Acquiring UPI, Britain’s largest bearing maker (1990)

The rank it bought, and the plant it took on

A company holding 3% of the European market bought that market’s largest producer whole. The Peterlee plant established in 1974 was earning well on capacity of 24 million units a year, but the road from that single plant to a market where SKF held 32% was long. Against conservative customers for whom two years could pass between first contact and first order, this can be seen as a decision to buy, with money, the time it would have taken to open those accounts alone. The half-step from fourth in the world to third would not have been reached any other way.

What it bought, however, was not only a ranking. The UPI plants, like the Polish plant acquired in 1998, are assets that turn into a burden of utilisation the moment demand thins, and by 2023 the size of Europe’s fixed costs was being named as the top priority. Reselecting which product lines to keep in local production is also the work of redrawing the outline of a manufacturing network taken on thirty years earlier. A decision to buy scale can be seen as the same decision as one to carry the cost of maintaining that scale for a long time.