The elevator consulting market is emerging as a new niche market as domestic skyscraper construction booms. The industry is just getting off the ground.

Elevator consulting refers to the provision of total services from the PD (Preliminary Design) stage to the CA (Construction Assistance) stage by specialized consultants to ensure the efficient placement and installation of equipment in buildings. It usually includes consulting as well as elevator diagnostics and supervision. By requesting elevator consulting, building owners, architects, and contractors can reduce unnecessary losses in budgeting, prevent problems that may occur after the building is completed, and increase the value of the building, so they are rushing to consult with related companies. 

The history of elevator consulting in the world dates back to the United States before World War II in 1939. At that time, elevator consulting was a simple consulting service requested by large elevator companies, but later, as the steel and machinery business in the United States was transferred to Japan and Germany, the steel and machinery industry in the United States was on the path of specification, which led to the deterioration of the company's management, and senior elevator engineers were retired and established elevator consulting companies with basic forms, leading to today. 

The domestic elevator consulting industry began in 1997 as a supervisory business such as precision diagnosis of elevators at Seoul Customs, and the history of full-fledged consulting business is not long. Currently, there are four major elevator consulting companies in Korea: Korea Elevator Safety Management Institute, Korea Elevator Safety and Technology Institute, VT Korea, and Corea Elevator Consulting. In addition, several small companies are performing diagnosis, supervision, and consulting on small-scale sites. Inspection agencies, which were previously limited to elevator supervision, are now entering the consulting field in earnest, and new private companies, which have been established for less than five years, are eager to take the lead in the market. 

As of the end of December 2011, the domestic elevator consulting market (including diagnosis, supervision, and consulting) was tentatively estimated to be worth about 30 to 35 billion won. According to ALIO (www.alio.go.kr), a public institutional management information disclosure system, in 2011, the technical contracting business of the Korea Elevator Safety Management Institute was KRW 1.293 billion, and the shear supervision and research contracting business of the Korea Elevator Safety Technology Institute was KRW 857 million. Two private companies, VTCorea and Corea Elevator Consulting, ended last year with sales of about 1.2 billion won.

The early elevator consulting market in Korea grew from consulting on the replacement of old elevators installed during the apartment boom in the late 1980s, and the technical contracting market has grown rapidly in recent years as plans for the construction of high-rise buildings such as the Lotte Super Tower in Jamsil, Seoul, and the Haeundae Skyscraper in Busan have been finalized. 

 

"Recently, the construction industry is not doing well due to the prevalence of bad news such as PF (Project Financing) failure and high-risk business structure risks," said Park Eung-gu, CEO of Corea Elevator Consulting. "However, the market size is expected to expand every year as the number of inquiries from apartment elevator remodeling sites and building construction continues to increase." According to the Korea Elevator Safety Management Institute Consulting Business Group, the average replacement age of an elevator is about 17 years, and as of 2012, there were about 14,000 elevators over 17 years old in apartment buildings. In addition, Article 13-2 of the Elevator Facility Safety Management Act, which was revised on January 30, 2099, stipulates that elevators that reach 15 years after installation must undergo a detailed safety inspection, so the diagnosis and consulting work for old elevators is expected to increase. 

 

Kim Seong-hyeop, head of the R&D Division at the Korea Elevator Safety Technology Institute, said, "Some sites with proper maintenance and management can be used for more than 20 years without replacement, but in general, the older the elevator, the scarcity of major replacement parts and the time to replace many consumable parts increases the cost of replacing parts, and the risk of potential safety accidents cannot be ruled out, especially if technical personnel capable of repairing the elevator are not secured."

Currently, the elevator consulting industry is dominated by apartment remodeling and medium-sized buildings of 15 to 30 stories rather than new sites or skyscrapers due to the recent construction recession and PF failures. "The supervision consulting market, which started with elevator replacement work, is now leading to the market for high-end elevators and new installations in large buildings, and it is expected that the market scope will grow to the point where all large-scale projects will have elevator consulting requests in the future," analyzed Kim Sung-hyeop, general manager of TechOne.

However, as the market is still in its infancy, it is expected to go through several bumps in the road before it enters the stabilization phase.  As it is still an unfamiliar market in Korea, there is a high dependence on overseas data when analyzing elevator traffic, which determines the number of elevators installed in a building, the speed of operation, and the mode of operation, and in the case of large-scale sites, there is a lack of close cooperation with other industries such as architecture and electricity, which greatly limits the right to speak out. Most companies are facing difficulties in their work due to a lack of reference materials as there are few related research activities in Korea, and they often acquire technical skills through trial and error or consult overseas advisors.

 

However, a bigger problem is the excessive competition among current companies, which often leads to unnecessary bleeding. Seunganwon has been diagnosing and supervising elevators since the 1990s, but with the amendment of the Elevator Act on February 22, it officially became possible to conduct elevator consulting business according to Article 15 (Inspection Agency), Paragraph 1, "The Minister of the Interior and Safety may assign inspections and detailed safety inspections under Articles 13 (1) and 13 (2) (1) to an inspection agency designated by the Minister of the Interior and Safety."

In response, Seung-An-Won has been actively engaged in the elevator consulting business by establishing a consulting business unit through an organizational reorganization 20 years after its founding in May. TechOne is also expanding its technical services business, which was limited to elevator diagnosis and supervision, into an overall consulting business.

As these two inspection organizations are more aggressively entering the consulting business, VT Korea and Korea Elevator Consulting, two private companies, are nervous. "The elevator consulting market is getting bigger but thinner," said Byung-hee Yoon, CEO of VT Korea. The industry, which should be purely for engineers, has become entangled with the interests of businessmen, and the depth of the market is thinning. "You may be able to stay alive for a while by taking on one or two projects, but if the race to the bottom continues, your honor as a consultant and your technical pride will be tarnished," he said.

"If things continue as they are, the private elevator consulting and supervision business will disappear," Mr. Yoon said, emphasizing that it is difficult to expect any further development, as some people have bluntly expressed it as 'Borit Pass'. He said that the domestic elevator consulting market is now in the spring season, when barley sprouts are coming up, so it is necessary to deal with this situation wisely.

"I have no objection to the law being amended to allow inspection agencies to operate elevator consulting businesses, but the current system of unconditionally awarding government agencies with the purpose of ensuring objectivity and fairness in public bidding is unfair," Yoon said. As a result, private companies have lost credibility and are being harmed rather than helped.

"It is ridiculous that the law was amended to allow inspection agencies in charge of elevator inspection to participate in the consulting market," said a representative of a small consulting company. "The consulting market can only be revitalized by breaking the monopoly of inspection agencies such as elevator attendants and technicians." In particular, he sarcastically said, "The idea of performing both inspection and supervision at the same time is an absurdity, and it is a self-inflicted wound." He said that the industry is on the path of specification and quality competition is declining due to the participation of inspection agencies in the elevator consulting industry.

In response, Seung-An Won and Tae-Won are of the opinion that the elevator consulting industry must ensure that government agencies can get the best quality fairly and responsibly. "The domestic elevator consulting industry is just getting started, and we need to prevent irresponsible errors that can cause irreparable damage later on," said Lee Chang-yong, head of the consulting business division at Seunganwon. "The industry should strive to carry out work responsibly for each project, rather than just a one-off project that is awarded to a site first," he said. "Elevator supervision is pre-management, and diagnosis, such as regular inspections and completion inspections, is post-management," he said, adding, "Last year, due to frequent complaints from private companies, the Ministry of the Interior and Safety issued a guideline, and a technician inspects the site supervised by the elevator operator, so that inspection and supervision do not overlap."

 

"Currently, the lowest bid system is applied to the remodeling and new installation of elevators in apartment buildings, and it is not uncommon for private companies to sign contracts at 60% of the KITA's price," said Kim Sung-hyeop, head of the KITA. "We must avoid such simple unit price competition and develop the market's ability to self-regulate, and the KITA, as an authorized inspection agency, will not consider the interests of manufacturers in protecting the lives and property of the people." Currently, KICT's supervision costs are calculated based on the number of working days, the number of inputs, and the grade of technicians, taking into account the size of the project, by referring to the labor unit price of engineering technicians from the engineering company wage survey results published annually by the Korea Engineering Association. Of course, there are differences in cost depending on the scope of elevator replacement, number of elevators, rated speed, rated capacity, and floor height. 

The domestic elevator consulting market is now in the early stages of a transitional period before entering a stabilization phase. In the early days of the market, there were a few elevator company employees preparing to enter the elevator consulting business, but after several years, no one is willing to try. Veteran elevator technicians, most of whom are middle-aged and older, have also turned their backs on the consulting business.

"In fact, a person who retired from an elevator company founded a supervisory company, but it closed down within a year," said Byung-hee Yoon, CEO of VT Korea. "After a few years of hunger, the company will enter the stabilization stage, but it is impossible to grow the power of the private industry because it cannot withstand the process." "It is necessary to further strengthen the private industry by establishing more than five private companies to facilitate bidding for elevators, which are mostly nominated bids, and organizing associations." The future of the elevator consulting market, according to Mr. Yoon, is one in which the government is in charge of elevator supervision and private companies are in charge of elevator consulting. "Consulting should be done by consultants with expertise who can provide technical support," he said, "and it is a hindrance to the development of the industry for government agencies to conduct both inspections and consulting.

"Consultants must have their own pride, professionalism, a mindset of protecting clients, reliability and integrity," said Kim Chul-jae, director of Korea Elevator Consultant, who has been in the elevator consulting business for decades. "Only consultants who have a combination of intelligence, art, and engineering can provide high-quality consulting that impresses people."

The following is a summary of the current trends of government organizations and private companies that are active in the domestic elevator consulting market (in alphabetical order)

 

On May 2, the Korea Elevator Safety Management Institute (hereinafter referred to as KESI) upgraded its technical division, which was in charge of diagnosing, supervising, and consulting elevators, to a consulting division and entered the domestic elevator consulting market in earnest through the largest reorganization in its 20-year history. 

Seung-An One's technical contracting business was the first in Korea, starting with a detailed diagnosis of elevators at Seoul Customs in 1997, and has steadily progressed into elevator diagnosis, supervision, and consulting, and last year, it supervised and diagnosed about 1,000 elevator installations. In the consulting field, the company started with the Soonhwa Building in Seoul in 2001, and last year won consulting contracts for the National Businessmen's Association Hall in Yeouido and military housing at the US military base in Pyeongtaek. According to Seung Ahn-won, sales of technical services, which were around 600 million won in 2007, exceeded 1 billion won in 2008 and reached 1.293 billion won in 2011.

"In Korea, there will be an increase in the construction of high-rise buildings, starting with the Lotte Super Tower in Jamsil, and the role of elevator consulting is expected to expand in high-rise buildings such as the Yongsan International Business District and the DMC District in Sangam-dong, Seoul," said Lee Chang-yong, head of the consulting business unit. "We will strive to expand our consulting business by performing our work more responsibly than any other organization or company, and by expanding our visits to the latest trends."  

According to Lee Chang-yong, the biggest advantage of Seunganwon is that it is the largest specialized elevator inspection agency in Korea, has differentiated credibility, is quick to grasp new technology trends such as the establishment of special inspection standards for elevators, and has a close network with all manufacturers. In addition, as an organization that deals with national standards related to elevators such as elevator inspection standards, it can quickly apply changes in overseas advanced codes, and has support and branches nationwide to respond immediately when problems occur. "We have MOUs with CEN, which is in charge of advanced European codes, as well as Japan, Russia, and China, and share technology through mutual business exchanges," said Lee Chang-yong. "We are also taking the lead in pioneering overseas markets by conducting elevator consulting in Mongolia, Vietnam, China, and Russia."

Currently, the consulting business unit is operated by a total of 110 people, including 10 headquarters and 100 support staff. Only employees who pass the headquarters' internal exams with excellent grades can become members of the consulting division, and the support team also conducts regular supervision and consulting self-training for employees with elevator operator certificates to raise their level. In addition, the company has developed and utilized technical equipment such as pulley wear meters and escalator handrail tensile force testers.

In Lee's opinion, elevator consulting is a concept that includes diagnosis, supervision, and consulting. The institute plans to maintain the current system for the time being, but in the future, the institute will act as a control tower and lead consulting work at each support center.

 

The Korea Elevator Safety Technology Institute (hereinafter referred to as KETI, Chairman Kim Yoon-bae) was designated by the Ministry of Employment and Labor in May as a safety inspection agency for all hazardous machinery and equipment, including safety certification, and plans to carry out more professional elevator technical services by applying design, inspection, and diagnostic technologies for various facilities to elevators. 

TechOne, which started its elevator consulting business by supervising the replacement work of old elevators in apartments, is now carrying out technical services at the regional headquarters and branch offices, instead of the existing business model centered on the business headquarters. "In order to carry out more professional and systematic work, we will assign dedicated employees to regional headquarters and branches to form an organic relationship with the headquarters and carry out work closer to the public," said Kim Sung-hyeop, head of the R&D Business Division.

 In addition, based on the knowledge and experience gained from supervisory consulting, we will provide better technical services to the public through continuous development of specialized equipment. Currently, the institute has specialized equipment such as ride comfort measurement equipment, thermal imaging cameras, power quality analyzers, electric motor winding deterioration measurement equipment, oscilloscopes that can check signal waveforms and rectification status, and brake braking ability measurement equipment. In particular, the ride comfort measuring equipment developed by the institute has been calibrated by an authorized institution and boasts superior performance to existing equipment in field tests, considering that users feel the most anxiety and discomfort from noise and vibration during elevator operation. The brake braking ability measurement equipment has even received a patent application and is being used in the field.

In Kim's opinion, elevator consulting is "a technical service that protects people's lives and property." By managing and supervising the design and final installation on behalf of the client to ensure that an elevator with performance beyond that required by the elevator inspection standards is installed, it not only ensures user safety but also increases the asset value of the building. Not to mention, we showcase the best consulting technology to create comfortable and convenient elevators.

The number of elevator consulting cases currently underway at the institute is about 50. The order rate is gradually increasing as the work is carried out simultaneously in branches across the country. According to the institute, sales of diagnostic supervision and research services, which were around 650 million won in 2008, exceeded 800 million won in 2011, with replacement work for apartment buildings and new installation sites accounting for 80 percent of the total. "The existing elevator consulting market is expanding from suggesting replacement plans for installed elevators to consulting on the installation of safe and efficient transportation at the design stage of high-rise state-of-the-art buildings," said Kim Sung-hyeop, general manager. "The institute recently signed an MOU with Samsung Electronics to conduct regular diagnostics for overseas workplaces, and will provide comprehensive diagnostics and consulting not only for elevators but also for dangerous machinery and equipment."   

 

Byung-hee Yoon, CEO of elevator technology consulting company VT Korea, is a pioneer in the domestic elevator consulting market, which was previously barren. In August 2006, he retired from Otis Elevator and started his own elevator consulting business.

In the early days of his business, he was met with skepticism, but he has persevered for the past five years with the idea that as long as foreign companies are encroaching on the domestic elevator market, someone must secure the technical independence and user safety of the elevator industry. "Only now are customers' perceptions slowly changing," Yoon said. Although the capacity of an elevator in a building is small, it is an indispensable facility, so more and more building owners are moving away from the perception that elevator consulting is 'free,' and are offering a reasonable amount of money.

Since 2009, VT Korea has been participating as a vertical transportation equipment research and development company in the vertical urban space vertical mobility planning technology field of the Green Vertical Urban Space Planning Research and Development, sponsored by the Korea Institute of Construction, Transportation and Technology Evaluation and organized by the High-Rise Complex Building Business Unit. "As a vertical transportation facility research and development company, we are currently conducting research on vertical transportation types, horizontal and vertical planning, floor area ratio, elevator size, legal system, and domestic and foreign case studies, and we are striving to develop programs related to elevator technology to settle the technology for high-rise buildings in Korea," Yoon said. The final goal is to develop an evaluation program for high-rise vertical planning and conduct elevator consulting in Korea. 

In addition, he has been in charge of large-scale elevator consulting projects such as Lotte's super high-rise projects Jamsil Super Tower (123 floors) and Busan Lotte Town (107 floors) in 2010, as well as the Haeundae Tourist Resort (117 floors) project. In addition, the company recently served as an elevator consulting advisor for the Seoul Metropolitan Government's 'Guidelines for Elevator Installation in High-Rise Buildings', the first private company in Korea to provide elevator consulting services.

The consulting services provided by BT Korea mainly include simulation analysis of grinding and piston phenomena that occur in high-rise buildings, RAMS analysis to minimize losses such as elevator failure, lifespan, and maintenance, and building energy analysis to find ways to save energy.

VT Korea's role model is Hanmi Global, the first CM company in Korea. It was the first company to introduce the concept of CM in Korea and grew rapidly, and Mr. Yoon's ambition is to grow the company to the same level in the elevator consulting industry. He is most concerned about employee welfare. Every Wednesday is designated as 'family day' and employees are given the opportunity to leave work early, as well as financial support for graduate school and other learning opportunities. Mr. Yoon is a gentle leader who believes that "the CEO is an operator before a manager" and that "a company run by employees is better." His idea of elevator consulting is to provide environmentally and human-centered technical services. It is the task of breathing life into a highly mechanical elevator.

Currently, the domestic elevator industry is facing a total crisis. "This will pose a threat to the safety of the people, users, and our families, and the number of cases of foreign companies violating contracts will increase rapidly," says Yoon, predicting that "foreign companies will continue to repeat the vicious circle of withdrawing from the business if it does not work." Therefore, "the elevator consulting and supervision business will require government agencies and private companies to become partners and look at the future soberly and move forward together," he said.

 

Attracting customers with excellent customer responsiveness and differentiated technology   

Korea Elevator Consulting is a startup company that has been established for less than three years, and has been attracting attention for its excellent customer responsiveness by proposing companies, quality, and products that fit the latest trends and times to customers according to their projects.

The company's CEO, Park Eung-gu, explained that elevator consulting is "a professional consultant doing the work for the client and returning the profits to the client." Especially considering that a project can last as short as one year and as long as five to seven years, customer preferences and technological trends change, so the company considers elevator consulting as a "living process" and works from the customer's perspective.

 "Currently, attendants and technicians are focused on elevator supervision and follow-up, and are very passive in customer responsiveness and work, focusing on inspection and quality control," said Park. "Our company is a PM business that leads projects, and we are actively engaged in sales and marketing by holding seminars for construction companies and architects."

The company's biggest differentiator is the standardization of its tools, programs, and processes, as well as the continuous development of new technologies. The company also customizes traffic analysis programs and trains its own experts through in-depth training for kerfuffle simulation. To date, the company has conducted more than 20 consulting projects in this area.

In 2009, the company partnered with Fortune Consulting, a global elevator consulting firm, and in May, it held an industry-academic cooperation ceremony with Seoil University to enhance the credibility of elevator consulting results. In addition, the technology research center, which is composed of experts with the best experience in the industry, is developing cost reduction tools (VE) that customers need most. "Because of this differentiation strategy, some construction companies are increasingly proposing to contract the entire project under a single price contract," Park said.

For Park, the most important aspect of designing an elevator for a building is to ensure the most efficient passenger flow within the building, and he prioritizes core decisions that serve as building pillars. In recent years, consulting inquiries have focused on emergency evacuation plans, grinding phenomena, and building sway.

"As buildings become increasingly high-rise, relevant laws are being revised accordingly, and owners are increasingly seeking out consultants specializing in elevators to reduce the trial and error of construction," said Park. "The elevator consulting business, which used to be limited to traffic analysis, is gradually expanding into derivative fields, such as construction and supervision, and research on the phenomenon of grinding stone." Corea Elevator Consulting is preparing to expand overseas with its accumulated technology and know-how.