Argentina, at a safe pace

By: Duván Chaverra A.

There is some optimism and expectation for the way in which the Argentine security market is developing during this year, in the first instance companies have again shown an interest in implementing security equipment in their facilities and that obviously means better marketing for distribution firms.

To know the current state of the economy we invite two well-known companies that distribute security equipment in Argentina to participate in this article, and we also consulted the statistics website TheDatamyne.com to have a view from the imports registered during 2009 and 2010. The guests are Patricio Quevedo, CEO of Tellex, and Néstor Gluj, corporate and international area manager of Nanocomm.

We will start by knowing from both companies how the local market has behaved so far in 2010. Néstor Gluj indicated in the first instance that the economic development in this year has generated optimism for what is coming: "In our opinion the year began very promising, with good sales projections and a lot of demand for new technologies. The market is open to the new and the order starts from the end users, that is, the customers of our customers and this fact drives and renews the industry."

He added that after the crisis, entrepreneurs expanded their commercial horizons again: "We also notice that entrepreneurs have the most open mind to the implementation of new services and to meet with their peers to share and add experiences, there is a maturation that allows them to differentiate the different segments in which each one operates, learning from each other.  This is demonstrated by the work breakfasts that we have been carrying out in our dependencies".

For his part, Patricio Quevedo was a little more reserved in his analysis by indicating that from his experience 2010 "began with great caution" and to explain this he divided the market into two segments:

- On the one hand, the product distribution area, which is aimed at installation companies, monitoring stations, etc., and which in turn install these products in the homes of families, shops, small and medium-sized industries, had a reactivation at levels close to those it maintained before the global crisis of the previous year (2009).

- In the high segment of the market, that is, in infrastructure projects, weak currents, firefighting, etc., just averaging the second quarter there is a reactivation in the sense of starting to quote works, pre-engineering, etc. This may have a result of concreteness within a year, so those companies that did not have a significant drag of work could be in trouble.

Import benchmark
To get a statistical point of view in this market analysis, we consulted The Datamyne, where we found that during 2008 and 2009, Argentina based its imports of fire and theft alarm systems on two fundamental markets: China and Canada. The former has recorded the highest amount of imports in both periods, but with a reduction of 10 percentage points between the two years.

The figures are clear evidence of the movement of consumption of security equipment in Argentina, although the reduction in imports was not very relevant between 2009 and 2008; According to the guests, this economic instability was not reflected in their movements since they agreed when referring to the fact that their companies registered growth numbers during this period.

"I would say that we were not affected by the crisis, our company grew in all aspects: turnover, volume and share in a market that also increased its demand for GPRS and added value. We also grew in infrastructure and human resources, while incorporating and consolidating more customers, including top-of-the-line companies. With regard to profitability, I think we had to give something to continue growing, but I think that was the common factor of 2009," Gluj explained.

Meanwhile, Quevedo comments in a similar way in reference to the same aspect that their numbers were positive, partly due to the acquisition they made of a subsidiary: "The year 2009 left a positive balance for us, with a turnover growth of 30% compared to the previous year, but this is conjunctural since in January of that year we acquired the diebold Argentina business, which of course gave a boost to turnover."

Optimism for the rest of the year
In the same way, the company led by Patricio Quevedo expects considerable growth by the end of this year, based on the positioning of his company by managing to enter into strong businesses: "For us the greatest achievement of last year was to insert ourselves as a very strong player in the business of banking solutions, ATM ́S and TAS, which positions us in a privileged place, since the synergy between these products and the traditional electronic security is very large. In relation to growth in 2010 we estimate that it may be 50%."

Nanocomm also estimates to achieve positive figures at the end of 2010, supported by the launch of new products and services: "We expect to grow by 30% in 2010 only in Argentina, thanks to new value-added products for the provision of alarm monitoring, which expand the range of services of our customers, in addition to the launch of vehicle trackers, with added value oriented to vehicle safety," said Gluj, who also made a reference about his experience in the international market.

"To date we have grown a greater percentage, incorporating corporate clients in Brazil with strong monthly demand for products and services. We have participated in Exposec, with great success, generating great expectation in that market. Now he continues to work on those contacts to continue the growth."

Products and services
The guests refer to the fact that today in addition to technology, the issue of additional services are the ones that are attracting the most customers to their showcases, as explained by Patricio Quevedo, CEO of Tellex.

"In relation to the offer or positioning. I think that the products themselves have lost the prominence, today it takes on a very great importance the consultancy, the engineering and all the offer that focuses on allowing the client the greatest amount of time to focus on their business, an example of this is the banking segment. The business of banks is to generate as many transactions as possible, and this undoubtedly goes to transactional automation through technological tools, then if a bank needs to open a branch and we understand that to achieve the above you have to strengthen the 24-hour area, a good project could be to offer from the civil works, networks, security systems, atM installation, etc."

Active industry uncertainty
Finally, we consulted with the guests about how the current political and economic situation in the country influences the industry, and how the sector can take advantage of this. Initially, Néstor Gluj, from Nanocomm, said that although the issue of security has as a consequence a better movement for the industry, that also generates that actors with little experience and professionalization enter the competition.

"Insecurity activates our industry, it is not the most appropriate but all of us live it and suffer with our families and friends. In any case, insecurity has generated many companies with little or no know-how, which enter the industry in search of magical growth and unsustainable prices, without knowing how and what to do. This generates bad service and disbelief. We must continue from the business chambers (CASEL and CEMARA in Argentina, and their peers in the region) promoting professionalization with standards, training and certification of professionals to position the activity as appropriate."

For his part, Patricio Quevedo commented in a similar way on the subject: "We are living a year with a lot of political bidding, since little by little the Government of Mrs. Cristina Fernández de Kirchner was and will continue to lose political power both in the chambers of deputies and senators, and in the will of the people, this, considering that next year there are presidential elections, it necessarily makes the Government go out to carry out infrastructure works to give work, which benefits our industry."

BOX
Local figures
According to unofficial figures provided by Casel, taken from different surveys, the economic situation in Argentina added to insecurity have allowed a growth in the industry in recent years.

The data provided are as follows:
* Total year 2009: U$S 560 Million
* CcTV: 37% (U$S 207 Million)
* Access Control: 22% (U$S 123 M)
* Intrusion Detection and Monitoring: 29% (U$S 163 Million)
* Fire Detection: 12% (U$S 67 Million)

The South American nation has presented a growth of around 15% during the first half of 2010, and it is expected that by the end of this year that figure will be maintained.