Sept. 11 Reverses Trend at Irvine’s HID
By CHRIS CZIBORR
The events of Sept. 11 have had a pronounced impact on Irvine-based HID Corp., for the better.
The maker of security access cards for office buildings, airports and other facilities said it has seen demand jump since the terrorist attacks, reversing a slowing trend that gripped it for most of last year.
“The (slowing) trend seems to have been reversed since October,” said Joe Grillo, HID’s vice president of access operations. “We’re bullish about 2002. That’s being driven by a number of clients, including airports, completely rebadging all staff.”
Before Sept. 11, HID was feeling the pinch of layoffs and rising office vacancies. Fewer workers at businesses and tenants in buildings meant slackened demand for access cards.
“We were seeing a flattening out in our business since around the fourth quarter 2000,” Grillo said. “We saw very low single-digit percentage growth for most of (2001) vs. double-digit growth in previous years.”
Company officials now expect to see sales grow around 10% to $110 million this year, according to Grillo. HID, which counts 150 workers in Irvine and 360 in all, plans to boost hiring by 5% to 10% this year, Grillo said.
The company, which was acquired by Swedish lock maker Assa Abloy AB in November 2000 for $250 million, makes identification cards and badges as well as readers, including devices used to unlock doors. HID cards typically hold a chip and an antenna laminated in plastic. The company also makes access cards for computers, not unlike devices from Irvine-based Rainbow Techno-logies Inc.
HID’s customers include Oracle Corp., Cisco Systems Inc., Hewlett-Packard Co., Nike Inc. and Boston’s Fenway Park. Airports also are big users.
“Major airports called us after Sept. 11 to rebadge completely,” Grillo said. “There have been concerns about counterfeit badges.”
For airports, upgrading security isn’t a choice. Since Sept. 11, the Federal Aviation Administration is requiring airports to adopt new security procedures based on recently enacted legislation.
“The Aviation Security Bill will drive significant growth in the security technology markets by mandating the adoption of advanced technologies and setting new guidelines for the personnel operating them,” wrote Frost & Sullivan analysts Deepak Shetty and Prianka Chopra in a recent market research report. “Smart cards and biometrics will open new opportunities in the airport security market.”
HID is working on “contactless” smart cards, Grillo said, as well as on biometrics,identification technology that includes fingerprint and facial recognition as well as eye scanning systems
Smart cards offer a higher level of security in the way data is encrypted. A biometric template can be stored in the card, Grillo said.
But Grillo said HID is cautious about the potential of new types of security devices: “A lot of the areas where there will be increased security spending may or may not be in the commercial types of business for our types of products.”
HID does research and development in Denver while its Irvine and North Haven, Conn., operations handle manufacturing and distribution.
San Jose is home to the HID’s sister company, Indala Corp., a former Motorola Inc. unit that parent Assa Abloy bought in November. Indala had been a main rival to HID before the deal.
A distribution center in the UK serves HID’s European customers, while one in Hong Kong handles Asia. HID has sales offices in Germany, France, the Netherlands, China, Singapore and Mexico.
The company started in 1991 as Hughes Identification Devices, part of Hughes Aircraft Co. In 1995, the company became part of Carlsbad-based Palomar Technolog-ical Cos. in a management buyout backed by Citicorp Venture Capital.
HID holds about half the market for access control technology products globally, according to industry sources.
Competitors include Boca Raton, Fla.-based Casi-Rusco, a unit of Austin, Texas-based Interlogix Inc. In December, General Electric Co. announced plans to buy Interlogix.
