Economic Outlook a Mixed Bag for Security

April 12, 2021
Retrofit opportunities are foreseen in healthcare and hospitality, with automotive key replacement remaining strong.
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Better days are ahead, but they might take a while to arrive.

That’s the main message derived from an economic forecast presented during the H.L. Flake/International Key Supply virtual trade show.

“Just hang in there,” says Kristy Calderwood, CFO of Flake. “If you’re struggling a bit, it’s all on its way back. Participate where you can, and tap into some additional opportunities.”

Those opportunities, according to the forecast: hospitality, healthcare and automotive.

The forecast was a joint presentation of Allegion, Flake and IKS and looked at the overall economy before breaking down residential, institutional and commercial building segments.

Overall, the economic forecast for 2021 and beyond is good, according to Mrinalini Vijayan, market intelligence manager of Allegion. However, the recovery isn’t being felt across all segments.

Also, the global recovery is causing inflation on the price of raw materials and commodities, including steel, aluminum, copper and zinc. This, in turn, affects the prices of products made from those materials. “We do not expect this to let up any time soon,” Vijayan says.

As to market segments, the single-family housing market is booming now, she says, with housing starts expected to show double-digit growth in 2021. Conversely, multifamily housing starts are expected to be flat and might even decline a bit.

Meanwhile, nonresidential markets — commercial (retail, hospitality) and institutional (education, healthcare) — aren’t expected to rebound until 2022 because of continued fallout from the COVID-19 pandemic. The good news there is that recovery in the aftermarket segment of nonresidential markets is expected to begin before the end of 2021. Vijayan says the nonresidential aftermarket is defined as “break-fix” and renovation projects.

“That’s the locksmith business,” says Sean McAuliffe, CEO of International Key Supply.

Within the aftermarket segment, the biggest opportunities for security pros, according to Vijayan, exist in the hospitality and healthcare vertical markets. In hospitality, facilities that have the resources will renovate before occupancy rates rebound, she says. Healthcare looks even better.

“What we can expect looking forward is healthcare does have more retrofit opportunities,” she says. “We saw that in this pandemic, healthcare facilities were not as prepared, so they are going to invest so they’re prepared for the next pandemic.” That means “better ways to improve security, control the flow of people, track the movement of people and, of course, investments in touchless entries.”

One other area that’s expected to show continued growth both near and long term is automotive key replacement. According to an IKS report, automotive key replacement is expected to be a $5 billion retail business by 2024, up from $3.2 billion in 2019.

“We need to make the public aware that they can get car keys and remotes from locksmiths,” he says. “A lot don’t know that.”

About the Author

Will Christensen | Senior Editor

Will Christensen is senior editor at Locksmith Ledger International. He has been an editor and reporter at magazines and newspapers for more than 30 years.