Exclusive! Interlogix Boosts Its GE-Wiz Factor

GE brings good things to life, or so the well-known slogan goes. But can the global giant inject new life into the electronic security industry? Having recently purchased Austin, Texas-based Interlogix—a leading worldwide security systems manufacturer and distributor—we’re about to find out.

General Electric Co., which posted revenues of nearly $126 billion in 2001, spent more than 100 years establishing itself as a technology and manufacturing leader before finally venturing into electronic security. What took it so long? After all, it seems like such a logical extension of what GE does, especially considering the ubiquity of its name in homes and businesses.

Apparently, GE was just waiting for the right vehicle. But perhaps even more surprising than GE’s late entry into electronic security was that, when it did ultimately occur, the mighty conglomerate was not the aggressor. In actuality, it was Interlogix, in the wake of GE’s failed merger with Honeywell in the summer of 2001, that wooed GE. And its overtures paid off quickly and handsomely.Currently, Interlogix is entrenched in GE Industrial Systems’ division and targets three core businesses: enterprise technologies; security and life safety; and key management. Its other electronic security interests include ESL, ITI and Sentrol (intrusion and fire protection); Fiber Options (fiber optics); and Aritech (European distribution).

Interlogix’s president and CEO, Ken Boyda, has been associated with the company since being named president and CEO of Sentrol Inc., a predecessor of SLC, in 1990. Prior to that, the Harvard School of Business graduate spent 14 years with Colortran Inc., leaving while he was president and CEO of its U.S. lighting group.

Boyda, a former director of the Security Industry Association (SIA), was instrumental in making the GE transaction happen and is at the forefront of the new GE Interlogix. This is a man who guided Sentrol from a $32 million company to a business that topped $600 million in revenues.

“The way things came together probably exceeded everyone’s expectations in terms of how quickly we reached that size,” says Boyda of Interlogix’s success. “GE was attracted to this industry because of its high, sustainable growth rates and offered us a very good fit in terms of growing the business further.”

Security Sales & Integration recently arranged an exclusive interview with Boyda to find out how that blockbuster deal came together, the secrets to his and Interlogix’s success, what’s in store for Interlogix and its dealers, and what GE’s interests are in the electronic security industry.

Interlogix Entices GE to Bring It Into Its Family

Security Sales & Integration: When did GE first show interest in Interlogix?

Ken Boyda: The beginning of 2001 was when GE first showed interest in Interlogix. I had made a presentation to our board of directors that really scrutinized the electronic security industry. It was designed to help us fully assess what we could do with the business and put forth some ideas about what could be achieved going forward.

At that time, the board decided that, with all the consolidation and the size and shape of the industry changing, it would make sense for us to be part of a larger entity. We identified companies that looked like a good fit for us. GE was at the top of the list; we all felt very comfortable with them.

SSI: How did GE’s failed merger with Honeywell play into this?

KB: Well, it would have been a very different situation had the Honeywell deal with GE happened. However, it was dead in the water by the time we approached them.

SSI: So, Interlogix actually pursued GE? That’s a switch; typically, the giant company takes over the smaller one. Tell me more about how that took shape.

KB: We engaged an investment banker that assisted us in making contact at the end of the third quarter. The whole process went very quickly. It was a good fit because GE looks for high-growth, sustainable industries.

Interlogix to Press Forward as Autonomous Operation

SSI: How smooth has the transition been? What have been some of the significant issues, if any?

KB: The whole process has gone very smoothly. It’s a new business segment for GE, so there is not a lot of change [for us]. We are set up as before. There are individuals who have elected to leave, but there have not been broad changes anywhere within the organization. It’s more about learning and taking advantage of new internal resources to get better.

SSI: What changes will we see in the way Interlogix conducts business, in terms of products, marketing and distribution?

KB: There really has not been any change in respect to products, but there are a lot of products changing within GE itself. The most noticeable change is in the name [GE Interlogix], but we are not planning any other significant marketing changes. GE believed there was good value in the goodwill of our name and the brands we sell.

In terms of how we go to market, GE is not changing the structure we already have in place. We go directly to dealers; we also go through distributors. On the system side, we work with both national and local system integrators. I foresee the system integration side emerging and I believe the whole facility management area is something we will progress in more quickly because of GE.

SSI: What prompted the recent decision to make ITI-branded equipment available through other distributors?

KB: [We wanted to] help eliminate the conflicts inherent in our current distribution strategies by making Sentrol, Caddx, ITI, ESL and the Kalatel traditional lines available to our customers through the same channels and under similar terms and conditions. Limiting product availability to only direct purchases was tough when our competitors rely on distribution to make their equipment widely available.

SSI: Is this an approach we will see more of with other GE Interlogix products?

KB: Yes. It is to the advantage of the installing dealer and to GE Interlogix to have our products available through a broad array of distribution channels with consistent pricing, terms and conditions.

Growth to Continue Organically, Acquisitively

SSI: Interlogix acquired several companies during a short period of time. What was the thinking and was there a plan in place to attract a suitor?

KB: We started by targeting companies based on geographic region. We wanted to develop as much internally as possible, but, if a company offered certain technology or had an advantageous location, we would move on it.

We acquired 20 companies in the 1990s. There was a real shift in the middle of the decade with a lot of growth on the CCTV and access control sides, and we quickly got into those businesses. We felt the need to accelerate those areas and we did so through acquisitions.

SSI: Then, Interlogix will continue to be acquisitive?

KB: Interlogix is not going to lay low. We are spending to grow internally and we will continue to look at opportunities that fit into our strategy. If we believe it can get us somewhere quicker, we now have even more capital resources to expand.

Keeping Workers in the Loop Bolsters Operations

SSI: How is GE Interlogix structured and what is its phi