Pelco Cuts Costs and 1% Employees Layoff 2008

Published Dec 03, 2008 00:00 AM
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Summary: 19 employees cut, salary freeze implemented, corporate jet to be sold, no more personalized license plates.

All in all, this is a very small cut. Relative to the cuts that video surveillance companies are making, these cuts are very shallow. Verint, March, DM and many other small private organizations have made far more significant cuts.

Watch a video and read details of Pelco's cuts [link no longer available].  The local news reaction seems to be over the top. I suspect that is because Pelco is a big, if not biggest employee, in its region.

UPDATE September 28, 2011: New Pelco / Schneider Electric layoffs.

What Does Pelco Cuts Mean?

As I examine in my company risk assessment in the 2009 Video Surveillance Industry Guide, I think the recession will have a significant impact in a variety of sectors with analog focused companies requiring deeper cuts because of the lower starting growth rate.

While you can always claim individual company factors (e.g., Pelco's acquisition), I think Pelco's cut should make clear to everyone that the recession will have an impact on the video surveilllance industry.  Of the traditional video surveillance companies (i.e., analog/CCTV), Pelco is a clear leader. If Pelco needs to cut costs, then all the analog/CCTV companies are likely to have to make cuts - many much more severe than Pelco's.

What Will Happen Next Year?

As we discussed this week in this examination of the recession's impact, the US and EU economies are likely to continue to drop significantly from now until at least the middle of next year. This will have a negative impact on almost all video surveillance companies.  IP video companies growing at 40% the last few years could see their growth drop to under 20%.  Analog companies that were only growing at 10% per year the last few years could drop to -10%. And if your growth is negative, layoffs and spending cuts become almost inevitable.

While I don't think the Pelco cuts today are significant in themselves, I do think industry professionals should view this as a clear signal that the recession is impacting the video surveillance business.