RBC Bearings: Dodge’s Distribution Strategy

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I know it's a broad question, but in terms of an apples-to-apples pricing comparison, how would a highly specialized bearing for harsh environments compare to a more standard, commoditized bearing?

If I had an RBC bearing, it might cost around $10. In contrast, something from overseas could be $1 or $2. The difference is that extreme at the commoditized level. As the product becomes more specialized, the price increases accordingly.

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I know it's a broad question, but in terms of an apples-to-apples pricing comparison, how would a highly specialized bearing for harsh environments compare to a more standard, commoditized bearing?

The less pricing pressure you see, the more your margins typically increase because fewer people can handle the higher-end applications, like those from RBC or New Hampshire Ball Bearing.

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What percentage of your sales is to the actual end customer, such as Coca-Cola, which already has machining in their operations, like a belt, versus the OEM, who's the conveyor belt manufacturer and is designing the conveyor belt? In the design process, they might want to incorporate RBC or any given bearing manufacturer. What's the split, if that makes sense?

It's a great question because that's what we're trying to figure out. Generally speaking, as a distributor, it's going to be different for RBC. As a distributor, about 75% of our business goes to MRO, to companies like Coke and Pepsi. The remaining 25% to 30%, depending on the year, goes to equipment manufacturers, the ones manufacturing equipment for companies like Coke, Pepsi, Ford, and Toyota. Our business is split about 75/25 between MRO and OEM business, where we're providing support.

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