Join or Sign in

Register for your free asmag.com membership or if you are already a member,
sign in using your preferred method below.

To check your latest product inquiries, manage newsletter preference, update personal / company profile, or download member-exclusive reports, log in to your account now!
Login asmag.comMember Registration
INSIGHTS

US market: Security companies coping with covid-19 shakeout

US market: Security companies coping with covid-19 shakeout
Despite ISC West being postponed, a&s spoke with various US security manufacturers and consultants to explore the outlook of the market, impact of covid-19 and technology trends for this year.
Covid-19 has become a pandemic that has infected millions and killed tens of thousands worldwide. The worst-hit area, of course, is the United States. By the time of this article’s publish, according to Worldometers, the U.S. saw over 2 million infections and over 110,000 deaths – both topping other nations in the world.
 
Needless to say, this has caused severe economic disruptions in the U.S. and affected US security companies, whose end user clients are faced with revenue declines and tighter budgets to work from. “Coronavirus has caused a downturn in many market segments. For example, the government sector has budget issues caused by its lower revenues. Federal, state and local governments have cut back dramatically on requests for security equipment. Education is also affected by the lower funding available,” said Bob Mesnik, President of Kintronics.
 
“Lockdown has affected every industry; airline traffic is less than 10 percent, malls and shops and office buildings are nearly empty, road traffic delightfully absent, money is not flowing anywhere,” said Art Kosatka, CEO of TranSecure. “And security is not a revenue source for the buyer – it’s a huge overhead cost. End users are considering whether they should buy equipment and its attendant long-term commitment, or pay guards to give them jobs with more flexible to hire/fire.”
 
“For essential vertical markets like healthcare, the need to ensure the safety and security of all employees and customers becomes greater as the pressure to prevent and contain the spread of the virus becomes the top priority. Conversely, nonessential and small businesses, which are facing a significant cash crunch, will not have the funding to spend on security this year. Many projects have been delayed until next year or outright cancelled. The construction of new headquarters facilities and office moves have been quashed. Many temporary furloughs are becoming permanent layoffs,” said John Torres, President of Guidepost Solutions.
 

Initial optimism for 2020 fades

 
In fact, a lot of security companies had expected at the beginning of the year the US economy would build on its 2.3 percent growth last year to go up even further in 2020. Now, covid-19 has thrown everyone off balance and created a general sense of uncertainty.
 
“The covid-19 pandemic makes sales projections for 2020 virtually impossible. We, and the entire industry, are hoping social distancing and quarantines will be lifted soon. At that time, we’ll get a much better idea of what to expect in the second half of 2020,” said Mohammed Murad, VP of Global Sales and Businesses Development at Iris ID.
 
For some, a slowdown in the industry this year has become all but inevitable. “The first quarter for the U.S. security market was strong, and we are only seeing a small drop in demand in the second quarter. The strength of Q1 may mask overall 2020 results, but I expect that Q2 2020 to Q2 2021 to be a little bit down,” said Mike Mathes, Executive Vice President of Convergint Technologies.
 

Trying to cope

 
Despite the gloomy and uncertain mood, US security companies are still trying to cope and stay viable, seeking to leverage certain demands that exist even during the pandemic. “Security is needed more than ever during the pandemic, especially in the US and abroad,” said Sean Ahrens, Security Market Group Leader at Affiliated Engineers. “I expect booms in crime, assaults, workplace violence and burglaries as we linger through this year. This will force investments in security technology and systems. To what degree will be based on individual companies/organizations fiscal health.”
 
Then, some US end users are especially using this historic and unprecedented time to install or enhance their security, and solutions providers are happy to oblige. “We are seeing customers using this time to accelerate deployments which would otherwise be restricted to night-time (or off-season) installations. Some are using this period to upskill their staff while others are looking to leverage low-touch, cloud-hosted solutions to enable collaboration across enterprise boundaries,” said Andrew Elvish, VP of Marketing at Genetec.
 
Finally, security vendors are bracing themselves for an eventual return to normalcy in which they expect security investments and projects to proceed in a rapid pace. “It is our belief that when we finally get through the covid-19 pandemic, there will be a positive upswing in everyone’s business and we will expect many delayed projects to be set in motion and most will see a large demand,” said Tom Cook, SVP of Sales at Hanwha Techwin America.


Product Adopted:
Other


Share to:
Comments ( 0 )