© 2009 Konecranes Plc. All rights reserved. Jarmo Juntunen Modernized by Konecranes 1Modernizations Strategy Jarmo Juntunen Strategy BU Modernizations

© 2009 Konecranes Plc. All rights reserved.

JarmoJuntunen

Modernized by Konecranes

1Modernizations Strategy Jarmo Juntunen

StrategyBU Modernizations


Modernization in 30 s

• Through Konecranes Crane Modernizations we can improve the safety and productivity of cranes and extend their life time

• In 2012 we will be the leading crane modernization provider of intelligent solutions in crane control systems

• Our customers are process industries, shipyards, ports, power plants

• Through modernizatios the cranes are modified to comply with the changing needs and requirements and regulations

• We can provide capacity and performance improvement and life time extensions with state of the art componentry and technology

• The expertize and experience of the leading crane supplier and service company are utilized on the modernizations

• We are specialized in crane technology and have the most comprehensive service organization close to the customer

Modernizations Strategy Jarmo Juntunen 2


Modernization in 5 min(External)

Why should customer buy our modernizations?

• All the needs during the life time of the crane from same supplier• Konecranes Solution; technology and components specially

designed for crane applications• Competent organization close to the customer for sales, service

and support• Experience and references• The modernization investments can be spread over longer time

period according to mutually agreed plan• Environmental benefits ;

– Utilization of existing structure and materials where feasible– Modern environment and energy saving solutions and technology



Modernization in 5 min(Internal)

Why are we doing modernization business?

• Make money– Opportunity for good margins through right technical solutions ,

project and contract management• Very attractive market potential

– Market large enough to be selective• Secure and increase Konecranes technology platform on the field

– Our electrical solutions provide platform for further solutions for improvement of the productivity of the customer

– Secure our own parts business– Secure our own service business– More volume to get the scale benefit for component production

• Modernizations is a balancing business during economic downturn



Current situation



HISTORY OF THE BUSINESS UNIT

• Modernization history as long as Crane Service -> 50 years

• Engineered modernizations separated from field modernizations since 90`s ( SP 27 vs. SP 22M)

• SP 27 organized under Heavy Lifting during 2001-2006

• BU Global Crane Modernizations in BA Service since 2007

• Reorganization started 2009 in connection to KC finetuning, KC/P&H integration and new regional structure

• No separate acquisitions for modernizations but Morris, P&H and Port Service aquisitions have provided increase in competence and offering



OUR CURRENT BUSINESS

• Products and services offered

Main cathegories

– Upgrading of electrifications, PLC´s, control systems– Machinery upgradings and replacements

• Special Single Failure Proof solutions for nuclear power stations– Steel structure modifications– Life time extensions (based on CRS and life time analysis)– Engineering and services– Component and material supply– Installation and commissioning

• Specialized site concept and equipment for nuclear sites



OUR CURRENT BUSINESS

• Products and services offered

Process crane modernizationsTechnology primarely based on Konecranes solutions in Europe and AsiaUK having also Morris solutionsAlso some other suppliers used locally in certain projectsUSA based on P&H technology with Drivecon electrics

Nuclear crane modernizationsStrong competence and technology base in Millwaukee

Ports and shipyard crane modernizationsKonecranes electrification and machinery solutions supported from

FinlandPorts Service Germany is having the competence in structural changes

and moves



Modernizations Strategy Jarmo Juntunen

Competitors

• Suppliers of drives and electricsABB, Siemens, Emerson, Avtron+ price competitive+ specialists in electrics+ scale benefits+ both AC and DC solutions- lack of mechanical competence machinery

offering- service network many times depending on

local partners

• Crane companiesKalmar, Demag, Bardella+ crane competence+ own equipment population- mainly concentrating on own fleet



Competitors

• Engineering houses+flexibility+ process know how+ project business understanding+ price/cost sensitive- in-house product competence- no service structure

• Customer segment specific(Reel, Whiting (nuclear, WTE), Portek (Ports),

Cargotec (Cargo), Seward Wyon (Ports)...)+ industry understanding’+ customer specific in-house solutions- vulnerability and dependence of one industry- Limited service approach- Lack of scale benefit



Competitors

• Local players (various by country)+ customer relationship+ flexibility+ low overhead costs- No own products (normally representatives)- Lack of financial strenght

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Business drivers




Business DriversModernization challenges and opportunities

1. SafetyIncreasing safety concerns and responsibility bring new opportunities for modernizations and upgrading.

2. EnvironmentIncreasing environmental requirements open possibilities for new technology and solutions– energy consumption– emissions– noise– material recycling

3. Increasing efficiency and reliability requirements• lower life time and operating costs• Western industries challenged by LCC, productivity improvements a must

4. Reorganizations– New layouts– New production processes under cranes– Movings and resellings


Customers

Engineered modernizations customers– Over 90% of customers related to heavy lifting

equipment applications in• Power plants

– Nuclear– WTE– Hydro power

• Steel mills and steel product warehouses• General engineering and manufacturing• Paper mills• Ports • Shipyards

– Expectations from supplier• Technical expertize and experience• Easy to deal with• Safe and hassle free project execution• Agile frontline with stable and reliable company behind




Market Trends

• Harbours : – Larger vessels sizes ; increasing STS height, outreach and speed

requirements – More efficient yard utilization– Electrical mods. Changes from DC to AC– Life time extensions , Life time costs + envir. (fuel saving concepts, el.

feed)• Paper:

– Upgrading of equipment has started after decisions in restructuring– Need for SW solutions

• Steel: – Safety improvements; emergency brakes, double rope drives– Capacity and life time extensions : inverters, el. rooms.

• Power:– Safety requirements – Technology upgrades

• Shipyards: (Repair shipyards upgrading equipment )– Larger Blocks handled– Electrical upgrades


SWOT




SWOT

• Strengths: – Profit focus– In-house competence : Electrical,

mechanical, consulting, engineering, production, own components.

– Local organizations close to customer

– Strong service culture– Long experience, references

• Opportunities:– Better utilization of customer and

crane base knowledge; MainMan IV data

– Large own heavy crane population– Increasing safety requirements– New market areas (ME, Asia, Latin

America)– New competence and ideas from

P&H, Morris

• Weaknesses:– Competitiveness of re-

electrifications– Too much outsourced engineering

not good concept for modernization– Site work problems in large projects

• Threats:– Risks of large projects– Profit centre focus must not prevent

visibility of pipeline profitability and suboptimization

– Dependence and leak of core competence of engineering know how to subcontractors

– Losing market share and crane intelligence to general electric companies


Key strategies and roadmap to achieve the targets



Key strategies

1. Solutions based on Konecranes technology and components• We supply the intelligent part of the crane• Manage engineering, supply, site and support

2. Focus on our service customers• Know the customer, their process and plans• Know the history of the crane• CRS platform

3. Risk management with new customers and areas through CRS and limited scope

4. Secure our crane population• Don´t let the competitors to touch

5. Expand to new markets where we have service presence but not modernizations yet

6. Keep the difference to general electric houses through having both mechnical and electrical competence

19



Key strategies

Modernizations and New Equipment supporting each other :

1. Giving customer alternative– Solution to the need can be new equipment or modernization

2. Customer is getting solution to new and old crane needs from the same company– Package solutions

3. One component and technology platform– Customer can harmonize component and spare parts base– Scale benefit for supply

4. Resource sharing possibility in engineering and project mgmt



Key strategies


CUSTOMER KNOWLEDGE ELECTRICAL & MACHINERY

KNOWLEDGEService history Component SupplyCrane usage dataMainman IV

MODERNIZATION COMPETENCE

CRANE ENGINEERINGCrane building know how


Modernization Units

Operational structure 2009

Modernizations Strategy Jarmo Juntunen22

Modernizations in the regions within Crane Service

Americas WEMEA NEA SEA

Global Mods Support

P&H Mods

Mods US

Global Mods

Export

Mods Nordic

Mods UK Mods SEA

Customers


ModernizationsOperational Structure 2010


Global ModernizationsGlobal BU responsibilityGlobal strategy and guidelines

Promotion and development of modernization solutions & technology

Sales supportEngineering solutionsComponent packages

Technical, product and sales training

Business Unit Regions


Key strategies and roadmapGeographical footprint

1.Get the business running in established areas where new organization has been but in place

• New organization in US after unification of KC and P&H• New structure in UK starting after combining KC and Morris operations• New set up in Finland as a new platform for East Europe mods Growth• Other WEMEA and NEI countries activating ; France, Benelux, Austria

2.Get started in areas where service has been operating but modernizations not been actively done so far

• Indian basic organization has been put n place October 2009• In China training of local engineers have started, first projects in pipeline• SEA having couple of interesting steel mill projects• Plan for Australia

3.New markets following set up of service presence.• Middle East• Latin America• Africa



NOT JUST LIFTINGTHINGS, BUT ENTIREBUSINESSES


Documents

© 2009 Konecranes Plc. All rights reserved. Jarmo Juntunen Modernized by Konecranes 1Modernizations Strategy Jarmo Juntunen Strategy BU Modernizations