Success in security

FRIDAY INTERVIEW: Niall Feely managing director G4S Secure Solutions:  NIALL FEELY is not what you'd call the conventional security guard type. Impeccably dressed in a well-cut suit, Feely looks like a man who has spent most of his life moving among the corporate world rather than the slightly more rough and ready environment of security.

Indeed his career path has followed an almost archetypal corporate trajectory. A qualified chartered accountant, he left Ireland in the late 1980s for New Zealand where he spent more than a decade building up a successful career in the telecoms industry, working for large corporations such as Telecom New Zealand and Unisys, as well as smaller IT company Bluestar.

In 1990 he returned to Ireland to head up Eircom’s business markets team.

Fifteen months ago, he was recruited to run G4S Secure Solutions in Ireland, the Irish division of the global security company G4S – the merger of Group 4 and Securicor. Why the change from telecoms? Feely is keen to downplay the significance of the career change – a casual shrug of the shoulders seems to warn against reading anything into the move.

“I was looking to move, and the opportunity came along” he smiles, though the fact that he worked for Eircom during one of its most tumultuous period is in itself intriguing.

While he admits he knew little about the security business before joining G4S, he threw himself into the managing director role, attracted by the diversity of an industry he says is “genuinely fascinating”.

Ireland’s security industry is big business. With an estimated turnover of €1.2 billion, it employs more than 20,000 people.

While the sector continues to have a relatively high number of smaller companies active in the space, G4S is one of the largest players.

The FTSE 100-listed company has had a presence in Ireland since the late 1960s, expanding its presence through the acquisition of a number of local companies, such as Omada and Bell Communications in 2007, and alarm monitoring company AMS which it acquired for €2.5 million earlier this year.

Today, G4S Ireland employs more than 3,000 people. Its cash-in-transit operations are run by a separate division which reports separately to G4S headquarters, while G4S Secure Solutions, which Feely heads, focuses on guarding, alarm monitoring and patrol and response.

While G4S has a presence in the residential and small business sector – it is the biggest provider of alarm monitoring services to the commercial sector following the acquisition of AMS – it has built up particular expertise in running security solutions to large corporate and multinationals, such as pharmaceutical, technology and medical devices companies.

Feely describes these clients as companies with “high-level security needs” with a lot of risk attached – “everything from explosive chemicals and expensive materials and parts, to reputation risk and intellectual property protection” he says. G4S provides a suite of services to these clients, from fencing and patrolling to CCTV and sophisticated alarm monitoring.

But despite the widely-held belief that the business of crime is recession-proof, the security industry has had it tough over the last few years.

“I’d estimate that the industry as a whole is down 20 to 25 per cent over the last couple of years” says Feely. “Some parts of the market such as alarm fitting for new build are probably down by as much as 50 per cent. Like every other business the security industry has been affected.”

G4S itself is back in the black this year, having lost money over the previous two years.

“When the recession hit, it hit hard. It took 2010 to deal with things, look at cost base, renegotiate contracts, but we’re back profit-making this year” says Feely. Turnover is around €80 million.

“There has definitely been a downward pressure on price. Customers are getting a better overall price, and we’re trying to get the right combination of manpower and technology. Guarding in particular is a low-margin business. If you’ve someone on site 24 hours a day, it clocks up.”

Already, security companies like G4S are being asked to provide more for their money he says. “Increasingly our security guards are taking on more tasks such as checking the photocopiers, doing reception duties, checking the fire extinguisher is still in place. You’re expected to add value.”

The issue of pay is one of the major issues facing the industry. Like other industries such as hospitality and construction, remuneration for security workers is covered by joint labour committee structures which were recently abolished following a High Court judgment, though new legislation is due to be published shortly. A registered employment agreement has been introduced in the interim.

Has the inability to reduce wages in such a labour-intensive, low-margin business been an impediment to profit growth?

“Undoubtedly pay is the main cost, but it probably makes sense to have some sort of standard in the industry” says Feely, who is conscious that the industry suffered from what he calls a “cowboy” image in the past.

“What we don’t want is a lowest common denominator type of situation. The risk is if you bring in a new rate, you displace people. There is already a fair bit of turnover in the industry. Forcing contract churn would be very disruptive. We would not be in favour of creating a two-tier structure.”

One of G4S’s main targets for future growth is public private partnerships (PPP). They recently won the PPP contract to design, build and service the new Criminal Courts of Justice in Dublin. Feely sees major opportunities in this space, and believes Ireland is behind the curve when it comes to private sector involvement in the provision of public services.

“The striking difference between our business in the UK and our business in Ireland is that the UK, since Thatcher’s time, has been very pro-active in its sourcing strategies. For example G4S’s business in the UK is 60 per cent government based; in Ireland it’s less than 8 per cent.”

He sees particular opportunities for G4S in the area of justice. G4S already builds and runs prisons in countries such as Britain and in Africa. “It costs about €70,000 to keep a prisoner in Ireland; we’ve got contracts in other parts of the world where we’re probably doing that close to €25,000. There’s no question that there are significant cost-savings involved.”

Linking in with G4S’s global expertise is central to Feely’s strategy for developing the Irish business. Globally, G4S is very strong in the healthcare field, again a target for growth for the Irish division.

G4S Ireland reports back to its parent company on a monthly basis, though Feely says the Irish management team is given plenty of autonomy within the agreed budget and plan.

Feely himself has extensive experience of working for large corporations. “G4S encourages people who are more entrepreneurial. Somewhere like Unisys, for example, had a very American approach, wanted the local sales to deliver but in a Unisys way.”

Eircom was a different situation again.

“Because it was never owned by a telecoms expert, it was very much for the investors to back the strategy being developed by the team in Ireland. There was always a conflict between the investors and financing structures and the level of investment and innovation you wanted to do. Because effectively venture capitalists were running it, they had more interest in gearing it up and milking the cash flow.”

On Eircom’s current troubles, Feely is unequivocal. “They inevitably ended up in this situation because the transaction with Babcock and Brown just loaded on so much debt.”

He says a default has been inevitable for the last three years. “The reality is that the business is going nowhere until they sort out the bondholders and do some sort of debt for equity swap. They’ve been trying to outrun a speeding train.”

ON THE RECORD

Name: Niall Feely

Age: 49

Work: Managing director of G4S Secure Solutions (Ire) Ltd; council member, Dublin Chamber of Commerce and former honorary treasurer

Lives:Blackrock. Originally from Boyle, Co Roscommon, he lived in Auckland, New Zealand, for more than a decade

Education: Following boarding school in Sligo, he took a B Comm at UCG. Trained as a chartered accountant with Ernst Young

Family: married with five children

Hobbies:cycling. Doesn't race competitively but completes a charity race from Dublin to Ballina organised by a friend each year.