The largest company in an industry that remains fragmented · ASSA ABLOY and the lock industry: The...

12 • ASSA ABLOY / 2000

assa abloy is the world’s largest lockcompany with total Group salesapproaching sek 20 billion. assaabloy’s share of this highly fragmentedworld market is around 10 percent.The Group has its origins in the Nordiccountries where it enjoys leading marketpositions. Thanks to organic growthand an ambitious acquisition strategy,notably the recent acquisition of YaleIntruder Security, the Group nowenjoys leading market positions inFrance, the Netherlands, the uk, NorthAmerica, Brazil, South Africa andChina. assa abloy is also the leadingplayer in Australia and South East Asiathrough the 1999 purchase ofLockwood – the leading lock companyin Australasia.

In the fast-growing area of electro-mechanical locks, the Group leads theworld in product development andmarket share, and continues to holdthe leading world position in hotelsecurity through its subsidiariesVingCard, Elsafe and Timelox.

MarketDespite a greater degree of consolida-tion in recent years there are only a

ASSA ABLOY and the lock industry:

The largest company in an industrythat remains fragmented

handful of multinational lock compa-nies, and their share of sales to a totalmarket estimated at approximately sek200 billion is quite small. The globallock market is still dominated by manysmall and medium-sized companies. In Europe and North America, thesecompanies enjoy strong local marketpositions and high brand loyalty. Theirproducts have long life cycles and thelarge number of installed locks makesfor a highly stable market. In otherparts of the world established lockStandards and strong brands are farless common.

In general, present market condi-tions and distribution patterns remainstable. E-commerce is opening up newand exciting opportunities particularly for business-to-business trade. Direct e-commerce sales to residential customerswill continue to develop, although at asomewhat slower pace due to securityand insurance considerations and theneed for skilled installation.

Growth factors• Trend toward higher securityThere is a growing need to protectinformation and property throughoutmodern society. Today’s high-tech societyis more vulnerable to breakdowns, andpeople’s personal safety must be safe-guarded in a society where criminalityis perceived as a substantial and grow-ing threat. These factors have led to asteady and growing demand for betterlock solutions for homes, institutionaland residential buildings, offices,industrial plants and hotels for theprotection of highly valuable intellectualproperty. assa abloy leads in thedevelopment and marketing of techno-logically advanced products to meetthese growing needs.

• Electromechanical locksThe growing demand for more sophisti-cated lock functionality has given riseto advances in electromechanical lock-ing solutions that promise to revolu-tionize the commercial and residentiallock markets.

In the borderland between accesscontrol and lock systems there aremany growing electromechanical oppor-tunities. Several of them are availablethrough the cross-fertilization betweenthe recently acquired company hid’sradio-frequency identification techno-logy and the assa abloy mechanicallocks and cylinders.

Electromechanical locks offer end-users higher security combined withbetter safety, greater flexibility andoptimal convenience.

• New marketsA rising standard of living in many newmarkets in Asia, eastern Europe, theMiddle East and Latin America has ledto increased demands for security andsafety. In these and many other parts ofthe world assa abloy is playing a lead-ing role in developing higher securitystandards.

CompetitionDespite the Group’s growing size, assaabloy continues to face competitionfrom leading companies such asIngersoll Rand, a diverse us-based corporation with well-known brandslike Schlage and Von Duprin. Theirlock division has annual sales roughlyhalf those of assa abloy. Other majorplayers include kaba of Switzerlandand Black & Decker (usa) whose locksdivision includes the Kwikset brand inthe usa and Dom in Germany.

TRUE

LEADERSHIP

ATTRACTIVE TO DISTRIBUTORS

– partnerships

EDUCATE THE MARKET

IDENTIFY TRUE CUSTOMER NEEDS

– invest in R&D

THE MARKET GROWS– customer satisfaction

ASSA ABLOY / 2000 • 13

assa abloy has grown to become theworld’s leading lock manufacturerthrough a combination of organicgrowth and an ambitious and highlysuccessful acquisition strategy based onopen lines of communication and agenuine sensitivity for different corpo-rate cultures. A case in point is the1999 acquisition of Lockwood ofAustralia. Lockwood President GeoffNorcott explains how the merger metwith both companies’ satisfaction, andthe mutual benefit it created from thestart.

“assa abloy senior managementdemonstrated early on in the processthat they were committed to establish-ing good lines of communication. Keymembers of the headquarters manage-ment team came to see us. They presented the Group’s philosophy to allLockwood employees and arranged afamiliarization tour of assa abloylocations in Europe and the usa for ourexecutives.

“The management team of bothnew and old members with ambitionsthat were in tune with the assa abloyphilosophy meant there was no ‘baggage’(no desire to protect previous practices)and we could move quickly to learnfrom other Group companies. Wefound them cooperative without beingdominant. Overall, I think that perhapsthe most impressive thing about assaabloy was the positive nature of alldiscussion – even if people didn’t agree!

“In the spring of 1999, a fewmonths after joining the Group, weformed a joint venture to develop anew high-security cylinder. We found agood partner in Assa in Sweden, whoseengineering technology fitted our ownvery well. We swapped engineeringskills and subsequently establishedvideo links with Sweden to enable us to

A winning partnership

collaborate on development, manu-facturing and marketing of what becamethe Lockwood Twin.

“By working together we were ableto produce an all-new high-securitycylinder far quicker than we couldhave managed on our own. TheLockwood Twin was launched success-fully in Melbourne in spring 2000, ayear after we’d started. Working togetherresulted in significant cost savings and

substantially reduced our Time toMarket. Now Lockwood and otherGroup companies enjoy a rich andactive cooperation on benchmarkingand cross-selling at many levels. It’sreally a win-win situation for all concerned”, concludes Mr Norcott.

Geoff Norcott, Group Vice President and Country Manager for Australia, New Zealand and the UK, believes the merger has proved mutually beneficial for both companies and created a win-win situation.


Strategy and financial objectives:

Expansion by growth, acquisition and technical leadership within our own industry

STEP-BY-STEP

CREATING A BASE• Organization• Basic routines• Core products

FOCUS ON EFFICIENCY• Benchmarking• Workflows / lead times• Delivery performance

FOCUS ON THE MARKET• Growth projects• Cross-selling• Distribution channels

INCREASIN

G PROFIT

OUR PRODUCTSAND MARKETS

Focus on the lock segment

As the world’s leading lock manufac-turer, assa abloy is dedicated to thedevelopment of locks and lock-relatedproducts. These range from conventionalmechanical locks and door hardwarethrough high-security masterkey systemsto state-of-the-art electromechanicallocks, electronic id readers and keycards which contribute to new stan-dards of security throughout the world.Because the lock business is assaabloy’s only business, all companieswithin the Group can benefit from arich transfer of know-how and fromextensive benchmarking activitiesdesigned to spread best practices andpromote excellence.

Promoting the trend to higher securityassa abloy’s product developmentactivities are carried out in closecooperation with insurance companies,police and fire officials, end-user organ-izations and other important decision-making bodies. Group companies also

engage actively in information and train-ing initiatives which target retailers,architects and security officers withfacts about our latest products andsecurity solutions. The growth in Do-It-Yourself (diy) distribution to the resi-dential segment gives Group companiesan opportunity to present their securitysolutions to an increasing number ofend-users.

OUR MANAGEMENT MODEL

Multi-domesticassa abloy’s success as a global leaderin the lock industry is based on theclose relationship individual Groupcompanies enjoy with their customersat the local and regional level. Theirunderstanding of and responsiveness tolocal needs, business arrangements anddistribution requirements remain para-mount to success in the lock industry.For this reason, we continue to run adecentralized organization giving fullbusiness responsibility to CountryManagers.

Major Country Managers are mem-bers of Group Management, whichmeets regularly. Group Vice Presidentshave regional responsibility for a numberof countries and ensure that Group methods are applied consistently.

Group companies serving the hotellock market, and the newly acquiredelectronic reader division, are organizedseparately from the Group’s nationallock companies in order to respondmore effectively to the opportunities ofthese specialized international markets.

Building on Group strengthsThe Group’s global size and unmatchedknowledge base offer many opportuni-ties of synergy through benchmarking,cross-learning and cross-selling, whichtogether greatly contribute to earnings

improvement. Group purchasing acti-vities have already resulted in substan-tial cost savings on raw materials and components, and a joint supplier data-base has been established to enhancethis process.

Wider ownership participationassa abloy wants employees and executives to participate in the com-pany to the greatest possible extent.Approximately 1,600 of the Group’s20,000 employees hold shares and convertible debentures amounting toapproximately seven percent of theshares when fully diluted. Group executives have substantial holdings.

assa abloy aims to present employees with a new convertibledebenture program in summer 2001.

Group informationThe Group’s rapid expansion calls for aregular flow of information to keepeveryone in the picture. The Groupinhouse magazine, assa abloy News,is published four times a year in twelvelanguages. It contains articles on newproducts, new initiatives and newacquisitions and communicates Groupstrategy and development plans. In2000 the Group website was restruc-tured and greatly expanded to servecustomers and staff as well as investorsand the media. It will be complementedwith a Group intranet in 2001.

EXPANSION STRATEGY

Organic growthOrganic growth remains vital to theGroup’s long-term success, and is achieved by intensive developmentefforts in both mature and new markets. In markets where assa abloyis well established, organic growthdepends largely on increasing sales to


In 1995, Sargent of the usa recognizedit was necessary to restructure itsorganization to respond more quicklyand effectively to a number of newmarket demands. These included de-mands for mass customization, greatercost sensitivity, higher quality, fasterdelivery and richer product varietyover shorter cycles.

To meet these demands, Sargentneeded to improve operational effici-ency at many levels. The companyinitiated Demand Flow Technologyroutines which eliminated batch production in favor of cellular manu-facturing. ‘Just In Time’ (jit) and‘Produce to Customer Order’ becamethe overriding philosophies.

In 1996, with a solid foundationlaid, additional improvements wererealized through a ‘flat’, more accoun-table organization. Dedicated profitcenters focused on specific productfamilies were established. By thinningout layers of responsibility, it was nowpossible to ‘see’ the customer from allcorners of the Sargent organization.

By 1997, workflows had been simplified and integrated into aCellular / Demand Flow productionsystem. After 1998, with a completelystreamlined organization in place, thecompany’s focus turned to the market.Customer partnerships were streng-thened, new products were deliveredmore rapidly and continued improve-ments were instituted for all added-value services beyond the productsbeing offered.

During this extensive period ofmajor and rapid change, communica-tion activities to all Sargent employeeswere greatly intensified. Change isreally all about People. It was vital tomeasure and benchmark each step ofthe process so that everyone felt theywere part of it and clearly understood

each improvement or shortcoming.Five years after initiating these

substantial changes, Sargent is reap-ing the benefits. Sargent PresidentThanasis Molokotos explains: “Wehave catapulted ourselves to the fore-front of the industry in terms of deliveryaccuracy and short lead-times. We havedramatically improved both our profit-ability and the time taken to developand launch new products.”

Sargent proves less is more

“Just In Time (JIT) delivery and ‘Produce to CustomerOrder’ became the overriding philosophies” says Thanasis Molokotos, President of Sargent Manufacturing Company, USA.

existing customers. Cross-selling amongGroup companies to expand andenhance product portfolios contributessignificantly to our organic growthpotential. In new markets where thereare no strong local players, new Groupcompanies are established. assa abloy’swide product range, ownership of strong,internationally respected brands and new,more efficient forms of distribution areall key to steady organic growth.

AcquisitionsA fast and highly effective way to entermature markets is through the strategicacquisition of a leading company.Acquisitions are also made to gain market share in a new and promisingproduct sector. assa abloy’s recent purchase of hid of the usa, a leadingmanufacturer of contactless electronicreading devices, illustrates this approach.

FINANCIAL OBJECTIVESThe strategy described above is designedto continue the achievement of a satis-factory earnings trend, with a focus onearnings per share.

assa abloy’s financial goal is toachieve a return of more than 20 percenton capital employed. This goal was setwhen the Group was formed in 1994.The goal is increasing automaticallybecause of the goodwill added throughthe acquisitions made. The return in2000 was 13.6 percent. Most of theimprovement required is expected tobe achieved through higher margins,although there are possibilities of further reductions in the capitalemployed in the business.

An equity ratio of 25 percent is considered sufficient, taking intoaccount the relative stability of the lockmarket and the Group’s strong cash flow.A goal of 20 percent on capital employedis achievable in a five year perspective.


At assa abloy we believe that peoplemake the difference. This is why ourmanagement approach is based ontrust, positive thinking and respect forlocal conditions and cultures. Goodmanagement is about creating anatmosphere that encourages employeesto make the most of their individualskills for the benefit of the whole company. To achieve the optimalworking environment for everyone,our management philosophy is basedon four cornerstones: Realism, Vision,Courage and Ethics.

Realism means everyone mustexcel at their job. Managers must fullyunderstand the business, the market,the products, the competition and allbusiness processes. Management musthave a broad perspective but remem-ber that answers are often found in thedetails.

Our Vision is to be the true worldleader in locks. Not just in size but interms of setting standards of excellencefor others to follow.

Courage is about spearheadingchange. This means not only livingwith change but leading through creative innovation based on solidknow-how and experience.

Management philosophy:

People make the difference

PEOPLE MAKE THE DIFFERENCE

OUR CORNERSTONES

REALISM • Know your numbers• Seek the truth• Keep perspective, don’t be afraid of details• Profit drives growth

ETHICS• Attract the best people• Believe in the individual• Lead by example• Confidence in competence

VISION• The true leading lock company

• Leading in size and thought

COURAGE• Lead change processes

• Courage is a must

Ethics are central to trust, creativityand commitment and to success in theinternational security marketplace.High ethical standards attract the bestpeople and motivate them to be thebest they can be.

Management training programOur continued success and growthdepend on the skills and commitmentof every employee and every manager.For this reason, skill enhancement, jobrotation and training programs areconducted continuously at all levelswithin the Group. Our sharp focus onthe lock market and active bench-marking establish a good frameworkfor a valuable exchange of ideas and ex-periences among assa abloy employeesfrom all over the world. As part of thisactivity, the Group conducts an annual

‘assa abloy Management Program’ in which some 25 employees chosenfrom throughout the Group have theopportunity to hone their leadershipskills. The entire program is carriedout by Group Management and is basedon real-life case studies from assaabloy. To date more than 125 managershave participated in this program.

200 MeetingEvery second year assa abloy arrangesa ‘200 Meeting’. The last meeting heldin September 2000 gathered the mostsenior executives together to exchangeexperience and ideas and review andagree the Group’s vision, objectivesand strategies as well as set the priori-ties for the coming two years.


assa abloy’s management approach inFrance shows how it is possible tounify a diverse group of competingcompanies while boosting overall performance and esprit de corps. BoDankis, President of assa abloy s.a.France and Country Manager forFrance, explains:

“assa abloy France comprisesseven companies including the Frenchholding company. Some of our unitsare in direct competition with eachother and even share the same distribu-tion network.

“The first time the management ofthe different entities met was on an airplane in summer 1997. That was theyear we acquired our first French companies, which have since grown innumber. At that time we initiated apost-acquisition practice of flying thenew managers around Europe to meettheir counterparts at other companysites. This first experience was so highlyappreciated that we decided to holdregular management team meetings. Itwas a bit tense at first. But once the icewas broken, a spirit of openness grew.People started feeling involved andbegan sharing experiences.

“Subsequent benchmarking of performance between the French unitsand the rest of the assa abloy worldproved most interesting. For the firsttime our French management couldcompare its performance with that ofother companies in other countriesmaking the same types of products.While our French group performedwell in comparisons on its own market,some of its new sister companies hadcome further in developing their opera-tional performance. This new insightinspired the French companies to workeven harder. New benchmarking tar-gets were set. Now it was possible to

see each month what needed to improveto join the other top-ranking perfor-mers in the Group.

“Once this common vision wasestablished, a more profit-orientedorganization was created. We flattenedthe hierarchy, cut delivery times, andintroduced new, cash-saving operationalroutines. Monthly management teammeetings are now held between thegeneral managers and at local companylevel. And we maintain transparencythanks to a growing exchange of infor-mation among all the French companies.The introduction of profit centers hasadded career opportunities and in-creased accountability throughout ourorganization.

“Management development hasbecome a new priority. Each unit is

actively engaged in succession plan-ning at lower and middle managementlevels.

“It is very rewarding to see howour international benchmarking activi-ties and other exchanges among Groupcompanies have motivated our peopleand given them valuable new perspec-tives.

“Each company has been given theopportunity to formulate its own operational and strategic targets. Todaythe French companies are performingwell in line with the best in the Group.Moreover, we have succeeded in intro-ducing a more open and accountablemanagement approach together withcross-border benchmarking that doesnot conflict with French cultural pract-ices”, says Bo Dankis.

The more open the better

ASSA ABLOY France has succeeded in introducing a more open and accountable management approach. Somemembers of the French management team: Michel Brassié, Bezault, Yvan Haddad, Mul-T-Lock, Frédéric Chanel,Fichet, Gérald Bauza, Vachette, Jouni Pitko, JPM and Robert Fidanza, Laperche.


Environmental managementEnvironmental concerns in assa abloybegan long before 1996 when theGroup decided formally that all itscompanies should aim to achieve theiso 14000 Environmental Manage-ment Standard. But the decisionemphasized the importance placed bythe Group on care for the environmentas a matter of social responsibility, andhas increased the urgency with whichindividual companies address environ-mental issues.

The first companies to apply forcertification were amazed to find thatmany of the changes they made to comply with the Standard also contri-buted to lower costs and more efficientproduction flows. Now that this isrecognized, it is no surprise that moreand more companies are eager toembark on the process. Seven majorGroup companies have already achievediso 14000 certification and six com-panies are expected to qualify in thenear future.

It would be possible to cite hundreds of examples from the last 12-18 months of how Group companieshave made significant environmentalimprovements – often beating the legalrequirements by good margins – and atthe same time have saved costs forthemselves. Instead, the three exampleshere, from major companies in theusa, Germany and Sweden, describespecific environmental programs inmore detail.

Quality assuranceQuality assurance and environmentalmanagement are intimately linked. Theiso 9000 Quality Assurance Standardcovers every aspect of a company’sactivities, which include environmentalmanagement as well as all manufactu-

Environmental management and quality:

Good environmental policies also give valuable cost savings

ring and commercial procedures. Likethe Environmental Standard, iso 9000imposes valuable disciplines on a company. Many assa abloy companieswere early to use the tools offered byiso 9000 and have since refined theirimplementations over time. Qualityassurance is also one of the main criteriafor internal benchmarking by whichcompanies learn from each other.

USA: Wastewater treatment pays foritself in nine months

As part of an initiative to achieve iso14000 certification, Medeco SecurityLocks, Inc. in the usa recently installeda new wastewater treatment system at a purchase price of usd 22,000. Theresulting cost saving will be usd32,000 annually, giving a payback timeof between eight and nine months.

Previously, most of the potentiallyhazardous wastewater collected fromfloor moppings, vibratory machinesand rinse waters was boiled away in anevaporator and released into theatmosphere as steam from an exhauststack. 500,000 liters a year were treated in this way, while the remaining60,000 liters a year were shipped offsite for treatment. The new system treats all the wastewater on site andsends a much smaller volume, 21,000liters a year, to the local sewage treat-ment plant from where, after furthertreatment, it is ultimately released intothe Roanoke river. The cost for shippingthe wastewater off site will be reducedfrom usd 80,000 to usd 48,000 annu-ally.

Other aspects of Medeco’s environ-mental initiative involve the recyclingof a wide range of materials includingmetal cutting chips, cutting oils, card-board, pallets, fluorescent tubes,plastic drums and office paper.

The majority of theASSA ABLOY companieshold ISO 9001 or ISO 9002quality certification.

Seven companies hold ISO 14001 environmental certification:Ruko A/SAbloy OyIKON AGFIX ABAssa ABAssa Industri ABAB FAS Låsfabrik

and six companies are in theprocess of achieving it: Yale Security Products UK Ltd.FAB a.sVachette S.A.Medeco Security Locks, Inc.TrioVing a.sSolid AB


A concerted drive to avoid unnecessaryuse of paper at Assa ab in Sweden isexpected to reduce the company’sannual consumption by more than 4.5metric tons by the end of 2001. Eachyear, 64 mature trees that would havebeen felled will still be standing in theforest, and the company will savearound sek 200,000.

Major savings in the main lock production unit come from the replace-ment of 75 percent of all work ordercards with work orders entered in com-puters once a week. Orders are trans-mitted to the rolling plant automaticallyand executed at the times required. Theonly work cards still needed are transport cards for identification. This

SWEDEN:

64 trees a year left standing

method of working will be progressivelyextended to Assa’s other plants.

New computer networks allowincreased use of e-mail and paperlessfax for internal and external communi-cations. By avoiding unnecessary print-ing, consumption of plain a4 paper willfall by an estimated 30 percent, from7,200 to 5,000 kg. Faxing of ordersand order confirmations direct to com-puter memory will save another 800 kgof paper, and similar savings will comefrom halving the volume of paper neededfor computer printouts. Users are beingtrained to lay out listings better and toread them on screen whenever hardcopy is not essential.

Thanks to Marianne Björklund and her colleagues in the Quality and Environment Department at Assa AB

in Sweden, 64 mature trees that would have been felled are still standing and the company will savearound SEK 200,000.

GERMANY:Continuing improvements year on year

ikon ag in Germany was one of thefirst assa abloy companies to obtainiso 14000 certification for its environ-mental management system back in1997, and has achieved further impro-vements every year since.

Gradual conversion from liquidpaints to more environmentally friendlypowder paints has been one of the mostsignificant changes on the productionline. The proportion rose from 10 per-cent powder in 1998 to 30 percentpowder in 1999, saving dem 13,000 indirect paint costs. Further savings arosefrom the reduced need for cold paint-stripping agents, reduced production ofpaint sludge, reduced disposal costs forboth, and reduced need for solventextraction equipment. Over the last threeyears too, cyanide-containing chemicalshave been almost totally eliminated fromsurface treatment processes.

Following the introduction of arevised quality management systemthat allows quicker intervention whendeviations in the production processoccur, the amount of brass and othermetal scrap generated during themanufacture of lock cylinders fell by10.5 percent (nearly 40 metric tons)between 1996 and 1999, giving anannual saving of dem 200,000. Allmetal scrap is returned to suppliers forrecycling. Another major source ofsavings is reduced consumption of oilfor process and space heating, achievedby progressive improvement of controlswitchgear and instrumentation.


Throughout the world people aredemanding higher levels of security.But security does not mean the samething in every country: there are manydifferent trends towards higher security.Economic conditions, history, culturaldifferences and the influence of religionon morals and development all affecthow different nationalities view security.People’s expectations, people’s fearsand people’s care for their own protec-tion differ widely.

Nor can security be considered onits own. Security must be combinedwith safety, with reasonable conveniencein use and if possible with attractivedesign and appearance.

More to protect – and moreimportant to protect it!The weight given to these different considerations varies between conti-nents and countries. There may even besignificant regional differences within acountry. But the basic trend towardshigher security is universal. In histori-cally poor countries more people are becoming richer and have more possessions. The same countries areindustrializing rapidly, led by localentrepreneurs, governments and multi-

The trend towards higher security:

Security must be combined with safety and convenience

national companies. Security needs aregrowing from next to nothing to whatcould be considered a Western worldstandard – or sometimes higher. Anyrise in private or corporate prosperitymeans there will be something to protect and a need for more and bettersecurity.

In more developed regions with alonger tradition of security the need tomodernize old security installations isincreasingly obvious. Vulnerable ‘just-in-time’ industries need the protectionof the latest mechanical and electro-mechanical technologies. Individualswant to protect their home and familyagainst the increase in crime and violence resulting from poverty, drugmisuse and other modern ills.

Consider some concrete examplesof what the trend towards higher secur-ity means in different environments. InIndia, installing abloy padlocks toprotect a stock of oil. In a new buildingin Shanghai, installing a mechanicalhigh-security masterkey system. In aresidential building in Sweden, replac-ing the old five-pin lock system with adual mechanical system like the TwinCombi. In the World Trade Center inNew York, installing the assa Twinhigh-security lock system following aterrorist attack with explosives. Invending machines, replacing a mecha-nical with an electromechanical lock tokeep track of the personnel havingaccess to the machines. In a govern-ment building in Berlin, installingmotorized locks in the perimeter doorsto ensure they are securely locked everyevening and never forgotten. And in adepartment store in France, replacingmechanical panic exits with monitoredand time-delayed electromechanicalcounterparts to prevent shopliftersfrom misusing the exits.

The list is endless, and every case isdifferent. But the trend is very clearthroughout the world.

The growing importance of safetySecurity and safety requirements oftenconflict. Very high security may makeit more difficult to get out as well asmore difficult to get in. And fast exit isvital in case of fire, a chemical escapeor evacuation in response to a bombthreat.

The value put upon human life alsovaries around the globe, and thisaffects the approach to safety relativeto security. The usa has financial driving forces due to the high legalpenalties for not taking sufficient safetyprecautions. Central and southernEurope focus on the human aspectfollowing a serious accident at a discotheque in Geneva some years ago.In Scandinavia the insurance approachto security dominates because of thevery high value put on possessions.But, regardless of culture, there is nowa general trend towards valuing humanlife more highly throughout the worldcivilization.

In response, the trend towards higher safety now follows close behindthe trend towards higher security. Theneed to combine the two is leading tothe use of more intelligent solutions,many based on electronics and electro-mechanical products.

Convenience also in demand A third factor that has to be balancedagainst higher safety and particularlyhigher security is the increasingdemand for convenience. A more secureenvironment can very easily become a more inconvenient environment, especially if based on traditional

ELECTROMECHANICS IN FOCUS

CONVENIENCEProducts that are easy to use

SAFETYProducts that

provide fast exit in emergency

situations

SECURITYHigh-security products that protect property

ELECTRO-MECHANICS


From a stone in front of a cave to wooden locks, lever locks, cylinderlocks, code locks, card readers, andfinally to proximity card readers – thishas been the chain of developing tech-nology providing increasingly securelocks with ever greater convenience.

hid Corporation, the us companyacquired by assa abloy in late 2000,focuses on breakthrough products inconvenient locking: proximity cardsand readers.

Many of the biggest suppliers ofmodern access control, and smallerfirms too, already use hid readers andcards.

The proximity card reader is basedon the advanced use of rf (radio- frequency) technology to transfer energy to passive proximity cards andto decode the card identity. Each cardcontains an electronic chip and anantenna to receive energy and send backits unique code.

Proximity technology is continuallyfinding new fields of application. Notonly to control access to doors, butalso to provide secure log-on to com-puters and networks, for identificationand tracking of valuable equipment,and for controlling access to restricteddatabases. For example, in the healthcare environment, controlling access topatient records has become increasinglyimportant.

rf technology enables a greaterlevel of convenience and security inboth new and traditional securityfields. The advanced technology thathid offers to the assa abloy Groupcompanies opens new perspectives forfuture security locks and cylinders andtheir applications. The chain of highersecurity and ever increasing conveniencehas not ended yet.

HID’s proximity readers addconvenience to high security

mechanical products alone. Access control systems are installed

with the aim of providing sufficientsecurity with reasonable convenience,so you can pass the security barrierquickly if you are authorized. Theymay be combined with door auto-matics for passage through lockeddoors. Some use a proximity device orin sensitive high-security applications afingerprint reader.

In this field the automotiveindustry has led the way. Ten years agoonly the most luxurious cars had centrallocking and a remote opening device.Today they are standard on most newcars. When will we see remote openersand central locking for the privatehouse or apartment? This is naturally alittle more complex, but it is certainlyachievable with today’s technology –and convenience is a strong drivingforce.

Opportunities for ASSA ABLOYThe increasing demand for high securityin markets all round the globe providesmany new opportunities for assaabloy’s existing mechanical products.At the same time the conflictingrequirements of security and safety areleading to more complex products thatcan meet both requirements. Such products are already installed in someof assa abloy’s most developed markets.When the demand for convenience isadded, it not only drives increased useof existing electromechanical locks butleads to development of totally newproducts with significantly higheradded value.

HID, the US company acquired by ASSA ABLOY in late2000, focuses on breakthrough products in conve-nient locking: proximity cards and readers.


ASSA ABLOY in development:

assa abloy is built on strong localmanagement in each country. Thecountry forms a natural entity with aconsistent security philosophy. Withineach country, long-life products design-ed to suit the local building technologyand climate give each local lock indus-try an exceptionally stable base.

Nevertheless, all Group companiesdo very much the same things, manu-facturing locks and door and windowhardware. Products are not identical,but they are similar, which gives thecompanies a lot to learn from eachother. Benchmarking lies at the heart ofthe Group’s management philosophy.And benchmarking covers much morethan just comparing figures for efficiency,costs and financial performance. Itencompasses the whole lock business –how different companies do things inmanufacturing, in planning, in distri-bution and in all other areas of thebusiness.

Common development oftechnologyThe new area of electromechanicsallows even more synergy between

Benchmarking and cross-learning speedthe development of new technology

different markets. Because the wholetechnology is new, no country is boundby tradition. Different dimensionalstandards may mean that the productswould not suit the different markets ifthey were identical – but the technologyinside may well be. This gives scopefor many cooperation projects withinthe Group, designed to develop newlock technologies that can be used‘multi-domestically’.

Development of common techno-logies calls for effective cross-learningbetween Group companies. It requiresan open environment in which com-panies can get closer to each other’s businesses and build deep mutualunderstanding of different markets’conditions and standards. To facilitatethe exchange of experience assaabloy has standardized on English asthe Group language and for computer-aided presentations.

The sharing of experience and col-laboration in joint projects is still in itsinfancy, but has already producedclear improvements in terms of fastertechnical development, cost cutting ofindividual processes and marketimpact.

Cross-selling opportunitiesAs globalization gradually advances,exploitation of the many opportunitiesfor cross-selling is also contributing tothe organic growth of the Group. Wehave learnt how to do it and how to doit well. The objective is to create newmarkets for products that are alreadysuccessful in their home market. A lotof preparatory homework is requiredto build on the local strengths ofdifferent companies by adding pro-ducts from elsewhere. And because thepace and relative importance of securityand safety trends differ significantly

between markets, some adaptation ofproducts may be needed.

Today security products from theNordic countries, Germany and Franceare finding their way to the usa,Australia, the Far East and easternEurope. Sales of safety products fromcentral Europe are increasing in theNordic countries. And electromech-anical products are spreading all overthe world from areas that have pioneered the introduction of thistechnology, including Scandinavia,Finland, Germany and the usa.

A sincere interest in the lock businessassa abloy’s acquisition strategymeans that new companies are con-stantly entering the Group. They find aspecial atmosphere of commitment toour common business based on sincereand deep interest in lock products.Many find their first impressionsoverwhelming. But they soon discoverthat the Group’s open, positive attitudeto sharing experiences at all levelsencourages everyone to learn fromeach other without fear or false pride.Every new acquisition brings a freshinjection of expertise in one or moreareas of the industry. Each newcomerhas something to give to others as wellas much to learn.

This two-way exchange gives thenew companies self-confidence as theyfind good ways to improve their ownbusiness. And for new and oldcompanies alike it has contributed to more active market development,better positioning of the companies andbetter organization of the business ingeneral.

INCREASED PROFIT• Satisfied customers• Committed employees• Increased quality• Declining cost• Shorter lead times• Simpler organization

LEARNING FROM EACH OTHER

CROSS-LEARNING • between group companies• from best examples• benchmarking best method


As the world’s leading lock manu-facturer assa abloy has an importantrole to play in the development of locktechnologies that meet the highest poss-ible security and safety standards. Tothis end the Exit Devices Group withinassa abloy’s Product Council saw anopportunity to showcase their specialistknowledge and expertise when newEuropean Standards for exit deviceswere recently announced.

This assa abloy initiative hasresulted in the production of a com-prehensive generic guide on exit devicesentitled ‘Saving Life and Property’. Theguide spells out the formal regulationsregarding exit devices used on an escape route.

Alain Varenne, who is StrategicDevelopment Director at assa abloyFrance and also Chairman of the centask group responsible for developing

New standards for safer exits

the new Standards, says: “This advisorydocument is designed to increaseknowledge about the new commonEuropean Standards as they pertain tosafety in general while highlighting thekinds of solutions we at assa abloyare able to offer. But there is no men-tion of our products or our companiesin the guide.”

The Exit Devices group made theguide as universal as possible since itwill be distributed in 17 countries andtranslated into nine languages. assaabloy companies will use this advisorydocument in their own language as anintroduction to the new EuropeanStandards.

The guide is addressed to archi-tects, specifiers, safety managers,government officials, insurance adjus-tors, police and fire officials as well assecurity consultants.

An environment of continuous development

assa abloy aims to provide an environ-ment of constant development. Newmarkets, new products and new companies all serve to stimulate andfeed this process. So far it has beeneasy for new companies to find theiridentity in the Group – and exceedexpectations. Following the largestacquisition yet, the Yale IntruderSecurity group and assa abloy arealready a good way through this ex-citing process of learning from eachother so as to achieve True Leadershipin the lock business.

An initiative from ASSA ABLOY’s Product Council and Alain Varenne, Strategic Development Director atASSA ABLOY France, has resulted in the production of a comprehensive generic guide on exit devicesentitled ‘Saving Life and Property’.


Innovative new products are of greatimportance for a true market leader ina business as technical as the lockindustry. assa abloy applies forpatents in all its product areas, the largest number relating to mechanicallocks, followed by fittings, securitydoors and – increasingly – electro-mechanical products. Patents are usedboth in the traditional way to protectour innovations from direct competi-tion, and also to protect the security ofcustomers’ keys used in masterkey sys-tems.

Mechanical locksThis product group covers masterkeycylinders, lock cylinders, lock cases,lever locks and accessories. There is agrowing need for these traditionalproducts in most markets, especially innew and developing markets where nolocks were used before or where oldsimpler products are now being re-placed by modern high-security locks.

Mechanical locks form the ‘core ofthe core’ of the assa abloy productrange. They provide the two essentialcomponents of any security device:identification (the key) and door holding/locking (the lock). In manymarkets they lead the way to selling acomplete package for doors and win-dows. Mechanical lock technology alsoremains at the heart of newer electro-mechanical products, providing thebasic strength of the lock, to which areadded a range of new identificationdevices and actuation/locking devices.These more sophisticated locks enable

ASSA ABLOY’s products:

New actuation and identification devicesadded to a core of mechanical knowledge

demands for safety and convenience tobe combined with those for security.

Fittings and security doorsIn most markets assa abloy simplydelivers fittings for the door and win-dow industry. But in some markets likethe usa and France, the industries have‘grown together’ in some segments andassa abloy has become a major sup-plier of complete doors. The us com-panies Curries and Graham supplydoors to the contract hardware andprofessional end-user markets, while inFrance Fichet distributes tailor-madedoors for the private market throughits own network of ‘Point Fort’ locksmiths.

Electromechanical productsIn today’s lock business, the electro-mechanical product group shows thestrongest growth, the highest invoicingper item and the largest number ofinnovations from both assa abloy andestablished and new competitors.Many different assa abloy productsnow employ motorized and solenoidlocks, electric strikes, and magnets fordoor locking. Electromechanical solu-tions are often integrated into accesscontrol applications, including panicexit devices. They provide delay andremote control functions where a

combination of security and safety isrequired.

New identification techniques likeproximity cards and keyfobs have already got a strong foothold, andsmart cards, increasingly combinedwith proximity techniques, are beginningto grow. In November 2000, assaabloy agreed to acquire hid Corpora-tion, the world leader in contactlesscards and readers using radio-frequencyidentification technology.

All around the world attempts tocreate reliable biometric identificationsystems based on fingerprint and otherbiometric scanners are in hand. Somehave found their first commercial appli-cation in computer protection. Thedoor application is exceptionallydemanding on reliability and will follow when the technology has rea-ched sufficient maturity.

Electromechanical products giverise to a new need for compatibility.The products need to communicate.And the locks as well as the communi-cation devices must be secure and easyto install. Future doors will be a littlesecurity system composed of intelligentcomponents and often connected via acommunication bus to access controland building control systems. Suchsolutions are of course in the test labo-ratories of many companies.

Industrial locksIndustrial locks, also called camlocks,form a product group with a separatemarket of oem and professional end-users. These are locks integrated into


The dynamic growth of the assaabloy Group over the past few yearshas created a truly global companywith operations on all five continents.

To make the most of the manypotential cross-selling and buyingopportunities within the Group aProduct Information Database (pid)has been developed. The pid makes itpossible for the assa abloy companiesto showcase products with cross-salespotential with the aim of increasingorganic growth.

Access to the pid is gained via the web through a secured server. Allparticipating companies provide detailedinformation about given products aswell as high-resolution graphic imageswhere applicable. The pid consists oftwo parts – the main database and aglossary containing readily recognizablekey words used to describe the variousproducts. In each instance the assaabloy preferred word appears inEnglish along with a list of alternativesto account for regional distinctions,followed by a short description of theproduct. The key words can then beaccessed in nine languages.

The pid program is scheduled tobecome operative at the beginning of2001.

Something for everybodyThe pid initiative enables individualGroup companies to reach a worldmarket by promoting their best prod-ucts via sister companies within theGroup. In addition to the potential forgreater cross-selling and buying lead-ing to higher Group sales, there arealso substantial savings to be achievedby sharing development costs and avoiding product duplication.

Intra-Group database to spark organic growth

another product, such as a vendingmachine, a parking meter, a payphoneor a locker for public or industrial use,often combined into a coin lock. assaabloy may supply a lock cylinder orsometimes a special lock or bolt design.Industrial locks are increasingly in-corporating electronics to provide new,secure functionality. Electronics typicallyprovide time control and tracking functions to route and monitor thepersonnel servicing the machines.

Hotel locksThe hotel lock business has changedtotally during the last twenty years,since VingCard invented the first card-operated hotel lock back in the 1970s.Traditional mechanical locks sufferedfrom compromised security wheneverkeys were lost. Now the hotel businesshas turned to electromechanical locks,addressing the problem of lost keys.The lock is automatically reprogrammedfor each new guest to provide safetyand security

The key card is more and moreoften used to open in-room safes, togive access to recreation areas, forenergy control and as a chargecard.The introduction of smart cards offersfurther opportunities to develop hotelservices.

To make the most of the many potential cross-selling and buying opportunities within the Groupa Product Information Database (PID) has beendeveloped. Aira Tikka, Project Manager at ASSA

ABLOY AB, and Olivier Schuester, Export Directorat JPM, are involved in the project.

Mechanicallocks, lock systems and accessories, 45%

Security doorsand fittings,

34%

Industrial locks, 5%

Electromechanical and electronic

locks, 16%

Patents by product group


In past times, communication withcustomers and the physical distributionof goods operated at similar speed.Both were limited to the pace of horseson land and sailing ships at sea.Today’s instantaneous communications– telephone, fax, e-mail and theInternet – have altered the balance,and distribution systems established ina slower-moving age are under increas-ing pressure from customers to adaptand modernize.

Ultimately, it is always the cus-tomer who shapes the distributionsystem and the supplier who mustrespond. Products will find their shortestand most cost-efficient way to thecustomer. The lock industry, tradition-ally, has offered a wide range of different products requiring specializedskills to select and install. The distri-bution structures set up have tended tobe based round wholesalers selling onto relatively small skilled installerssuch as locksmiths serving a local area.

In this world the most successfulsuppliers were those with efficientdistribution systems who could alsoadd value to their offering in the formof availability (quantity, assortmentand geography), know-how, installa-tion skills, and complementary productsthat made up a complete applicationpackage.

Instant communications and it-controlled production and distributionprocesses are now short-circuitingthese established structures. In particular,not only distributors but end-usershave immediate access to manufacturers,making for increased transparency andmore effective competition. A customerorder can be passed directly to the fac-tory floor the same second the order isbooked. A product’s location duringmanufacture or delivery is available to

Distribution:

Instant communication opens up direct distribution routes

everyone instantly at any time.In the extreme case, bringing the

customer closer to the distributor andthe distributor closer to the factorymay sometimes make the intermediaryobsolete. Distributors will survive onlywhere they continue to serve a usefulfunction.

LocksmithsLocksmiths are professional installersof security products with strong localpresence, proven know-how and highlevels of trust. They often originatenew technology in lock products aswell as introducing it to their customers.Increasingly, locksmiths are givendirect ‘information highways’ to assaabloy’s factories by which they canexchange ideas with product specialistsand place orders instantly.

Building trade suppliersMany locksmith businesses are nowincorporated in more general tradesuppliers providing a wider range ofmechanical products for the buildingindustry. The availability of leading-brand locks and masterkey systems isimportant in driving sales of completepackages. Like independent lock-smiths, these suppliers need direct linksto the factory to ensure fast deliveryand the latest technical know-how.

WholesalersIn some countries direct links havebecome so strong that wholesalershave lost their role. In others, whole-salers still serve an important inter-mediary function, providing both a wideassortment of products and supportingfinancial strength to small local lock-smiths and carpenters who install locks.

Contract hardware dealersIn the usa in particular, contract hard-ware businesses now account for asubstantial part of total lock sales. In away analogous to electrical installers,they handle the assembly, engineering


Production efficiency the key to fast delivery

By scheduling production runs on adaily rather than weekly basis, CurriesCompany of Iowa, usa, which manu-factures hollow steel doors and doorframes, has been able to reduce theaverage lead-time from order to ship-ment from 5-6 weeks to only 3-4weeks.

Driven by customer demands forshorter lead-times, Curries took theopportunity to examine all its orderflow, production scheduling, manufac-turing and shipping processes with theaim of eliminating bottlenecks andstreamlining operations. “The notionof daily production runs was first discussed after touring a manufactu-ring facility that produces and deliverscustom-made freezers and coolers within five days or less”, says JerryCurrie, President of Curries.

A cross-functional team started toassess the impact of daily productionruns on each department of the com-pany in April 1998, and their resultingimplementation plan was fully under-

way by mid August. Curries has cutlead-times for most products by nearly50 percent while maintaining 95percent or better on-time shipping –among the best and most consistentfigures in its industry. The project hasalso reduced work-in-progress invento-ries by 10 percent.

Switching to daily production runshas required improved communicationwith customers. In addition to customer-written order forms that are then converted into Curries productioncodes, the company now offers itscustomers estimating, order writingand shop drawing services throughvarious software solutions.

Summing up the project, JerryCurrie says: “We have learned that tomaintain our leadership role we mustbe willing to adapt to a constantlychanging marketplace. This attitudeneeds to permeate the organizationand can only be achieved by involvingall employees in the process.”

Dick Ebeling, Distributor Communication Manager, and Jerry Currie, President, schedule productionruns on a daily rather than weekly basis at Curries Company of Iowa, USA. Curries has been able toreduce the average lead-time from order to shipment from 5-6 weeks to only 3-4 weeks.

and installation of all the mechanicalproducts that go into a constructionproject. This role is gradually changingas manufacturers supply complete product packages that reduce the fieldengineering work. But the trendtowards more sophisticated productsoffering high security, safety and con-venience is continually extending therequired range of skills into new electromechanical areas.

DIYAs basic lock products become easier toinstall and many householders growmore confident in taking on such tasks,the diy business is strengthening allover the world. It is also becomingmore international, as the major diychains consolidate through mergers andacquisitions and establish new branchesacross borders, for example in easternEurope. The diy business is essentiallya new market, serving new types ofcustomers, and is thus a genuine addi-tion to existing distribution channels.Of course it also has some influence onthe buying patterns of existing install-ers, especially through its long openinghours.

For a Group like assa abloy with awide product range and cross-borderselling abilities, diy represents a majoropportunity for increased sales. In particular it will serve to increase thespeed of renewal for the installed baseof lock products.

The largest company in an industry that remains fragmented · ASSA ABLOY and the lock industry: The...

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