What Opportunities for Development Do the Elevator Industry in Russia Have
From：Taiwan Trade Center, Moscow
Despite the economic difficulties of 2022, which also affected the construction industry, the number of Russian elevator manufacturers has not decreased. Moreover, the sale of assets of the American Otis to S8 Capital led to the emergence of a new strong player METEOR Lift. Nevertheless, the participants of this market face urgent tasks of early localization of components and expansion of the model range. And regulators are increasingly thinking about adjusting the rules for companies' participation in elevator replacement programs as part of the overhaul to improve their efficiency.
According to the Committee on Analytics and Statistics of the National Elevator Union (NLS), more than 40 thousand elevators were put into operation in Russia annually. In 2021, the figure reached 45.89 thousand, for the previous 12 months — about 44. In 2021, 75% of this volume accounted for elevators manufactured in Russia, another 12.6% were produced in Belarus.
As of 2021, 20% of the installation market (9.1 thousand units of equipment) in Russia was occupied by the Shcherbinsky Elevator Plant (ShchLZ),
The second place with a share of 16% (7.2 thousand) was held by the American Otis Elevator Company (today called METEOR Lift), which had production facilities in the country. Finnish KONE was the third with a large margin and a share of 3%.
The Russian market shares of other European manufacturers were even smaller. Swiss Schindler accounted for 0.7% of the market in 2021 (343 units), German ThyssenKrupp Elevator — 1.1% (526 elevators), Greek Kleemann — 0.4% (182), according to the National Elevator Union
In 2022, the Russian elevator market shrank. Due to the geopolitical situation, the "big four" — Otis, Schindler, Thyssen, and KONE - left the country.
Russian manufacturers faced violations in the supply chains of components and elements of elevator architecture, which affected the schedules of equipment production. In addition, the number of new construction projects decreased due to a significant increase in prices for building materials and a reduction in consumer demand.
As follows from the data of the system "Our.House.By the end of 2022, the total area of new buildings under construction in the Moscow region amounted to 8.3 million square meters, which is 13.5% less. In St. Petersburg, 7.9 million square meters were built in 2022, which is 16% less than in 2021. As the developers noted, due to the crisis, the start of some development projects was postponed, but already in the second half of 2022 the situation began to change somewhat, and activity in the construction sector began to gradually recover.
Despite the drop in the elevator market in 2022, the number of local manufacturers has not decreased. Russian SchLZ, Karacharovsky Mechanical Plant, Siblift, MEL, Euroliftmash, Serpukhov Elevator Plant, and Belarusian Mogilevmash remained on the market. Otis sold Russian assets, including a plant in St. Petersburg and the production of winches in Shcherbinka, to the multidisciplinary holding company S8 Capital. The deal led to the emergence of a new strong player in the industry — METEOR Lift.
Acute Issues of the Industry
In the current geopolitical situation, localization of the production of components and elements of elevator architecture is becoming the cornerstone of the industry, primarily from the point of view of security, METEOR Lift says. According to the company, today about 30% of imported components, primarily microelectronics, and chips, are used in the production of elevators at any of the Russian enterprises. More than 700 thousand units of vertical transport systems are currently installed and operating throughout Russia, and almost every one of them has foreign components.
If the supply of foreign components to Russia is suspended, all elevators in the country may stop within two years, the company warns. Therefore, they consider the development of technologies and components a priority and a key to the development of the industry. First of all, gearless winches, frequency converters, safety nodes — buffers, and speed limiters, as well as control stations need localization.
In addition, Russian manufacturers are not yet able to provide all the products required by the market. Commercial escalators and travelators used to be purchased from the "Big Four", and now the market is reorienting to Chinese manufacturers. Also, Russian manufacturers will have to create their own lines of high-speed elevators, which will require significant new investments.
To fill the market deficit, METEOR Lift has entered into an exclusive agreement with the Chinese company Xizi Elevator Company for the distribution of the entire line of elevators (including high-speed and high-speed), escalators, travelators, as well as individual components. The contract also provides for engineering: the use of components, including critical ones during production and maintenance, at the plant in St. Petersburg and certification of finished products of Xizi Elevator and safety components. METEOR Lift's technical staff is already being trained by the vertical transport manufacturer Xizi in accordance with international standards.
Meteor accepts the rules of the game
No less relevant than the localization of the component base and the development of modern products is the topic of regulation of the public sector: programs for the replacement and overhaul of elevator equipment. Today, only Russian manufacturers can participate in capital repair fund programs.
According to METEOR Lift, the current system has led to the fact that now about 2 thousand installation organizations dominate the elevator replacement market, which most often acts as suppliers for public procurement. Such structures buy elevators from factories, forcing manufacturers to lower prices, and then install them themselves, winning about 75% of all tenders in the country. The manufacturer's rights in this case are not protected in any way, emphasizing METEOR Lift.
To solve this problem, it is necessary to make changes, that will make it possible for manufacturers to participate in purchases for the replacement of elevators, not only in terms of production but in the full complex: from the design of equipment to its commissioning.
What else adds to the problems?
An equally alarming situation, according to industry experts, has developed in the field of service maintenance.
"According to the National Elevator Union, over the past five years, 331 accidents have occurred in Russia during the movement of citizens by elevators, 61 of which were fatal. And these disappointing statistics clearly demonstrate that most of the incidents occurred due to poor-quality or untimely maintenance or previous unscrupulous installation of elevator equipment.",— noted in METEOR Lift.
The situation is such that 79% of the installation and maintenance market is accounted for by small companies that significantly underestimate the cost of work in order to obtain a contract for the maintenance of lifting equipment.
As a result, the quality of elevator service suffers, and the safety of life and health of passengers is at risk.
In order to avoid aggravating the situation, the task is to introduce strict requirements for specialized companies engaged in installation, replacement, commissioning, technical, and emergency maintenance. To introduce the obligation of service companies to use original spare parts to preserve the warranty period for elevators, as well as to establish at the legislative level a single minimum possible cost of elevator maintenance.
The implementation of the proposed changes will lead the Russian elevator industry to transparency and responsibility on the part of all market participants.