KONE

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KONE Corporation
Type Public (OMX: KNEBV)
Founded 1910
Headquarters Espoo, Finland
Key people Antti Herlin (Chairman of the board), Matti Alahuhta (President and CEO)
Industry Engineering and service
Products Elevators, escalators and automatic building doors.
Revenue €4.079 billion (2007)[1]
Profit ▲ €180.3 million (2007)[1]
Employees 32,500 (2007)[1]
Website www.kone.com

KONE Corporation, founded in 1910 and headquartered in Espoo, Finland, is an international engineering and service company employing some 30,000 personnel worldwide. The firm is the fourth largest manufacturer of elevators worldwide, a leading manufacturer of escalators, and also provides maintenance services and modernization solutions. In addition, KONE builds and services automatic doors (including their internal mechanisms) for office buildings. The company provides local service for builders, developers, building owners, designers and architects in 800 locations in over 40 countries. Since 1924, Kone been owned and operated by one of Finland's wealthiest families, the Herlin family. After Harald Herlin purchased the company in 1924, he served as its Chairman until 1941. Afterwards, his son, Heikki H. Herlin, took over his father's post from 1941–1987. Control of the company was then handed down to his son, Pekka Herlin, which he retained from 1987–2003. Finally, the current Chairman of KONE's Board of Directors from 2003 onwards is Antti Herlin.

Contents

[edit] History

[edit] 1910–1964

KONE(then known as Osakeyhtiö KONE Aktiebolag) was founded in 1910 as a subsidiary of Gottfr. Strömberg Oy. Strömberg's license to import Graham Brothers elevators was transferred to the new company. KONE sold just a few units before terminating the licensing agreement in 1917. KONE, then a company with only 50 employees, started to make and install its own elevators in 1918. Six years later, in 1924, entrepreneur Harald Herlin bought KONE from Strömberg and became the new chairman of the company's Board of Directors. His son, Heikki Herlin, joined the company and was appointed technical director in 1928. His office was located in a former margarine factory on Haapaniemi Street in Helsinki that KONE had bought and converted into an elevator production facility the previous year. Heikki Herlin took over as KONE's president in 1932. KONE's first foreign subsidiary - AB KONE Hissar of Sweden - was established in 1957.

After World War II, KONE was called upon by the Finnish government to contribute elevators, electric hoists and cranes to the war reparations being paid to the Soviet Union. This program forced KONE to expand its capacity, rationalize production processes and learn to meet demanding manufacturing schedules. In the 1950s KONE introduced its first group controls, automatic doors and hydraulic elevators. Heikki Herlin turned over the president's duties in 1964 to his son, Pekka, who had served as administrative director since 1958.

[edit] 1965–1998

KONE opened a purpose-built elevator factory in 1966 in Hyvinkää, Finland. The following year KONE was listed on the Helsinki Exchanges and started its international expansion through the acquisition of Sweden's Asea-Graham and its Norwegian and Danish affiliates. Numerous acquisitions followed during the 1970s and 1980s with only the most significant being listed here. The acquisitions of companies larger and older than KONE itself has been seen to have brought KONE respectability and lifted the company to a position of market prominence. Eventually KONE further expanded its business scope. The company became one of the world's largest hoist and crane manufacturers as well as a producer of high-tech electronic hospital and laboratory equipment.

In 1981 KONE entered the American elevator market with the acquisition of New York City based Armor Elevator Company, which it continued to operate independently as a wholly owned subsidiary. The addition of Navire Cargo Gear in 1982 and International MacGregor a year later made KONE number one worldwide in shipboard cargo access equipment. Wood-handling systems and equipment for pulp and paper mills, hydraulic piping systems, mining equipment and conveyors, and specialized steel components from KONE's own steel foundry rounded out the company's offerings to industrial customers. In 1987, after 60 years as a member of KONE's board of directors and 46 as its chairman, Heikki Herlin retired. Prevented by Finnish law from serving simultaneously as president and board chairman, Pekka Herlin ceded the presidency to Matti Matinpalo, the first non-Herlin to occupy the position in 55 years, and continued as Chairman of the Board.

Although KONE's business had been thriving leading up to 1987, by 1990, global recession had set in, which led KONE to sell its shipboard cargo handling business in 1993, as well as its crane, wood handling and piping systems businesses in 1994, and finally the steel foundry and electronic medical instruments divisions in 1995. Only its elevators, escalators, and automatic door branches remained. KONE acquired Montgomery Elevator Company of the U.S. in 1994, which madethe Finnish company a major player in North America. Soon afterwards, the KONE Corporation purchased a majority of the outstanding shares of O&K Rolltreppen GmbH of Germany. These lucrative acquisitions made KONE the world's leading supplier of escalators and autowalks. After expanding in both North America and Europe, the company sought to stregnthen its presence in Asia. The Finnish manufacturer achieved this in 1998 through a major, $29 million (US) investment in the construction of an elevator and escalator factory in Kunshan, China.

In 1996, Antti Herlin, the great-grandson of the company's founder, was appointed KONE CEO and deputy chairman of the board of the company that he had now inherited. The company introduced new technology such as the KONE EcoDisc hoisting machine and the KONE MonoSpace elevator technology concept in 1996. These technologies produced a shift in the elevator manufacturing business, as KONE was one of the first to introduce machine-room-less (MRL) construction in elevators. KONE's novel MRL designs significantly reduced the size of elevator machinery and its lift mechanism by using permanent magnet motors (PMM). The use of these smaller and more energy-efficient (can save up to an estimated 70-80% more electricity than hydraulic-lift elevators) mechanisms enables all of the elevator's equipment and its inner workings to be confined entirely in the space above the elevator shaft, known as the hoistway overhead instead of needing an entire room dedicated to machinery. At the beginning of the 21st Century, due to the apparent benefits of KONE's pioneering elevator systems, rival companies began competitively marketing machine-room-less elevators of their own.

[edit] 1999–2007

Flags at KONE corporate headquarters, built in 2001 in Keilaniemi, Espoo, Finland (photo 2003).
Flags at KONE corporate headquarters, built in 2001 in Keilaniemi, Espoo, Finland (photo 2003).

Th company faced several problems in the new millennium due to an unexpected slowdown in the elevator industry as a result of increased international competition due to over-consolidation, resulting in few independently-owned mid-sized companies left in Europe and America. Furthermore, worldwide economic downturn reduced construction activity, and modernization of elevators in aging buildings has been slower than predicted. KONE's chairman of the board, Pekka Herlin, passed away on April 4, 2003 after a long illness. Antti Herlin, was subsequently appointed the new chairman of the board in June 2003. Matti Alahuhta, a former Executive Vice President at Nokia Corporation, previously serving as the President of Nokia Mobile Phones, was later chosen to fill Herlin's vacant position as the acting President of the KONE Corporation. he has held the position since 2005, officially becoming the firm's President and CEO in 2006.

Unlike the elevator business, the automatic building door service business, which KONE had entered on a small-scale in France in 1980, had not yet experienced such consolidation that plagued the elevator business. KONE made a few strategic acquisitions and alliances and soon became the leading company in the field. In 2002, KONE acquired Partek, a Finnish industrial engineering company with net sales equal to KONE's. Partek's business areas specialized in container handling, load handling, forest machinery and tractors. The tractors were manufactured under the Valtra brand. The KONE Materials Handling division thus comprised these Partek business areas.

In 2003, KONE decided to concentrate on Container Handling and Load Handling and the tractor and forest machine businesses were sold. The Valtra tractor business was sold to AGCO, a world-wide agricultural manufacturer. As the structure of KONE Materials Handling had changed significantly, the name Kone Cargotec was introduced in January 2004. Its business areas were Kalmar (container handling) and Hiab (load handling).

At the end of 2004, Kone Cargotec acquired MacGREGOR, a global marine cargo-flow solution and service provider, thereby adding the leading market position in shipboard cargo-handling solutions to its existing market leadership in container handling and load handling.

In August 2004 the KONE Board of Directors presented a plan to split the company into two separately listed companies on the Helsinki Stock Exchanges in June, 2005. One company would comprise KONE's existing elevator, escalator & building door service business and continue to operate under the name KONE Corporation. The other company would comprise Kone Cargotec’s business area and operate under the name Cargotec Corporation. The Extraordinary Shareholders’ Meeting in December 2004 approved the Demerger Plan. The demerger was completed in June 2005.

In 2007 KONE announced they are moving their North American Headquarters out of Moline, Illinois. Most of the non senior management will remain. In September of 2007 it was announced that KONE is proposing to lease several floors of a new riverfront tower to be built on Bass Street Landing, which is part of the Moline Riverfront.[2]

Also in 2007, it was announced KONE had received part of the largest fine ever handed out by the EU Commission for massive and extensive price fixing potentially going back decades (the commission stated that it could only prove its case back to 1995, though evidence suggested the abuse had started much earlier), relating to the servicing of elevators. The crime was seen as especially severe as the cartel activity focused on maintenance required by law, and thus related to the safety of elevator users. This also meant victims of the fraud were legally required to agree to contracts regarding the servicing of their elevators, meaning KONE abused a captive market. KONE has appealed against the size of the fine, currently 142 million EUR. In total, the industry received 1 billion EUR fine for cartel activity across Belgium, Germany, Luxembourg and the Netherlands.[3]

[edit] Significant Alliances & Acquisitions

KONE offices in the United States, located in Moline, Illinois.
KONE offices in the United States, located in Moline, Illinois.
  • 1985 – the acquisition of Montgomery Elevator's Canadian subsidiary opens an alliance with Montgomery in the U.S. that leads to the total integration of Montgomery into the KONE organization after 1994.
  • 1995 – an alliance was formed as KONE and MacGregor worked together to create elevators for handling passenger traffic on modern cruise ships. This alliance commands the leading position in marine elevator market.
  • 1998 – KONE's alliance initiated with Toshiba of Japan.
  • 2001 – KONE-Toshiba alliance is strengthened as the companies signed a historic agreement to exchange shares and extend Toshiba's license to market elevators based in KONE MonoSpace technology.
  • 2002 – KONE acquires the industrial engineering company Partek

[edit] References

  1. ^ a b c Annual Report 2007. Kone. Retrieved on 2008-04-11.
  2. ^ Schorpp, Doug. :Kone to sell its Moline properties to Q-C developer", "QCTimes.com",September 27, 2007. Accessed September 27, 2007.
  3. ^ Finnish Lift Maker KONE to Appeal EU Cartel Fine | Industries | Autos & Transport | Reuters

[edit] External links

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OMX Helsinki 25 companies of Finland