According to Samsung Economic Research Institute, 2013 is expected to be a year of low growth and heightened pressure for paradigm shifts under the new government. The domestic construction industry is also expected to face increasing difficulties due to the slow recovery of the global economy and sluggish domestic demand. As a result, domestic companies are expected to strive to improve their condition and make various efforts to shift their management paradigm.

The domestic elevator industry is also expected to continue to see low growth below its potential this year, and is preparing for intensified competition from high-quality products and differentiated services as construction companies compete to secure profits. "It is not easy to overcome the low-growth phase early as exports, domestic demand, and economic stimulus, the three major growth engines of the Korean economy, have all weakened," said an industry insider, emphasizing that the industry should try to transform itself into a highly efficient management structure, including creating a business model to achieve cost advantage and enhanced profit-making output in the face of various unstable factors in the business environment."

The global economic crisis, which began in Europe in the second half of 2011, began to affect the Korean economy in earnest last year, causing a downturn in the construction and housing economies. In the aftermath of this, the elevator industry is expected to see a decline in new demand for elevators in 2013 as private sector housing construction plans are expected to be put on hold or delayed due to the ongoing credit risk of construction companies, and new demand for elevators is expected to remain flat or decline. However, if the new government's economic revitalization policies are implemented early and show tangible results, housing supply, mainly from the public sector, is expected to recover somewhat.

However, the decline in new demand for elevators will further encourage price competition among suppliers, and elevator companies are worried that over-competition will lead to a decline in sales and deterioration in profits. "It is inevitable at this point, especially since construction companies, which hold the key to elevator orders, are likely to take full advantage of the lowest bid system to reduce total construction costs," said an industry insider. 

In order to gain an edge in price competition, companies are expected to competitively import and sell low-cost Chinese products and components this year, and the domestic elevator market is likely to be overrun by Chinese products and components. In fact, due to the decline in market demand and intensified price competition, almost all companies are expanding the application of cheap Chinese parts and FULL SETs, and there are concerns about the dependence of the domestic manufacturing industry on China and the decline in product safety due to the deepening of the communization of the domestic manufacturing industry and the high dependence on Chinese parts.

"The quality reliability of Chinese-made products and parts is still low," said an official from a large company. "If this situation continues for a long time, it is inevitable that user safety risks will increase, frequent replacement of parts due to low durability, and increased maintenance costs will be inevitable." Therefore, it is time to strengthen win-win cooperation between large and small manufacturers, foster the parts industry through institutional support, and strengthen safety and reliability standards to prevent low-grade Chinese parts from dominating the market.

The main areas that companies will target this year are the elevator replacement market and the maintenance service market, but the situation on the ground is not very bright. Currently, there are about 470,000 elevators in operation nationwide, of which about 100,000 are more than 15 years old. According to the figures, the demand for replacement work will continue to grow as the number of old elevators increases by about 20,000 every year. In particular, due to the downturn in the housing economy, the volume of new demand has decreased, while the potential demand in the replacement market is expected to continue to increase. However, in reality, the percentage of elevators that are 15 years old or older that lead to replacement demand each year is low at 3 to 4 percent.

A company representative said, "This is because consumers postpone the replacement work due to the cost of replacement work, and suppliers select companies based on the lowest bid method, which leads to partial replacement rather than full replacement because profits are lower than new ones." "Certain support measures are needed for the replacement of elevators in apartment buildings, and quality evaluation should be strengthened to move away from price-oriented selection," he said.

In the maintenance service market, the lowest-price public bidding method is used to select elevator maintenance companies, which increases market demand but decreases the quality of service. According to the industry, the lowest bidder is forced to neglect maintenance and inspection activities because it is difficult to generate profits through low maintenance fees, and in the end, they are forced to meet the balance sheet by replacing unnecessary parts. Therefore, when selecting a maintenance company, it is judged that various quality evaluations such as product reliability, promptness of service, and technical skills of service inspectors should be evaluated in addition to price.

"As an elevator is a means of transportation that transports people, safety should be a top priority, but because it is perceived as a communal property, there is a strong tendency to be insensitive to quality and safety in general and reluctant to pay a proper price for the service," said an industry insider. "People neglect maintenance and management of elevators with the mentality of 'install it and that's it,' which is why safety accidents are so frequent." "The lifespan of an elevator is supposed to be 50 years, but in Korea it is only 12 to 13 years," he said, adding, "As the Chrysler Building in the United States, built in the 1920s, is still using the original elevator, Korea should increase the use of elevators with maximum safety even if it means paying high service fees." 

The construction industry is currently experiencing a trend of super high-rise and large-scale buildings, and elevator safety standards are gradually being strengthened. It is necessary for the industry, organizations, and the government to come together to strengthen elevator maintenance standards to meet global standards, improve the lowest bid culture in the elevator maintenance industry, establish evaluation standards for elevator maintenance services, and improve the quality of maintenance services by reorganizing the Apartment Management Act.

The biggest topic in the industry this year is the first implementation of the revised Elevator Act, EN Code, and inspection standards. In particular, the revised Elevated Platform Act includes restrictions on subcontracting maintenance, subdivision of maintenance business registration standards, and strengthening of self-inspector qualification standards, which are expected to lead to poor maintenance due to the establishment of independent maintenance companies and excessive competition among existing maintenance partners, eventually posing a serious threat to user inconvenience and safety.

An official from a large company said, "The original intention of the amendment to the Passenger Transportation Act is to strengthen user safety, but the actual content of the amended law is far from reality." "Although it is said that subcontracting for maintenance and inspection is limited to 50%, the criteria for this is not clear, and on the contrary, it overlooks the unique characteristics of large companies and maintenance contractors," he criticized. As a result, it is feared that user safety could be further threatened by the proliferation of independent repair companies that lack technical skills and expertise. "To compensate for this, the government states that manufacturers must conduct their own self-inspection once every three months, but it is considered a policy that ignores realistic issues such as the market of 470,000 vehicles currently in operation and the operation of companies' manpower," said another large company official. Therefore, the government should come up with concrete institutional support measures to strengthen win-win partnerships between technologically advanced manufacturers and suppliers even before the law is implemented.

The following is a look at the 2013 domestic and international business plans of four major companies, Otis Elevator, ThyssenKrupp Elevator Korea, Mitsubishi Elevator Korea, and Hyundai Elevator (in alphabetical order).

 

 

Otis Elevator (hereinafter Otis, CEO Kenneth Lloyd Mahler), which is celebrating its 160th anniversary this year, plans to strengthen customer satisfaction by conducting business with a tendency philosophy of ▲ differentiated safety system ▲ transparent management based on business ethics ▲ and hotel-level customer service orientation to achieve business results based on its history of being the world's No. 1 in the elevator industry.

"Even last year, when many companies continued to face difficulties due to the uncertainty of the external business environment after the global economic crisis, we exceeded our plans in all business divisions through active sales activities," said an Otis representative. "In particular, we succeeded in renewing the maintenance contract for elevator facilities at Incheon Airport, the gateway to Korea, solidifying our long-term partnership with our customers and achieving meaningful results, such as becoming the first company in Korea to exceed 100,000 elevator maintenance units."

This year, Otis will continue to practice its global standard management, including its core management values of passenger safety, ethical management, and customer-oriented service, as a leading company in the industry. In addition to conducting active marketing activities such as conducting safety education for children, Otis will provide differentiated products and services such as IRIS, an eco-friendly gearless elevator that has received great response in the mid-to-low speed market, OM, an advanced maintenance service, and Elite, an advanced remote control service. In particular, the company will strive to realize these core management values even in the new environment of elevator-related laws.

The company's basic strategy for this year is to stick to its first management principles of 'safety' and 'ethical management'.  Based on this, the company will strengthen its customer-oriented sales competitiveness according to the characteristics of the domestic market and intensively attack the market with Otis' unique technology, installation know-how, and advanced service capabilities.

From eco-friendly elevators such as 'Gen2' and 'Regen' to 'Elite Service,' an eco-friendly, state-of-the-art remote control service, Otis will continue to invest heavily in the eco-friendly field, and will continue to develop green campaigns that express its commitment to becoming a 'green partner' for customers. In the service field, Otis will expand its Elite Service and expand customer visits to the Elevator Experience Bus, a mobile showroom that was introduced in 2010.

"We will continue to lead the market through continuous innovation that provides differentiated value to customers," said an Otis official. "As the global market is our stage, we plan to focus on expanding the scale of overseas exports by developing new markets." In particular, we plan to actively pursue overseas markets based on global standards, starting with Otis' export brand 'Sigma', which is currently exported to more than 80 countries around the world. 

Currently, OTIS applies the OTIS Worldwide Job Site Safety Standard (WJSSS), which is stricter and more demanding than European safety standards, from product development and design to elevator production, installation, and maintenance, and is leading the industry's advanced safety culture by providing safety education to kindergarten and elementary school students.

 

ThyssenKrupp Elevator Korea (CEO Yangchun Park, hereinafter referred to as Thyssen) plans to focus on developing innovative new products that can lead the elevator market trend with 'luxury' while avoiding 'following' product development.

The company is implementing strict quality control, including the declaration of a quality vision, to ensure that its products are chosen by customers, and is currently strongly promoting design improvement projects. In addition, we plan to strengthen our maintenance service business and expand overseas exports to generate sustainable profits amid the stagnant domestic new installation market.

In particular, as the EN Code will be introduced and applied in Korea in earnest this year as part of the international standardization and enhancement of elevator safety, Thyssen has formed a TFT team to prepare strategic and efficient responses, and is making every effort to secure the quality and enhance the competitiveness of gearless products. "Once the EN code is fully applied in the domestic market, the competitiveness of geared products is expected to decline due to component complementation," said an official from Thyssen. "As a result, the replacement of geared products with gearless products is expected to accelerate." In addition, Thyssen is preparing countermeasures for the revised boarding law and restrictions on remunerative subcontracting, which will be applied after reviewing the law.

"Thyssen will become the 'BMW' of the elevator industry, leading the trend by introducing innovative masterpieces to the market," said Park Yang-chun, CEO of Thyssen. "We plan to introduce a step-up in product quality and design by implementing a well-organized sales strategy with simple models that can stimulate customers' curiosity rather than unconditional volume offensive and aggressive marketing."

In the field of maintenance, we plan to expand the number of FM (comprehensive maintenance) contracts, which is a service in advanced countries. In addition, the company plans to find growth strategies to compete with Chinese products in overseas markets and expand its export regions to emerging markets such as Eastern Europe and North Africa.

In the first half of this year, Thyssen will introduce an innovative new product that it has been developing under the "Mini Cooper Project" (tentative name). It is a unique model that has never been introduced in Korea before and is expected to lead innovation and change in the industry. The new product is aimed to be a "luxury elevator" that prioritizes customer satisfaction from design and construction to design.

Mitsubishi Elevator (CEO Kim Yong-sung, hereinafter referred to as Mitsubishi) plans to pursue sustainable growth through balanced growth in three areas: new, replacement, and service business, including domestic and export, based on its corporate motto 'Quality in Motion' as its management policy for 2013.

Since the domestic new market is already saturated and has entered a period of decline, the company will focus on increasing overseas exports rather than relying solely on new markets. In particular, the Incheon plant, which is Mitsubishi's global supply base, produces more than 300 high-speed products in the 240-meter per minute class every year and exports them to the Middle East, Latin America, and Southeast Asia, so in 2013, Mitsubishi plans to accelerate production and sales of high-speed models, which have four to five times the added value of mid- and low-speed models.

Mitsubishi has already supplied and maintained elevators to large corporate buildings and high-end residential complexes such as 63 Building, Samsung Group Seocho Office, Hyundai Motor Group Office, SK Telecom Office, Kumho Asiana Group Office, Dongkuk Steel Office, Galleria Foret, Tower Palace, Haeundae Weave the Zenith, Lotte World Tower, and others, demonstrating its superiority in the high-speed, high-rise market. This year, we will strive to solidify our position as a leader in the high-speed, high-rise market through intensive sales activities in our core markets.

In addition to high-speed models, Mitsubishi plans to focus on developing new MRL models through a combination of independent development and joint development with its Japanese R&D division. "Our R&D personnel's skills are already recognized by our headquarters in Japan, and we also carry out commissioned development for which we receive development fees," said a Mitsubishi representative. "In particular, we send design and development personnel and maintenance and installation engineers to Japan every year for one to two years to acquire advanced technical skills, thereby enhancing our technical expertise and customer confidence."

Mitsubishi will also focus on the elevator replacement business, where demand is constantly increasing, mainly for high-rise and luxury buildings such as hotels, offices, and residential complexes concentrated in Seoul. Having already successfully replaced major buildings in the city such as 63 Building, Lotte Hotel, Shilla Hotel, and Chosun Hotel, Mitsubishi aims to focus on its sales strategy with differentiated quality and technology. The maintenance service business will also provide the best customer service to ensure 100% satisfaction for both customers and users. In addition, Mitsubishi plans to operate differentiated services that allow customers to experience and decide on the products they want in advance through an advanced service response system that combines GIS and smartphones, a 24-hour service operating system through a state-of-the-art remote service device (Maintecom), and the first 3D design simulation system in Korea.

Rather than adopting low-grade, low-priced parts to expand market share, Mitsubishi focuses on supplying eco-friendly, high-quality products that maximize product durability for safe and convenient use by all customers, eliminating unnecessary waste of resources. Rather than being an exporter that imports cheap parts from China, assembles the finished product, and exports it overseas, Mitsubishi aims to be a true exporter that manufactures quality-certified parts domestically and exports the finished product. "It is important to make elevators 'higher and faster,' but the technology that makes them 'safer and stronger' is true craftsmanship, and this is the 'quality management' that we pursue," said a Mitsubishi representative.

In fact, Mitsubishi's advanced technology has been at the forefront of the evolution of elevator technology worldwide, including the development of inverter elevators (1982), spiral escalators (1985), wave escalators (1991), PM elevators (1995), and a contract to supply ultra-high-speed elevators (1,080 min/min elevators for Shanghai Tower in China in 2011).

Mitsubishi plans to pursue four basic quality philosophies: ▲ Quality is first and will be prioritized over delivery and price; ▲ The goal of creating good quality at any cost will not change; ▲ Quality should be safe and convenient to use, have a reasonable lifespan and uniform performance; and ▲ All employees involved in the manufacturing of each product will take responsibility for the quality of each product, while simultaneously adhering to quality management with advanced technology.

Currently, Mitsubishi makes monthly donations to the Children's Foundation and the Dail Community (which supports hungry children overseas) through the Nanuri Club, an in-house informal group. In addition, Mitsubishi is actively engaged in social contribution activities such as improving the living environment of socially marginalized elderly people living alone and delivering briquettes in winter.

The company also actively participates in activities such as the Matching Gift Program, in which employees voluntarily donate a certain amount of money when using free beverages provided in the company, and the company donates the same amount at the same time. In addition, by actively recruiting students and graduates of Korea Elevator University, the only university in Korea that specializes in elevators, Hyundai Elevator is contributing to the development of the elevator-based industry and creating jobs.

 

Hyundai Elevator (CEO Han Sang-ho, hereinafter referred to as Hyundai) plans to accelerate its overseas sales expansion centered on these regions as the demand for elevators in BRICS and Southeast Asian countries, which are leading economic growth economies, continues to increase in the wake of the global economic downturn.

Having already succeeded in developing a high-speed elevator with purely domestic technology in 2009, and based on the brand recognition gained through orders for high-speed elevators in Venezuela's Government Complex, China's Rutai Center, and the Busan International Financial Center (BIFC), we will conduct aggressive marketing to promote the excellence of indigenous elevators in overseas markets. To accelerate overseas business, Hyundai plans to strengthen its overseas sales capabilities by securing talented manpower and focus on opening and expanding overseas markets centered on Brazil, Turkey, Russia, Vietnam, and Malaysia.

Unlike foreign elevator manufacturers, Hyundai has the advantage of operating its own factory and logistics center that can produce all elevator products, enabling quick supply and smooth distribution of parts. It also has a large number of excellent domestic technicians and skilled professionals, enabling it to respond flexibly, and it expects to achieve high sales in 2013.

Hyundai's flagship model is THE EL, a high-speed elevator developed using purely domestic technology. THE EL 600D, a double-deck elevator that can travel up to 1,080 meters per minute, also boasts the world's fastest speed of 600 meters per minute for a double-deck elevator. Both products provide a comfortable ride by controlling lateral vibration and air pressure generated during high-speed travel, and are characterized by a nine-phase motor control system that enables normal operation even if a part of the motor fails.

In addition, the company plans to reorganize its organization to strengthen its competitiveness in the maintenance service business and provide differentiated customer service through its state-of-the-art remote management service, Hyundei Real Time Service (HRTS). The system enables the customer care center to monitor elevator operation information installed nationwide in real time 24 hours a day, 365 days a year, enabling remote safety checks and adjustments, as well as prevention of system failures due to mechanical errors, so that the operation and management of elevator facilities can be maintained at optimal levels.

This year, Hyundai plans to carry out thorough internal management based on three management goals: ▲ maintaining its position as the domestic elevator market leader ▲ accelerating overseas business ▲ and strengthening competitiveness in the service business. Hyundai will continue to lead the domestic elevator market by winning strategic orders for high-speed sites, and will enhance profitability through differentiated strategies such as securing advantages in each model and introducing new construction methods in preparation for the downturn in the domestic construction economy.

As Hyundai has already succeeded in various domestic and overseas orders, including the Venezuelan Government Complex, the first in the domestic elevator industry to win an order for an ultra-high-speed elevator, as well as China's Rutai Center and the Busan International Financial Center (BIFC), it is expected to receive active orders in line with the world's high-rise construction plans. Meanwhile, Hyundai is making every effort to systematically respond to the application of elevator-related laws across all business divisions.