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Composition Structure of elevator industry

The elevator industry is divided as organized Sector & Unorganized sector. The organized sector being bigger companies like, OTIS, KONE, Mitsubishi, Schindler, ThyssenKrupp, Johnson while the unorganized sector comprises of one man show companies and freelancers and constitute around 20% of the total elevator market in India. The organized sector commands around 80% of the elevator market in India amongst the organized sector OTIS is the market leader with 30% followed by Kone with 20%, ThyssenKrupp with 20%, Schindler with 10%, Mitsubishi with 10% & Johnson with 10%.

4.2 Market Leaders & Competitive Strategies

The major elevator companies in India are :

OTIS

KONE

MITSUBISHI

SCHINDLER

THYSSENKRUPP

JOHNSON

Otis Elevator Company

Type

Subsidiary of UTC

Founded

1853 (acquired in 1976)

Headquarters

Farmington, Connecticut

Industry

Vertical Transport Systems

Products

Elevators and Escalators

Employees

Approximately 63,000

Website

otis.com

1853: Elisha Graves Otis invents first safety-hoist elevator.

1861: Otis dies; two sons take over business.

1889: First electric-powered elevator and escalator are introduced.

1898: Otis Elevator Company is formed.

1975: United Technologies Corporation buys company.

2000: Gen2 belt-driven elevator is introduced.

Company History

Otis Elevator Company, Inc. is the world leader in the manufacture, maintenance, and service of elevators, escalators, moving walkways, and other horizontal transportation systems. After more than a century in business, Connecticut-based Otis has more than 1.2 million elevators and escalators in operation, controlling about 22 percent of the world's elevator market. Almost 80 percent of the company's business is done overseas. Since 1975 Otis has been a subsidiary of United Technologies Corporation (UTC), a conglomerate that also owns Pratt & Whitney and Carrier. Otis contributes approximately 23 percent of UTC's annual sales.

Otis was acquired by United Technologies in 1976 and is a wholly-owned subsidiary. The company has over 60,000 employees, with 2007 revenue of US$11.885 billion. The company headquarters are located in Farmington, Connecticut.

Otis has also dabbled in horizontal automated people-mover "shuttle" systems. In 1996, Otis formed a joint venture called Poma-Otis Transportation Systems with the French company Pomagalski to promote these products.

Otis Elevator Company purchased Express Evans Lifts in the UK. Evans Lifts was the oldest and largest manufacturer of lift equipment in the UK and was based in Leicester, England before being acquired by Express Lifts of Northampton, to be known as Express Evans Lifts. Otis' Customer Care Centre is still based in the old Express Evans Lifts building in Leicester. The building has since been extended by Otis.

There are still some installations of Evans Lifts being used today. Notably, an original Evans Lift is still in the Silver Arcade in Leicester. It formerly transported people to the upper floors, but the upper floors are no longer occupied so the lift is no longer used.

Gen2 Elevator

Otis entered the machine-room-less market with the introduction of the Gen2 elevator system. Otis designed a technology system that employs flat polyurethane-coated steel belts that replace the heavy, woven steel cables which have remained the industry standard since the late 1800s. The belts are approximately 3 mm (0.1 inch) thick and allow for a smaller sheave than conventional elevators. Together with a redesigned machine, this allows the machine to be mounted within the hoistway itself.

Kone Corporation

Type

Public (OMX: KNEBV, Pink Sheets: KNYJF)

Founded

1910

Headquarters

Espoo, Finland

Key people

Antti Herlin (Chairman of the board), Matti Alahuhta (President and CEO)

Industry

Engineering and service

Products

Elevators, escalators, automatic building doors

Revenue

€4.603 billion (2008)[1]

Operating income

▲ €558.4 million (2008)[1]

Profit

▲ €418.1 million (2008)[1]

Employees

34,830 (2008)[1]

Website

www.kone.com

Kone Corporation (officially typeset KONE and pronounced "ko-nay"), founded in 1910 and headquartered in Espoo, Finland, is an international engineering and service company employing some 32,500 personnel worldwide. The firm is the fourth largest manufacturer of elevators worldwide, provides maintenance services and modernization solutions. In addition, Kone builds and services automatic doors and gates. The company provides local service for builders, developers, building owners, designers and architects in 800 locations in over 40 countries. Since 1924, Kone has been owned by one of Finland's wealthiest families, the Herlin family. After Harald Herlin purchased the company in 1924, he served as its Chairman until 1941. Afterwards, his son, Heikki H. Herlin, took over his father's post from 1941–1987. Control of the company was then handed down to his son, Pekka Herlin, which he retained from 1987–2003. The current Chairman of Kone's Board of Directors from 2003 onwards is Antti Herlin.

Company History

Kone (then known as Osakeyhtiö Kone Aktiebolag) was founded in 1910 as a subsidiary of Gottfr. Strömberg Oy. Strömberg's license to import Graham Brothers elevators was transferred to the new company. Kone sold just a few units before terminating the licensing agreement in 1917. Kone, then a company with only 50 employees, started to make and install its own elevators in 1918. Six years later, in 1924, entrepreneur Harald Herlin bought Kone from Strömberg and became the new chairman of the company's Board of Directors. His son, Heikki Herlin, joined the company and was appointed technical director in 1928. His office was located in a former margarine factory on Haapaniemi Street in Helsinki that Kone had bought and converted into an elevator production facility the previous year. Heikki Herlin took over as Kone's president in 1932. Kone's first foreign subsidiary - AB Kone Hissar of Sweden - was established in 1957.

Significant alliances & acquisitions

1985 – the acquisition of Montgomery Elevator's Canadian subsidiary opens an alliance with Montgomery in the U.S. that leads to the total integration of Montgomery into the Kone organization after 1994.

1995 – an alliance was formed as Kone and MacGregor worked together to create elevators for handling passenger traffic on modern cruise ships. This alliance commands the leading position in marine elevator market.

1998 – Kone's alliance initiated with Toshiba of Japan.

2001 – Kone-Toshiba alliance is strengthened as the companies signed a historic agreement to exchange shares and extend Toshiba's license to market elevators based in Kone MonoSpace technology.

2002 – Kone acquires the industrial engineering company Partek

Type

Corporation TYO: 6503

Founded

Tokyo, Japan (1921)

Headquarters

Tokyo, Japan

Key people

Setsuhiro Shimomura, President & CEO

Industry

Electronics

Products

Energy and electric systems, Electronic devices, Industrial automation systems, Home appliances, Information and communication systems

Revenue

$32.6 billion USD or 3,855 billion Yen (Consolidated, as of June 28, 2007)[1]

Employees

102,835 (Consolidated, as of Dec 2007)[2]

Website

Mitsubishi Electric Global

Mitsubishi Electric Corporation (,Mitsubishi Denki Kabushiki-gaisha) (TYO: 6503) is a Japanese company based in the Tokyo Building in Tokyo, manufactures electric and architectural equipment, as well as a major worldwide producer of photovoltaic panels[3]. The Corporation was established on 15 January 1921.It sponsors a PGA Champions Tour event at Hualalai, Hawaii.

Locations

Mitsubishi Electric Global [1]

Mitsubishi Electric America [2]

Canada

USA

Mitsubishi Electric Asia & Oceania [3]

Asia

Australia / New Zealand

China

Hong Kong

Taiwan

Japan

India

There are 11 facilities and 2 laboratories, for example, Kobe, Amagasaki and Kamakura.

Korea

Malaysia

Singapore

Thailand

Mitsubishi Electric Saudi Ltd. (MELSA) - Saudi Arabia [4]

Mitsubishi Electric Europe [5]

Benelux

France

Germany

Ireland

Italy

Portugal

Russia

Spain

Sweden / Denmark

Finland / Norway

United Kingdom

The Schindler Group

Type

Public

Genre

Corporate histories

Founded

Lucerne, Switzerland (1874)

Founder(s)

Robert Schindler and Eduard Villiger

Headquarters

Ebikon, Switzerland

Key people

Alfred N. Schindler (Chairman)

Industry

Vertical transportation

Products

Elevators, Escalators

Revenue

CHF13,835 million (2007), ▲ 24.6% from 2006

Employees

44,000 (2006)

Parent

Schindler Holding Ltd

Website

The Schindler Group

The Schindler Group was founded in Switzerland in 1874 and is the second largest manufacturer of elevators world wide. Schindler installs and maintains elevators and escalators in all kind of buildings (Residential, Commercial and High-Rise). The company is present in more than 130 countries and employs 43,000 persons worldwide. The production facilities are located in Austria, Brazil, China, France, Slovakia, Spain and the USA.

The second business division of the Schindler Holding is the ALSO Group. It is a wholesale and logistics company in the information and communications technology sector and the consumer electronics sector. The ALSO division business is mainly in Switzerland and Germany.

Company history

The company was founded in Switzerland in 1874, by Robert Schindler and Eduard Villiger who establish the collective joint partnership Schindler & Villiger. Shortly thereafter, a mechanical engineering workshop was built on an island in the River Reuss in Lucerne, Switzerland, for the production of lifting equipment and machines of all types.

Schindler entered the North American elevator market with the purchase of Toledo, OH based Haughton Elevator Company in 1979-- briefly branding their products as Schindler-Haughton. In 1989, the company dramatically increased their presence in the United States after acquiring the Elevator/Escalator division of Westinghouse Electric, one of the largest producers of elevators and escalators at the time. Currently, Schindler Elevator Corporation, the United States operations of Schindler Group, is based in Morristown, NJ.

ThyssenKrupp AG

Type

Public (FWB: TKA, LSE: THK)

Founded

1860

Headquarters

Düsseldorf, Germany

Key people

Ekkehard Schulz (CEO and Chairman of the executive board), Gerhard Cromme (Chairman of the supervisory board)

Industry

Steel, engineering, capital goods

Products

Steel, stainless products, automotive technologies, plant technologies, elevator systems, marine systems, shipbuilding, services

Revenue

€53.43 billion (2007/2008)[1]

Operating income

▲ €3.572 billion (2007/2008)[1]

Profit

▲ €2.276 billion (2007/2008)[1]

Employees

199,370 (2007/2008)[1]

Divisions

ThyssenKrupp Nirosta, ThyssenKrupp Marine Systems

Website

www.thyssenkrupp.com

ThyssenKrupp AG (FWB: TKA, LSE: THK) is a large German industrial conglomerate, with more than 200,000 employees. The corporation consists of 670 companies worldwide. ThyssenKrupp is one of the world's largest steel producers. It operates worldwide in three business areas: steel, capital goods, and services. The steel unit concentrates on carbon steel and stainless steel, while the capital goods unit consists of three segments: elevators, automotive (parts, sub-assemblies, and modules), and technologies (machine tools, large-diameter bearings, cement plants, bulk material handling systems, chemical / refining plants and industrial doors). The services sector provides tailor-made materials, environmental services, mechanical engineering, and scaffolding services. The company is the result of the 1999 merger of Thyssen and Krupp, and is headquartered in Düsseldorf. As of 2008, 25.01% of the company shares are held by the Alfried Krupp von Bohlen und Halbach Foundation.

Products and sales

ThyssenKrupp generates 33% of its consolidated sales on its home market. The rest of the EU (European Union) (28%) and the NAFTA region (21%) are the key foreign regions for its business outside Germany. ThyssenKrupp companies hold leading positions with their products in numerous international markets.

Mergers and acquisitions

ThyssenKrupp itself is the result of the 1999 merger of Thyssen and Krupp. In 2005, ThyssenKrupp acquired Howaldtswerke-Deutsche Werft (HDW) in Kiel from One Equity Partners. ThyssenKrupp Marine Systems (TKMS) is now the most important European group of shipbuilders. In addition to HDW, Blohm + Voss in Hamburg as well as Nordseewerke at Emden are also subsidiaries of TKMS. One Equity Partners holds 25% of the TKMS shares.

In early 2002, ThyssenKrupp acquired 90% share of ECE Industries Limited, Elevator Divison, India. Now it is 100% subsidiary of ThyssenKrupp AG, Germany.

In December 2005, ThyssenKrupp acquired 60% of Atlas Elektronik from BAE Systems, with EADS acquiring the remaining 40%.

In August 2007, ThyssenKrupp Materials North America acquired OnlineMetals.com, a small-quantity distributor of semi-finished metals and plastics based in Seattle, WA.

In early 2008, ThyssenKrupp Aerospace acquired Apollo Metals and Aviation Metals, both suppliers to aerospace and defence.

Four decades in elevators

Today, No. 1 in South India and No. 2 in India

Over Rs 500 crore sales in 2007. 

5000 elevators/year. 

19,000 installations to date.

ISO 9001 company. 

Setting industry benchmarks: 

New technology adapted for Indian conditions. 

Professional installation teams. 

Quickest service response.

2 ultra modern factories - in Chennai and Nagpur, India.

Comprehensive product range in elevators and escalators.

Over 1500 employees. 800 installation personnel.

Offices all over India. Overseas in Srilanka, Male and Nepal.

4.3 Competitors Activities in South India :

Bangalore : OTIS, Kone, Schindler are aggressive an taking the maximum share of orders finalized. ThyssenKrupp & Johnson are dong well. Mitsubishi yet to capitalize the market through they have openings.

Hyderabad : OTIS, Kone & Johnson are aggressive. Schindler, Mitsubishi & ThyssenKrupp are doing normal. Unorganized Sectors are aggressive.

Chennai : Kone & Johnson are aggressive. Schindler, Mitsubishi are doing well. ThyssenKrupp doing normal. Unorganized sector’s doing well.

Cochin : Kone & Johnson are aggressive. Kone is following a distress selling. Schinder, Mitsubishi, ThyssenKrupp are doing normal. OTIS is on lowkey marketing efforts. Unorganized sector is steadily improving their market share.

Goa : Unorganized Sector doing aggressively. OTIS, Kone, ThyssenKrupp, Schindler, Johnson are doing normal. Mitsubishi yet to capitalize the market through they have openings.

4.4 Market Targeting :

The following captions/slogans are using by various companies on their marketing of new sales

OTIS : “The World’s Number One”

“Quality is installed well before the elevator is”

KONE : “The Heart of your building”

“Reach new heights with us”

SCHINDLER : “Smart innovations to serve you better”

MISTUBISHI : “Quality in Motion”

THYSSENKRUPP : “Accept No Limits”

The following captions/slogans are using by various companies on their marketing of Maintenance/Service contracts.

OTIS : “When it concerns user safety we leave no stone unturned “

“A child is now absolutely safe”

KONE : “Global presence local excellence”

SCHINDLER : “Quality for everyone

Value for money

Quality and Value for all

Comfort with efficiency”

MITSUBISHI : “Trend setters in elevator and escalator industry”

“Elevator people of the gulf”

“We do our best”

“Our business is to transport people with safety”

“Our motto – customer satisfaction”

“Round the clock, 365 days service”

“Advanced, ever advancing technology”

THYSSENKRUPP : “The World in Motion”

“Endless Mobility”

“Would you handover your Child to a Stranger?

- Definitely not!

They why do the same to your elevator?

- Let the people, who know the Elevator care for it!”

4.5 Mergers & Acquisitions :

Before the concept of Globalization and liberalization there are few companies established in India independently and also had a tie up of technology issues by some foreign companies but after the concept of Globalization and liberalization many Multi National Companies entered into the Indian market by acquiring the existing companies and also at the same time the transformation of Indian origin company to Multi National Companies began to take place. Now there are 2 or 3 Indian origin companies that which are properly organized, but it is very difficult to compete with Multi National Companies.

Globalization & Liberalization :

Multi National Companies

Acquired Indian Company

1.United Technologies - OTIS

2.ThyssenKruppElevator AG (Germany)

E C E Industries Ltd

CARE Elevators-Mumbai

3.Kone (Finland)

Bharat Bijlee Ltd

4.Mitsubishi (Japan) through ETA Melco

7.Fujitec (Singapore)

5.Schindler (Europe)

8.Fuji (Singapore)

6.Hyundai (Korea) through a joint venture with Kinetic India

9.Hitachi (Japan)

Indian & Organized

10.Johnson

The Indian Elevator industry is made of organized sector and unorganized Sector. The organized sector constitutes about 70 percent of Elevator market while the unorganized Sector constitutes the balance 30 percent.

The organized sector comprises OTIS, ThyssenKrupp, KONE, JOHNSON, SCHINDLER, MITSUBISHI, etc…While the unorganized comprises of Freelancers, one man elevator companies and caters to the low end segment.

A Comparative Study

Organized

Unorganized

Huge capital

Very Less

Installed base

In minority

Skilled man power

Unskilled

R and D facilities

No

Service backup

Lack of service capability

Availability of spares

No Inventory

Guaranteed Service support

Not reliable

4.6 Future Status of The Industry :

The Elevator industry today is rising to unprecedented heights. After seeing stagnant volumes during the early nineties, Elevator production increased sharply last year by 50%. This higher growth rate is a consequence of structural changes in the real estate market/increased rate in lending bank loans with less interest rate, etc., There is not only a marked acceleration in the orders booked in the recent past years but today there is also a sharp pickup in the inquiries, suggesting that the robust demand growth will continue in the future too.

The factors pushing the country’s hitherto minuscule Elevator industry into a new growth orbit are:

The structural changes in the construction industry, which is a major buyer of Elevators.

The recent economic liberalization, which has not only boosted construction demand but also brought in a host of new, quality conscious buyers.

Thus not only will the industry grow faster in future, it will also see the infusion of hi-tech elevators. This will lead to a quantum jump in elevator sales fuelled by both faster growth and higher price realizations. The runaway rise in real estate prices in metros and major cities in the past few years, has led to a big jump in sales of better quality and safer elevators. Real estate buyers now pay huge sums of money and expect builders to provide high quality facilities. The liberalization of rules and procedures for facilitating Non - Resident Indians (NRI) investments in housing have also had a similar impact.

Another significant change in recent years has been the growing corporatisation of real estate business. More and more Non Resident Indians are returning to India and seek out a life style as close as possible to the one they enjoyed abroad and it is for this reason that builders believe that all their constructions have to be extremely sophisticated and luxurious using only the very best materials and facilities available. Corporate headquarters which are getting swankier demand state-of-the-art elevators.

The increased demand in this segment is also related to the price of real estate with people paying more per inch, they expect the best facilities. Since this segment is not price-sensitive the demand for quality elevators has picked up in tandem.

A number of large corporate like Great Eastern Shipping, Reliance, Mahindra and Mahindra, Essar, Ashok Leyland, Lloyds steel, Videocon are now active in property development while many of traditional big builders like the Raheja’s, Brigade Group, Prestige Group, DLF are now more corporative. This has led to a significant rise in the quality of construction and of facilities provided to property buyers. It has also encouraged more people to invest in property because of the greater trust reposed in corporate builders.

The shift towards better technology and more complex products will lead to higher retention of service income and yield better margins on both maintenance and new installations. Service income is a major contributor to profits because it offers higher margins than on equipment sales. Barring the first year after a elevator is installed (guarantee period) the manufacturer receives service income at around 5 – 6% of the value of the Elevator.

India is emerging as a fast growing market, and is seen as a huge ‘potential’ market for elevators.


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