When the electronic security industry failed to grow like gangbusters immediately after 9/11 it became abundantly clear that economics is the most powerful force known to humankind. Even in the wake of the most heinous single attack ever carried out on U.S. soil and the advent of the war on terror, funding proved as difficult to track down as Osama Bin Laden and bureaucracy proved as hard a nut to crack as al-Qaida. Ultimately, and dishearteningly, the slumping economy trumped America’s elevated need for security solutions.
On the bright side, during that period the electronic security industry mostly ranged from being flat to experiencing modest gains — demonstrating that although it might not be recession-proof, it is at least recession-resistant. In good or bad times, the value of security never completely wanes. Fortunately, the economy rebounded and with it the fortunes of those in the electronic security industry. (This is all reflected in the “Measuring the Electronic Security Market” graph on the bottom the page.)
However, there is growing sentiment that America is slipping into another economic lull. Key indicators include the lingering war in Iraq, investor leeriness as the presidential election nears, the aftereffects of Hurricane Katrina and a nationwide decline in housing starts, sales and valuations. According to a recent poll by the American Research Group, 69 percent of Americans believe the national economy is getting worse, while only 8 percent believe it is getting better.
This is reflected in the latest industry figures from J.P. Freeman Co., which show an estimated 4.6-percent increase in security equipment manufacturer revenues (to $27.1 billion) compared to 2006. If that figure holds up once all the 2007 books are closed, it will be the smallest gain since 2003 and only the third time in the past 10 years growth has been less than 5 percent. Additionally, the estimated number of systems installed during 2007 rose just 3.4 percent and the total monitored population grew just .6 percent. If those figures pan out, they will be the worst since 2002.
Are we on the brink of an overall recession and prolonged period of lean times for the electronic security industry? Given the track record of resiliency exhibited on both counts, the chances seem remote. Could 2008 turn out to be even more fiscally challenged for security suppliers than 2007? Sure, but it’s hard to go wrong with a business that has grown more than 80 percent overall the past 10 years, especially one that has yet to peak and is rife with so much exciting new technology.
Furthermore, while 2007 appears to have been a ho-hum year for suppliers, installing dealers and systems integrators are telling a different story.
According to SECURITY SALES & INTEGRATION’s Annual Installation Business Report (IBR), some 13-percent more installing companies expect to earn at least $1 million than they did in 2006, and those companies projecting to total less than $100,000 fell one-fifth.
In addition, the average number of video surveillance installations recorded an all-time high. These robust returns ought to help lift suppliers’ spirits. Judge the state of the industry for yourself as you pore through the following pages of analysis and stats compiled and tabulated from SSI’s IBR, J.P. Freeman, the National Fire Protection Association (NFPA), the FBI and other leading sources. Last year was the first time the IBR’s results had been evaluated according to small, midsize and large installation companies; now, that approach has been further broken down to make it more relevant and useful.
All that great data is just the tip of the iceberg, as you hold in your hand the industry’s preeminent single source of electronic security information. In addition to invaluable market research, you will find listings of leading suppliers and trade associations, editorial archives, a 2008 events calendar, and more. I enthusiastically welcome you to our Top 300 Industry Resource Guide I hope you will find it an enjoyable read and tremendously beneficial to your business.