Industries & Professions /
Security and Investigation
Crime protection and law enforcement were community responsibilities in the United States during colonial times, but the increased urbanization of 19th-century America led to a rise in crime that sparked the creation of municipal police departments. As urbanization continued, these agencies proved incapable of suppressing crime adequately and created a need for additional crime-prevention services.
In the 1850s, Allan Pinkerton, a former detective on the Chicago police force, teamed with a Chicago attorney to form the nation's first private security agency, which took his name. The Pinkertons achieved some early fame protecting the railroads from train robbers, but their legacy is tainted by their role in suppressing the early labor movement.
The 1850s also saw the invention of the first modern burglar alarm, on which Edwin Holmes founded a business that by 1866 was protecting more than 1,200 residential customers in New York. He soon expanded his clientele to cover businesses as well, and he and his son improved the technology, first by connecting it to a clock and later by using the existing telephone network to transmit alarm signals.
A rival company, American District Telegraph (now known as ADT), dispatched messenger boys to the site of an alarm, where they would use dedicated call boxes to summon police or fire fighters as needed. The company soon expanded its services by offering security patrols. By the 1960s, ADT dominated the market for central-station alarm services and was accused of creating a monopoly.
Brink's began as a parcel delivery service in Chicago and did not begin to transport money for banks until the 1890s. The company's experiments with armored cars began with converted school buses in the 1920s; following the Second World War, the cars were heavily armored and their operators outfitted with heavy weaponry. Brink's expanded to home security alarms in the 1980s, and the spun-off business eventually was folded into ADT. The Wells Fargo Armored Security Corporation (later absorbed into Loomis Armored) began in a similar way, as a spinoff of a delivery service.
A relative newcomer is G4S Secure Solutions, which was founded in 1954 by George Wackenhut and three other former FBI agents. Early on, the company specialized in security services for government installations such as the Kennedy Space Center. Eventually it expanded to operating for-profit prisons.
Between 1997 and 2007, the three sectors within the investigation, guard, and armored car services industry had very different growth patterns. Of the three, the security guard and patrol service sector tallied the greatest gains overall during the period, doubling in revenue and increasing the number of establishments by 38 percent and paid employees by 26 percent. The investigation services sector experienced even better gains in revenue, 114 percent, but the number of establishments declined by 1 percent and employees by 17 percent. The armored car services sector performed the worst of the three, with only 57 percent gains in revenue, 6 percent shrinkage in the number of employees, while the number of establishments remained flat.
One factor that has encouraged the growth of security guards is the amount of shoplifting and employee theft that occurs at retail stores. One industry survey of 23 retailers estimates that for every dollar of sales in 2012, just under 1 cent was lost to some form of theft, and of those thefts, only 4 percent of the value was recovered, even though 1.1 million shoplifters and dishonest employees were apprehended.
For the security system services industry between 1997 and 2007, the number of establishments with paid employees almost doubled, the number of employees increased by 9 percent, and sales increased by 129 percent. A useful metric for this industry is recurring monthly revenue (RMR), which indicates the number of subscribers and thus highlights the state of the service industry as opposed to installations from new construction. From 2005–10, despite a major recession, RMR increased for the top 100 security system services companies at an average annual rate of 6 percent, accelerating to 10 percent in the last year of that period. Alarm installations are fairly evenly split among residential, commercial, and large industrial customers.