With the resource backing of a US$31bn US-based industrial conglomerate and new management drive, Chubb Security is poised to expand its already sizeable share of SA's lucrative security market.
It will endeavour to do so by expanding its technological capabilities, harnessing the synergies of its four business divisions and using its national reach to enhance customer service, says acting group MD Stephen Mundy.
Before mid-2004, Chubb's divisions of Electronic Security, Integrated Systems, Guarding and Fire protection operated largely as independent entities, and even competed for business where services overlapped.
That practice came to an abrupt end with Mundy's arrival from the UK in June. "It was obvious there would be many more opportunities to be gained by pulling the standalone businesses together into a more cohesive and synergistic enterprise," he says.
One of Chubb's competitive advantages is the size and scope of its operations. About 60% of the group's R1bn-plus revenue comes from its Chubb Electronic Security (CES) division, which runs property monitoring and armed response. This serves about 200 000 residential and commercial clients nationwide, making it one of the two biggest security monitoring and armed response operators in SA.
The scale of this advantage can be gauged by the fact that the next-largest four or five competitors each have no more than 15 000 monitoring and armed response contracts.
What gives Chubb the edge over everyone, though, is its capacity to combine its huge client base with state-of-the-art technology and services from its other divisions, so that video surveillance, access control, intruder alarms, fire detection and prevention, as well as guarding can be brought together as a package. The aim, says Mundy, is to leverage all Chubb's services to make it a one-stop security shop, particularly for commercial clients.
Key areas for growth lie mainly in the fields of improved service levels, technology and methodology - better monitoring software and procedures such as density mapping to optimise the deployments of personnel and vehicles in areas where customers need them most.
A critical factor for all armed response companies is the percentage of false alarms, which drive up costs, raise the incidence of staff injuries through car accidents and weaken customer service. Typically, nine out of every 10 alarm calls turn out to be false. Mundy, who has an IT background, believes false alarms can be significantly reduced by improving technology. In this, he now has a powerful ally.
In July 2003, United Technologies Corp (UTC), the 51st biggest US corporation, bought Chubb's UK-based holding company with operations also in Europe, the UK and Ireland, Australasia and North America. UTC achieved revenues of $31bn last year and employs more than 200 000 people in more than 180 countries.
"There is a shift in the culture of Chubb SA, especially in the emphasis on technology solutions and systems' efficiency," says Mundy. "With the financial muscle of UTC behind us, we'll be able to make progress in these areas."
Technological sophistication tends to be pricey, which is why Chubb's hi-tech Integrated Systems (CIS) division has always focused mainly on the corporate and wealthy residential markets. CIS designs and installs integrated systems for video surveillance, access control, burglar alarms and fire detection and suppression.
Mundy believes that by adapting these systems and integrating them more fully with the core CES service, cost efficiencies will make them more affordable for small commercial applications, and a wider pool of residential clients too.
In recent months, Chubb has embarked on a search for a black economic empowerment partner. "We have commissioned strategy research to help us find a suitable partner and assess prospects for a deal," says Mundy.
Chubb and UTC, he says, recognise that empowerment is a business imperative in SA and regard it as a critical element in adding value to the growth of the organisation.
"The growth or decline of the SA economy is inextricably linked to the economic upliftment and growth of a strong middle class and the eradication of poverty," he says.
An added feature of the culture change at Chubb SA comes from UTC chairman George David's emphasis on the education, health and safety of employees. Following its US parent's lead, Chubb has instituted an employee scholar programme that entitles full-time staff members to pursue part-time a university degree of their choice, at company expense. On graduation, students will also be granted stock options in the New York-listed UTC.
Several Chubb SA staff have already grasped the opportunity and started studying for their degrees. "You really feel UTC's presence, even here in Johannesburg," a Chubb staff member says.
Mundy says the education programme was not designed for under- or unschooled staff to complete basic schooling. However, he acknowledges there could be a need for more basic education, especially in Chubb's Guarding division, which employs more than 3 500 guards. "We need to look at their situation and see if we can offer anything to help. But we have not yet discussed it in detail," he says.
Chubb SA is the only division of the global company that employs a large contingent of armed response officers - a fact that caused some concern within UTC at the time of the Chubb acquisition. "There was some discussion about whether they should keep that part of the company, and the decision was: Yes, absolutely', but we would have to make a large investment in the guards' health, safety and training," Mundy says.
About half of the group's employees are guards. The division "was seen as something of an orphan child" and consequently did not receive the focus it deserved, Mundy says. But those days look to be ending as the company moves to revitalise training and safety programmes to produce more guards for the top end of the market, and to complement the group's hi-tech approach to security.
The fourth division in the group, Chubb Fire, may be the least affected by the changes at the top. It is already Africa's leading fire-fighting equipment manufacturer, distributor and service provider, manufacturing fire extinguishers, hose reels, valves and other fittings, all of which carry the SABS mark of approval.
The division is the only national fire service provider and provides services through 14 branches and centres around the country. The greatest opportunity for growth here lies in service more than in manufacturing.
This year the trade & industry department recognised Chubb SA as one of the country's top 300 companies. In 2003 it was nominated as one of the country's top performers.
With the energy of its new management and ownership, the future looks bright for Chubb SA.
