US private contracted security services demand to increase 7.3% annually through the year 2006.

Demand for private contracted security services is forecast to advance 7.3 percent per year to $48 billion in 2006. Gains will be fueled by the ongoing outsourcing of proprietary (in-house) security functions in several markets such as commercial offices and warehouses, as well as the privatization

of some public safety operations such as correctional facilities management. Despite the trend of falling crime rates through 2000, many consumers remain concerned about violent and property crimes, particularly since the September 2001 terrorist attacks. These and other trends are presented in Private Security Services, a new study from The Freedonia Group, Inc., a Cleveland-based industrial market research firm.

The guarding services segment accounted for the largest share of security services expenditures in 2001, with 35 percent of the total. Growth in guarding services demand will benefit from the increasing interest in better trained and more experienced guards which accompanies the shift away from viewing guarding services as a commodity. However, the alarm monitoring services segment is projected to experience the fastest annual growth through 2006. This pattern of growth is largely the result of rapid gains in the vehicular alarm monitoring segment, which includes the monitoring of more complex telematics systems. The airport security segment is affected by the federalization of its operations, shifting from private firms to public employees.

The nonresidential market will continue to account for the vast majority of private security services demand, led by above average gains in the government sector and increased growth in demand at commercial and industrial facilities. The residential market will advance faster, however, led by rising demand for alarm monitoring services. Security service requirements vary across the major user markets, influenced by factors such as exposure to potential loss, the nature of the consumers' activities and the availability of alternative security options, as well as the consumers' size, the value of their property and assets, and their available resources.

In 2001, the Pacific states, which feature several large urban centers, were the largest geographic market for private security services. Middle Atlantic and Pacific states will post the strongest gains through 2006, benefitting from the presence of a number of the nation's largest urban areas.

Private Security Services (published 04/2002, 332 pages) is available for $3,700 from The Freedonia Group, Inc., 767 Beta Drive, Cleveland, OH 44143-2326. For further details, please contact Corinne Gangloff by phone 440.684.9600, fax 440.646.0484 or e-mail pr@freedoniagroup.com. Information may also be obtained through www.freedoniagroup.com.

A limited license to use or reprint information from this news release is granted to you provided attribution for same -- including, if possible, the price of the report -- is given to The Freedonia Group, Inc. (Cleveland, OH). We would also appreciate the courtesy of receiving a copy of the article or publication in which we appear.

US PRIVATE SECURITY SERVICES DEMAND
(million dollars)

                                                     % Annual Growth
Item                          1996    2001    2006    01/96   06/01

Security Services Revenues   24180   33550   47700      6.8     7.3
  Guarding                   10000   11650   15500      3.1     5.9
  Alarm Monitoring            6900   11050   18800      9.9    11.2
  Private Investigations      1990    2130    2300      1.4     1.5
  Armored Transport           1490    2060    2800      6.7     6.3
  Private Correctional
    Facilities Mgmt            660    1950    2700     24.2     6.7
  Systems Integration          715    1500    2400     16.0     9.9
  Security Consulting          525     910    1450     11.6     9.8
  Pre-Employment Screening
    & Other                   1900    2300    1750      3.9    -5.3

[c] 2002 by The Freedonia Group, Inc.