Napco Security ends its relationship with ADI

Sunday, February 1, 2004

AMITYVILLE, N.Y. - Security product manufacturer Napco Security Group severed its ties with ADI in January, ending a 17-year relationship with the nation’s largest mover of security products.

The decision to leave ADI came as Napco officials became concerned about ADI pushing the Honeywell brand over other products, the distributor asking for product exclusivity and the distributor’s ties with Honeywell’s installation arm, said Jorge Hevia, senior vice president of sales and marketing for Napco Security.

“They’re really driving their own brands, which we think is a conflict of interest,” said Hevia. A flyer inserted into several security industry publications also said that Napco decided not to do business with a company that “openly competes in installation and monitoring against its own customers … you the dealer.”

Hevia said recent changes at ADI, such as changes to which products that the distributor will carry in-stock, were not contributing factors in its decision to leave the product distributor. ADI launched a reorganization of its branches at the beginning of this year, a project that not only includes a new look at all branches but also determines which products would be in-stock at each branch.

Tom Polson, president of ADI, said he was surprised by Napco Security’s announcement, but “respects the right for them to manage their business as they choose.”

Polson said allegations that ADI pushes its house brands are untrue and that the company has strong relationships with many vendors, even ones whose products compete against brands from its sister companies.

“We promote both our family brand products and alternative brand products,” said Polson. “We promote both categories and those where we have strong, exclusive relationships, we promote strongly.”

The move by Napco comes as little surprise to security industry researcher Joe Freeman, principle of J.P. Freeman Co., who has seen the margins in distribution decline over the years while the competitive climate continues to escalate. Freeman speculated that other product manufacturers may follow suit.

“I would not in the least be surprised to see other manufacturers do the same,” said Freeman.

Napco Security announced the distribution change through a mailing to security professionals, a blast email and by posting a notice on its website. Hevia said the company had been considering making the change for some time, but made a definitive decision to end its relationship with ADI about four months ago.

In lieu of distributing its Napco and Alarm Lock brands through ADI, Napco Security Group will work with a network of 106 independent distributor locations across North America.

Napco has been selling its products through independent distributors for years, but now plans to increase independent distributor’s expertise on its products through a more formalized training program..