19 Jan 2010
last year closed with new security threats, 2010 looks better than ever
for giant, private security companies, Jody Ray Bennett writes for ISN
The world’s largest defense contractor, Lockheed Martin, received an early Christmas present last year when it was awarded an $841.9 million contract to supply 24 F-16 fighter jets to the Kingdom of Morocco. According to reports,
Morocco is paying $35 million per aircraft, “which includes advanced
countermeasures, electronic warfare and support equipment.”
The defense industry feared losses after the
Obama administration cut costly, technologically risky and often
developmentally delayed defense programs that were manufactured by Lockheed and its subcontractors. However, market analysts predict
that this new contract will “boost […] the company, which had shrunk to
$76.4 billion [in] fiscal 2009 from $80.9 billion at year-end fiscal
But while Morocco has been searching to strengthen its military forces, the North African country is having difficulty attracting foreign investment,
primarily from neighboring Gulf states, due to “poor infrastructure,
lack of proper legal framework and excessive red tape.” As
intra-national security is a deep concern for potential investors, the
monarchy has been looking to strengthen security in its largest cities
in order to attract foreign capital.
one of the world’s largest private security companies, has swiftly
moved into Morocco to become its largest provider of private security
guards and security-related services. In a press release statement
late last November, the company announced that it had purchased “75
percent of the shares in the security services company GMCE Gardiennage
in Morocco,” which has 400 employees, mostly in Casablanca and Rabat.
The additional 25 percent is set to be acquired in 2013, depending on
Big fish, little fish
In fact, Securitas spent most of last December
buying up smaller security companies all over the world, the lynchpin
strategy of the company’s rapid growth since 1999 when it successfully began to acquire some the oldest private detective and investigation agencies in the US.
Throughout December 2009, Securitas acquired Dora Security
in the Czech Republic and is now the largest private security provider
in the country. The very next day after its Czech acquisition,
Securitas acquired Grupo Argos and - literally overnight - became the second largest private security provider in Mexico, which contains a fragmented market of approximately 6,000 registered security companies.
“These recent acquisitions reflect opportunities
created by the current economic crisis. Global security providers like
Securitas aspire to continual global growth and expansion, and their
biggest profit margins are generally in emerging markets. As profits
come under pressure in the more mature markets of Europe and North
America, a global acquisition strategy becomes even more important,”
Professor Rita Abrahamsen and Professor Michael C Williams of the
Graduate School of Public and International Affairs at the University
of Ottawa, told ISN Security Watch.
One week later, the company became the second largest provider in Serbia after acquiring Gordon DOO, a firm that provides “technical security, monitoring operations and fire prevention.”
By 29 December, Securitas acquired 49 percent of Long Hai Security, the first privately owned security services company in Vietnam, founded by none other than Retired General Phan Van Xoan,
the former head of Internal Protection Services for Vietnam's interior
ministry and chief bodyguard for President Ho Chi Minh.
Securitas ended 2009 with its final purchase of Tecniserv in Spain, a firm that monitors third-party connections and alarm systems for customers mostly in Madrid.
Global private security behavior
These recent acquisitions seem to indicate
something of a new period of growth since the post-9/11 industry boom
that created much of the demand for private security. However, where
one may find a similar parallel with the post-9/11 spike, some experts
identify such acquisitions as indicative of the economic behavior
driving multinational corporations in the private security industry.
“While the private security industry experienced
a spike post-9/11, the dynamics driving the expansion of the sector
long preceded those events, and the social factors behind this growth
go well beyond the issues associated with 9/11,” Abrahamsen and
Williams told ISN Security Watch. “The climate of fear and risk
following 9/11 has combined with and further intensified already
existing pressures towards security privatization, leading to a more
security conscious society at all levels.
“For global security companies like Securitas, a
regulated environment is generally preferable and advantageous. It
allows them to turn standards into a competitive advantage, to access
higher margin clients, and thus improve their competitive position.
While this does not stop companies from moving into unregulated
environments, profit in one market needs to be balanced against risk to
global reputation and this again leads towards a preference for
regulated markets,” they said.
In North America, arguably the industry’s most lucrative market, many companies are experiencing decreases in sales. Indeed, BusinessDay reported
last November that Securitas specifically would remain in recession
into 2010. This is part of the reason large companies are trying to buy
up smaller firms in developing markets, where purchases are less
expensive. These strategic moves are what Williams believes is a result
of opportunities created by the current economic crisis.
Indeed, when global recessions begin to yield,
Securitas will find itself at an immense advantage with newly
controlled or accessed markets throughout the developing world. That
private security giants are moving rapidly to gain a stake in a global
market, there is little reason to brush the phenomenon off as ‘business
“The extent to which two or three global
companies have acquired significant influence within ‘national’
security sectors across the globe is not simply a story of business
expansion, but a re-organization of political and security relations.
It also has potential social implications [that are] changing how
security is provided, for whom, and by whom across the globe,” Williams
Bennett is a freelance writer and academic researcher. His areas of
analysis include the private military and security industry, the
materialization of non-state forces and the transformation of modern