The Economics Of Lifts

March 15, 2013 in Daily Bulletin

The Economist took a look at the economics of lifts:

  • Four firms make the majority of lifts in the world, and they’ve been doing incredibly well as businesses.
  • This is in part due to the rise of China and an increasing demand for high-rise buildings. 70 million people a year – more than the population of Britain – moves to a city every year.
  • But this isn’t the whole story. The real reason why lift manufacturers have done so well is because people hate getting stuck in lifts, and the lift firms are able to sell maintenance contracts.
  • They can charge up to $5,000 a year to keep the elevators running smoothly. A fat sum for very little effort.
  • Maintenance contracts are also lucrative because this demand is much more stable than the demand for lifts – which changes depending on the state of the economy.

Read more about why it’s so difficult for competitors to enter the market, why they might soon anyway, and expanded financials of the industry over here.

Source: The Economist