Market overview for elevator products and services

Market overview for raising products and servicesAggregate worldwide demand for lift / escalator products and services is projected to increase 5.6% per year through 2009 to more than $20 billion. Fueling gains go away be economic recuperation and expansion in the mature markets of the developed world, coupled with ongoing industrialization among the less advanced countries of Asia.The world elevator market rose at a recountingly level-headed pace throughout close to of the 1990s in a gener all toldy sanguine global macroeconomic climate. Basically strong economic product in developing countries was briefly interrupted in 1997-1998 by a financial crisis engulfing many East Asian and Latin Ameri corporations nations, as well as Russia. side effect form the crisis continued to adversely impact the elevator market into 1999 and 2000, as trends in the elevator market tend to lag increases in the macro miserliness by a few years. Subsequently, as the emerging market began to re cover, product in western sandwich Eur0pe and northeastern America was depressed in the wake of the global economic slowdown precipitated in the US, although by 2004 a recovery was app arnt in around markets.In the developed world, gains allow for reflect an expected recovery in percentage body structure, as vacancy rates come down in major global financial centers such as Tokyo and London. everywhere the long term, development of the residential sector, oddly in the largely untapped US market where single-family homes predominate, give also create opportunities, fight backed by once again populations and regulations such as the Americans with Disabilities prompt. In europium, adoption of innovative EU-wide safety regulations for existing lifts result bolster the modernization/upgrade service segment.The fastest growth is anticipate in the worlds developing regions Asia, Latin America, easterly Europe, Africa and the Middle East. In developing countries, market expa nsion provide reflect increased urbanization, as virtually all structures in large third-world cities require elevators. Aftermarket services are also not well established, plane in more developed countries such as mho Korea and hence offer a sizable potency market which major global suppliers such as OTIS are actively working to develop. china, which has already emerged as the largest global elevator market in unit terms, impart continue to log explosive gains, with the genesis of a lucrative service aftermarket bolstering the productive OEM business. Al or so half of the increase in rider and freight elevator unit sales will be attributable to China, where per capita elevator practice session body less than 10% of that typical of Western Europe. add-in III 1 realness ELEVATOR MARKET BY REGION(billion dollars)Item19941999200420092014 humanness urban Population (mil persons)25162811311934433790Bldg. Construct Expend (bil 2000$)29003324425452706661$ elevator/urban capita1011 121517$ elevators/000$ construct8.69.09.19.69.9 humanity face lifting Market24.930.038.550.566.2North America 4.05.05.87.48.9 social united States3.64.55.16.57.8Canada Mexico0.50.50.70.81.1Western Europe 11.713.816.119.323.0Asia/Pacific 6.58.012.418.427.0China0.91.23.56.912.3Japan4.55.36.47.99.5India0.40.61.21.72.5 different Asia/Pacific0.70.91.31.92.7Other Regions 2.73.24.25.57.4Latin America1.01.11.41.92.5Eastern Europe1.21.41.82.33.0Africa/Midest0.50.71.01.31.9 showtime The Freedonia Group, Inc.CHART III 1WORLD ELEVATOR MARKET BY REGION, 2009($50.5 billion)Source The Freedonia Group, Inc.3.1.1 Regional ProfileGiven the modernized economies, well-developed industrial and commercial sectors, gold consumer populations and highly evolved building/nonbuilding construction infrastructures in place throughout the developed world, most OECD (Organisation for Economic Co-Operation and Development) countries maintain large markets for elevator/escalator products and services relativ e to population and size of the economy. These include the US, Western Europe, Japan (the largest global market in value terms, reflecting the countrys aged, urban population and stringent safety standards) and Australia and New Zealand. The nations of Eastern Europe, especially Russia and certain of the other more industrialized states of the former Soviet Union, also comprise markets of some significance, but they tend to be much littler in two absolute and relative terms than those of the major Western countries.However, the fastest growing markets for elevator products and services are typically found in spite of appearance the developing regions, especially Asia and to a lesser extent Latin America and Africa/Mideast as well. As numerous countries within these regions work to industrialize their economies, they are face rising infrastructure expansion and modernization requirements, which has led to extensive building construction activity.Another get word aspect of the ind ustrialization process in most countries is increasing urbanization, as individuals and households migrate from rural areas to cities to participate in the growing economic opportunities available there. Such dynamics are positively correlated to the development of markets for construction-related products like elevator systems moreover, as the number of systems interjected increases, markets for related maintenance/repair and eventually modernization, services tend to emerge as a matter of course.3.1.2 international Parameters Trade FlowsLike most industries, the elevator business has become increasingly international in scope in recent decades. The physical nature of elevator / escalator system largely, bulky, involving numerous component parts, etc., renders them not easily transportable. In addition, elevator manufacturers often prefer to have local anaesthetic manufacturing capacity, which allows them to better satisfy local requirements (e.g., regulations and standards) an d cultivate lucrative aftermarket service relationships. As such, foreign trade per se is not as extensive in the industry as in most durable goods manufacturing businesses. Foreign trade is some what more prevalent in the replacement parts and components segments of the business.However, multinational investment on part of the leading producers (and even a few of the mid-sized and smaller ones) is extremely prevalent. This takes the form of direct ownership of overseas nursing homed subsidiaries, manufacturing facilities and other assets and after sales servicing and technical support networks. Moreover, in recent years there has been an effort on the part of major producers such as OTIS and KONE to consolidate their global operations and gaucherie production capacity to lower make up venues in the developing world, which has increased the importance of cross-border trade.As the global elevator industry continues to restructure and consolidate, the home base of operations of op erations of the major players is becoming increasingly less relevant to the competitive dynamics of the business, with a handful of multinational companies dominating the business in most geographic areas especially with respect to product manufacturing. The service segment remains considerably most fragmented, but it too is consolidating rapidly. As global companies manufacturer and install their systems in given countries, they have a direct incentive to invest in after sales servicing networks in these countries as well, which is also trace consolidation in the service segment of the business. Such dynamics are expected to become more rather than less pronounced going forward, as the economics of the business favor large companies with a multinational reach.3.2 Demand by Product Service cosmetic surgerys, escalators and related products are used to physically operate individuals, freight and sometimes other items from one place to another within a building, facility or some o ther designated place. The movement occurs either vertically (in the case of elevating and lifting equipment), at an incline (escalators) or horizontally (moving walkways). Elevators and escalators are thus integral components of many types of structures, especially those with multiple floors or levels and/or involving an extensive measure of physical space.Aggregate world demand for elevator products and services is projected to increase 5.6% per year through 2009 to more than $50 billion, an improvement from the 1994-2004 pace. Fueling gains will be an upswing in new system installations, accompanying expected recovery in nonresidential building activity in Japan, Western Europe and the Americas. This will help to offset some slowing in residential building construction, which is an important indicator of elevator demand outside of North America . Preventing immediate gains especially on the products die is the high degree of maturity of the elevator / escalator market in the d eveloped world, which has prompted leading vendors to target high growth markets in the Pacific Rim and other developing areas which hold the greatest potential for incremental increases in new installations going forward.Also fueling growth will be technological innovations in letter generation system including microprocessor based controls and sensors, remote monitoring, automated performance and generate further demand, at both the new installation and modernization/upgrade ends of the business. In addition, retrofits to comply with changing building codes and federal mandates will rejuvenate the upgrade/modernization services market, especially in North America and Western Europe.TABLE III 2WORLD ELEVATOR EQUIPMENT SERVICE MARKET(billion dollars)Item19941999200420092014Bldg Construct Expend (bil 2000$)29003324425452706661$ elevators/000$ construction8.69.09.19.610.0World Elevator Market24.930.038.550.666.3Equipment 8.810.915.021.229.5Passenger Freight6.27.510.214.119.0Escalat ors Moving Walkways0.81.01.62.64.0Parts Other1.82.43.24.66.6Services 16.119.123.529.336.8Installation2.63.24.15.57.3 modernization Repair13.416.019.423.829.5Source The Freedonia Group, IncCHART III-2WORLD ELEVATOR EQUIPMENT SERVICE MARKET, 1994-2014(billion dollars)Source The Freedonia Group, Inc.3.2.1 EquipmentWorld demand for elevator and escalator products totaled $15 billion in 2004 billion in 2004, accounting for or so 40% of the total elevator/escalator market. For present purposes, elevator products are defined to include passenger and freight elevators and associated products.Demand is projected to post a 7.1% per annum increase through 2009 to $21.2 billion. Growth will stem from improving cyclical dynamics, in particular a revival in nonresidential construction pass especially in the key office/commercial/lodging and industrial building sectors. Gains will be best for work room less (MRL) elevators, which will benefit from expansion of the global retail and (espe cially) transportation sectors.3.2.2 Passenger Freight ElevatorsGlobal demand for passenger and freight elevators is projected to rise 5.7% per annum through 2009 to around 4,40,000 units, of which over 60% will be the newer machine room less (MRL) type. Along with improving cyclical dynamics and continued secular growth in the developing world, gains will be fueled by increased penetration of less traditional market segments, such as single-family residences. The latter is a key consideration in North America, where single family housing is more prevalent than in Europe and Asia. Even in the latter regions, however, again of the population will create opportunities in the residential segment, as elevators are increasingly intentional into low-rise buildings which would previously have relied exclusively on staircases. As a result, the installed base will expand from 7.4 million units in 2004 to 9.2 million in 2009.In value terms, demand for passenger and freight elevators will g row 6.6% per year to $14 billion in 2009. While intense global competition and greater reliance on low footprint units will hold down cost increases, higher fuel and energy cost and the expanding technical complexity of latter generation elevator system, which can be priced at a premium relative to earlier designs, will contribute to price inflation.Passenger and freight elevators, as the name implies, are general purpose lifting systems designed to vertically transport individuals and commodities between different floors or levels within a single building or facility. From a technological standpoint, essentially all modern passenger and freight elevators are either the hydraulic (powered by pressurized liquid) or traction (electric powered) type the latter can be either geared or gearless. Hydraulic came into prominence during the 1950sm transcendent the geared market which was prominent prior to that time and remain the dominant type in the US. Traditional traction elevators rema in in broader use in Europe and Asia, although in Europe they have been widely supplanted by MRLs since the mid 1990s.The newer MRL elevator types incorporate the gears and control into the elevator shaft, rather than a separate machine room, and hence provide greater design flexibility, as well as energy and (in some cases) cost savings. MRLs have made significant inroads in Western Europe and will continue to penetrate North America, Asia and other regions. Moreover, while initially suited only for buildings upto 7 stories, MRLs have not been adapted for use upto about 25 stories, substantially broadening the potential market.TABLE III 3WORLD PASSENGER FREIGHT ELEVATOR MARKET(million dollars)Item19941999200420092014World Elevator Market24893 three hundred15385365055066300% Passenger Freight24.825.126.527.828.6Passenger/Freight Elevator Market61757532102201405018950North America 665977116017002100United States585873100014801800Canada Mexico80104160220300Western Europe2155264531 2539404850Asia/Pacific 25752975466066509525China425550160028004700Japan16501800200023252700India220305470745950Other Asia/Pacific 2803205907801175Other Regions 780935127517602475Latin America305360450615840Eastern Europe265275425595825Africa/Midest210300400550810000$/Unit31.833.030.832.033.0P/F Elevator Market (000 Units)194228332439575Machine Room194203232164100Machine Room Less25100275475% New3.83.84.54.84.9P/F Elev. Installed Base (000 Units)512060357355922011700Source The Freedonia Group, Inc.Elevator related service revenues are generated when new systems are installed and then subsequently as installed systems are repaired and maintained over their efficacious lives. Major renovations or upgrades on existing systems are oftern undertaken as well for present purposes this type of activity is classified under repair/modernization. Not surprisingly given their much larger installed base, elevating/lifting systems account for a substantially higher share of the total service ma rket than escalators and moving walkways, in both the new installation and repair/modernization segments.TABLE III 4WORLD ELEVATOR SERVICE MARKET BY TYPE(billion dollars)Item19941999200420092014World Elevator Market2489330015385365055066300% Services64.663.761.058.055.5Elevator Service Market16.119.123.529.336.8Installation2.63.24.15.57.3Repair modernization13.416.019.423.829.5Repair Maintenance11.613.515.818.321.0Modernization/Upgrade1.82.53.65.58.5Source The Freedonia Group, Inc.3.2.3 InstallationWorld revenues generated from the installation of new elevator/escalators systems are projected to increase 6.1% per year through 2009 to $5.5 billion. Installation revenues will grow somewhat more slowly than will new elevator and escalator equipment demand. This reflects the fact that elevator/escalator vendors have been working aggressively in recent years to lower the installation costs of their system, in orde3r to increase new business volume.TABLE III 5WORLD ELEVATOR INSTALLA TION REVENUES BY REGION(million dollars)Item19941999200420092014World Elevator Service Market1607919118234912930036800% Installations16.516.517.418.819.7Installation Revenues26503153408755007245North America 372484530735880United States338440464650765Canada Mexico34446685115Western Europe9631162135016702020Asia/Pacific 10931236183125703600China14418856310251725Japan7528048729901120India87126168255345Other Asia/Pacific 110128228300410Other Regions 222271376525745Latin America8197123170235Eastern Europe8086134190265Africa/Midest6188119165245Source The Freedonia Group, Inc.3.2.4 Repair ModernizationRevenues derived from the provision of repair, maintenance and upgrade/modernization services on existing elevator/escalator system are projected to increase 4.2% per annum through 2009 to $23.8 billion, which compares favorably to longer term historical norms.Repair and maintenance revenues will expand just 3.0% per annum to $18.3 billion in 2009, trailing all other product and service s egments. In much of the developing world, maintenance spending is sensed as an unaffordable luxury building owners and managers tend to wait for an elevator to fail before they will invest in maintenance/repair. However, there is evidence that this is extraction to change as major Western and Japanese elevator companies work to educate their equipment customers about the importance of routine servicing. Service requirements tend to be highest in Japan, where for cultural reasons elevator failures are considered to be unacceptable.As in case of elevator and escalator systems themselves, the provision of related repair/maintenance services has benefited importantly in recent years from the application of a advanced technology. What has become especially prominent of late are computer based monitoring tools that can detect system faults (or even potential faults) and alert service technicians immediately. Repair/maintenance services can be performed on a contract basis, or on an as n eeded service call basis for building owners and other operators that do not maintain contracts.In addition, there is considerable potential for business activity on the modernization upgrade side of this market, in terms of retrofitting existing systems to be compatible with new building codes, the Americans with Disability Act (in the US), the safety Norm for Existing Lifts 9SNEL-in Western Europe) and other mandates. A number of the leading elevator vendors have in recent years launched modernization packages designed specifically to comply with the requirements of these mandates. Examples include Schindlers SCHINDLER 6200 and KONEs MAXISPACE. The latter allows users to replace a 4 passenger car with a 6 or even 8 passenger lift.More generally, numerous building owners will want to upgrade existing elevator/escalator systems to incorporate the latest technological advances along such parameters as improved safety and enhanced performance and energy efficiency characteristics, and this will provide further momentum to the repair/modernization service market overall. Modernization revenues are forecast to rise 8.8% annually through 2009 to $5.5 billion, making this the fastest growing segment of the elevator business. Modernization projects can range from replacing controls and inner fittings, to installing new doors or other structural components, to incorporating advanced electronics based sensors and monitoring tools, to complete renovations of entire elevator cabs or replacement of escalator stairs.TABLE III 6WORLD ELEVATOR REPAIR MODERNIZATION REVENUES BY REGION(million dollars)Item19941999200420092014World Elevator Service Market1607919118234912930036800% Repair Modernization83.583.582.681.280.0Repair Modernization1342915965194042380029450North America 25182981352941905025United States22172646314537354485Canada Mexico301335384455540Western Europe77318918103551211514240Asia/Pacific 18482492360951107165China551102706451350Japan15161957266434304275In dia4295210410745Other Asia/Pacific 235330465625795Other Regions 13321574191123853020Latin America4725546888651095Eastern Europe74285298311801445Africa/Midest118168240340480Source The Freedonia Group, Inc.3.3 Demand by MarketElevator related products and services are use in a broad array of buildings and facilities featuring multiple floors or levels, as well as in certain single-floor and even non-building type settings. Large, well-trafficked facilities with multiple levels office buildings, institutions such as hospitals and schools, department stores and other retail establishments, hotels and motels, factories and warehouses, etc., tend to be the most intensive users of elevator products and services.