Elevators and Moving Stairways

SIC 3534

Companies in this industry

Industry report:

This classification comprises establishments primarily engaged in manufacturing passenger or freight elevators, automobile lifts, dumbwaiters, and moving stairways. Establishments primarily involved in manufacturing commercial conveyor systems and equipment are classified in SIC 3535: Conveyors and Conveying Equipment, and those manufacturing farm elevators are classified in SIC 3523: Farm Machinery and Equipment.

Industry Snapshot

The elevator and moving stairway industry manufactures a series of products designed for the vertical transportation of both materials and passengers. Machines manufactured for the exclusive purpose of moving materials, such as freight elevators and automobile lifts, comprise a small niche of the wide-ranging materials handling market. The majority of company revenues are generated by manufacturing passenger elevators and escalators, producing parts required for elevator renovation and modernization, and servicing elevators.

The livelihood of this industry is based mostly on the well-being of the construction industry, since new buildings need new elevators. The demand for elevators in the United States in the late 2000s was low, as the slow economy took its toll on the construction industry and, as a result, the elevator and escalator industry.

By the late 2000s, total value of shipments in the elevator and moving stairway industry reached $2.58 billion in 2007. There were 900,000 elevators and 35,000 escalators in use in the United States, based on figures from the National Elevator Industry Inc. (NEII).

Organization and Structure

Approximately 377 establishments were engaged in manufacturing elevators and moving stairways in 2009, according to Dun & Bradstreet's Industry Reports. Establishments in the elevator and moving stairway industry employed an average of 28 people each. Of the companies operating in 2009, 79 percent employed fewer than 25 workers. However, 72 percent of all employees in the industry were concentrated in establishments employing more than 50 people. The greatest concentration of industry employees was in the Midwest and the East. Tennessee was home to some 1,460 employees, followed by Pennsylvania with 873, California with 837, New Jersey with 789, and New York with 659. Combined, these five states employed almost half of the industry's total work force and housed about 33 percent of all companies.

In 2007, this industry spent more than $1.4 billion on materials, according to the U.S. Census Bureau. New and used capital expenditures totaled $32.4 million for the industry as a whole.

The application of modern technology to the elevator industry fostered greater competition among major contractors that engaged in manufacturing new elevators as only a part of their operations and smaller independent firms who derived their business exclusively from the service market. In an effort to guarantee future service and renovation contracts on elevators they manufactured, many of the larger companies in the industry attempted to guard the technical data governing their elevators so that outside contractors lacking proper access codes would be unable to service their product. Although this form of proprietorship was frowned upon by governing organizations such as the National Association of Elevator Contractors (NAEC), the profit margin on new elevators--about five percent--encouraged companies to protect their large capital investments in this manner.

Background and Development

The genesis and evolution of the elevator industry closely paralleled the historical development of the Otis Elevator Company. The company was founded by Elisha Otis, the inventor of the first "safe" hoist--a technological development that generated public confidence in the elevator for the first time and laid the foundation for the elaborate vertical transportation systems of the twentieth century. An innovative advertiser as well as a skillful engineer, Otis brought his new invention to the Crystal Palace Exposition in New York City in 1854. During the middle of his demonstration, Otis stunned the crowd by cutting the rope that held up the hoist platform on which he stood, only to be kept securely in place by the release of the wagon spring safety mechanism he had invented. While Otis himself died before he was able to realize the financial rewards of his inventions, the company he founded reached the $1.0 million mark in sales in 1870 through the leadership of his sons, Charles and Norton.

As technology made the construction of taller buildings possible, the Otis-dominated elevator industry kept pace with developments of its own, introducing the hydraulic elevator in 1878, the electric elevator in 1889, and the gearless traction electric elevator in 1903. These innovations would later become the backbone of the industry, enabling passengers to be transported safely at greater speeds and to greater heights in buildings such as the 102-floor Empire State Building.

With increases in the volume of passengers and the construction of taller buildings, the need arose for federal safety codes regulating the industry. In 1922, the American standard safety requirements for elevators were established, codifying the informal laws that had previously governed the industry. By keeping such concerns at the forefront, the industry was able to maintain an excellent safety record, strengthening consumer confidence and paving the way for the public acceptance of new technologies in future years.

As elevator speeds reached 700 feet per minute, the need for an automated control system became more evident. Consequently, in 1924, Otis developed the Signal Control System, which took the guesswork away from the operator by automatically slowing down the elevator as passengers on various floors pushed call buttons. The system was further refined with the invention of Peak Period Control, a control device which automated the job of the elevator starter, further increasing efficiency.

The widespread use of electronics in World War II ushered in a new era of technological advances in the elevator industry. In addition to providing improvements in safety devices, such as the development of a sensor that automatically returned the elevator doors to the open position when a person occupied the doorway, electronics technology finally eliminated the need for elevator operators and starters. With Otis's development and refinement of autotronics, a system that electronically controlled when elevator doors should be opened and closed, most commercial elevators were fully automated by the mid-1950s.

The next two decades were marked by continued refinement of the automatic control systems developed in the 1950s. By 1970, for instance, solid state circuitry, which contained hundreds of printed circuit boards per system, was applied to the elevator industry. This innovation significantly reduced the size and weight of the control system, while improving its reliability and ease of maintenance in comparison to earlier models. New methods of production were introduced as well, such as the concept of the preengineered elevator, which brought forth the mass production of uniformly designed elevators. This manufacturing philosophy not only lowered production costs but, by providing the architect with the exact hoistway dimensions and other elevator specifications, eliminated much of the arduous work required in designing elevators to fit individual construction projects. Such innovations enabled the industry to surpass the $1.0 billion mark in shipments by 1982, more than twice the total of a decade earlier.

As the 1980s progressed, however, the pattern of growth characteristic of earlier years was not sustained. An increased demand for escalators in shopping malls and other public buildings throughout the country was not enough to overcome the slowdown in the elevator market, a direct result of the severe decline in multi-story buildings. At the close of 1991, total shipments of $1.2 billion were recorded, reflecting only a five percent increase over the previous 10 years. In a similar fashion, new capital expenditures fell from $31.2 million to $16.3 million, nearly a 48 percent decline.

While the future of the industry largely depended on the condition of the real estate and construction markets, it was also influenced by firms' abilities to sell clients on new technological developments, particularly those implementing the use of computerized control systems. With the advent of various types of new computer technology, the future of the industry was dependent on the ability of elevator manufacturers to convince consumers that extensive modernization projects were indeed necessary. Requirements for such expenses to be justified included a strong economy.

The value of U.S. shipments rose each year from 1991 to 1996. To combat the unfavorable economic conditions of the early 1990s, the elevator industry attempted to fill the void in new elevator contracts by shifting its attention to the renovation and modernization of models installed 20 or more years ago. By replacing old control panels with new machinery and computer technology, the elevator industry hoped to negate the effects of the glutted real estate market. Elevator manufacturers also looked to take advantage of the new opportunities for renovation made available by legislation passed during the early 1990s requiring that elevators be updated to provide greater handicapped accessibility in public and private buildings.

From 1990 to 1995, the demand for elevators and escalators fell from 90,000 units annually to 70,000 units. Large international firms and small local companies all suffered. They responded to the crunch by cutting costs, decreasing the number of employees, simplifying designs, and consolidating. In 1991, there were 175 companies operating in this industry; by 1997, there were only 34--with the industry leaders consisting of subsidiaries of larger, diversified corporations.

In 1996, the elevator industry faced increased competition, and a slow construction industry made business difficult. Large European companies were in financial straits, such as the Swiss engineering firm Schindler. Its 1995 profits were one-half the preceding year's. KONE, a Finnish company, closed several of its factories. The American firm Otis, which controlled about one-fifth of the market, by this time, saw a 20 percent rise in operating profits in 1995; with $5.3 billion in sales, the company made $511.0 million in profits.

Historically, the servicing of elevators has been the privilege of the manufacturer, but the servicing of elevators has become a fiercely competitive market of its own. Servicing contracts are of great importance because generally, in the first 20 years of its life, an elevator will cost its owner as much in repairs as the initial cost. To offset this, Otis started installing elevators equipped with electronics that allowed engineers to remotely monitor elevators for faults and upcoming problems. The remote monitoring enabled engineers to spot problems, so elevators could be serviced before breakdowns occur.

The U.S. market recovered in the late 1990s. Commercial building construction boomed, as vacancy rates in office buildings were at their lowest in a decade. Demand for elevators in office buildings was high. An overall strong economy boosted construction of public buildings--many of which also needed elevators--as well as new football stadiums and other sports arenas. As a result, the value of shipments increased each year between 1997 and 2000, growing from $1.6 billion to $1.8 billion.

However, the rising need for elevators and moving stairways in the United States was undercut by the precipitous drop in demand in Asian markets. Damaged by currency devaluation and widespread financial panic, construction projects in Asia slowed dramatically in the late 1990s. American elevator companies were not immune to the crisis. For example, the industry's worldwide leader, Otis Elevator Company, had depended on Asian nations for over 19 percent of its sales in the late 1990s; as a result, the company was forced to restructure its Far Eastern operations.

Current Conditions

Like many U.S. manufacturing sectors, the elevator and moving stairway industry was dealing with the negative effects of the economic recession of the late 2000s as the second decade of the twenty-first century began. In the meantime, industry participants continued to look for ways to make elevators safer and more environmentally friendly.

In 2009, three companies (Liftinstituut Holding BV, TUV SUD America Inc., and Underwriters Laboratories, Inc.) were named Accredited Elevator and Escalator Certification Organizations (AECO) by the American National Standards Institute (ANSI). These organizations were the first to be recognized under the AECO program begun in February 2008 and were accredited by ANSI to inspect and evaluate elevator and escalator systems. Those systems that met the standards could be certified. According to Lane Hallenbeck of ANSI, "The AECO designation demonstrates that accredited organizations are competent and capable at assessing compliance to standards that help assure the safety and reliability of elevators and escalators." Other developments in the 2000s included the creation of the Performance Based Code (PBC), which was, according to a NEII press release, " a comprehensive method for specifying safety requirements for new elevator technologies."

Elevator makers also jumped on the "green" bandwagon and worked to make their products and manufacturing processes more environmentally friendly. For example, KONE, a leading company in the industry, produced a line of "Eco-Efficient(TM)" elevators that saved energy, used no oil, and reduced the amount of carbon dioxide released during use. In addition, the company launched its "10 for 2010" initiative as part of its overall Environmental Excellence Program, in which the company sought to reduce its energy use by 10 percent in 2010. Otis Elevator contributed to the movement with its new Gen2 elevator system, which were smaller, used less energy, and needed no lubricating oil, which was classified as a pollutant.

Industry Leaders

Farmington, Connecticut-based Otis Elevator Company has historically been the leader of elevator companies. This status quo continued through the 2000s, as Otis achieved total sales of $11.7 billion in 2009. A wholly owned subsidiary of United Technologies Corp. since 1976, Otis employed 61,000 people; 53,000 of those worked outside the United States. The company claimed that 2.3 million of its elevators were in service in the late 2000s. Otis also produced escalators and moving walkways. In 2009, over 80 percent of its revenue was derived from exports.

Other key players in the elevator industry included Dover Corp., a multinational conglomerate that owned a successful elevator division, Dover Elevator Co. Dover Corp. had overall sales of $5.7 billion in 2009. Schindler Elevator Corp. of Morristown, New Jersey, had 2009 sales of $1.5 billion with almost 5,000 employees. Schindler Elevator was a division of Switzerland's Schindler Holding, the largest escalator manufacturer in the world and the second largest elevator manufacturer (after Otis). ThyssenKrupp Elevator Americas Corp. was located in Memphis, Tennessee, and was owned by Germany's ThyssenKrupp Elevators, a firm that recorded $6.0 billion in sales in 2009 and was contracted to provide elevators and escalators in the One World Trade Center at the site of the former Twin Towers. Finally, KONE Inc., based in Moline, Illinois, and a subsidiary of elevator manufacturer KONE Corp. of Finland, accounted for about one-fifth of its parent company's revenues.

Workforce

Total employment in the elevator and escalator industry encountered a period of gradual decline in the early and mid-1980s. After reaching a decade high of 13,000 total employees in 1982, employment figures declined to 10,200 in 1987 and to 8,400 in 1996. However, by 2007, employment had increased to 9,048, of whom 5,892 were production workers earning an average wage of $33.82 per hour.

As elevator and moving stairway establishments continued to work to accommodate the shift towards modernization and renovation and away from the manufacturing of new units, the education requirements for working in the industry promised to change as well. As evidenced by the NAEC's early campaign to improve the training of field personnel and recruit more people with computer experience, the industry's introduction of more sophisticated computerized technology demanded a larger percentage of workers with a strong college or trade school background in computers.

Research and Technology

While the Japanese centered their efforts on the production of faster elevators during the 1990s, U.S. companies focused on making them run "smarter," or more efficiently, in relation to the needs of their patrons. One of the most promising developments in domestic elevator technology came in Otis's introduction of a new type of computer software that used "fuzzy logic" to decide upon the best way to accommodate the various traffic needs of a modern office building. This type of artificial intelligence software distinguished itself from the standard computer logic governing conventional modern elevators by its ability to process uncertainties of information more efficiently. Rather than simply sending the closest elevator when a patron signaled, fuzzy logic took into account the number of people waiting for elevators throughout the building, hoping to avoid the common problem of sending an elevator to service one individual at the expense of several left waiting somewhere else. This innovative system by Otis was first installed in Japan in 1993.

One of the new technological trends in the elevator industry in the late 2000s was the use of the machine room-less elevator (MR-L). According to Elevator News in July 2010, these systems located the main electrical control and drive systems for the elevator in a closet close to the elevator hoistway, as opposed to a traditional system in which controls are located in a separate machine room either at the top or bottom of the building. These elevator systems were promoted as space saving and better for the environment, but they were also more complicated and required some special training for operation and maintenance. As of 2010, KONE had discontinued manufacturing hydraulic elevator systems and replaced them with the KONE EcoDisc hoisting machine, which made use of the MR-L method. Otis was also using the systems and predicted that MR-L would become the most commonly used system in the future.

© COPYRIGHT 2018 The Gale Group, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. For permission to reuse this article, contact the Copyright Clearance Center.

News and information about Elevators and Moving Stairways

Readers Remember the Beloved Frederick & Nelson
The Seattle Times (Seattle, WA); December 17, 2016; 700+ words
...shoppers for decades. Photo credit: Richard S. Heyza / The Seattle Times, 1973 At Frederick & Nelson, elevators and moving stairways couldn't handle the crowds of shoppers as the Christmas buying rush began in earnest. Santa Claus had just...
Producer Price Indexes-January 2015
PPI Detailed Report; January 1, 2015; 700+ words
...except laboratory 1141-15012 12/11 Elevators, escalators, and other 1142 lifts Elevators and moving stairways 1142-01 Elevators and moving stairways 1142-0112 12/03 Parts and attachments for elevators 1142-02 and moving stairs...
Producer Price Indexes-June 2014
PPI Detailed Report; June 1, 2014; 700+ words
...stairway mfg 333921 Primary products 333921-P Elevators and moving stairways 333921-1 Parts and attachments for elevators and moving stairways (sold separately) 333921-3 Secondary products...
Table 6. Producer Price Indexes and Percent Changes for Commodity and Service Groupings and Individual Items, Not Seasonally Adjusted-Continued
PPI Detailed Report; July 1, 2013; 700+ words
...except laboratory 1141-15012 12/11 Elevators, escalators, and other lifts 1142 Elevators and moving stairways 1142-01 Elevators and moving stairways 1142-0112 12/03 Parts and attachments for elevators and 1142-02 moving stairs...
Producer Price Indexes-July 2014
PPI Detailed Report; July 1, 2014; 700+ words
...handling equipment manufacturing 33392 Elevator and moving stairway mfg 333921 Primary products 333921-P Elevators and moving stairways 333921-1 Parts and attachments for elevators and 333921-3 moving stairways (sold separately) Secondary...
Table 6. Producer Price Indexes and Percent Changes for Commodity and Service Groupings and Individual Items, Not Seasonally Adjusted [1982=100 Unless Otherwise Indicated]
PPI Detailed Report; April 1, 2013; 700+ words
...compressors and vacuum pumps 1141-1501 06/05 Elevators, escalators, and other lifts 1142 Elevators and moving stairways 1142-01 Elevators and moving stairways 1142-0112 12/03 Parts and attachments for elevators and 1142-02 moving stairs...
Producer Price Indexes-April 2014
PPI Detailed Report; April 1, 2014; 700+ words
...06/81 Primary products 333921-P 06/81 Elevators and moving stairways 333921-1 06/81 Parts and attachments for 333921-3 06/81 elevators and moving stairways (sold separately) Secondary products and...
Table 6. Producer Price Indexes and Percent Changes for Commodity and Service Groupings and Individual Items, Not Seasonally Adjusted
PPI Detailed Report; November 1, 2012; 700+ words
...compressors and vacuum 1141-1501 06/05 pumps Elevators, escalators, and other 1142 lifts Elevators and moving stairways 1142-01 Elevators and moving stairways 1142-0112 12/03 Parts and attachments for elevators 1142-02 and moving stairs...

Search all articles about Elevators and Moving Stairways