Schindler Holding AG

views updated

Schindler Holding AG

Seestrasse 55
CH-6052 Ebikon
Switzerland
(41) (41) 632-8550
Fax: (41) (41) 445-3134
Web site: http://www.schindler.com

Public Company
Incorporated: 1874 as Schindler & Villiger
Employees: 38,574
Sales: CHF 6.55 billion (1998)
Stock Exchanges: Zurich Berlin Frankfurt/Main
Ticker Symbol: SCHN
NAIC: 333922 Conveyor & Conveying Equipment Manufacturing; 335312 Motor & Generator Manufacturing; 333999 All Other Miscellaneous General Purpose Machinery Manufacturing; 42143 Computer & Computer Peripheral Equipment & Software Wholesalers; 551112 Offices of Other Holding Companies

Through its numerous subsidiaries, Schindler Holding AG is Europe’s top supplier of elevators and escalators and ranks second in the world in that capacity. Managed and majority-owned by fourth-generation descendants of its founding family, the group operates about 100 subsidiaries and affiliated companies around the world with nearly 40,000 employees and generates about $4.4 billion in sales annually. As the “electronic heart” of the group, Schindler Elettronica S.A., in Locarno, Switzerland, develops and manufactures high technology control systems, power converters, electronic equipment and accessories, and other elevator components. The Schindler drive systems plant, Schindler S.A., in Zaragoza, Northern Spain, produces drives for elevators, while another main Schindler subsidiary, Etablissements Henri Peignen S.A., near Paris, develops and produces elevator doors—the most sensitive part of an elevator. Elevator Car System in France specializes in the mass production of elevator cars, push-button boards, and door drives. As a second line of business, the Schindler Group holds the majority share of ALSO Holding AG, Switzerland’s leading wholesale distributor of computers, peripheral equipment, and software, with annual sales of $700 million.

The First 50 Years: 1874-1924

In 1874, a mechanical engineering workshop was built in Lucerne, Switzerland. Newly established by two Swiss men, Robert Schindler and Eduard Villiger, the partnership of Schindler & Villiger produced lifting equipment and other machinery. Nine years later the business moved to a new and bigger factory. In 1892 partner Eduard Villiger left the firm, which continued operations under a new name: Robert Schindler, Machinery Manufacturer. Schindler’s most important customers during its first years were large hotels and production plants, first in Lucerne and later throughout Switzerland.

In 1901 Robert Schindler sold the business to his brother Alfred Schindler, who became the new sole proprietor and changed the firm’s name accordingly. Five years later, a new business partner, Fritz Geilfuss, joined the company and it became a partnership, Schindler & Cie. Around the same time, the company’s first subsidiary, Schindler & Cie. o.H.G., was established in Berlin, Germany. Over the following years, the Schindler company expanded into more and more European countries. It established Schindler & Houplin in France, purchased the Severin Senator GmbH in Berlin, Germany, and opened new sales and branch offices in Switzerland, Argentina, Turkey, Algeria, Romania, Russia, Belgium, Italy, Spain, Egypt, Poland, and Chile. In 1923 a new production facility was established in Mulhouse, France.

While elevators manufactured by Schindler & Villiger in 1883 were water driven, the first hydraulic models for lifting freight were shipped from the factory in 1890. They were followed two years later by the first belt-driven electric elevator. In 1899 Schindler elevators were equipped with worm gears and controlled by a pull rope. The first electric passenger elevator with automatic push-button control left the factory in 1902. In 1915 Schindler began manufacturing elevator motors; cranes were added to its product range in 1920.

Becoming Europe’s Leader: 1925-69

In 1925 Adolf Sigg became Alfred Schindler’s new business partner after Fritz Geilfuss died in an accident. That same year, after the company’s iron foundry (which had produced munitions during World War I) was spun off, the firm was renamed Kommanditaktiengesellschaft Schindler & Cié., Aufzüge und Maschinenfabrik. The subsidiary in Mulhouse was renamed as well, becoming the Société Schindler & Cie. By 1931 Schindler had expanded into Croatia, Greece, Lithuania, Bulgaria, Yugoslavia, Morocco, Egypt, Colombia, Ecuador, South Africa, and even China. The company was incorporated as Aufzüge und Elektromotorenfabrik, Schindler & Cíe. A.G. in 1932. When Alfred Schindler died in 1937, his son Alfred F. Schindler took over management of the company. Although World War II slowed the company’s growth as Word War I had earlier—elevators and escalators were not first-priority goods for the war and defense production—Schindler continued to expand internationally. New subsidiaries were opened in Locarno, Johannesburg, Caracas, and London. Testing facilities were added to the modernized and expanded factory in Lucerne, and a brand new factory was built in Ebikon, Switzerland, between 1954 and 1957. By 1959, Schindler had established itself as Europe’s number one elevator maker. In 1960 the Schindler company employed about 9,100 people worldwide. Between 1967 and 1969 Schindler acquired a share in the Dutch firm Westdijk and in the Austrian Wertheim-Werke.

While its geographic scope widened, Schindler’s product line expanded as well. In 1925 Schindler had produced the world’s first elevators that had a speed of 1.5 meters per second and were equipped with automatic floor leveling and cascade control. The first Schindler escalator was introduced in 1936. The same year after Schindler engineers modernized Europe’s fastest and highest passenger elevator in Bürgenstock-Hammetschwand, Switzerland, it had a running speed of 2.7 meters per second. Improvements continued, and just before the outbreak of World War II in Europe Schindler built an elevator for the overhead cable car of the city of Zurich. It was the fastest passenger elevator in Europe and could travel at 4.2 meters per second. In 1955 the company introduced the first programmed control system called “Supermatic,” and one year later it marketed its first elevator with electronically controlled alternating current drive.

Worldwide Growth and Reorganization: 1970-89

With the establishment of the Schindler Holding AG in 1970, a basic corporate structure was in place that would endure for the next 20 years. In 1974, the firm’s 100th anniversary year, the Schindler empire consisted of 56 subsidiaries in Western Europe, Latin America, and South Africa, employing 22,270 people, and generating operating revenues of CHF 46 million.

In 1979 Schindler extended its reach to include the United States. The company acquired the Haughton Elevator Division from Reliance Electric Cleveland and transformed it into the Schindler Haughton Elevator Corporation based in Toledo, Ohio. In 1985 all of Schindler’s North American subsidiaries were unified as one entity—the Schindler Elevator Corporation. The same year Schindler pioneered double-decker elevators in the Scotia Place building in Toronto, Canada, a 68-story high-rise.

Over the following 15 years the company entered a period of unprecedented growth. In 1980 Schindler pioneered a new chapter in economic relationships with the People’s Republic of China when it established China Schindler Elevator Co. in Beijing, China’s first industrial joint venture with a western company. A second joint venture in China followed in 1988, when the Suzhou Elevator Company, with 1,000 employees and an output of 950 elevators per year, was set up in the Jiangsu province. A Schindler subsidiary was established in Australia in 1981, followed by the acquisition of Precision Elevator Pty. Ltd., an Australian elevator company. A participation, licensing, and agency agreement was reached between Schindler and Bharat Bijlee Ltd., India’s second-largest elevator manufacturer in 1986. A year later Schindler purchased a majority share of Nippon Elevator Industry Co. Ltd. based in Tokyo, Japan. In 1989 Schindler took over two elevator companies in New Zealand.

In addition to the worldwide growth of its core business, Schindler diversified into other fields. With the acquisition of a majority share in FFA Plug- und Fahrzeugwerke AG Altenrhein, Schindler strengthened its rolling stock production arm, managed by the new Schindler Waggon Altenrhein AG. When Schindler acquired a majority share in ALSO Holding AG, a Swiss personal computer wholesaler, in 1988, industry analysts wondered whether the company was spreading its resources too thin. However, once ALSO was restructured and downsized, it began to thrive.

In 1985 a new generation of management took over the Schindler group. Alfred N. Schindler—an MBA graduate of the renowned Wharton School of Finance in Pennsylvania, as well as a graduate of the University of Bern Law School—together with Luc Bonnard and Dr. Uli Sigg were elected at the general shareholder meeting as the new executive directors. Among their first actions was to develop new ways to reduce overcapacities in Europe and increase production efficiency. Component manufacturing for the whole Schindler group was streamlined, standardized, and concentrated in six factory sites: Ebikon and Locarno in Switzerland; Mulhouse and Melun in France; Zaragoza in Spain; and Berlin, Germany.

Company Perspectives:

Schindler serves its customers 24 hours a day worldwide through reliability, innovation and leadership. Schindler cares for its employees and minds the natural environment, while striving for profitable growth.

In the late 1980s, Schindler made its biggest deal to date in the United States, signing a contract with the Westinghouse Electric Corporation to take over Westinghouse’s entire North American elevator and escalator business, worth a total of half a billion dollars in annual sales and with resources of 5,500 employees. The takeover was effective on January 1, 1989 and was followed by a complete reorganization of Schindler’s North American business. Westinghouse’s business units in Canada were integrated into Schindler’s Canadian subsidiary, Schindler Elevator Corporation located in Pickering, Ontario. In the United States, the installation businesses of the two companies were merged, manufacturing was concentrated in Gettysburg and Sidney, three other factories were closed down, and a brand-new one built in Clinton, North Carolina.

New Group Strategy for the 1990s

In 1990 Schindler’s top managers developed a new group strategy, with the intention of transforming the group from an engineering company to a service provider. At the end of the year, Uli Sigg, who had initiated Schindler’s early China strategy and the ALSO takeover, left the group. The newly developed management structure which came into effect in 1991 was set up to better manage the group’s rapid growth. Under this structure, a new executive committee of the board would be mainly responsible for strategic planning, while the management committee would be in charge of the day-to-day business. At Schindler’s annual meeting in 1995, Alfred N. Schindler was elected CEO.

In January 1991 a major fire broke out in the Ebikon factory, causing damage valued at several million Swiss Francs. Fortunately, nobody was injured. Three years after the incident, the Ebikon plant ceased component production. That production was transferred to Schindler’s factory in Zaragoza, Spain. In 1991 Schindler was chosen exclusive supplier for infrastructure installations at the World Exhibition EXPO ’92 in Seville, Spain. A total of 213 pieces of Schindler equipment were in service from April until October 1992, among them 79 elevators and 33 escalators. 8,000 Schindler customers attended the show. In spring of 1994 the new Schindler 300 elevator car range was launched and received several design prizes. However, the high-priced innovation hit the market just as prices collapsed in Europe, cutting Schindler’s profits in half.

In September 1991 the first escalator left Schindler’s brand-new factory in Clinton, North Carolina. Over the next two years, Schindler came to command a market share of over 20 percent and thus became the number one escalator maker in the world. In 1995 a new Schindler-owned factory for the production of aluminum escalator steps was opened in Suzhou, China. Schindler’s computer wholesale business, ALSO, obtained a majority interest in the Swiss computer trading and services firm MPC SA in Lausanne. Two state-of-the-art logistics centers were built in Emmen, near Lucerne, and in the Southern German Straubing. Schindler’s rolling stock units were concentrated under the umbrella of Schindler Waggon AG.

In 1995, the Total Cycle Time Program was introduced which, a year later, was transformed into the far-reaching Schindler Program for Radical Innovative New Thinking (SPRINT). Both programs were initiated to bring about a significant improvement in Schindler’s productivity, by redesigning processes and introducing new efficiency standards, such as cutting production time by an ambitious 50 percent and striving for error-free production.

Schindler’s international acquisition activity in the first half of the 1990s concentrated on expanding into Middle and Eastern Europe, strengthening its interests in various foreign ventures, and making the group’s presence more visible by giving its name a higher profile. After the reunification of Germany, Schindler established a joint venture between its subsidiary in Berlin and a Dresden elevator company formerly owned by the East German government. Later Schindler took over 11 other companies in the former German Democratic Republic. In 1990, a new joint venture was also set up in the USSR. Schindler held a 51 percent share in Schindler Mosmontash Lift based in Moscow. Another joint venture was set up with a Hungarian partner in Budapest. The length of Schindler’s contract for the Chinese Suzhou joint venture was extended to 50 years in 1991, and Schindler’s stake in the project was increased to 55 percent in 1993. New joint ventures were established in Latvia and Lithuania after those countries had separated from the Soviet Union. In the early 1990s Schindler acquired a Turkish elevator manufacturer, Türkeli Ticaret S.A. based in Istanbul, and a majority interest in the Czech elevator firm Vytahy CSFR A.S., based in Prague. The group’s subsidiaries in Great Britain and France were transformed into holding companies, subsidiaries in Ireland and Australia were now completely owned by Schindler, and all of them carried the group’s name. In 1995 Schindler increased its interest in the Beijing-based China Schindler Elevator Co. to over 60 percent.

Stronger than Ever: 1996-99

The second half of the 1990s saw a flood of Schindler innovations. In 1996, an “intelligent” hall call destination control system known as Miconic 10 was launched, which—according to Schindler—was able to increase the capacity of elevator groups by up to 50 percent and significantly cut down overall travel time. With the new system, instead of pushing “up” or “down” buttons, elevator users entered their destination on a decimal keypad before entering the elevator.

The “SchindlerMobile”—launched in April 1997—was a new type of passenger elevator. Its self-propelled car could operate without a machine room, suspension ropes, or hoistway walls, while its wheels moved up and down self-supporting aluminum columns. Preassembled at the factory, “SchindlerMobile” could be installed with the help of a crane in just three days. In the same year Schindler launched the first elevator which could be ordered via the Internet: “Schindler 001,” a simple, standardized elevator for residential buildings. In the escalator field Schindler introduced “Schindler 9300,” a new modular system manufactured in Vienna for European customers, in Clinton for the North American customers, and in China for the Asian market. “SMART MRL 001,” another elevator with no machine room was introduced in 1998. It too could be ordered via the Internet by European customers. For the North American Market Schindler offered a new hydraulic elevator called the Schindler 321A and Networx, a communication system for Schindler customers that allowed them to track the progress of their orders, monitor the condition and maintenance status of their Schindler installations, calculate prices, and place orders online. Installation and maintenance mechanics were able to retrieve information on the jobs and download drawings through Networx.

Despite a downturn in the industry, Schindler’s market position improved. As the Swiss construction market was about to collapse, the company managed to increase exports by no less than 82 percent to CHF 240 million. The escalator factory in Clinton, North Carolina, was named one of Industry Week magazine’s “America’s Ten Best Plants” in 1996 and was expanded again that same year. Schindler became world market leader in the marine business as well, as Schindler elevators were installed on the Carnival Destiny and the Grand Princess —both the world’s largest cruise liners at the time of their launchings. In 1997 Schindler’s escalator service division, including its subsidiary Millar Escalators, was granted a contract by Sears, Roebuck and Co. to maintain about 2,000 elevators and escalators in the retail chains’ 820 U.S. stores.

Computer subsidiary ALSO exceeded the CHF 1 billion mark for the first time in 1998; as a result, its office and distribution facilities in Switzerland and Germany were expanded. During this time, the Schindler group also took over the German Haushahn Group, an elevator and elevator component manufacturer headquartered in Stuttgart with DM 400 million in annual sales and about 1,750 employees.

In 1999, Schindler’s celebrated its 125th anniversary, presenting 1998 financial results that were cause enough for celebration. Net profits had reached CHF 244.9 million, a 71.5 percent increase over 1997, in part due to Schindler’s earlier divestment of its rolling stock business. The company’s operating revenues totaled CHF 6.6 billion, a 6.3 percent increase over 1997. During this time, about 60 percent of Schindler’s invoiced sales were realized in Europe, 24 percent in the Americas, and 16 percent in Asia, Africa, and Australia. Schindler’s elevator and escalator business made up 80 percent of operating revenues and enjoyed a 12 percent growth rate in North and South America. Finally, the Suzhou Schindler Elevator Company was the number one elevator maker in China in mid-1998, according to Asialnfo Services. Schindler’s 25 percent share of the world market for escalators enabled the company to outperform even its chief rival Otis Elevator, which led the world elevator market. At the same time, Schindler held an 18-percent share of the escalator market, and computer wholesaler ALSO realized impressive growth as well, contributing one-fifth of Schindler’s total operating revenues. Despite an uncertain economic climate in Japan, Southeast Asia, Russia, and Brazil, the company expected net profits to continue to grow modestly in 1999. In a maturing and increasingly competitive market, Schindler reported that it would concentrate on information technology, training, achieving cost leadership in all important market segments, and on being “the reliable and user-friendly service company of choice” in the elevator and computer wholesale businesses.

Principal Subsidiaries

Schindler Aufzüge AG (Switzerland); Schindler Elettronica S.A. (Switzerland); Schindler Aufzüge und Fahrtreppen AG (Austria, 96.9%); Elevator Car System (France, 99.9%); Etablissements Henri Peignen S.A. (France, 99.9%); Schindler Holding Deutschland GmbH (Germany); Schindler S.p.A. (Italy); Schindler S.A. (Spain, 99.1%); ALSO Holding AG (Switzerland, 69.7%); Elevadores Schindler do Brasil S.A. (Brazil); Schindler Elevator Corporation (United States); Millar Elevator Industries, Inc. (United States); China-Schindler Elevator Co. Ltd. (China, 62.7%); Schindler Lifts (Hong Kong) Ltd.