Security systems integrators open opportunities for electrical contractors.
According to reports compiled by the FBI, in the time it takes you to read this sentence one burglary will be committed in the United States. Elsewhere in that same amount of time, a fire department will be responding to a residential fire. So it's no coincidence that out of all the automated systems that are installed in homes, security is the priority of homeowners and builders alike.
“There isn't a new home built without a security system,” says Louis Katona of VidCorp Security and Home Automation Systems, Houston. “It's almost a standardized product.”
The typical residential integrated security system will include intrusion and fire alarms, personal emergency systems, access control, and some lighting control. However, where the market gets interesting is not in the cookie-cutter housing developments but in high-end custom installations. These systems comprise all the components of the basic system, plus stricter access control, more extensive lighting control, telephone-line security, closed-circuit television with recording capability, and monitoring services. Add to that temperature control and home entertainment, and the security business lands firmly in the realm of home automation.
In this climate, there are plenty of opportunities to find work on residential integration and home automation. In fact, many electrical contractors have earned licenses to purchase and install security systems to supplement their residential work. In addition, there are a few instances of integration firms becoming licensed to do the wire pulling work of electricians. However, what seems to be most advantageous for both sides is to work together.
Keeping sides. The competition between low-voltage and high-voltage installers has always been present in the security industry. Some security firms manage to have good relationships with their high-voltage counterparts. “We work with electrical contractors, primarily on fire alarm systems and maybe on some large camera and CCTV systems,” says Spencer Smith of Alarm Protection Services (APS) in Metairie, La. “Sometimes it's us needing to have some electrical work done or a lot of conduit work done. We'll hire them to do that for us, or they'll bring us in to do connections. They may have piped and wired, and we come in and do all the connections and provide all the fire products. We do what we do, and they kind of stick to what they do.”
Other firms have good relationships with the electrical contractors they hire to work on projects, but feel a tightening in the market due to the attitudes of the builders. “Builders don't want to pay the low-voltage contractors to do a high-tech installation,” Katona says. “They want to pay an electrician to run some wires and call it a high-tech installation.”
On most of its jobs, Vidcorp performs the low-voltage wiring for all of the electronics in its residential projects, but most of the installations also require hiring electrical contractors to install a dedicated service. “They come in and they do the electrical work to our specifications and deliver all the circuitry where we need it,” Katona says. “After that, we install all of the equipment, turn everything on, and give it over to the customer.”
The electrical contractors who work with both APS and Vidcorp are separate firms with a working relationship with the installers. Only in rare cases do the two do work for the same company, but it is possible. Almost 15 years ago, Absolute Power & Communications, Washington, Neb., began as a low-voltage firm. However, when demand to become a one-stop shop for builders in the area increased, the company began hiring electrical contractors in order to provide contracting services from the same company. “The builders want one person to do everything,” says Tom Lengeling, sales manager. “We can do electrical, low voltage, security, and even signs. We just diversified what we were already doing.”
However, according to Lengeling, at his company the cross over from divisions only runs one way. The electricians in his company don't work on the low-voltage side of installation, but sometimes the installers will cross over to the wiring side. “We have different divisions,” he says. “We cross over quite a few times.”
A different industry. The prevailing attitude of installers is that electricians don't have the necessary skill set to cross over to the low-voltage side. “Sure, high-voltage contractors could probably obtain the same equipment and attend certification classes,” Katona says. “But they're in a fog. It's not because they don't know how to do it; it's just because it's such a different industry.”
Katona points to the many intricacies involved with meshing together security, home automation, and entertainment components and systems as a barrier. “You cannot just go out and read a book today and then start installing home automation systems,” he says. “The field training, including the certification training, is intense because it changes so frequently. We're using different control centers and software packages on a day-to-day basis.”
The investment in equipment isn't cheap either. Katona estimates his average vehicle has about $30,000 worth of test equipment in it.
According to Ron Cain, president of Cain Security Systems, Alexandria, Va., an installer's predisposition to technology helps immensely in the security automation field. “I'm a very technology-oriented guy,” he says, claiming that the most difficult part of his job isn't keeping up with the technology, but rather choosing the right technology for each project. “There's lots of stuff out there, and much of it is what we call in our business ‘vaporware’ — software that doesn't work all that well.”
Having the interest level and know-how to steer clear of these types of products is a key attribute of a successful security professional. Another obstacle to a firm's success can be finding qualified and experienced employees. “I try to find good quality people, and then I train them all the way through,” Cain says. “You can't hire anybody to do what I do, but we get to where staff members have a pretty good strong basis in about a year.”
To stay current, Cain takes advantage of training offered by manufacturers and the classes given by the national and Virginia burglar and fire alarm societies. The bulk of employee training, however, is done in-house.
Certification. In addition to staying current on products and systems, security firms also must be licensed or certified by the states in which they perform installations. Installers must pass extensive background checks, even polygraph tests in some cases. “In Virginia you have to go through background checks, polygraphing, and all kinds of things to get your registration,” Cain says. “One of the ways electrical contractors have become involved in my business is that they run the wire or the conduit sometimes for jobs that we do as part of the electrical contract, and there is an exception in the law that says they can do all of that without doing the background checks, if they're not doing it for the end user.”
But if you are involved in the sale, design, programming, or maintenance of a security system, you have to go through an extensive and expensive process to become a Division of Criminal Justice Services (DCJS) registered company. You must have a qualified agent to operate between you and the state. “Everybody who has access to circumvention information has to go through this process,” Cain says. “If don't do that, the state can hit you with a $100,000 fine.”
Another drawback to the security industry is the issue of liability. Cain recently gave a deposition as an expert witness in a fire loss case. The legal fees for the defendant, a security installation company, are running close to $500,000. “If you're going to get in, you better know all the risks,” Cain says.
Not only is becoming certified expensive and time-consuming, but the work itself may also require inconvenient hours. “I buy accounts from electrical contractors who've already made the decision to get into it,” Cain says. “The reason they sell is that they don't want to get the calls in the middle of the night about all the problems that go with security. So they get 20 to 30 accounts, and then they say, ‘This is driving me nuts,’ and they sell them.”
Advice for novices. The security market in general is very competitive, Katona maintains. “It has been ever since 10 years ago when companies started undercutting and giving away free systems,” he says.
According to Katona, there isn't much revenue to be gained through maintaining a strictly security-only business. Most companies have diversified and found other niches and used security as an additive to home automation systems. “We started 30 years ago, and security was our primary business,” he says. “We've since expanded into home automation systems. Security is part of the home automation business now. We're a systems integration company.”
What may trip up electricians wanting to get into the security industry is that server-based platforms and control panels are now capable of handling all aspects of home automation on one system, including security, lighting, HVAC, and audio and video components for home entertainment systems. “They handle everything from soup to nuts,” Katona says. “We're getting more of the younger generation demanding higher-tech systems.”
Other high-end custom companies have also expanded their repertoire to include home automation in addition to security. “Alarm Protection Services was the original company,” says Smith. “We have another division of our company that we call Audio Professional Services. It handles the audio, home theater, and automation.”
In the last 10 years, the home automation section of APS has grown slowly. “We're seeing more integration among fire alarm, access control, camera, and the security,” Smith says. “The technology of the systems overall has become more computerized. It's a little bit easier to program these days, and it provides more information on the touchscreens. It's become a little more user-friendly.”
The downside of the advanced technology is that the systems are now quite expensive and out of reach of the average homeowner. Based in a smaller town in Louisiana, APS must still depend on its security division to bring in revenue. “Security is the bulk of our business,” Smith says. “The higher-end work, percentage wise, is probably about 25% of our business.”
Demographics. For some security firms, however, custom high-end projects have proven to be profitable. “The nature of things today is that about 20% of our contracts are new construction,” says Cain. “We don't do projects with 200 houses. We're a custom installer.”
At any moment, Cain Security may be working on custom projects in a dozen to 20 new construction sites. The other portion of the company's business comes from a combination of existing premises that are being upgraded, expanded, or both — a partial retrofit. “The remodeling world has really ramped up,” Cain says.
In 95% of its jobs, Cain Security works directly with the homeowner instead of a contractor. Although there's more of an educational component involved, Cain still prefers the timeliness of working directly with homeowners. “It's much better for me to take a contract, send a team of men in, do the job, and then the customer looks around and says ‘Yeah, you're done, here's your check,’” he says.
Homeowners, says Cain, may not have a clear understanding of what's available or what might be the best system for their home. Cain Security overcomes that obstacle by also providing system design services. “We are a design build outfit,” he says. “It's not uncommon for us to charge $5,000 to do the design.”
Another aspect that helps the company take on appropriate projects is that almost all of Cain Security's business comes from referral — 99%, according to Cain. “The people that come to us already believe they need some version of what we do,” he says. “They come to us because our existing customers or people who know our business — architects, engineers, security people, police, insurance companies — send business to us.”
Katona agrees with custom installation as a business strategy. “The systems are not inexpensive,” he says. “We only do high-scale homes — 10,000- to 15,000-square-foot homes. Typically, we get in on the ground floor with an architectural firm. We get in with the remodeling contractor and do a turnkey operation.”
One-stop shop. Whether electrical contractors prefer to work alongside low-voltage professionals or are earning certification and setting up shop on their own, it's important to keep in mind that the majority of clients — from builders to homeowners — prefer working with just one subcontractor for all their home automation installation needs. “When we do a job, it's one company doing everything — home controls, entertainment, communications,” Katona says. “The customer likes that a lot better because they can deal with one contractor.”
As home automation and access control systems become more complicated, customers are pushing to streamline installation. Therefore, partnerships between professions traditionally competitive with one another are an integral part of this growing vertical market.