Uptake of technology into security sector is hampered by recession and imports.
Dataweek spoke to component suppliers, manufacturers and the South African Electrotechnical Export Council (SAEEC) about the uptake of local technology in the security sector. While there is still a large degree of optimism, some companies are feeling the pinch of the recession, which has been exacerbated by the importation of complete systems.
The manufacturers’ perspective
GSC Systems specialises in access control, time recording and RFID systems. Andrew Dawson, the company’s technical director, said that the company does not do much in the way of innovation of new technology but that it does incorporate some new technologies into its products when these technologies have matured a little.
“Over the last 15 years, passive RFID cards and tags have taken over from magnetic stripe and barcode cards when it comes to opening doors and clocking in at your place of work. We are not seeing NFC in this space yet. In the last five years, fingerprint recognition readers have taken over a significant portion of the card reading market. Wireless technologies such as Zigbee are likely to find their way into our product line in the future,” said Dawson.
Martin Electronics is a local manufacturer of consumer and OEM radio frequency remote controls, remote receivers, security systems, and door and gate automation. Steve Martin, owner of the company, said that a large portion of the local manufacturing market has been eroded by the importation of complete systems as opposed to retrofit solutions. “Because components are subject to importation duties, whereas complete systems are not, we are finding it increasingly difficult to compete locally. I have had to retrench a number of my employees and the situation is not helped by the numerous strikes that seem determined to cripple the South African economy.
“However, we have one big advantage on our side as local manufacturers – we have pioneered much of the technology available in gate automation as well as tracking systems and these products were designed, engineered and manufactured for our demanding local conditions. This makes them the perfect match to the local environment,” said Martin.
“Sadly though, in spite of the robust quality of our locally developed products, the consumer is often ignorant of the importance of looking beyond the purchase price. It is not uncommon for them to purchase a cheap look-alike, which just cannot handle the local conditions and which therefore has a much shorter lifespan,” he added.
Martin said that he has noticed acceleration in the loss of critical skills for the market. “It would seem that nobody is actually addressing this problem. School leavers do not want to do apprenticeships and when we put them through the practical aspects of training, they fail to understand the applications. There is a huge opportunity for learners to forge a career path in this arena but, sadly, they seem to be more attracted by the supposed glamour of office-bound IT and business management related jobs.”
Dawson had this to say on the topic of innovation: “I believe that there is still a large base of engineering and design skill in SA which enables us to keep innovating, but I do think that our competitiveness when it comes to manufacturing is under threat from high quality Asian competitors. We do electronics manufacturing in-house and outsource certain mechanical parts such as the housings to other SA companies. We do not do any offshore manufacturing.”
Martin said that when he first started the company he did outsource work but quickly realised that in the extremely competitive local arena, it was not profitable to ‘give work away’. “We have niched ourselves by developing products that there is a direct demand for. It is a known fact, however, that in order to bring new technology to market, you commonly need to have produced four other prototypes that never leave the test bench and therefore fail to launch. We undertake regular market research but it is not always possible to give customers everything they demand due to the practicalities and logistics involved,” Martin added.
“Another ongoing battle for us is that many installers are too focused on achieving maximum profitability at the cost of the customer’s satisfaction. This often means that they install substandard, inexpensive products which solely serve to maximise their bottom line. It would be fantastic for local manufacturers if the local consumers stood together and demanded the use of local products, which are made with longevity in mind,” he added.
“We are becoming a country of ‘box movers’ as most of our products are now imported. This has an extremely negative effect on both the potential growth and, indeed, the sustainability of local manufacture,” he cautioned. “In addition, excessive importation of goods can result in ‘dumping’ of product which in turn damages the local market,” Martin said.
“As a result of the influx of imported products and the heavy duties we pay, our local export opportunities have also been negatively affected. The overseas market is looking for something that is less expensive than this local product base, so we just cannot compete,” Martin concluded.
FSK Electronics offers integrated RF and GSM security and monitoring solutions to both local and global security and monitoring companies, all developed and manufactured in-house. Keith Vieira, MD of FSK, said that the company has undergone an evolution from being merely a radio communications transmitter company to one supplying a comprehensive communications solution. “This has been achieved with the advent of GSM and IP-based technology and we have seen some exciting developments in the past few years.”
Vieira explained that this technology has resulted in new products having increased intelligence. “ICASA would only allow us a very narrow bandwidth around which to develop products but the reach we have with this new generation of products is almost limitless. One example of this technology is the ability to include bidirectional communication, which allows the transmitter to communicate with both the control room and the property owner, using data transmission on cellphones.
“In essence, the property owner can now not only utilise the system to ensure the security and monitoring of his property, but can also program it to send commands, such as ‘switch on a pump’, ‘turn lights off’, etc. In addition, a business owner can at any stage, using a laptop or PC from a remote location, log into his site and monitor productivity. In essence, his cellphone or laptop becomes a virtual control room,” he explained.
This web-based control centre is referred to as the ‘Beyond Wireless Platform’. The technology, which is built into FSK’s vehicle dispatcher and gate opener unit has the ability to notify the control room when an officer is on site; send a ‘gate opening’ message from the control room via an encrypted GPRS message; scrambling the gate opening code on either timeout or when the response officer leaves site. “This ensures total integrity of the system and ensures that unauthorised people do not enter the property,” said Vieira.
Vieira said that the GSM product is fast finding favour with the export market. “We have honed our products to the stage where we can compete on unit cost with many of the Chinese imports, while still maintaining extremely high levels of quality. We have shipped a number of units to New Zealand, Australia and Europe. As with all our other products that are popular with the international market, we have undertaken our own marketing and developed the export links ourselves.”
PFK’s specialist design expertise encompasses embedded microcontroller and radio frequency-based automotive security systems, keyless entry systems, GPS/GSM based tracking systems, CANBus-based vehicle security systems and alcohol breathalyser immobilisers. A recent addition to the company’s portfolio is video alarms for homes and the commercial market.
Nicholas Allen, a product development manager at PFK said: “As you can imagine, with such an extensive product portfolio we are constantly exposed to new technologies. The video alarm that we are developing for a Russian customer provides a gateway to your intelligent/automated home or business and the technologies we are actively embracing here include video and video analytics, Ethernet, 3G and HSPA and sub-1 GHz ISM-band communications.
“Although none of these can really be considered ‘new’ in their own right, when combined they are relatively new to the market segment we are targeting. With the cost of broadband Ethernet having dropped and the availability having grown substantially over the last couple of years, this has opened up a whole new market niche targeted at the ‘average’ user,” Allen added.
“Hot new technologies that I personally have my sights on in this field include energy harvesting for wireless nodes (PIRs, water and smoke sensors) and human-machine interfaces (HMI) such as Microchip’s BodyCom technology,” he continued. “This facilitates short range wireless communication by utilising the human body to transfer data signals, using capacitive coupling between mobile unit, body and base unit. It will be interesting to see what impact these technologies end up having on the market.
“Regarding RFID and NFC though, we are not currently active in these technologies, however we do have a number of products that achieve a similar end result using active bidirectional 2,4 GHz transceivers and active range limited ISM band (433 MHz and 868 MHz) transceivers. I have high hopes for NFC though and anticipate the impending launch of the iPhone 5 will unleash the NFC era, if the rumours regarding the inclusion of NFC are in fact true. Once the dust settles, spinoffs into security are, in my opinion, inevitable.”
Additional technologies on PFK’s radar are touch screen displays and fingerprint biometric identification of users, which is already incorporated into its new generation Alcolock breathalyser. Future developments include the addition of photo identification and investigation into facial recognition in order to accurately identify the ‘blower’. According to Allen, “Monitoring of blood alcohol levels using infrared methods as opposed to fuel cells are also on the horizon although there is still a fair bit of research to be pioneered by the international community here before it is ready to be adopted.
“On the tracking front, AGPS (assisted GPS) is a hot focus of ours as it offers the possibly to achieve sub 5 second TTFF (time to first fix) from cold start. This is crucial for our asset tracking units which rely on a high sleep-wake ratio. The quicker they can wake up, get a fix and go back into their dormant state, the better. We are currently pursuing this with a Sierra Wireless module,” Allen explained.
“We have also added CANBus support to a range of our automotive products. This allows these products to tap directly into the vehicle’s data bus. This is used extensively in our tracking systems sold into the Russian BMW market. As technology evolves, it is our responsibility to keep up if we want to justify our spot in the global market.
“All of our products are designed and manufactured in-house. We have our own SMD facility, automated looming facility and production floor. We do however get our PC boards from both local and offshore suppliers. Here we have found that the more complex multilayer boards that require accurate impedance matching and strict via/trace tolerance are required to be sent offshore for manufacture. The SMD process and leaded population is however still done in-house,” said Allen.
“Innovation in today’s market is crucial. It is no longer just about the technology itself though but the way in which one puts it all together. Steve Jobs taught this lesson. The original iPhone did not include any mind blowing technology per se; in fact it was rather bland. It was the user experience and how it was all packaged that won the world over. Our products need to add real value to the customer in order for us to avoid having to compete head-on with the East.
“In particular, we can highlight our work on the video alarm front stems from the market void we believe exists between the bottom of the range CCTV/DVR systems and the top of the range, top dollar home automation systems. The world is becoming more and more connected and the home/business is next on the roadmap. A single point of access (gateway) via Ethernet or 3G/HSPA to your connected/intelligent home or business opens up so many opportunities such as video enabled security, energy monitoring and home automation,” Allen said.
“We want in on this market. The development road has been challenging with humble beginnings approximately three years ago when we strove to achieve 1 fps, 320x240 video using a PIC32. Since then technology has evolved and so has our expertise, to a point that we have gone through a number of solutions from Analog Device’s Blackfin BF537 to Freescale’s iMx range before settling on a Texas Instrument’s DaVinci processor running embedded Linux. Once we have bedded the product down in Russia the plan is to find our niche in the local market,” Allen elaborated.
“Another exciting development is on the tracking front where we are designing a modular tracking system, again for the Russian market. Here the focus is on satisfying their ERA-GLONASS and eCall requirements,” Allen continued.
“We also have a really exciting wireless breathalyser product for the local and international markets that prevents you from driving if under the influence. Here the focus in on DUI offenders and public transport. These evolving product ranges have been under development for the last seven and five years respectively.”
PFK is exposed to a number of export opportunities; in fact 70% of its business is export. “We are active in the USA (35 000 to 40 000 automotive security systems per month), Canada, Sweden, our subsidiary in the UK (which is also our gateway into a number of European countries), Australia, Russia and a handful of other countries. Our export strategy however is to partner up with driven partners in our various active market segments. This is all done by means of our marketing through engineering approach which relies on transparent technical relationships. We have standing relationships of up to 10 years with some of our larger partners,” Allen concluded.
Vieira is concerned about the severe skills shortage in the industry. “The provision of suitable tertiary level education needs to be addressed as a matter of urgency. We see many learners who come to us armed with a qualification that quite frankly does not allow them to do any job. The level of knowledge transfer afforded to these learners is quite shocking. For those learners who are equipped to undertake a technical job, the world is their oyster and they can command large salaries.
“The solution to this seemingly infinite skills shortage, however, would seem to be automation of processes in order to replace the human element.
This is a sad fact of life and one which should be taken cognisance of by the powers that be in the educational arena,” he concluded.
Technology lag
RF Design represents a balanced portfolio of the world’s premier wireless data communications, RF/microwave component and sub-systems manufacturing companies. Sales director Andrew Hutton said: “The cost of RFID has come down substantially, resulting in an increase of its usage in products. RF Design, however, focuses on the components that are used in high-end product manufacture rather than tags.”
Hutton said that the supply of components into the security equipment manufacturing market could be considered stable at present. “While there has not been a great deal of growth over the past few years, similarly, there has also not been a drop-off in sales.”
He added that while, in principle, innovation is a good thing, South Africa is exposed to the latest technology but developers tend to adopt a conservative approach and only use the new technology once proven. “Processes are being improved and technology is becoming more affordable but it is advisable not to change to new technology simply because it is available. We find that the local market is driven too much by cost and not performance, therefore customers will often continue to use older technology because of the cost implications of upgrading.”
Hutton said that the company has seen positive growth in the direction of bidirectional GSM communications. “There is some delay by local companies to use this technology in security related products. This is probably due to the historical reliance on the one-way radio communications used in alarm systems, whereby a radio signal is sent to a security company’s control room for action. This older technology, however, does not allow interaction by the consumer with the security company.”
Hutton said that technology is being driven by its suppliers. “As they grow new features into components, consumers will see the benefits and push the demand, but ultimately, the consumer is the driving force behind technology adoption.”
Kobus Botes is the technical marketing manager of Arrow Altech Distribution, a leading distributor of quality industrial electronic components. Botes is also the marketing representative for the recently formed SA Electronics Industry Federation (SAEIF), an umbrella body for the electronics industry in South Africa (see sidebar for details).
“From our perspective there have been no real fireworks in RFID technology recently. The primary application we see for RFID is in animal tracking with some access control applications. With regard to near field communication (NFC) we anticipate that the market will in future be stimulated by mobile phone technology. However, only once the global market has refined and adopted this technology, will it come into its own in South Africa. At that stage, our customers will no doubt design and engineer the technology into their reading systems,” said Botes.
“One area that is moving very fast though is GSM communications,” he continued. “Previously the cost of embedded GSM modules made it relatively unaffordable in many applications. However, due to the element of competitiveness, we have seen an average annual price decrease of 25%, making it a cost effective option for implementation into many new applications in the local market.
“This is a double edged sword for component distributors, since they now need to sell much larger quantities in order to achieve the same or higher sales levels. Fortunately though, the demand has accelerated substantially and therefore the volumes are exponentially higher. This leads to a balancing of the scales to some extent.”
“Together with the decrease in the cost of data communications, it is now financially feasible for local manufacturers to incorporate GSM technology into their products and we have seen this trend escalating in much of the lower-end equipment going into the market,” Botes clarified. “Currently, the new generation of GSM technology is geared around long-term evolution (LTE) which meets the demand for high bandwidth modules that can send high volumes of data very quickly. This is very pertinent for video streaming in future applications.”
Hutton believes that South Africa has long been the leader in technology with respect to vehicle tracking and fleet management systems. “South Africa pioneered these systems and refined them over time. They are robust due to the demands of local application and installation, and are therefore attractive to a global market. In many similar systems that are made overseas and imported to South Africa, the foolproof element has not been engineered into the equipment, making them vulnerable to handling by improperly trained installers. That is why it is preferable for local consumers to utilise locally designed and manufactured products.”
Hutton said that, unless the consumer has a technical orientation, technology updates will be driven by manufacturers. “As we grow new features into components, consumers will see the benefits and push the demand, but ultimately, the manufacturers are the driving force behind technology adoption.”
According to Botes, Arrow Altech’s focus has always been to push technology into the manufacturing sector. “An example of this is in biometric technology. We have seen a growing market for fingerprint reader products which require large processing power. The new generation is powerful, but low cost processors on the market have been engineered to meet this demand and thus the ability to locally develop such readers into numerous new applications has become more viable. The same argument can be used for video and camera products where we will continue to be proactive in introducing new component technology to the market to afford them a competitive advantage over imported systems.”
Botes believes that South Africa lagged 18 months behind the rest of the world in terms of the impact of the recent economic recession. “I also believe the impact of the recession has not been as drastic as that exhibited in Europe and the USA. However, our recovery has been much slower than the global markets, so if the impending second recession hits the world shortly and we have still not climbed out of this current recession, we could be in for a very bumpy ride. Naturally, this will have a negative effect on local manufacture, compounded by the fact that imported technology is in many instances much cheaper than our local product offerings.
“Counterbalancing this negativity, though, is the fact that ADEC statistics for the period ending June 2011 showed a growth of 8,1% in electronic component sales over the past 12 months. It is important for local companies to support one another to ensure that we ride the wave smoothly and come out on the other side stronger, leaner and more competitive,” Botes concluded.
Export opportunities
Eileen Leopold is the CEO of the SA Electrotechnical Export Council (SAEEC), a Section 21 organisation in public-private partnership with the Department of Trade and Industry (DTI), geared towards driving export growth for the electronics, electrical engineering, information technology and telecommunications sectors.
“Our primary mandate is to facilitate export growth and increase the export base in South Africa,” said Leopold. “We also act as the primary interface between the DTI and industry in terms of export policy, programmes and incentives.”
She added that the functions of the SAEEC includes a presence at international exhibitions and shows; outward and inward trade missions; producing subsector marketing material; providing market access to shows and exhibitions; export training; assistance with funding of support schemes for members; finding suitable projects (in conjunction with other export councils in related sectors); as well as membership promotion through the SAEEC website, membership directories and CDs which are widely distributed.
“The global market for electronic manufacturing services is estimated to reflect growth rates of around 8% for the next three to five years. This is led by large global players moving towards outsourcing models to control costs. South African electronic manufacturing is well positioned to offer high quality, highly professional, cost effective service focused on specific client requirements with the flexibility to ensure satisfaction and reliable delivery,” said Leopold.
A research initiative undertaken in August 2010 focused on ‘Accelerating South African export growth in electronic product development and manufacturing solutions and services’ and highlighted the opportunities available for export of electronics design, subcontracting and testing skills and products.
The study was jointly funded by the DTI and SAEEC members. “In essence the research addressed the barriers and constraints facing the electronics sector and pinpointing potential areas of government intervention; a report benchmarking the South African electronics sector against successful international competitors and a matrix which targets countries and buyers and positions products for maximum export growth. The final output was an Export Marketing Strategy Framework which the SAEEC will refine and implement with members, and a value proposition for the electronics sector which could be used in international market promotion,” said Leopold.
As a result of the research undertaken, the European Union was identified as the primary target market, followed by the Middle East and Northern Africa. Sub Saharan Africa was identified as a key market for finished products as opposed to subcontracting services. “We also formed a special interest group of members involved in electronics subcontracting to further drive export growth,” said Leopold.
Recent activities included attendance at MIDEST – the world’s largest subcontracting show – in Paris in November 2010 on a DTI sponsored pavilion. “We also produced a brochure: ‘Why subcontract your electronics manufacturing to South Africa?’ for the event and presented at the MIDEST conference,” added Leopold. “Working with our members, we have put a plan in place for the next 12 months for attendance at the key industrial shows including MIDEST and Productronica in November, new marketing material and a targeted inward buying mission early next year.
“We also capitalise on presidential and ministerial missions to promote the sector and had a specific breakaway session for electronic subcontracting during president Zuma’s visit to Paris in March. We also make knowledgeable, competent local speakers available to conference organisers to increase the exposure of local companies,” Leopold said.
“Sadly, the electronics sector and in particular subcontracting, has not been on the DTI’s radar and apart from set top boxes and fridges the sector is not prioritised on the new Industrial Policy Action Plan. This is something that we are striving hard to change. There is enormous potential for job creation in this sector and it is our objective to get the industry the recognition it needs and deserves. The formation of the SAEIF last year will play a key role in achieving this,” said Leopold.
The SAEEC is launching a new project geared around increasing the competitive edge available in local manufacture for export. “We are working closely with the DTI and the SAEIF to put an application to the International Trade Administration Commission (ITAC) for the reduction of importation duties of components not manufactured locally,” said Leopold.
“In order to drive exports, which will result in job creation, transformation and sustainable growth for the electronics sector, we need more companies to join the SAEEC. There is definitely strength in numbers and collective bargaining will put this market sector in a very advantageous position,” Leopold concluded.
South African Electronics Industry Federation
“Our main objective is to bring together all stakeholders involved in the electronics industry in South Africa, including government, under an umbrella body that will stimulate economic growth in the sector and improve global competitiveness in the industry,” said the South African Electronics Industry Federation (SAEIF)’s marketing representative, Kobus Botes.
“In addition, our secondary objectives will be to promote networking and cooperation amongst all stakeholders involved in the electronics sector; the formation of SMMEs; the development of appropriate skills within the sectors represented in the country; helping to protect and grow the industry; increase knowledge and competitiveness through research and development, and innovation; use of tariff and non-tariff barriers to protect the industry; and identifying and mitigating against bottlenecks that restrict growth,” Botes added.
The SAEEC can be contacted on +27 (0)11 315 0209; [email protected] or www.saeec.org.za
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