Guarding industry consolidation is “inevitable … and overdue”, claims the MD of a retail-based guarding firm.
Consolidation of the hundreds of smaller security service providers is both inevitable and overdue, according to Steve Haskins, Managing Director of Frances Clarke, the manned guarding and store detective firm. He said his North Yorkshire-based firm is open to approaches from ‘quality’ smaller firms looking to consolidate, whether by partnership or acquisition. He said: "Since the announcement of a greater level of detail regarding the SIA’s requirements for regulation, we have been inundated with approaches from independent firms seeking to forge strategic partnerships and even acquisitions. I see the process of consolidation as inevitable, overdue, and ultimately good for both the industry and its customers."
Haskins’ view is that many smaller providers are seriously contemplating selling out to larger companies as the reality of regulation begins to bite. He said: "Whilst medium-sized providers such as Frances Clarke are well-placed to adapt to the challenge of regulation, there are many owner-managed businesses who have done an excellent job for years, but are terrified by the likely £600-a-head cost of obtaining licences for all staff. Consolidation spreads the cost and enables quality producers to gain a stronger position within a professionalised industry". The £600 a head figure, including the £190 application fee for a Security Industry Authority licence, was reported last issue in a joint BSIA-SIA booklet about regulation. Senior BSIA figures such as Chief Executive David Dickinson have stated that the 2,000 or so guarding companies could become more like 200.
Meanwhile; security market conditions will ‘remain challenging’ leading up to regulation of the security industry, says Reliance Security chairman Brian Kingham.
In a statement accompanying the company’s interim results for the half year to December 2004, he added: “We believe that, when fully implemented, regulation will benefit the industry, its customers and the public, facilitating the fullest participation in the Government’s wider policing family. Accordingly, we believe that market conditions will improve in the medium term.” The guarding and facilities management company hailed what it called strong organic growth in FM. Turnover was up 0.4 per cent to £149.5m; and profit before tax up 13pc to £6.8m. Despite what the firm called a difficult security market, it did have new security contracts with BP, Global Switch, UKAEA, Babcock Rosyth Dockyards and Centrica, among others. Mr Kingham quoted British Security Industry Association estimates (last reported last issue) that about 2,000 manned guarding companies could become 200 after regulation, because many will be unable or unwilling to comply with the new legislative requirements. He went on: “We expect to see shortages in the availability of licensed security personnel, which will favourably influence employment conditions and moderate downward pressure on wages, prices and profit margins. Better training will increase skills, resulting in an improved service to customers. Our regulator, the Security Industry Authority, has stated that industry-wide margins are too low and they need to improve to accommodate the higher standards of operational performance expected by the Government. The past few years have seen a paradigm shift in the nature and use of private security services, with greater emphasis on multi-tasking management and larger, more complex contracts involving the use of technology.”
