‘Modernisation, service and digitalisation are our growth drivers’

Alexander Vitt has been Managing Director of the DACH region at Kone since May 2024. In an interview with LIFTjournal, he talked about strategic priorities, the challenges in the new construction market, the role of digitalisation – and why Kone was focusing on partnerships and platform solutions in the long term.

Mr Vitt, you have now been Managing Director of the DACH region for over a year. What is your interim assessment?
Vitt: I am very pleased with the responsibility and the collaboration with our team. During this time, we have strategically realigned ourselves to be able to respond more agilely to market changes. We are seeing double-digit growth, particularly in service and modernisation – up to 20 per cent in some areas. That gives us stability.

What are the key focus areas at Kone at the moment?
Vitt: We are clearly focusing on three key areas: digitalisation, modernisation and residential real estate. Digitalisation affects not only our products, but also communication with our customers – it should become more transparent, faster and more efficient. We see enormous potential in modernisation: over 800,000 systems in the DACH region are more than 20 years old. We are also focusing more strongly on residential construction, especially in the area of multi-family houses.

The new construction sector is in crisis. How severe is the decline at Kone?
Vitt: Looking at the past three years, we are talking about a decline of 40 to 50 per cent in the new construction market – this affects us as well as the entire industry. We are counting on a recovery through political initiatives such as the ‘housing construction turbo’, but the effects will only become apparent after a delay.

How are Kone's profits currently distributed between new construction, modernisation and service?
Vitt: If we look at profits, new construction now accounts for only a very small part. The vast majority comes from modernisation and service. This is a significant shift compared to the past, when new construction was a much stronger foundation for earnings.
In terms of turnover, the share of new construction is naturally higher, but modernisation and service are clearly ahead in terms of profitability. There are several reasons for this: interest rates, rising construction costs and a general slowdown in the new construction market have put significant pressure on margins in this area. In the service business, on the other hand, we benefit from stable, long-term customer relationships and greater predictability of income.
Processes can be standardised, particularly in maintenance and servicing, which increases efficiency and profitability. In addition, modernisation projects often offer attractive returns because they require technical expertise and tailor-made solutions – and thus offer greater added value for the customer.

Some say that Kone deliberately calculates low prices for new construction and earns its money primarily from maintenance contracts. Is there any truth in this?
Vitt: This image persists – probably because there are examples in other industries that work in a similar way. But this cannot be applied to our industry and our pricing.
Historically, new construction has contributed a higher share of earnings, but this has changed significantly in recent years due to external factors. Construction costs have risen, as have interest rates, and demand for new construction has declined significantly. This has a direct impact on margins – across the entire industry, not just for us.
It's not that we deliberately sell lifts below value in order to ‘catch up’ later with maintenance contracts. We calculate each project so that it pays off in the market environment – with a fair price-performance ratio for the customer and a sustainable basis for our partnership.
Of course, the service business is more economically stable and predictable than the new construction business. That is why we are placing a strategic focus on it. But that does not mean that new construction only serves as a ‘door opener’. It is and remains an important part of our value creation, especially when it comes to building long-term customer relationships.

How realistic do you think it is that completely new competitors such as Amazon will set their sights on the industry?
Vitt: The idea is not entirely far-fetched – but I don't think a corporation like Amazon will suddenly start building its own lifts. Digital platforms that connect services or building technology, for example, are conceivable. We are already cooperating with partners such as Microsoft and Amazon Web Services (AWS) to develop such solutions. Because the future lies in smart, connected buildings.

Kone focuses heavily on the flow of people in buildings, and you are also investing in automatic door solutions. Why?
Vitt: Mobility is a key issue for the future. Cities are growing, buildings are getting taller – and with that, the demands for a smooth flow of people are increasing. We have to ensure that people can reach their destinations quickly, efficiently and safely.
There are impressive examples: in Mecca, huge crowds of people have to be brought to hotels or specific areas within a very short time during prayer times. Such scenarios will be repeated in more and more cities – including in Germany, as urban centres continue to densify.
That is why we are developing solutions that are as intelligent and connected as possible. This includes integrating lifts, escalators, doors and building data into a common platform to avoid bottlenecks and optimally control the flow of people.

EN ISO 8100-1/2 will soon be the first international standard for the lift industry, and Kone has been very involved in its development. How important is it for the company?
Vitt: We very much welcome this harmonisation. Uniform international requirements create greater safety for users and make it easier for globally active manufacturers to offer their products in different markets. Until now, there have been considerable differences between national regulations – especially in building law – which makes projects more complex. An ISO standard can significantly reduce this effort.
It is particularly interesting that the new standard not only covers technical and safety-related requirements, but also addresses issues such as cybersecurity. In the future, we will rely even more heavily on data and work with data – whether for predictive maintenance, optimising passenger flow or networking entire buildings. To do this, we need globally comparable rules for the secure handling of this information.
Kone already meets high cybersecurity standards and complies with many of the requirements set out in the upcoming ISO standard. However, an internationally uniform basis ensures that all market participants operate at a comparable level – for the benefit of security, data integrity and fair competition.

What new product developments can we expect – it's been a while since new Kone lifts came onto the market ...
Vitt: Our DX lifts are a major milestone, but of course we are constantly working on new solutions – lighter, more efficient, more digital. Many things are first tested in pilot projects before being rolled out on a larger scale. Think of Formula 1: there, innovation is developed under extreme conditions and later transferred to everyday life.

Why doesn't Kone focus more on open control systems?
Vitt: Your question is surely aimed at whether this also serves to keep competitors at bay. I think all manufacturers do this to a certain extent – not everyone has a completely open control system. The important thing is that most of the information relevant to operation and customers is generally available. This mainly concerns parameters, settings and safety-related functions.
It's also a question of safety: complex projects often require individually developed engineering solutions and the special expertise of our technicians. Standardisation ensures reliability and efficiency in this area. We are seeing on the market that many standard systems, such as machine room-less lifts, are now 25 to 30 years old. In these cases, maintenance, replacement or partial modernisation must be carried out as efficiently as possible. And this affects not only us, but also other manufacturers.

This raises the question: Who owns the lift data – the operator or the manufacturer?
Vitt: Basically, it belongs to the operator. We provide data – within the framework of applicable standards and with a view to safety and data protection. It is important to note that a lift is a safety-relevant product. Access to data should be regulated responsibly.

Will the lift industry need its own training solutions in the future – such as a ‘mechatronics engineer for lift technology’?
Vitt: Specialisation can help to train new skilled workers more quickly. At the same time, however, we also benefit from broadly trained career changers who bring fresh perspectives. We combine both: with training courses, shadowing programmes and our Kone Academy.

Orona has taken over the German company AK Aufzüge with relatively little fanfare. Will Orona become the fifth major player in the German market?
Vitt: We welcome competition. The German market is attractive, and we are positioning ourselves accordingly. Our goal is to be number one in the DACH region and globally. Orona is welcome to take a place behind us. In addition, Orona focuses on standardised products in the low-end segment. That is not our main segment.

There are rumours that Kone will try again to take over TKE – is there any truth to these rumours?
Vitt: I don't think interest in competitors in the industry has waned. I think our merger and acquisition activities to date underscore this.

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