Focus on Elevator BusinessKONE's business had been booming in 1987. By 1990, however, global recession had set in. KONE's response was to sell its shipboard cargo handling business in 1993, crane, wood handling and piping systems businesses in 1994, and the steel foundry and electronic medical instruments business in 1995. Only elevators and escalators remained.

KONE Strengthens its Position

KONE set out to strengthen its position as a worldwide elevator and escalator supplier.

• The first step was the acquisition of Montgomery Elevator Company of the U.S. in 1994, which made KONE a major player in North America.
• The second move was the acquisition of all outstanding shares in its associated company, O&K Rolltreppen GmbH of Germany. This acquisition, when coupled with Montgomery's strength in escalators, made KONE the world's leading supplier of escalators and autowalks.
• The third decisive move by KONE was to strengthen the company's presence in Asia. This was done in 1998 by a U.S. $29 million investment in the construction of an elevator and escalator factory in Kunshan, China.

KONE announced a revolutionary technological breakthrough with the introduction of the KONE EcoDisc® hoisting machine and KONE MonoSpace® elevator concept in 1996.

It wasn't until the beginning of the 21st Century that rival companies began marketing competitive machine-room-less elevators of their own.

Effective Alliances

The creation of strategic alliances has proven to be successful way for KONE to gain competitive advantage in its industry. Partnerships exist at all levels of KONE operations.

• 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 important 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 the highly global marine elevator market.
• 1998 - by far the most important of KONE's alliances was initiated with Toshiba of Japan.
• 2001 - this KONE-Toshiba alliance was strengthened as the companies signed a historic agreement to exchange shares and extend Toshiba's license to market elevators based in KONE MonoSpace® technology.

The Fourth Generation Takes Over

Antti Herlin was appointed KONE CEO and deputy chairman of the board in 1996. Through this appointment, the fourth generation of the Herlin family began exerting its influence in the development of KONE's business.

Pekka Herlin passed away on April 4, 2003 after a lengthy illness. Antti Herlin was appointed chairman of the board in June 2003.

The Door Business

By the start of 2000, consolidation in the elevator business had reached the point where few independent mid-sized companies were left in Europe or America. Construction activity leveled off in many markets, and the expected wave of modernization of existing equipment in aging buildings was slower to materialize than predicted.

Unlike the elevator business, the automatic building door service business, which KONE had entered in France in 1980, had not yet experienced such consolidation. However, the skills required were similar to those needed in the elevator business and many of the customers were the same. KONE made a few strategic acquisitions and alliances and soon became the leading company in the field.

Materials Handling

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 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. 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.

The Demerger

In August 2004, to best serve the shareholders' interests, 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.

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