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Pest Analysis

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INTRODUCTION

This chapter identifies the main external influences on the UK market for

private security and fire protection, using the four headings of a PEST

analysis: political, economic, social and technological.

Where such influences have more than one dimension, they are considered

under the heading that is considered to be the most relevant.

POLITICAL FACTORS

The Terrorist Threat

Precautions against terrorist attacks have been stepped up since the events

of 11th September 2001, and there is strong demand for security services

and equipment in the public sector. The UK, and especially London, has been

on a high level of alert since the war in Iraq. Some of the UK's export

customers are also concerned about the threat from terrorism.

Airport Security

In the important airport and airline security sector, the effects of terrorism

have been mixed. In the US, the Federal Government took over all passenger

screening from the private security industry, and it plans to retain direct

control until 2005. Because UK firms play an important role in airport

security, this meant the loss of an important customer sector. In the UK, the

Department for Transport (DfT) took over the approval of companies

providing airport security, but it left the work in the private sector.

Around the world, heightened awareness of the need for airport security has

been a positive driver for the private security industry. There are still many

airports where security needs to be improved.

Regulation of the Security Industry

After at least 8 years of discussion, compulsory regulation of the security

industry has begun in England and Wales. It will take some time to extend

registration to all regions and all the security activities that need to be

covered, but the result should be improved standards and improved

customer confidence in the manned security sector. However, the increase in

labour costs caused by regulation is likely to eliminate some of the lower-cost

services and raise the prices of others.

The Scottish security industry is in favour of similar legislation for Scotland,

but it will take some time for this to go through the Scottish Parliament and

for a scheme to be set up.

The Expanded EU

The expansion of the EU should assist the development of the Union's new

members and lead to growth in construction work in these countries, which

will in turn produce demand for security products. UK manufacturers are

already facing growing competition from manufacturers in Eastern Europe,

but the opportunities for exports are also improving.

EU Legislation on Services

In July 2004, the Chairman of the British Security Industry Association

(BSIA), David Dickens, expressed concern about a proposed European

Directive on Services in the Internal Market. This Directive would allow EU

nationals to market their services in the UK while complying only with the

regulations that apply in their home countries, regardless of any additional

rules that may exist in the UK. The Directive would cover a very wide range

of services, including security services.

Mr Dickens pointed out that the legislation could cause abuses of competition

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