Otis Finds Staying Top Elevator Maker Tough

By Fraser, Andrew | THE JOURNAL RECORD, September 28, 1994 | Go to article overview

Otis Finds Staying Top Elevator Maker Tough


Fraser, Andrew, THE JOURNAL RECORD


FARMINGTON, Conn. _ The Otis Elevator Co. is finding it harder these days to stay on the top floor of the industry it has dominated for years.

Tough competition and a lull in high-rise building in its traditional big markets are challenging the world's largest elevator company to look elsewhere aggressively for new business.

Otis is hurting at home and in Europe because of recessions and overbuilding in the 1970s and 1980s.

"During the construction boom we couldn't get enough mechanics to keep up with the work," said F. Mark Granato, the company's vice president of communication. "Now (that) the office market is glutted, we have to reorient the business."

Otis still commands a 21 percent share of the world market _ down from 23 percent in 1991, but more than double that of No. 2 Schindler Holding AG of Switzerland and No. 3 Mitsubishi Electric Corp. of Japan. And its 1993 sales figure of $4.4 billion was about 1 times Schindler's.

But Otis has fallen to No. 2 in the new equipment market in United States behind New York-based Dover Corp. and is facing difficult times in Europe as high-rise construction lags and other competitors dominate the low-rise market _ a segment to which Otis had devoted less attention.

After decades in Japan, the world's biggest and most difficult market to penetrate, Otis' share is only about 13 percent, and that's with 30 percent growth in the last five years.

To help increase its business, Otis has vigorously gone after other underdeveloped and growing foreign markets, especially in former communist countries and the Asia-Pacific rim. Since 1990, it has spent $250 million on acquisitions and joint ventures abroad.

"I remember the day the Berlin Wall tumbled," Jean-Pierre van Rooy, Otis president, said in a recent interview. "Our company was on the next side literally the next day."

Otis, the most global and profitable unit of Hartford-based conglomerate United Technologies Corp., has reason to keep looking overseas. Eighty percent of its revenue is from abroad, up from 10 percent in the early 1900s and 50 percent about 20 years ago. Otis has more than 68,000 workers worldwide and maintains and sells elevators in almost every country.

So Otis has established 20 joint ventures in former communist countries, including Russia and Ukraine, where it has committed $50 million and expects to spend an additional $60 million in the next few years. …

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