A historic deal in the elevator industry is going down. Cue the muzak.
What happened: Finnish elevator maker Kone has agreed to take over German rival TK Elevator (TKE) in a deal valued at $34.4 billion. The lift link-up would create the world’s biggest elevator company, surpassing the current top dog Otis, the U.S. elevator originator.
Why it matters: The elevator industry is already an oligopoly, with four manufacturers (the three above plus Switzerland’s Schindler) dominating the game. Consolidation could exacerbate the issues over-concentration in the sector has already caused — especially in the U.S. and Canada.
Wait, why here? Canada is godawful at elevators. We have the second-fewest per capita in the developed world (behind the U.S.) due to norms about how many a building needs per unit and high prices — a new lift costs up to four times as much here as it does in Europe.
This cost is a product of the byzantine set of regulations for new elevators, which is different from everywhere else except the U.S. And because of the extra costs of building elevators for one specific market, only the biggest companies bother.
That’s how we get the current oligopoly where the big four (three if the deal goes through) elevator makers control some 70% of the North American market — and as high as 90% in places like Ontario — with a vice grip on maintenance, too.
Our take: Elevators are more than just a way to skip the stairs, they’re a crucial form of urban transport, particularly for people with accessibility needs. Adding more elevators and keeping them up and running is vital as more of Canada’s population lives in cities and apartment buildings. The further consolidation of an already concentrated industry will only make things worse.—QH
