Global Elevator and Escalator Industry Analysis

Running Head: Global Elevator and Escalator Industry Analysis:
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Global Elevator and Escalator Industry Analysis:

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Executive Summary
The Elevator and Escalator market (E+E market) comprises of mainly three segments: New
installation, Modernization (equipment upgrades) and Maintenance. Due to the recent economic
slowdown globally, the new equipment installation market weakened. However, the
Modernization market and the Maintenance market have better performance during this period.
Globally, four key players have been dominating the elevator and escalator market. They are:
Otis Elevator Company, Schindler Holding Ltd., ThyssenKrupp Elevator and KONE
Corporation. They control about 2/3 of the whole market together. This report provides details of
the global elevator and escalator market, industrys internal competition, and also profiles the
main players.
This report analyzes the current market trend and market drivers. The main industry drivers are
increasing urbanization and the ageing population. The report also mentions about Safety
regulations, which requires modernization of lifts in Western countries. Report also provides
information regarding the key regional markets, including Europe, China and the US. Currently,
China is dominating the new Elevator and Escalator market globally. The largest share for the
installed base is the EMEA (Europe, the Middle East and Africa) region. China is the fastest
growing market and in coming years, and expected to increase further.
Findings:
In year 2012, the elevator and escalator market was valued at around US$65 billion, with
elevators comprising the major share in the market. The Elevators market (including the
new equipment installation, maintenance, repair and modernization) was valued at $61 to
$62 billion USD, while the Escalators market was around $3.5 billion USD. Total
industry revenue expected to grow up to $95 billion USD by year 2020.
By year 2012, the global installed base of escalators and elevators had been more than 11
million units. The new equipment market accounted for 670,000 units, elevator and
escalators in year 2012 alone.
In year 2012, China was the largest market with 65% share in the new equipment
installation, whereas Europe led the market in terms of operational escalators and
elevators with a share of 49%.
Industry revenue is split equal between new installation and Service (modernization and
maintenance) segments. Profit margin in new installation segment is around 10% and in
service segment is around 25%.
Otis Elevator Company was the global leader in the E+E market with around 20% of the
global market share globally.
In this industry suppliers enjoy high power and customers have low power.
Most popular products are MRL elevators and are replacing hydraulic elevators.
Due to very limited number of companies controlling the industry, there were instances of
price fixing in the past, and there is a possibility of price-fixing in the industry.

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Overall, future looks bright for companies making the products as growth will continue,
and also customer will benefit from sustainable, energy saving, and space saving
products.

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Table of Contents:
Executive Summary......................................................................2
1. Industry Classification:..............................................................4
2. Introduction to Elevator and Escalator:......................................5
3. Background History of Elevators:.............................................8
4. Elevator and Escalator (E+E) Industry Overview:........................9
5. Global Elevators and Escalators Market:...................................13
5.1. Growth in the Global Elevator and Escalator Market:.....................15
6. Key Trend and Market Drivers:.................................................16
6.1. Key Trend: Energy Conservation and Sustainability......................16

6.2 Market Drivers:............................................................................18
6.2.1. Urbanization Growth:............................................................................... 18
6.2.2. Ageing Population:................................................................................... 20
6.2.3. Codes and Regulations:...........................................................................20
6.2.4. Construction and Real estate Industry Growth:.......................................22
7. Industry Analysis:...................................................................23
7.1. Threat of New entrant:................................................................25

7.2. Supplier Power:..........................................................................26
7.3. Customer power:........................................................................27
7.4. Product substitute:..............................................................................28
7.5. Industry Internal Rivalry:......................................................................28
7.5.1. Industry profitability:...............................................................................29
8. Company Analysis:..................................................................31
8.1. Company Profiles and History:.....................................................31

8.1.1.
OTIS Elevator (Parent Company: United Technologies Inc.):.................31
8.1.2.
Schindler Elevator Corporation:...........................................................33
8.1.3.
ThyssenKrupp AG:................................................................................35
8.1.4.
KONE Corporation:...............................................................................37
8.2. Company Products and Pricings:..................................................38
8.3
Financial Analysis:....................................................................40
8.3.1.
OTIS Elevator and its parent company UTC:........................................40
8.3.2.
Schindler Elevators financials:............................................................43
8.3.3.
ThyssenKrupp financial performance:..................................................46
8.3.4.
Kone Elevators Financials:....................................................................49
8.3.5.
Financial Ratios Comparison between major players:.........................52
8.4. Major companies position in the industry, and their capabilities: 55
8.4.1
OTIS SWOT Analysis:.........................................................................55
8.4.2.
Schindler SWOT analysis:..................................................................56
8.4.3.
ThyssenKrupp Elevator SWOT analysis:............................................57
8.4.4
KONE SWOT Analysis:.........................................................................57
9. Conclusion:............................................................................. 59

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10. References:..........................................................................61
11. Appendix: Tables...................................................................63
1. Industry Classification:
As per North American Industry classification (NAICS) 2012, Elevator and Escalator Industry is
classified in two sectors:
Section one is for manufacturing the equipments, and section two is for installation, maintenance
and service of equipments.
1. 33392 - Material handling equipment manufacturing: This industry comprises establishments
primarily engaged in manufacturing material handling equipment (statistics canada, 2013)
Which includes, manufacturing of elevators or escalators, passenger and freight, farm type,
hoists, stairways and moving walkways.
2. 238291 - Elevator and escalator installation contractors: This industry comprises
establishments primarily engaged in installing or servicing elevators and escalators, moving
sidewalks and similar conveying equipment in buildings. The work performed may include new
work, additions, alterations, maintenance, and repairs (statistics canada, 2013).
There are 2 classifications for this industry as industry is involved in manufacturing of
equipments and also maintaining/servicing the equipments under the long term service contracts.
The Elevators and escalator industry designs, manufactures, installs, and maintains the
equipments. It is very specialized industry, where main focus is on engineering, research and
product development. Industry workforce is highly skilled and specially, field employees are
highly trained due to nature of business.

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2. Introduction to Elevator and Escalator:

An elevator and escalator are used to move goods and people vertically. The elevators are legal
requirement in new buildings because of wheelchair access laws. They have become an integral
part of any building facility over the past few decades. In our everyday life, we are dependent on
them for vertical transportation in public buildings, offices, schools, airports, etc.
Elevators or lifts began as simple rope or chain hoists. A lift is a platform, which is pulled or
pushed up by a mechanical means. A lift consists of a cab (also called a "car" or "cage"), which is
mounted on a platform within an enclosed space called a shaft, or "hoist way". In the past,
hydraulic pistons were powering its drive mechanisms. Hydraulic lift uses the principles of
hydraulics to pressurize an above ground or in-ground piston to raise and lower the car. In a
"traction" lift, cars are pulled up by rolling ropes (mostly made of steel), over a grooved sheaves
(pulleys). The friction between the ropes and the pulley creates traction, which gives this type of
lift its name. Hydraulic lifts are usually slower than traction lift. The weight of the car is
balanced with a dead weight called counterweight. Recent installations include permanent
magnet motors, machine room-less gearless machines (which are mounted in hoist way rather
than in separate machine room), and microprocessor controls (wikipedia, 2013).
Hydraulic lifts are cheaper, but installing cylinders for high-rise buildings are impractical. For
buildings of much over seven stories, traction lift must be installed. Each building comes with its
own requirements like a different number of floors, the dimensions of a hoist way, where an
elevator is installed and its usage.
An escalator is a moving staircase or a conveyor transport device for carrying people between
the floors of a building. The device consists of a motor driven chain of individually-linked steps
that move up or down on tracks, allowing step treads to remain horizontal. Escalators include
moving stairways and moving walkways. The escalators move people efficiently between floors
and in the case of moving walkways, over long distances. Pricing of escalator depends on the
distance they are required to travel, the amount of rise and the various appearance options
available. Figures 1 and 2 in the next two pages are generic pictures of elevator and escalator
(wikipedia, 2013).

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Figure 1: Geared motor elevator structure
(Source: Google image)

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Figure 2: Typical Escalator structure (Source: Google image)

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3. Background History of Elevators:

Elevators or hoists were in use during the middle ages and history goes as far as the third century
BC. The human, animal and water-driven mechanisms were used to operate them. The first
power elevator was installed for moving freight in the mid 19th century in a New York Crystal
Palace between just two floors. In 1853, Elisha Graves Otis had demonstrated an elevator with a
safety to brake the fall of elevator cab in the case of rope failure. This was a defining moment
in this industry. By 1857, Countrys first passenger elevator was installed in New York City
department store, and after ten years, Elishas sons went on to found Otis Brothers and Company
in Yonkers, NY (Mitsubishi Electric, 2013). They achieved mass production of elevators in
thousands. Today, Otis is the worlds largest elevator manufacturer.
Geared electric powered elevators were introduced in year 1889, allowing for building of taller
structures. In year 1903 gearless traction elevators were introduced, allowing hundred plus story
buildings to be built, and changing urban landscape. Innovation and technology improvements
have continuously improved vertical transportation, made them reliable, fast and safe. Figure 3
below shows major timeline events for elevator industry.
Year 1889:
Geared elevator
introduced
Year 1853:
First
passenger
elevator
introduced.
Year 1857: First

passenger elevator
installed in New
York.
Year 1903:
Gearless elevator
introduced

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Figure 3: An Important timeline for elevator industry.
4. Elevator and Escalator (E+E) Industry Overview:

The escalator and elevator market, also known as the E+E market comprises three main
segments: New equipment, Modernization and Maintenance.
The life cycle of the escalators and elevators start with the new equipment installation. There is
typically a time lag of 12 months for a new installed equipment to require maintenance but it can
extend up to 30 months. The modernization is the next step in the complete life cycle of
escalators and elevators. The modernization process upgrades certain equipment and parts so
building can keep up with upgraded technology without going through the high cost of complete
overhaul. Generally, after approximate 30 to 35 years period, the equipment requires full
replacement (Elevator1, n.d.)
Figure 4: The Life Cycle of the E+E Market Equipment.

The new equipment market is rather consolidated at the global level, while the maintenance and
modernization markets are more fragmented. Growth drivers and competitive landscape is listed
in Table 1 below.

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New Equipment
Growth
drivers
Modernization
Maintenance
-Urbanization
-GDP growth
-Construction market growth
-Aging of the installed -Growth of the

base,
installed base,
-Legislation and safety -Legislation
and
requirements
safety requirements
Competitive
-Consolidated,
-Fragmented, although -Fragmented,
landscape
-Only few globally operating OEMs have much similar
to
OEMs
bigger market share
modernization
-Number of more locally
market
operating OEMs, some of which
-OEMs
have
not
in
service
market
significant market
(modernization & maintenance)
share
Table 1: Growth drivers in industry segments (OEM Original Equipment Manufacturer)
Elevators are segmented in following categories: Gearless, geared, hydraulic elevators, and
machine-room-less (MRL). Primarily, there are two types of elevators: hydraulic and electric.
Hydraulic elevators work by pumping an oil or uncompressed fluid into a cylinder. The piston
within the cylinder is forced to move by the liquid filling in its space. The piston is attached with
the cab of the elevator. The quantity of liquid and the rate at which it is pumped to vary the speed
and distance traveled by the cab is managed by controls. General, lower buildings use hydraulic
elevators, while tall buildings need a different way to move the cab (Queens University, n.d.).
Electric elevators are driven by powerful electric motor, cables, pulleys and counterweights to
provide travel. Elevator controller makes motor to drive an elevator cab to move up and down
and counterweight is used to offset the weight of cab and passengers or freight in it. As the cab
travels up, the counterweight goes down and vice versa (wikipedia, 2013).
An escalator is a moving staircase or a conveyor transport device for carrying and moving people
between the floors. It consists of an individual steps, which move up or down on the tracks.
These steps are driven by a chain, which is driven by a motor. The moving walkways and
moving stairways are also products of escalator industry. They move people between floors and
also over long distances (wikipedia, 2013).
Major stake holders of installing elevator or escalator project are: the owner of the building,
architect, structural engineer, general contractor, consultant, subcontractors and elevator
manufacturer. Their relationships are shown in figure 5 below.

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Figure 5: Relationship in the Construction Industry.

Its common practice that, the elevator design is finalized during the pre-construction stage. This
is efficient, and it allows the building construction and elevator production to run in parallel as
shown in figure 6.
Figure 6: Parallel process in a new project (Kane, 2002).

The whole process of producing an elevator or an escalator involves multiple stakeholders as
described below in figure 7.

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Figure 7: Elevator/Escalator manufacturer and its various functions

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5. Global Elevators and Escalators Market:

The industry is steadily growing, which is driven by population and urbanization. In the
developed markets, the main focus has been on modernization. After installing new equipment,
generally it takes 12 months to 30 months before handed over to maintenance.
The Elevators market (including a new equipment installation, maintenance, repair and
modernization) was valued at US$61 billion to $62 billion (Thyssenkrupp, 2013), while the
Escalators market was around US$3billion to $3.5 billion. In year 2012, the elevators market is
valued at 95% and the escalators market is around 5%.
Chart 1: Global Elevators and Escalators Market Breakdown (Year-2012). (Ref: Appendix table
1).
A recent economic downturn has affected negatively on new installations of elevators and
escalators in developed countries. But modernization markets remained quite stable. This market
is less cyclical in nature and continued to grow. The growth is primarily due to strong new
equipment installation previous years. Modernization and maintenance of equipment are termed
as service industry. New equipment and service segments produce nearly equal (50% each)
revenues (Kone, 2013). Chart 1, is graphical presentation of the revenue share between new
equipment vs. service segment.

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Chart 2: Market revenue by the percentages, new equipment vs. service. (Source:
www.kone.com) (Ref. Appendix table 2).
The good growth is expected in the new equipment market segment in Asia - Pacific region. This
is because, the population is increasing and the population is ageing. Increase in urbanization is
also a big factor. New equipment sales have jumped from 14% to 35% in the APAC region
(Kone, 2013). Chart 2, shows market share in percentages of the new equipment installation by
region.
Chart 3: New Escalator and Elevator installed by the Regions. (Source:www.kone.com) (Ref.
Appendix table 3).
The European market size was significantly larger than the market size of the North Americas.
This is because of Europes higher population density and increase of the high-rise buildings.
Overall elevators and escalators in operation are more in Europe, although its share is decreasing.

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Chart 4 below, shows the percentage of market share by region for year 2007 & 2012. From year
2007 to year 2012, market was growing in Asia Pacific. APAC market share increased from 25%
to 37% in terms operational equipment, while in the same years EMEA market share decreased
from 58% to 49% and also AMERICAS market share decreased from 17% to 14% (Kone, 2013).
Chart 4: Overall market share by region (APAC Asia Pacific, AMERICAS North and South
America, EMEA Europe, the Middle-east and Africa) (Source: www.kone.com) (Ref.
Appendix table 5).
5.1. Growth in the Global Elevator and Escalator Market:

In year 2012, the global escalator and elevator market was valued at $65 billion; and further
growth in this market could substantially benefit the industry. It is projected that market will be
double in revenues by next decade (Trefis Team, 2013). Chart 5 below, shows strong upward
trend line in industry revenue.
Chart 5: Projected growth in E+E industry. (Source: www.trefis.com) (Ref. Appendix

table 4)

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6. Key Trend and Market Drivers:

Technology has made it easy to build tall buildings around the globe. Elevators and Escalators
are part of these buildings. There are few major players in this industry, but innovation and
technology is at the center of it. Major companies are producing products with social
responsibility. Energy conservation and Sustainability is a major key trend in the industry.
6.1. Key Trend: Energy Conservation and Sustainability

Energy conservation and sustainability drive have affected this industry in great extent.
Hydraulic lifts getting replaced with more technological, energy efficient, space savings and
environmentally friendly lifts, which are known as MRL (machine room less elevators). Sales of
MRL elevators in the Americas exceed hydraulic elevators by over $160 million in year 2012
with revenues of $1.4 billion according to a recent study published by IMS research.
Worldwide MRL market is around $18.7 billion in year 2012. MRL are double the price than of
hydraulic elevators, but they offer 50% to 75% energy efficiency, and also remove a need of
digging a deep hole for the cylinder or building a machine room. Energy efficiency of MRL
provides LEED (Leadership in Energy and Environmental Design) certification points to
building (IHS Inc., 2013). This allows customers to claim tax rebates and zoning allowances in
certain countries like USA and Canada.
One of the elevator manufacturers, KONE already discontinued producing hydraulic elevators in
year 2007, as a commitment to become more environmentally friendly.
Escalators and the elevators are now designed such that they are turned off, and signals and
indicators are dimmed when not in operation. Lights in the cab changed to LED lighting systems.
Elevator wall panels are made from environmentally friendly, urea formaldehyde free materials.
Also, technology changed from Geared machines to Gearless machines. They have benefits of
smaller footprints, they run only when elevator runs. They are much cleaner system which
eliminates carbon dust and no oil in machine room or hoist way. They reduce heat generation so
no air conditioning needed in the machine room. Gearless machines use direct drive
technology, which maximizes energy efficiency and provide smoother ride with minimal
vertical vibrations. They also provide better control and floor leveling. They come with dual
brake systems, which provide additional safety feature.

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Figure 8: Elevator Permanent magnet Gearless machine and Geared machine

(Source: Google Images)
In newer trend in the industry, manufacturers use Regenerative drives, which are used to produce
and conserve energy. This energy can be fed back to the network, to save up to 25% energy.
When loaded elevator rises, energy is needed. Naturally, when the machine lowers the loaded
cab, the force of gravity generates energy. Without regenerative drives, this energy is wasted. It
dissipates in the form of heat into the machine room. With regenerative drives, the energy
generated by lowering the loaded cab is captured and reused throughout the building, saving
energy costs and helping fulfill its sustainability mission and vision (ThyssenKrupp, n.d.).
Benets of the regenerative drives:
It requires less power, it means lower monthly utility bills. It also reduces heat generation, which
means reduced cooling requirements in the elevator machine room. Also, there is a possibility of
rebates from the government sponsored and local utility programs. Major advantage in big
projects is its potential to earn points toward LEED certication (ThyssenKrupp, n.d.). (LEED is
a registered trademark of the U.S. Green Building Council).

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Figure 9: Energy saving concept of Regenerative Drives

(Source: http://www.thyssenkruppelevator.com/downloads/Geared-to-Gearless/document.pdf)
6.2 Market Drivers:

There are four major market drivers in the industry.
1. Urbanization growth
2. Ageing population
3. Codes and Regulations
4. Construction and Real estate industry growth
6.2.1. Urbanization Growth:

Urbanization is increasing in recent years. It is expected that by year 2013, approximate 4 billion
people will be living in urban areas. This number is more than half of the worlds population. It
is a universal trend, but it has affected the Asian markets more. The Asian regions are also denser
than other regions worldwide (Cox, 2012). Table 2 below shows density of population for urban
population of 10 million and up.

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Urban Area
Dhaka
Mumbai
Karachi
Manila
Lagos
Kolkata
Delhi, DL-HR-UP
Seoul-Incheon
Cairo
Istanbul
Jakarta
Mexico
Shenzhen
Sao Paolo
Shanghai
Rio de Janeiro
GuangzhouFoshan, GD
Buenos Aires
Osaka-KobeKyoto
Beijing
Tokyo-Yokohama
Moscow
Paris
Nagoya
Los Angeles
New York, NY-NJCT
15
17
14
22
11
14
22
23
18
14
26
19
12
20
21
12
347
546
777
1425
907
1204
1943
2163
1709
1399
2784
2046
1748
3173
3497
2020
Density per
sq. km
43228
31136
18018
15439
12128
11628
11323
10633
10532
10007
9339
9286
6865
6303
6005
5941
CHINA
ARGENTINA
17
14
3173
2642
5358
5299
JAPAN
CHINA
JAPAN
RUSSIA
FRANCE
JAPAN
USA
17
17
37
16
10
10
15
3212
3497
8547
4403
2844
3820
6299
5293
4861
4329
3634
3516
2618
2381
USA
20
11642
1718
Country
BANGLADESH
INDIA
PAKISTAN
PHILIPINES
NIGERIA
INDIA
INDIA
SOUTH KOREA
EGYPT
TURKEY
INDONESIA
MEXICO
CHINA
BRAZIL
CHINA
BRAZIL
Population
millions
Land area
square km
Table 2: Population per square meter in worlds most populated urban areas. (Source:
http://www.newgeography.com)
This increase in urbanization trend has a positive impact on the elevator and escalator industry.
The population growth is one of the key factors when it comes to demand in the E+E industry. In
the past 50 years the world has experienced an unprecedented increase in the population growth
(World bank, n.d.). As per chart 6 below, the developing world is having tremendous
population growth.

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Chart 6: World population growth, past and projected (year 1750 to year 2050) (Source:
www.worldbank.org)
6.2.2. Ageing Population:

The elevator and escalator market growth fueled by elderly people. Elderly people prefer to use
lifts and escalators rather than stairs in high rise buildings. The population of old people in the
age group of 65 years or above to reach 600 million by year 2015. As a result, the increase in
population of elderly people, will increase demand for elevators and escalators. This is true for
not only residential buildings but also for office buildings. As per World Bank data, ageing
population is increasing as per shown in the table below.
Country Name
World
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
7.15
7.24
7.31
7.38
7.45
7.51
7.58
7.65
7.74
7.84
Table 3: Population of 65+ in percentages of the total population (Source: www.worldbank.org)

Increasing population in this age group of 65+, increases demand of retirement homes and highrise condominiums. In these facilities, homeowners are not required to do property repair and
management services, like they used to do in their houses. Professional companies manage these
retirement homes and high-rise condominiums, and thats why they are popular in the age group
of 65+. This factor brings growth in E+E industry.
6.2.3. Codes and Regulations:

Although, elevators and escalators are mostly safe in their operations, Regulations change
worldwide drives modernization and maintenance segment. Modernization and maintenance
sales represent almost half of the revenue of the whole industry. Average life of equipment is

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about 30 to 35 years, change in the rules and regulations are accommodated through modernizing
certain equipment. Few examples of regulation standards, various countries and regions follow:
-USA: ANSI (AMERICAN NATIONAL STANDARDS ASSOCIATION), ASME A17
(AMERICAN SOCIETY OF MECHANICAL ENGINEERS)
-CANADA: CAN/CSA B44 (CANADIAN STANDARD ASSOCOATION)
-EUROPE: SNEL (SAFETY NORMS FOR EXISTING LIFTS) EN 81 series (EN 81-1, EN 812, EN 81-28, EN 81-70, EN 12015, EN 12016, EN 13015, etc.)
-CHINA: GB/T 18775-2009 Standards of maintenance for elevator, escalator and passenger
conveyors.
-AUSTRALIA: AS1735
Recent example of code change in Canada and USA: Under the new 2007 code, all elevators in
the public buildings will be required to install equipments, which send the elevators to the safe
floor in case of smoke detectors goes off in the lobby or machine room. If people are in an
elevator when the smoke alarm activates, the elevator will automatically take them to a safe
floor, away from the fire, then shut down with the doors open. To comply with this code,
buildings will have to upgrade phase I automatic recall system to protect the occupants of a
building.
Until now, only the high buildings were required to have automatic recall and firefighter
operation. The Canadian Standards Association CSA B-44 and American Society of Mechanical
Engineers ASME A-17 committees have completed the 2007 code, which now needs to be
adopted by the provinces and territories (Cook, n.d.). To make these changes in the elevator, the
customer will have to upgrade layout of buttons in panels as shown in the picture (figure 10)
below:
Figure: 10. Diagram shows how the firefighter panel will look in elevators that comply with the
2007 code. (Source: www.firefightercanada.com)

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Another code change implemented in the Destination dispatch feature of elevators. Major
office buildings and prestigious residential buildings have feature called destination dispatch.
Passenger swipes the RFID card (its like the Credit Card), and make an elevator trip
personalized. Elevator wont stop anywhere but the destination floor. Many destination dispatch
systems identify each individual rider using the RFID card readers, allowing them to personalize
each elevator trip by providing extra boarding time for wheelchair users. Destination dispatch
systems introduced beneficial visual cues as the hall call displays direct riders to a specific
elevator that announces its arrival with an alphabetic hall lantern at the elevator opening.
The ANSI A117.1 accessibility standard referenced in most U.S. building codes requires
destination dispatch (destination-oriented elevators) to provide a visible signal, audible tones and
verbal announcements to indicate which car is responding to a call. These types of code changes,
brings more business for modernization segment of industry.
6.2.4. Construction and Real estate Industry Growth:

Demand in industry for new equipment is directly related with growth in construction activity.
More of high rise construction and engineering activities would drive the market as increasing
construction would require more elevators and escalators.
The 'Global Construction 2025' report, which was sponsored by 24 major companies, found that
construction would account for 13.5 percent of world output by 2025, with activity driven by
rising populations in the developing world, plus increasing urbanization. World construction
activity will increase by $6.3 trillion or 70 percent by year 2025, with the explosion in growth
boosted by a new generation in Asia Pacific (Katy, 2013).
Growth in the world's global big urban centers gives rise to major challenges for the engineering
and construction industry. Around two billion additional people are expected by 2050 in these
big cities. While two-thirds of global construction will be focused in China, India and the U.S.,
the authors noted that activity in the emerging Asia will be increasingly driven by Vietnam,
Indonesia and the Philippines, which they termed them as new Asian Tigers (Katy, 2013)
As per McGraw Hill Construction outlook of the year 2014, predicts that total U.S. construction
starts for 2014 will rise 9% to $555.3 billion, higher than the 5% increase to $508 billion
estimated for 2013 (malangone, 2013). Report states, even elevated uncertainty and federal
spending cutbacks, the construction industry should still benefit from various positive factors
such as Job growth, while sluggish, is still taking place. Interest rates are low by historical
standards, and in the near term the Federal Reserve is likely to keep them low.
Based on outlook above, the report details the forecast for year 2014 as follows:
-Multifamily housing will rise 11% in dollars and 9% in units. This structure type is still a
favored investment target by the real estate finance community, which in the near term should
lead to more high-rise residential buildings in major cities.
-Commercial building in year 2014 will increase 17%, a slightly faster pace than the 15% gain
estimated for 2013. Both warehouses and hotels will continue to lead the way, while stores and
office buildings pick up the pace (malangone, 2013).

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7. Industry Analysis:
In E+E industry, only few major players share 2/3 of the market, but internal competition is very
high. Competition is mostly based on technology, sustainability, cost, service and reputation. All
competitors produce products, which fulfills a customers vertical transportation needs.
Porter Five-Force analysis will provide insight of industrys condition and various factors
affecting the industry.
These five forces are:
1. Threat of New Entry: Which analyzes, how easy to enter into industry for new company.
2. Supplier Power: How much power suppliers have in this industry. Suppliers can be outside
raw material and parts suppliers, labor unions, regulators, etc.
3. Customer Power: How much power customers have in this industry? How a customer dictates
terms of purchase such as; prices, quality, lead-time, etc.?
4. Product Substitution: Is there any other product from different industry, which can replace
products from this industry?
5. Industry Rivalry: How intense is the competition between companies in this industry?

26
Threat of new entrant
(Low)
-High capital required
-Highly skilled labor
-Higher wages
-Higher R & D costs
-Big players market
reputation
-Customer loyalty
-Access to suppliers
discount price structure
Supplier Power
(High)
-Many specialty
parts
-Long lead times
-Supplier technical
support
-Skilled labor
shortage
-Labor unions
-Demanding
consultants and
architectural firms
-Subcontractors
schedules
-Safety
Regulations
Industry Rivalry (High)

-Very competitive industry
-Major players are big,
multinational firms like OTIS
(USA), Schindler
(Switzerland), Kone (Finland)
and ThyssenKrupp (Germany)
-$65 billion plus global market
-New product introduction
-Industry consolidation
-Saturated developed market
-Emerging market growth
-Proximity to market
-Over capacity in mature
markets
-Economic slowdown
Customer power
(Low)
-Customers dont
have too much
choice
-Specialized
industry
-Equipment
modernization
upgrade needed
every 20 to 25
years
-Only handful of
reputable firms
Product Substitute
(Low)
-No high rise
buildings
-Cranes, cable cars,
walking, stair walks,
ladder climbing
11:
Figure
Five

27
Forces Analysis

28
7.1. Threat of New entrant:

Threat of new entrant in this industry is low. The main reasons are high capital requirement,
higher wages for mechanic and technicians, and customer loyalty to existing big organizations.
New entrant must be able to invest in manufacturing, installing and maintaining equipment.
Major players have invested heavily in all segments of industry and in all markets of the world.
There are small companies in industry, but they end up working as sub-contractor for bigger
players. To serve the market, new entrant will have to invest in building manufacturing facilities,
investing in hiring skilled employees, will have to invest in getting certifications from
institutions like UL, CSA and have to invest in Research & development.
4 major players Otis, Schindler, ThyssenKrupp and Kone dominate the market. Each of these
has a turnover of billions of dollars annually, and they are densely spread out throughout the
globe. With large number of offices, they manage hundreds of projects simultaneously. They
have resources of skilled labor, materials, machinery, advance information trafficking system and
computerization. Otis is the largest producer of elevators and escalators in the world with an
annual sale of over $12 billion in 2012. OTIS has about 20% of the market share and supply
products to 220 countries.
Higher wages: In year 2012 average elevator mechanic makes $112,000 per year in Ontario. It is
increased to $121,000 per year this year (labour-reporter, 2013). In year 2010, median pay of
elevator installer and repair technician in the USA was $34.09 per hour (U.S. Department of
Labor, 2012).
Access to Suppliers discounted pricing structures: The new entrants will have to build the
relationships and bring the economies of scales to get the maximum supplier price discount,
which other big players are already enjoying. The amount of business they give to suppliers,
decides the pricing discounts. Figure 12 below, shows an example of one of the industry
suppliers (GAL CANADA) List price structure for the customers in the market. By doing
research, I found that ThyssenKrupp and other major OEM enjoys great price discount. For
example, ThyssenKrupp Elevator is procuring material from this supplier GAL Canada Elevator
Products at a whopping 50% discount.

29
Figure 12: GAL Canada Elevator List Price structure. (Source: www.galcanada.com)
7.2. Supplier Power:

In this industry, suppliers are outside power. They do control this industry in the form of supply
of material, material prices and lead times, subcontractor schedules, labor unions, safety
regulations, etc.
The supply of material and service, at the right price, of right quality and at the right time is very
important in this industry. Every project, either it is a new construction, a modernization or a
maintenance of equipment, requires parts on time. Items like rails, machines & motors, hydraulic
Jack & pump, steel ropes & cables, Door equipment, all require extra long time (Right Way
Elevator, n.d.). Most of the time, they are different for different projects due to nature of project.
Supplier qualification is a lengthy process due to the importance of safety in the industry. A
recent jump in the rare earth metal prices, have increased price of the Permanent magnet gearless
machines. The Equipment manufacturers have no choice but to pay price increases as their
design included these machines to be part of the system. To change permanent magnet machines
to other type of machines requires design changes of many other parts. This is not feasible and
cant be done overnight.
The Stable raw material prices such as steel prices, stainless steel prices and copper prices are
very important in this industry. The Steel mills sudden price increases hurt industry profitability.
It is because of the prices for equipment are quoted to the customers almost year in advance for
new projects and almost 4 to 6 months in advance for the modernization projects. It is not easy to
go back to the customer with price increases after order is secured.
Labor unions are strong in this industry. Currently, there was a strike situation in Ontario during
the summer of 2013 and lasted for around 2 1/2 months. On May 1st, IUEC Locals 50, 90 and 96

30
broke off negotiations and opted to go on strike. These unions cover all major companies
employees, who maintain, repair and install elevators and escalators. There were many types of
equipment down in various buildings and hospitals across the province. One of the hospitals in
Toronto has posted following sign during the strike period (figure 13):
Figure 13: Notice in a hospital because elevators were out of service, and repair mechanics were
on strike (Som, 2013). Figure shows labor union power in the industry.
No new installation or modernization was done during this period of strike. Repairs were done
with a very minimal staff and on priority bases. Customers who had comprehensive contracts
with elevators and escalator companies, refused to pay the monthly fixed fees because they
didnt received the service. Strike had financial impact on companies.
7.3. Customer power:

The customer power is low in this industry. Customer, who requires elevators and/or escalators,
has to choose from very narrow choice of reputable suppliers. There are multiple small
companies who can manufacture parts of whole order, but then installation, and maintenance

31
services can become headache for the customer. Customer tends to choose, who can provide
complete package. And there are only very few suppliers who can provide complete package.
Bigger customers like Tridel (Condo developer), does show some power in the form of quality
demand, on-time schedule, warranties, and environmentally friendly products which can earn
them LEED points. Equipment modernization is needed every few years because of outdated
technology or regulation changes, customer will have to do required upgrades in due time
(McClay, 2012).
7.4. Product substitute:

In general, there is no efficient and logical substitute available for the elevators and escalators in
high-rise buildings. Now even low-rise buildings have elevators to accommodate disabled
customers or employees. If only low-level houses are built then vertical transportation is
avoided. But in the age of urbanization, multi level buildings are in demand. There will be
always demand in this industry due to new construction as well as servicing and maintaining
existing equipment. Single-family housing cant fulfill need of space for urban centers.
Population density as per table 1 is growing in the developing world, which can only be
accommodated through the high-rises. So elevators and escalators industry will benefit from this
growth and no other product at this time market have, which can fulfill this demand.
7.5. Industry Internal Rivalry:

In this industry of vertical transportation, the profitability of the firms depends on their
engineering expertise and efficient production. Large companies have economies of scale in their
procurement of materials. While small companies can compete effectively by specializing and
fast customer response. OTIS, ThyssenKrupp, Schindler and Kone dominate the global
Escalators and Elevators market, and they controlled approximate 65% of market share. Table 4
below shows their year 2012 key financial figures.
OPERATION
IN
COUNTRIES
EMPLOYEES
OTIS
SCHINDLER
KONE
200
140
50
THYSSENKRUPP
65
61,000
45,000
40,000
47,000
TOTAL 2012
$12.4 BILLION $7.3 BILLION
$6.2 BILLION
REVENUES
USD,
2012
$2.5 BILLION
$960 MILLION $784 MILLION
OPERATING
PROFIT, USD
Table 4: Data comparison: 4 major players. (Source: OEM websites).
$8.3 BILLION
$595 MILLION

32
Market share per number of elevator and escalators in operation globally:
OTIS 20%, KONE 11%, Schindler 18%, ThyssenKrupp 14%, others are 36%. Others include
Fujitek, Mitsubishi, Toshiba and many other small companies.
Chart 7: Global E+E market share (Source: OEM websites). (Ref. Appendix table 12).
7.5.1. Industry profitability:

Two-thirds of the global E+E market is controlled by 4 major companies. These companies are:
Otis, which is part of United Technologies of the U.S.A.
Kone of Finland
ThyssenKrupp, part of the big group of the same name of Germany
Schindler of Switzerland
Elevator makers are attractive for long-term investment since they operate in a highly specialized
industry and have high profit margins. People live more vertically than ever before. As
urbanization increases, more people move to cities every year. Many live in blocks of flats or
work in high-rise offices. Nearly all use escalators and elevators from time to time. This factor
gives boost to the growth in the industry, and because the industry makes specialized equipment,
they have less price competition and makes healthy profits. Chart 8, below presents the operating
profit in percentages for major players. OTIS is leading with very healthy operating margin of
above 20%.

33
Chart 8: Operating profits of E+E industry major players (year 2002-2012). (Ref: Appendix
tables 7, 8, 9, &11)
As per Mr. Jrgen Tinggren, Schindler's boss, global demand for new lifts has gone from
300,000 a decade ago, to nearly 700,000 this year. China, where two-thirds of the new units are
installed, accounts for much of the rise. The Freedonia Group, a consultancy, says annual
revenues are climbing steadily, and they will have doubled to $90 billion in the decade to 2015
(Hunkar, 2013).
The industry's good profit margin is because of the maintenance segment of industry. This
segment brings constant monthly stream of the income. Customers sign comprehensive contracts
to keep each elevator and escalator running smoothly. Since 11million machines are already in
operation, many needing only a quick look-over and equipment lubrication every few months,
this is a nice business. Margins are 25-35%, compared with 10% for new equipment. Revenue
from maintenance is far more stable than that from installations, which are affected by the ups
and downs of the economy (Hunkar, 2013).
8. Company Analysis:
In this section, I will be discussing and analyzing 4 major players in the industry. These
companies share most of the revenue in the industry. They are listed below:

34
-OTIS (United Technologies Corporation)
-Schindler Holding Ltd.
-ThyssenKrupp AG
-KONE Corporation
8.1. Company Profiles and History:

In this section, I will give details of these 4 companies, their origin, their market and their
history.
8.1.1.
OTIS Elevator (Parent Company: United Technologies
Inc.):
OTIS is the oldest elevator company and it is the pioneer of this industry. OTIS is headquartered
in the USA. It has a history of 160 years of successful operations. OTIS is part of company
United Technologies Inc. (UTC), which has a total of over 60,000 employees worldwide. UTC
operates in Aerospace and space, Commercial and Industrial sectors. OTIS is part of their
commercial business. As per 2012 data, Commercial business accounts for UTCs 51% sales
revenue. Total revenue for UTC was $57 billion USD in year 2012, and OTIS accounts for
approximate 22% of total UTC revenue.(source: www.utc.com,)
OTIS is a market leader for the last number of years. OTIS has supplied elevators and escalators
in prestigious projects like the Eiffel Tower, the Kremlin, the Washington Monument, Madrids
Royal Palace and Japans first skyscraper. The Vision of OTIS is to be to number one is service
excellence amongst all the companies. OTIS is operating in more than 200 countries and
territories in the world. It has total of more than 61,000 employees worldwide. 53,000 employees
are working out of the USA. OTIS has revenue of $12.4 billion in year 2012. Its market share of
revenue is approximate 20% in the E+E industry globally. 83% of its revenue comes from the
outside of the USA.
OTIS has installed an approximate total of 2.5 million units of elevators and escalators
worldwide. It is maintaining more than 1.8 million units worldwide. OTIS has manufacturing
facilities in the USA, Europe and also in Asia.
OTIS values its people, safety of the products, Quality of the products and ethical integrity of the
business. OTIS believes in providing; safe products, quality products and services, fast response
time, open communication, delivering what was promised, and working with professional
attitude.
OTIS has a long history of servicing E+E industry. Figure 14 below, lists major events in
company history (source: www.otis.com).

35
Figure: 14.
1852: First safety elevator

introduced.
1853: OTIS installed first

freight elevator.
1875: OTIS introduced inclined

catwalk
1889: OTIS introduced electric

elevator machines. Speed: 100
feet/minute, height: 69 feet,
capacity: 1500 lbs.
1903: OTIS introduced first
Gearless machine. Speed: 500
feet/minute, height: 300 feet,
Start of Sky scrapper Era.
1931: OTIS installed Double
deck elevator (2 cabs in same
hoist- way) in 67-storey
building in NY.
2003: OTIS introduced Gen2

elevator systems to meet strict
criteria of energy savings,
environmentally responsibility.
OTIS: HISTORY TIMELINE
1859: Steam hydraulic elevator

introduced
1857: First commercial

passenger elevator installed
by OTIS for $300.00, in NY
.departmental store. Speed:
40 ft/minute
1862: OTIS goes
international by merging
with Fenson elevator
company of Toronto.
1878: First Water powered
hydraulic elevator
introduced by OTIS.
1898: First moving

walkway (escalator),
introduced by OTIS.
1921: OTIS launched full

monthly maintenance
contracts at fixed fees.
1976: OTIS merged with

United Technologies (UTC).
2005: Destination dispatch

system introduced by OTIS
to resolve over crowding
issues.

36
8.1.2.
Schindler Elevator Corporation:
Schindler Elevator Corporation is the Switzerland based company and operates worldwide. It
operates in more than 100 countries, with approximately 44,000 employees worldwide. Schindler
supplies Elevators, Escalators and Moving walks. It is the largest supplier of escalators and
second largest supplier of elevators. Similarly to OTIS, it designs, installs, services and
modernizes the equipment. The company generated revenue of 8,265 million CHF in year 2012,
with operating profit of approximate 12%.
Schindler has a strategy of Leadership through Service, and aims to gain leadership in the
industry by providing efficient services. The company is trying to achieve its goal through
increasing global presence and cost leadership. Some of the notable buildings such as: The
Pentagon, The White House, Orlando International Airport and Dallas Cowboys stadium have
installed Schindler products. Schindler has recently introduced solar powered elevators, where
the elevator roof will be mounted with solar panels. This is a hybrid system where up to 100% of
energy need can be supplied by solar cells (Schindler, n.d.). This has a major advantage in the
case of power outages.
Schindler is in this industry since year 1874. Figure 15 below, lists major events in company
history. (Source: www.schindler.com)

37
Figure: 15.
1874: Robert Schindler and
Eduard Villiger establish the
collective joint partnership
Schindler & Villiger.
1892 Eduard Villiger leaves

the partnership. The company
continues under the name of
Robert.
1989 Schindler acquires entire

elevator and escalator business
of Westinghouse Electric
Corporation and increases its
presence in North America.
2009 Schindler introduces its

destination dispatch system,
The PORT Technology.
2011 Schindler named one of

Forbes Magazines top
innovative companies.
SCHINDLER: HISTORY TIMELINE
1952 Schindler Group

introduces first electronic
elevator controls.

introduces first variablespeed electric elevators.
acquires Haughton Elevator
Division, Toledo, Ohio and
establishes Schindler
Haughton Elevator
Corporation.
1990 Schindler formed,

Millar Elevator Service
Company, as a service
division in USA.
2011 Schindler launches
the new generation,
Machine Room less
Elevator in the United States
and Canada.
2013 Schindler introduces
Solar powered elevators.

38
8.1.3.
ThyssenKrupp AG:
ThyssenKrupp Elevators Company is based in Essen, Germany. It started making elevators in

1970, and started making escalators in year 1973. It has strengthened its position in the market
mainly by acquisitions of various companies around the world. ThyssenKrupp produced
equipments are installed in important locations such as; Shanghai world finance center, Dubai
International Airport, Toronto international Airport terminal 1, Freedom Towers - NY, and Bilbao
metro in Spain.
ThyssenKrupp Elevators company business strategy includes followings:
1. Cost base Improvement: Cost reduction through restructuring and efficient supply chain.
2. Technology: ThyssenKrupp has more than 85 development centers across the world, which
includes the development of energy saving elevators.
3. Quality Oriented Products: Main focus is to produce quality products and at the same time
provide value to the customer. ThyssenKrupp introduced the TWIN system, in which 2 cabs
travel in the same hoist way independently. So it takes less space, at the same time increase
capacity and convenience.
The companys important history timeline is listed below in figure 16 below. (Source:
www.thyssenkrupp.com).

39
Figure: 16.
1973: Thyssen AG
acquired elevator
company, Rheinstahl
AG of Germany. Also,
company established
large scale production
facility in Stuttgart,
Germany for making
elevators and
escalators.
2003: Thyssen
acquired DongYang
Elevators in the South
Korea.
2012: Thyssenkrupp
discontinued making
traditional hydraulic
elevators and replaced
them Endura, eco-friendly
hydraulic fluid driven
elevator.
TIMELINE
HISTORY
ELEVATORS:
THYSSENKRUPP
THYSSENKRUPP ELEVATOR:
HISTORY
TIMELINE
1891: Thyssen AG
was established in
Germany by two
brothers, Thyssen and
Joseph. Primary
business is steel
making.
1811: Krupp AG
established. Primary
product is steel to
make ammunition.
1970: Thyssen AG
started making
Elevators
1999: Thyssen AG and

Krupp AG merged.
New name is
ThyssenKrupp.
Thyssenkrupp bought
Dover elevator, the
market leader in the
USA. Also, acquired
Northern Elevators in
Toronto, Canada.
2008: ThyssenKrupp
introduced its MRL
elevators, named
Synergy.

40
8.1.4.
KONE Corporation:
Kone Corporation is based in Finland, and has big international presence. It is the fourth largest
company by revenue in E+E industry. It designs, manufactures, installs and services the
equipments. The company was established in year 1910. The brief history of the company is
listed in the figure 17 below. Kone Corporations follows the business strategy of increasing
International presence, R&D and Customer focus (source: www.kone.com).
1998: 17.
Kone and Toshiba
Figure
elevator built alliance.

Toshiba can produce
Kones MRL technology in
Japan.
1957: Kone founded sales

company Konehissar in
Sweden
1969-1974: Kone expands

by acquisition: in Spain
(Eguren), Austria
(Sowitsch), France
(Falconis French
subsidiary), Germany
(Hvemeier & Sander) and
England (Whitbread) and
Westinghouses Europeon
divison.
1996: Kone announced

technology breakthrough in
the industry: MRL
(machine room less)
elevator.
KONE ELEVATOR: HISTORY TIMELINE
1919: Kone produced

first 5 elevators.
1910: Kone Machine ltd.

founded in Finland
1924: Harland Herlin

bought Kone.
1968: Kone acquired

ASEAs elevator
company in Sweden
1994: Kone bought

Montgomery elevator
company, the 4th largest
in the USA.
1998: Kone opened

Greenfield company in
China.

41
8.2. Company Products and Pricings:

Elevators and escalators are produced in a variety of types depending upon its applications.
Main types of Elevators are listed below:
Hydraulic - For low rise to midrise buildings Older style system, which is
driven by fluid, and is not considered as environmentally friendly. They are
getting obsolete now.
Geared Traction For mid rise applications. Its an electrical system rather
than hydraulic.
Gearless Traction For higher speeds and for High rise applications. This is a
direct drive electrical system.
MRL Machine Room Less elevators, in which machines are mounted directly
in the elevator shaft. It means, it doesnt require specific room for installing
the machines. This saves space and cost for the customer. For low rise to mid
rise elevators
TWIN This design accommodates, 2 cabs or 2 elevators in the same hoist
way or shaft. This system saves lots of space, and very efficient.
Freight Elevators
Accessibility Lifts
Main types of Escalators are listed below:
Stair Escalators
Moving Sidewalks
Escalator is a conveyor transport device to be used to transport a large number of people between
floors of a building. The Escalator is driven by an electric motor, which drives a chain of
individual linked steps.
Pricings of the elevators and escalators are not like commodity pricings, which are fixed. Price of
the equipment depends on number of floors or rise, type of equipment (speed, capacity), finish of
the cab. In elevators, simple hydraulic elevator could sell for $75,000 USD, and Gearless can sell
around $500,000 USD.
Typical escalator pricing is around $200,000 USD (source:
www.thyssenkruppelevator.com)
As there is limited competition in the industry, there were instances of price fixing in the
industry. In November 2006, the EU (The European Union) found major players, including
ThyssenKrupp, OTIS, Schindler, Kone and Mitsubishi, guilty of price fixing over 9 years. The
EU Competition Commission reported that the companies had worked to rig bids for
procurement contracts, share markets, and fix prices between at least 1995 and 2004. Total fine
for all 5 companies was around $1.3 billion USD (Newman, 2007). Table 5 below, lists all major
products in the industry with their features, pricings and the manufacturers product
specifications.

42
Types of
Equipment
Hydraulic
Elevators
Geared
Traction
Elevators
Features
-For low rise
applications, up
to 5 floors,
Speed up to 200
fpm (foot per
minute).
-For low rise to
midrise up to
20 floors.
Speed up to 500
fpm.
Price
Range
-From
$50,000 to
$80,000
OTIS
Schindler
ThyssenKrupp
Kone
-Hole less,
efficient
Hydrofit
system
-Hole less
330A
system
-Above
ground, and
underground
Endura
system.
Discontin
ued
-From
$250,000
to
$350,000
-Available with
Gen2
system. Which
eliminates steel
ropes.
-Schindler
offers MRL
in this
category.
3300A
&400AE
Schindler
DR PMS
400
system.
-Products such
as 151, 160
and 340
machines sold
in Canada.
-Kone
offers
Mono
Space
system
-Sold with
their own
DAF380 ,
DAF 270 and
similar.
-Synergy
and TIME
systems
Ecosystem
MR, and
Mini
Space.
-Kone
offers
Eco
space
system.
Kone
Polaris
system
with
.Gearless
Traction
Elevators
-For Sky
scrappers.
Speed up to
2000 fpm.
-Around
$500,000
to
$750,000
OTIS 4000,
and OH
5000 with
Gen2 system.
MRL
Elevators
-Replacement
of Hydraulic
and to some
extent Geared
traction types.
For low to mid
rise. Speed up
to 350 fpm.
-Specialty
elevators,
where 2 cabs
travels in the
same hoist way.
For very tall
buildings.
-For
transporting a
freight.
-For wheel
chairs and
disables.
-Like a step
ladder going up
or down, but
moving.
-Horizontally
moving
-From
$100,000
to
$250,000
-Available with
Gen2
system. Which
eliminates steel
ropes.
-Schindler
3300
system
OTIS offers
Super Double
Deck Elevator
System.
-Schindler
7000
with the
double
deck option
-TWIN
system
YES, up to
12,000 lbs
capacity
YES
YES
YES, Up to
10,000 lbs
capacity
YES
YES
OTIS offers
NCE escalators
Offers
9300AE
and 9700
systems.
Offers
9500
walk.
Offers Velino,
Victoria and
Tugela.
Travel
Master
series
Offers iWalk
and
Orinoco.
Kone
Auto
Walk
Double
Deck
Elevators
Freight
Elevators
Access
Elevators
Step type
Escalators
Moving
Walks
-From
$180,000
to
$300,000
Otis 610 NPT

Trav-O-lator.
YES
destination
dispatch.
YES

43
Table : 5.
8.3 Financial Analysis:
The financial performance is positive for all these 4 major companies in the industry and they all
are profitable. I will analyze each company first, and then will compare all together.
8.3.1.
OTIS Elevator and its parent company UTC:
UTC (United technologies) company as a group, operates in multiple sectors such as; Aerospace
and space, Commercial and Industrial sectors. OTIS is an elevators and escalator business, and is
a part of their commercial business. As per 2012 data, Commercial business accounts for
UTCs 51% sales revenue. Total revenue for UTC was $57 billion USD in year 2012, and OTIS
accounts for approximate 22% of total UTC revenue. Chart below shows UTC total revenue and
operating revenues from year 2001 to year 2012.
Chart 9: UTC group revenue and operating profit in USD billions (year 2001 2012). (Ref.
Appendix table 6).

44
As seen in the chart, UTC revenue and operating profit have increased significantly during the
last decade. This revenue growth has a positive effect on its stock price. The company trades
under the symbol of UTX in the US stock exchange. Stock performance is shown in chart below:
Chart 10: United technology stock price performance (year 2001-2012). (Ref. Appendix table 6).
Current stock price is around $108.00 USD. EPS and an annual dividend per share are also
healthy numbers and increasing, as per the chart below:

45
Chart 11: EPS and Div. per share for UTC (year 2002-2012). (Ref. Appendix table 6).
Now lets look at OTIS financial performance. OTIS total revenue and operating profits in USD
are shown in the chart below.
Chart 12: OTIS revenue and operating profits (year 2002-2012). (Ref. Appendix table 7).
OTIS revenue has almost doubled in a decade, with increasing operating revenues. OTIS brings
around 22% of UTC revenue. Chart below shows revenue of OTIS in percentages of the UTC
revenue.

46
Chart 13: OTIS revenue in comparison to whole group revenue (year 2002-2012). (Ref.
Appendix table 6 & 7).
Although, OTIS is bringing only around 22% of UTCs total revenue, but an operating profit
margin from OTIS operations is much higher than the parent company. As shown in chart below,
OTIS has been earning more profit margin than its parent company as a group. As per year 2012
data, OTIS had a margin of 21% and UTC margin was around 13%.
Chart 14: Operating profit margin comparison between OTIS and its parent company UTC. (Ref.
Now lets look at Schindler Elevators financial performance.

47
8.3.2.
Schindler Elevators financials:
Schindler elevator is a public company and trading on the Swiss exchange (SIX) under the
symbol SCHN. Its revenue is around 8 billion CHF (Swiss Franc) in year 2012. Although, it
had a bumpy ride of total revenues, its operating profits and profit margin have grown. The chart
below, shows companys total revenue and operating revenues in currency CHF.
Chart 15: Schindler total revenues and operating revenues. (Ref. Appendix table 8).
Schindler has out very good stock price growth. It has more than tripled in last 10 years. Chart
below, shows the companys stock price performance. Current stock price is around 130 CHF.

48
Chart 16: Schindler stock price performance. Year 2003 2012. Price is CHF. (Ref. Appendix
table 8).
The Earning per share and an annual dividend per share are also healthy numbers as shown in the
chart below.
Chart 17: EPS and Div. per share for Schindler in CHF (year 2005-2012). (Ref. appendix table
8).
Now lets look at financial of another giant, ThyssenKrupp AG.

49
8.3.3.
ThyssenKrupp financial performance:
ThyssenKrupp AG group operates in mainly steel industry. But they also have interest in
Elevators technology, Component technology, Industrial solutions, and Materials services
division. The company employs around 200,000 employees worldwide (as per 2012 figure), and
just elevator segment employs around 47,000 people worldwide. Charts below show revenues of
ThyssenKrupp AG whole group, and also revenues of ThyssenKrupp elevator technology
segment. Revenues are in Euro currency.
Chart 18: ThyssenKrupp AG revenues in EUR (year 2003-2012). (Ref. Appendix table 9).

50
Chart 19: ThyssenKrupp Elevator segment revenues in EUR (Ref. Appendix table 10).
As it is evident from the charts above, ThyssenKrupp elevator segment is doing much better
financially than the whole group. Its revenues are growing, and so the operating profits and
margin. The Elevators and Escalators side of business brings around 13% of total group revenue.
Its percentage is growing as shown in the chart below.

51
Chart 20: ThyssenKrupp elevator segment revenue as a percentage of whole group revenue. (Ref.
Similarly to OTIS vs. UTC, operating margins are also higher in the case of ThyssenKrupp
Elevator vs. ThyssenKrupp AG group. As per year 2012 data, the whole groups operating profit
margin was under 5%, while Elevator segment had a margin of above 10%. The chart below
shows comparison of an operating profit margin of ThyssenKrupp Elevator business vs. the
whole ThyssenKrupp AG group.
Chart 21: Comparison of operating profit margin, ThyssenKrupp AG group vs. companys
elevator business (year 2003-2012). (Ref. Appendix table 9 & 10)
As ThyssenKrupp AG group continues to suffer due to the economic slowdown, the stock price
has suffered as shown in the chart below. The company is trading in Germanys Xetra stock
exchange under the symbol TKAG. Its current stock price is around EUR17.00.

52
Chart 22: ThyssenKrupp AG stock price (year 2003-2012). (Ref. Appendix table 9).
The Chart below shows the poor performance of ThyssenKrupp AG as a whole group, in EPS
and dividend per share.
Chart 23: EPS and Annual dividend per share for ThyssenKrupp AG Group (Year 2003-2013).
(Ref. Appendix table 9).
The company has discontinued paying dividend in year 2012. EPS is also going down in recent
years.

53
Now lets look at Kones financial performance.
8.3.4.
Kone Elevators Financials:
Kone has a nice steady growth of the total revenues and also operating revenues as shown in the
chart below. Kone had over 6 billion Euro of total revenue in year 2012. It had an operating
revenue of close to 1 billion Euro in the same year.
Chart 24: Kone Revenues in Euro (year 2002-2012). (Ref. Appendix table 11).
Kone trades under the symbol KNEBV. Kones stock price performance has been good as shown
in the chart. Chart shows data from year 2004 to 2012. Current stock price is around 32.00 Euro.

54
Chart 25: Kone stock price in Euro (year 2004-2012). (Ref. appendix table 11).
Kone EPS and dividend per share shown below:
Chart 26: EPS and annual dividend per share in Euro (year 2002-2012). (Ref. Appendix table
11).

55
Individually, an elevators and escalators segment of companies are doing very good in their
revenue growth, and profit margins. Now, lets check comparison between peers.

56
8.3.5.
players:
Financial Ratios Comparison between major
I have compared these companies on three criteria:

-Operating margins %
-ROCE (Return on Capital employed) and
-Solvency Ratio (Total liabilities/Total assets)
The comparison of their operating margins are as shown in the chart below:

57
Chart 27: Elevator companies operating margin comparison (year 2001 2012). (Ref. Appendix
table 7,8,9 &11)
As per chart 27 above, OTIS is far better than other 3 competitors in profit margin. Other 3
competitors margins are also going up steadily. In year 2012, OTIS has around 21% margin, and
margin for other 3 companies are between 10 to 15%.
In the chart below, I have compared Return on Capital Employed for all 4 companies. As this
industry is capital intensive, companies are spending money in their engineering, product
developments and research departments. I was not able to find separate OTIS data for ROCE
comparison, so I have used ROCE data for UTC (OTISs parent company).
Chart 28: ROCE comparison. (Ref. Appendix table 6, 8,9, 10 &11)

As per chart, Kone is consistently generating more from its capital employed. ThyssenKrupps
elevator segment is also improving, but ThyssenKrupp AG (the whole group) has not been
utilizing its capital spend too efficiently.

58
Now importantly, I have also analyzed, companies financial solvency ratio. This ratio compares
companys total liabilities (short term and long term) vs. its total assets. Again, I couldnt able to
find separate elevator business data for OTIS and ThyssenKrupp Elevators Company, I have
used their group data. The chart below, shows that UTC is lagging versus its peers in percentage
of liabilities to its assets. UTCs solvency ratio is more than 80%. Kone elevator is in better
shape with less than 60% of solvency ratio.
Chart 29: Solvency ratio comparison for 4 major companies in E+E industry (year 2001-2012).
(Ref. Appendix table 6, 8, 9 & 11).
To conclude financial analysis, we can see that elevator companies are having steady revenue
growth. The two big groups are lagging, is due to their group wide performance. Their elevator
divisions are also enjoying growth. In the industry, stock prices of these companies have risen

59
and still shows uptrend. They have healthy EPS, and all companies pay healthy dividends except
ThyssenKrupp.

60
8.4. Major companies position in the industry, and their

capabilities:
Every company operating in this industry realizes that the future growth depends on making the
products, which save company overall cost. This total cost takes consideration of the cost of
product, energy usage, installation time, service & maintenance, parts cost and standardization,
space consideration, environmentally friendly products and government subsidies for energy
efficient products.
Although these companies share steady market share since the last number of years, they are
each different in their strengths and weaknesses.
8.4.1
OTIS SWOT Analysis:
I have done SWOT analysis below to identify companys Strengths, Weaknesses, Opportunities
and Threats as below.
8.4.1.1.
Acquisitions: Over the past two years, Otis has grown its service portfolio to
over 1.7 million units worldwide, in part through more than 60 acquisitions
(source:www.otis.com)
Economies of scale: OTIS is a market leader and is supplying to all over the
world. They have a large buying power
Research and development
Strong Brand reputation
EBIT revenue margin of appx. 25%, it is the best in the industry
Market leader with 20% market share globally
OTISLINE 24/7 customer service and prompt response
REM 24/7 Remote Equipment monitoring system
Have access to vast resources of engineering and product testing from parent
company, UTC
Huge market share of more than 10% in growing market of China
8.4.1.2.
Weaknesses:
Not able to increase market share globally. Company is stuck with around
20% market share since the last number of years
Currency exchange rates: Major market is in China, and Chinese currency
getting strong. The company is making a less profit in terms of base currency
of USD
8.4.1.3.
Strengths:
Opportunities:
Growth in developing economies

New technologies

61
Modernization market
Harder for new entrant to come into the industry and capture the market
Urbanization
Ageing population
8.4.1.4.
Threats:
Decline in new installation market in developed markets of USA and Europe

Strong internal competition
Spending almost 5% of the sales revenue on R&D (Source: 2012 company
financials)
Safety and Regulations, code compliance
Economic downturn
Government policies in different markets
8.4.2.
Schindler SWOT analysis:
The SWOT analysis of Schindler elevator shows followings:

8.4.2.1.
Acquisitions
Economies of scale
Focus is only on elevators and escalators.
8.4.2.2.
Opportunities:
Solar Elevator Company offered product differentiation this year

New technologies
Urbanization
Ageing population
8.4.2.4.
Weaknesses:

getting strong. So company is making less profit in terms of base currency of
CHF.
Not able to increase the share in the largest market of China.
Profit Margin is much less than the biggest rival, OTIS.
8.4.2.3.
Strengths:
Threats:
Decline in developed market of USA and Europe

62

Safety and Regulations
Economic downturn
Technical expertise: Companies such as OTIS, and ThyssenKrupp have vast
resources of engineering and R&D.
8.4.3.
ThyssenKrupp Elevator SWOT analysis:
The SWOT analysis of ThyssenKrupp Elevators:

8.4.3.1.
Acquisitions
Economies of scale
Much bigger group
Stronger in North American and European markets
8.4.3.2.
Opportunities:

New technologies
Urbanization
Ageing population
8.4.3.4.
Weaknesses:

Euro.
Competitors such as OTIS and KONE, doing better in terms of market share, in
the largest market of China.
Profit margin is much less than that of competitor, such as OTIS.
8.4.3.3.
Strengths:
Threats:
ThyssenKrupp group as a whole is financially not performing well.

Economic downturn
Technology change: Companies such as OTIS has huge resources in their
R&D, they are constantly working to bring new products & services.

63
8.4.4
KONE SWOT Analysis:
SWOT analysis for KONE:

8.4.4.1.
Its alliance with Toshiba to capture Asian market.

Economies of scale
Revenue growth
Focus is only on elevators and escalators.
8.4.4.2.
Opportunities:

New technologies
Urbanization
Ageing population
8.4.4.4.
Weaknesses:
Relatively small company between 4 major firms

Euro.
8.4.4.3.
Strengths:
Threats:

Economic downturn
Technical expertise: Companies such as OTIS, and ThyssenKrupp have vast
resources of engineering and R&D.
Generally, each of the major companies listed here have similar opportunities and threats. They
dont face much of the threats from internal rivalry, but do face threats because of general market
dynamics. China is a major new installation market, so companies do face currency exchange
rate threat, as well as there are government policy threats. Economic downturn is also a threat as
construction industry might slow down in the recession.

64
They all have similar opportunities as they make similar products. One of the major strength seen
for these companies is not too many companies in the market, which they have to compete. Big
groups like ThyssenKrupp and OTIS have advantages of vast resources availability from other
sister groups. While Kone & Schindler produce only elevator and escalator products, so their
focus is not diverted.

65
9. Conclusion:
First passenger elevators, was introduced by Elisha Otis of the USA in year 1853. Since then the
industry grew by leaps and bounds. Otis Elevator Company is the global leader in the E+E
industry with around 20% of the global market share in year 2012 globally.
The Elevator and Escalator industry mainly has three segments: New installation, Modernization
(equipment upgrades) and Maintenance. The new installations have slowed down due to a recent
economic crisis. Main areas affected are the developed markets of the USA and Europe.
However, the service (modernization and maintenance) market still growing worldwide.
There are mainly four key players have been dominating the elevator and escalator market
globally. They are: Otis Elevator Company (Parent company is United Technology) of the USA,
Schindler Holding Ltd. of Swtizerland, ThyssenKrupp Elevator of Germany, and KONE
Corporation of Finland. They control about 2/3 of the whole market together.
The main drivers of the markets are increasing urbanization and the ageing population. Safety
regulations and code changes also plays part in growth in the modernization market. Key
regional markets for this industry are: Europe, China and the US. Currently, China is dominating
the new Elevator and Escalator market globally. The largest share in the installed base is the
EMEA (Europe, the Middle East and Africa) region. China is the fastest growing market and in
coming years, and expected to increase further.
The elevator and escalator market was valued at around US$65 billion in year 2012, with
elevators comprising the major share in the market. The elevator segment revenues are
approximate 95% and escalator segment revenues are around 5%. The Elevators market
(including the new equipment installation, maintenance, repair and modernization) was valued at
$61 to $62 billion USD, while the Escalators market was around $3.5 billion USD. The industry
is projected to grow to $95 billion USD by year 2020.
The global installed base of escalators and elevators had been more than 11 million units by year
2012, and the new equipment installed in year 2012 alone were 670,000 units. China was the
largest market with 65% share in the new equipment installation, whereas Europe led the market
in terms of operational escalators and elevators with a share of 49% in year 2012.
Most of company growth for the companies comes from acquisitions of other smaller companies,
and alliances with bigger regional firms in the industry. Four major players have acquired the
number of companies to grow their market share in the industry. For example, ThyssenKrupp
Elevators has acquired Dover Elevator in the USA and Northern Elevators limited in Canada.
Kone has done alliance with Toshiba and has allowed their MRL technology to be sold in the
Asian market.

66
The new equipments generally last 30 to 35 years and then replacements are required. In the
tenure of 30 to 35 years of life, these installed equipments go through modernization upgrades
and also requires regular maintenance. As per year 2012 data, the new equipment business brings
50% of total industry revenue and service business (modernizations and maintenance) also brings
50% of industry revenue.
The elevator segment has major 2 product lines: Hydraulic powered elevators and Electric
powered elevators. Schindler Elevator Company has recently introduced solar powered elevators.
Hydraulic elevators are either on the ground or in the ground. On the ground doesnt require
digging a hole, while in the ground concept does require to dig a hole to install a Jack in the
ground. As these elevators are powered by mainly oil, it is environmentally unfriendly and also
these kinds of elevators are not suitable for high rise buildings. Simply, larger the building, they
will have to install a larger Jack & Piston. Due to these issues, customers prefer electric
elevators.
The electric elevators are mainly: Geared type, Gearless type, MRL (Machine Room Less) type,
TWIN, Freight elevators, and Access elevators.
The escalators mainly are 2 types: Staircase style and Moving Walk style.
The market trend is towards making energy efficient equipments, which requires less energy, and
use less space. MRL design is most popular for low rise to mid rise, and also companies are
using LED lightings, Regenerative drives to save energy usage, environmentally friendly cab
wall material (urea formaldehyde free material). Gearless equipments are popular where speed is
needed and mostly in high-rise buildings.
In the industry supplier power is high. Suppliers are outside forces such as; Architects,
Consultants, Labour unions, Regulation codes, Raw material and parts supplier, all dictates
industry in their capacities. Industry doesnt have easy entry for new comers. Customers dont
have much of the power due the fact that, there is no alternative for vertical transportation
equipment other than elevators and escalators, and also not too many companies to choose from.
But internal rivalry is intense between companies in the industry.
Financially, all companies are making profits with healthy margins. Stock prices have soared for
this industry companies. For big groups such as; ThyssenKrupp and UTC, their elevator business
segment doing very well compared to other parts of their business. OTIS elevator is leading the
competition with more than 20% of operating margin, while other three companies, which are
listed here are making between 10% to 15% margins.
Overall, the industry is growing and expected to grow further in the future. So the companies
operating in the industry will benefit from the growth. While customers will have, more energy
efficient, space saving, and environmentally friendly products in the future.

67

68
10. References:
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31, 2013, from www.cnbc.com: http://www.cnbc.com/id/100855449
Cook, D. (n.d.). Code changes make elevators safer for firefighters, residents. Retrieved 2013
22-10 from www.firefightingcanada.com:
http://www.firefightingincanada.com/content/view/1654/213/
Cox, W. (2012 03-05). WORLD URBAN AREAS POPULATION AND DENSITY: A 2012
UPDATE. Retrieved 2013 25-10 from www.newgeography.com:
http://www.newgeography.com/content/002808-world-urban-areas-population-anddensity-a-2012-update
Elevator1. (n.d.). Preventative Maintenance & Elevator Life Cycle Planning. Retrieved 2013
25-10 from www.elevatorone.ca: http://elevatorone.ca/elevator-maintenance/
Hunkar, D. (2013 19-05). Why You Should Invest In Elevator Company Stocks. Retrieved
2013 25-10 from www.seekingalpha.com: http://seekingalpha.com/article/1445601why-you-should-invest-in-elevator-company-stocks
IHS Inc. (2013 01-04). Elevator industry invests in energy efficiency in U.S. Retrieved 2013
20-10 from www.csemag.com: http://www.csemag.com/industry-news/codes-andstandards-updates/single-article/elevator-industry-invests-in-energy-efficiency-inus/8207bbe18c2aa1cc952bd96cdf9c676f.html
Kane, A. (2002). Strategies for IT adoption in the Building Industry -Elevators. Retrieved 2013
11-10 from www.scribd.com: http://www.scribd.com/doc/131782167/Elevators
Katy, B. (2013 01-07). Global Construction Boom to Create New Asian Tigers. Retrieved
2013 15-10 from www.cnbc.com: http://www.cnbc.com/id/100855449
Kone. (2013 22-10). Kone as an Investment. Retrieved 2013 25-10 from
www.kone.com: http://www.kone.com/corporate/en/Investors/KONE-as-aninvestment/Documents/KONE%20equity%20story.pdf
labour-reporter. (2013 03-06). Going up? 1 stumbling block remains in elevator strike, say
employers. Retrieved 2013 23-10 from www.labour-reporter.com:
http://www.labour-reporter.com/articleview/18110-going-up-1-stumbling-block-remainsin-elevator-strike-say-employers
malangone, K. (2013 25-10). Housing Leads Construction Industry to Moderate Growth in
2014, According to McGraw Hill Construction. Retrieved 2013 27-10 from

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www.construction.com: http://construction.com/about-us/press/housing-leadsconstruction-industry-to-moderate-growth-in-2014.asp
McClay, C. (2012 30-10). Elevator modernization ensures safety, reliability. Retrieved 2013
24-10 from www.capeplymouthbusiness.com:
http://www.capeplymouthbusiness.com/blog/show/215
Mitsubishi Electric. (2013). History of the Elevator. Retrieved 2013 17-10 from
www.mitsubishielectric.com:
http://www.mitsubishielectric.com/elevator/overview/elevators/history.html
Newman, M. (2007, 07 21). EU Fines Otis, Four Other Elevator Makers for Cartel (Update6).
Retrieved 12 03, 2013, from www.bloomberg.com:
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a8zJBSdTmFZI
Queens University. (n.d.). The Elevator. Retrieved 2013 25-10 from www.queensu.ca:
http://livebuilding.queensu.ca/building_systems/electrical_systems/elevator
Right Way Elevator. (n.d.). Modernization. Retrieved 2013 25-10 from
www.rightwayelevator.com: http://www.rightwayelevator.com/modernization.html
Schindler. (n.d.). Solar Elevator. Retrieved 12 3, 2013, from www.schindler.com:
http://www.schindler.com/us/internet/en/about-us/solar-impulse-acrossamerica/reimagining-mobility.html
Som, G. (2013, 07 04). Ontario Elevator Strike: Not an Uplifting Experience for Patients.
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statistics canada. (2013, 10 31). North American Industry Classification System (NAICS) Canada
2012. Retrieved 10 31, 2013, from www23.statcan.gc.ca:
http://www23.statcan.gc.ca/imdb/p3VD.pl?
Function=getVDDetail&db=imdb&dis=2&adm=8&TVD=118464&CVD=118468&CPV
=33392&CST=01012012&MLV=5&CLV=4&CHVD=118471
statistics canada. (2013, 10 31). North American Industry Classification System (NAICS) Canada
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http://www23.statcan.gc.ca/imdb/p3VD.pl?
Function=getVDDetail&db=imdb&dis=2&adm=8&TVD=118464&CVD=118468&CPV
=23829&CST=01012012&MLV=5&CLV=4&CHVD=118471
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http://www.thyssenkrupp.com/documents/equity_story/ThyssenKrupp_Elevator_Technol
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11. Appendix: Tables

Table 1: Industry segment by revenue in percentages.
market share be revenue
%
Elevators market revenue 95%
95%
Escalators market revenue 5%
5%
Table 2: Revenue split between new installations and service segments.

New equipments % Service ( Modernization and
Maintenance) %
2007
45
2008
48
2009
47
2010
46
2011
46
2012
50
Table 3: Market share by regions in percentages.

AsiaAmericas EMEA
Pacific
2007
14
21
2008
16
19
2009
17
21
2010
21
21
2011
27
18
2012
35
16
65
65
62
58
55
49
Table 4: Industry revenue past and future trend.

E+E
Market
size USD
billions
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
51
53
60
65
67
68
71
75
78
82
86
90
Table 5: Industry trend by region in percentages.

EMEA
Year
APAC
58
25
AMERIC
AS
17
55
52
53
54
54
50

72
2007
Year
2012
49
37
14
Table 6: UTC financial data.

utc/usd
REVENUE-UTC
USD Billions
OPERATING
INCOME USD
Billions
OPERATING
MARGIN-UTC
NET INCOME USD
Billions
20
01
$2
7.8
9
ROCE-utc
solvency Ratio UTC
20
05
$4
3.4
2
20
06
$4
8.6
5
20
07
$5
5.7
1
20
08
$5
9.7
5
20
09
$5
2.9
2
20
10
$5
2.2
7
20
11
$5
5.7
5
20
12
$5
7.7
0
$4.
30
11
%
$2.
67
$2.
69
$0.
70
$4
0.4
4
$5.
12
12
%
$3.
06
$3.
19
$0.
88
$4
5.9
2
$2
8.1
5
$2.
24
$5
5.9
1
$1
5.3
5
$3
0.5
7
17
%
61
%
$6.
09
13
%
$3.
73
$3.
81
$1.
02
$4
7.1
4
$2
9.0
0
$2.
54
$6
4.7
2
$1
5.2
1
$3
1.9
3
19
%
62
%
$7.
05
13
%
$4.
54
$4.
38
$1.
17
$5
0.1
0
$3
5.0
0
$3.
60
$7
7.8
3
$1
7.4
7
$3
2.6
3
22
%
70
%
$7.
62
13
%
$5.
05
$5.
00
$1.
35
$5
6.8
3
$3
9.9
1
$4.
32
$5
3.0
4
$1
9.4
3
$3
7.4
0
20
%
70
%
$6.
46
12
%
$4.
17
$4.
17
$1.
54
$5
5.7
6
$3
4.3
7
$4.
44
$6
9.5
1
$1
7.9
1
$3
7.8
5
17
%
62
%
$6.
89
13
%
$4.
71
$4.
82
$1.
70
$5
8.4
9
$3
5.8
4
$4.
08
$7
8.4
0
$1
7.7
3
$4
0.7
6
17
%
61
%
$7.
84
14
%
$5.
37
$5.
58
$1.
86
$6
1.4
5
$3
8.2
7
$5.
96
$7
4.1
8
$1
8.6
2
$4
2.8
3
18
%
62
%
$7.
68
13
%
$5.
49
$5.
73
$2.
03
$8
9.4
0
$6
2.1
0
$4.
81
$8
2.0
1
$2
3.7
9
$6
5.6
1
12
%
69
%
$2.
23
$2.
33
$0.
57
$3
5.6
7
$2
9.7
8
$3
1.2
4
$4
5.8
0
TOTAL ASSETS
USD Billions
TOTAL
LIABILITIES USD
Billions
CASH USD
Billions
TA-CL USD
Billions
20
04
$3
7.4
4
$2.
11
$2.
21
$0.
49
$3
0.2
5
DIV./YEAR USD
Current liabilities
USD Billions
20
03
$3
1.0
3
$1.
93
EPS-utc
STOCK PRICE
USD
20
02
$2
8.2
1
$5
1.9
5
$1
2.9
5
$2
7.4
9
16
%

73
Table 7: OTIS financial data.
OTIS usd
REVENUE-OTIS
USD BILLIONS
OPERATING INCOME OTIS USD Billions
OPERATING
MARGIN % OTIS
Revenue - OTIS
of UTC %
20 20 20 20
02 03 04 05
$6. $7. $8. $9.
80 92 93 57
$1. $1. $1. $1.
05 37 11 71
15 17 12 18
%
%
%
%
24 26 24 22
%
%
%
%
200
6
$10
.29
$1.
88
18
%
21
%
200
7
$11
.88
$2.
32
20
%
21
%
200
8
$12
.94
$2.
47
19
%
22
%
200
9
$11
.77
$2.
44
21
%
22
%
201
0
$11
.57
$2.
57
22
%
22
%
201
1
$12
.43
$2.
81
23
%
22
%
201
2
$12
.05
$2.
51
21
%
21
%
200 201 201

9
0
1
CH
F
8.2 CHF CHF
8 8.18 7.85
CH
F
0.9 CHF CHF
3 0.95 0.79
201
2
Table 8: Schindler financial data.

schindler/chf
REVENUEschindler
Billions CHF
OPERATING
INCOMEBillions CHF
OPERATING
MARGINschindler
NET INCOME
- Billions
CHF
20
01
CH
F
8.3
2
CH
F
0.4
8
20
02
CH
F
7.8
8
CH
F
0.1
2
200
3
CH
F
7.7
2
CH
F
0.4
0
200
4
CH
F
8.2
5
CH
F
0.5
2
200
5
CH
F
8.8
7
CH
F
0.6
3
200
6
CH
F
11.
10
CH
F
0.7
2
200
7
CH
F
13.
83
CH
F
0.8
3
200
8
CH
F
14.
02
CH
F
0.8
8
6%
CH
F
0.3
7
2%
CH
F
0.0
1
5%
CH
F
0.1
8
6%
CH
F
0.3
0
7%
CH
F
0.4
0
CH
F
3.0
5
CH
F
5.8
5
CH
F
6.0
4
CH
F
4.1
6%
CH
F
0.5
1
CH
F
3.9
6
CH
F
1.3
0
CH
F
7.2
7
CH
F
5.1
6%
CH
F
0.2
7
CH
F
2.0
8
CH
F
1.6
0
CH
F
7.1
4
CH
F
5.0
6%
CH
F
0.6
3
CH
F
5.1
5
CH
F
4.0
0
CH
F
6.7
8
CH
F
4.7
EPS
DIV./YEAR
TOTAL
ASSETS
Billions CHF
TOTAL
LIABILITIES
Billions CHF
CH
F
5.5
3
CH
F
4.0
CH
F
5.1
4
CH
F
3.9
CH
F
6.0
0
CH
F
5.2
2
CH
F
3.9
CH
F
7.0
0
CH
F
5.2
8
CH
F
3.7
11
%
CH
F
0.6
5
CH
F
5.2
6
CH
F
2.0
0
CH
F
7.0
8
CH
F
4.5
12%
CHF
8.25
CHF
0.99
10%
12%
CHF CHF
0.71 0.60
CHF
0.73
CHF CHF
5.69 4.89
CHF
6.06
CHF CHF
2.00 2.00
CHF
2.20
CHF CHF
7.43 7.41
CHF CHF
4.61 4.66
CHF
7.82
CHF
5.00

74
CASH
Billions CHF
9
CH
F
0.9
6
5
CH
F
1.1
0
STOCK
PRICE
2
CH
F
1.4
0
CH
F
34.
50
Current
liabilities
Billions CHF
TA-CL
Billions CHF
ROCE shindler
Solvency
Ratio SCHINDLER
74
%
77
%
75
%
9
CH
F
1.0
0
CH
F
47.
50
CH
F
2.4
6
CH
F
2.8
2
18
%
6
CH
F
1.1
0
CH
F
51.
20
CH
F
3.0
0
CH
F
3.0
4
21
%
0
CH
F
0.9
7
CH
F
75.
60
CH
F
3.7
4
CH
F
3.5
3
20
%
5
CH
F
1.0
2
CH
F
72.
30
CH
F
3.8
2
CH
F
3.3
2
25
%
7
CH
F
1.2
5
CH
F
46.
55
CH
F
3.7
2
CH
F
3.0
6
29
%
5
CH
F
1.9
0
CH
F
78.
50
CH
F
3.4
6
CH
F
3.6
2
26
%
72
%
69
%
70
%
71
%
70
%
64
%
CHF CHF
2.30 2.30
CHF
2.10
CHF CHF
115. 110.
70
20
CHF
129.
70
CHF CHF
3.67 3.34
CHF
3.32
CHF CHF
3.76 4.07
CHF
4.50
25%
19%
22%
62%
63%
64%
200
9
EUR
40.
56
EUR
1.6
0
201
0
EUR
42.
62
201
1
EUR
42.
72
201
2
EUR
40.1
2
EUR
1.7
0
EUR
2.1
0
EUR
0.72
-4%
EUR
1.8
0
-
4%
5%
2%
EUR
0.9
2
EUR
EUR
1.7
0
EUR
EUR
0.19
-
Table 9: ThyssenKrupp AG ( Group ) financial data.

ThyssenKrupp
/Eur
REVENUEThyssenKrupp
Euro Billions
OPERATING
INCOME Euro
Billions
OPERATING
MARGIN-TK
GROUP
NET INCOME
Euro Billions
EPS-TK EURO
200
3
EUR
35.
30
200
4
EUR
39.
30
200
5
EUR
42.
90
200
6
EUR
47.
12
200
7
EUR
51.
70
200
8
EUR
53.
40
EUR
0.9
5
EUR
1.7
0
EUR
2.2
5
EUR
3.0
4
EUR
3.7
2
EUR
3.5
7
3%
4%
5%
6%
7%
7%
EUR
0.4
0
EUR
EUR
0.3
0
EUR
EUR
1.0
7
EUR
EUR
1.7
0
EUR
EUR
2.1
9
EUR
EUR
2.2
7
EUR

75
DIV./YEAR
Euro
TOTAL
ASSETS Euro
Billions
TOTAL
LIABILITIES
Euro Billions
CASH Euro
Billions
STOCK PRICE
Euro
Current
liabilities Euro
Billions
1.0
9
EUR
0.5
0
EUR
18.
90
EUR
12.
70
EUR
1.4
0
EUR
15.
09
TA-CL Euro
Billions
ROCE-TK
Solvency
Ratio THYSSENKRU
PP
67
%
4.5
9
EUR
1.3
0
EUR
41.
60
EUR
30.
10
EUR
1.2
5
EUR
18.
18
EUR
3.7
2
EUR
37.
88
EUR
4.0
1
EUR
0.3
0
EUR
41.
36
EUR
31.
60
EUR
5.7
6
EUR
26.
82
EUR
3.4
6
EUR
37.
90
1.7
7
EUR
0.4
5
EUR
43.
71
EUR
33.
30
EUR
3.5
6
EUR
31.
90
EUR
3.6
7
EUR
40.
04
3.5
7
EUR
0.4
5
EUR
43.
60
EUR
33.
20
EUR
3.3
7
EUR
17.
95
EUR
3.3
4
EUR
40.
26
EUR
0.38
9%
4.3
0
EUR
1.3
0
EUR
38.
07
EUR
27.
60
EUR
1.0
2
EUR
38.
35
EUR
3.8
2
EUR
34.
25
11
%
9%
-4%
4%
5%
2%
75
%
72
%
72
%
76
%
76
%
76
%
88%
1.8
9
EUR
0.6
0
EUR
18.
30
EUR
12.
20
EUR
1.0
0
EUR
16.
20
EUR
2.4
6
EUR
15.
84
11
%
2.0
8
EUR
0.7
0
EUR
35.
30
EUR
27.
30
EUR
1.1
0
EUR
17.
63
EUR
3.0
0
EUR
32.
30
3.2
4
EUR
1.0
0
EUR
36.
46
EUR
27.
50
EUR
0.9
7
EUR
35.
69
EUR
3.7
4
EUR
32.
72
7%
67
%
77
%
EUR
0.00
EUR
38.2
8
EUR
33.7
0
EUR
2.27
EUR
17.9
5
EUR
3.32
EUR
34.9
6
Table 10: ThyssenKrupp elevator segment financial data.

ThyssenKrupp
Elevator/Eur
REVENUE-TK
Elevator Division Euro Billions
OPERATING INCOME TK
Elevator Division Euro
200
4
EU
R
3.5
6
EU
R
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
EUR
3.7
7
EUR
0.3
EUR
4.2
9
EUR
0.4
EUR
4.71
EUR
EUR
4.9
3
EUR
0.4
EUR
5.0
9
EUR
0.6
EUR
5.2
8
EUR
0.8
EUR
5.2
5
EUR
0.3
EUR
5.7
0
EUR
0.8

76
Billions
OPERATING MARGINTK Elevator Division
ROCE-TK
Elevator
Division
THYSSENKRUPP:
ELEVATOR REVENUE VS.
GROUP
0.3
7
10
%
9%
2
10
%
24
%
22
%
9%
9%
0.07
5
9%
5
13
%
0
15
%
-1%
22
%
9%
9
7%
0
14
%
-4%
38
%
43
%
36
%
16
%
32
%
9%
9%
13
%
12
%
12
%
14
%
200
9
201
0
201
1
201
2
Table 11: Kone elevator financial data.

Kone/Eur
20
02
200
3
200
4
200
5
200
6
200
7
200
8

77
REVENUEKONE Euro
Billions
OPERATING
INCOME Euro
Billions
OPERATING
MARGIN-KONE
NET INCOME
Euro Billions
EPS-kone
EURO
DIV./YEAR
EURO
EU
R
4.3
4
EU
R
0.2
7
EU
R
5.3
4
EU
R
0.3
2
EU
R
2.8
9
EU
R
0.2
3
EU
R
3.2
4
EU
R
0.2
7
6%
EU
R
0.1
5
EU
R
2.5
4
EU
R
1.5
0
6%
EU
R
0.2
7
EU
R
3.1
0
EU
R
2.0
0
8%
EU
R
0.1
6
EU
R
1.3
3
EU
R
2.0
0
8%
EU
R
0.1
0
EU
R
0.8
7
EU
R
0.5
0
EU
R
2.0
6
TOTAL ASSETS
Euro Billions
EUR
3.60
EUR
4.0
7
10%
EUR
0.4
7
12
%
EUR
0.23
EUR
0.1
8
EUR
1.86
EUR
1.4
4
EUR
0.50
EUR
0.6
5
EUR
2.10
EUR
2.2
9
EUR
0.36
TOTAL
LIABILITIES
Euro Billions
EU
R
4.6
0
EU
R
0.5
6
12
%
EU
R
0.4
2
EU
R
1.6
6
EU
R
0.6
5
EU
R
2.3
6
EU
R
2.3
5
EUR
4.74
EUR
4.9
8
12%
EUR
0.7
0
14
%
EUR
0.47
EUR
0.5
4
EUR
1.84
EUR
2.1
0
EUR
1.30
EUR
0.9
0
EUR
3.68
EUR
4.1
4
EUR
5.22
EUR
6.2
7
14%
EUR
0.7
9
13
%
EUR
0.64
EUR
0.6
1
EUR
2.30
EUR
2.4
6
EUR
1.40
EUR
1.7
5
EUR
4.72
EUR
5.1
3
EUR
2.20
EUR
2.4
5
EUR
2.60
EUR
3.1
0
EUR
14.9
8
EUR
20.
80
EUR
20.0
5
EUR
27.
90
EUR
0.57
EUR
0.73
CASH
STOCK PRICE EURO
Current
liabilities
EU
R
4.6
0
EU
R
8.3
8
23
%
24
%
18
%
16
%
EUR
10.7
4
EUR
11.
98
EU
R7.
77
30
%
25
%
36
%
47
%
100
%
TA-CL
ROCE-kone
ROE
Solvency Ratio
- KONE
16
%
18
%
15
%
19
%
35%
34%
34%
39%
60%
34
%
37
%
59
%
34%
36%
55%
29
%
32
%
60
%

78
Table 12: Industry Market share

OTIS
20%
SCHINDLER
17%
THYSSENKRUPP
14%
KONE
11%
OTHERS
36%

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Running Head: Global Elevator and Escalator Industry Analysis:

Global Elevator and Escalator Industry Analysis:

Global Elevator and Escalator Industry Analysis:

Global Elevator and Escalator Industry Analysis:

5.1. Growth in the Global Elevator and Escalator Market:.....................15

6. Key Trend and Market Drivers:.................................................16

6.1. Key Trend: Energy Conservation and Sustainability......................16

7.1. Threat of New entrant:................................................................25

8.1. Company Profiles and History:.....................................................31

Global Elevator and Escalator Industry Analysis:

Global Elevator and Escalator Industry Analysis:

Global Elevator and Escalator Industry Analysis:

2. Introduction to Elevator and Escalator:

Global Elevator and Escalator Industry Analysis:

Figure 1: Geared motor elevator structure

(Source: Google image)

Global Elevator and Escalator Industry Analysis:

Figure 2: Typical Escalator structure (Source: Google image)

Global Elevator and Escalator Industry Analysis:

3. Background History of Elevators:

Year 1857: First

Global Elevator and Escalator Industry Analysis:

4. Elevator and Escalator (E+E) Industry Overview:

Figure 4: The Life Cycle of the E+E Market Equipment.

Global Elevator and Escalator Industry Analysis:

-Aging of the installed -Growth of the

Global Elevator and Escalator Industry Analysis:

Figure 5: Relationship in the Construction Industry.

Figure 6: Parallel process in a new project (Kane, 2002).

Global Elevator and Escalator Industry Analysis:

Figure 7: Elevator/Escalator manufacturer and its various functions

Global Elevator and Escalator Industry Analysis:

5. Global Elevators and Escalators Market:

Global Elevator and Escalator Industry Analysis:

Global Elevator and Escalator Industry Analysis:

5.1. Growth in the Global Elevator and Escalator Market:

Chart 5: Projected growth in E+E industry. (Source: www.trefis.com) (Ref. Appendix

Global Elevator and Escalator Industry Analysis:

6. Key Trend and Market Drivers:

6.1. Key Trend: Energy Conservation and Sustainability

Global Elevator and Escalator Industry Analysis:

Figure 8: Elevator Permanent magnet Gearless machine and Geared machine

Global Elevator and Escalator Industry Analysis:

Figure 9: Energy saving concept of Regenerative Drives

6.2 Market Drivers:

6.2.1. Urbanization Growth:

Global Elevator and Escalator Industry Analysis:

Global Elevator and Escalator Industry Analysis:

6.2.2. Ageing Population:

Table 3: Population of 65+ in percentages of the total population (Source: www.worldbank.org)

6.2.3. Codes and Regulations:

Global Elevator and Escalator Industry Analysis:

Global Elevator and Escalator Industry Analysis:

6.2.4. Construction and Real estate Industry Growth:

Global Elevator and Escalator Industry Analysis:

Global Elevator and Escalator Industry Analysis:

Industry Rivalry (High)

Global Elevator and Escalator Industry Analysis:

Global Elevator and Escalator Industry Analysis:

7.1. Threat of New entrant:

Global Elevator and Escalator Industry Analysis:

7.2. Supplier Power:

Global Elevator and Escalator Industry Analysis:

7.3. Customer power: