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 £1.2bn and the Fire Protection Market worth an estimated £369m in 2004.

The electronic security market enjoyed considerable success throughout the latter half of the 1990s and early 2000s, reflecting growing concerns over safety and security issues both within domestic and non‑domestic situations. Technological developments and changing legislation were key drivers over this period.

The electronic access control and closed circuit television (CCTV) sectors have performed well over the last 5 years, although both sectors have experienced a relatively high level of price competition in recent years and growth levels have slowed. Similar trends have occurred in the intruder alarm sector. However, legislation regarding false alarms has prompted some replacements of older systems.

The market is increasingly reliant on replacement sales as the individual sectors mature, although advances in technology, which has seen higher levels of networked and integrated systems, is providing some stimulus to the overall market.

In 2005, market growth is likely to be supported by slightly higher construction and refurbishment activity in the commercial sector, while in new housing; both the private and public sectors are also expected to achieve higher growth. The re-election of the Labour government should also secure expenditure commitments within the health and education sectors in the medium term.

In the longer term, overall market growth may be supported by the trend towards integrated systems, which are gaining share prompted by the growth of IT infrastructure in many organisations. However, in the short to medium term, the high level of price competition is likely to continue in the CCTV and access control sectors, in line with the increasing level of lower value imports from the Far East.

The high level of price competition in the market is prompting manufacturers to focus on value added services, such as maintenance and service contracts, in order to boost margins and long-term revenue. Product development is fairly rapid, however, new hardware and software rapidly fall in price due to the fast pace of development and manufacturers are increasingly looking towards value added services.

Fire Protection is now a mature market sector worth an estimated £369m (manufacturers selling prices) in 2004. The majority of the market is accounted for by alarms and detection systems in terms of value.  New business is heavily reliant on construction activities, which have fluctuated between sectors since the relatively high levels of new build witnessed in the late 1990’s, resulting from a large number of millennium related projects.  The emphasis is increasingly on replacement purchases in the private sector, although increased public spending in areas such as health and education is likely to be of benefit the market in the medium to longer-term future.  Long term service and maintenance contracts are also increasingly prominent in this sector as a means of adding value and generating replacement purchases.

Household ownership of smoke detectors rose dramatically throughout the 1990’s with campaigns by the government, media and fire brigades raising awareness of home protection.  The market is now heavily saturated and growth rates have slowed, although new build installations are generating some growth within the sector.  Ownership of other fire prevention products such as extinguishers and blankets has remained low but fairly steady in recent years.

While national and multinational suppliers have gained market share in recent years, the security market remains fragmented and, in addition to the major conglomerates, this industry supports a wide range of specialist suppliers operating profitably and successfully in niche sectors.

The structure of the market in terms of product segmentation has enabled specialists to develop successful niches. However, as the level of consolidation increases, these companies are increasingly being acquired and absorbed by the large national and multinational suppliers, in order to expand their product portfolio and knowledge base rapidly and offer a wider range of services.

Leading electronic security and fire protection suppliers include major groups such as Tyco, UTC Corporation (Chubb), Kidde, Assa Abloy, Cooper Menvier, Initial, Honeywell, GE and Bosch.  The majority of the major suppliers operate across a variety of different market sectors, many offering a wide range of services spanning from manufacturing and maintenance to the management of their own alarm receiving centres.  In addition, some companies also offer other security services not included in the definition of the report, such as manned security services.

Companies within the fire sector include Apollo Fire Detectors (owned by the Halma Group), Gent (Honeywell), Tyco (incorporating Wormald Ansul, ADT, Macron and How), and Protec. CCTV and access control suppliers include Upperpoint Group (Norbain, Baxall), Bosch, Panasonic, Dedicated Micros, Stanley Security Solutions, Honeywell, JVC and Sanyo.  Suppliers of access control systems include Bewator, PAC International, Assa, Kaba and Group 4 Technology.

In terms of distribution, specialist distributors remain an important force in the network, benefiting from rapid technological change and demand for their specialist product knowledge.

In the short to medium term future, growth levels are likely to remain relatively modest, influenced by several factors including the high level of price competition.  Replacement purchases will provide the main impetus to the market, as levels of new build construction and refurbishment activity gradually increase.  The growing level of imports from lower value manufacturing countries, e.g. South Korea and Taiwan, is also expected to assert a greater influence on several sectors within the market over the next few years. Consequently, the level of price competition is likely to increase further and influence the level of value growth, particularly in the CCTV and access control sectors.

Technological developments are also likely to provide some stimulus to market growth, with products such as networked and integrated systems experiencing more widespread specification.

The growth of integrated systems may cause a blurring of the boundaries in the overall market, as products such as CCTV, access control, fire safety and intruder alarm products are combined into a single system. The growth of larger organisations that offer the entire spectrum of electronic security and fire products is increasing, which is also likely to support this trend.