Pissed! Why the UK is so Upset with Norbain

By: John Honovich, Published on Jul 10, 2012

The pitchforks are out in the UK, with hordes of integrators and manufacturers angered at the UK's most prominent distributor, Norbain. If you are outside the UK, you might have missed this but it is a very interesting case study in the evolution of the surveillance industry. In this note, we examine why so many are upset with Norbain.

Background

Norbain, whose annual revenue has historically been ~$200 Million USD, suffered a major shakeup, going into administration (similar to a bankruptcy restructuring in the US) and then being sold to a new company [link no longer available]. Most importantly, these events confirmed that Norbain had been losing significant amounts of money and had built up unsustainable debts. Basically, their business model was broken.

Manufacturers Impacted

Many manufacturers are major debt holders to Norbain and are unhappy as they will lose a lot of money as Norbain cannot / will not pay a significant portion of those debts. From what we hear, it is a tense negotiation for many manufacturers as both sides have a lot to lose.

While manufacturers may not get paid for their outstanding debts, manufacturers also have power to no longer do business with Norbain. Indeed, Dedicated Micros has voided all warranties for all products bought via Norbain [link no longer available] - an unprecedented move that demonstrates how serious this situation has become. Other manufacturers may change their terms and / or restrict product availability to limit their exposure to future Norbain issues or as retailiation to being screwed by Norbain.

Integrators Impacted

One of Norbain's biggest historical advantages was its generous credit terms for integrators. Indeed, many of our contacts referred to Norbain as ‘the UK's bank' for the security market. The attractive financial terms certainly helped win business and helped cash tight integrators.

Our contacts tell us that those terms are now being tightened and Norbain has become much more aggressive in getting paid on past due bills from integrators.

We see a number of important impacts on integrators:

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  • For those that owe Norbain money, expect pressure to pay this back. Integrators that are financially weak may be significantly hurt by this.
  • For new purchases, expect less generous financial terms that may make Norbain less attractive to buy from.
  • Product availability will likely be impacted. Integrators should carefully check which manufacturers are still available and how long it will take to get products under Norbain's new condition.

What Caused This

We are too far removed from the local UK market to offer our own opinion. However, we have heard the following as potential factors:

  • The UK economy and overall security market remain weak.
  • Norbain was too slow to IP and too committed to old school analog installers.

The Future

While some of the anger is due  to Norbain's heavy marketing expenditures over the last few months even though they were deep in debt and in trouble, much of the anger is about how this will change the UK security market. While Norbain confidently trumpeted that they are back to ‘business as usual', many in the UK market disagree as manufacturers and integrators affected by the fallout struggle to adjust. Given the bridges that are being burnt and the probable reductions in financing options and product availability that will come from this, it will be interesting to see if Norbain can maintain its prominent position in the UK market.

On the other hand, a brighter future may be ahead for the UK's security market. Given that Norbain has been selling products for less than cost over the last few years, eliminating this may force out weaker players (both manufacturers and integrators) strengthening the survivors in a healthier ecosystem.

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