BusINEss suMMArY salEs aND DIsTRIbuTION cOMPETITION THE TIMKEN COMPANY 3$^{ }$ Maintaining high standards of product quality and reliability, while keeping production costs competitive, is essential to Timken’s ability  to compete with domestic and foreign manufacturers in both the anti-friction bearing and steel businesses. Competition within the steel industry, both domestically and globally, is intense and is expected to remain so. Principal bar competitors  include foreign-owned domestic producers Gerdau Special Steel North America (a unit of Brazilian steelmaker Gerdau, S.A) and  Republic Steel (a unit of Mexican steel producer ICH), along with domestic steel producers Steel Dynamics, Inc. and Nucor Corporation.  Seamless tubing competitors include foreign-owned domestic producers ArcelorMittal Tubular Products (a unit of Luxembourg-based  ArcelorMittal, S.A.), V&M Star Tubes (a unit of Vallourec, S.A.), and Tenaris, S.A. Additionally, Timken competes with a wide variety of  offshore producers of both bars and tubes, including Sanyo Special Steel and Ovako. Timken also provides value-added steel products  to its customers in the energy, industrial and automotive sectors. Competitors within the value-added market segment include Linamar,  Jernberg and Curtis Screw Company. The anti-friction bearing business is highly competitive in every country in which Timken sells products. Timken competes primarily  based on price, quality, timeliness of delivery, product design and the ability to provide engineering support and service on a global  basis. The Company competes with domestic manufacturers and many foreign manufacturers of anti-friction bearings, including  SKF Group, Schaeffler Group, NTN Corporation, JTEKT Corporation (JTEKT) and NSK Ltd. Timken has entered into individually negotiated contracts with some of its customers in its Mobile Industries, Process Industries,  Aerospace and Defense and Steel segments. These contracts may extend for one or more years and, if a price is fixed for any period  extending beyond current shipments, customarily include a commitment by the customer to purchase a designated percentage of its  requirements from Timken. Timken does not believe that there is any significant loss of earnings risk associated with any given contract. Timken’s steel products are sold principally by its own sales organization. Most orders are customized to satisfy customer-specific  applications and are shipped directly to customers from Timken’s steel manufacturing plants. Less than 10% of Timken’s Steel segment  net sales are intersegment sales. In addition, sales are made to other anti-friction bearing companies and to the automotive and truck,  forging, construction, industrial equipment, oil and gas drilling and aircraft industries and to steel service centers. The Company has a joint venture in North America focused on joint logistics and e-business services. This alliance is called CoLinx,  LLC and includes five equity members: Timken, SKF Group, the Schaeffler Group, Rockwell Automation and Gates Corporation. The  e-business service is focused on information and business services for authorized distributors in the Process Industries segment. Traditionally, a main focus of the Company’s sales strategy has consisted of collaborative projects with customers. For this reason,  the Company’s sales forces are primarily located in close proximity to its customers rather than at production sites. In some  instances, the sales forces are located inside customer facilities. The Company’s sales force is highly-trained and knowledgeable  regarding all friction management products, and employees assist customers during the development and implementation phases  and provide ongoing support. Timken’s products in the Mobile Industries, Process Industries and Aerospace and Defense segments are sold principally by its own  internal sales organizations. A portion of the Process Industries segment’s sales are made through authorized distributors.