With more infrastructure and urbanization adding to the density of the city, the government wants developers to build more high-rise buildings, whether apartments or office and commercial towers, to reduce the environmental impact of development. The challenge of these high-rise buildings is accommodating their occupants in a fast and reliable way, and this has boosted the growth of the elevator and escalator business in Indonesia. KONE, a pioneering Finnish elevator company helps developers and property managers ensure a smooth flow of people within buildings.
KONE’s products include elevators, escalators, autowalks, turnstiles and access and destination control systems; as well as providing a committed service along the way. To KONE, the elevator industry is not a simple matter of transporting people safely and at speed within a building, it also involves the company’s role in providing consultation right from the earliest planning of the building, and continuously maintaining this to ensure an efficient and safe service for all users. Throughout its operation, KONE products are constantly improved in terms of sustainability and energy efficiency, and the company claims it has constantly reduced its products’ energy consumption by up to 70%.
“Our business is about people flow. It means we want to move people safely, conveniently and without waiting in and between buildings. When you have more people in buildings, the flow will get congested if an elevator breaks down. But with our technologies, we can make sure that things work constantly during busy periods,” President & CEO of KONE Henrik Ehrnrooth said during his visit to KONE’s Indonesia office launch in March.
KONE, which means ‘machine’ in Finnish, was established in 1910, and according to Henrik it has a market share of some 20% - globally and in Asia Pacific. As the elevator industry relies on the property sector, changes in economic conditions are a major concern. For example, in 2015 KONE enjoyed a leap of 18% in global sales growth thanks to massive development in China. The country, according to Henrik, contributes to almost one-third of total revenues. In recent years however, the economic slowdown has taken a toll on China’s growth, and this has affected Asia Pacific’s overall performance. But the constant global growth despite the decline in its major market signifies that the company overcame the situation by growing in all other parts of the world.
KONE’s global sales in 2018 reached over €9 billion, a 3.1% increase from 2017. Among its three regional operations, about 42% of the Finland-based company’s revenue comes from the Europe and Middle East Asia region, followed by 38% from Asia Pacific and the rest from North America. But since growth in Europe has been slowing down in the past years, Henrik expects that Asia Pacific will show the fastest growth. After all, the region is home to many significant markets aside from China. India is another huge, important market prospect, and there are dynamic Southeast Asian countries like Indonesia, Vietnam, Malaysia, the Philippines, and Singapore. Indonesia itself is the biggest market in Southeast Asia, given its population size and rates of urbanization.
“Indonesia, I think, is a really interesting market because it has strong megatrends as we also see globally. It has large potential and quite a young population that is urbanizing, which means you’ll need, constantly, more infrastructure, housing and places to work, which are our great growth drivers. And the people are very willing to take up new technologies, and that is why we continue to expand in this market.”
KONE came to Indonesia in 1994 and established a joint venture with a local elevator company. It now operates as PT KONE Elevator Indonesia and has become a major player in the national elevator industry.
“We operate in low-rise buildings, the residential, office and hotel segment. What we are looking at now in Indonesia is how the residential segment is dominating growth in the property sector,” says Yandy Januar, managing director of KONE Indonesia.
Accordingly, with the many high-rise building projects, Yandy says revenue from the new-equipment business in Indonesia accounts for around 70-80% of overall revenue, which is 20% higher than its global average. The rest comes from maintenance and modernization - services that are both important to the continuous well-being of their products, compatibility and efficiency in aging buildings.
In Indonesia, KONE works with the nation’s top developers such as Agung Sedayu, Lippo Group, Mayapada, MNC and Mulia Group, among others, and mostly handles big projects for high-end buildings. For instance, recently Agung Sedayu Group launched District 8 in the Senopati area of Jakarta, where the elevator concept showcased by KONE was the first double-decker elevator in the country. An ongoing project is the upcoming 65-story twin tower Indonesia 1 located adjacent to Plaza Indonesia, which is expected to be completed in 2020 as another iconic landmark in the capital.
With the growing trend toward Industry 4.0, KONE is taking advantage of technological disruption to optimize its services for its customers. For instance, the company has established 24/7 Connected Services, where elevators are integrated with technology to send real-time analysis to a cloud platform provided by IBM-Watson. This allows KONE to take proactive measures to prevent any errors in the elevator systems. In Indonesia this service is projected to be launched in the third quarter of this year.
To provide greater convenience for customers, especially younger users, KONE has also been selling services where people can call for an elevator using their mobile phone. This started in Europe in 2017, and KONE has since been rolling it out across the world and expects to enable it in Indonesia this year.
“I think it is a very exciting time and industry that we are in. The growth in the world may be a little bit slower now, but we see how the fourth industrial revolution is impacting every business. I still see huge opportunities because of what we can do: bringing new services and solutions to help our customers succeed in their businesses, that’s why we are investing so much in it,” says Henrik.