Breaking out of the local security market

THE cut-throat nature of the security business has cruelled the dreams of a host of local players and, until recently, it seemed the fate of the Malaga business of brothers George and Jamie Koutsoukos might go down a similar ignominious path.

WA Security Products has been operating since 1990, providing security screens to WA homebuyers and builders from its 800 square metre factory.

“In 1997 we got to a stage where we were just becoming order takers,” George Koutsoukos said.

“We felt that we needed to differentiate ourselves, and be different.”

The brothers decided to embark on an ambitious research and development program.

Within a year, the Clearshield product, looking much like a flyscreen but made of steel providing window and door security, was developed. It replaces barred or grilled windows and doors.

Richardson Pacific Ltd perforates the steel sheets for the company while the pre-treatment and powder-coating process is undertaken by Powderline Coatings.

Armed with the new internationally patented product, the brothers could have been forgiven for expecting big results from their order book. But still the market hesitated and has yet to fully embrace the product.

George Koutsoukos said he was baffled by the sluggish response from the local market, which remained extremely price sensitive.

The company found buyers baulked at the $1,000 price tag for some of their products, when cheap security doors are selling for under $200.

Not ready to accept defeat, the business sold its agency and manufacturing rights in States around Australia over 2000 and 2001. Its latest business opened its doors in Adelaide in June this year.

Unlike WA, the other States have performed in-credibly well. The Queensland business already has a workforce of 60 staff, George Koutsoukos said. New South Wales has 40 staff, Victoria has 20, while the Northern Territory and South Australia, like WA, have six staff each.

For WA Security Products the reward for the success rests solely with ongoing royalties, which is becoming an integral part of the business cash flow. For its part, the business is maintaining its research and development program at a cost of around $500,000 a year.

Meanwhile, following a $50,000 research study into the Singapore and Malaysian markets carried out on behalf of the business by Ernst & Young, an agency was sold in Singapore mid July.

Already the agencies account for around 50 per cent of Clearshield’s $5 million turnover. And despite projections for a flat performance from the WA part of the business, overall turnover is forecast to double to $10 million in 2002-03, with the WA contribution falling to around 25 per cent.

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