At this year's SecuTech Expo, hosted in Taipei from April 22 to 24, Gert van Iperen, President of Bosch Security Systems, delivered insight and encouragement to industry movers and shakers on survival tactics to weather the economic storm.
Bosch is impressed with the strong role that Taiwan is playing in the APAC region, despite the recent downturn in the global economy. It is remarkable how businesses in Asia show entrepreneurial spirit and tenacity in the face of adversity. This is clearly evident at this year's SecuTech Expo, dominated by powerful examples of high-quality security products developed and manufactured in Asia, together with those from suppliers located in many countries outside the region.
The global security market shows that annual demand in 2009 will decrease by about 5 percent. In the Americas, a 10-percent decline is expected; however, some recovery is anticipated in the United States for the second half of the year. The market in Latin America is smaller but shows nice growth opportunities. For EMEA, a decline of 5 percent is expected this year, but opportunities remain for large sporting events like the Winter Olympic Games in Sochi and the EURO 2012 soccer games in Poland and Ukraine. The situation, however, differs by country, as some are hardly affected and others have had substantial delays in investments. For 2010, only modest growth is forecasted for the global security market.
Effects of Economy
Investments in public and private infrastructure are being reduced substantially, and both end users and channel players have more problems financing their projects. Work on existing installations has been put on hold, and planned installations have been postponed, subject to financial review. This leads to installers, system integrators and even end users becoming hesitant to make further investment in new technologies, which, of course, has a bounced-back effect on manufacturers. Therefore, manufacturers need to encourage and support the acceptance of new technologies.
Another adverse effect of the poor economy is abnormal currency fluctuation and its direct impact on pricing. For large projects, this means that business gets even tougher, while customers need to think more carefully about their investment strategies. Competition gets fiercer and technology differentiation becomes more critical than ever. Manufacturers can reduce the impact of these currency fluctuations by establishing factories in all three regions of the world: the Americas, EMEA and APAC.
But it is not all bad news — independent research shows that the security industry in APAC is still enjoying more favorable market conditions than other industries. It is expected that the market in Asia will decline by 2 percent in 2009. Now, the first signs of recovery in some of Asia's main markets can already be seen, which can be heavily tied to the support of national and local governments encouraging and, to some extent, continuing investment in certain large projects such as airports, train stations and government buildings. In this way, government investment continues to stimulate market growth, which, in turn, boosts the economy.
Still, the innovation of technology continues. Significant ongoing trends include further advances in and growing demand for IP-based solutions, medium- and large-scale network and system integration, more rapid retrieval and display of video content, and, last but not least, cooperation of companies toward increased interoperability.
There are also market segments and applications that show growth opportunities. There is growing demand to protect assets and provide a safe and secure environment in transportation, oil and gas refineries and installations, chemical industry, city surveillance, places of worship, and schools and universities.
Companies have to ensure that they are well-presented in every region of the world so they can first and foremost exploit opportunities offered by the individual regions. Secondly, they need to balance risks with respect to exchange rates and economic development; finally, they need to be close to their customers.
As always, industry standards are crucial to large-scale manufacturing. A recent example is the Open Network Video Interface Forum (ONVIF), which now has 47 members, including Cisco, Siemens, Samsung, IndigoVision and Panasonic. Last year, the first version of the ONVIF core specification was announced, defining standardized procedures for communication between networked video products, and making it possible to employ interfaces from different manufacturers.
These factors impact the security industry in the form of convergence and consolidation. This is where new and different business models determine how to achieve cost reductions, productivity increases, improved core competencies and better economies of scale. Convergence and consolidation are part of the cycle, and some major IT companies, for example, are becoming more active in combining technology and experience to provide networked solutions for security.
Advice to Manufacturers
For manufacturers, support should be provided in the form of innovative and reliable products and systems, training and service facilities. Installers and channel partners can then benefit.
· Focus on key competencies and continue to invest in innovations; do not invest in what you cannot afford.
· Seize acquisition opportunities.
· Keep investing in your people; continued improvement of staff competence is key to long-term success.
· Continuously improve business processes like product development, supply chain management and maintenance and repair services.
· Closely cooperate with industry partners to develop various markets.
· Invest in risk management analysis; a good balance of risks and opportunities is required to prepare for different scenarios.
· Set careful and realistic sales goals; most manufacturers overstock their factories and have had to adjust resources to the actual demand. It is prudent to focus on leading indicators, like investments in the construction industry, infrastructure, and retail and banking sectors, rather than the traditional sales forecasting system.
· Shorten response time to change in demand.
· Commit to social responsibility to partners, customers and within your own organizations.