For Otis Korea, high-tech elevators offer room to grow

Company-in-company system allows healthy competition against global unit, says CEO Thomas Vining

By Cho Jin-seo

The room where Thomas Vining greeted Business Focus reporters looked like an ordinary corporate meeting facility, except that there were dark windows on one side. When he pushed a button on the wall, the windows suddenly lit up, revealing a group of people in a large control room behind. It was not obvious whether the workers on the other side could see through the windows, as their eyes were fixed on the large screens in front of them.

It felt like a scene from a Hollywood movie but this system was real. The large screens showed the locations of Otis servicemen and customers in need of help, while the smaller ones showed the status and movements of specific elevators in buildings. It is the largest control and monitoring room an elevator company has in Korea, and the facility enables Otis to be the fastest in responding to customers’ calls, says Vining, the president and CEO of Otis Korea.

“With new technology and new ways of servicing our customers, there are a lot of opportunities to keep expanding,” Vining said at the company’s “Elite Service” center in southern Seoul on July 14.

In a mature market, Korea’s construction industry has seen slow growth recently, so competition among the three major elevator makers — Otis Korea, Hyundai Elevator and ThyssenKrupp — is getting fiercer each year.

Vining says that as the elevators get older, they need more maintenance and updating so there is room to grow revenue in the service business. So the firm is operating a state-of-the-art call center and control and monitoring room for high-end elevators it sells in Korea.

Otis is the world’s leading elevator maker. Formerly a unit of LG Group, Otis Korea is a major subsidiary of Otis Group. In 2010, Otis had $11.6 billion in sales globally. Around $1 billion was achieved by Otis Korea, though exact figures are not disclosed.
In Korea, Otis is the market leader in terms of revenue even though Hyundai sells more units — Otis sells more high-end elevators thanks to its advanced technology and marketing strategies.

High-tech lifts

Worldwide, Otis is best known for its super-fast elevators at Burj Khalifa, the world’s tallest building, in Dubai. In Korea, the most popular Otis elevators are the ones installed at N Seoul Tower atop Mt. Namsan. Rising half a kilometer above sea level, the tower is the tallest structure in Seoul and the elevators from Otis carry passengers to its observation floors. Even though tickets cost 9,000 won per person, the trip is so popular that one has to wait at least 30 minutes even during weekdays and much longer on weekends.

But Vining himself is most proud of the elevators installed at Incheon International Airport. Incheon International is regarded as one of the most efficient airports in the world and some 500 Otis products — elevators, escalators and moving sidewalks — form an important part of that reputation.

“For us, it’s really a showpiece because so many people both in Korea and internationally go through that building. It’s rated as one of the top, if not the top, airport in the world,” he said. “And we’re the key part of not just the installation, but we have a very sophisticated, 24-hour service operation there, so those elevators run seamlessly. And so we do a great job there.”

Soon, however, Koreans will remember Otis as the provider of the country’s fastest elevators to be installed at the Lotte Super Tower. Construction is underway to build the 123-story, 555-meter-tall building in southeastern Seoul, and Otis is to provide high-tech elevators that can scale its height in a single minute.

The company is also to provide Korea’s first double-deck elevators for the super structure.

Double-deck elevators have one car mounted on top of another so they can serve even and odd floors at the same time. They are used in many tall buildings around the world but it will be the first time they are used in Korea.

“We installed elevators at Burj Khalifa in Dubai, which is the tallest building in the world. With the new Lotte Tower, we’ll be able to apply lot of the technology that we used in Burj Khalifa,” he said.

Otis provided Korea’s first elevator in 1910 at the Bank of Korea. But the Korean subsidiary was launched only in 1991. In 2000, it merged with the elevator division of LG Industrial Systems. This formed a major manufacturing entity with its own overseas branches and a global sales network, separated from the main Otis Global network.

Company inside company

This dual structure puts Otis Korea in competition with Otis Global in many countries. In other locations, Otis Korea sells elevators under the Sigma brand, which often competes against the main Otis brand.

“This is a unique company within Otis. Not just as a second brand of a global company but we have an engineering center here, and a lot of innovation coming out of here,” he said.

“Sometimes, we even compete with Otis. It’s very healthy competition. Frankly there are areas in the market where Otis may be strong and areas in the market where Sigma may be strong.

“So I think that is what a global company is looking for — can we get synergy? Can we get more business by having two brands? And in almost all markets, we’re healthy competitors.”

Vining does not provide financial figures or sales targets, as the company is not listed on the stock market here and thus does not have to disclose such information. But he says exports make up roughly 30 percent of the firm’s business, and he wants to increase that share.

“We’re working in a lot of developing countries — BRIC, Africa and the Middle East. There still are a lot of opportunities for us to grow our business in those areas,” he said.

One company, many homes in Vining's career