RHP BEARING PRICES

We often receive questions regarding our prices on RHP bearings. In this article I will try to answer why we have such high prices.

In a simple answer all European made bearings arrive with a 78% duty. So the bearing that might cost $20 actually costs nearly $36 after we pay tribute to the US Customs Agent. Not all importers are treated the same. For some reason we receive unwanted attention from Customs and Border Protection. Other sellers have long gone unnoticed in the industry.

In recent years we have heard much about tariffs, in US politics, but not much about duty. So what is the difference?

The main difference between a tariff and duty is that a tariff is a type of duty, but not all duties are tariffs:

Duty
A tax imposed on imported or exported goods. Duties are based on the characteristics of the product and the value of the shipment. There are different types of duties, including specific duties and ad valorem duties.

Tariff
A tax on specific imports that is usually imposed to protect local industries or raise government revenue. Tariffs can be specific, ad valorem, or compound. Governments can also use tariffs to make trading with a different country more difficult.

First a bit of history:

RHP is a UK-based brand and was founded in 1969. The letters stand for the three major British bearing manufacturers Ransome & Marles Bearing Co., Hoffmann Manufacturing Co. and Pollard Ball & Roller bearing Co. All have origins dating back as far as 1898.

NSK acquired RHP in 1990 from the UPI Group and it has been a prosperous and proud brand of NSK ever since. Nippon Seiko KK, or NSK for short, was founded in 1916. The name translates as Japanese Precision Elements. The company quickly grew and its first subsidiary outside Japan was established in Düsseldorf, Germany, in 1963. From here NSK started to grow over the continent with subsidiaries in the Netherlands, Spain, the UK, Turkey, France, Italy and Poland.

The 1980’s were a tough time in US economic history. High energy costs, high interest rates, and a market crash in the Late 80’s. American business was feeling the pressure. In 1988 the current bearing situation kicked off.

Any US company can accuse a foreign company of unfair trade practices. Torrington USA now owned by Timken was the company that raised complaints regarding the imported price of: ball and cylindrical roller bearings. The accusation was that RHP was importing products at prices below reasonable market value. This is referred to as dumping in the trade business. Duties enacted to combat these practices are called anti-dumping duties.

Click here to read an article with more details.

U.S. antidumping laws allow even the smallest American firm to initiate a dumping charge, no matter how much the domestic demand might be for the foreign products in question. This allowed a small U.S. manufacturer of ball bearings, the Torrington Company of Torrington, Connecticut, in 1988 to accuse virtually all of the world’s bearing manufacturers with dumping in the U.S.

The company claimed that firms in nine countries were acting to undermine Torrington’s competitiveness.

On October 1988, the ITC (US International Trade Commission) initiated an investigation against bearing manufacturers in Britain, France, Italy, Japan, Romania, Singapore, Sweden, Thailand, and West Germany. In a May 2, 1989, press release, Torrington Company President Thomas E. Bennett stated, “There is clear evidence that dumping has caused long-term, fundamental damage across the entire bearing industry, affecting all product types. We will continue to monitor with great vigilance all bearing imports and will not hesitate to take strong action again to challenge additional unfair trade practices that are identified.” (“Landmark Dumping Decision Praised by U.S. Bearing Manufacturer,” Torrington Company, Torrington, Connecticut, press release, May 2, 1989.)

Yet before the investigation, domestic bearing manufacturers were unable to supply enough bearings to meet domestic demand. In fact, many U.S. manufacturers who use ball bearings in their products testified at ITC hearings that they were unable to find any domestic producers that could fill their orders. Moreover, in the orders that were accepted by domestic ball bearing manufacturers, some companies did not receive shipments in time and in some cases, not at all. Many American users of ball bearings testified in the investigation that Torrington had a long history of failing to supply agreed-upon shipments of bearings. Indeed, the American Manufacturers for Trade in Bearings released a statement during the investigation declaring that “[f]oreign producers and domestic consumers of antifriction bearings emphasized both delivery and reliability problems in their experiences with Torrington.”

Despite this, the Commerce Department found dumping margins ranging up to 212 percent with an average rate of about 60 percent. As a result, the Department established duty rates based on the dumping margins, and many American manufacturers that use ball bearings, like the Briggs and Stratton Company, the General Electric Company, Hewlett-Packard, and IBM, were forced to pay higher prices for imported bearings, because domestic suppliers still could not meet the demand. These duties increased the cost of production of such products as electronic motors, household appliances, office equipment, and power tools, which have been passed along to consumers in the form of higher prices. Increased component costs also have made the products of American firms less competitive abroad.

Torrington still was not satisfied. In 1990, it pressed new charges against firms in thirteen additional countries: Argentina, Austria, Brazil, Canada, China, Hungary, South Korea, Mexico, Poland, Spain, Taiwan, Turkey, and Yugoslavia. This time the ITC threw out the case ruling that no material damage was done. (“U.S. Maker of Ball Bearings Loses New Dumping Case,” The New York Times, March 28, 1991, p. D5.)

Every 5 Years the duty rate is up for review. 78% is the rate we are charged as a deposit toward the final rate. This rate is open to change based off the whim of government agents. It is not unheard of to receive a bill up to 5 years after the importation event has occurred. So we can be billed for additional duty and interest, at anytime, for product long sold. 

Timken U.S. Corporation (“Timken”) appeals from the judgment of the Court of International Trade, affirming the determination of the International Trade Commission (“Commission”) on the agency record. Timken U.S. Corp. v. United States, 2004 WL 1781348, No. 00-08-00385 (CIT Aug. 9, 2004).

In 1989 the Commission determined domestic industry was being materially injured by reason of imports of cylindrical roller bearings (“CRBs”) being sold at lower than fair value in the United States. Antidumping duties were accordingly imposed on CRB imports from France, Germany, Italy, Japan, Sweden, and the United Kingdom.

After the antidumping duties were imposed, the performance of the domestic CRB industry underwent a dramatic improvement. In nominal terms, domestic consumption of CRBs more than tripled between 1987 and 1998. Capacity utilization increased and stood at over 80 percent in 1998. The number of production workers more than doubled between 1987 and 1998.

In 1999, the Commission instituted five-year reviews to determine whether the revocation of the antidumping orders would likely lead to a continuation or recurrence of material injury on a domestic industry. In order to revoke the antidumping order, the Commission was required to consider various statutory factors including any likely volume effects, price effects and impact of imports resulting from the revocation. The Commission conducted a full review including a public hearing, allowing interested parties to comment. A wide variety of comments was received.

During the review process, Timken (seeking the continuation of the antidumping duties) urged the Commission to collect data on prices in third-country markets in addition to those in the United States. The Commission asked producers and importers to “compare market prices of cylindrical roller bearings in your home [foreign] market, the United States, and third-country markets, if known.” J.A. at 1421.

Conclusion:

 We accurately report all our imports due to the attention we receive. Our bearing prices are based on actual import costs and a reduced margin. While we won’t be the least expensive we will offer a bearing as close to OE as possible. Alternate options, not subject to high duty rates, are available in most cases. Japan (except for NSK products), China, and Taiwan supplied bearings can be imported with only a 5% duty rate.

We have, in the past, domestically sourced UK made SKF bearings (70-1591 and 70-2879A) that were imported in the late 1970s. These bearings were fairly priced as they were before the additional duty was in effect. Sadly the US bearing house stocking them realized they could be asking much more for these and we are no longer able to get them at competitive prices.  In recent years our competitors have begun to get charged for the same bearing duty. If at any point the duty is removed from the product we will adjust prices to reflect lower imported cost. The problem is the government is pretty keen on taking in the money even though the company may no longer being “harmed”. It is not in the nature of the governments to make things easier or less expensive.