North American fire alarm equipment market

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Market overview and industry definitions from Frost and Sullivan

Overwiew

The North American fire alarm equipment market is a well-established market, with the participation of over 30 main manufacturers.

The number of competitors has reduced slightly since 2005 due
to a series of mergers and acquisitions, which resulted in higher
consolidation of the market in a few large conglomerates.

In 2007, revenues for fire alarm equipment were estimated at $1,025.3 million, with a growth rate of 4.6 percent over 2006.

The North American fire alarm equipment market is expected to grow moderately from 2007 to 2014.

The North American fire alarm equipment market is likely to witness favourable demand, mainly due to the increasing activity in renovation and retrofit of existing buildings, as the non-residential building construction levels are not showing signs of recovery.

New non-residential construction activity had been experiencing
a serious diminution since 2001. However, renovation and retrofit of existing buildings have compensated for this decline in activity and also maintained market growth.
 

The fire alarm industry is mainly driven by the fire and building codes, which have been maintained in a conservative manner, as they deal with issues of life safety.

Some of the main pieces of legislation driving the market are National Fire Protection Association (NFPA) 72, which is the national fire alarm code covering the application, performance, and maintenance of fire
alarm equipment, the American with Disabilities Act (ADA) that requires specific notification devices for the hearing impaired, and Occupational Health and Safety Administration (OSHA) guidelines.

Moreover, there are approvals and listings given by nationally recognised testing laboratories such as the Underwriter’s Laboratory (UL) and Factory Mutual (FM), for the various components of the fire alarm system as well as for the complete system.

These conservative codes, legislation, and standards explain the historical stability of the North American fire alarm equipment market, which is characterised by slow growth and the cautious nature of the market in adopting advanced technologies.

Manufacturers have to deal simultaneously with old conservative
codes and an increasing end-user demand for innovative solutions.

Currently, most technical advances are mainly advocated to respond to the push from end users to integrate fire alarm systems with other building safety and building management systems.

Building control has traditionally been divided into separate as well as disparate systems. With an increase in the trend toward automated buildings, these independent, proprietary technology driven and legacy systems have to be interconnected to constitute an intelligent building.

Intelligent buildings converge data, voice, and video with security, HVAC, lighting, and other electronic controls on a single IP network platform, which facilitates user management, space utilisation, energy conservation, comfort, and systems improvement.

The market for fire alarm equipment is very price-sensitive, as installing this equipment is a requirement and not an option.

As building codes mandate that, all non-residential buildings must
have an effective method for the detection and suppression of fire
in the incipient stage, some end users with low budget tend to install the minimum to comply with the codes.

Consequently, there is fierce competition among participants to attract customers and price is a major competing factor. Other key competitive factors in the market are code compliance, brand recognition, and a proficient distribution network.

Generally, participants in the fire alarm panels industry utilise
traditional distribution channels through engineered systems distributors, fire and security distributors, and original equipment
manufacturers.

Some of the larger companies offer support through their branches and representatives, but most of them follow the usual methods of distribution.

Definitions

Fire detection and alarm systems are universal in their applications
and are installed in all building types, irrespective of whether it is a
shopping centre, an office building, or a manufacturing facility.

In terms of the end use, all buildings can be classified into residential
and non-residential buildings and this is consistent with the industry
classification of buildings.

End – user definition

Key end users for the fire alarm equipment market encompass the entire spectrum of the non-residential sector and are best described in terms of building categories.

In this research service, end users have been divided into the following groups:

Office buildings
Commercial buildings
Manufacturing buildings
Educational buildings
Healthcare buildings
Other buildings

The other buildings category includes the buildings for nonresidential
use, which do not come under any of the above categories such as cinemas, theatres or hotels and motels.

Product definition

The North American fire alarm equipment market has been segmented based on the type of equipment and this is consistent with the industry’s segmentation of the market.

This study considers all types of fire alarm equipment, except the automatic initiating devices such as fire and smoke detection devices.

Fire alarm equipment can be broadly classified into two product
groups as shown below:

Fire alarm panels: Panels are the heart of any fire alarm system
and include the controls, which process the signals received from
input devices and give out signals to the output devices

Fire alarm devices: This product group takes into account devices that are connected to the main fire alarm panel, and that either send to (initiating devices) or receive (output devices) signals from the same

Fire alarm panels are further sub-segmented into the following types:

Conventional fire alarm panels
Addressable fire alarm panels
Voice evacuation systems

Fire alarm devices are further sub-segmented into the following types:

Annunciators
Notification appliances
Manual pull stations

Chart 1.1 depicts the market segmentation of the total North
American fire alarm equipment market in 2007.

Total Fire Alarm Equipment Market: Market Segmentation (North America), 2007 / Source: Frost & Sullivan

The geographic region covered in this study is North America, which includes the United States and Canada.

Moreover, this study examines the current structure of the industry and analyses its competitive factors from 2004 to 2014, with 2007 as the base year.

Summary of key findings

Market trends

The following are some of the major market and technology trends:

Addressable fire alarm systems offer more value for money and are being preferred over conventional systems.

The declining prices of these systems and the savings in terms of lower amount of wiring, easier maintenance, and better false alarm immunity, add to the cost effectiveness of these systems in various situations 

Voice evacuation systems are being installed to meet the requirements for public assemblies and high-rise buildings to add voice capability to alert the occupants by voice instructions in the event of an emergency.

The human touch accorded by such systems is preferred by end users
over the sound of horns. Moreover, the United States Department of Defence and other organisations such as OSHA, established new requirements for voice notification in and around all new inhabited buildings

Integration of fire alarm panels with other building systems such as lighting, HVAC, security, elevators, water management, and CCTV is a growing trend.

Besides the integration of fire and security systems, the market is also
witnessing integration of fire with building management systems, as concerns of ensuring priority and integrity of fire alarm systems have been addressed 

Despite their high initial costs, combination units such as the horn strobes and speaker strobes are gaining wider acceptance over single units because such items optimise the spares inventory and help in modifications, if required at a later stage. Similarly, units with selectable outputs are preferred over the fixed ones

In line with the building systems integration trend, some building managers are taking rapid efforts to automate buildings to achieve remote monitoring, diagnostics, and centralised operation. Remote monitoring and diagnostics is a growing trend in the North American
fire alarm equipment market.

Currently, ultimate data communication technology, either wireless or hard-wired solutions, and sophisticated computer software allow
building managers to monitor and manage an intelligent building.

This is done centrally through a computerised building management system, and the building managers supervise it out-of-premises through the Internet, hand-held devices, and smartphones.

This results in benefits such as cost effectiveness, process improvements in facility automation, monitoring, and management

Fire alarm systems coupled with voice evacuation systems for use in retail stores and industrial buildings are being opted for by end users over having to install two separate systems one for the two functions.
 
This also meets the federal requirements of employee notification and
mass notification systems

Radio frequency-based wireless detectors available in the market are cost-effective and reliable in a variety of applications.

However, end users generally prefer hardwired systems, as the batteries of the field devices need to be replaced periodically. Wireless technology is expected to gain wider acceptance among customers over the forecast period

The current slowdown in new non-residential construction is expected to decimate the growth potential of the market.

As a result, the fire alarm equipment industry must expand its efforts, targeting the existing buildings, where there are still significant opportunities for growth with renovation and retrofit activities

Market segment analysis

Chart 1.2 depicts the percent of revenues by product type for the total North American fire alarm equipment market in 2007.

Chart 1. 2

Total Fire Alarm Equipment Market: Percent of Revenues by Product Type (North America), 2007 Note: All figures are rounded. Source: Frost & Sullivan

Chart 1.3 depicts the percent of revenues by product type for
the total North American fire alarm equipment market in 2014.

Chart 1. 3

Total Fire Alarm Equipment Market: Percent of Revenues by
Product Type (North America), 2014

Note: All figures are rounded. Source: Frost & Sullivan

Fire alarm panels

Fire alarm panels are considered the brain of a fire alarm system.

All the devices which are part of the fire alarm systems are
connected to this central panel which process the signals received
from the input devices and gives out signals to the output devices.
Input devices such as detectors measure signals of combustion,
communicate with panels which in turn trigger the output devices
such as an audible or visual devices.

The fire alarm panels segment contributed to 59.0 percent of the total revenues of the North American fire alarm equipment market in 2007.

This segment is witnessing a higher demand for the more expensive and feature-rich addressable fire alarm panels, at the expense of the basic conventional systems.

Voice evacuation systems are witnessing higher demand, as voice capability is mandated to an increasing number of existing and new buildings based on the height of the building and the gatherings expected.

The fire alarm panels segment is likely to grow at a compound annual growth rate (CAGR) of 5.4 percent over the period 2007-2014.

The high cost of panels compared to the fire alarm devices explains its growth expectation in terms of revenues, with higher growth rates than the devices segment.

This segment analyses the devices that are connected to the main fire alarm panel and those either send to or receive signals from the same.

Fire alarm devices include initiating devices that detect and measure the environmental conditions and initiate an alarm. The initiating devices could either be automatic or manual.

Automatic initiating devices include fire and smoke detection devices whereas manual initiating devices refer to manual pull stations.

Fire alarm devices also include devices that notify the occupants of an alarm condition and include notification appliances such as horns, strobes, speakers, and bells.

In addition to these, there are devices such as annunciators, which are used by respondents to replicate the status of the main fire alarm panel.

The fire alarm devices segment generated 41.0 percent of total North American fire alarm equipment market revenues in 2007.

Despite its mature stage this segment is expected to grow moderately at a CAGR of 4.0 percent from 2007 to 2014.

Increase in CAGR is primarily driven by new commercial construction and through retrofit applications.

The slowdown in new non-residential building construction since 2001 has limited the revenue growth in the fire alarm devices segment.

The market continues to witness a slight decline in prices due to increased competitiveness among the participants, and this has affected the profitability of this market segment.

Furthermore, the lack of major technology innovations and the cautious approach toward adoption of such products have resulted in slower growth in these segments.

Competitive analysis

The North American market for fire alarm equipment has approximately 30 active competitors and comprises different types of companies.

They are broadly classified as:

Large conglomerates that have product offering in all market segments

Specialist manufacturers that participate in either the fire alarm panels or fire alarm devices segment

Specialist manufacturers that participate in only one subsegment
of the market. For example, voice evacuation panels

‘The slowdown in new non-residential building construction since 2001
has limited the revenue growth in the fire alarm devices segment.’

manufacturers or notification appliances manufacturers Consolidation has been widespread in the North American fire alarm equipment market, due to the immense opportunity it brings in the form of inroads into new markets, wider customer base, and strengthening position in the market.

The trends toward the integration of fire alarm systems with other building control systems has also pushed companies to acquire or enter into strategic alliances with other companies, in order to extend the expertise to the related fields of security, fire and life safety, heating, ventilation, and air conditioning (HVAC), and lighting.

Companies such as Honeywell, Inc., Siemens Building Technologies, General Electric Security, and Tyco Fire and Security have made strategic acquisitions since the late 1990s.

Since the market for fire alarm equipment in North America is
well-established and mature, there are high levels of competition.

Some of the key competitive factors in the market are code compliance, product adaptability (for integration with other building security systems), and a proficient distribution network.

However, it is predominantly a price-driven market with high incidence of brand reputation.

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