Interview Synopsis

Global elevator servicing – coronavirus & independent servicing competition

  • Multi Asset
  • Industrials
  • Europe

Third Bridge Forum interviewed a former VP from Thyssenkrupp AG to understand more about the mechanics of the elevator servicing industry. This Interview covered the impact of coronavirus, competition between the big four and independent service providers (ISPs), and the future of digital elevators.

Business tracking along for elevator servicing companies

The specialist started by outlining the various service types, and estimated the global differences, as “the split among these [varies] massively from country to country”. There is a general shift towards full maintenance service contracts, although in countries such as Spain, where there is a large residential share, basic “grease-and-oil” agreements are preferred. 

Servicing frequency also fluctuates globally, depending on country regulations. “For example, Germany has four maintenance checks per year by regulation, Spain has 12 per year… [and] China has 24 per year.” With labour the largest cost for elevator service companies, this must be taken into account when setting prices.

COVID-19 is not expected to “dramatically” affect profitability, although some customers may seek price renegotiations. In addition, the pandemic could accelerate certain trends – for instance, bringing regulation governing the number of maintenance visits down in certain countries. “Is it necessary to have 12 visits in Spain? Probably not. If it works in Germany, why should it not work in Spain?” 

The servicing growth rate for the big four varies from ISPs: “I would say between 2% and 5% [overall], but the big four are more on the lower end, the lower single digits. I would say 1-3%”. While the big four have certain advantages – such as reverse engineering capabilities and product knowledge – the ISPs’ strength lies in having better customer relationships.

Other topics explored in this Interview included the Otis carve out and acquisition strategies, as well as the roll-out of digital elevators, which could offer remote monitoring capabilities.

To access all the human insights from Third Bridge Forum’s Global Elevator Servicing – Coronavirus & Independent Servicing Competition Interview, click here to view the full transcript.

The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.

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