Industry confidence skyrockets, SIA reports

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07/31/2019

Security industry confidence continues to rise with the summer temps, according to The Security Industry Association’s latest Security Market Index, a bimonthly measure and outlook for the security industry.

While confidence in the state of the market had already seen a bump in May with a Security Market Index (SMI) of 63, up from the March SMI of 60, hopes are even higher this month with a July 2019 SMI of 71, SIA reported, noting that any Index above 50 indicates that conditions within the industry are largely positive and that security industry professionals are predominantly confident in their business outlooks.

Special focuses of the July 2019 SMI include:
•    A continuously climbing SMI for security consultants;
•    Despite other sectors' increases, a dip in confidence for the video surveillance SMI;
•    Integrators increasing spending among decreases in overall confidence in business conditions; and
•    Expected security spending increases in government and education.

For its July SMI, SIA found that 48 percent of security professionals rated current business conditions as “excellent,” and 45 percent said they were “good.” Only 7 percent said conditions were “average,” and no Security Market Index respondents considered current conditions to be “fair” or “poor.” In May 2019, 49 percent of respondents said conditions were “excellent,” and 38 percent rated conditions as “good.” Eight percent said conditions were “average,” 5 percent rated conditions as “fair” and no Security Market Index respondents rated conditions as “poor.”

SIA noted that multiple respondents said that there is a strong demand from customers for security system upgrades, as well as new installations, while others pointed out the strong acquisition activity currently happening within the security market. And while the responses were mostly positive, some pointed out what they see as current issues in the industry. “While the economy appears strong, we’re seeing a lot of pressure to cut prices,” said a respondent working in the access control sector, who rated current business conditions as “good.” One respondent who works as an engineer in the industry rated current business conditions as “good,” but expressed worry over the U.S. president’s relations with Europe, saying, “Unnecessary business risk results.”

While numbers remained steady in most key factors (new orders; product/service sales; new product intro; and capital equip spend) this July, SIA found that the percentage of respondents who said they plan on increasing their number of employees or hours worked jumped to 76 percent, when only 56 percent said so in May.

Within the next three months, 90 percent of security professionals believe business conditions will be either “much better” or “a little better,” SIA found, with 10 percent expecting no change to business conditions, and zero Security Market Index respondents expecting conditions to be worse. This is slightly more optimistic than in May, when 87 percent expected improved conditions within three months.

When SIA asked which vertical market they think has the most potential for increased security spending in the next five years, many respondents to the July SMI answered government and education, with 24 percent answering government, and 21 percent answering education. Other answers included healthcare (17 percent), cannabis (10 percent), office buildings (7 percent) and energy (3 percent).
  
In regard to increased government business, SIA referenced a Dec. 2018 U.S. Government Accountability Office (GAO) report, Federal Building Security: Actions Needed to Help Achieve Vision for Secure, Interoperable Physical Access Control, which pointed out the need for improved security in government buildings and a government-wide approach to regulate access to controlled areas in federal buildings using access control systems such as card readers.   

“Implementation of physical access control systems at federal agencies represents a significant federal investment,” stated the report. “For example, over the next five years the Transportation Security Agency plans to spend about $73 million to implement physical access control systems . . . In addition, according to GSA officials, GSA has spent millions of dollars to test these systems.”   

School security has also proven to be a booming market for the security industry, with bills requiring security spending in schools and grants for security systems in schools being introduced at a rapid rate, SIA reported.  The education sector of the market for security equipment spending and services reached $2.7 billion in revenue in 2017, according to a 2018 report from IHS Markit, School Security Systems Industry – U.S. Market Overview. The market is expected to grow an average of 1 percent annually, reaching $2.8 billion by 2021. However, the report warns that since so much progress has been made in securing schools over recent years, security spending may actually slow in the market.

For the full Security Market Index, including a breakdown by segment click here