ASSA ABLOY Execs Talk Access Control Market, Recent Acquisitions
In this exclusive interview, key ASSA ABLOY execs shed light on strategic initiatives, leadership and recent acquisitions by the world’s largest lock manufacturer.
Chances are if you asked the average person what comes to mind when they think of a means to prevent someone from getting at something or into someplace, especially when no one else is around, they would say a lock.
With origins that trace back thousands of years to ancient Egypt, the first crude locks evolved over time to serve as the foundation of modern access control.
A major step forward occurred in the mid-1840s when Linus Yale and his son invented a refined pin tumbler design that is still in use today. The Yale name went on to become synonymous with locks and today is owned by a Swedish conglomerate that itself has become synonymous with all manner of access control devices — ASSA ABLOY.
Since its founding in 1994 following the merger of ASSA and ABLOY, the company has grown exponentially with a blend of organic and acquisitive operations inclusive of more than 200 acquisitions. Other well-known acquired brands include Corbin Russwin, HES, HID, Medeco, Mul-T-Lock, Sargent, Securitron, Traka and VingCard.
In the latter part of 2017, the firm bought consumer residential smart lock leader August Home and commercial OEM open platform access controller frontrunner Mercury Security (under the HID Global brand). Both of those additions bring intriguing new market expansion possibilities into the fold.
“For dealers and integrators there are really two divisions they’re going to interact with,” says ASSA ABLOY President, Access and Egress Hardware, Martin Huddart. “HID is one, obviously very well-known and a leader in what they do. And then ASSA ABLOY Americas is the other, which includes many brands of door operators, locks and electromechanical access control products. It’s basically everything but the reader and controller that make your access control system work. You put all that together and you’ve got all the electromechanical and access control solutions to do access control.”
Indeed ASSA ABLOY’s door opening products and solutions serve just about every conceivable application around the globe. Included are mechanical locks, electromechanical and electronic locks, padlocks, access control systems, mobile keys, automatic doors, doors closers, exit devices and panic exit devices, power supplies, hotel locks, safes, security doors, intelligent lockers and key management systems.
Its 47,500 employees span more than 70 countries and generate annual sales (40% from North America) of $8.9 billion, U.S. Beyond its leadership position and recent acquisitions, ASSA ABLOY also welcomed a new CEO March 15 in Nico Delvaux, who ended Johan Molin’s 12-year run at the top.
To address these significant developments, in addition to Huddart, SSI spoke with Mercury Security President Matthew Barnette and August Home Founder & CEO Jason Johnson.
Several months now beyond the acquisitions of August Home and Mercury Security, where do things stand there?
JASON JOHNSON: When Martin [Huddart] and the team told us that they were going to try everything they could to make this be as smooth a transition for August Home as possible, I’m happy to report they have lived up to those words. It has been nothing but a positive experience. As an entrepreneur, you’re of course concerned there’s going to be major changes to the thing you’ve created.
I’m happy to report everything that has happened so far has been a positive impact on me personally and on the company. As a technology company in Silicon Valley, we certainly have our perspectives and views of industries, including the door access solutions industry. But it’s not until you become part of a company like ASSA ABLOY that you really come to understand a lot of the nuances and size of the industry. It’s been a very educational time for us.
August is a bit unique within ASSA ABLOY because we make different types of products. We are a leader in smart locks in North America, we make cameras and we have an access control system in the Cloud with very rich mobile software. We have been working with our colleagues and other business units on ways to bring those technologies to other parts of the ASSA ABLOY family. It’s been a great collaboration to show how one plus one can equal three.
MATTHEW BARNETTE: It’s pretty much been business as usual for Mercury Security. ASSA ABLOY and HID have become fairly proficient at these acquisitions and what works and what doesn’t. So we’ve continued on as a separate business and slowly integrating where it makes sense into the larger organization. It’s been impressive with the people and the technology within the company.
The global perspective HID has is a much larger worldwide presence than Mercury. The thing you learn about is more of the perspective of the end users, consultants, architects, which is a bit different from the technology partners we’re used to working with. We find especially the end users are much more involved in the process of selecting a technology.
From our perspective, there have been no real roadblocks and we’ve been given resources. We’ve added to our team both in engineering, to keep up with technology changes in the marketplace, as well as in the sales and business development side of the business. We’re continuing down a fairly robust roadmap that was already laid out when the acquisition occurred.
Is the August Home acquisition the tip of the spear, signifying a concentrated push into the residential market?
MARTIN HUDDART: It’s true that if you look at ASSA ABLOY around the world, we do more business in the nonresidential side of things. Nonresidential is primarily made up of institutional and commercial buildings in the U.S. If you look at the overall size of the markets, between residential and commercial hardware, they’re reasonably similar in size. So it’s natural, given that we have a lower share of residential today, particularly in the U.S. market.
August was definitely a move to increase that market share, particularly in smart locks. Between Yale and August, now we believe we’re leading in smart locks, with both pro channel and DIY-oriented offerings. And it gives us a great base to build and grow into other products like video doorbells.
How is the recent CEO transition progressing?
HUDDART: Given our success both in ASSA ABLOY Americas and HID, we wouldn’t expect a major change in strategy. But Nico Delvaux’s new and he’s been very active learning about the U.S. market and has made a lot of customer visits over the short period he’s been in charge. That’s good to see.
In your current roles, what is a typical day like for you right now?
HUDDART: It’s different each day. I’ll give you a positive and a negative. The positive one is just executing and developing our innovation roadmap. We’re very fortunate to be in an industry that has so many good ways to grow through innovation. That’s a lot of the day. The negative concerns an interesting dynamic right now, which is affecting a lot of the manufacturers. That is the global pushing out of lead time on components.
To build circuit boards, simple things like resistors and capacitors, there’s a global shortage as the auto industry and the Internet of Things is taking hold and everybody’s embedding electronics into their devices. It’s created a global shortage. We’re running around like everybody else securing supplies of components to build our circuit boards.
Sometimes you have to substitute component A for component B and make design changes or design approvals. Plus as supply gets tighter we are paying more for some components. Often, you have to go to alternative sources such as aftermarket distributors rather than suppliers themselves. That tends to have another layer of margin in it. So far, we’re managing through it well.
BARNETTE: I’m spending a lot of time building out the team here at Mercury, and how we can continue to grow the organization as our company has grown the past few years. I am making sure we can continue to service our customers and that we’re in business alignment with HID. As we tie these products more and more together I want to ensure we don’t have any missteps. I also spend a lot of time talking to our customers about what’s going on with their business. I want to know how the market is looking from their perspective and what we can do to help them.
JOHNSON: Roughly 80% of my typical day is the business of managing and running August. Then there’s a certain amount of time I spend working on these larger global initiatives with the larger organization. More recently, I’m spending some of my time working on acquisitions and finding ways to help identify and look for opportunities to grow the organization, particularly in the areas of technology.
There has been more emphasis on putting the ASSA ABLOY name out there of late; how are branding decisions made?
HUDDART: When ASSA ABLOY was formed in 1994 the goal was to grow through acquisition. The biggest and best brands were purchased across the globe. Since 2007, the group has tied the strong local brands tighter to the ASSA ABLOY brand with the goal of building ASSA ABLOY as a solutions brand; a one-stop shop for all your door and hardware opening needs. The ASSA ABLOY brand will continue to grow as a leader in opening solutions and access solutions.
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