Didier Michaud-Daniel, president of Otis Elevator, in one of the CN Tower's Otis-built and -maintained elevators. Fred Lum/The Globe and MailFred Lum/The Globe and Mail
Otis Elevator Co. is a true multinational. The division of United Technologies Corp. is based in the United States, it is headed by a Frenchman who previously ran the British operations, and its fastest-growing market is China.
Active in 200 countries around the world, Otis installs thousands of elevators every year and services millions that are already in place. It sold its first elevator in Canada in 1862 and now has them in many major buildings across the country, including the CN tower.
Otis president Didier Michaud-Daniel, who says he is obsessed with making the company more environmentally friendly, was in Toronto recently to launch a new energy-efficient escalator at a green building conference.
What technological breakthroughs have allowed your elevator products to be more green?
The best one is regenerative drive. In the past when [elevator cars]were braking, we had to add [power] Now we can use the energy which is given off by the braking system and redistribute it to the grid. We are creating energy, like in a hybrid car. It is really a fantastic breakthrough in terms of technology. On our Gen2 brand elevators, we save up to 75 per cent of energy [compared with older elevators]
Also, in the past we had cables [moving the equipment]that we had to lubricate every month. Now we use belts [and]there is no lubrication any more. On escalators the steps were moved with chains, so they needed a lot of lubrication. With a new belt system we don't need oil any more.
Are there other advances?
We are using LEDs, [which]save 30 per cent of [lighting]energy. And on escalators, we have a power standby system. If there is no passenger on the escalator, the escalator slows down.
We've also invented what we call the Compass system. You go in the building you work in and you scan your [security]card. It detects that you work on the 24th floor, and it tells you the elevator that you have to take. You have no button in the elevator. You go directly to your floor. This saves energy because it optimizes traffic.
How have you greened your manufacturing operations?
The factory [we are building]in Chongqing, China, is a LEED gold factory. In Madrid we decided to equip the roof of the factory with solar panels, so 60 per cent of the energy we use in the factory comes from the panels. In Bangalore, India, we have a water recovery system. When it is raining we have big tanks where we collect water and use it inside the factory.
Why are you so concerned about making Otis environmentally friendly?
We are going to leave this planet to our kids, and to the kids of our kids, so we want to be as green as possible. If [environmental policy]comes from the leader, people apply it everywhere. [It has to be in]manufacturing, in products, and in day-to-day behaviour. Also, our customers want energy-efficient products.
How international is Otis?
I don't think there is any other company which is so global. But our teams are local. All my team here is Canadian. The 9,000 people who are working in China, are Chinese. In Vietnam, they are Vietnamese. It gives a fantastic perspective on the world and how people can work together. On my executive committee there are 16 people and eight nationalities.
Do you get tired of travelling?
I spent 200 days outside the U.S. last year. There is no other way of [managing]a company today. If you are [at head office]in your stronghold, you will not make the right decisions. It is by going and seeing the customers, the suppliers, and the people who are leading the countries, that you make the right decisions.
Why is China so important?
The global escalator and elevator market is 520,000 units per year and China is 350,000 of that. I foresee it growing by 10 per cent [per year]over the next 10 years. In comparison, the market in North America is 12,000 or 13,000 units.
In China we have four brands, and five factories. We have more than 20-per-cent market share, [so]we probably sell 80,000 elevators per year. We are building a new factory in Chongqing in the west part of China. I was there last week [and it has]32 million inhabitants. There are cranes everywhere. It is unbelievable.
The second [fastest-growing]market in the world is India. Brazil is really booming. In Russia, we sell twice the number of elevators that we sell in the U.S. now. These countries are growing when Europe and the U.S. are quite stable.
Do you have any problems with safety or quality issues in China?
We have good joint venture partners [and]I do not see any quality issues. To make sure that quality is the same worldwide, we have a big engineering group. They check that all the [products]we launch in the market are [up to]Otis quality standards.
H ow do you decide where to build plants?
We try to have manufacturing facilities as close as possible to customers. We are building a new facility in Florence, S.C., to manufacture for the U.S. market and for Canada. It is there because 70 per cent of our customers are on the East Coast. [We will]regroup all of the manufacturing [and]engineering under the same roof.
That is also what we do in China. We are also building a factory in Brazil, to serve the Brazil market.
Would you consider manufacturing in Canada?
With the size of the market in Canada, in term of economies of scale, it would not make sense to have a manufacturing facility here. But our labour is local. We have 900 people working in Canada. We have an installation team and a service team. We have 11 branches and 55 service centres.
How did the recession affect your company?
In 2009 and 2010 we were affected by the crisis. Thanks to China, this year our revenue is going up. Sixty per cent of our revenue comes from servicing equipment, and that doesn't vary: We have a service portfolio of 1.7 million units that we maintain. And because of the recession we decided to [pay more attention]to acquisitions. Last year we did 50, mostly of service companies.
What's the key to a good elevator experience?
We want [passengers]to have a soft ride. We try to find an aesthetic which is safe, comfortable, and where you feel good. Lighting, colours … everything counts. We measure the decibel level – we want to be sure there is no noise in an elevator.
Are there particular issues for very tall buildings?
The machines are different [as are]the control systems to stabilize the car. We've installed the elevators in the CN Tower, and in the Burj Khalifa [in Dubai] the tallest building in the world. In that building we have an Otis elevator which goes from the ground floor to close to the top, the longest travelling elevator in the world. You don't feel it [even though]it goes to 10 metres per second.
We are working in Saudi Arabia on a one-kilometre-high tower. That is a new height for us, but we like new heights.
Your CN Tower elevator is a big showcase for Otis in Canada. How important are marquee projects like that?
They are very important. Without the elevator you can't go [up the tower] And if that happens, it will be in the newspaper the day after.
In the past, the company has ventured briefly into "horizontal" transportation such as transit-type vehicles. Any plans to diversify away from elevators and escalators?
We want to be really focused on what we know. And what we know is elevators and escalators. There are still great opportunities to develop our business there.
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DIDIER MICHAUD-DANIEL
Title: President, Otis Elevator Co.
Personal: Born in Montluçon, France; 53 years old.
Education: Business management degree from France's École Supérieure de Commerce.
Career highlights:
Joined Otis in France 1981, in service sales.
Became deputy general manager for operations in France in 1998.
From 2001 to 2004, was managing director for United Kingdom and Ireland.
Named president of operations in United Kingdon and central Europe in 2004.
Became president of Otis Elevator in 2008.