Elevator industry consolidation - Titans ready to clash

In business school we read case study after case study about industry consolidation; beer companies, consumer products, etc.  Industry consolidation is occurring right before our eyes in the elevator universe, right now.  For someone like me this is a really exciting to watch the market research, selection of companies, acquisition and execution.

To my knowledge the two biggest suppliers to independent elevator contractors in the industry consolidation are GAL and Nidec.

GAL – Out of the Bronx, NY having just been acquired by a private equity firm called Golden Gate Capital, GAL owns GAL, Hollister Whitney and GAL Canada[was called ECI].  Since GGC’s acquisition they have acquired Courion[freight doors] and Boremax[hydralic cylinders & power units].  GAL will soon have local offices in Chicago, Los Angeles, Miami and New York.  Their wings have expanded and it appears they have big plans to crash the markets.  But remember that private equity firms typically only keep companies 5 years after acquisition and strategy/process implementation.  

[GAL presenting at the Chicago Elevator Association Thursday April 5th, 2018] 

Nidec – Nidec is a international technology/motor company that has owned Motion Control Engineering and Imperial Electric for a number of years.  Last year Nidec acquired Canton Elevator[elevator package provider].  I have not heard of additional plans moving forward to change their business landscape.  Long term, does Nidec hold on to their elevator/motion/motor control portfolio or spin it off to a private equity firm?

Lots of sharks circling the water to get into the elevator market so I wouldn’t be surprised if a 3^rd entrant begins consolidation in the North American market.

What this means?  I would believe this should create a more competitive environment in the short term then when one gains a critical mass of market share, prices will rise. A 3^rd entrant or evolution will inevitably come but, will they be a direct competitor like Coke to Pepsi or a RC Cola.  Who will buy who?  Or will the independent nature continue to be strong in the elevator universe?  Will the long standing friendly supplier/competitor relationships turn into rigid chokehold posturing like Iron Sheik’s camel clutch?  Large independent commingled family business is leaving and Corporate America’s strategy is coming.  Where do you fit?  What will you do?  Where will you buy?  Who do you stand by?

2 weeks ago I was in a meeting at a Condominium and was asked why our prices are 40% lower than the OEM’s for a vanilla 5 stop modernization.  My answer was simple, because we are in the long-term relationship business not short-term maximization of for profit business.  How much will consolidation effect our supplier/contractor relationships?  Could it get better?  Faster lead times?  Better technical support?  Market research that will evolve into what customers want?  This is some fascinating stuff!  At least very interesting for me.

As always feel free to contact us at www.colleyelevator.com, email Craigz@colleyelevator.com or call 630-766-7230.