SUMMARY OF REPORT CONTENTS

The overall Electronic Security & Fire Protection Market has experienced lower levels of growth in recent years with the Electronic Security Market estimated at £1.16bn per annum and the Fire Protection Market worth an estimated £354m in 2002 

The electronic security market enjoyed considerable success throughout the latter half of the 1990s, reflecting growing concerns over safety and security issues both within domestic and non-domestic situations, technological developments and changing legislation and Millennium related projects.

The access control systems and closed circuit television (CCTV) sectors have continued to perform reasonably well, although there is evidence of lower levels of growth. The intruder alarm sector is much less buoyant as this sector reaches the mature stage of the product lifestyle.

The maturity of the intruder alarm market has resulted in a greater emphasis on replacement products supported by technological developments and product innovation. Additionally, a tightening of the ACPO (Association of Chief Police Officers) policy regarding false alarms in 2001 is gradually prompting replacement levels, although other factors such as the economic situation may affect some commercial sectors in the short term.

In the longer term, technological developments, changing legislation and integration with other electronic security products may support growth. The high level of suppliers in the market is likely to maintain the high level of price competition.

The growing evidence regarding the effectiveness of CCTV in reducing crime rates in the areas under surveillance has supported the growth of this sector in recent years. Government funding has also encouraged growth and the recently publicised government CCTV campaign, with a total of £170m allocated to a variety of schemes across England and Wales.

However, the increasing number of suppliers and falling cost of computer hardware is resulting in the average price of CCTV systems declining. Consequently the level of value growth during the last two years has been significantly lower compared to the rapid growth experienced in the 1990's. Technological developments have provided some short term growth opportunities but competition remains intense.

The Electronic Access Control Systems market experienced rapid growth throughout the 1990's, largely due to the increased awareness of crime and concern for security in commercial organisations. More recent trends indicate that market growth has slowed. This is largely due to the increasing level of price competition in the market, which is pressurising margins in addition to the trend towards replacement products as the market matures. Other factors include the falling cost of technology.

Future developments involve the integration of access control systems with CCTV, intruder alarms and other building management systems.

In the UK, Fire Protection is now a mature market sector worth an estimated £354m (manufacturers selling prices) in 2002. Service and maintenance contracts provide a source of revenue, but the volume of new business is heavily reliant upon new construction activity. The growth of Millennium and lottery related projects boosted the non-domestic sector throughout the latter half of the 1990's. However, lower levels of construction growth during the last two years has restricted the level of installations and increased the emphasis placed on replacement purchases.

The maturity of the fire protection market has resulted in suppliers focusing on service and maintenance contracts, which are accounting for an increasing proportion of turnover for some key manufacturers.

The market for domestic smoke detectors is near saturation and despite maintaining a high profile through various initiatives by the Fire Brigade and the government, sales of domestic smoke alarms are expected to decline due to high ownership levels and little impetus to replace existing products. Therefore, new installations will be largely confined to the new build sector.

In terms of the supply structure, the large conglomerates continue to develop their interests in all areas of this diverse market on a global scale, with a high proportion of relatively small companies specialising in niche markets.

Leading electronic security and fire protection suppliers includes major groups such as Tyco, Kidde, Novar, Chubb, ASSA, Halma, Honeywell, Cooper Menvier and Bosch. The major companies often compete within several market sectors and have activities spanning the whole spectrum, from manufacturing to installation and maintenance in addition to the management of their own alarm receiving centres (ARCs).

Companies within the fire sector include Apollo Fire Detectors (owned by the Halma Group), Gent, Wormald Ansul (owned by Tyco International), How Fire Group and Preussag Fire Protection. Companies within the electronic security and CCTV sector are more numerous and include Blick, Ademco Microtech, Dedicated Microcomputers, Norbain, Baxall and ADT, as well as companies from the 'traditional' video arena such as JVC, Sanyo and Panasonic. Major access control suppliers includes PAC International, Bewator, KABA and Sensormatic.

In terms of distribution, specialist distributors continue to be an important force in the network, benefiting from rapid technological change sustaining the demand for their specialist product knowledge. Distribution of security equipment and fire protection systems through the electrical wholesalers has remained static in recent years at around 9%.

The short to medium term outlook for the security market is relatively optimistic, although growth levels are likely to remain modest as opposed to the rapid development experienced in recent years. The economic uncertainty is likely to impact the short-term growth of the market. In addition, the slow growth within the construction market will affect the level of first-time installations, while the increasing level of maturity in the intruder alarm and CCTV sectors will impact growth levels. Consequently, suppliers are likely to place a greater emphasis on technical developments in order to encourage a higher level of replacement and related activities such as servicing and maintenance to add value.