Synergetic business model
Konecranes is in the business of improving customers’ material handling productivity. To do this, we do not only perform individual – service- or equipment-related – transactions with our customers. We take a holistic view on their material handling processes, which in many cases are suboptimal. We firmly believe that we can deliver the highest lifecycle value to our customers by maximizing their productivity of uptime and minimizing their cost of downtime. To do this, our Business Area Service is built on genuine service culture with a preventive approach while our Business Area Equipment offers lifting equipment packed with the latest automation technology. Thus, our mission is that we are not just lifting things, but entire businesses.
Konecranes’ Service and Equipment Business Areas are interlinked by a high degree of synergy. Every service customer relationship creates opportunities for equipment sales. Also, every crane sold creates opportunities for providing services. The solutions provided by Konecranes’ business areas complement each other and enable customers to meet most of their lifting needs through one supplier.
Unique service concept
Konecranes is the clear market leader in crane service with the world’s most extensive service network. Our Service Business Area is unique in the industry. Its over 3,900 service technicians around the world are servicing cranes and machine tools of all makes. About 75% of the cranes in our maintenance contract base are non-Konecranes equipment, which means that the growth potential is not limited to our own installed base.
We estimate that two-thirds of the global crane fleet is still serviced in-house. The level of outsourcing is higher in developed countries while it is lower in developing countries. A common problem for in-house service is that the productivity of the service technicians is usually low and the performed service is often reactive, resulting in too high downtime and too low productivity. In addition, the technological development increases the requirement of skills needed to maintain modern lifting equipment and machine tools.
To maintain this skill set, critical mass of expertise is needed. By outsourcing service, companies receive preventive maintenance performed by well-trained professionals, which will help to tackle these everyday challenges. Konecranes has developed a concept of five service levels, which covers everything from one-off transactions up to full scope material handling.
Outsourcing of service creates a win-win situation for both our customers and Konecranes. Konecranes can lower customers’ maintenance costs through increased performance and uptime for the equipment in use. On the other hand, the increased density of the equipment under maintenance contracts enhances the productivity of Konecranes’ service operations.
In the relatively mature markets for outsourced crane service, such as the Nordic countries, the UK and the US, Konecranes offers maintenance services also for machine tools. By outsourcing machine tool maintenance to Konecranes, companies receive service from a single provider that has an established service culture, processes and infrastructure for a successful partnership.
We are developing our offering and introducing new technologies that enable real-time visibility to the condition and performance of the lifting devices and machine tools that we are servicing. Our new TRUCONNECT® Remote Service, intelligent machines with smart features and automation are key elements of this development.
Prominent market position in new equipment
Within new equipment, Konecranes is the world’s largest supplier of industrial, process and shipyard gantry cranes as well as wire rope hoists, and one of the largest manufacturers of light crane systems and chain hoists as well as the worldwide leader in explosion-protected crane technology. Konecranes is also a global supplier of cranes and lift trucks for container handling and bulk materials. Konecranes possesses state-of-the-art automation technology for ports and terminals.
During the years Konecranes has developed a solid knowledge and understanding for its customers’ processes and is thus able to offer equipment that help the customers to maximize their productivity. Our products feature high quality and reliability, they are safe to operate and maintain, and they incorporate a high level of ergonomics and eco-efficiency. Coupled with excellent service back-up, we strive for the lowest total cost of ownership for our products.
Konecranes has efficient product platforms and supply chains as well as global distribution channels that enable scale benefits both in production and sales. Our products are based on modularity and standardization, and make use of the latest technology and designs with an efficient use of raw materials. Maintaining a globally uniform product platform gives us valuable flexibility in terms of capacity utilization and resource allocation.
Konecranes has a dual channel strategy to cover the global markets as well as possible. We are selling our equipment directly to end-customers through our Konecranes brand while we are using several distribution brands (Sanma, SWF, Stahl, R&M and Verlinde) to make business with resellers and independent crane builders who do not have their own component technology and who buy hoists or crane kits from the market.
Profitable growth
Konecranes’ growth strategy is based on continued organic growth and market share gains in existing markets – paired with an active plan for acquisitions to enter new geographical markets or to fill a gap in the product portfolio. Well recognized local or regional brands, with large installed bases, remain the primary target for Konecranes’ acquisition policy.
Konecranes has acquired almost 100 companies over the last 40 years since the beginning of the internationalization in the early 1970’s. In recent years, Konecranes has acquired approximately ten companies a year. However, over the latest ten years, majority of the Group’s net sales growth has been organic.
The crane industry is still, today, very fragmented. Konecranes has the financial and managerial resources to lead the consolidation of the industry. We have a vision of reaching 30 percent global market share one day, which roughly means that we have to double our current market share. Given the market growth rate and the degree of fragmentation, our acquisitions are and will be increasingly in the emerging markets, such as the BRIC countries. However, we have still room to grow in the developed markets too through acquisitions of local crane and machine tool service companies.
Exposure to economic growth in the emerging markets
As part of the strategy, Konecranes strives to maintain a wide geographical presence, a diverse customer base as well as a wide product range to balance out different economic trends in different market areas.
A significant part of today’s industrial investments take part in the emerging markets. These are also the places where Konecranes has to be locally present. Approximately a third of the Group’s revenues are derived from the emerging markets. further steps call for products between the current high-end offering and the typical low-end equipment widely used in emerging markets. These “mid segment products” typically offer a wide selection of basic features, without sacrificing the safety or quality of the high-end offering.
As the service business in still relatively infant in the emerging markets, those countries generate a significantly higher share of the new equipment orders. However, as the emerging markets mature, they will offer significant business opportunities for the Business Area Service, which is already building presence outside the developed markets.
Local presence in cost competitive regions of Asia and Eastern Europe offers great opportunities to improve our cost competitiveness both in terms of own manufacturing and outsourcing. By having a direct access to these areas, we can make sure that we have cost competitive suppliers. For example, we have had production in China since 2002 and are currently operating five manufacturing plants there. We have been running production in India since 2007.
Capital-efficient business model
Konecranes’ business model is capital-light due to the high share of service revenue and a high degree of outsourced production. In manufacturing, we have own operations for lift truck assembly, high volume components of industrial cranes, load carrying key parts as well as for electrics. The common denominator for own manufacturing activities is a target for scale benefit. Low volumes of steel structures or single units of industrial cranes and components are subcontracted. A significant part of the manufacturing and office work takes place in leased facilities.