Otis CEO Judy Marks on Navigating Tariffs and Global Supply Chain Strategy

Global Supply Chain Resilience

• 💡 Otis Worldwide is actively managing the impact of tariffs by leveraging its global manufacturing footprint of 17 factories.
• 🎯 The company is prepared to shift production of certain parts to its Florence, South Carolina facility based on evolving tariff policies.
• 🧩 Otis maintains a common product platform, enabling manufacturing of elevator products at any facility worldwide to ensure competitiveness and proximity to installation sites.

Navigating Conflicting Information

• 🧠 Judy Marks emphasizes resilience and calmness as key strategies for CEOs dealing with fluctuating political and trade news.
• ⚠️ The company has built dual sourcing into its supply chain over recent years to mitigate risks.

The Strength of Otis's Service Business

• 📈 The service business, accounting for 90% of earnings, provides significant resiliency as it is less impacted by tariffs and trade wars.
• 🤝 Otis services 2.4 million units globally, with 44,000 colleagues dedicated to maintenance, repair, and refurbishment.
• 🌍 2.4 billion people use Otis products daily, highlighting the company's global reach and responsibility.

China Market Strategy

• 🇨🇳 Otis has operated in China for 40 years and views itself as a local company with 16-17,000 employees there.
• 📉 The new equipment business in China has declined for four consecutive years due to a downturn in the property sector, but this has been offset by growth in the service sector, now representing 40% of China's revenue.
• 🛠️ China is preparing for a refurbishment cycle, supported by government subsidies, to ensure elevator safety as the population ages.

Commodity Challenges and Sourcing

• 🏭 Steel is a critical commodity for elevators, comprising 80% of Otis's raw material costs.
• ⚠️ A challenge exists with formed steel components imported from Canada, as there are no domestic US suppliers for this specific product in the industry.
• 🇺🇸 Otis encourages Canadian suppliers to manufacture in the US and would welcome any US steel manufacturer to join their supply chain.