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TWST: Can we start with an introduction to KCI Konecranes (HEL: KCI1V)?

Mr. Rintamäki: We produce cranes, overhead traveling cranes for various industries. We also produce cranes for harbors, shipyards, for container handling, ship building. Those are huge cranes. But the biggest single business area of ours is the maintenance services around those very same products, basic maintenance work plus the preventive and predictive maintenance programs. That counts for about half of the total group sales. Our roots are in Kone Corporation. Kone is one of the worlds leading elevator company and we used to be part of that corporation until 1994 when Kone Corporation decided to spin off all the other divisions apart from escalators and elevators. So we became independent and had an IPO in 1996 and have been trading thereafter on the Helsinki Stock Exchange. Our shareholding structure today is very versatile with some 70% of the shareholding is outside Finland. Mostly the shares are held by those first class investment funds in this world like Franklin, Fidelity, Capital and so on so forth. As I say, the roots on Kone are actually in electrical motors, which today is part of KCI Konecranes, then in the 1940s, they started to build cranes, overhead traveling industrial cranes. A little bit later they produced their first electric wire rope hoist which is the key component in every crane today. We are very focused in what we do. So we stick strictly to this electric motor-driven industrial cranes or harbor and shipyard cranes and we do maintenance on those very same products, and that’s all we do. We don’t touch for instance, mobile cranes, those truck mounted cranes, and we don’t do those tower cranes you see in every construction site. There are mainly two reasons why we want to keep our hands off those products: One is that they are very mobile by their nature, so there is a very well-developed second hand market, which means when you are selling your product you very often get your old equipment traded in. In industrial cranes, you know, the crane usually becomes part of the building, part of the real estate, and they are not readily movable. The second difference is in technology, our products use electrical motors, which are digitally controlled. When we talk about truck mounted mobile cranes, they use diesel engines and hydraulics, which is a totally different technology.

TWST: Who’s the competition? Are there some key players that you are running up against?

Mr. Rintamäki: That’s a good question. The nature of this market is that it’s very, very fragmented. For one reason or another we haven’t seen such a consolidation in this industry like we have seen for instance in the elevator industry or the computer industry or even in automotive industry. We haven’t seen that consolidation yet. There has of course been some consolidation, but it’s been an amazingly slow process. So the market is very, very fragmented. Regardless of what product we take, whether it be it the standard crane or a special crane or a harbor crane or service, for every one of those products if we count the top five players in the world together they amount to less than 25% of the world market. And there is no single product where anybody can claim higher than 10 percent global market share. As you see its very, very fragmented. The only global competitor we have today is a company by the name of DEMAG. Nowadays it’s owned by KKR, a big private equity house in the USA. It used to part of Mannesman Group, but was sold to Siemens and Siemens then sold some seven divisions, one of which was DEMAG, to KKR at the end of September last year. That’s the only global player and they are a good competitor especially in the standard lifting area, in the standard range. The other players, other competitors either concentrate on only one or two products or they are very local in their customer reach. For instance in the US, our biggest competitor in standard lifting is Columbus McKinnon, CM, which is a NASDAQ quoted company. In special cranes our biggest local competitor in the US is Morris Materials Handling formerly Harnishfeger Crane Division crane division out of Milwaukee. And then there are a lot of local players. In Germany we have strong local competitors, Abus is one of them, Stahl Fördertechnik is another one, and so on and so forth.