing factory, being built in Ahmedabad, Gujarat, is still on track. Budgeted at more than Rs 3 billion, it will be twice the size of Haridwar and will focus on producing large industrial bearings and for wind power generation applications.

Scheduled to come online by mid-2009, Ahmedabad will initially focus on producing bearings for Suzlon, India's leading wind turbine manufacturer. SKF reportedly has an exclusive 5-year contract with Suzlon; it currently supplies Suzlon with bearings imported from other plants.

SKF blamed India's slowing automotive and truck business -- now down more than 10% -- for the Haridwar delay. The slowdown has now hit the country's auto industry unexpectedly hard after a long period of only minor slowing compared to other industrial nations. New vehicle sales dropped 14.5% in October from 2007.

SKF India currently has three factories -- one in Pune and two in Bangalore. So far, they remain unaffected other than minor layoffs hitting temporary and contract workers. Exports account for approximately 10% of the Indian plants' output.

Mr. Johnstone added: "We feel that the current market demand can be met with our facilities in Bangalore and Pune."

When Haridwar and Ahmedabad are operational, Mr. Johnstone said the company's total employment in India will from the current 2,600 to more than 3,300.

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