PLEASE NOTE:

MyNews24 is a user-generated section of News24.com. The stories here come from users.

 
Dolf Scheepers
 
Comments: 4
Article views: 1420
 
 
Latest Badges:

 
View all Dolf Scheepers's badges.
 

Impact of the Economic downturn on the security industry in SA

24 April 2013, 07:13

Recession, economic downturn, impact of labour unrest on mining and the general economy, high labour force salary expectations, labour union fights for survival, political rivalry with external influences from socialist movements on labour issues  and now lately fragflation (high inflation and low economic growth) also influence the private security industry negatively. With more than 8 000 registered security businesses the “cake” is not big enough to give everyone a sizeable opportunity under current conditions.

The reality is a decline in business spending or planning to spend on private security services and stretching payment terms to 60 days plus. Budget adjustments hardly exceed 6% whilst new security contracts are all signed on lower than current rates. The nett effect is an ailing private security industry dropping to net profit margins below 5% at rand values of between R300 and R350 per person per month. It is estimated that on equal time work, companies make more profit out of car guards than a security guard – up to R900 profit  could be made from a car guard.

Despite for the above is the security industry growing – more and more new entrants are seen in the industry, new names emerge and “go down” (No nonsense security CC) more second hand bakkies of new companies feature and there are rumours of a growing dissatisfaction amongst security officers due to low rates, non complying security owners pertaining to provident fund contributions and statutory compliance. Government Gazette 36278 dated 28 March 2013 reflect on more than 200 security services providers  withdrawn from rendering security services due to failure to pay annual PSIRA fees. In an April 2013 report it is published that only 480 private security companies out of 9020 registered companies contribute and comply with the regulations of the Private Security Services Provident Fund (PSSPF).

Where does this leave private security companies and business?

 A decline in service levels, less innovative security solutions, security officers less cared for, increases in safety risks due to improper uniforms and protective measures with staff vulnerable due to non statutory compliance in terms of UIF, WCA and other compliant contributions and an industry looking shabby due to low cost uniforms? All of these in efforts to protect net profit margins and enhance shareholder expectations?

The serious security services provider would take on the challenge to compete on price (sic) and would differentiate the low price with additional products and services – over are the days where high prices would be justified with promises of better staff, better uniforms, better training and management. The era is entered (wrongly) where low prices will be protected by the above but business will require that ‘extra” from the service provider, despite for a low price.

 More and more smaller role players will vanish whilst BBBEE and Mining Charter requirements will put more pressure on the larger companies to share wealth in especially mining contracts with local role players putting additional pressure on profit margins being at least 26% less than a year ago.

Whilst survival will force security companies to “go for every new business opportunity” will the responsible business owner still wait and see to it that affordable business contracts are entered into. Mining security might not, if Mining Charter pressure continue to surface, be the lucrative business in the future.

Responsible business owners and users of private security will continue to maintain their values of preferring security services suppliers who care for their employees, value safety of staff and provide that bit extra that would put the user of security at ease of dealing with a responsible security services supplier. The risk of dishonest, unhappy and disgruntled security staff is a threat to business.

Irresponsible security businesses will underpay their staff, reduce costs on uniforms and site equipment and continue to be non statutory compliant – clever and innovative ideas to overcome high statutory expenses in terms of for example the 4,28% WCA contributions will become more pertinent whilst tax compliance would decrease. Security officer unhappiness and possible irresponsible industrial action could be the order of the day.

Responsible security companies will continue to do business on quality standards, differentiate themselves from the rest of the market and wait for “better days to come” whilst the responsible user of security should appreciate and uses businesses that would be prepared to reduce costs, maintain standards and lower profits.

The future

 The future lies in the hands of true, honest and caring leaders with a passion for the industry, service delivery and maintenance of standards who rate quality as the first prize and then profits will follow immediately

Disclaimer: All articles and letters published on MyNews24 have been independently written by members of News24's community. The views of users published on News24 are therefore their own and do not necessarily represent the views of News24. News24 editors also reserve the right to edit or delete any and all comments received.

 

Read News24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
4 comments
Add your comment
Comment 0 characters remaining

Read more from our Users

Submitted by
Guy M Artist
Small business trips, tricks and ...

Today I want to talk to you about entrepreneurship, owning a small business and the hazards of being self employed.  Read more...

0 comments 0 views
Submitted by
Adam Sibuyi
Our subsequent scuffle cutting ed...

Africa, albeit sovereign, are still far-flung from being unrestricted and liberated. Dogmatic liberation is demarcated basically as autonomous. Read more...

0 comments 0 views
Submitted by
Jenelle Joanne Ramsami
My Story

My name is Jenelle Joanne Ramsami and I was born from Durban as a partially impaired individual and I had to endure a lot of hurdles and challenges in life. Read more...

0 comments 0 views
Submitted by
Julian Jackson
Why value investors have been und...

Value investing has been a solid philosophy and history has shown that it works better than most other investment philosophies.  Read more...

1 comments 824 views
Submitted by
Luke Folb
Springbok World Cup Squad

The Springboks have shown great failure this season in closing out games and showing cool heads in the final third of the game. Read more...

3 comments 817 views
Submitted by
Tau Tawengwa
Labour, Race Relations and Zimbab...

The government’s intervention in labour relations after 1980 resulted in a frigid labour market characterized by the pro-worker labour laws. Read more...

3 comments 530 views
 

services

E-mail Alerts The latest headlines in your inbox

RSS feeds News delivered really simply.

Mobile News24 on your mobile or PDA

E-mail Newsletters You choose what you want

News24 on Android Get the latest from News24 on your Android device.

SMS Alerts Get breaking news stories via SMS.

Blogs Your opinion on you, me and everyone.

TV Get us in your home, on your television.

 
Interactive Advertising Bureau
 
© 2015 24.com. All rights reserved.
There are new stories on the homepage. Click here to see them.
 
English
Afrikaans
isiZulu

Hello 

Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.


Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Settings

Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.




Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.