The dinosaurs are still roaming the earth, warned a senior contract guarding MD, in a review of the guarding sector after one year of SIA licences and the approved contractor scheme (ACS).
And expect more of the same for the next few years, he added.
Stuart Lowden left an audience at IFSEC on Tuesday, May 22 stunned with a bleak assessment of lower margins and still ‘Victorian’ working practices which he has long been a critic of. As he put it: "I have some very deep concerns about the industry that I work in." There were no questions from the floor after his talk, arguably a sign of how his message harsh but realistic. He began his talk with a dinosaur metaphor, describing the guarding industry before licensing as ‘when dinosaurs roamed the earth’. "I think there was a hope that licensing would change that. There was a lot said about how licensing would be a force for good and there would be a sea-change within the industry." What has changed? He asked. "There are some good things that have come about through licensing. The introduction of minimum training means at least an individual [has] four days’ training whereas before they might have had no training at all. Criminality has probably been removed from the industry." That is, he raised concerns that criminality has gone ‘below the radar’: ‘the jury is still out on how effective the inspection regime has been’. Stuart Lowden credited the SIA with helping the establishment of the new Skills for Security body. And, the SIA has created what Stuart Lowden called an ’embryonic’ standard, the ACS. He added: "To me the ACS is a great disappointment. It comes well, well short of what a number of us hoped it would be; and there are a number of reasons for that. I think particularly the problem is that we all expected too much out of the SIA. We all believed the hype that it was going to change the industry and the real question is actually – does the industry want to change?" And if the guarding sector did not want to change, could it be transformed?
ACS, he went on, has not improved margins; promised had been a ‘promised land’ of happy managers and improved margins. Arguably, margins have got worse, he added. As for training, yes, it has been dealt with; at the lower level. Stuart Lowden returned to this point later. Continuing with ACS, he said it could have been an opportunity to actually transform guarding. "Actually what it has done is allow buyers to say, ‘well you are all approved contractors, you are all providing licensed officers. So why shouldn’t I buy on price, because I can’t differentiate’. So we have an issue to address there."
Another issue: in-house officers, who do not need an SIA licence. It is now possible for somebody to fail to get a job as a contract officer and walk into an in-house job, he said: "That cannot be right. In fairness to the SIA, they are starting to address that." And another issue that the SIA have not addressed – but as Stuart Lowden asked, was the regulator ever there to do it? – is employment practices: "We are still in an industry which works its people too many hours for too little pay and actually nothing has changed. Now it may change in time and it will be interesting to see whether it does; but for now nothing in particular has changed."
But what he called the biggest issue was that the guarding industry seems to be getting more competitive, with lower margins, and companies are fighting for each other’s work. "I can’t be certain whether licensing has changed that or whether these are just commercial pressures, but there is no indication that licensing hasn’t stopped it happening .." He argued that there is a polarisation within contract guarding, in terms of services offered: some of the very largest companies are winning work on the basis of selling economies of scale, doing work cheaper, and persuading buyers that the work can be done one or two per cent cheaper: "And then there is a group who are trying to stay out of this," saying that there should be an element in the price of guarding for management, and training. However, buyers may see ACS as enough and ask themselves, why buy more?
"Ultimately, I am not quite sure where the industry is going to go from there, because with any service offering, there has to be something in there for the management of staff, training and development of staff, and a little bit of profit. Now if that is being driven out of the process, I am not quite sure where the industry is going to go." As for eastern Europeans maybe willing to do work for lower wages, again Stuart Lowden spoke in terms of ‘unenlightened’ buyers able to buy services cheaper because people are willing to do the job at a lower rate. That is, security clients who want guarding done properly may have to fight their organisation’s procurement people (who look for cheapest price).
Stuart Lowden argued that there is no genuine guarding standard, that you can take to a buyer as a sign of quality. Before the ACS, the NSI gold standard was something people could use to differentiate themselves, he said. Stuart Lowden hoped that the ACS might be a vehicle to change the industry, to improve some of what he called the ‘social charter’ issues such as working hours and pay. He asked whether there could be a new standard.
He recalled that when writing notes for the talk, when he came to the part, ‘looking forward, and positives’, ironically his pen ran out. He said: "My view is, the industry is going to get worse before it gets better." He claimed that a couple of guarding companies are intent on driving margins down and creating market share. Until such large companies get size out of their system, guarding is to have a period of turbulence and contract churn. What Stuart Lowden called a secondary concern is that some buyers will just say that it confirms what has been said all along – buyers may as well buy guarding on price. "Certainly in time the industry does need to wake up to the fact that you cannot run any quality service if you have no management on the ground managing and mentoring the workforce." What he called Victorian working practices are bad enough, compounded by the stripping out of overhead management, ‘that might persuade staff to come to work happy and motivated, Otherwise I cannot see how we are going to be other than an industry of last resort.’ Returning to the ACS, Stuart Lowden said he was not sure that the scheme will work for change. He suggested that guarding may have to live with ACS ‘as a lowest common denominator’ and have to find another standard. At this point Stuart Lowden noted that NSI staff were in the audience; the inspectorate’s chief executive Andrew White nodded.
On a brighter note, Stuart Lowden said that ‘lunatic’ guarding prices may be temporary, once larger companies get to the size they want; and maybe they will lead the industry forward. But, he repeated, the SIA would not change the industry if the industry did not want to change. "Now it could be argued there are people within the industry that like it the way it is." That is, knowing the price model, guard firms can undercut competitors, being only interested in the short term. Stuart Lowden did speak of talk of a cartel coming together, to talk about margins; this cannot happen, he added. Skills for Security, if properly supported, will help improve the industry: "You may argue some of is don’t deserve help because of the way we actually treat our people."
On the SIA, Stuart Lowden said it shows a willingness to listen, ‘which it hasn’t really done for about the last 12 months’. But, he repeated, it was for the industry to move itself forward. He summed up: "The dinosaurs are still roaming the earth; for the next few years, a bit more of the same."
What makes the assessment all the bleaker is that it (unlike some criticism of licensing) comes from a man and company that have invested time and effort into doing the right thing. Wilson James was among the first to be granted status as an SIA approved contractor. Stuart Lowden got a leadership award at the 2006 annual IFSEC Monday night dinner; in 2007, that award went to John Saunders, the departed SIA chief executive who was not there to collect the award.
