x) The market for elevator installation, maintenance, repair and modernization was roughly EUR 34 billion in 2008. The corresponding escalator market was around EUR 2 billion. The market for automatic building doors service amounted to roughly EUR 2 billion. In 2008, KONE’s share of the elevator and escalator market reached 13 percent.
| Elevators: new equipment, maintenance, modernizations |
EUR ~34 billion x) |
| Escalators and autowalks: new equipment, maintenance, modernizations |
EUR >2 billion x) |
x) will be updated on March 2010
KONE’s operating environment
Due to the global economic and financial crisis, new equipment markets weakened during 2009. As the year progressed the market situation became increasingly mixed, with most markets continuing to weaken but with some markets already showing positive development. The modernization markets remained quite stable despite the weak environment, and the size of the market was approximately the same in monetary value as the year before. Maintenance markets, which are less cyclical by nature, continued to grow. The growth was supported by high conversions of installed equipment into the maintenance base which was due to strong new equipment deliveries in prior years. The lag between the installation of new equipment to the conversion into maintenance is typically 12 months but can be up to 30 months. The maintenance market became increasingly competitive throughout the year.
In the European, Middle East and African region (EMEA), the markets were very challenging and continued to decline throughout the year. At the end of the year however, signs of recovery were seen in certain residential markets, especially in Sweden, Finland and Austria. The market in Germany was quite resilient throughout the year. The new equipment market in the United Kingdom continued to weaken towards the end of the year when it seemed to have bottomed out in some residential segments at a low level, but the commercial segment continued to weaken. The new equipment markets in the southern parts of Europe continued to become weaker and the markets in the Middle East and Russia were very weak. The modernization market was stable mainly due to the European Safety Norms for existing Lifts (SNEL) and the need for upgrades of an aging equipment base. The maintenance market continued to grow, but was increasingly competitive in EMEA.
In the Americas region, the new equipment markets weakened significantly compared to the previous year. The new equipment market in the United States has been demanding since the beginning of 2007. The infrastructure market increased partly due to stimulus activity during the second half of the year, but was very competitive because of the increasing aggressive
pricing behavior. The modernization market was relatively stable as a result of federal stimulus money which was available for public housing, schools, hospitals and government facilities. The market in Canada was challenging, but stabilized towards the end of the year. In Mexico, the market was, up to the fourth quarter for the most parts consistent with those of the United States, but in the fourth quarter it showed signs of bottoming. The maintenance markets continued to grow, but was highly competitive.
In the Asia-Pacific region, the positive market development continued in China, but most other markets declined. Positive signs could however be seen in several markets towards the end of the year. Urbanization continued to drive growth in China, where the new equipment market
was also weaker in the beginning of 2009 but strengthened throughout the year to show some growth compared to 2008. Real estate investments, construction areas, completed areas and sale of completed dwellings all showed growth compared to the previous year. The government eased reserve requirements for banks to increase lending activity to stimulate real estate developments and housing sale, but tightened it at the end of the year to moderate the growth in these sectors. Especially the infrastructure and affordable housing markets grew, driven by stimulus packages. The new equipment market in India declined during the first half of the year but the residential construction activity started to grow from its low level in the second half of the year. In Australia, the construction activity weakened due to high vacancy rates, but some improvements in tender activity were seen towards the end of the year. In Southeast-Asia, the construction market remained weak during 2009. However, the tendering activity also improved towards the end of the year, but decision making remained slow. The maintenance market, in Asia-Pacific developed
favorably.