Thought Leadership
In an exclusive roundtable, presidents and executive managers from five leading installation firms discuss the current state of the security industry and provide details of how they are positioning their companies for success in 2010.
Sandes: We are probably going to be moving toward GPS. If ammonia is being stolen and meth labs are being created, you put GPS tracking in place, you build your RMR model around it, and you can not only see where the meth labs are, you can see where your [stolen] shipment is. The denim jeans that were stolen on the smash-and-grabs and all these types of things, GPS technology is something to be excited about today.
Mahler: We launched managed access service six months ago. We have done a lot of access but we have done zero managed access. The first market that we went after was school systems. In Kentucky, for example, the first installation was five different schools. The top producers in our company are the ones that are selling the managed access. The first 15 managed access customers were all brand new, not existing customers.
Pat Egan: I have felt for years that if we maintain an electronic link with our customer, you will have a customer for life. So we push Internet access with what we call SelectLink so they can look at their account; if they have a link they are less likely to give it up. But we have to be careful not to give them too much. I don’t want to empower the customer to do away with the monitoring center. I don’t want a customer who may be out of the state getting a video clip and deciding they need to call the neighbor saying, ‘I think I have a burglar in my house, can you call 911 for me?’
You can play out that scenario and say, ‘We are going to deliver some value-added stuff to you, but you still need the monitoring center to be your link between the public authorities and your property.’
Gardner: About a year ago we bought a company in New Jersey that did 90 percent of its business in the automotive sector, car dealerships. Luckily he was in foreign cars, not domestic, so we actually lost nothing in the whole auto industry debacle. We are going back now and selling remote video monitoring. A lot of car dealers use guard services to watch the cars after-hours. We can now do that remotely through video. Put video motion in, use the video analytics to monitor, and then we can actually talk back if somebody comes on the lot. The dispatcher can get on the phone and communicate, ‘Leave now or we are going to notify the police.’
That is a service that certainly is saving the car dealership money. We go back to them and show them the cost savings; our cost to do video monitoring versus what they are paying for the guards and there is certainly a very healthy return for them. That is one of the big services we are pushing out this coming year. (To learn more about how to capitalize on remote video monitoring, see “Remote Video Catches ‘Em in the Act” on page 62.)
Regionally, what challenges do you see in your marketplace in 2010?
Callahan: We have to keep an eye on foreclosures. In Atlanta I think we have ranked No. 6 [in the nation] in foreclosures and No. 4 or 5 in bankruptcies. We have some pretty stringent guidelines when bringing on customers. We are doing things like checking FICO scores and things of that nature to make sure we aren’t bringing people on who aren’t going to be able to pay their bill.
Another challenge we face is labor. In order to continue to be able to handle the volume, we are experiencing some shortage in what I will call qualified labor. It is ever-challenging to keep up with a qualified pool of labor. Mel, maybe you are seeing the same sort of thing since you are in the Southeast as well.
Mahler: We have done over 170 acquisitions. That is where we get our good technicians and our good people. Invariably these small mom-and-pops have very few benefits and all of a sudden they are with a company that has full benefits and a 401K and profit-sharing, and you don’t lose them. You get some really good people through acquisition.
The Southeast compared to the rest of the country has been in pretty good shape. What we are seeing is the cancelation rate coming down because the moves are way down. Fifty-two percent of our cancels historically have been people moving. That is an opportunity to get two or three deals: a potential new customer moving in and wherever the current customer is moving to. Chances are they are going to move within our footprint within our 14 locations. Our cancelation rate [due to moving] is now down to 41 percent.
Gardner: Most definitely, I also see labor as a big problem. As an industry we have always had a problem with qualified labor. There are just not enough good training programs to attract young people into the business. We all hire ‘the helpers’ and they graduate to the technicians. We do a lot of self-training or you take them from other companies that have trained them.
Egan: There are labor issues and keeping up with technology, but the guy we hire today doesn’t come with a toolbelt – he comes with a laptop. He better know IP and routers and ports and all that stuff, more than just tip-and-ring and 12-volt DC. You have to find the right guy and you have to train him our way.
The other issue that is going to face the industry in 2010 is financing. There are a lot of small, independent companies out there that don’t have the financial wherewithal. They delay making the decision to lay off that installer or selling that extra truck, and they start using their RMR to cover their G&A [general and administrative expenses]. All of a sudden they wake up and they don’t have enough new installs and they haven’t accepted the challenges and made the necessary changes, and therefore they are stuck.
We are going to have more foreclosures in 2010, more unemployment, and a lot of the small independent guys are going to say ‘Uncle’ because they’ve got that credit card run up, they’ve got that second mortgage on the house. There is a financing challenge for small to midsize companies and that is going to be increasingly difficult to meet that challenge in 2010, particularly with lower new sales.
Rodney Bosch is Managing Editor for SECURITY SALES & INTEGRATION. He can be reached at (310) 533-2426 or [email protected].
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About the Author
Rodney Bosch, Senior Editor
Although Bosch’s name is quite familiar to those in the security industry, his previous experience has been in daily newspaper journalism. Prior to joining SECURITY SALES & INTEGRATION in 2006, he spent 15 years with the Los Angeles Times, where he performed a wide assortment of editorial responsibilities, including feature and metro department assignments as well as content producing for latimes.com. Bosch is a graduate of California State University, Fresno with a degree in Mass Communication & Journalism. In 2007, he successfully completed the National Burglar and Fire Alarm Association’s National Training School coursework to become a Certified Level I Alarm Technician.
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