Consolidation Questions

Nov. 18, 2014

A public announcement on November 7 indicates that Kaba Holdings has acquired Advanced Diagnostics in UK and its related company, Advanced Diagnostics USA Inc.,  based in Las Vegas, Nevada.      

Industry consolidation news such as this has become routine.  Each of us can probably name several former independent lock manufacturers who are now part of a company consortium. 'Economies of Scale' is an expression used to explain one reason why consolidation is taking place.  If a company can produce more goods of a certain type, any fixed cost-per-unit can be spread over a greater number of parts produced and can tend to lower cost-per-unit.

A second reason for a company buyout is to obtain technology which the purchasing company may not have and to possibly gain additional sales in a particular sector of business.

Tom Hennessy wrote a book called Early Lock and Lock Makers of America. In his book Mr. Hennessy listed eighteen different lock companies which once existed in the town of New Britain, CT.    Although some of the company names listed by Mr. Hennessy still exist, these companies are now parts of large groups of companies and individual identities are less noticeable. 

Locksmiths have no input into the phenomenon of company buyouts but the results of buyouts do have an effect on our business.  When companies are purchased, technology and designs are then often shared by the group.  Similarities appear in several different product lines of the group and individual innovations within each product line can become obscured. 

As fewer large companies dominate the marketplace, there are less choices of unusual lock products. When the same keyways appear in almost every product line and mortise dimensions are identical, locks move into the realm of a commodity. Two examples which buck the trend are the cable exit device by Allegion and the Power Jump by ASSA ABLOY. 

Mergers and buyouts are commplace in every field today so changes in the lock industry are no different than any other.  However, recommending the best security product is an important, life safety job.   Our task will only become more difficult  as sameness continues to take over the security industry.