Despite economic climate, forecast for security OK

While growing, industry could still suffer from economic downturn


Broken down by product segments, the fastest growers will include access control, video surveillance, fire detection and intrusion detection, according to SIA Chief Executive Richard Chace.

"Security as a practice and commodity are value propositions, for the foreseeable future, that arch through U.S. government, corporate and industrial, institutional, commercial and residential markets," Chace said by e-mail.

In large part, the growth of electronic security is being driven by perceptions of a growing crime risk -- despite a long-term trend of falling crime rates, according to the Freedonia Group. Furthermore, many homeowners and businesses are taking charge of their own security in the belief that public safety crews are overburdened.

Technology improvements and lower costs should increase spending for upgrades to existing security systems. Those advances should also help increase market penetration with new sales.

The best prospects for growth will involve products and services that offer high levels of protection with minimal amounts of human support. Automated controls for building access can replace live guards, for instance.

Makers of biometric controls, which use fingerprints or iris scans to grant clearance, will grow exponentially over the next decade, according to the Freedonia Group. The biometric market alone should reach $4.6 billion in sales by 2017.

3. Climate

Sales of contraband-detection systems grew quickly in the five years after 9/11, but that trend has since cooled off. A major slowdown in home sales will likely crimp growth for home security systems as well.

To stay competitive with the huge multinationals, many pure-play security firms have bulked up through acquisitions. More mergers are likely.

L-1 Identity Systems formed when Viisage Technology and Identix merged in 2006. L-1 also bought Integrated Biometric Technology, SecuriMetrics and Iridian Technologies.

Geo Group of Florida formed in 2003 when Wackenhut Corrections merged with Group 4 Falck of Denmark.

Brink's will spin off its $500 million home-security division on Oct. 31.

The Brink's consumer unit is growing 10% per year in sales and subscribers. But the business is still largely misunderstood, Cunningham says.

"By being separated, a pure-play company should get better stock multiples and more focus from management and Wall Street," he said.

4. Technology

New biometric security systems have been a big help in thwarting the bad guys. These systems limit access by checking users' unique fingerprints, palms, eyes or even face. When implemented well, biometrics are virtually fail-safe.

Computer automation systems have also speeded the processing of new inmates and improved security records maintenance.

Brink's, which will turn 150 next year, continues to evolve. The company has developed a technology called CompuSafe to protect the cash collected by store managers and other merchants. Clients can use it to make bank deposits instantly to get same-day credit.

The system manages cash online, doing away with manual counting and recounting. It also can spot counterfeits, order change and reconcile bank deposits. In this way, stores make fewer mistakes, and managers can give more attention to customers and employees.

Brink's also insists on using heavy armor on all its trucks to protect the guards who make pickups and drop-offs, says Cunningham.

"One way to cut prices is to cut safety and security, but we're not going to do that," he said.

5. Outlook

Security risks are a growing concern in an uncertain world. Nine in 10 executives rate security as a CEO- or board-level matter.

Yet decentralized management and conflicted priorities can make it hard to maintain security, according to a recent survey of 175 large global companies conducted by Forrester Consulting and BearingPoint.

"It's clear that overly complex, dotted-line organizational structures and competing business priorities are hindering organizations' ability to effectively manage risk and security -- from planning and budget to execution," J.R. Reagan, a BearingPoint vice president, said in a statement.

** Upside: People naturally want to ensure safety for themselves, their families and their businesses. As such, this market should continue with steady annual growth in the single digits.